Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following information should be read in conjunction with the Consolidated Financial Statements, including the notes thereto, included elsewhere in this Form 10-Q as well as our Annual Report on Form 10-K for the year ended December 31, 2025, filed on March 16, 2026.

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, including, but not limited to, statements regarding our future performance, business prospects, events and product development plans. These forward-looking statements are not historical facts, but are based on current expectations, estimates and projections about our industry, our beliefs and our assumptions. These forward-looking statements include statements about our strategies, objectives and our goals. To the extent statements in this Quarterly Report involve, without limitation, our expectations for growth, estimates of future revenue, our sources and uses of cash, our ability to continue to meet the listing standards of the NYSE American, our liquidity needs, our current or planned clinical trials or research and development activities, product development timelines, our future products, regulatory matters, expense, profits, cash flow balance sheet items or any other guidance on future periods, these statements are forward-looking statements.

These statements are often, but not always, made through the use of word or phrases such as "believe," "will," "expect," "anticipate," "estimate," "intend," "plan," "would," and "These," forward-looking statements are not guarantees of future performance and concern matters that could subsequently differ materially from those described in the forward-looking statements. Actual events or results may differ materially from those discussed in this Quarterly Report on Form 10-Q. Except as may be required by applicable law, we undertake no obligation to update any forward-looking statements or to reflect events or circumstances arising after the date of this Report.

Important factors that could cause actual results to differ materially from those in these forward-looking statements are in the section entitled "Risk Factors" located in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, and the other risks and uncertainties described elsewhere in this report as well as other risks identified from time to time in our filings with the Securities and Exchange Commission, press releases and other communications. In addition, the statements contained throughout this Quarterly Report concerning future events or developments or our future activities, including concerning, among other matters, our NYSE American compliance plan, current or planned clinical trials, anticipated research and development activities, anticipated dates for commencement of clinical trials, anticipated completion dates of clinical trials, anticipated meetings with the FDA or other regulatory authorities concerning our product candidates, anticipated dates for submissions to obtain required regulatory marketing approvals, anticipated dates for commercial introduction of products, and other statements concerning our future operations and activities, are forward-looking statements that in each instance assume that we are able to obtain sufficient funding in the near term and thereafter to support such activities and continue our operations and planned activities in a timely manner. There can be no assurance that this will be the case. Also, such statements assume that there are no significant unexpected developments or events that delay or prevent such activities from occurring. Failure to timely obtain sufficient funding, or unexpected developments or events, could delay the occurrence of such events or prevent the events described in any such statements from occurring.

Overview

We are a development-stage biopharmaceutical company and have been focused on the research and development of nasally delivered pharmaceutical therapies targeting neurological conditions; delivered with our novel and proprietary intranasal drug delivery device. The Company has been focused on advancing the development and commercialization of its lead product candidate, ONP-002. Our lead product, ONP-002, is a fully synthetic, non-naturally occurring neurosteroid, is lipophilic, and we believe it can cross the blood-brain barrier with the goal of rapidly eliminating swelling, oxidative stress and inflammation while restoring proper blood flow through gene amplification.

Our ONP-002 Neurology Asset for Brain Related Illness and Injury

Our lead product and focus are on the development and commercialization of ONP-002 for the treatment of mild traumatic brain injury ("mTBI" or "Concussion").

ONP-002, together with our other neurology assets, are referred to herein as the Neurology Assets. To date, ONP-002 has been shown to be stable up to 104 degrees for 18 months. The drug candidate is manufactured into a powder and filled into our novel intranasal device. The drug is then administered through the nasal passage from the device. The novel intranasal device is lightweight and, we believe, easy to use in the field.

We believe the proprietary powder formulation and intranasal administration through our proprietary device allows for rapid and direct accessibility to the brain. The device is breath propelled and is designed to allow patients to blow into the device which closes the soft palate in the back of the nasopharynx, preventing the flow of drug to the lungs or esophagus, minimizes system exposure and side effects, and, we believe, has the potential to effectively cross the blood brain barrier. This mechanism is designed to trap ONP-002 in the nasal cavity allowing for more abundant and faster drug availability in the traumatized brain.

