What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-07-15 compared with 2025-11-13 · 320 added, 294 removed, 172 unchanged (78% of the section changed)

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

following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial

statements and the related notes included under Part I, Item 1 of this Quarterly Report on Form 10-Q (this “Quarterly Report”)

as well as the Company’s audited financial statements and notes thereto included in its Annual Report on Form 10-K for the year

ended December 31, 2024 that was filed with the SEC on March 28, 2025.

Certain information contained in the discussion and analysis set

forth below includes forward-looking statements that involve risks and uncertainties.

The following discussion contains forward-looking

statements based upon current expectations that involve risks, uncertainties and assumptions.

Our actual results may differ materially

from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the section

titled “Risk Factors” or in other parts of this Quarterly Report.

Our historical results are not necessarily indicative of

the results that may be expected for any period in the future.

All dollar amounts are expressed in thousands of United States dollars

(“$”), unless otherwise indicated.

following discussion and analysis of our financial condition and results of operations should be read in conjunction with the

unaudited condensed consolidated financial statements and the related notes included under Part I, Item 1 of this Quarterly Report

on Form 10-Q (this “Quarterly Report”) as well as the Company’s audited financial statements and notes thereto

included in its Annual Report on Form 10-K for the year ended December 31, 2025 that was filed with the SEC on April 15, 2026.

Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks

and uncertainties.

The following discussion contains forward-looking statements based upon current expectations that involve risks,

uncertainties and assumptions.

Our actual results may differ materially from those anticipated in these forward-looking statements

as a result of various factors, including those set forth under the section titled “Risk Factors” or in other parts of

this Quarterly Report.

Our historical results are not necessarily indicative of the results that may be expected for any period in

All dollar amounts are expressed in thousands of United States dollars (“$”), unless otherwise

September 22, 2023, a merger transaction (the “Business Combination”) between Conduit Pharmaceuticals Limited (“Old

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scientific innovation and strategic partnerships.

Equity is a data-driven biotech development and digital asset treasury management company focused on identifying, enhancing, and advancing

high-potential therapeutic assets through scientific innovation and strategic partnerships.

The Company has evolved into a broader, more

agile platform that leverages artificial intelligence, solid-form chemistry, and efficient asset repositioning to accelerate the development

of novel therapeutic treatments.

Equity is a data-driven pharmaceutical development company, focused on identifying, enhancing, and advancing high-potential therapeutic

assets through scientific innovation and strategic partnerships.

The Company has evolved into a broader, more agile platform that

leverages artificial intelligence, solid-form chemistry, and efficient asset repositioning to accelerate the development of novel

Equity’s strategy is centered on unlocking the untapped value of clinical-stage compounds, particularly those deprioritized by

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Through advanced co-crystallization and solid-form technologies

developed at our Cambridge facility, we aim to improve drug properties and have successfully extended the patent life of certain drugs

by up to 20 years.

current pipeline includes candidates targeting inflammatory and autoimmune disorders, as well as idiopathic male infertility, dermatology,

developed at our Cambridge facilities, the Company improves drug properties and extends patent life by up to 20 years.

In partnership

with Sarborg Limited (“Sarborg”), the Company also applies AI-powered signature analysis to rapidly identify new therapeutic

applications and combinations for existing compounds.

pipeline includes candidates that target autoimmune disorders, as well as idiopathic male infertility, oncology, dermatology, rare disease

and animal health.

The intellectual property portfolio comprises pending patent applications in several international jurisdictions describing

a solid-form compound, including the AZD1656 Cocrystal (a HK-4 Glucokinase Activator).

Our pipeline research includes a number of compounds

that serve as promising alternatives to existing clinical assets currently marketed and sold by large pharmaceutical companies, which

we have identified as potential opportunities to develop further intellectual property positions through solid-form technology.

collaboration with Sarborg enables us to apply proprietary algorithms utilizing AI-powered disease mapping to identify novel

re-purposing opportunities across a database of more than 800 disease signatures.

Sarborg’s insights have directly informed

two new combination patent filings, strengthening our intellectual property portfolio.

In addition, CDT Equity has initiated

pre-clinical in-vitro models to explore new indications, guided by AI-insights without human intervention.

