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. 20 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. 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 South Korea as 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. 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. Financial Results Since inception, Apimeds has incurred significant operating losses. For the three and nine months ended September 30, 2025 and 2024, Apimeds Pharmaceuticals US, Inc. net loss was $1,781,255 and $4,845,845 and $332,521 and $1,078,357, respectively. Liquidity As of September 30, 2025, the Company had accumulated deficit amount to $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 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 September 30, 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 September 30, 2025 2024 Change Operating expenses Research and development expenses $ 619,693 $ - $ 619,693 General and administrative expenses 1,224,546 299,999 924,547 Loss from operations (1,844,239 ) (299,999 ) (1,544,240 ) Other expenses Interest income 56,426 116 56,310 Change in fair value of warrant liability (12,859 ) - (12,859 ) Interest expense (6,301 ) (32,638 ) 26,337 Net loss $ (1,781,255 ) $ (332,521 ) $ (1,448,734 ) 21 Revenues For the three months ended September 30, 2025 and 2024, the Company had no revenue. Operating expenses Research and development expense The following table summarizes the year-over-year changes in research and development expenses for the three months ended September 30, 2025: Three Months Ended September 30, 2025 2024 Change Payroll expenses $ 8,871 $ - $ 8,871 Clinical trials 557,430 - 557,430 Compensation - stock and stock options 13,629 - 13,629 Other 39,763 - 39,763 $ 619,693 $ - $ 619,693 Research and development expenses totaled $619,693 for the three months ended September 30, 2025, compared to no such expenses for the same period in 2024, reflecting an increase of $619,693. This increase was primarily driven by the availability of funding, which supported higher overall research and development spending. The increase was mainly attributable to stock-based compensation of approximately $14,000, clinical trial costs of approximately $557,000, and other research and development expenses totaling approximately $40,000. General and administrative expenses The following table summarizes the year-over-year changes in general and administrative expenses for the three months ended September 30, 2025: Three Months Ended September 30, 2025 2024 Change Payroll expenses $ 384,451 $ 91,000 $ 293,451 Professional services 549,590 202,995 346,595 Compensation - stock and stock options 29,045 - 29,045 Insurance 54,255 - 54,255 Office expenses 106,131 3,818 102,313 Other general and administrative 101,074 2,186 98,888 $ 1,224,546 $ 299,999 $ 924,547 General and administrative expenses totaled $1,224,546 for the three months ended September 30, 2025, compared to $299,999 for the same period in 2024, representing an increase of $924,547. The increase was primarily driven by higher stock compensation costs and expanded operational activities. Specifically, the change included an increase in professional services of approximately $347,000, stock-based compensation of approximately $29,000, insurance expenses of approximately $54,000, office expenses of approximately $102,000, and other general and administrative costs of approximately $99,000. 22 Other Income (expense) The following table summarizes the year-over-year changes in other income (expense) for the periods presented: Three Months Ended September 30, 2025 2024 Change Interest income $ 56,426 $ 116 $ 56,310 Change in fair value of warrant liability 12,859 - 12,859 Interest expense (6,301 ) (32,638 ) 26,337 $ 62,984 $ (32,522 ) $ 95,506 Other income was $62,984 for the three months ended September 30, 2025, compared to other expense of $32,522 for the same period in 2024, representing an increase in income of $95,506. The increase was mainly due to an increase in interest income of approximately $56,000 and a decrease in interest expense of approximately $26,000. Net Loss Net loss was $1,781,255 for the three months ended September 30, 2025, compared to net loss of $332,521 in the same period of 2024, representing an increased loss of $1,448,734. The increase was mainly due to the increase in both general and administrative expenses and research and development expenses due to higher payroll expenses, professional services and expanded operational and research and development activities. Results of operations for the nine months ended September 30, 2025 and 2024 Operating Expense The following table sets forth the Company’s selected statements of operations data for the following periods: Nine Months Ended September 30, 2025 2024 Change Operating expenses Research and development expenses $ 1,271,477 $ - $ 1,271,477 General and administrative expenses 3,601,034 999,482 2,601,552 Loss from operations (4,872,511 ) (999,482 ) (3,873,029 ) Other expenses Interest income 71,676 2,794 68,882 Change in fair value of warrant liability 22,377 - 22,377 Interest expense (67,387 ) (81,669 ) 14,282 Net loss $ (4,845,845 ) $ (1,078,357 ) $ (3,767,488 ) Revenues For the nine months ended September 30, 2025 and 2024, the Company had no revenue. 