Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this annual report. Some of the information contained in this discussion and analysis or set forth elsewhere in this annual report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section of this annual report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are a biopharmaceutical company using our proprietary PTR^TM drug delivery platform technology to build and advance a pipeline of next-generation pharmaceutical products designed to improve the lives of patients suffering from frequently diagnosed conditions characterized by burdensome daily dosing regimens and suboptimal treatment outcomes. With an initial focus on the treatment of ADHD and anxiety, we are identifying and evaluating additional therapeutic areas where our PTR technology may be employed to develop future product candidates. Our PTR platform incorporates a proprietary EBL designed to allow for the release of drug substance at specific, pre-defined time intervals, unlocking the potential for once-daily, multi-dose tablets. We believe there remains a significant, unmet need within the current treatment paradigm for true once-daily ADHD stimulant medications with lasting duration to better serve the needs of patients throughout their entire active-day.

Since inception in 2012, our operations have focused on developing our product candidates, primarily CTx-1301, organizing and staffing our company, business planning, raising capital and establishing our intellectual property portfolio. We do not have any product candidates approved for sale and have not generated any revenue. We have funded our operations through public and private capital raised. Cumulative capital raised from these sources, including debt financing, was approximately $128.7 million as of December 31, 2025.

We have incurred significant losses since our inception. Our ability to generate product revenue sufficient to achieve profitability will depend on the successful development and commercialization of one or more of our product candidates. Our net losses were $22.4 million and $16.6 million for the years ended December 31, 2025 and 2024, respectively. See "Results of Operations" below for an explanation of the fluctuations in our net losses. As of December 31, 2025, we had an accumulated deficit of $132.4 million.

We expect to continue to incur significant expenses and operating losses in the near term as we:

●	seek regulatory approval for CTx-1301;
●	continue research and development activities for our existing and new product candidates, primarily for CTx-1301;
●	continue manufacturing activities, primarily for CTx-1301;
●	advance commercialization efforts for CTx-1301; and
●	operate as a public company.

We believe our cash will satisfy our capital needs late into the fourth quarter of 2026 under our current business plan, which primarily includes activities related to us seeking regulatory approval for CTx-1301 and pre-commercialization efforts for CTx-1301. We will also need additional capital to advance our other programs. See "Liquidity and Capital Resources" below.

Our ability to generate product revenue will depend on the successful development, regulatory approval and eventual commercialization of one or more of our product candidates. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of equity, debt financings, or other capital sources, including potential collaborations with other companies or other strategic transactions. Adequate funding may not be available to us on acceptable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, scale back or discontinue the development and commercialization of our product candidates. Our most advanced product candidate currently is CTx-1301, for which we submitted a NDA with the FDA in July 2025. On [DATE], the NDA submission was accepted by the FDA and a PDUFA target action date of May 31, 2026 was assigned. However, completing the process of obtaining FDA approval of the pending NDA for CTx-1301 still involves substantial risk. See "Risk Factors-We depend heavily on the success of CTx-1301. If we are unable to secure approval of CTx-1301, we will never be able to generate revenues from CTx-1301, and our ability to create stockholder value will be severely limited" for more information about the risks related to regulatory approval of CTx-1301.

2024 Reverse Stock Split

On August 9, 2024, we completed a one-for-twelve reverse stock split (the "2024 Reverse Stock Split"), which reduced the number of shares of our common stock that were issued and outstanding immediately prior to the effectiveness of the 2024 Reverse Stock Split. The number of shares of our authorized common stock was not affected by the 2024 Reverse Stock Split and the par value of our common stock remained unchanged at $0.0001 per share. No fractional shares were issued in connection with the 2024 Reverse Stock Split. All share and per share amounts in this report have been adjusted to reflect the 2024 Reverse Stock Split.

Securities Issuances

ATM Agreement

We entered into the At the Market Offering Agreement ("ATM Agreement") with HCW, as sales agent, in January 2023 as amended in May 2023, pursuant to which we could offer and sell, from time to time through HCW, shares of our common stock for aggregate proceeds of up to $32.34 million (upon the terms and subject to the conditions and limitations set forth in the ATM Agreement). On March 16, 2026, we terminated the ATM Agreement, effective March 23, 2026.

During 2025, we sold 785,784 shares of common stock under the ATM Agreement, for net proceeds of $3,574,574, after deducting $122,576 of compensation to HCW and other administration fees. Subsequent to December 31, 2025, we sold 210,158 shares of common stock under the ATM Agreement, for net proceeds of $1,304,011, after deducting $43,300 of compensation to HCW and other administration fees.

Equity Line of Credit

In April 2023, we entered into a purchase agreement (the "Original LP Purchase Agreement") with Lincoln Park Capital Fund LLC ("Lincoln Park"). Pursuant to the Original LP Purchase Agreement, Lincoln Park agreed to purchase from us up to an aggregate of $12.0 million of common stock. During 2025, we sold 897,415 shares of common stock under the Original LP Purchase Agreement, for net proceeds of $3,513,236. As of June 30, 2025, we sold to Lincoln Park the maximum dollar value worth of common stock pursuant to the Original LP Purchase Agreement, and the Original LP Purchase Agreement thereupon expired in accordance with its terms.

