Apimeds Pharmaceuticals US, Inc. 10-Q

Item 1. Financial Statements. INDEX TO FINANCIAL STATEMENTS Contents Page Unaudited Condensed Balance Sheets as of September 30, 2025 and December 31, 2024 2 Unaudited Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024 3 Unaudited Condensed Statements of Changes in Shareholders’ Equity (Deficit) for the Three and Nine Months Ended September 30, 2025 and 2024 4 - 5 Unaudited Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 6 Notes to Unaudited Condensed Financial Statements 7 1 Apimeds Pharmaceuticals US, Inc. Unaudited Condensed Balance Sheets September 30, December 31, 2025 2024 (unaudited) Assets Current assets: Cash $ 6,986,617 $ 3,455 Prepaid expenses and other current assets 2,099,491 9,602 Total current assets 9,086,108 13,057 Property and equipment, net 34,188 - Long-term portion of prepaid expenses 129,740 - Total assets $ 9,250,036 $ 13,057 Liabilities and shareholders’ equity Current liabilities: Accounts payable and accrued expenses $ 567,633 $ 591,191 Accrued interest - related party 21,651 106,643 Advance payable to related party 100 76,500 Notes payable - related party 500,000 250,000 Total current liabilities 1,089,384 1,024,334 Long-term liabilities Long-term convertible notes payable – related party - 346,844 Total liabilities 1,089,384 1,371,178 Commitments and contingencies (note 8) - - Shareholders’ equity: Preferred stock, par value $ 0.01 , 10,000,000 shares authorized; none issued and outstanding as of September 30, 2025 and December 31, 2024 - - Common stock, par value $ 0.01 , 100,000,000 shares authorized; 12,575,983 and 7,903,850 issued and outstanding as of September 30, 2025 and December 31, 2024, respectively 125,760 79,039 Additional paid-in capital 17,272,661 2,954,764 Accumulated deficit ( 9,237,769 ) ( 4,391,924 ) Total shareholders’ equity (deficit) 8,160,652 ( 1,358,121 ) Total liabilities and shareholders’ equity $ 9,250,036 $ 13,057 The accompanying notes are an integral part of these unaudited condensed financial statements. 2 Apimeds Pharmaceuticals US, Inc Unaudited Condensed Statements of Operations For the three months ended For the nine months ended September 30, September 30, 2025 2024 2025 2024 Operating expenses: Research and development expenses $ 619,693 $ - $ 1,271,477 $ - General and administrative expenses 1,224,546 299,999 3,601,034 999,482 Total operating expenses 1,844,239 299,999 4,872,511 999,482 Loss from operations ( 1,844,239 ) ( 299,999 ) ( 4,872,511 ) ( 999,482 ) Other income (expense) Change in fair value of warrant liability 12,859 - 22,377 - Interest income 56,426 116 71,676 2,794 Interest expense ( 6,301 ) ( 32,638 ) ( 67,387 ) ( 81,669 ) Total other income (expense) 62,984 ( 32,522 ) 26,666 ( 78,875 ) Net loss $ ( 1,781,255 ) $ ( 332,521 ) $ ( 4,845,845 ) $ ( 1,078,357 ) Net loss per common share - basic and diluted $ ( 0.14 ) $ ( 0.04 ) $ ( 0.47 ) $ ( 0.14 ) Weighted average common shares outstanding 12,575,983 7,903,850 10,308,911 7,903,850 The accompanying notes are an integral part of these unaudited condensed financial statements. 3 Apimeds Pharmaceuticals US, Inc Unaudited Condensed Statements of Changes in Stockholders’ Equity (Deficit) Preferred Stock Common Stock Additional Number of Shares Amount Number of Shares Amount Paid-in capital Accumulated Deficit Total Balance at December 31, 2024 - $ - 7,903,850 $ 79,039 $ 2,954,764 $ ( 4,391,924 ) $ ( 1,358,121 ) Net loss for the period ended March 31, 2025 - - - - - ( 402,397 ) ( 402,397 ) Balance at March 31, 2025 - - 7,903,850 79,039 2,954,764 ( 4,794,321 ) ( 1,760,518 ) Stock-based compensation - stock options - - - - 192,053 - 192,053 Stock-based compensation – common stock grants - - 1,000,000 10,000 1,690,000 - 1,700,000 Conversion of convertible debt - related party - - 297,133 2,971 496,251 - 499,222 Issuance of Representative Warrants in connection with IPO - - - - 139,388 - 139,388 Issuance of common stock in IPO (net of $ 1,599,060 in offering costs and warrant liability) - - 3,375,000 33,750 11,595,977 - 11,629,727 Net loss for the period ended June 30, 2025 - - - - - ( 2,662,193 ) ( 2,662,193 ) Balance at June 30, 2025 - - 12,575,983 125,760 17,068,433 ( 7,456,514 ) 9,737,679 Stock-based compensation - stock options - - - - 42,674 - 42,674 Issuance of Advisor Warrants in connection with IPO - - - - 161,554 - 161,554 Net loss for the period ended September 30, 2025 - - - - - ( 1,781,255 ) ( 1,781,255 ) Balance at September 30, 2025 - $ - 12,575,983 $ 125,760 $ 17,272,661 $ ( 9,237,769 ) $ 8,160,652 The accompanying notes are an integral part of these unaudited condensed financial statements. 4 Apimeds Pharmaceuticals US, Inc. Unaudited Condensed Statements of Changes in Stockholders’ Equity (Deficit) Preferred Stock Common Stock Additional Number of Shares Amount Number of Shares Amount Paid-in capital Accumulated Deficit Total Balance at December 31, 2023 - $ - 7,903,850 $ 79,039 $ 2,954,764 $ ( 3,001,934 ) $ 31,869 Net loss for the period ended March 31, 2024 - - - - - ( 296,473 ) ( 296,473 ) Balance at March 31, 2024 - - 7,903,850 79,039 2,954,764 ( 3,298,407 ) ( 264,604 ) Net loss for the period ended June 30, 2024 - - - - - ( 449,363 ) ( 449,363 ) Balance at June 30, 2024 - - 7,903,850 79,039 2,954,764 ( 3,747,770 ) ( 713,967 ) Net loss for the period ended September 30, 2024 - - - - - ( 332,521 ) ( 332,521 ) Balance at September 30, 2024 - $ - 7,903,850 $ 79,039 $ 2,954,764 $ ( 4,080,291 ) $ ( 1,046,488 ) The accompanying notes are an integral part of these unaudited condensed financial statements. 5 Apimeds Pharmaceuticals US, Inc Unaudited Condensed Statements of Cash Flows For the nine months ended September 30, 2025 2024 Cash flows from operating activities: Net loss $ ( 4,845,845 ) $ ( 1,078,357 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation - common stock grants 1,700,000 - Stock-based compensation - stock options 234,727 - Change in FV of warrant liability ( 22,377 ) - Depreciation expense of property and equipment 1,721 - Accrued interest expense - related parties 27,554 26,568 Accretion expense 39,833 55,101 Changes in operating assets and liabilities Prepaid expenses and other current and non-current assets ( 2,219,630 ) 1,259 Accounts payable and accrued expenses ( 23,558 ) 361,519 Net cash used in operating activities ( 5,107,575 ) ( 633,910 ) Cash flows from investing activities: Purchase of furniture and equipment ( 35,909 ) - Net cash provided by investing activities ( 35,909 ) - Cash flows from financing activities: Cash proceeds from issuance of common stock in IPO 11,953,046 - Proceeds from notes payable - related parties 250,000 250,000 Cash advances from related parties 17,400 - Cash advances paid to related parties ( 93,800 ) - Net cash provided by financing activities 12,126,646 250,000 Net increase (decrease) in cash 6,983,162 ( 383,910 ) Cash, beginning of period 3,455 410,481 Cash, end of period $ 6,986,617 $ 26,571 Supplemental disclosure of cash flow information: Cash paid for interest $ - $ - Cash paid for taxes $ - $ - Non-cash investing and financing activities: Conversion of convertible debt - related party $ 386,676 $ - Conversion of accrued interest expense for convertible debt - related party $ 112,546 $ - Issuance of Representative Warrants in connection with IPO $ 300,942 $ - The accompanying notes are an integral part of these unaudited condensed financial statements. 