We will seek an exit

through third-party license deals following successful in vitro and in vivo pre-clinical trials, entering into agreements with third

parties to pursue further development, FDA approval, commercialization, and marketing of our assets.

We continue to evaluate novel

artificial intelligence and cybernetics approaches to drug re-purposing, intellectual property, and asset selection to give CDT a

competitive advantage.

Sarborg Agreement entered into between the Company and Sarborg on December 12, 2024 is designed to address longstanding challenges

in the pharmaceutical sector, in particular by reducing human error in critical decision-making processes in both clinical

Ongoing in vitro and in vivo studies, guided by AI insights, are designed to support licensing and commercialization

partnerships.

The Company will seek an exit through third-party license deals following successful in vitro and in vivo pre-clinical

trials, by entering into agreements with third-parties to pursue further development, FDA approval, commercialization and marketing of

the Company’s assets.

December 12, 2024, Sarborg and the Company entered into an agreement (the “Sarborg Agreement”) designed to address longstanding

challenges in the pharmaceutical sector, in particular by reducing human error in critical decision-making processes in both clinical

development and asset identification.

By integrating Sarborg’s algorithmic AI/cybernetics technology, CDT Equity aims to

enhance efficiency, lower costs, and accelerate timelines by minimizing human intervention, ultimately optimizing the drug

development cycle and giving CDT Equity a competitive advantage in the sector.

this relationship, CDT Equity will gain access to cutting-edge predictive models and dashboards, enabling the Company to evaluate

drug candidates, streamline clinical trials, and optimize asset management with real-time data.

These tools will drive faster, more

accurate decisions, improving efficiency and reducing costs.

By leveraging these insights, CDT Equity can differentiate itself in a

competitive sector and gain unique data-driven insights that position the Company for success across both its current and future

asset portfolio.

By integrating Sarborg’s signature intelligence technology, the Company aims to enhance efficiency,

lower costs, and accelerate timelines by minimizing human intervention, ultimately optimizing the drug development cycle and giving the

Company a competitive advantage in the sector.

Through this relationship, the Company will gain access to cutting-edge predictive models

and dashboards, enabling the Company to evaluate drug candidates, streamline clinical trials, and optimize asset management with real-time

These tools will drive faster, more accurate decisions, improving efficiency and reducing costs.

By leveraging these insights,

the Company can differentiate itself in a competitive sector and gain unique data-driven insights that position the Company for success

across both its current and future asset portfolio.

Our collaboration with Sarborg enables us to apply proprietary algorithms utilizing

AI-powered disease mapping to identify novel re-purposing opportunities across a database of more than 3,000 disease signatures.

insights have directly informed two new combination patent filings, strengthening our intellectual property portfolio.

In addition, the

Company has initiated pre-clinical in-vitro models to explore new indications, guided by AI-insights without human intervention.

seek an exit through third-party license deals following successful in vitro and in vivo pre-clinical trials, entering into agreements

with third parties to pursue further development, FDA approval, commercialization, and marketing of our assets.

We continue to evaluate

novel artificial intelligence and cybernetics approaches to drug re-purposing, intellectual property, and asset selection to give the

Company a competitive advantage.

Sarborg is considered to be a related party of CDT, as Dr.

Andrew Regan, Chief Executive Officer of

CDT, also sits on the board of directors of Sarborg, and Chele Chiavacci Farley, a director of CDT is also a shareholder of Sarborg.

the first quarter of 2026, the Company and Sarborg furthered our partnership through a strategic investment by the Company in Sarborg.

See Note 4, Note 13 and Note 16 for further detail.

further partnership with Manoira enables CDT Equity to expand the scope of its drug portfolio into the animal health market in a cost-efficient

This collaboration allows us to accelerate the understanding of the mechanism of action, safety, and potential efficacy of its

portfolio across multiple species, while retaining 100% ownership of all data and intellectual property generated relating to human

applications.

This is expected to enhance the core human therapeutic pipeline but also opens potential new revenue streams in the high-growth

veterinary market.

portfolio across multiple species, while retaining 100% ownership of all data and intellectual property generated relating to human applications.