As of September 30, 2026, we have enrolled 9 participants and have administered 34 study drug doses in our Phase IIa clinical trial evaluating ONP-002 in concussed patients in Australia across three sites: Mackay Base Hospital, Alfred Health, and Royal Adelaide Hospital. Zero serious adverse events have been reported across all treated participants to date. During September 2026, we encountered device stability concerns that we are currently evaluating, which caused a pause in participant enrollment.

In July of 2026, we submitted our Type B Meeting request to the U.S. Food and Drug Administration (FDA) and followed that with submission of our full briefing dossier. The meeting with the FDA is intended to facilitate FDA guidance on our planned U.S. clinical development program for ONP-002, in support of our Investigational New Drug (IND) application. Drug stability concerns encountered in September have caused potential significant delays in work related to the submission of our IND application originally projected to be submitted by the end of 2026.

Traumatic brain injury represents a significant neurological condition without an FDA-approved pharmacological treatment. According to the CDC, an estimated 1.7 to 3.8 million people in the U.S. experience traumatic brain injuries annually, with sports and recreational activities among the leading causes.¹ Globally, an estimated 69 million individuals sustain traumatic brain injuries each year. Despite this scale, no pharmacological treatments have been approved, leaving patients, military personnel, athletes, and families without FDA-approved effective options beyond rest and symptom management. If approved by the FDA, we believe ONP-002 would be the first and only pharmacological standard of care for a global concussion market projected to reach over $9 billion by 2030.²

Our Phase IIa trial is designed to enroll 40 patients who meet enrollment criteria based on CT scan findings, presenting symptoms, and emergency room or hospital admission. The trial is further designed to provide patients with first dosing within 12 hours of concussion, followed by continued treatment for up to 30 days

Expected ONP-002 Product Development Timeline:

Pre-clinical Animal Studies		Phase 1		Phase IIa clinical trials		U.S. based clinical trials
Complete		Complete		Q1 2026 started		Projected 2027

This product development plan is an estimate and is subject to change based on additional funding (of which there can be no assurances), technical risks and regulatory approvals. The Company does not expect to launch U.S. based trials unless it can raise significant additional capital, of which there are no assurances. See Risk Factors.

Business Development Strategy

Success in the biopharmaceutical and product development industry relies on the continuous development of novel product candidates. Most product candidates do not make it past the clinical development stage, as a result of which companies frequently look externally for innovation. Accordingly, we expect, from time to time, to seek strategic opportunities through various forms of business development, which can include strategic alliances, licensing deals, joint ventures, collaborations, equity or debt-based investments, dispositions, mergers, and acquisitions. We view these business development activities as a necessary component of our strategies, and we seek to enhance shareholder value by evaluating business development opportunities both within and complementary to our current business, as well as opportunities that may be new and separate from the development of our existing product candidates. The Company currently is not a party to any definitive acquisition or joint venture agreement for the development of additional product candidates and there can be no assurance the Company will be able to secure any such agreements.

¹ American Association of Neurological Surgeons; Sports Related Head Injury / CDC TBI Data

² Grand Market Research; Concussion Market (2025-2030)

Recent Developments

Our Common Stock commenced trading on the NYSE American (formerly the NYSE MKT) on April 10, 2013, and we are subject to certain NYSE American continued listing requirements and standards. On August 26, 2026, we received notification (the "Notice") that the Company was no longer in compliance with NYSE American's continued listing standards. Specifically, the Notice stated that the Company is not in compliance with the continued listing standards set forth in Sections 1003(a)(ii) and 1003(a)(iii) of the NYSE American Company Guide (the "Company Guide"). Section 1003(a)(ii) requires a listed company to have stockholders' equity of $4 million or more if the listed company has reported losses from continuing operations and/or net losses in three of its four most recent fiscal years. Section 1003(a)(iii) requires a listed company to have stockholders' equity of $6 million or more if the listed company has reported losses from continuing operations and/or net losses in our five most recent fiscal years.