6 Apimeds Pharmaceuticals US, Inc Notes to the Unaudited Condensed Financial Statements 1. DESCRIPTION OF BUSINESS Business Description Apimeds Pharmaceuticals US, Inc. (the “Company” or “Apimeds”) was formed as a corporation in May 2020 and was incorporated in the State of Delaware. Apimeds is a clinical stage company that is in the process of seeking U.S. Food and Drug Administration (“FDA”) approval for Apitox, a proprietary intradermally administered bee venom-based toxin. Apimeds Inc., the majority shareholder of the Company which is a subsidiary of Inscobee Inc. (“Apimeds Korea”), and the Company entered into license agreements, under which the Company was granted the right to continue any clinical trial, acquire the permits and approval necessary from the FDA and commercially develop and market Apitox within the United States (see notes 3). Apimeds completed a positive Phase 3 trial for the treatment of pain associated with osteoarthritis in 2018 and is now proceeding with the next steps for FDA approval. In the future, the Company plans to investigate potential uses for Apitox to treat pain associated with multiple sclerosis (“MS”), and intends to conduct non-registered corporate sponsored studies to identify appropriate MS patient populations. Apitox is currently marketed and sold by Apimeds Korea in South Korea (Republic of Korea) as “Apitoxin” for the treatment of osteoarthritis. 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. 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The Company has prepared these unaudited condensed financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”). Except as disclosed herein, there have been no material changes in the information disclosed in the Notes to the Financial Statements included in the Annual Report for the year ended December 31, 2024 (the “Annual Report”). Accordingly, the unaudited condensed financial statements and related disclosures herein should be read in conjunction with the Annual Report. As permitted under the SEC requirements for interim reporting, certain footnotes or other financial information have been condensed or omitted. These financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of results for the interim periods presented. Revenues, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be representative of those for the full year. Liquidity As of September 30, 2025, the Company had an accumulated deficit of $ 9,237,769 . The Company incurred net losses of $ 1,781,255 and $ 4,845,845 for the three and nine months ended September 30, 2025, respectively, 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 cash 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 unaudited condensed financial statements. 7 Apimeds Pharmaceuticals US, Inc Notes to the Unaudited Condensed Financial Statements Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates, judgements and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates and assumptions made in the accompanying unaudited condensed financial statements include, but are not limited to, the determination of prepaid clinical development costs, stock-based compensation and estimates that are related to convertible instruments. Actual results could differ from those estimates, and such differences could be material to the financial statements. Fair Value Measurement The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities: Level 1 — Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 — Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. Level 3 — Unobservable inputs based on the Company’s assessment of the assumptions that market participants would use in pricing the asset or liability. In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement. A financial asset or liability classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The tables below summarize the fair values of our financial assets and liabilities as of September 30, 2025, and December 31, 2024: Fair Value at September 30, Fair Value Measurement 2025 Level 1 Level 2 Level 3 Warrant Liability $ - $ - $ - $ - Fair Value at December 31, Fair Value Measurement 2024 Level 1 Level 2 Level 3 Warrant Liability $ - $ - $ - $ - 8 Apimeds Pharmaceuticals US, Inc Notes to the Unaudited Condensed Financial Statements The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) and FASB ASC Topic 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be liability classified and recorded at their initial fair value on the date of issuance and remeasured at fair value and each balance sheet date thereafter. Changes in the estimated fair value of the liability classified warrants are recognized as a non-cash gain or loss on the statements of operations. The fair value of the Representative Warrants and initial liability and fair value upon issuance related to Advisor Warrant (as defined below) was estimated using a Black Scholes valuation approach (see Note 9). On September 5, 2023, the Company entered into a consulting agreement with certain advisor, under which, upon completion of the IPO, the Company would issue to advisor warrants to purchase a number of shares of common stock equal to 6 % of the aggregate number of shares sold in the IPO (the “Advisor Warrants”). The Advisor Warrants were issued on August 5, 2025. Because the obligation to issue the Advisor Warrants became unconditional at the IPO close (May 12, 2025), the Company recorded a warrant liability at the IPO date fair value and remeasures that liability at each reporting date. Because the Advisor Warrants were issued as compensation for the IPO-related