This is expected to enhance the core human therapeutic pipeline but also opens potential new revenue streams in the high-growth veterinary

Repositioning

CDT Equity enables the Company to explore multiple opportunities in the healthcare, biotech and broader technology innovation.

continues to evaluate a cryptocurrency treasury reserve strategy, collaborating with consultants to best advise a novel market which has

seen significant recent activity and success for respective stakeholders.

Long-term exposure to digital assets can present both strategic

and financial benefits as part of a diversified capital management approach.

with a lean disease-agnostic model, CDT Equity prioritizes speed, adaptability, and capital efficiency.

We avoid the cost burden of

late-stage clinical trials, focusing instead on high-leverage development strategies.

the Company enables us to explore multiple opportunities in the healthcare, biotech and broader technology innovation.

Operating with

a lean disease-agnostic model, the Company prioritizes speed, adaptability, and capital efficiency.

We avoid the cost burden of late-stage

clinical trials, focusing instead on high-leverage development strategies.

Led by highly experienced executives:

Freda Lewis-Hall, former Chief Medical Officer of Pfizer Inc., the Chair of the Company’s Board;

Andrew Regan, CEO and

James Bligh, CFO.

Our management team includes active senior scientists who have an extensive understanding of the pharmaceuticals

Andrew Regan, CEO

and James Bligh, CFO;

our management team includes active senior executives who also have an extensive understanding of the pharmaceutical

market, supporting our strategy of developing clinical assets in a cost-efficient manner focused on therapeutic efficacy.

2024, AstraZeneca granted a license to the Company under certain intellectual property rights controlled by AstraZeneca related to HK-4

Glucokinase activators AZD1656 and AZD5658 in all indications and myeloperoxidase inhibitor AZD5904 for the treatment, prevention, and

prophylaxis of idiopathic male infertility.

The Company will be responsible for development and commercialization of the Licensed Products

under the related License Agreement.

The Company is required to use commercially reasonable efforts to develop and commercialize the

Licensed Products.

has conducted initial pre-clinical and, in some instances, clinical trials on these assets, but has decided to license them for further

As the clinical assets have undergone initial pre-clinical and clinical testing conducted by AstraZeneca, we are able to

use the safety data generated in these clinical trials to assess which clinical assets to further develop and re-purpose.

Furthermore, CDT Equity is well positioned to pursue, and intends to pursue,

additional relationships and/or partnerships with third parties to license assets which are currently deprioritized.

We plan to focus

our efforts on developing clinical assets to address disorders that impact large populations where there is no present treatment or the

existing treatments carry significant unwanted side effects.

Component of Result of Operations

CDT Equity is well positioned to pursue, and intends to pursue, additional relationships and/or partnerships with third parties to license

assets which are currently deprioritized.

We plan to focus our efforts on developing clinical assets to address disorders that impact

large populations where there is no present treatment or the existing treatments carry significant unwanted side effects.

The Company effected four reverse stock splits of its common stock pursuant to amendments to the Company’s Second Amended

and Restated Certificate of Incorporation that were previously approved by the Company’s stockholders and authorized by the Board

of Directors.

The reverse stock splits were implemented as follows:

a 1-for-100 reverse stock split effective January 24, 2025, a 1-for-15

reverse stock split effective May 19, 2025, a 1-for-8 reverse stock split effective October 10, 2025 and a 1-for-25 reverse stock split

effective March 26, 2026.

fractional shares were issued in connection with the reverse stock splits.

Stockholders who otherwise would have been entitled to receive

fractional shares received cash in lieu of fractional shares based on the applicable post-split trading price of the Company’s

common stock.

All references to numbers of shares of common stock and per-share information in this Interim Report on Form 10-Q have

been adjusted retroactively, as appropriate, to reflect the reverse stock split.

stock splits were applied sequentially at their respective effective dates (resulting in a cumulative effect equivalent to an approximate

1-for-300,000 reverse stock split).

reverse stock splits automatically combined the Company’s issued and outstanding shares of common stock at the applicable ratios

without affecting the number of authorized shares of common stock or the par value of $0.0001 per share.

No fractional shares were issued

in connection with the reverse stock splits.