On September 25, 2026, we submitted a plan of compliance (the "Plan") to the NYSE American. On November 11, 2026, the Company received a letter from the Exchange notifying the Company that the Exchange had accepted the Company's plan of compliance and granted the Company a plan period through February 25, 2028 (the "Plan Period") to regain compliance with Sections 1003(a)(ii) and 1003(a)(iii) of the NYSE American Company Guide. The Company's common stock will continue to be listed on NYSE American during the Plan Period, subject to the Company's compliance with other continued listing requirements. The Exchange staff will review the Company periodically for compliance with the initiatives outlined in the plan, and the Company is required to provide quarterly updates to the Exchange staff concurrent with its interim and annual SEC filings. The Company must also timely pay all listing and annual fees owed to the Exchange during the Plan Period. If the Company is not in compliance with the continued listing standards by February 25, 2028, or if the Company does not make progress consistent with the plan during the Plan Period, the Exchange staff will initiate delisting proceedings as appropriate, and the Company may appeal a staff delisting determination in accordance with the NYSE American Company Guide. There can be no assurance that the Company will make progress consistent with its plan, that the Company will regain compliance with the applicable continued listing standards by the end of the Plan Period, or that the Company's common stock will maintain its listing on NYSE American.

Recent Funding

Stock Sale

In March 2026, we sold 84,700 shares pursuant to our ATM Agreement with Dawson James for net proceeds of $79,210. See Note 8 of Notes to Consolidated Financial Statements.

Promissory Note

As of September 30, 2026, the Company had no outstanding promissory notes during the quarter.

Going Concern

See Note 1 of Notes to Consolidated Financial Statements.

Significant Accounting Policies and Use of Estimates

During the three months ending September 30, 2026, there were no significant changes to our significant accounting policies and estimates as described in Note 1. Significant Accounting Policies included in Part II, Item 8. of our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on March 16, 2026.

Future Capital Requirements

Our capital requirements for 2026 and beyond will depend on numerous factors, including the success of our research and development efforts, the progress of our ONP-002 program, and our ability to secure strategic partnerships acquisitions and licensing arrangements to support our pipeline.

We expect to incur substantial expenditures to further develop our neurology assets and to pursue strategic partnerships, acquisitions and licensing arrangements, including increased cost related to research, nonclinical testing, clinical trials, due diligence, regulatory submissions, and the ongoing requirements of being a public company. Additional capital will still be required to undertake clinical trials, acquisitions, due diligence, regulatory filings, and any future commercialization efforts. Subject to our ability to raise additional capital, of which there can be no assurances, we plan to continue advancing the ONP-002 toward Phase II clinical trials and further IND-enabling work. Additionally, subject to the terms of any future financings, we may shift our focus away from ONP-002 and toward other potential product candidates.

To support these activities, we may seek additional equity and debt financing, as well as strategic alliances, joint ventures, licensing agreements, or other business arrangements that could generate sufficient capital to sustain our operations. There can be no assurance that we will be able to obtain such financing on acceptable terms, or at all. If we are unable to raise sufficient capital in the future, we may be forced to delay, reduce, or eliminate our research and development programs and future acquisition and commercialization efforts, which would adversely affect our business prospects and ability to continue as a going concern. As of the date hereof, due in part to the device stability concerns discussed above and our capital needs, we have paused participant enrolment with regard to our ONP-002 clinical trial.

As of September 30, 2026, we had $2.2 million in cash and cash equivalents. We believe this capital may allow us to fund our current limited operating plan through the end of 2026, depending on the timing and scope of our development activities and other strategic decisions.

Additional capital will still be required to complete planned clinical trials, undertake acquisitions, negotiate joint venture agreements, undertake due diligence in connection therewith, regulatory filings, and any future commercialization efforts. There can be no assurance that such funding will be available on favorable terms, or at all. If we are unable to secure sufficient capital, we may be forced to delay, scale back, cease or eliminate our operations and development plans, which would adversely impact our business and strategic objectives.

The sale of additional equity or convertible securities could result in significant dilution to our existing shareholders. If we raise funds through debt or preferred stock, these instruments may have rights senior to our common stock and could impose restrictive covenants on our operations.