advisory services, the initial fair value recognized at the IPO date was recorded as an offering cost that reduced the additional paid-in capital as of May 12, 2025. For the Company’s warrant liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3), the following table provides a reconciliation of the beginning and ending balance for each category therein, and gains or losses recognized during the three and nine months ended September 30, 2025: Beginning Balance - December 31, 2024 $ - Advisor warrant liability incurred in connection with the IPO 183,931 Re-measurement adjustments: Change in fair value of warrant liability ( 22,377 ) Balance – August 5, 2025 $ 161,554 Reclassification of warrants to equity classification ( 161,554 ) Ending balance – September 30, 2025 $ - August 5, 2025 (Issuance Remeasurement) Warrant Liability Fair Value $ 161,554 Valuation technique Black-Scholes options pricing model Significant unobservable unit Volatility and risk-free rates The warrant liability as of May 12, 2025 (IPO date), was valued utilizing the Black-Scholes options pricing model with the following inputs: $ 1.81 of stock price, 4.09 % risk-free rate, 78.29 % volatility, 0 % dividend rate, and the expected term of 5 years. The warrant liability as of August 5 , 2025, was valued utilizing the Black-Scholes options pricing model with the following inputs: $ 1.78 of stock price, 3.74 % risk-free rate, 77.11 % volatility, 0 % dividend rate, and the expected term of 5 years. Upon issuance of the advisor warrants on August 5, 2025, the Advisor Warrants were reclassified to additional paid-in capital and will remain equity classified. Upon the issuance of the warrants on August 5, 2025, the final terms were evaluated, and the warrants met all conditions for equity classification under ASC 815-40. As a result, the warrants were revalued as of August 5, 2025 with the change in value reflected in the statement of operations. That amount was then reclassified to additional paid-in capital. No gain or loss was recognized in the consolidated statements of operations in connection with the reclassification. The warrants are no longer subject to recurring fair value measurement following equity classification. Prior to issuance, changes in the fair value of the warrant liability were recorded in other income (expense). For the three and nine months ended September 30, 2025, the Company recognized a gain of $ 12,859 and $ 22,377 , respectively, in other income (expense) for the change in fair value. Common Stock Reverse Stock Split On February 7, 2025 , the Company’s board of directors (the “Board”) approved and implemented a reverse stock split at a ratio of 1-for-2.6, which provided that every 2.6 shares of its issued and outstanding common stock was automatically combined into one issued and outstanding share of common stock, without any change in the par value per share. All share and per share amounts in the accompanying unaudited condensed financial statements and footnotes have been retrospectively adjusted for the reverse split. 9 Apimeds Pharmaceuticals US, Inc Notes to the Unaudited Condensed Financial Statements Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in financial institutions which, at times, may exceed the federal depository insurance corporation limit of $ 250,000 . As of September 30, 2025, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts. Segment Information The Company operates as a single operating and reportable segment, which aligns with the way the Chief Executive Officer , designated as the Chief Operating Decision Maker (CODM), evaluates performance and allocates resources. The Company is a clinical-stage entity focused on the development of a proprietary intradermally administered bee venom-based therapeutic. As of September 30, 2025, the Company has not generated any revenue and does not have any material long-lived assets. The CODM assesses the Company’s performance primarily through the analysis of operating expenses, specifically within key categories such as research and development and general and administrative expenses. Given the Company is in a pre-revenue stage, these expense categories serve as the primary financial drivers. Financial information provided to and utilized by the CODM is consistent with the Company’s U.S. GAAP financial statements, including the Statements of Operations, which reflect the loss. A single management team reports directly to the CODM and oversees the entire business comprehensively. Resource allocation, performance evaluation, incentive setting, and forecasting activities are conducted at the corporate level using the financial statements and a unified budget. Accordingly, the Company does not evaluate performance by geographic area or product line, as it has not yet commenced commercial operations and has limited activity due to current liquidity and funding constraints. All operations are based in the United States of America, and all assets and operating expenses — including those related to research and development and general and administrative functions — are attributed to the Company’s single reportable segment. Cash The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. As of September 30, 2025 and December 31, 2024, the Company had no cash equivalents. Convertible Instruments The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815 “ Derivatives and Hedging Activities ”. Applicable U.S. GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other U.S. GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. 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 accreted over the term of the related debt to their stated date of redemption. If a security or instrument becomes convertible only upon the occurrence of a future event outside the control of the Company, or, is convertible from inception, but contains conversion terms that change upon the occurrence of a future event, then any contingent beneficial conversion feature is measured and recognized when the triggering event occurs and contingency has been resolved. 