Stockholders who otherwise would have been entitled to receive fractional shares received

cash in lieu of fractional shares based on the applicable post-split trading price of the Company’s common stock.

a result of the aggregate of the reverse stock splits, every 300,000 shares of our common stock issued or outstanding were automatically

reclassified into and became one new share of common stock.

The number of our issued and outstanding shares of common stock, when accounting

for the reverse stock splits, was 4,722,457 and 92,140 shares as of March 31, 2026 and December 31, 2025, respectively.

accordance with ASC 260, Earnings Per Share, all historical share and per-share amounts presented in the accompanying consolidated financial

statements and related notes have been retroactively adjusted to reflect the effect of the reverse stock splits for all periods presented.

Accordingly, all references to common stock share amounts and per-share information in this Interim Report on Form 10-Q have been retroactively

adjusted, as applicable, to reflect the reverse stock splits.

Components of Results of Operations

and Development Expenses

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expensed as the benefits are consumed.

incurred approximately $1.5 million and $3.1 million on research and development activities during the three months ended September 30,

2025, and September 30, 2024, respectively.

We incurred approximately $4.3 million and $3.2 million on research and development activities

during the nine months ended September 30, 2025, and September 30, 2024, respectively.

Our research and development activities have been

focused on developing co-crystals of AZD1656 to increase patent life as well as purchasing technology to help us determine the feasibility

that AZD1656, and potentially other de-prioritized assets, reach commercialization.

Some of this work was completed by third-party CROs

but all intellectual property is retained by us.

We currently have one pending international patent application and two pending national

patent applications.

The successful completion of clinical trials increases the value of clinical assets and may lead to the commercialization

and/or licensing of such assets to other pharmaceutical companies.

There is no assurance that any clinical trials on the assets owned

or licensed by us will be successful.

incurred approximately $0.8 million and $0.9 million on research and development activities during the three months ended March 31,

2026 and March 31, 2025, respectively.

Our research and development activities have been focused on developing co-crystals of

AZD1656 to increase patent life as well as purchasing technology to help us determine the feasibility that AZD1656, and potentially

other de-prioritized assets, may reach commercialization.

Some of this work was completed by third-party CROs but all intellectual

property is retained by us.

We currently have one pending international patent application and two pending national patent

applications.

The successful completion of clinical trials increases the value of clinical assets and may lead to the

commercialization and/or licensing of such assets to other pharmaceutical companies.

There is no assurance that any clinical trials

on the assets owned or licensed by us will be successful.

our equity method investment in Sarborg, we note that revenue generated by Sarborg is not consolidated and the loss upon our equity method

investment in Sarborg is discussed below.

and Administrative Expenses

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income (expenses), net consists of change in the fair value of options, change in fair value of convertible notes, change in fair value

of digital assets and expense incurred upon the issuance of warrants during the year.

expense, net consists primarily of interest expense on convertible loan notes and promissory notes and interest expense on deferred commissions

of digital assets and expense incurred upon the issuance of warrants during the three months ended March 31, 2026.

on equity method investment

Loss on equity method

investment consists of our pro rata portion of losses incurred through our 20% equity method investment in Sarborg.

See Note 4, Note

13 and Note 16 for further discussion of our relationship with Sarborg.

expense, net consists primarily of interest expense on convertible notes, promissory notes and interest expense on deferred commissions

payable to an advisor for fees related to the merger, as well as a small amount of interest income on cash and cash equivalents held

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following table sets forth our results of operations for the periods indicated:

Three Months ended

September 30,

Nine Months ended

September 30,

Three Months Ended March 31,

(Dollar amounts in thousands)

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Operating loss

Other income (expenses):

Other income (expense), net

Other expenses:

Other expense, net

Loss on equity method investment

Interest income

Interest expense, net

Total other (expense) income, net

of the Three Months Ended September 30, 2025 and 2024

Total other expense, net

of the Three Months Ended March 31, 2026 and 2025

and Development Expenses

Three Months ended

September 30,

Months ended March 31,

(Dollar amounts in thousands)

Research and development expenses

Research and development expenses decreased by $1.6 million, or 50%, to

$1.6 million for the three months ended September 30, 2025, as compared to $3.1 million for the three months ended September 30, 2024.