Due to uncertainties associated with clinical development, regulatory approval timelines, and partnership negotiations, we cannot precisely estimate our future capital requirements. However, our needs will depend on many factors, including but not limited to:

	●	Conducting Phase II trials and filing an IND for ONP-002, including potential Phase III Trial planning;
	●	Identification and preparation of clinical sites;
	●	The number and development paths of product candidates we pursue;
	●	The scope, cost, and results of our preclinical and clinical programs;
	●	Timing and cost of obtaining regulatory approvals;
	●	Our ability to identify, secure and acquire other potential product candidates;
	●	Our pursuit and our ability to secure and maintain strategic partnerships and licensing deals;
	●	Our performance under existing agreements, including potential milestone or royalty payments;
	●	Patent prosecution, enforcement, and potential litigation; and
	●	The timing and revenue, if any, from future product sales and royalties.

We have based these forward-looking statements on assumptions we believe are reasonable; however, actual results and funding needs may differ materially from our current expectations

New Accounting Pronouncements

See Note 2 of Notes to Consolidated Financial Statements.

Business Segments

We operate in a single reportable segment, which includes all activities related to the development of our lead product candidate, ONP-002, for the treatment of mild traumatic brain injury (concussion). This determination is consistent with how financial information is reviewed and evaluated by our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") for purposes of performance assessment, resource allocation, and planning.

Our CEO and CFO regularly review consolidated net loss and total assets as key measures in operating decision-making. We do not separately evaluate results by geographic region or product line.

For the nine months ended September 30, 2026, and 2025, we did not generate any revenue. Our segment asset measure is reported on the consolidated balance sheet and total assets.

Results of Operations

We do not currently sell or market any products and did not generate any revenue for the nine months ended September 30, 2026, and 2025.

		Three Months Ended September 30								Increase (Decrease)				Percentage Change
		2026				2025
Research and development		$	1,576,121			$	930,894			$	645,227				69.31	%
General and administrative			1,019,856				2,192,879				(1,173,023	)			(53.49	)%
Total Operating Expenses			2,595,977				3,123,773				(527,796	)			(16.90	)%
Loss from operations			(2,595,977	)			(3,123,773	)			527,796				(16.90	)%
Other income (expense):
Interest income			13,919				68,142				(54,223	)			(79.57	)%
Interest expense			(6,555	)			(7,039	)			484				(6.88	)%
Foreign currency exchange net			(35,200	)			(3,919	)			(31,281	)			798.19	%
Total other (expense) income, net			(27,836	)			57,184				(85,020	)			(148.68	)%
Loss before income taxes			(2,623,813	)			(3,066,589	)			442,776				(14.44	)%
Income tax (expense) benefit			20,526				-				20,526				100.00	%
Net loss		$	(2,603,287	)		$	(3,066,589	)		$	463,302				(15.11	)%

		Nine Months Ended September 30								Increase (Decrease)				Percentage Change
		2026				2025
Research and development		$	3,398,218			$	1,722,115			$	1,676,103				97.33	%
General and administrative			4,046,214				5,142,087				(1,095,873	)			(21.31	)%
Total Operating Expenses			7,444,432				6,864,202				580,230				8.45	%
Loss from operations			(7,444,432	)			(6,864,202	)			(580,230	)			8.45	%
Other income (expense):
Interest income			84,821				95,138				(10,317	)			(10.84	)%
Interest expense			(10,696	)			(778,476	)			767,780				(98.63	)%
Foreign currency exchange net			(52,458	)			(8,077	)			(44,381	)			549.47	%
Total other (expense) income, net			21,667				(691,415	)			713,082				(103.13	)%
Loss before income taxes			(7,422,765	)			(7,555,617	)			132,852				(1.76	)%
Income tax (expense) benefit			89,528				-				89,528				100.00	%
Net loss		$	(7,333,237	)		$	(7,555,617	)		$	222,380				(2.94	)%

Research and Development

For the three months ended September 30, 2026, research and development ("R&D") expenses were $1.6 million compared to $930,894 for the same period in 2025, representing an increase of $645,227, or 69.3%.

For the nine months ended September 30, 2026, R&D expenses were $3.4 million compared to $1.7 million for the same period in 2025, representing an increase of $1.6 million, or 97.3%.