10 Apimeds Pharmaceuticals US, Inc Notes to the Unaudited Condensed Financial Statements Patent Costs All patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure. Amounts incurred are classified as general and administrative expenses in the accompanying statements of operations. Leases The Company accounts for a contract as a lease when it has the right to direct the use of the asset for a period of time while obtaining substantially all of the asset’s economic benefits. The Company determines the initial classification and measurement of its right-of-use assets (“ROU”) and lease liabilities at the lease commencement date and thereafter if modified. ROU assets and liabilities are to be represented on the balance sheet at the present value of future minimum lease payments to be made over the lease term. The Company has elected as an accounting policy not to apply the recognition requirements in ASC 842, Leases (“ASC 842”) to short-term leases. Short-term leases are leases that have a term of 12 months or less and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. The Company recognizes the lease payments for short-term leases on a straight-line basis over the lease term. As of September 30, 2025 and December 31, 2024, the Company did not have leases that qualified as ROU assets. Property and Equipment, net Property and equipment, net is stated at cost less accumulated depreciation. These assets are depreciated over their estimated useful lives of three to seven years using the straight-line method. The Company adheres to ASC 360 “Property, Plant, and Equipment” and periodically evaluates whether current facts or circumstances indicate that the carrying value of its depreciable assets to be held and used may not be recoverable. If such circumstances are determined to exist, an estimate of undiscounted future cash flows produced by the long-lived assets, or the appropriate grouping of assets, is compared to the carrying value to determine whether impairment exists. If an asset is determined to be impaired, the loss is measured based on the difference between the asset’s fair value and its carrying value. For long-lived assets, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows. The Company reports an asset to be disposed of at the lower of its carrying value or its fair value less costs to sell. 11 Apimeds Pharmaceuticals US, Inc Notes to the Unaudited Condensed Financial Statements Related Parties The Company follows ASC 850, “ Related Party Disclosures” for the identification of related parties and disclosure of related party transactions. General and Administrative General and administrative expenses consist primarily of management personnel costs, professional service fees, and other general overhead and facility costs, including rent and insurance, which relate to the Company’s general and administrative functions. Research and Development Research and development expenses consist primarily of consulting, regulatory and manufacturing related costs, third-party license fees and external costs of vendors engaged to conduct preclinical development activities. These costs are expensed as incurred and non-refundable prepayments for goods or services that will be used or rendered for future research and development activities are deferred and capitalized in prepaid expenses and other current assets. The Company enters into arrangements with contract research organizations in connection with pre-clinical and clinical trials. Such arrangements often provide for payment prior to commencing the project or based upon predetermined milestones throughout the period during which services are expected to be performed. As part of the process of preparing the Company’s financial statements, management is required to estimate prepaid and accrued clinical trial expenses. The date on which services commence, the level of services performed on or before a given date, and the cost of such services are often determined based on subjective judgments informed by the facts and circumstances known to management from the terms of the contract and the Company’s ongoing monitoring of service performance. The Company makes these judgments based upon the facts and circumstances known to management based on the terms of the contract and the Company’s ongoing monitoring of service performance. In line with the guidance suggested under ASC 450, Contingencies and ASC 730, Research and Development, all research and development costs will be expensed as incurred. Development and regulatory milestone payments are accounted for by estimating the probability of milestone achievement. Stock Based Compensation The Company accounts for share-based compensation in accordance with the fair value recognition provision of FASB ASC 718, Compensation — Stock Compensation (“ASC 718”), which prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the unaudited condensed financial statements based on the estimated grant date fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period). The Company accounts for forfeitures as they occur. The Company classifies share-based compensation expense in its statements of operations in the same manner in which the award recipient’s cash compensation costs are classified. The fair value of each employee and non-employee stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company is a public company but has limited company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on implied volatility. The expected term of the Company’s stock options for employees has been determined utilizing the “simplified” method for awards. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve. Expected dividend yield is zero based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. 12 Apimeds Pharmaceuticals US, Inc Notes to the Unaudited Condensed Financial Statements Income Taxes The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences attributable to differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes and for operating loss and tax credit carryforwards. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company’s deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which these temporary differences are expected to be recovered or settled. A valuation allowance is recorded to reduce deferred tax assets if it is determined that it is more likely than not that all or a portion of the deferred tax asset will not be realized. The Company considers many factors when assessing the likelihood of future realization of deferred tax assets, including recent earnings results, expectations of future taxable income, carryforward periods available and other relevant factors. The Company records changes in the required valuation allowance in the period that the determination is made. The Company assesses its income tax position and records tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances and information available as of the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, the Company records the largest amount of tax benefit with a greater than 50 % likelihood of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, the Company does not recognize a tax benefit in the financial statements. The Company records interest and penalties related to uncertain tax positions, if applicable, as a component of income tax expense. Basic and Diluted Loss per share Basic loss per share data for each period presented is computed using the weighted average number of shares of common stock outstanding during each such period. Diluted net loss per share is computed by giving effect to all potential shares of common stock to the extent they are dilutive. The following table sets forth the number of potential shares of common stock that have been excluded from basic net loss per share because their effect was anti-dilutive: For the nine months ended September 30, 2025 2024 Employee stock options 589,871 213,692 Representative Warrants 168,750 - Advisor Warrants 202,500 - Convertible notes and interest - 283,397 961,121 497,089 Emerging Growth Company The Company is an emerging growth company, as defined in Section 2(a) of the Securities Act of 1993, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act allows emerging growth companies to delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these unaudited condensed financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. 13 Apimeds Pharmaceuticals US, Inc Notes to the Unaudited Condensed Financial Statements Recently Issued Accounting Pronouncements The Company considers the applicability and impact of all Accounting Standard Updates (ASUs). ASUs not discussed in these unaudited condensed financial statements were assessed and determined to be either not applicable or are expected to have minimal impact on the financial statements. In November 2024, the FASB issued Accounting Standards Update No. 2024-03, Disaggregation of Income Statement Expenses . This guidance will require additional disclosures and disaggregation of certain costs and expenses presented on the face of the income statement. The amendments are effective for annual reporting periods beginning after December 15, 2026 and interim reporting period beginning after December 15, 2027 with early adoption permitted. The Company is currently evaluating the impact of this new guidance to our financial statements. 3. LICENSE AGREEMENTS On August 2, 2021, the Company entered into a business agreement with Apimeds Korea. Under the agreement, the Company received the right to continue any clinical trial and acquire the permits and approval necessary from the U.S. Food and Drug Administration. The Company will pay Apimeds Korea a royalty of 5 % of the earnings before interest and taxes, delivered from the sale or license of Apitox less any credits and charges, however, the royalty terms shall not apply when shares of the Company are transferred or sold through merger, acquisition, or share transfer agreement to a third party. On October 12, 2021, the Company entered into an exclusive patent license agreement with Apimeds Korea, a shareholder of the Company. Under the agreement, the Company was granted the exclusive right and license under the licensed patents to make and sell the licensed products in the United States of America. The agreement commenced on the effective date and shall remain in force for each licensed product on a licensed-product-by-licensed-product basis for rights and obligations concerning the licensed patent, until the expiration of the last to expire valid claim of a licensed patent. The total consideration exchanged for the exclusive license agreement was $ 1 . 4. PREPAID EXPENSE AND OTHER ASSETS As of September 30, 2025, and December 31, 2024, the prepaid expense and other assets balance consists of the following: September 30, December 31, 2025 2024 Prepaid insurance $ 344,990 $ - Prepaid clinical development costs 1,729,886 - Other prepaid assets 154,355 9,602 Less: long-term portion of prepaid insurance ( 129,740 ) - Prepaid expenses and other current assets, current $ 2,099,491 $ 9,602 14 Apimeds Pharmaceuticals US, Inc Notes to the Unaudited Condensed Financial Statements 5. ACCOUNTS PAYABLE AND ACCRUED EXPENSE Accounts payable and accrued expenses consist of balances owed to vendors, as well as others, such as the taxing authority and employees. As of September 30, 2025, and December 31, 2024, the accounts payable and accrued expense balances consists of the following: September 30, December 31, 2025 2024 Professional fees payable $ 193,377 $ 410,641 Clinical trials payable 352,349 - Accrued compensation 18,250 180,550 Other 3,657 - Total accounts payable and accrued expenses $ 567,633 $ 591,191 6. DEBT 2022 Convertible notes (amended from notes payable) — related parties On March 21, 2022, the Company issued a promissory note in the amount of $ 160,000 to Inscobee, one of its shareholders. On June 3, 2022, the Company issued another $ 100,000 promissory note to Inscobee (together, and as amended, the “2022 Convertible Notes”). The 2022 Convertible Notes bear interest at 5 % per annum and mature on the earlier of (a) the closing of an equity financing with proceeds to the Company of at least $ 3 million, or (b) July 15, 2022. On December 5, 2023, the Company amended their promissory notes to be convertible and extended the maturity date of the convertible notes with the related parties to be the earlier of (i) December 31, 2026 or (ii) consummation of a qualified offering. The notes are convertible at a price of $ 1 per share. The purchase of convertible notes and cancellation of the old promissory notes was accounted for as a debt extinguishment that did not result in a gain/loss on extinguishment due to related party treatment. The conversion option was valued utilizing the Black-Scholes model, with the following inputs: volatility of 92.22 %, current stock price of $ 1.96 , expected dividend yield of 0 % and a risk-free rate of return of 4.33 %. The resulting value of the convertible option of $ 158,099 based on the allocation of relative fair value to cash proceeds, was applied towards additional paid-in capital and added as a discount on the convertible note. The note will be accreted over the remaining period through maturity at the calculated effective interest rate of approximately 41.4 %. In connection with the closing of the IPO, the 2022 Convertible Notes and 2021 Convertible