What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-31 compared with 2025-03-31 · 244 added, 259 removed, 554 unchanged (48% of the section changed)

80 unchanged sentences

100,000 and 150,000 shares authorized as of December 31, 2025 and 2024, respectively;

10,174 shares issued and outstanding as of December 31, 2024 and 2023, respectively

13,784 and 10,174 shares issued and outstanding as of December 31, 2025 and 2024, respectively

Additional paid-in capital

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General and administrative

Legal settlement

Total operating expenses

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Interest income, net

Foreign exchange loss

Foreign exchange gain (loss)

Total other income, net

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Stock-based compensation

Sale of common stock to related entities, net of transaction costs

Balance as of December 31, 2024

$ ( 333,418 )

$ ( 315,914 )

Sale of common stock in ATM, net of transaction costs

Stock-based compensation

Share issuance from RSU award

Sale of common stock and warrants, net of transaction costs

Balance as of December 31, 2025

$ ( 342,249 )

$ ( 333,418 )

accompanying notes to consolidated financial statements.

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Financing activities:

Payments of finance lease obligations

Proceeds from sale of common stock, net of transaction costs

Net cash provided by (used in) financing activities

Proceeds from the sale of common stock under ATM

Proceeds from sale of common stock and warrants, net of transaction costs

Net cash provided by financing activities

Net decrease in cash and restricted cash

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(“we”, the “Company” or “Cocrystal”), a biopharmaceutical company, has been developing

novel technologies and approaches to create first-in-class and best-in-class antiviral drug candidates since its initial funding in 2008.

Our focus is to pursue the development and commercialization of broad-spectrum antiviral drug candidates that will transform the treatment

and prophylaxis of viral diseases in humans.

By concentrating our research and development efforts on viral replication inhibitors, we

plan to leverage our infrastructure and expertise in these areas.

novel technologies and approaches with the goal of creating viable antiviral drug candidates since its initial funding in 2008.

is to pursue the development and commercialization of broad-spectrum antiviral drug candidates that will transform the treatment and

prophylaxis of viral diseases in humans.

By concentrating our research and development efforts on viral replication inhibitors, we plan

to leverage our infrastructure and expertise in these areas.

September 2021, the Company opened a wholly owned foreign subsidiary in Australia named Cocrystal Pharma Australia, Ltd (“Cocrystal

Australia”) with the objective of operating clinical trials in Australia.

Company’s consolidated financial statements have been prepared and presented on a basis assuming it will continue as a going concern.

As reflected in the accompanying consolidated financial statements, for the year ended December 31, 2024, the Company recorded a net

loss of approximately $ 17.5 million and used cash in operating activities of $ 16.5 million, and at December 31, 2024, the Company has

an accumulated deficit of $ 333.4 million.

As of December 31, 2024, the Company had a cash balance of $ 9.9 million and working capital

of approximately $ 9.1 million.

We believe that our current resources will not be sufficient to fund our operations beyond the next 12

This estimate is based, in part, upon our currently projected expenditures.

Due in large part to the ongoing Phase 2a clinical

trial for the Company’s antiviral influenza candidate, we expect to continue to incur net losses and negative cash flows from operating

activities for the foreseeable future.

These conditions raise substantial doubt about our ability to continue as a going concern within

one year from the issuance of these consolidated financial statements.

Company’s consolidated financial statements have been prepared and presented on a basis assuming it will continue as a going

As reflected in the accompanying consolidated financial statements, for the year ended December 31, 2025, the Company

recorded a net loss of approximately $ 8.8

million and used cash in operating activities of $ 8.2

million, and at December 31, 2025, the Company has an accumulated deficit of $ 342.2

As of December 31, 2025, the Company had an unrestricted cash balance of $ 7.0

million and working capital of approximately $ 5.9

We believe that our current resources will not be sufficient to fund our operations beyond the next 12 months.

estimate is based, in part, upon our currently projected expenditures.

Due to ongoing research and development efforts, we expect to

continue to incur net losses and negative cash flows from operating activities for the foreseeable future.

These conditions raise

substantial doubt about our ability to continue as a going concern within one year from the issuance of these consolidated financial

Company’s activities since inception have principally consisted of acquiring product and technology rights, raising capital, and

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total of the same such amounts shown in the consolidated statements of cash flows (in thousands):

of Reconciliation of Cash and Restricted Cash

Schedule of Reconciliation of Cash and Restricted Cash

December 31, 2025

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Note 6 – Warrants.

At December 31, 2023 the Company had approximately 11,000 warrants that expired in January 2024, there we no warrants

outstanding at December 31, 2024.

