Apimeds Pharmaceuticals US, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Apimeds Pharmaceuticals US, Inc. References to our “management” or our “management team” refer to our officers and directors. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from the results, expectations and plans discussed in these forward-looking statements. Special Note Regarding Forward-Looking Statements This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and variations thereof and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on April 15, 2025 (the “Annual Report”) and the “Risk Factors” section of this report. Our securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Overview Apimeds Pharmaceuticals US, Inc. is a clinical stage biopharmaceutical company that is in the process of developing Apitox, a proprietary intradermally administered bee venom-based toxin. Our primary focus is to advance Apitox in the treatment of inflammatory conditions in the United States, specifically osteoarthritis (“OA”) and, eventually, multiple sclerosis (“MS”). Apitox, is currently marketed and sold by Apimeds, Inc. in South Korea (“Apimeds Korea”) as “Apitoxin” for the treatment of inflammation and pain management symptoms associated with OA. There is an extensive history of use of bee venom, both in the United States and around the world, to assist with pain management. We believe that, in addition to knee OA and MS, Apitox has the potential to help manage difficult to control pain and inflammation issues, which we will explore in the future. Our Product Candidate Our product candidate Apitox is a purified, pharmaceutical grade venom of the Apis mellifera, or honeybee, which is classified by the U.S Food and Drug Administration (“FDA”) as an active pharmaceutical ingredient (“API”). Apimeds Korea has developed a proprietary method and process of turning extracted bee venom into a lyophilized powder for reconstitution prior to intradermal dose injections, which they sell in Korea as South Apitoxin. Apimeds Korea has exclusively licensed to us all rights to develop, commercialize, market and sell Apitoxin as “Apitox” in the United States in exchange for a sales royalty. See “ Item 13. Certain Relationships and Related Transactions, and Director Independence — Certain Relationships and Related Transactions — Business Agreement .” The success of the Company is dependent on obtaining the necessary regulatory approvals of its product candidates, marketing its products and achieving profitable operations. The continuation of the research and development activities and the commercialization of its products, if approved, are dependent on the Company’s ability to successfully complete these activities and to obtain additional financing through a combination of financing activities and operations. It is not possible to predict either the outcome of future research and development or commercialization programs, or the Company’s ability to fund these programs. 15 Financial Results Since inception, Apimeds has incurred significant operating losses. For the three months ended March 31, 2025 and 2024, Apimeds Pharmaceuticals US, Inc. net loss was $402,397 and $296,473, respectively. As of March 31, 2025, Apimeds Pharmaceuticals US, Inc. had an accumulated deficit of $4,794,321, a stockholders’ deficit of $1,760,518 and a working capital deficit of $1,136,898. Liquidity As of March 31, 2025, the Company had accumulated deficit amount to $4,794,321. The Company incurred net losses of $402,397 for the three months ended March 31, 2025, and expects to continue to incur substantial losses in the future. On May 12, 2025, the Company consummated its initial public offering (the “IPO”) of 3,375,000 shares of its common stock at a price of $4.00 per share, generating net proceeds to the Company of $11.9 million. Based on cash that is available for Company operations, together with the proceeds from the IPO, and projections of future Company operations, the Company believes that its cash will be sufficient to fund the Company’s current operating plan through at least the next twelve months from the date of issuance of the accompanying condensed financial statements. Results of operations for the three months ended March 31, 2025 and 2024 Operating Expense The following table sets forth the Company’s selected statements of operations data for the following periods: Three Months Ended March 31, 2025 2024 Change Operating expenses Research and development expenses $ — $ — $ — General and administrative expenses 364,368 271,726 92,642 Loss from operations (364,368 ) (271,726 ) (92,642 ) Other expenses Interest income 3 2,161 (2,158 ) Interest expense (38,032 ) (26,908 ) (11,124 ) Net loss $ (402,397 ) $ (296,473 ) $ (105,924 ) Revenues For the three months ended March 31, 2025 and 2024, the Company had no revenue. General and administrative expenses The following table summarizes the year-over-year changes in general and administrative expenses for the years presented: Three Months Ended March 31, 2025 2024 Change Payroll expenses $ 106,500 $ 99,000 $ 7,500 Professional services 249,512 154,058 95,454 Office expenses 512 6,853 (6,341 ) General administrative 7,844 11,815 (3,971 ) $ 364,368 $ 271,726 $ 92,642 General and administrative expenses were $364,368 for the three months ended March 31, 2025, compared to $271,726 for the same period in 2024, representing an increase of $92,642. The increase was mainly attributable to an increase in professional expenses for a total of approximately $95,000 and an increase in payroll expenses for the officers of the Company for a total of approximately $8,000. 