What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-14 compared with 2026-05-26 · 58 added, 183 removed, 1 unchanged (100% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

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.

Note Regarding Forward-Looking Statements

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

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

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.

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.

Pharmaceuticals US, Inc.

is a development-stage biopharmaceutical company incorporated in the State of Delaware.

Our primary focus is

the clinical development of Apitox, a purified honeybee venom-based drug candidate being evaluated for the treatment of acute pain and

inflammation associated with knee osteoarthritis.

We operate our biopharmaceutical business through our wholly owned subsidiary, Lokahi

Therapeutics Inc.

Through MindWave Innovations, the Company holds

Bitcoin (“BTC”), Tether (“USDT”), and MindWaveDAO NILA tokens (“NILA”), and participates in the MindWaveDAO

blockchain ecosystem through the continued sale of NILA.

The Digital Asset segment’s performance is subject to the volatility inherent

in cryptocurrency markets.

A more detailed discussion of the Digital Asset segment, including the MindWave Merger and the Company’s

related accounting policies, is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Product Candidate

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.

success of the Company is dependent on obtaining the necessary regulatory approvals of its product candidates, as well as the continued

advancement of it’s Digital Asset segment, which includes the appreciation of its cryptocurrency holdings consisting of Bitcoin

(“BTC”), Tether (“USDT”), and NILA tokens (“NILA”), and the advancement and continued sale of NILA

on the MindWaveDAO blockchain.

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 cryptocurrency market sentiment or the advancement of the MindWaveDAO blockchain.

inception, Apimeds has incurred significant operating losses.

For the three months ended March 31, 2026 and 2025, Apimeds Pharmaceuticals

net loss was $35,059,852, and $402,397, respectively.

and Capital Resources

of March 31, 2026, the Company had accumulated deficit amount of $45,452,914.

The Company incurred net losses of $35,059,852 for the

three months ended March 31, 2026, and expects to continue to incur substantial losses in the future.

On December 8, 2025, the Company

completed a PIPE financing (the “PIPE”) with an aggregate maximum amount of $120,900,000 drawn in tranches at the Company’s

discretion, given the market conditions allow.

As of March 31, 2026, the Company has drawn a total amount of $10,900,000 from the PIPE

(see note 6) wherein $8,000,000 in proceeds have been recorded as restricted cash.

Based on cash that is available and cash that is predicted

to become unrestricted for Company operations, together with continued Tether (“USDT”) proceeds from the digital assets segment,

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.

Proceeds in the form of USDT have been included in evaluation of liquidity concerns given the fact that the Company uses these proceeds

to satisfy select operating expenses that pertain directly to the maintenance and management of the Digital Asset segment.

of operations for the three months ended March 31, 2026, and 2025

following table sets forth the Company’s selected statements of operations data for the following periods:

Three Months Ended

Operating expenses

Research and development expenses

General and administrative expenses

Total operating expenses

Total other income (expense)

(22,874,158 )

(22,836,129 )

$ (35,059,852 )

$ (34,657,455 )

the three months ended March 31, 2026, and 2025, the Company had no revenue.

General and Administrative Expenses

For the three months ended March 31, 2026, included in General and

administrative expense is $8,113,318 non-cash charge for stock issued to our financial advisor.

This charge is not expected to be recur.

Other income expense

The $22,836,129 increase in other expense for the three months ended

March 31, 2026 compared to March 31, 2025 was principally the result of $22,078,601 of unrealized losses on the Company digital asset

The Company did not hold any digital assets during the three months ended March 31, 2025.

Digital asset market volatility can

be expected to be significant in future periods.

loss was $35,059,852 for the three months ended March 31, 2026, compared to net loss of $402,397 in the same period of 2025, representing

an increase in loss of $34,657,455.

The increase was mainly due to the loss on fair value of cryptocurrency holdings and stock compensation

expenses (see Cash Flows).

following table presents selected financial information and statistics for each of the periods shown below:

Three Months Ended

Net cash used in operating activities

$ (2,067,727 )

$ (2,047,414 )

Net cash provided by investing activities

Net cash provided by financing activities

Net increase (decrease) in cash

the three months ended March 31, 2026, operating activities used approximately $2,067,727 of cash, differing drastically from a reported

net loss of $35,059,852 due in large part to noncash additions of $22,061,472 of changes in fair value of cryptocurrency and stock

compensation expenses of $8,113,318, respectively.

Other material noncash additions include accretion expense of approximately $851,018,

and changes in operating assets and liabilities of approximate increase of $1,839,261, due to the netting of an increase in prepaid research

costs and increases in accounts payable and accrued expenses.

Comparatively,

during the three months ended March 31, 2025, operating activities used $20,313 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.

the three months ended March 31, 2026, and 2025, investing activities used approximately $490,606 and $0, respectively.