At December 31, 2025 the Company had 7,222,821 warrants outstanding and no warrants outstanding at December

December 31, 2025 and 2024, the carrying amounts of financial assets and liabilities, such as cash, other assets, and accounts payable

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The Company records refundable tax credits as a reduction of research

and development expenses when the Company can reasonably estimate the amounts and it is more likely than not, they will be received.

and development expenses when the Company can reasonably estimate the amounts and it is more likely than not;

they will be received.

During the year ended December 31, 2025, the Company recorded tax

credits receivable of $ 1,123,843 , of which approximately $ 1,146,593 was

recorded as a reduction of research and development expense.

credits receivable of $ 661,910 .

The amount remained outstanding at year end and was recorded as

a reduction of research and development expense.

Company accounts for income taxes under the asset and liability method.

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Accounting Pronouncements

November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosure.”

The amendments expand a public entity’s segment disclosures by requiring disclosure of significant segment expenses that are regularly

provided to the chief operating decision maker, requiring other new disclosures, and requiring enhanced interim disclosures.

requires public entities with a single reportable segment to provide all the disclosures required by this standard and all existing segment

disclosures in Topic 280 on an interim and annual basis.

ASU 2023-07 is effective for annual periods beginning after December 15, 2023,

and interim periods beginning after December 15, 2024, applied retrospectively with early adoption permitted.

As of December 31, 2024,

the Company has adopted ASU 2023-07.

The adoption of this standard did not have a material impact on the Company’s consolidated

financial statements but has resulted in additional disclosures within the footnotes to our consolidated financial statements (See Note

November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures

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the remeasurement of monetary assets and liabilities are recognized in other income (loss).

The Company recognized a loss of approximately

$ 163,000 and $ 65,000 for the years ended December 31, 2024 and 2023, respectively.

of December 31, 2024 and 2023, the Company’s cash balances consisted of the following (in thousands):

of Cash Balance

The Company recognized a gain of

approximately $ 54,000

and a loss of approximately $ 163,000

for the years ended December 31, 2025 and 2024, respectively.

of December 31, 2025 and 2024, the Company’s cash and restricted cash balances consisted of the following (in thousands):

Schedule of Cash Balance

Australian Dollars – in US $

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have been billed and estimated unbilled, respectively, as of year-end.

On June 27, 2024, the Company, following approval of the Company’s

stockholders at the 2024 Annual Meeting of Stockholders filed an amendment to its Certificate of Incorporation with the Secretary of State

of the State of Delaware (the “Amendment”) to decrease the number of shares of authorized capital stock of the Company from 155,000,000 shares

of capital stock, consisting of 150,000,000 shares of common stock and 5,000,000 shares of preferred stock, to 101,000,000 shares

of capital stock consisting of 100,000,000 shares of common stock and 1,000,000 shares of preferred stock.

The Amendment

became effective on June 27, 2024.

June 27, 2024, the Company, following approval of the Company’s stockholders at the 2024 Annual Meeting of Stockholders filed an

amendment to its Certificate of Incorporation with the Secretary of State of the State of Delaware (the “Amendment”) to decrease

the number of shares of authorized capital stock of the Company from 155,000,000 shares of capital stock, consisting of 150,000,000 shares

of common stock and 5,000,000 shares of preferred stock, to 101,000,000 shares of capital stock consisting of 100,000,000 shares of common

stock and 1,000,000 shares of preferred stock.

The Amendment became effective on June 27, 2024.

of December 31, 2025, the Company has authorized 100,000,000 shares of common stock, $ 0.001 par value per share.

The Company had approximately

10,174,000 shares issued and outstanding as of December 31, 2024 and 2023, respectively.

13,784,000 and 10,174,000 shares issued and outstanding as of December 31, 2025 and 2024, respectively.

holders of common stock are entitled to one vote for each share of common stock held.

Sale of Common Stock to Related

April 4, 2023, the Company entered into a Securities Purchase Agreement with two accredited investors (the “Purchasers”)

whereby the Purchasers agreed to purchase a total of 2,030,458 shares of unregistered common stock at a price of $ 1.97 per share for

a total purchase price of $ 4,000,000 in two equal $ 2,000,000 investments.

The Purchasers were an entity controlled by a director and

another investor who subsequently joined the Company’s Board of Directors.

At-The-Market

Company is a party to the At-The-Market Offering Agreement, dated July 1, 2020 (“ATM Agreement”) with H.C.

Company is party to the At-The-Market Offering Agreement, dated July 1, 2020 (“ATM Agreement”) with H.C.