Note (defined below) automatically converted into shares of Common Stock. Pursuant to the terms of the 2021 Convertible Note and 2022 Convertible Notes (as amended), all outstanding accrued and unpaid interest owed under the 2021 Convertible Note and 2022 Convertible Notes was to convert into common stock simultaneously with the consummation of an offering of common stock resulting in the listing of the Common Stock on the NYSE American, or other national securities exchange (a “Qualified Offering”). An aggregate of $ 660,000 outstanding principal together with $ 112,576 and accrued interest under the 2021 Convertible Note and 2022 Convertible Notes was converted to Common Stock, resulting in the issuance of an aggregate of 297,133 shares of Company’s Common Stock, based on a conversion price of $ 2.60 per share, as set forth in the 2021 Convertible Note and 2022 Convertible Notes. As of the date of the conversion, the outstanding balances for the 2021 Convertible Note and 2022 Convertible Notes were $ 235,439 and $ 151,237 , respectively, net of the unamortized debt discounts of $ 164,561 and $ 108,763 . The total of unamortized debt discounts for the 2021 Convertible Note and 2022 Convertible Notes in the aggregate amount of $ 273,324 as of the date of the conversion was reflected within additional paid in capital, and the carrying aggregate amount of the 2021 Convertible Note and 2022 Convertible Notes of $ 386,676 along with accrued outstanding interest for the 2021 Convertible Note and 2022 Convertible Notes in the aggregate amount $ 112,576 as of the date of the conversion are reflected within condensed statement of changes in shareholders’ equity (deficit). 15 Apimeds Pharmaceuticals US, Inc Notes to the Unaudited Condensed Financial Statements As of December 31, 2024, there was accrued interest in connection to the 2022 Convertible Notes of $ 34,745 . Interest expenses were $ 1,498 and $ 4,596 for the three and nine months ended September 30, 2025, respectively. Interest expenses were $ 3,170 and $ 9,438 for the three and nine months ended September 30, 2024, respectively. There was accretion on the note’s debt discount in connection to the 2022 Convertible Notes of $ 5,171 and $ 15,771 for the three and nine months ended September 30, 2025, respectively. There was accretion on the note’s debt discount of $ 8,898 and $ 21,742 for the three and nine months ended September 30, 2024, respectively. 2021 Convertible note — related party On August 30, 2021, the Company issued a convertible promissory note in the amount of $ 400,000 (“2021 Convertible Note”) to Apimeds Korea. The 2021 Convertible Note bears interest at 5 % per annum and matures on the earlier of (a) the sale of the Company or (b) August 30, 2026. The 2021 Convertible Note is convertible at any time up through the maturity date. On December 5, 2023, the Company amended their convertible note to be convertible at $ 1 per share and extended the maturity date to be the earlier of (i) December 31, 2026 or (ii) consummation of a Qualified Offering. The repurchase and cancellation of the old note was accounted for as a debt extinguishment that did not result in any gain/loss on extinguishment due to related party treatment. The conversion option was valued utilizing the Black-Scholes model, with the following inputs: volatility of 92.22 %, the fair value of the stock of $ 1.96 , expected dividend yield of 0 %, and a risk-free rate of return of 4.33 %. The resulting value of the convertible option of $ 240,079 , based on the allocation of relative fair value to cash proceeds, was applied towards additional paid-in capital and added as a discount on the convertible note. The note will be accreted over the remaining period through maturity at the calculated effective interest rate of approximately 40.6 %. In connection with the closing of the IPO, the 2022 Convertible Notes and 2021 Convertible Note automatically converted into shares of common stock (see 2022 Convertible notes (amended from notes payable) — related parties per above). As of December 31, 2024, there was accrued interest in connection with the 2021 Convertible Note of $ 66,137 and is included within accrued interest — related party on the accompanying unaudited condensed balance sheets. Interest expenses were $ 2,301 and $ 7,068 for the three and nine months ended September 30, 2025, respectively. Interest expenses were $ 4,877 and $ 14,521 for the three and nine months ended September 30, 2024, respectively. There was accretion on the note’s debt discount in connection to the 2021 Convertible Notes of $ 7,884 and $ 24,061 for the three and nine months ended September 30, 2025, respectively. There was accretion on the note’s debt discount of $ 13,632 and $ 33,359 for the three and nine months ended September 30, 2024, respectively. 2024 Promissory Notes — Related Parties On May 20, 2024, the Company issued a $ 100,000 promissory note to Inscobee. On August 19, 2024, the Company issued a $ 150,000 promissory note to Inscobee (together, the “2024 Promissory Notes”). The 2024 Promissory Notes bear interest at 5 % per annum and mature on the earlier of (a) the closing of an equity financing by the Company with gross proceeds of at least $ 3,000,000 ; or (b) May 19, 2025. On May 16, 2025, the 2024 Promissory Notes were amended to extend the maturity date of for the outstanding principal and accrued interest payment date to May 19, 2026. As of September 30, 2025 and December 31, 2024, there was accrued interest in connection with the 2024 Promissory Notes of $ 11,959 and $ 5,760 . Interest expenses were $ 3,116 and $ 6,199 for the three and nine months ended September 30, 2025, respectively, and are included within accrued interest — related party on the accompanying unaudited condensed balance sheet. Interest expenses were $ 548 for the three and nine months ended September 30, 2024. 16 Apimeds Pharmaceuticals US, Inc Notes to the Unaudited Condensed Financial Statements 2025 Promissory Note — Related Parties On March 21, 2025, the Company issued a $ 250,000 promissory note to Apimeds Korea (the “2025 Promissory Note”). The 2025 Promissory Note bears interest at 5 % per annum and matures on the earlier of (a) December 31, 2026 or (b) consummation of a Qualified Offering. On May 16, 2025, the 2025 Promissory Note was amended to extend the maturity date of for the outstanding principal and accrued interest payment date to May 19, 2026. As of September 30, 2025, there was accrued interest in connection with the 2025 Promissory Note of $ 3,390 . Interest expenses were $ 3,082 and $ 3,390 for the three and nine months ended September 30, 2025, respectively, and are included within accrued interest — related party on the accompanying unaudited condensed balance sheet. 