For the period

ended 2026, this value consists of $500,000 received as a transfer from short term investments and a decrease of $9,394 incurred due

to purchases of furniture and fixtures.

the three months ended March 31, 2026, financing activities provided approximately $920,000 of cash.

This was primarily attributable

to net proceeds from the issuance of notes payable, partially offset by issuance costs paid upon closing of the debt offering of $75,000.

Comparatively,

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.

Obligations and Commitments

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 March 31, 2026, included elsewhere in this Quarterly Report for further discussion of the Company’s

commitments and contingencies.

Sheet Arrangements

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.

Accounting Policies and Significant Judgments and Estimates

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.

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.

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.

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.

Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815 “Derivatives

and Hedging Activities”.

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.

Quantitative and Qualitative Disclosures About Market Risk

a smaller reporting company, we have elected not to provide the disclosure required by this item.

The following discussion and analysis should be read together with our unaudited condensed consolidated financial statements and the related notes included in Item 1 of this Quarterly Report and our audited consolidated financial statements for the year ended December 31, 2025.

This discussion contains forward-looking statements that involve risks and uncertainties.

Our actual results could differ materially from those discussed below.

All share and per-share amounts have been retroactively adjusted for the 1-for-10 reverse stock split effected July 24, 2026.

We operate through two reportable segments.

Our BioBusiness segment, conducted through our subsidiary Lokahi Therapeutics Inc., is a clinical-stage pharmaceutical business developing APITOX for the treatment of pain associated with osteoarthritis and other indications.

Our Digital Asset segment, conducted through MindWave Innovations Inc.

and its subsidiaries, holds and transacts in digital assets, principally Bitcoin, Tether and NILA tokens.

As of June 30, 2026 we held digital assets with a fair value of $116,737,168, representing 89% of our total assets.

Because those assets are measured at fair value with changes recognized in earnings, our reported results are subject to substantial period-to-period volatility that is unrelated to our operating performance.

On April 24, 2026 we entered into a Confidential Settlement Agreement and Mutual Release providing, among other things, for a working capital contribution to the BioBusiness, the distribution of 51% of the equity of Lokahi and a contemplated spin-off of the BioBusiness within approximately twelve months.

As of June 30, 2026 the distribution had not been effected and Lokahi remained a wholly owned subsidiary.

Going Concern

We have incurred recurring losses and negative operating cash flows.

We incurred a net loss of $55,232,982 for the six months ended June 30, 2026, used $7,734,893 of cash in operating activities, and had an accumulated deficit of $65,626,043 and cash and cash equivalents of $278,371 as of June 30, 2026.

In addition, notes payable with an aggregate principal amount of $5,000,000 and a senior secured convertible note with an aggregate principal amount of $10,900,000 were current obligations as of June 30, 2026.

These conditions raise substantial doubt about our ability to continue as a going concern, as further described in Note 2 to the condensed consolidated financial statements.

Our conclusion has changed from the quarter ended March 31, 2026, when we concluded that our cash and expected sources of liquidity were sufficient for twelve months in reliance on the Securities Purchase Agreement providing for the issuance of notes in tranches with an aggregate redemption amount of up to $120,900,000.

Additional tranches under that agreement are issuable only on satisfaction of the conditions in the agreement and at the holder’s election, and we have no unilateral right to draw;

no further tranche has been drawn and the $10,900,000 drawn to date remains the only amount funded.

In addition, since March 31, 2026 the holder of the senior secured convertible note delivered a notice of default, a forbearance agreement entered into on April 30, 2026 expired on June 30, 2026 without extension, our notes payable of $5,000,000 matured on July 1, 2026, $250,000 of the working capital contribution under the Settlement Agreement remained unfunded at June 30, 2026, and release of the $8,000,000 held under the deposit account control arrangement remains contingent on conversion of the Series A Convertible Preferred Stock in accordance with the note agreement and is not available for general corporate purposes.

Those developments, taken together, are the basis for the change in conclusion.

Results of Operations — Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

Research and development expenses were $959,742 for the three months ended June 30, 2026, compared with $651,784 for the same period in 2025, an increase of $307,958, or 47%.

The increase was driven by clinical manufacturing costs of $287,623, non-clinical study costs of $187,232 and professional consulting of $240,695, partially offset by lower Phase II clinical trial spend.

General and administrative expenses were $5,319,018 for the three months ended June 30, 2026, compared with $2,012,120 for the same period in 2025, an increase of $3,306,898.

The increase was driven principally by $1,281,090 of settlement-related legal and consulting fees, $1,150,000 of transaction and advisory fees, higher investor relations and public-company costs, and the inclusion of $1,153,443 of general and administrative expenses of the Digital Asset segment, which was not part of the Company in the prior-year period.

Total other expense, net, was $13,894,369 for the three months ended June 30, 2026, compared with other income, net, of $1,711 for the same period in 2025.

The change reflects an unrealized loss on digital assets of $13,178,928 and interest expense of $3,223,755, partially offset by realized and trading gains on digital assets of $1,987,367, $282,732 of digital asset yield income and a $215,993 gain from the change in fair value of our derivative liability.