Co., LLC (“Wainwright”), pursuant to which the Company may issue and sell over time and from time to time, to or through

Wainwright, up to $ 10,000,000 of shares of the Company’s common stock.

have been no sales under the ATM Agreement during the years ended December 31, 2024 and 2023.

The following is a summary of activity in the number

of warrants outstanding to purchase the Company’s common stock for the years ended December 31, 2024 and 2023 (table in thousands):

of Warrants Activity

Accounted for as:

Outstanding, December 31, 2022

The Company sold 85,076 shares of its common stock at an

average price of $ 1.88 under the ATM agreement during the three and nine months ended September 30, 2025.

Prior to the termination of

the ATM on September 12, 2025, the Company had sold a total 1,200,152 shares of its common stock for total net proceeds of approximately

$ 2,380,000 pursuant to the ATM Agreement.

On September 12, 2025, the Company and Wainwright agreed to terminate the sales of shares under

the ATM Agreement and filed a prospectus supplement with the SEC to that effect.

As a result of this, the at-the-market offering under

the ATM Agreement is no longer ongoing as of September 12, 2025, and the Company will not make any sales of common stock pursuant to

the ATM Agreement unless and until a new prospectus supplement is filed with the SEC;

however, the ATM Agreement remains in full force

Sale of common stock and warrants

October 28, 2025, we entered into a securities purchase agreement with four accredited investors under which the investors purchased

a total of 743,024 units of the Company’s securities.

The units were priced at-the-market under the rules of The Nasdaq Stock Market

at a purchase price of $ 1.39 per unit.

Each unit consisted of one share of common stock and one warrant to purchase two shares of common

stock at an exercise price of $ 1.24 per share over a 27 -month period.

The investors did not receive registration rights.

The gross proceeds

were $ 1,032,000 .

The investors were four insiders of the Company.

September 12, 2025, the Company, entered into a securities purchase agreement with certain accredited investors, pursuant to which the

Company sold to the investors (i) in a registered direct offering, an aggregate of 2,764,710 shares of the Company’s common stock,

at a price of $ 1.70 per share and (ii) in a concurrent private placement, warrants to purchase up to an aggregate of 5,529,420 shares

of common stock (“the Investor Warrants”), at an initial exercise price of $ 1.50 per share.

The Investor Warrants are exercisable

upon issuance and will expire on September 27, 2027.

Wainwright acted as the Company’s placement agent in connection with this

The Company paid Wainwright consideration consisting of (i) a cash fee equal to 7.0% of the aggregate gross proceeds in the

offering, (ii) a management fee equal to 1.0% of the aggregate gross proceeds in the offering, (iii) reimbursement of certain expenses

and (iv) warrants to acquire up to an aggregate of 207,353 shares of common stock (the “Placement Agent Warrants”) .

The Placement

Agent Warrants are similar to the Investor Warrants, except that the initial exercise price of the Placement Agent Warrants is $ 2.125

The Company received net proceeds of $ 4,183,000 from the sale of its common shares and warrants in the direct offering.

following is a summary of activity in the number of warrants outstanding to purchase the Company’s common stock for the years ended

December 31, 2025 and 2024 (table in thousands):

Schedule of Activity of Warrants Outstanding

Weighted average

Exercise price

Intrinsic Value

Outstanding, December 31, 2024

Outstanding, December 31, 2025

Expiration date

As of December 31, 2023, the above outstanding warrants

were liability classified warrants, which had de minimis fair value as of the year then ended.

As of December 31, 2023 the Company had approximately

11,000 warrants that expired in January 2024, there we no warrants outstanding as of December 31, 2024.

Company had approximately 7,222,821 warrants outstanding as of December 31, 2025 and no warrants outstanding as of December 31, 2024.

Stock Based Awards

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The maximum term of options granted under the 2015 Plan is ten years .

As of December 31, 2024, 27,000 shares remain available for future grants under the 2015 Plan.

On June 16, 2021, the Company’s stockholders voted to approve an amendment to the 2015 Plan to increase the number of shares of

common stock authorized for issuance under the 2015 Plan from 416,667 to 833,333 shares.

The 2015 Plan expired on June 29, 2025 and no

further equity awards will be issued under the 2015 Plan.

June 25, 2025, our stockholders approved and ratified an Equity Incentive Plan (the “2025 Plan”).

The 2025 Plan provides

for the grant of incentive stock options, qualified stock options, restricted stock awards, restricted stock units, stock appreciation

rights, and performance shares or units and cash awards.