7. ADVANCE PAYABLE — RELATED PARTY As of September 30, 2025, and December 31, 2024 the Company had an outstanding balance of $ 100 and $ 76,500 , respectively, due to funds received from officers of the Company. These advance payables carry no interest and do not have a maturity date. The cash proceeds from these advance payables were used for operating purposes. 8. COMMITMENTS AND CONTINGENCIES Legal Periodically, the Company reviews the status of any significant matters that exist and assesses its potential financial exposure. If the potential loss from any claim or legal claim is considered probable and the amount can be estimated, the Company accrues a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based on the best information available at the time. As additional information becomes available, the Company reassesses the potential liability related to pending claims and litigation. As of September 30, 2025 and December 31, 2024, there are no pending claims or litigation that are expected to materially affect the Company’s results going forward. Executive employee agreement On September 21, 2023, the Company signed an executive employee agreement with the Chief Executive Officer (CEO) of the Company. Under the executive employee agreement terms, if the Company closes on a public offering, the CEO will be eligible to receive an incentive stock option to purchase a number of shares of the Company’s common stock equal to 3 % of the post-IPO capitalization of the Company. 40 % of the options shall vest immediately upon grant and the remainder will vest in three equal installments on the annual anniversary of the date of grant. On May 12, 2025, the Company consummated the IPO. Immediately following the IPO on May 16, 2025, the Board approved the grant of 347,279 stock options to the CEO, with vesting terms of 40 % on the grant date and the remaining 60 % vesting in three equal annual installments on each anniversary of the grant date. In addition to the stock option grant, the Board also granted 750,000 shares of the Company’s Common Stock to the CEO of the Company, which are fully vested and unrestricted. 9. SHAREHOLDERS’ EQUITY Common Stock As of September 30, 2025 and December 31, 2024, the Company had 100,000,000 authorized shares of common stock. The Company had 12,575,983 and 7,903,850 shares of common stock issued and outstanding, as of September 30, 2025 and December 31, 2024, respectively. Each share of common stock is entitled to one vote. On February 7, 2025, the Board approved and implemented a reverse stock split ratio of 1-for-2.6, which provided that every 2.6 shares of its issued and outstanding common stock were automatically combined into one issued and outstanding share of common stock, without any change in the par value per share. All share and per share amounts in the accompanying unaudited condensed financial statements and footnotes have been retrospectively adjusted for the reverse stock split. 17 Apimeds Pharmaceuticals US, Inc Notes to the Unaudited Condensed Financial Statements On May 12, 2025, the Company consummated 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 $ 11.6 million after deducting underwriting discounts, offering expenses and the value of the Advisory Warrant liability. Out of the total shares issued, 500,000 shares were purchased by Inscobee . In connection with the closing of the IPO, the 2022 Convertible Notes and 2021 Convertible Note automatically converted into shares of common stock. Pursuant to the terms of the 2021 Convertible Note and 2022 Convertible Notes , all outstanding accrued and unpaid interest owed under the 2021 Convertible Note and 2022 Convertible Notes was to convert into common stock simultaneously with the consummation of a Qualified Offering. An aggregate of $ 499,222 of outstanding principal and accrued interest under the 2022 Convertible Notes and 2021 Convertible Note, net of unamortized debt discount of $ 273,324 , was converted to common stock, resulting in the issuance of an aggregate of 297,133 shares of Company’s common stock, based on a conversion price of $ 2.60 per share, as set forth in the 2021 Convertible Note and 2022 Convertible Notes. Immediately following the IPO on May 16, the board of directors approved the grant of 750,000 and 250,000 shares of the Company’s common stock to the CEO and Chief Medical Officer of the Company, respectively. Such stock were issued under the Apimeds Pharmaceuticals US, Inc. 2024 Equity Incentive Plan (the “2024 Equity Incentive Plan”) and are fully vested and unrestricted. The value of the fully vested shares granted was determined by the value of the stock on the quoted trading price of $ 1.70 per share and in aggregate of $ 1,700,000 , and recorded as stock-based compensation - stock grants, with $ 1,275,000 and $ 425,000 allocated to general and administrative expenses and research and development expenses, respectively, for the three and nine month periods ended September 30, 2025. Warrants In connection with the IPO, the Company entered into an Underwriting Agreement, dated May 8, 2025, between the Company and its underwriter. The Company also agreed to issue warrants to purchase an aggregate of 168,750 shares of common stock (the “Representative Warrants”), each dated May 12, 2025, to underwriter and its designees. The Representative Warrants have an exercise price of $ 5.00 per share and also feature a cashless exercise option. The initial exercise date of the Representative Warrants is November 4, 2025. The Company accounts for Representative Warrants as equity-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) and FASB ASC Topic 815, Derivatives and Hedging (“ASC 815”). The measurement of fair value of the Representative Warrants was determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price of $ 1.81 , exercise price of $ 5.00 , term of 5 years, volatility of 78 %, risk-free rate of 4.09 %, and expected dividend rate of 0.0 %). The grant date fair value of these Representative Warrants was estimated to be $ 139,388 on May 12, 2025, and was reflected as a reduction to additional paid-in capital as of May 12, 2025. On September 5, 2023, the Company entered into a consulting agreement