On July 21, 2025, we entered into a second purchase agreement with Lincoln Park (the "2025 LP Purchase Agreement"), pursuant to which Lincoln Park has agreed to purchase from us up to an aggregate of $25.0 million of common stock (subject to certain limitations and satisfaction of the conditions set forth in the 2025 LP Purchase Agreement) from time to time and at the Company's sole discretion over the 36-month term of the 2025 LP Purchase Agreement. Pursuant to the terms of the 2025 LP Purchase Agreement, we issued 120,424 shares of common stock to Lincoln Park as consideration for its commitment to purchase shares of common stock under the 2025 LP Purchase Agreement. During 2025, we sold 852,948 shares of common stock to Lincoln Park, under the 2025 LP Purchase Agreement, for net proceeds of $3,238,007. Subsequent to December 31, 2025, we sold 1,526,628 shares of common stock to Lincoln Park, under the 2025 LP Purchase Agreement, for net proceeds of $8,506,791. As of March 18, 2026, we had approximately $13.3 million of availability under the 2025 LP Purchase Agreement.

Private Placement

On January 27, 2026, we entered into a securities purchase agreement (the "Purchase Agreement") with several purchasers, including a lead investor (the "Lead Investor") and certain of our officers, directors and other affiliates, for the private placement (the "Private Placement") of: (i) 2,147,472 shares of our common stock, (ii) 954 shares of Series A convertible preferred stock with a stated value of $1,000 (the "Stated Value") and a conversion price equal to a $5.04 per share of common stock (the "Preferred Stock") and (iii) a warrant (the "Warrant") to purchase 1,869,415 shares of common stock (the "Warrant Shares") for aggregate gross proceeds of approximately $12.0 million, at a price per share of $5.14 per share of common stock (including $0.10 per Warrant Share). The Warrant Shares have an exercise price of $5.04 per share of common stock, subject to adjustment as provided in the Warrant. The shares of Common Stock, the shares of Preferred Stock, and the Warrant Shares are referred to collectively as the Securities.

The closing of the Private Placement occurred on February 6 and 13, 2026. At a special meeting of stockholders scheduled for March 24, 2026, stockholders are being asked to approve the issuance of common stock upon conversion of the Preferred Stock and the exercise of the Warrant. Upon stockholder approval (i) each outstanding share of the Preferred Stock, without any further action by us or the holder, will automatically convert into shares of common stock determined by dividing the Stated Value plus all unpaid accrued and accumulated preferential dividends on such share by the $5.04 conversion price and (ii) the Warrant will be exercisable.

Falcon Creek Capital Advisor LLC ("Falcon Creek"), on behalf of the Lead Investor that it manages, may designate up to two (2) directors (each a "Falcon Creek Director") to serve on our board of directors (the "Board"), who will be designated as follows: (i) one Falcon Creek Director was designated on February 13, 2026 and (ii) Falcon Creek will have the right to designate the second Falcon Creek Director upon stockholder approval; provided, that (1) one Falcon Creek Director shall be required to resign from the Board if the Lead Investor no longer beneficially owns at least 15% of our outstanding common stock and (2) the remaining Falcon Creek Director shall be required to resign from the Board if the Lead Investor no longer beneficially owns at least 5% of our outstanding common stock.

Except as provided in the Purchase Agreement, during the period commencing on and including the date of the Purchase Agreement and continuing through and including the 180th day following the date of the Purchase Agreement (such period being referred to as the "Lock-up Period"), each purchaser will not, without our prior written consent, sell, offer to sell, contract to sell or lend any Securities. The Purchase Agreement also provides that during the Lock-up Period, the purchasers will not (i) effect any short sale, or establish or increase any "put equivalent position" or liquidate or decrease any "call equivalent position" of any Securities; (ii) pledge, hypothecate or grant any security interest in any Securities; (iii) in any other way transfer or dispose of any Securities; (iv) enter into any swap, hedge or similar arrangement or agreement that transfers, in whole or in part, the economic risk of ownership of any Securities, regardless of whether any such transaction is to be settled in securities, in cash or otherwise; (v) grant any proxies or powers of attorney with respect to any Securities, deposit any Securities into a voting trust, or enter into a voting agreement or similar arrangement or commitment with respect to any Securities; or (vi) publicly announce the intention to do any of the foregoing.

The Purchase Agreement also includes a standstill provision for a period of twenty-four (24) months following the last closing date, whereby each purchaser has agreed that, without our prior written consent, the purchaser will not: (i) acquire, offer to acquire, or agree to acquire any of our securities if such acquisition would result in the purchaser and its affiliates beneficially owning more than 40% of our outstanding common stock on an as-converted basis; (ii) make, or in any way participate in, any solicitation of proxies or consents with respect to any of our securities; or (iii) propose or participate in any merger, tender offer, business combination, recapitalization, or similar transaction involving us.

The independent members of our Board reviewed the terms of the Private Placement, including the participation of certain of our officers, directors and other affiliates, and determined that the Private Placement is in our best interest and the best interests of our stockholders.