Awards may be granted under the 2025 Plan to our employees, directors and independent

the aggregate number of shares of Common Stock which shall be available for grants or payments of Awards under the 2025

Plan during its term shall initially be 1,500,000 (the “Total Plan Shares”).

The Total Plan Shares will automatically increase

on January 1st of each year, for a period of nine years commencing on January 1, 2026, in an amount equal to 5 % of the total number of

shares of Common Stock outstanding as of December 31 of the preceding calendar year on a fully diluted basis.

2025 Plan also provides that, notwithstanding the annual increase provision, in no event will the increase in Total Plan Shares available

under the 2025 Plan pursuant to the increase provision exceed 2,500,000 additional shares (or a total of up to 4,000,000 Total Plan Shares),

subject to adjustment as provided under the 2025 Plan.

April 2, 2025, the Board of Directors of the Company approved and adopted the 2025 Plan, which has an effective date of March 31, 2025.

On June 25, 2025, the 2025 Plan was approved by our stockholders at our annual meeting of stockholders.

of December 31, 2025 there have been no equity awards issued under the 2025 Plan.

Stock Reserved for Future Issuance

following table presents information concerning common stock available for future issuance (in thousands) as of December 31, 2025:

Schedule of Common Stock Available

for Future Issuance

of Roll-forward of Common Stock Available for Future Issuance

Shares Available

Balance at December 31, 2024

Restricted Stock Units (RSU) Granted

Cancelled or returned

2015 Plan expiration

2025 Plan approval

Balance at December 31, 2025

following table summarizes stock option transactions for the 2015 Plan, collectively, for year ended December 31, 2024 (in thousands,

Stock Reserved for Future Issuance

following table presents information concerning common stock available for future issuance as of December 31, (in thousands):

Schedule of Common Stock Available for Future Issuance

Stock options issued and outstanding

Restricted stock units issued and outstanding

Shares authorized for future option grants

Warrants outstanding

following table summarizes stock option transactions for the 2015 and 2025 Plan, collectively, for year ended December 31, 2025 (in thousands,

except per share amounts):

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Total Options

Weighted Average

Exercise Price

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Balance at December 31, 2025

options were granted during the year ended December 31, 2024.

During the year ended December 31, 2023 the Company granted stock options

to officers, directors, employees and consultants to purchase a total of 209,216 shares of common stock.

The options have an

exercise price of $ 2.67 per share, expire in ten years , and vest as follows:

one half vests on the one-year anniversary of

the grant date and the remainder will vest in eight equal quarterly increments with the first such quarterly increment vesting on September

The total fair value of these options at the grant date was approximately $ 470,000 using the Black-Scholes Option pricing

The Black-Scholes option pricing model includes the following weighted average assumptions for grants made during the year ended

December 31, 2023:

Schedule of Weighted Average Assumptions Used for Grants

Weighted average per share grant date fair value

Risk-free interest rate

Expected dividend yield

Expected volatility

Expected terms (in years)

For options granted and outstanding, there were 550,000

options outstanding which were fully vested or expected to vest, a weighted average exercise price of $ 10.37 and weighted average remaining

contractual term of 7.22 years at December 31, 2024.

For vested and exercisable options, outstanding shares totalled 453,000 .

These options

had a weighted average exercise price of $ 11.92 per share and a weighted-average remaining contractual term of 6.98 years at December

aggregate intrinsic value of outstanding and exercisable options at December 31, 2024 was calculated based on the positive

difference between the closing price of the Company’s common stock as reported on the Nasdaq Capital Market on December 31,

2024 of approximately $ 2.02

per share and the exercise price of the underlying options.

As of December 31, 2024, total outstanding and exercisable options had

no intrinsic value.

Common Stock Reserved for Future Issuance

The following table presents information concerning

common stock available for future issuance as of December 31, (in thousands):

Schedule of Common Stock Reserved for Future Issuance

Stock options issued and outstanding

Shares authorized for future option grants

Warrants outstanding

options were granted during the years ended December 31, 2025 and 2024.

options granted and outstanding, there were 537,000 options outstanding which were fully vested or expected to vest, a weighted average

exercise price of $ 8.91 and weighted average remaining contractual term of 6.25 years at December 31, 2025.

For vested and exercisable

options, outstanding shares totaled 512,000 .

These options had a weighted average exercise price of $ 9.23 per share and a weighted-average

remaining contractual term of 6.18 years at December 31, 2025.

aggregate intrinsic value of outstanding and exercisable options at December 31, 2025 was calculated based on the positive difference

between the closing price of the Company’s common stock as reported on the Nasdaq Capital Market on December 31, 2025 of approximately

$ 0.98 per share.

As of December 31, 2025, total outstanding and exercisable options had no intrinsic value.

August 12, 2024, the Company’s Compensation Committee approved the issuance of 256,000 restricted stock unit (“RSU”)

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Schedule of Restricted Stock Units

Weighted Average

Intrinsic Value

Unvested December 31, 2023

Unvested and expected to vest at December 31, 2024

Unvested and expected to vest at December 31, 2025

Company accounts for share-based awards to employees and nonemployee directors and consultants in accordance with the provisions of

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For the twelve months ended December 31, 2025 and 2024, equity-based

compensation expense recorded on vested options and RSU was $ 643,000 and 801,000 ,

compensation expense recorded on vested options and RSU was $ 270,000

and $ 643,000 ,

respectively.

As of December 31, 2024, there was approximately $ 252,000 of

total unrecognized compensation expense related to non-vested stock options that is expected to be recognized over a weighted

average period of 0.4 years.

Licenses and Collaborations

Sharp & Dohme Corp.

January 2, 2019, the Company entered into an Exclusive License and Research Collaboration Agreement (the “Collaboration Agreement”)

with Merck Sharp & Dohme Corp.

(“Merck”) to discover and develop certain proprietary influenza A/B antiviral agents.

Under the terms of the Collaboration Agreement, Merck agreed to fund research and development for the program, including clinical development,

and will be responsible for worldwide commercialization of any products derived from the collaboration.

Cocrystal received an upfront

payment of $ 4 million and was eligible to receive payments related to designated development, regulatory and sales milestones with the

potential to earn up to $ 156,000,000 , as well as royalties on product sales.

Merck can terminate the Collaboration Agreement at any time

prior to the first commercial sale of the first product developed under the Collaboration Agreement, in its sole discretion, without

December 15, 2023, the Company received written notice from Merck of Merck’s election to terminate the Exclusive License and Collaboration

The termination of the Agreement was effective on March 14, 2024.

According to Merck’s termination notice, Merck determined

there were no existing conditions to continue the collaboration.

The termination resulted from the inability to develop the compounds

to meet a specific aspect of Merck’s program.

The pending patent applications on compounds covered by the Agreement and previously

filed by Merck on behalf of both companies remain in place.

State University Research Foundation

entered into two License Agreement with Kansas State University Research Foundation (the “Foundation”) on February 18, 2020

to further develop certain proprietary broad-spectrum antiviral compounds for the treatment of norovirus and coronavirus infections.

February 28, 2024, the Company provided notice to the Foundation of the Company’s election to terminate the 2020 License Agreements.

The terminations, which were made due to the Company’s determination that further development efforts under the License Agreements

would be futile, took effect on March 29, 2024.

As of December 31, 2025, there was approximately $ 57,000

of total unrecognized compensation expense related to non-vested stock options that is expected to be recognized over a weighted

average period of 0.371

years and as of December 31, 2025, there was approximately $ 165,000 of total unrecognized compensation expense related

to non-vested RSU that is expected to be recognized over a weighted average period of 0.88 years.

Collaborations

October 27, 2025, the Company issued a press release announcing it has received a $ 500,000 Small Business Innovation Research (“SBIR”)

Phase I award from the National Institutes of Health (“NIH”) and the National Institute of Allergy and Infectious Diseases

The NIH/NIAID Phase I award is designed to assess the scientific, technical and commercial potential of early-stage programs

and will support the Company’s development of a novel, oral, broad-spectrum antiviral candidate for the treatment of influenza

A and B infections.

1b Clinical Trial

June 9, 2025 the Company engaged Emory University, a nonprofit research institution of higher education, to conduct a Phase 1b human

challenge study evaluating CDI-988 for norovirus prevention and treatment.

The cost of the agreement including protocol development,

study performance and virology is budgeted at approximately $ 3 million.

Company has expensed $ 564,000 during the 2025 year, which includes $ 521,000 in accrued expense at December 31, 2025.

2a Clinical Trial

August 3, 2022 the Company engaged hVIVO, a subsidiary of London-based Open Orphan plc (AIM:

ORPH), a contract research organization (CRO),

to conduct a Phase 2a clinical trial (the “Study”) with the Company’s novel, broad-spectrum, orally administered antiviral

influenza candidate.

The Company paid a reservation fee of $ 1.7 million upon execution of the Start-Up Agreement (the “Agreement”)

for the Study.

The Company recognized the reservation fee as prepaid asset on its balance sheet at December 31, 2022.