23 Operating expenses Research and development expenses The following table summarizes the year-over-year changes in research and development expenses for the nine months ended September 30, 2025: Nine Months Ended September 30, 2025 2024 Change Payroll expenses $ 81,027 $ - $ 81,027 Clinical trials 674,967 - 674,967 Compensation - stock and stock options 452,258 - 452,258 Other 63,225 - 63,225 Total research and development expenses $ 1,271,477 $ - $ 1,271,477 Research and development expenses totaled $1,271,477 for the nine months ended September 30, 2025, compared to no such expenses for the same period in 2024, reflecting an increase of $1,271,477. This increase was primarily driven by the availability of funding, which supported higher overall research and development spending. The increase was mainly attributable to payroll expenses of approximately $81,000, stock-based compensation of approximately $452,000, clinical trial costs of approximately $675,000, and other research and development expenses totaling approximately $63,000. General and administrative expenses The following table summarizes the year-over-year changes in general and administrative expenses for the nine months ended September 30, 2025: Nine Months Ended September 30, 2025 2024 Change Payroll expenses 594,929 297,000 297,929 Professional services 1,138,448 669,923 468,525 Compensation - stock and stock options 1,482,469 - 1,482,469 Insurance 85,510 - 85,510 Office expenses 176,508 14,144 162,364 Other general and administrative 123,170 18,415 104,755 Total general and administrative expenses 3,601,034 $ 999,482 $ 2,601,552 General and administrative expenses totaled $3,601,034 for the nine months ended September 30, 2025, compared to $999,482 for the same period in 2024, representing an increase of $2,601,552. The increase was primarily driven by higher stock compensation costs and expanded operational activities. Specifically, the change included the increases in professional services of approximately $469,000, stock-based compensation of approximately $1,482,000, payroll expenses of approximately $298,000, insurance expenses of approximately $86,000 and office expenses of approximately $162,000. 24 Other Expense The following table summarizes the year-over-year changes in other expenses for the periods presented: Nine Months Ended September 30, 2025 2024 Change Interest income $ 71,676 $ 2,794 $ 68,882 Change in fair value of warrant liability 22,377 - 22,377 Interest expense (67,387 ) (81,669 ) 14,282 $ 26,666 $ (78,875 ) $ 105,541 Other income was $26,666 for the nine months ended September 30, 2025, compared to other expense of $78,875 for the same period in 2024, representing an increase in other income of $105,541. The increase was mainly due to an increase in interest income of approximately $69,000 corresponding with the decrease in interest expense of approximately $14,000 due to conversion of the notes, as well as gain as a result of the change in fair value of warrant liability for approximately $22,000. Net Loss Net loss was $4,845,845 for the nine months ended September 30, 2025, compared to net loss of $1,078,357 in the same period of 2024, representing an increase in loss of $3,767,488. The increase was mainly due to the increase in both general and administrative expenses and research and development expenses due to higher stock compensation costs and expanded operational and research and development activities. 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: Nine Months Ended September 30, 2025 2024 Change Net cash used in operating activities $ (5,107,575 ) $ (633,910 ) $ (4,473,665 ) Net cash used in investing activities (35,909 ) - (35,909 ) Net cash provided by financing activities 12,126,646 250,000 11,876,646 Net increase (decrease) in cash $ 6,983,162 $ (383,910 ) $ 7,367,072 During the nine months ended September 30, 2025, operating activities used approximately $5,108,000 of cash, primarily resulting from a net loss of $4,859,332, partially offset by non-cash stock-based compensation for stock and stock options grants in the approximate amount of $1,700,000 and $235,000, respectively, accretion expense of approximately $40,000, and changes in operating assets and liabilities of approximate decrease of $2,243,000, mainly due to increase in prepaid research costs and prepaid insurance and decrease in accounts payable and accrued expenses. 25 During the nine months ended September 30, 2025, operating activities used approximately $634,000 of cash, primarily resulting from a net loss of $1,078,357, partially offset by non-cash interest expense-related parties of approximately $27,000, accretion expense of approximately $55,000, and positive changes in operating assets and liabilities of approximately $363,000. Investing activities During the nine months ended September 30, 2025 and 2024 investing activities used approximately $36,000 and $0, respectively, resulting from acquired furniture and equipment. Financing activities During the nine months ended September 30, 2025, financing activities provided approximately $12,126,600 of cash. This was primarily attributable to net proceeds from the issuance of common stock in the IPO of $11,953,046, proceeds from notes payable from related parties of $250,000, and cash advances from related parties of $17,400, partially offset by cash advances paid to related parties in the amount of $93,800. During the nine months ended September 30, 2024, financing activities provided $250,000 of cash, consisting entirely of proceeds from notes payable from related parties. Contractual Obligations and Commitments See Note 6 – Debt, and Note 8 – Commitments and Contingencies, of the notes to the Company’s financial statements as of and for the three months ended September 30, 2025 included elsewhere in this Quarterly 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 U.S. 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 U.S. 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. 26 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.