Debt Conversion

In August 2022, CTx, a wholly-owned subsidiary of Cingulate Inc. issued a promissory note to WFIA with a principal amount of $5.0 million, and in May 2023, CTx issued an amended and restated promissory note (the "WFIA Note") increasing the principal amount under the promissory note by $3.0 million to $8.0 million.

On September 8, 2023, Cingulate Inc. and CTx entered into a note conversion agreement with WFIA, pursuant to which WFIA agreed to convert $5.0 million of principal under the WFIA Note plus all accrued interest thereon, or $5,812,500, into pre-funded warrants (the "September WFIA Pre-Funded Warrants") to purchase 28,493 shares of our common stock at a conversion price per September WFIA Pre-Funded Warrant of $204.00. The closing price of our common stock on Nasdaq on September 8, 2023 was $138.60 per share. The September WFIA Pre-Funded Warrants had no expiration date and were exercisable immediately at an exercise price of $0.024 per share, to the extent that after giving effect to such exercise, WFIA and its affiliates would beneficially own, for purposes of Section 13(d) of the Exchange Act, no more than 19.99% of the outstanding shares of our common stock.

On January 25, 2024, Cingulate Inc. and CTx entered into a note conversion agreement with WFIA, pursuant to which WFIA agreed to convert the remaining $3.0 million of principal under the WFIA Note plus all accrued interest thereon, or $3,287,500, into pre-funded warrants (the "January WFIA Pre-Funded Warrants") to purchase 57,254 shares of our common stock, at a conversion price per January WFIA Pre-Funded Warrant of $57.42. The closing price of the Common Stock on Nasdaq on January 24, 2024 was $52.20 per share. The January WFIA Pre-Funded Warrants had no expiration date and were exercisable immediately at an exercise price of $0.0012 per share, to the extent that after giving effect to such exercise, WFIA and its affiliates would beneficially own, for purposes of Section 13(d) of the Exchange Act, no more than 19.99% of the outstanding shares of our common stock. In March of 2024, we issued to WFIA an additional pre-funded warrant to purchase 588 shares of common stock as a result of an error in the interest calculation, on the same form and at the same conversion price as the January WFIA Pre-Funded Warrants.

The WFIA Note was unsecured with interest accruing at 15% per annum. After the conversion of the remaining principal amount plus all accrued interest thereon and the issuance of the January WFIA Pre-Funded Warrants, the WFIA Note was paid in full and we have no further obligations under the WFIA Note. WFIA exercised all of its pre-funded warrants in April 2024.

Public Offerings

On February 2, 2024, we entered into agreements, including a Securities Purchase Agreement, with investors, pursuant to which we issued 114,583 shares of our common stock, pre-funded warrants to purchase up to an aggregate of 197,917 shares of our common stock, Series A warrants to purchase up to 312,500 shares of our common stock and Series B warrants to purchase up to 312,500 shares of our common stock (the "February 2024 Offering"). The February 2024 Offering closed on February 6, 2024. The combined purchase price per share of common stock and accompanying Series A and Series B warrants was $24.00. The combined purchase price per pre-funded warrant and accompanying Series A and Series B warrants was $23.9988, which represents the public offering price per share of common stock and accompanying warrants less the $0.0012 per share exercise price for each pre-funded warrant. The pre-funded warrants are exercisable at any time after the date of issuance and have no expiration date. The holder of pre-funded warrants may not exercise the warrants if the holder, together with its affiliates, would beneficially own more than 4.99% (or, at the election of the holder, 9.99%) of the number of shares of common stock outstanding immediately after giving effect to such exercise. The Series A warrants have an exercise price of $24.00 per share, were exercisable immediately, and will expire five years after the issuance date, and the Series B warrants have an exercise price of $24.00 per share, were exercisable immediately, and will expire two years after the issuance date. We received gross proceeds of approximately $7.5 million, before deducting $750,950 of placement agent's fees and other offering expenses, pursuant to the February 2024 Offering. All pre-funded warrants were exercised during 2024.

Warrant Inducement

On June 28, 2024, we entered into an inducement offer letter agreement (the "June 2024 Warrant Inducement"), pursuant to which certain holders ("Holders") of certain of our existing warrants to purchase 265,625 shares of common stock issued to the Holders on February 6, 2024 (the "February 2024 Warrants") agreed to exercise for cash their February 2024 Warrants at a reduced exercise price of $7.02 per share. In consideration for the exercise of the February 2024 Warrants, the Holders received new Series C common stock purchase warrants to purchase an aggregate of 354,167 shares of common stock and new Series D common stock purchase warrants to purchase an aggregate of 177,083 shares of common stock. Such new warrants have an exercise price of $7.02 per share. We received net proceeds of $1.6 million from the closing of the June 2024 Warrant Inducement, which occurred on July 1, 2024. The Series C and Series D warrants have an exercise price of $7.02 per share and were exercisable beginning on August 24, 2024, the effective date of stockholder approval of the shares issuable pursuant to the warrants. The Series C warrants have a five-year term and the Series D warrants have a two-year term from the initial exercise date.