In September 2023,

the Clinical Trial Agreement (“CTA”) was executed by the Company and hVIVO, which superseded the Agreement, including the

terms attributable to the reservation fee.

Under the terms of the CTA, total budget of the Study was approximately $ 6.8 million, which

consisted of the reservation fee of $ 1.7 million and additional milestone payments totaling approximately $ 5.1 million.

The reduction

of the reservation fee and the milestone payments will become due during the length of the CTA as milestones are realized.

the year ended December 31, 2024 and 2023, upon achievement of certain milestones, the reservation fee was reduced by approximately

$ 1.28 million and

$ 0.4 million,

respectively, which was recognized as expense during the year then ended.

As a result, there was no

balance of the reservation fee included in prepaid expenses as of December 31, 2024.

Pursuant to the CTA, additional milestones

payments became due during the year ended December 31, 2024 and 2023, resulting in the recognition during the year of aggregate

expenses of $ 2.2

million and $ 3.05

million, respectively.

As of December 31, 2024, $ 0.5

million was due on the CTA which is included in accounts payable and accrued expenses in the accompanying consolidated balance

ORPH), a rapidly growing specialist contract

research organization (“CRO”), to conduct a Phase 2a clinical trial with the Company’s novel, broad-spectrum, orally

administered antiviral influenza candidate.

The Company prepaid a reservation fee of $ 1.7 million upon execution of the agreement and

the reservation fee been fully expensed as of December 31, 2024, leaving no balance in prepaid and other expenses as of the prior year

total cost of the agreement (including the reservation fee) is approximately $ 6.9 million.

an internal review and consultation, the Company is not in agreement with hVIVO Phase 2a clinical trial practices and is in discussions

to resolve the matter.

Company’s income (loss) before provision (benefit) for income taxes for years ended December 31, 2025 and 2024, respectively were

generated in the following jurisdictions (in thousands):

of Income (Loss) Before Provision (Benefit) for Income Taxes

Years Ended December 31,

Worldwide income

accordance with the authoritative guidance for income taxes under ASC 740, a deferred tax asset or liability is determined based on the

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Currently, no years are under examination.

a result of operating loss and tax credit carryforward benefits being offset by valuation allowances, there is no current or deferred

federal, state or foreign tax expense in 2025 or 2024.

There were no federal, state or foreign tax payments in 2025.

components of the Company’s deferred income taxes at December 31, 2025 and 2024 are shown below (table in thousands):

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If eliminated, the related asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation

reconciliation of the federal statutory income tax rate to the Company’s effective income tax rate is as follows:

of Reconciliation of Federal Statutory Income Tax Rate

adoption of ASU 2023-09, Improvements to Income Tax Disclosures, the reconciliation of taxes at the federal statutory rate to our provision

for (benefit from) income taxes for the year ended December 31,2025 was as follows (in thousands, except for percentages):

Schedule of Reconciliation of Federal Statutory Income Tax Rate

Year Ended December 31, 2025

Tax Computed at federal statutory rate

State tax, net of federal income tax effect:

Foreign tax effects:

Nondeductible research expenditures

Effects of changes in tax laws or rates enacted in the current period:

Effects of cross-border tax laws:

Change in valuation allowance:

Nontaxable or nondeductible items:

Equity Compensation

Changes in Unrecognized Tax Benefits:

Company’s domestic operations are principally in the states of Washington and Florida.

reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the year December 31, 2024,

in accordance with the guidance prior to the adoption of ASU 2023-09 was as follows:

Statutory federal income tax rate

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Effective income tax rate

July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, which enacts significant changes to U.S.

and related laws.

Some of the provisions of the new tax law affecting corporations include but are not limited to current deduction of

domestic research expenses, increasing the limit of the deduction of interest expense deduction to thirty percent of EBITDA, and one

hundred percent bonus depreciation on eligible property acquired after January 19, 2025.

The impact of the tax law changes from the OBBBA

is included in the Company’s financial statements.

December 2023, the FASB issued ASU No.

2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.” ASU 2023-09

requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income

ASU 2023-09 is effective for public entities with annual periods beginning after December 15, 2024.

The Company adopted ASU

2023-09 on a prospective basis effective January 1, 2025.

Lease Commitments

Company leases office space in Miami, Florida and research and development laboratory space in Bothell, Washington under operating leases

that expire on September 30, 2027 and January 31, 2031 , respectively.

Company leases office space in Miami, Florida that expire on September

30, 2027 and two research and development laboratory spaces in Bothell, Washington under operating leases that expire on

January 31, 2029 and January

31, 2031 , respectively.