The decrease was primarily attributable to a $3.1 million decrease in expense related to the August 2024 License Agreement in 2024 with

no comparable activity during the three months ended September 30, 2025.

The decrease was partially offset by an increase of $1.2 million,

$0.1 million, and $0.1 million related to the Sarborg, Thesprogen, and Manoira agreements activity in 2025, respectively.

and development expenses decreased by $0.1 million, or 15%, to $0.8 million for the three months ended March 31, 2026, as compared

to $0.9 million for the three months ended March 31, 2025.

The decrease was primarily attributable to a $0.2 million decrease in

expense related to our transactions with Sarborg and a $0.1 million decrease related to Charles River activity.

The decrease was

partially offset by an increase of $0.1 million related to the Thesprogen agreement entered into during 2026 and an increase of $48

thousand related to a third-party consultant’s research and development activity.

and Administrative Expenses

Three Months ended

September 30,

Months ended March 31,

(Dollar amounts in thousands)

General and administrative expenses

and administrative expenses increased by $2.8 million, or 102%, to $5.7 million for the three months ended September 30, 2025, compared

to $2.7 million for the three months ended September 30, 2024.

The increase was primarily driven by a $1.0 million increase in payroll

and stock-based compensation expense, $1.4 million increase in legal fees and a $0.3 million increase in travel expense.

Income (Expense), Net

Three Months ended

September 30,

(Dollar amounts in thousands)

Other income (expense), net

income (expense), net changed by $0.3 million or 87%, to $44 thousand expense for the three months ended September 30, 2025, compared

to a net expense of $0.3 million for the three months ended September 30, 2024.

The change was primarily driven by a $0.4 million contingent

liability incurred in the third quarter of 2024 and a $0.1 million research and development tax receivable recorded during the third

quarter of 2025, partially offset by $0.1 million change in fair value of convertible notes payable.

further details refer to Note 13, “Other income (expense), net,” in the unaudited financial statements as of September 30,

2025 and September 30, 2024 included elsewhere in this document.

Three Months ended

September 30,

(Dollar amounts in thousands)

Interest expense, net

expense, net decreased by $261 thousand, or 84%, to $48,000 for the three months ended September 30, 2025, as compared to $309 thousand

for the three months ended September 30, 2024.

The decrease was driven by a decrease of $0.1 million of interest expense related to the

amortization of debt discount, decrease of $0.1 million of interest expense on the deferred commission payable to an advisor for fees

related to the Merger and a $0.1 decrease of interest expense on convertible notes and notes payable.

of the Nine Months Ended September 30, 2025 and 2024

and Development Expenses

Nine Months ended

September 30,

(Dollar amounts in thousands)

Research and development expenses

Research and development expenses increased by $1.1 million, or 33%, for

the nine months ended September 30, 2025, as compared to $3.2 million for the nine months ended September 30, 2024.

The increase was primarily

driven by $3.6 million of expense incurred under the Sarborg agreements, $0.3 million of expense incurred under Thesprogen Consulting

Agreement, $0.4 million of expense under the Charles River MSA and $0.1 million incurred under the Joint Development Agreement with Manoira,

partially offset by a $3.1 million decrease related to the August 2024 License Agreement.

and Administrative Expenses

Nine Months ended

September 30,

and administrative expenses increased by $0.2 million, or 7%, to $2.9 million for the three months ended March 31, 2026, compared to

$2.7 million for the three months ended March 31, 2025.

The increase was primarily driven by a $0.2 million increase in audit and accounting

fees and a $0.2 million increase in travel expense, partially offset by a $0.2 million decrease in salaries and stock based compensation,

a $0.1 million decrease in insurance expense and a $47 thousand decrease in legal expense.

Months ended March 31,

(Dollar amounts in thousands)

General and administrative expenses

and administrative expenses increased by $2.6 million, or 30%, to $11.3 million for the nine months ended September 30, 2025, as compared

to $8.7 million for the nine months ended September 30, 2024.

The increase was primarily driven by a $2.1 million increase in legal expenses,

a $0.3 million increase in salaries and stock compensation expense, a $ 0.3 million increase in travel expense, and a $0.1 million increase

in professional fees, partially offset by a $0.2 million decrease in insurance expense.