The increase was primarily attributable to the recognition of previously prepaid research and development expenses as the Company made significant progress on its ongoing R&D programs during the quarter. A substantial portion of previously contracted research and development activities was performed during the three months ended September 30, 2026, resulting in the recognition of expenses associated with amounts previously recorded as prepaid assets. These activities primarily related to the continued advancement of the Company's ONP-002 concussion program, including clinical development, regulatory preparation, and other program-related activities.

Subject to our ability to raise additional capital, the Company expects R&D expenses to increase in future periods as it advances the ONP-002 program, including the ongoing Phase IIa clinical trial in Australia, conducting IND-enabling activities to support U.S.-based clinical trials, and scaling manufacturing of clinical trial material. If the Company is unable to raise additional capital, it may be unable to further advance its ONP-002 program, undertake acquisitions and pursue joint ventures and licensing arrangements.

General and Administrative

For the three months ended September 30, 2026, general and administrative ("G&A") expenses were $1.0 million, compared to $2.2 million for the same period in 2025, representing a decrease of $1.2 million, or 53.5%.

The decrease was primarily driven by lower legal and professional fees of approximately $817,000, reflecting reduced expenditures for external professional services, and lower investor relations expenses of approximately $240,000. Additionally, patent-related expenses decreased by approximately $113,000, public company expenses decreased by approximately $33,000, and other administrative expenses decreased by approximately $11,000. These decreases were partially offset by higher salaries and benefits of approximately $33,000 and higher board compensation of approximately $10,000.

For the nine months ended September 30, 2026, G&A expenses were $4.0 million, compared to $5.1 million for the same period in 2025, representing a decrease of $1.1 million, or 21.3%.

The decrease was primarily driven by lower legal and professional fees of approximately $427,000, lower investor relations expenses of approximately $234,000, and lower salaries and benefits of approximately $185,000. Additionally, patent-related expenses decreased by approximately $131,000, public company expenses decreased by approximately $107,000, insurance expenses decreased by approximately $22,000, and travel expenses decreased by approximately $19,000. These decreases were partially offset by higher board compensation of approximately $33,000.

We expect general and administrative expenses to remain relatively consistent, with potential increases driven by legal, regulatory, and public-company compliance requirements, as well as continued investor relations activities supporting the Company's strategic initiatives.

Other Income (Expense)

Other income (expense) includes interest income, interest expense, and realized gains or losses related to foreign currency exchange rates with our vendors. Interest income reflects earnings on our cash and cash equivalents, which are invested with a primary objective of capital preservation. Interest expense consists primarily of costs associated with our short-term note payable for financing insurance premiums.

For the three months ended September 30, 2026, total other expense, net was $27,836, compared to total other income, net of $57,184 for the same period in 2025, representing an unfavorable change of $85,020. The change was primarily attributable to a decrease in interest income of approximately $54,000, reflecting lower average cash and investment balances, and an increase in foreign currency exchange losses of approximately $31,000. These unfavorable changes were partially offset by a decrease in interest expense of approximately $500.

For the nine months ended September 30, 2026, total other income, net was $21,667, compared to total other expense, net of $691,415 for the same period in 2025, representing a favorable change of $713,082. The change was primarily attributable to a decrease in interest expense of approximately $768,000, primarily reflecting lower financing-related costs compared to the prior-year period. This favorable change was partially offset by an increase in foreign currency exchange losses of approximately $44,000 and a decrease in interest income of approximately $10,000.

Liquidity and Capital Resources

Since our inception, we have funded our operations primarily through the sale of equity securities in public and private offerings, debt financing, and warrant exercises. As of September 30, 2026, we had an accumulated deficit of $233.9 million and have not yet achieved profitability. We incurred a net loss of $7.3 million for the nine months ended September 30, 2026, and $9.8 million for the year ended December 31, 2025. Subject to our ability to raise additional capital, of which there can be no assurances, we expect to continue incurring significant operating losses as we advance the development of our Neurology Assets, including ONP-002, through regulatory and clinical stages toward potential commercialization. If the Company is unable to raise additional capital, we may not be able to continue operating and may be unable to further advance its ONP-002 program, undertake acquisitions and pursue joint ventures and licensing arrangements.