Debt Issuance

On December 20, 2024, we entered into a Note Purchase Agreement (the "2024 Note Purchase Agreement") with Streeterville Capital, LLC, a Utah limited liability company ("Lender"), pursuant to which we issued and sold to Lender an unsecured promissory note in the amount of $5,480,000 (the "2024 Note"). The principal amount included an original issue discount of $450,000 and expenses payable by us of $30,000. In exchange for the 2024 Note, Lender paid a purchase price of $5,000,000 in cash. The 2024 Note bore interest at a rate of 9% per annum and had a maturity 18 months after its issuance date. Our wholly-owned subsidiaries Cingulate Therapeutics LLC and Cingulate Works, Inc., provided a guarantee of our obligations to Lender under the 2024 Note and the other transaction documents. We used the net proceeds from the sale of the 2024 Note for working capital and other general corporate purposes.

From time to time, beginning on July 2, 2025, Lender could redeem a portion of the 2024 Note. Pursuant to the terms of the 2024 Note, we were charged a monitoring fee equal to the outstanding balance on the 90-day anniversary of the effective date of the 2024 Note divided by 0.85 less the outstanding balance on such date.

During 2025, we entered into exchange agreements with Lender to exchange an aggregate of $4,675,000 in principal for 1,167,300 shares of common stock, thereby extinguishing that portion of the 2024 Note. Subsequent to December 31, 2025, we entered into exchange agreements with Lender to exchange an aggregate of $2,308,947 in principal for 460,122 shares of common stock, thereby extinguishing the remaining balance of the 2024 Note. See Note 8 to our consolidated financial statements for additional information regarding the 2024 Note and the 2024 Note Purchase Agreement.

On November 7, 2025, we entered into a note purchase agreement (the "2025 Note Purchase Agreement") with Avondale Capital, LLC, a Utah limited liability company ("Avondale"), pursuant to which we issued and sold to Avondale an unsecured promissory note in the amount of $6,570,000 (the "2025 Note"). The principal amount includes an original issue discount of $540,000 and expenses payable by us of $30,000. In exchange for the 2025 Note, Avondale paid a purchase price of $6,000,000 in cash. The 2025 Note bears interest at a rate of 9% per annum and matures 18 months after its issuance date. Our wholly-owned subsidiaries Cingulate Therapeutics LLC and Cingulate Works, Inc., provided a guarantee of our obligations to Avondale under the 2025 Note and the other transaction documents. We intend to use the net proceeds from the sale of the 2025 Note for working capital and other general corporate purposes.

From time to time, beginning on May 7, 2026, Avondale may redeem a portion of the 2025 Note, not to exceed an amount of $660,000 per month; and provided that we have not previously received a "complete response letter" from the FDA with respect to CTx-1301, we may defer up to two redemptions for up to thirty (30) days each. If we exercise our deferral right, the outstanding balance of the 2025 Note will be increased by 1% of the outstanding balance on the date of the deferral. We were charged a monitoring fee equal to the outstanding balance on the 90-day anniversary of the effective date of the 2025 Note divided by 0.85 less the outstanding balance on such date. Subject to the terms and conditions set forth in the 2025 Note, we may prepay all or any portion of the outstanding balance of the 2025 Note at any time.

Pursuant to the 2025 Note Purchase Agreement, while the 2025 Note is still outstanding, we will not enter into any arrangement that prohibits us from entering into a variable rate transaction, as defined in the 2025 Note Purchase Agreement, with Avondale or its affiliates, or from issuing our securities to Avondale or its affiliates. We are also prohibited from entering into a variable rate transaction while the 2025 Note is outstanding, subject to certain exceptions. At any time while the 2025 Note is still outstanding, Avondale will have the right, but not the obligation, with our consent, to reinvest up to an additional $5.0 million in one or more tranches on the same terms and conditions as the 2025 Note. Additionally, so long as the 2025 Note is outstanding, upon any issuance by us of any debt security with any economic term or condition more favorable to the holder of such security that was not provided to Avondale pursuant to the 2025 Note, then, at Avondale's option, such additional term shall become part of the 2025 Note and related documents for the benefit of Avondale. See Note 8 to our consolidated financial statements for additional information regarding the 2025 Note and 2025 Note Purchase Agreement.

Components of Operating Results

Revenue

Since inception, we have not generated any revenue and do not expect to generate any revenue from the sale of products in the near future. If our development efforts for our product candidates are successful and result in regulatory approval, or if we enter into collaboration or license agreements with third parties, we may generate revenue in the future from a combination of product sales or payments from collaboration of license agreements.

Operating Expenses

Research and Development Expenses

Research and development expenses consist of costs incurred in the discovery and development of our product candidates, and primarily include:

	●	expenses incurred under third party agreements with contract research organizations (CROs), and investigative sites, that conducted or will conduct our clinical trials and a portion of our pre-clinical activities;
	●	costs of raw materials, as well as manufacturing cost of our materials used in clinical trials and other development testing;
	●	expenses, including salaries and benefits of employees engaged in research and development activities;
	●	costs of manufacturing equipment, depreciation and other allocated expenses; and
	●	fees paid for contracted regulatory services as well as fees paid to regulatory authorities including the FDA for review and approval of our product candidates.