Income (Expense), Net

Nine Months ended

September 30,

Other expense, net

expense, net decreased by $0.7 million or 70%, to $0.3 million for the three months ended March 31, 2026, compared to a $1.0 million

for the three months ended March 31, 2025.

The decrease was primarily driven by a decrease of $1.6 million of expense for the net

changes in fair value of convertible notes payable, partially offset by $0.4 million change in the gain upon a waiver of accrued interest, $0.3 million change in

gain upon debt extinguishment, $0.1 million change on the gain on change in the fair value of warrants, and a $0.1 million change on the

gain on the issuance of shares for services.

further details refer to Note 14 in the unaudited condensed consolidated financial statements for the three months ended March 31,

2026 and March 31, 2025 included elsewhere in this document.

Loss on Investment

Months ended March 31,

(Dollar amounts in thousands)

Other income (expense), net

income (expense), net changed by $0.9 million, or 31%, to $2.0 million of expense for the nine months ended September 30, 2025, as compared

to $3.0 million of net expense for the nine months ended September 30, 2024.

The change was primarily driven by a $2.7 million decrease

related to the issuance of warrants in exchange for stockholders’ entering into lock-up agreements during the nine months ended

September 30, 2024, a $0.4 million decrease related to a waiver of interest on the A.G.P.

Convertible Note, a $0.4 million expense related

to a loss contingency recorded during the nine months ended September 30, 2024, a $0.3 million gain on debt extinguishment, a $0.1 million

gain on the issuance of shares for services and a $0.1 million research and development tax credit receivable recorded during the nine

months ended September 30, 2025, partially offset by a $3.0 million loss on the change in fair value and loss on conversion of convertible

notes payable.

further details refer to Note 13, “Other income (expense), net,” in the unaudited financial statements as of September 30,

2025 and September 30, 2024 included elsewhere in this document.

Nine Months ended

September 30,

Loss on investment

Loss on equity method investments was $0.1 million for the three months ended March 31, 2026.

The loss was driven by a loss on the change in the carrying value of our investment in Sarborg

with no comparable activity during the three months ended March 31, 2025.

Three Months ended

(Dollar amounts in thousands)

Interest expense, net

expense, net decreased by $0.3 million, or 49%, during the nine months ended September 30, 2025, as compared to $0.6 million for the

three months ended September 30, 2024.

The change was primarily driven by a decrease of $0.1 million of interest expense related to the

amortization of debt issuance costs and a decrease of $0.2 million of interest expense on the deferred commission payable to an advisor

for fees related to the Merger, partially offset by a $0.1 million increase of interest expense for interest on convertible notes and

notes payable.

expense, net decreased by $0.1 million, or 72%, to $0.1 million for the three months ended March 31, 2026, as compared to $0.2

million for the three months ended March 31, 2025.

The decrease was driven by a decrease of the principal outstanding on the A.G.P.

Convertible Note as a result of conversions, decrease of the principal outstanding on the August 2024 Nirland Note and October 2025

Nirland Note as a result of conversions and repayment in full during the three months ended March 31, 2025, and a decrease of $65

thousand of debt issuance cost amortization related to the Convertible Promissory Note Payable , partially offset by $23

thousand of interest expense related to the Ascent Note which was entered into during the three months ended March 31, 2026.

and Capital Resources

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To date, our primary sources of capital have

been through convertible debt, private placements of equity securities and the Sales Agreement with A.G.P.

During the nine months ended

September 30, 2025 and 2024, we incurred operating losses of $17.9 million and $15.4 million, respectively.

been through convertible debt, private placements of equity securities and the Sales Agreement with A.G.P., dated October 23, 2024, as amended.

During the three months ended

March 31, 2026 and 2025, we incurred operating losses of $3.7 million and $3.6 million, respectively.

and Uses of Liquidity

primary use of cash is to fund our operations as we continue to grow our business.

We will require a significant amount of cash for

expenditures as we invest in ongoing research and development and business operations.

Until such time we can generate significant

revenue from the successful approval and commercialization of a product candidate, we expect to finance our cash needs for ongoing

research and development and business operations through public or private equity or debt financings or other capital sources,

including strategic partnerships.