For operating leases, the weighted average discount rate is 6.4 %

and the weighted average remaining lease term is 5.2 years.

and the weighted average remaining lease term is 5.2

lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease

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Total operating lease liabilities

In April 2023, the Company renewed

its lease for the unit 100 at the Bothel, Washington facility (“Bothel 100”) for an 84-month (7 years) term, starting February

1, 2024, and ending on January 31, 2031.

The Company classified the amended lease as an operating lease pursuant to the provisions of

ASC 842 and calculated the discounted value of the total lease payments to be approximately $ 1,224,000 using a discount rate of 6 %.

amount was recognized as the lease liability and right-of use asset at the renewal date of the lease.

As the renewal occurred in 2023,

the Company deemed it appropriate to recognize both the right-of-use asset and lease liability for the extension term in 2023, with no

amortization of the asset until the commencement of the extension term in February 2024.

In September 2023, following

the renewal of the Bothell 100 facility lease, the Company amended the agreement to expand the premises to include Suite 200 (“Bothell

200 facility”).

The lease for the Bothell 200 facility has a 60-month (5-year) term, running from February 1, 2024, through January

The Company classified the lease as an operating lease and calculated the discounted value of the total lease payments to be

approximately $ 571,000 , using a 6 % discount rate.

This amount was recognized as the lease liability and right-of-use asset at the

lease commencement date.

As the lease for the Bothell 200 facility is tied to an existing lease and was executed in 2023, the Company

deemed it appropriate to recognize both the right-of-use asset and lease liability in 2023, with no amortization of the asset until the

lease term begins in February 2024.

In August 2024, the Company

renewed its lease for the Miami, Florida location for a 36-month term, starting from October 1, 2024, and ending on September 30, 2027,

with an optional two-year extension.

At the time of renewal, the Company classified the lease as an operating lease pursuant to the provisions

of ASC 842 and calculated the discounted value of the total lease payments to be approximately $ 163,000 , using a discount rate of 10.75 %,

and recognized this amount as the lease liability and right-of-use asset at renewal date.

The lessor of the Miami, Florida lease is a limited liability company controlled

Phillip Frost, a director and a principal stockholder of the Company.

minimum lease payments above do not include common area maintenance (CAM) charges, which are contractual obligations under the

Company’s Bothell, Washington lease, but are not fixed and can fluctuate from year to year.

CAM charges for the Bothell,

Washington facility is calculated and billed based on total common expenses for the building incurred by the lessor and apportioned

to tenants based on square footage.

In 2024 and 2023, approximately $ 174,000

of CAM charges for the Bothell, Washington lease was included in operating expenses in the consolidated statements of operations,

respectively.

the twelve months ended December 31, 2024 and 2023, operating lease expense, excluding short-term leases, finance leases and CAM charges,

totaled approximately $ 393,000 and

respectively, of which $ 62,000

for each period was to a related party.

Commitments and Contingencies

time to time, the Company is a party to, or otherwise involved in, legal proceedings arising in the normal course of business.

the date of this report, except as described below, the Company is not aware of any proceedings, threatened or pending, against it which,

if determined adversely, would have a material effect on its business, results of operations, cash flows or financial position.

Insurance Underwriters Inc.

(“Liberty”) filed suit against us in federal court in Delaware seeking a declaratory judgment

that there was no insurance coverage for any settlement, judgment, or defense costs in the class and derivative litigation, that the

monies totaling approximately $1 million it paid to the Company in connection with the SEC investigation were not covered by insurance,

and for recoupment of the monies already paid.

We had retained counsel to defend us which had filed an answer to the complaint denying

its material allegations, as well as a counterclaim against Liberty for breach of contract, declaratory judgment, bad faith and violation

of the Washington State Consumer Protection Act, alleging among other things that Liberty wrongfully denied the Company’s claims

for coverage of the class and derivative litigations, and seeking money damages.

Liberty Insurance Underwriters Inc.

filed suit against

us in federal court in Delaware seeking a declaratory judgment that there was no insurance coverage for any settlement, judgment, or

defense costs in the class and derivative litigation, that the monies totaling approximately $ 1 million it paid to the Company in connection

with the SEC investigation were not covered by insurance, and for recoupment of the monies already paid.

On June 7, 2022, the court filed

a Stipulation and Order for Entry of Judgment in the amount of $ 1,359,064 in favor of Liberty (the “Judgment”) following

summary judgment granted by the court to Liberty on all but one of the matters at issue in the case.

The Company filed an appeal in July

On March 29, 2023, the Third Circuit ruled in favor of the Company on the appeal, thereby vacating the trial court’s prior

grant of summary judgment in favor of Liberty.