We expense research and development costs as incurred. Costs for external development activities are recognized based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our consolidated financial statements as prepaid or accrued costs.

Research and development activities are central to our business model. Subject to successful regulatory approval and commercialization of CTx-1301, we expect that our research and development expenses will continue to increase for the foreseeable future as we continue clinical development for our product candidates, as well as adding additional PTR product candidates to our pipeline. As products enter later stages of clinical development, they will generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. Historically, our research and development costs have primarily related to the development of CTx-1301. We expect to fund our research and development expenses from our current cash and cash equivalents and any future equity or debt financings, or other capital sources.

General and Administrative Expenses

General and administrative expenses consist primarily of (i) professional fees for legal, accounting, audit, tax and consulting services, (ii) salaries and related costs for our employees in administrative, executive and finance functions and (iii) pre-commercialization expenses for CTx-1301. General and administrative expenses also include insurance, office, and travel expenses.

We expect that our general and administrative expenses will increase in the future as we increase our general and administrative headcount to support our growing operations, including the potential commercialization of CTx-1301, and incur costs related to pre-commercialization activities. We have experienced, and will continue to experience, increased expenses associated with being a public company, including costs of accounting, audit, legal, regulatory and tax compliance services; director and officer insurance; and investor and public relations costs.

Issuance cost and change in fair value of derivative and interest and other income (expense), net

Issuance cost and change in fair value of derivative relates to the consideration for Lincoln Park's commitment to purchase shares under the 2025 LP Purchase Agreement and the change in fair value of the derivative asset or liability. Interest and other income (expense), net consists of interest expense on our notes payable and interest earned on our cash and cash equivalents, including money market funds. The primary objective of our investment policy is liquidity and capital preservation.

Critical Accounting Policies and Significant Judgments and Estimates

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of expenses during a reporting period. Actual results could differ from estimates.

While our significant accounting policies are described in more detail in Note 2 to our consolidated financial statements, we believe the following accounting policies are those most critical to the judgements and estimates used in the preparation of our consolidated financial statements.

Research and Development Costs

Research and development costs are expensed as incurred and include all direct and indirect costs associated with the development of our product candidates. These expenses include payments to third parties for research, development and manufacturing services, personnel costs and depreciation on manufacturing equipment. At the end of the reporting period, we compare payments made to third party service providers to the estimated progress toward completion of the research or development objectives. Such estimates are subject to change as additional information becomes available. Depending on the timing of payments to service providers and the progress that we estimate have been made as a result of the service provided, we may record net prepaid or accrued expense relating to these costs.

Stock-Based Compensation

Under our 2021 Omnibus Equity Incentive Plan (the "2021 Plan"), we granted non-qualified stock options to certain employees, directors and consultants in 2025 and 2024. The options were granted with strike prices ranging from $3.44 to $4.22 in 2025 and $3.46 to $13.34 per share in 2024. The term of these options is ten years with vesting periods ranging from immediate to four years.

On each of July 8, 2025 and November 3, 2025, we granted non-qualified stock options to an officer of the Company to purchase 30,000 shares of common stock at an exercise price of $4.51 and $3.80, respectively. These grants were inducement awards in accordance with Nasdaq Listing Rule 5635(c)(4) and were not granted from the 2021 Plan. The term of these options is ten years with vesting over four years.

We recorded stock-based compensation expense of $1,427,159 and $995,484 during the years ended December 31, 2025 and 2024, respectively, based on the grant-date fair value of the options granted. The fair value of each option grant was estimated as of the date of grant using the Black-Scholes option-pricing model. The fair value is amortized as compensation cost on a straight-line basis over the requisite service period of the awards, which is generally the vesting period.

See Note 12 to our consolidated financial statements for the assumptions that were used to estimate the fair value of stock options granted using the Black-Scholes option pricing model.

Results of Operations

Comparison of the years ended December 31, 2025 and December 31, 2024

The following table summarizes our results of operations for the years ended December 31, 2025 and 2024:

		Year ended												%
		December 31,								Increase				Increase
(in thousands)		2025				2024				(Decrease)				(Decrease)
Operating Expenses:
Research and development		$	9,774			$	9,445			$	329				3.5	%
General and administrative			10,164				6,200				3,964				63.9	%
Loss from operations			(19,938	)			(15,645	)			4,293				27.4	%
Issuance cost and change in fair value of derivative			(1,151	)			(1,014	)			137				13.5	%
Interest and other income (expense), net			(1,361	)			99				(1,460	)			NM
Net Loss		$	(22,450	)		$	(16,560	)		$	5,890				35.6	%

Research and development expenses

The following table summarizes our research and development expenses ("R&D") for the years ended December 31, 2025 and 2024:

		Year ended												%
		December 31,								Increase				Increase
(in thousands)		2025				2024				(Decrease)				(Decrease)
Clinical operations		$	2,696			$	4,712			$	(2,016	)			(42.8	)%
Drug manufacturing and formulation			3,251				2,696				555				20.6	%
Personnel expenses			2,781				1,761				1,020				57.9	%
Regulatory costs			1,046				276				770				279.0	%
Total research and development expenses		$	9,774			$	9,445			$	329				3.5	%

R&D expenses were $9.8 million for the year ended December 31, 2025, an increase of $0.3 million or 3.5% from the year ended December 31, 2024. This change was primarily the result of an increase in personnel expenses, regulatory costs and manufacturing costs, partially offset by a decrease in clinical operations. Personnel expenses increased due to separation costs for an executive in August 2025, costs related to a contingent bonus plan, which were earned upon NDA submission of CTx-130l, and the reinstatement of base salaries in September 2024 following salary reduction measures which had been implemented in late 2023. Regulatory costs increased due to preparation for the pre-NDA meeting with the FDA and the NDA submission. The increase in manufacturing costs was due to the manufacturing of pre-process validation batches of CTx-1301. Clinical operations costs decreased due to more prior year costs related to the close-out and analytical activities related to the fixed dose pediatric and adolescent safety and efficacy study and the pediatric dose optimization and duration study compared to the current year.

General and administrative expenses

The following table summarizes our general and administrative ("G&A") expenses for the years ended December 31, 2025 and 2024:

		Year ended												%
		December 31,								Increase				Increase
(in thousands)		2025				2024				(Decrease)				(Decrease)
Pre-commercialization costs		$	2,381			$	116			$	2,265				NM
Personnel expenses			2,992				1,862				1,130				60.7	%
Legal and professional fees			3,121				2,396				725				30.3	%
Occupancy			327				346				(19	)			(5.5	)%
Insurance			741				984				(243	)			(24.7	)%
Other			602				496				106				21.4	%
Total general and administrative expenses		$	10,164			$	6,200			$	3,964				63.9	%

G&A expenses were $10.2 million for the year ended December 31, 2025, an increase of $4.0 million or 63.9% from the year ended December 31, 2024. This is primarily the result of an increase in pre-commercialization costs, personnel expenses and legal and professional fees. Pre-commercialization costs increased as we prepare for the potential product launch of CTx-1301, pending FDA approval. The increase in personnel expenses was due to costs related to a contingent bonus plan, which were earned upon NDA submission of CTx-1301 and the reinstatement of base salaries in September 2024 following salary reduction measures which had been implemented in late 2023. The increase in legal and professional fees was due to an increase in certain professional, financial and accounting fees.

Issuance cost and change in fair value of derivative and interest and other income (expense), net

The following table summarizes issuance cost and change in fair value of derivative and interest and other income (expense), net for the years ended December 31, 2025 and 2024:

		Year ended												%
		December 31,								Increase				Increase
(in thousands)		2025				2024				(Decrease)				(Decrease)
Issuance cost and change in fair value of derivative		$	(1,151	)		$	(1,014	)		$	137				13.5	%
Interest and other income (expense), net			(1,361	)			99				(1,460	)			NM

Issuance cost and change in fair value of derivative in 2025 and 2024 relates to the consideration for Lincoln Park's commitment to purchase shares under the 2025 LP Purchase Agreement and the change in fair value of the derivative asset or liability. Interest and other income (expense), net in 2025 and 2024 relates to interest incurred on outstanding notes payable, offset by interest earned on invested balances. The increase in interest expense in 2025 is related to interest expense incurred on the 2024 Note which was executed in December 2024, including loss on debt extinguishments.

Cash Flows

		Year ended
		December 31,
		2025				2024
Net cash (used in) operating activities		$	(17,245	)		$	(18,451	)
Net cash (used in) investing activities			(162	)			(212	)
Net cash provided by financing activities			16,149				30,822
Net decrease in cash and cash equivalents		$	(1,258	)		$	12,159

Cash Flows from Operating Activities

Net cash used in operating activities was $17.2 million for the year ended December 31, 2025. Cash used in operating activities was primarily due to the use of funds in our operations to develop CTx-1301 resulting in a net loss of $22.4 million, prior to the effects of significant noncash items, including stock-based compensation expense of $1.5 million, issuance cost and change in fair value of derivative of $1.2 million, loss on debt extinguishment of $0.8 million, depreciation expense of $0.5 million and accretion of discount on note payable of $0.3 million. Changes in operating assets and liabilities included an increase in trade accounts payable and accrued expenses of $1.5 million primarily due to increases in accrued commercial costs and accrued interest on the outstanding note payable. These are partially offset by an increase in prepaid expenses and other current assets due to payments for manufacturing materials.

Net cash used in operating activities was $18.5 million for the year ended December 31, 2024. Cash used in operating activities was primarily due to the use of funds in our operations to develop CTx-1301 resulting in a net loss of $16.6 million, prior to the effects of significant noncash items including stock-based compensation expense of $1.0 million, issuance cost and change in fair value of derivative of $1.0 million and depreciation expense of $0.7 million. Changes in operating assets and liabilities included a decrease in trade accounts payable and accrued expenses of $4.5 million primarily due to the payment of vendor balances in the first quarter of 2024 with the cash proceeds from the issuance of common stock pursuant to our ATM Agreement in January 2024 and the issuance of equity in the February 2024 Offering.