However, we may be unable to raise additional funds or enter into such other arrangements, when

needed, on favorable terms or at all.

To the extent that we raise additional capital through the sale of equity or convertible debt

securities, the ownership interest of our stockholders will be, or could be, diluted, and the terms of these securities may include

liquidation or other preferences that adversely affect the rights of our common stockholders.

Debt financing and equity financing,

if available, may involve agreements that include covenants, limiting or restricting our ability to take specific actions, such as

incurring additional debt, making capital expenditures or declaring dividends.

We have also considered exploring strategic

alternative paths to fund raising through a shift in our fundamental operations as a pharmaceutical development company to a digital

asset treasury management company.

If we are unable to raise additional funds through equity or debt financing when needed, we may

be required to delay, limit, or substantially reduce research and development efforts all of which could have a material adverse

effect on the Company and its financial results.

We will require a significant amount of cash for expenditures

as we invest in ongoing research and development and business operations.

Until such time we can generate significant revenue from the

successful approval and commercialization of a product candidate, we expect to finance our cash needs for ongoing research and development

and business operations through public or private equity or debt financings or other capital sources, including strategic partnerships.

However, we may be unable to raise additional funds or enter into such other arrangements, when needed, on favorable terms or at all.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our

stockholders will be, or could be, diluted, and the terms of these securities may include liquidation or other preferences that adversely

affect the rights of our common stockholders.

Debt financing and equity financing, if available, may involve agreements that include

covenants, limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures

or declaring dividends.

We have also considered exploring strategic alternative paths to fund raising through a shift in our fundamental

operations as a pharmaceutical development company to a digital asset treasury management company.

If we are unable to raise additional

funds through equity or debt financing when needed, we may be required to delay, limit, or substantially reduce research and development

efforts all of which could have a material adverse effect on the Company and its financial results.

the Company believes in the viability of its ability to raise additional funds, there can be no assurances to that effect.

8 unchanged sentences

As a result, our business, financial condition, and results of operations could be materially affected.

has concluded that there is substantial doubt regarding our ability to continue as a going concern for a period of at least 12 months

from the date of the filing of this Quarterly Report.

has concluded that there is substantial doubt regarding our ability to continue as a going concern for a period of at least 12

months from the date of the filing of this Quarterly Report.

This is based on our analysis under applicable accounting principles.

These financial

statements have been prepared assuming the Company will continue as a going concern and do not include adjustments to reflect the possible

effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the

outcome of this uncertainty.

These unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern

and do not include adjustments to reflect the possible effects on the recoverability and classification of assets or the amounts and

classification of liabilities that may result from the outcome of this uncertainty.

material cash requirements include the following contractual and other obligations.

February 19, 2026, the Company entered into a Securities Purchase Agreement with all of the stockholders of Sarborg.

The investors

of Sarborg agreed to sell to the Company, and the Company agreed to acquire from the investors, an aggregate of 1,020 shares of

Sarborg, representing approximately 20% of the outstanding common stock of Sarborg.

consideration for the purchase, the Company has agreed to issue to the investors, in the aggregate:

(i) 23,920 shares of the Company’s

Common Stock, exercise price of $0.0025 per share and (ii) pre-funded warrants (the to purchase up to 4,399,156 shares of Common.

the Company has agreed to pay Sarborg cash consideration of $8 million, with the cash portion of the consideration deferred until such

time as the Company raises no less than $20 million through the use of an at-the-market facility program.

As of March 31, 2026, the $8

million cash portion of consideration for our investment in Sarborg was still outstanding.

We expect to raise the funds through an at-the-market

facility program and repay the $8 million within 12 months of the issuance of the financial statements.

to Note 4 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form

Convertible Note

8 unchanged sentences

Convertible Note, provided that A.G.P.

has given at least three business days written

notice to the Company, A.G.P., in its sole discretion, may elect to have all or any portion of the outstanding principal amount and all

interest accrued converted into shares of the Company’s Common Stock, at the lower of the Reverse Split price and the market price

per share at the time of the conversion date, but in no event less than $1.00, subject to adjustment as provided therein and to take

into account any future share splits or reverse splits.

has given at least three business days

written notice to the Company, A.G.P., in its sole discretion, may elect to have all or any portion of the outstanding principal

amount and all interest accrued converted into shares of the Company’s Common Stock, at the lower of the Reverse Split price

and the market price per share at the time of the conversion date, but in no event less than $1.00, subject to adjustment as

provided therein and to take into account any future share splits or reverse splits.