16 Other Expense The following table summarizes the year-over-year changes in general and administrative expenses for the years presented: Three Months Ended March 31, 2025 2024 Change Interest income $ 3 $ 2,161 $ (2,158 ) Interest expense (38,032 ) (26,908 ) (11,124 ) $ (38,029 ) $ (24,747 ) $ (13,282 ) Other expense was $38,029 for the three months ended March 31, 2025, compared to $24,747 for the same period in 2024, representing an increase in expense of $13,282. The increase was mainly due to an increase in interest expense for a total of approximately $11,000. Net Loss Net loss was $402,397 for the three months ended March 31, 2025, compared to $296,473 in the same period of 2024, representing an increase in loss of $105,924. The increase was mainly due to the increase in general and administrative expenses, specifically professional fees associated with the filing of the registration statements with the U.S. Securities and Exchange Commission (the “SEC”) and pre-IPO expenses as well as an increase in payroll expenses. Liquidity and Capital Resources The Company has generated no revenue, has incurred operating losses since inception, expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. Until such time as the Company is able to establish a revenue stream, it is dependent upon obtaining necessary equity and/or debt financing to continue operations. The Company cannot make any assurances that sales will commence in the near term or that additional financing will be available to it on acceptable terms or at all. This could negatively impact our business and operations and could also lead to the reduction of our operations. Cash Flows The following table presents selected financial information and statistics for each of the periods shown below: 2025 2024 Change Net cash used in operating activities $ (20,313 ) $ (263,100 ) $ 242,787 Net cash used in investing activities — — — Net cash provided by financing activities 267,200 — 267,200 Net increase (decrease) in cash $ 246,887 $ (263,100 ) $ 509,987 During the three months ended March 31, 2025, operating activities used approximately $20,000 of cash, primarily resulting from a net loss of $402,397, partially offset by non-cash interest expense-related parties of $11,256, accretion expense of $26,776, and changes in operating assets and liabilities of $344,051. During the three months ended March 31, 2024, operating activities used approximately $263,000 of cash, primarily resulting from a net loss of $296,473, partially offset by non-cash interest expense-related parties of $7,956, accretion expense of $18,952, and changes in operating assets and liabilities of $6,464. Investing activities During the three months ended March 31, 2025 and 2024 investing activities used $0. 17 Financing activities During the three months ended March 31, 2025, financing activities provided $267,200 of cash resulting from $250,000 in proceeds from notes payable from related parties and cash advances from related parties of $17,200. During the three months ended March 31, 2024, financing activities used $0. Contractual Obligations and Commitments See Note 4 – Debt, and Note 6 – Commitments and Contingencies, of the notes to the Company’s financial statements as of and for the three months ended March 31, 2025 included elsewhere in this Annual Report for further discussion of the Company’s commitments and contingencies. Off-Balance Sheet Arrangements The Company is not party to any off-balance sheet transactions. The Company has no guarantees or obligations other than those which arise out of normal business operations. Critical Accounting Policies and Significant Judgments and Estimates The Company’s management’s discussion and analysis of its financial condition and results of operations is based on its financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The preparation of these unaudited condensed financial statements requires Apimeds Pharmaceuticals US, Inc. to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the balance sheet and the reported amounts of expenses during the reporting period. In accordance with GAAP, Apimeds Pharmaceuticals US, Inc. evaluates its estimates and judgments on an ongoing basis. The most significant estimates relate to convertible instruments. Apimeds Pharmaceuticals US, Inc. bases its estimates and assumptions on current facts, historical experiences, and various other factors that Apimeds Pharmaceuticals US, Inc. believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The Company defines its critical accounting policies as those accounting principles that require it to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on its financial condition and results of operations, as well as the specific manner in which the Company applies those principles. While its significant accounting policies are more fully described in Note 2 to its financial statements, the Company believes the following are the critical accounting policies used in the preparation of its unaudited condensed financial statements that require significant estimates and judgments. Convertible Instruments The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815 “Derivatives and Hedging Activities”. The Company accounts for convertible instruments (when we have determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption. 18 Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, we have elected not to provide the disclosure required by this item.