Cash Flows from Investing Activities

Net cash used in investing activities for both the years ended December 31, 2025 and December 31, 2024 was primarily related to the purchase of equipment to support our research and development.

Cash Flows from Financing Activities

Net cash provided by financing activities in the year ended December 31, 2025 was related to the cash proceeds from the issuance of common stock pursuant to the ATM Agreement, the Original LP Purchase Agreement, the 2025 LP Purchase Agreement, as well as the issuance of the 2025 Note in November 2025.

Net cash provided by financing activities in the year ended December 31, 2024 was related to the cash proceeds from the issuance of common stock pursuant to the ATM Agreement, Original LP Purchase Agreement, the February 2024 Offering and the June 2024 Warrant Inducement, as well as the issuance of the 2024 Note in December 2024.

Liquidity and Capital Resources

Sources of Liquidity

Since our inception in 2012 through December 31, 2025, we have not generated any revenue and have incurred significant operating losses and negative cash flow from our operations.

In November 2025, we received net proceeds of $6,000,000 from the issuance of the 2025 Note with Avondale pursuant to the 2025 Note Purchase Agreement.

During 2025, we sold 785,784 shares of common stock under the ATM Agreement, for net proceeds of $3,574,574, after deducting $122,576 of compensation to HCW and other administration fees. Subsequent to December 31, 2025, we sold 210,158 shares of common stock under the ATM Agreement, for net proceeds of $1,304,011, after deducting $43,300 of compensation to HCW and other administration fees. On March 16, 2026, we terminated the ATM Agreement, effective March 23, 2026. We anticipate that we will enter into another at-the-market offering agreement with a different counterparty in the near future.

During 2025, we sold 897,415 shares of common stock under the Original LP Purchase Agreement for net proceeds of $3,513,236.

During 2025, we sold 852,948 shares of common stock under the 2025 LP Purchase Agreement, for net proceeds of $3,238,007. Subsequent to December 31, 2025, we sold 1,526,628 shares of common stock under the 2025 LP Purchase Agreement, for net proceeds of $8,506,791. As of March 18, 2026, we had approximately $13.3 million of availability under the 2025 LP Purchase Agreement.

As of December 31, 2025, we had cash and cash equivalents of $11.0 million. Taking into account the $12.0 million we received in the Private Placement, we believe our cash will satisfy our capital needs late into the fourth quarter of 2026 under our current business plan. Changing circumstances may cause us to expend cash significantly faster than we currently anticipate, and we may need to spend more cash than currently expected because of circumstances beyond our control. Our policy is to invest any cash in excess of our immediate requirements in investments designed to preserve the principal balance and provide liquidity while producing a modest return on investment. Accordingly, our cash equivalents are invested primarily in money market funds which are currently providing only a minimal return given the current interest rate environment.

We expect to continue to incur substantial additional operating losses for the near term as we seek marketing approval for CTx-1301 and conduct pre-commercialization activities. If we obtain marketing approval for CTx-1301, we will incur significant sales, marketing and outsourced manufacturing expenses. In addition, we expect to incur additional expenses to add operational, financial and information systems and personnel, including personnel to support our planned product commercialization efforts. We also expect to incur significant costs to comply with corporate governance, internal controls and similar requirements applicable to us as a public company.

Our future use of operating cash and capital requirements will depend on many forward-looking factors, including the following:

	●	Whether we receive FDA approval for CTx-1301 and the timing of such approval;
	●	the cost and timing of the FDA review process for CTx-1301;
	●	the cost and timing of manufacturing the clinical supply of our product candidates;
	●	the initiation, progress, timing, costs and results of clinical trials for our product candidates;
	●	the clinical development plans we establish for each product candidate;
	●	the number and characteristics of product candidates that we develop or may in-license;
	●	the terms of any collaboration or license agreements we may choose to execute;
	●	the outcome, timing and cost of meeting regulatory requirements established by the FDA or other comparable foreign regulatory authorities;

	●	the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights;
	●	the cost of defending intellectual property disputes, including patent infringement actions brought by third parties against us;
	●	the cost and timing of the implementation of commercial scale manufacturing activities; and
	●	the cost and timing of outsourcing our commercialization efforts, including, sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products.

To continue to grow our business over the longer term, we plan to commit substantial resources to research and development, including clinical trials of our product candidates, and other operations and potential product acquisitions and in-licensing. We have evaluated and expect to continue to evaluate a wide array of strategic transactions as part of our plan to acquire or in-license and develop additional products and product candidates to augment our internal development pipeline. Strategic transaction opportunities that we may pursue could materially affect our liquidity and capital resources and may require us to incur additional indebtedness, seek equity capital or both. In addition, we may pursue development, acquisition or in-licensing of approved or development products in new or existing therapeutic areas or continue the expansion of our existing operations. Accordingly, we expect to continue to opportunistically seek access to additional capital to license or acquire additional products, product candidates or companies to expand our operations, or for general corporate purposes.