As a result of this ruling, the case has been remanded to the District Court for trial

on the merits of the Company’s coverage claims for defense and settlement costs.

The Court had ordered the return of the $ 1.6 million.

On August 8, 2023, the Company received $ 1.6 million as refunded by the registry of the court.

On November 16, 2023, prior to commencement

of a new trial which had been scheduled for December 4, 2023, the parties entered into a settlement agreement pursuant to which Liberty

paid the Company an additional $ 1 million and each party released the other from its respective claims and rights arising from the matter.

There is no further litigation with Liberty following this settlement.

April 2023, the Company renewed its lease for the unit 100 at the Bothel, Washington facility (“Bothel 100”) for an 84-month

( 7 years) term, starting February 1, 2024, and ending on January 31, 2031 .

The Company classified the amended lease as an operating lease

pursuant to the provisions of ASC 842 and calculated the discounted value of the total lease payments to be approximately $ 1,224,000

using a discount rate of 6 %.

This amount was recognized as the lease liability and right-of use asset at the renewal date of the lease.

As the renewal occurred in 2023, the Company deemed it appropriate to recognize both the right-of-use asset and lease liability for the

extension term in 2023, with no amortization of the asset until the commencement of the extension term in February 2024.

September 2023, following the renewal of the Bothell 100 facility lease, the Company amended the agreement to expand the premises to

include Suite 200 (“Bothell 200 facility”).

The lease for the Bothell 200 facility has a 60-month ( 5 -year) term, running

from February 1, 2024, through January 31, 2029 .

The Company classified the lease as an operating lease and calculated the discounted

value of the total lease payments to be approximately $ 571,000 , using a 6 % discount rate.

This amount was recognized as the lease liability

and right-of-use asset at the lease commencement date.

As the lease for the Bothell 200 facility is tied to an existing lease and was

executed in 2023, the Company deemed it appropriate to recognize both the right-of-use asset and lease liability in 2023, with no amortization

of the asset until the lease term begins in February 2024.

August 2024, the Company renewed its lease for the Miami, Florida location for a 36 -month term, starting from October 1, 2024, and ending

on September 30, 2027 , with an optional two-year extension.

At the time of renewal, the Company classified the lease as an operating

lease pursuant to the provisions of ASC 842 and calculated the discounted value of the total lease payments to be approximately $ 163,000 ,

using a discount rate of 10.75 %, and recognized this amount as the lease liability and right-of-use asset at renewal date.

lessor of the Miami, Florida lease is a limited liability company controlled by Dr.

Phillip Frost, a director and a principal stockholder

of the Company.

minimum lease payments above do not include common area maintenance (CAM) charges, which are contractual obligations under the Company’s

Bothell, Washington lease, but are not fixed and can fluctuate from year to year.

CAM charges for the Bothell, Washington facility is

calculated and billed based on total common expenses for the building incurred by the lessor and apportioned to tenants based on square

In 2025 and 2024, approximately $ 169,000 and $ 174,000 of CAM charges for the Bothell, Washington lease was included in operating

expenses in the consolidated statements of operations, respectively.

the twelve months ended December 31, 2025 and 2024, operating lease expense, including short-term leases, finance leases and CAM charges,

totaled approximately $ 578,000 and $ 568,000 , respectively, of which $ 63,000 and $ 62,000 , respectively was to a related party.

Transactions with Related Parties

5 unchanged sentences

Upon the extension of the lease, the Company recognized a right-of-use asset of approximately $ 163,000 .

rate used to measure the lease assets and liabilities for the extension was 10.75 %.

The discount rate used to measure the lease assets and liabilities for the extension was 10.75 %.

Company paid a lease deposit of $ 4,000 on the original agreement and total rent and other expenses paid in connection with this lease

1 unchanged sentence

Segment information

The Company operates and manages its business as one

reportable and operating segment dedicated to the research and development Company’s novel orally administered antiviral influenza

The measure of segment assets is reported on the balance sheet as total consolidated assets.

In addition, the Company manages

the business activities on a consolidated basis.

Company operates and manages its business as one reportable and operating segment dedicated to the research and development Company’s

novel orally administered antiviral influenza candidate.

The measure of segment assets is reported on the balance sheet as total consolidated

In addition, the Company manages the business activities on a consolidated basis.

Company’s CODM reviews financial information presented on a consolidated basis and decides how to allocate resources based on net

9 unchanged sentences

Stock-based compensation

Operating expenses

Other operating expenses

Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

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-K

Item 8. Financial Statements and Supplementary Data