with certain advisor, under which, upon completion of the IPO, the Company would issue to advisor warrants to purchase a number of shares of common stock equal to 6 % of the aggregate number of shares sold in the IPO (the “Advisor Warrants”). The Advisor Warrants were issued on August 5, 2025. Because the obligation to issue the Advisor Warrants became unconditional at the IPO close (May 12, 2025), the Company recorded a warrant liability at the IPO date fair value and remeasures that liability at each reporting date. Because the Advisor Warrants were issued as compensation for the IPO-related advisory services, the initial fair value recognized at the IPO date was recorded as an offering cost that reduced the additional paid-in capital as of May 12, 2025. The warrant liability as of May 12, 2025 (IPO date), was valued utilizing the Black-Scholes options pricing model with the following inputs: $ 1.81 of stock price, 4.09 % risk-free rate, 78.29 % volatility, 0 % dividend rate, and the expected term of 5 years. The warrant liability as of August 5, 2025, was valued utilizing the Black-Scholes options pricing model with the following inputs: $ 1.78 of stock price, 3.74 % risk-free rate, 77.11 % volatility, 0 % dividend rate, and the expected term of 5 years. Upon the issuance of the warrants on August 5, 2025, the final terms were evaluated, and the warrants met all conditions for equity classification under ASC 815-40. As a result, the warrants were revalued as of August 5, 2025 with the change in value reflected in the statement of operations. That amount was then reclassified to additional paid-in capital. No gain or loss was recognized in the consolidated statements of operations in connection with the reclassification. Preferred Stock On December 5, 2023, the Company authorized 10,000,000 shares of preferred stock with a par value of $ 0.01 . The rights and preferences of preferred shareholders have not been determined as of the date of filing. The Company had no preferred shares issued or outstanding as of September 30, 2025, and December 31, 2024. 10. STOCK-BASED COMPENSATION Stock Options On September 18, 2024, the Company adopted the 2024 Equity Incentive Plan. 1,538,462 shares of common stock have initially been reserved for the issuance of awards under the 2024 Equity Incentive Plan with 42,283 shares available for future issuance as of September 30, 2025. There were 213,692 nonqualified stock option awards issued and outstanding outside of the 2024 Equity Incentive Plan as of September 30, 2025 and December 31, 2024. The Company and its subsidiaries calculate stock-based compensation expense in accordance with ASC 718. The fair value of stock-based awards is amortized over the vesting period of the award. 18 Apimeds Pharmaceuticals US, Inc Notes to the Unaudited Condensed Financial Statements There were 496,179 stock options granted under the 2024 Equity Incentive Plan to the Company’s employees and directors during the three and nine months ended September 30, 2025, and no stock options granted for three and nine months ended September 30, 2024. The stock options granted during the three and nine months ended September 30, 2025, were valued utilizing the Black-Scholes options pricing model with the following inputs: $ 1.70 - $ 1.93 of stock price, 4.06 % risk-free rate, 78.23 % - 81.85 % volatility, 0 % dividend rate, and the expected term of 5.50 -6.00 years. The following represents a summary of options: Number of Options Weighted Average Exercise Price Weighted-Average Remaining Contractual Term (In Years) Issued and outstanding, December 31, 2024 213,692 $ 7.33 5.12 Granted 496,179 1.82 - Exercised - - - Forfeited/Expired - - - Issued and outstanding, September 30, 2025 709,871 $ 3.48 8.22 Exercisable at September 30, 2025 372,604 $ 5.22 6.76 For the three and nine months ended September 30, 2025 the Company had $ 42,674 and $ 234,727 of stock compensation related to the stock options outstanding, of which $ 13,629 and $ 178,424 were included in general and administrative expenses and research and development expenses, respectively, on the accompanying unaudited condensed statements of operations. There was no expense related to the stock option grants recognized during the three and nine months ended September 30, 2024. As of September 30, 2025, the remaining unamortized expense of $ 372,805 will be recognized over the next 2.52 years. Such amount does not include the effect of future grants of equity compensation, if any. The intrinsic value of options outstanding was $ 1,445 at September 30, 2025 and the intrinsic value of options exercisable was $ 0 at December 31, 2024. 11. INCOME TAXES The Company recorded no provision or benefit for income tax expense for the three and nine months ended September 30, 2025 and 2024, respectively. For all periods presented, the pretax losses incurred by the Company received no corresponding tax benefit because the Company concluded that it is more likely than not that the Company will be unable to realize the value of any resulting deferred tax assets. The Company will continue to assess its position in future periods to determine if it is appropriate to reduce a portion of its valuation allowance in the future. The Company has no open tax audits with any taxing authority as of September 30, 2025. 12. SUBSEQUENT EVENTS The company’s management has evaluated subsequent events occurring after September 30, 2025, the date of our most recent balance sheet, through the date our financial statements were issued. On October 15, 2025, the Company entered into a Waiver Agreement with D. Boral Capital in connection to its previously executed Underwriting Agreement dated May 8, 2025, whereby the Right of First Refusal (as defined in the Waiver Agreement) and the Company Lock-Up Agreements (as defined in the Waiver Agreement) are waived and terminated. In consideration for such waiver and termination, the Company paid to D. Boral Capital a non-refundable fee of $ 700,000 upon execution of the Waiver Agreement. On October 15, 2025, the board of directors approved the grant of 510,500 options for shares of the Company’s common stock to participants in the 2024 Equity Incentive Plan and vest in quarterly installments beginning on the respective vesting commencement dates, such that the awards shall be fully vested after three years . The exercise price of the options granted was determined by the value of the stock on the quoted trading price of $ 1.92 per share. 19