If we raise additional funds by issuing equity securities, our stockholders will experience dilution. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

For example, pursuant to the 2025 Note Purchase Agreement with Avondale, we are subject to certain restrictions on our ability to issue securities during the term of the 2025 Note. Specifically, we have agreed, among other things, to refrain from entering into any agreement or covenant that locks up, restricts or otherwise prohibits us from entering into a variable rate transaction with the lenders or any of their affiliates, or from issuing common stock or other equity or debt securities to the lenders or any of their affiliates. If we breach the 2025 Note Purchase Agreement, we may be obligated to indemnify Avondale for loss or damage arising as a result of any breach or alleged breach by us of the 2025 Note Purchase Agreement, which may affect our business operations and financial condition. Additionally, the 2025 Note provides that following an event of default under the 2025 Note, Avondale has the right to seek and receive injunctive relief from a court or an arbitrator prohibiting us from issuing any of our common stock or preferred stock to any party unless fifty percent of the gross proceeds received by us in connection with such issuance are simultaneously used to make a payment under the 2025 Note. Avondale also has the right to seek and receive injunctive relief from a court or arbitrator to prevent the consummation of any fundamental transaction, as defined in the 2025 Note, unless it contains a closing condition that the 2025 Note are paid in full upon consummation of the transaction or Avondale has provided its written consent to such transaction.

Any debt financing or additional equity that we raise may contain terms, such as liquidation and other preferences that are not favorable to us or our existing stockholders. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish valuable rights to our technologies, future revenue streams or product candidates or to grant licenses on terms that may not be favorable to us. Adequate funding may not be available to us on acceptable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, scale back or discontinue the development and commercialization of our product candidates.

Contractual Obligations

The following summarizes our contractual obligations as of December 31, 2025 that will affect our future liquidity.

We entered into a patent and know-how licensing agreement with BDD Pharma Limited in August 2018. See "Item 1. Business - Material Agreements" for a description of this agreement. We are required to pay BDD certain amounts in connection with clinical trial and regulatory milestones. The final milestone payment of $250,000 will be due to BDD upon FDA approval of CTx-1301. Additional royalty payments will become due upon potential sales of CTx-1301 pursuant to the terms of the agreement.

We entered into an agreement with Bend Bioscience, our CDMO, for the manufacture of process validation batches of CTx-1301 with a total estimated cost of approximately $7.0 million.

In May 2025, the Company executed a lease to renew the office space for its headquarters in Kansas City, Kansas. The lease has a five-year term that commenced on June 1, 2025 with total rent of $33,145 per month over the lease term. The operating lease right-of-use asset was $1,339,086, the current portion of the operating lease liability was $238,864 and the long-term portion of the lease liability was $1,100,222 as of December 31, 2025.

Going Concern

Since inception we have been engaged in organizational activities, including raising capital and research and development activities. We have not generated revenues and have not yet achieved profitable operations, nor have we ever generated positive cash flow from operations. There is no assurance that profitable operations, if achieved, could be sustained on a continuing basis. We are subject to those risks associated with any pre-clinical stage pharmaceutical company that has substantial expenditures for research and development. There can be no assurance that our research and development projects will be successful, that products developed will obtain necessary regulatory approval, or that any approved product will be commercially viable. In addition, we operate in an environment of rapid technological change that is largely dependent on the services of our employees and consultants. Further, our future operations are dependent on the success of our efforts to raise additional capital. These uncertainties raise substantial doubt about our ability to continue as a going concern for one year after the issuance date of our financial statements. The accompanying consolidated financial statements have been prepared on a going concern basis. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the company to continue as a going concern, which contemplates the continuation of operations, realization of assets and liquidation of liabilities in the ordinary course of business. We have incurred a net loss for the years ended December 31, 2025 and 2024 and had accumulated losses of $132.4 million since inception to December 31, 2025. We anticipate incurring additional losses until such time, if ever, that we can generate significant revenue from our product candidates currently in development. Our sources of capital have included private capital raises in various classes of units of CTx prior to the Reorganization Merger, the issuance of equity securities in connection with our initial public offering (IPO), follow-on public offerings in September 2023 and February 2024, sales of common stock under the ATM Agreement, Original LP Purchase Agreement and 2025 LP Purchase Agreement, a private placement with WFIA, the WFIA Note, which was subsequently converted to equity, the June 2024 warrant inducement, the issuance of the promissory notes in December 2024 and November 2025 and the Private Placement in February 2026. Additional financings will be needed by us to fund our operations, to complete development of and to commercially develop CTx-1301 and our other product candidates. There is no assurance that such financing will be available when needed or on acceptable terms.

JOBS Act

On April 5, 2012, the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for an "emerging growth company". As an "emerging growth company," we are electing to take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for emerging growth companies.

Subject to certain conditions set forth in the JOBS Act, as an "emerging growth company," we are not required to, among other things, (i) provide an auditor's attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer's compensation to median employee compensation. These exemptions will apply until the fifth anniversary of the completion of our IPO or until we no longer meet the requirements for being an "emerging growth company," whichever occurs first.