However, the conversion of the A.G.P.

Convertible Note may not occur prior to

the Company having sufficiently authorized shares of Common Stock to permit the entire conversion of the convertible promissory note.

Refer to Note 5 to our financial statements included elsewhere in this Quarterly Report on Form 10-Q.

March 31, April 11, 2025, April 16, 2025, June 2, 2025, June 17, 2025, June 26, 2025 and September 29, 2025, the holder of the

Convertible Note converted $0.4 million, $0.5 million, $0.8 million, $0.1 million, $0.2 million, $0.2 million and $0.3

million of principal and interest into 3,583, 3,583, 8,878, 5,000, 11,250, 12,500 and 60,000 shares of the Company’s Common

Stock, respectively.

As of September 30, 2025, there was approximately $3.4 million in outstanding principal and interest

We currently anticipate that cash required for working capital for the

next 12 months is approximately $11.7 million, which includes forecasted research and development costs of $0.1 million, forecasted general

and administrative costs of $5.8 million, current liabilities of $2.4 million and a convertible promissory note payable, if not converted

prior to maturity of $3.4 million.

We do not anticipate being able to fund required working capital for the next 12 months with cash and

cash equivalents on hand and current borrowings.

Management believes that we will be able to fund cash required for the next 12 months

through borrowings and equity raises.

We have historically been able to access funds through the issuance of debt, and more recently our

at the market offering program through the Sales Agreement and believe we can continue to obtain funding through such debt financing agreements

and Sales agreement as needed to meet cash requirements for the next 12 months.

of September 30, 2025, we had raised $22.1 million out of the $23.9 million available to us through the Sales Agreement and expect to

raise an additional $1.8 million over the next 12 months.

Convertible Note may not occur prior to the Company having sufficiently authorized shares of Common Stock to permit the entire

conversion of the convertible promissory note.

Refer to Note 7 to our unaudited condensed consolidated financial statements included

elsewhere in this Quarterly Report on Form 10-Q.

the three months ended March 31, 2026, the holder of the A.G.P.

Convertible Note converted $0.7 million of principal and interest into

25,760 shares of the Company’s Common Stock, respectively.

As of March 31, 2026, there was approximately $1.9 million in outstanding

principal and interest remaining.

Secured Promissory Note with J.J.

June 11, 2026, the Company issued a senior secured convertible promissory note (the “Note”) to J.J.

“Lender”), in the principal amount of $2.0 million.

The Company will receive net proceeds of $1.5 million, before deduction

of closing fees and was funded in two tranches.

Note is payable to the Lender over twenty-four equal weekly installments of $82 thousand commencing on June 18, 2026, which may be paid

in cash or, at the option of the Company once an applicable resale registration statement is declared effective by the Securities and

Exchange Commission covering the resale of any shares of the Company’s common stock, par value $0.0001 per share that may be received

on such conversion.

Additionally,

the Company issued the Lender, common stock purchase warrants to purchase 912,500 shares of the Company’s Common Stock at an exercise

price of $0.72 per share.

The Warrants will become exercisable beginning on the effective date of stockholder approval of the issuance

of the Warrant Shares (such date, the “Stockholder Approval Date”) and will expire five years after the Stockholder Approval

March 3, 2026, the Company entered into a Securities Purchase Agreement with Ascent Partners Fund LLC (“Ascent”) and

issued a senior secured convertible promissory note (the “Ascent Note”) with a principal amount of approximately $0.6

Unless earlier repaid or converted in accordance with its terms, the Ascent Note was due to mature on July 3, 2026.

Company and Ascent may mutually agree to extend the maturity date by up to two months.

The Ascent Note bears interest at 10% per

annum and is secured by a first-priority security interest in the collateral pledged pursuant to the related security agreement and

What changed 10-Q

Item 2. Management’s Discussion and Analysis