The following table sets forth our primary sources and uses of cash:

		Nine months ended September 30,
		2026				2025
Net cash used in operating activities		$	(6,420,794	)		$	(6,410,975	)
Net cash provided by investing activities			4,000,000				-
Net cash (used) provided by financing activities			248,451				16,949,901
Net change in cash and cash equivalents		$	(2,172,343	)		$	10,538,926

Operating Activities

Cash used in operating activities for the nine months ended September 30, 2026, and 2025 was $6.4 million and $6.4 million, respectively. In both periods, cash used in operations primarily reflected the Company's net losses adjusted for non-cash charges and changes in operating assets and liabilities.

For the nine months ended September 30, 2026, non-cash adjustments primarily consisted of $60,085 of stock-based compensation expense and $5,000 of common stock issued for services. In contrast, the prior-year period included $771,437 of amortization of debt discount and closing costs, $30,525 of stock-based compensation expense, and an $86,617 stock-based compensation recapture, with no comparable debt discount amortization or stock-based compensation recapture in 2026.

Changes in operating assets and liabilities also impacted operating cash flows during the current period, including a $53,082 decrease in interest receivable, a $560,567 decrease in prepaid expenses and other current assets, primarily reflecting the recognition of previously prepaid research and development costs as the underlying services were performed, and a $233,709 increase in accounts payable and accrued expenses, reflecting the timing of vendor payments and accrued obligations.

Cash used in operating activities remained relatively consistent year over year, increasing by approximately $10,000. The decrease in the Company's net loss and favorable changes in prepaid expenses and other current assets were substantially offset by lower increases in accounts payable and accrued expenses and the absence of significant prior-year non-cash financing-related adjustments.

Investing Activities

Net cash provided by investing activities for the nine months ended September 30, 2026, was $4.0 million, primarily consisting of proceeds from the maturity of a short-term certificate of deposit. The Company also recognized interest income associated with this investment, which is reflected in operating activities.

There was no comparable investing activities during the nine months ended September 30, 2025. The increase in cash provided by investing activities was attributable to the maturity of the short-term investment during the current period, providing additional liquidity to support the Company's ongoing operating and research and development activities.

Financing Activities

Net cash provided by financing activities was $248,451 for the nine months ended September 30, 2026, compared to $16.9 million for the same period in 2025.

Financing activities during the nine months ended September 30, 2026, consisted of $508,196 in borrowings under short-term notes payable and $79,210 in proceeds from the issuance of common stock, partially offset by $338,955 in repayments of short-term notes payable.

In contrast, financing activities during the nine months ended September 30, 2025, were primarily driven by $15.0 million in net proceeds from the issuance of preferred stock and warrants, $2.6 million in proceeds from the issuance of common stock, and $2.6 million in borrowings under short-term notes payable, partially offset by $3.3 million in repayments of short-term notes payable.

The year-over-year decrease in cash provided by financing activities primarily reflects the absence of significant equity financing transactions during the current period, particularly the preferred stock and warrant financing completed in the prior-year period, as well as lower proceeds from common stock issuances and reduced short-term borrowing activity.

Short-Term Notes Payable

Short-term notes payable consisted of the following:

		September 30, 2026				December 31, 2025
Insurance premium financing of $506,430, due in monthly installments of $58,194, which includes principal and annual interest at 8.15% through April 2027		$	396,589			$	-
Insurance premium financing of $506,190, due in monthly installments of $58,314, which includes principal and annual interest at 8.75% through April 2026			-				227,348
Total short-term notes payable		$	396,589			$	227,348

Inflation

Inflation may impact the cost of services and supplies used in our operations, including professional services, insurance premiums, and research-related vendor agreements. Increases in wages, employee benefits, and regulatory compliance costs may continue to exert upward pressure on operating expenses. However, because we are currently in the development stage and do not maintain significant manufacturing operations or large-scale procurement of raw materials, we have not experienced material inflationary effect on our operating results. For the nine months ended September 30, 2026, and 2025, inflation has not had a material impact on our results of operations.

Off Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.