Interest expense comprises $1,304,011 of contractual and flat interest on our notes payable and related-party notes and $1,859,744 of accretion of debt discounts and the $60,000 cash extension fee paid in June 2026 on Notes 2 and 3.

As a result, net loss was $20,173,129, or $11.77 per basic and diluted share, for the three months ended June 30, 2026, compared with $2,662,193, or $2.57 per basic and diluted share, for the same period in 2025.

Results of Operations — Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

Research and development expenses were $1,860,886 for the six months ended June 30, 2026, compared with $651,784 for the same period in 2025.

The increase reflects a full six months of clinical development activity, including manufacturing costs of $533,159, contract research organization fees of $297,309, professional consulting of $422,705, non-clinical studies of $187,232 and Phase II clinical trial costs of $140,000.

General and administrative expenses were $16,603,568 for the six months ended June 30, 2026, compared with $2,376,488 for the same period in 2025.

The increase was driven principally by the $8,113,318 non-cash charge for advisory shares committed for issuance, $1,281,090 of settlement-related legal and consulting fees, $1,210,000 of transaction and advisory fees, and the inclusion of $2,814,364 of general and administrative expenses of the Digital Asset segment.

Total other expense, net, was $36,768,528 for the six months ended June 30, 2026, compared with $36,318 for the same period in 2025, driven principally by an unrealized loss on digital assets of $35,257,529 and interest expense of $4,083,160, partially offset by realized and trading gains on digital assets of $2,004,495, $282,732 of digital asset yield income and a $264,272 gain from the change in fair value of our derivative liability.

Net loss was $55,232,982, or $33.83 per basic and diluted share, for the six months ended June 30, 2026, compared with $3,064,590, or $3.35 per basic and diluted share, for the same period in 2025.

Segment Results

For the three months ended June 30, 2026, the BioBusiness segment reported a net loss of $7,197,738, the Digital Asset segment reported a net loss of $12,061,814 and Corporate reported a net loss of $913,577.

For the six months ended June 30, 2026, the BioBusiness segment reported a net loss of $9,479,177, the Digital Asset segment reported a net loss of $35,785,775 and Corporate reported a net loss of $9,968,030.

Segment assets as of June 30, 2026 were $2,497,274 for the BioBusiness segment, $117,075,940 for the Digital Asset segment and $9,769,393 for Corporate.

Liquidity and Capital Resources

As of June 30, 2026, we had cash and cash equivalents of $278,371 and restricted cash of $8,000,000, compared with $1,636,655 and $8,000,000, respectively, as of December 31, 2025.

Our restricted cash consists of $8,000,000 held in a deposit account control arrangement for the benefit of the holder of our senior secured convertible note, pending release upon conversion of the Series A Convertible Preferred Stock in accordance with the terms of the note agreement, and is not available for general corporate purposes.

Net cash used in operating activities was $7,734,893 for the six months ended June 30, 2026, compared with $3,381,409 for the same period in 2025.

The 2026 amount reflects our net loss of $55,232,982, adjusted for non-cash items including $35,257,529 of unrealized losses on digital assets, $8,113,318 of advisory shares committed for issuance, $2,710,762 of non-cash accretion of debt discounts, $1,212,398 of accrued but unpaid interest and $219,376 of stock-based compensation, and for a $2,302,994 increase in accounts payable and accrued expenses.

Net cash provided by investing activities was $1,990,606 for the six months ended June 30, 2026, comprising $2,000,000 of redemptions of short-term investments, partially offset by $9,394 of equipment purchases.

Net cash used in investing activities was $13,369 for the same period in 2025.

Net cash provided by financing activities was $4,386,002 for the six months ended June 30, 2026, comprising $5,970,000 of proceeds from notes payable net of original issue discount and $1,002 of subscription receivable collected, less $1,000,000 of note repayments and $585,000 of debt issuance costs paid.

Net cash provided by financing activities was $12,126,646 for the same period in 2025, principally from our initial public offering and note financings.

Our ability to fund operations depends on our ability to raise additional capital, to monetize our digital-asset holdings, and to repay, extend or restructure our notes payable and senior secured convertible note.

These factors raise substantial doubt about our ability to continue as a going concern.

Critical Accounting Estimates

Our critical accounting estimates include the fair value measurement of our digital assets under ASC 350-60 — in particular the NILA token, which is measured using Level 2 inputs and represented $49,983,968, or 43%, of our digital assets as of June 30, 2026 — the fair value of the embedded conversion feature accounted for as a Level 3 derivative liability and measured using a Monte Carlo simulation, and the effective interest rates used to accrete debt discounts.

Changes in the assumptions underlying these estimates could have a material effect on our reported results.

Off-Balance-Sheet Arrangements

We do not have any off-balance-sheet arrangements as defined under SEC rules.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis