What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-11 compared with 2026-05-13 · 172 added, 122 removed, 255 unchanged (54% of the section changed)

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to satisfy our capital needs;

accuracy of our estimates regarding expenses, future revenues, capital expenditures, our need for additional financing and our anticipated

dependence on our products, which are still in various stages of development;

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In September 2025, after an extensive review of current trends in dermatology, changing consumer preferences, additional non-clinical

and clinical development costs, and go-to market costs for an Rx acne product, management, with approval from our board of directors,

determined that a strategic shift to developing and distributing DTC and B2B skincare products, that are backed by science, would be

a better path to commercialization for the Company with potentially greater financial upside and faster time to market.

We believe we

can leverage our history and knowledge of Rx dermatology to create skincare products that are effective and safe, and available to consumers

without the nuisance of obtaining a prescription.

and clinical development costs, and go-to market costs for a prescription, or Rx, acne product, management, with approval from our board

of directors, determined that a strategic shift to developing and distributing DTC and B2B skincare products, that are backed by science,

would be a better path to commercialization for the Company with potentially greater financial upside and faster time to market.

we can leverage our history and knowledge of Rx dermatology to create skincare products that are effective and safe, and available to

consumers without the nuisance of obtaining a prescription.

We believe this strategic repositioning will accelerate our path to commercialization,

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topical skincare product, we have an opportunity to capture a large segment of consumers seeking to simplify their skincare routine without

needing to schedule an in-office visit.

While this is a major shift in strategy for our company, we believe pursuing the commercial sale

of unique cosmetic skincare products is the best path forward to meet our mission of providing consumers with efficacious and safe skincare

treatment options.

needing to schedule an in-office visit with an aesthetician or a dermatologist.

While this is a major shift in strategy for our company,

we believe pursuing the commercial sale of unique cosmetic skincare products is the best path forward to meet our mission of providing

consumers with efficacious and safe skincare treatment options.

view this shift in consumer preferences as a significant benefit for our strategic repositioning.

We have gained substantial clinical

knowledge of various dermatology diseases and skin conditions.

We plan to leverage this knowledge to create a whole product line of skincare

treatments that consumers can access directly for each of their skincare needs.

While our background is in clinical products, we plan

to leverage the unique attributes of our hero ingredient, Spongilla lacustris , to develop skincare treatments.

We plan to launch

our first cosmetic product, the Foundational Treatment, in the middle of 2026.

In the future, we plan to offer additional products that

target specific needs of consumers.

For example, for consumers who have more sensitive skin, we may plan to commercialize a milder version

of our Foundational Treatment that could be used more often.

knowledge of various dermatology diseases and skin conditions or our years of developing prescription products.

We plan to leverage this

knowledge to create a diversified product line of skincare treatments that consumers can access directly for each of their skincare needs.

While our background is in prescription products, we plan to leverage the unique attributes of our hero ingredient, Spongilla lacustris ,

to develop multiple skincare treatments for a variety of consumer and professional needs.

We expect to launch our first cosmetic product,

our Tome Foundational Treatment, on August 25, 2026, with those on our waitlist being able to preorder early.

In the future, we plan

to offer additional products that target specific needs of consumers.

For example, for consumers who have more sensitive skin, we may

plan to commercialize a milder version of our Foundational Treatment that could be used more often.

core products, like our Foundational Treatment, will utilize our Bioneedle, which is 100% Spongilla lacustris powder, to provide

a once weekly skin renewal routine that is simple addition to skincare routines.

a once-weekly, skin renewal routine that is a simple addition to skincare routines.

This once weekly routine will contain our Bioneedle

which will be combined with a fluidizing agent for easy application.

Our Bioneedle is derived from a wildly grown freshwater sponge,

Our Bioneedle is derived from a wild harvested freshwater sponge,

Spongilla lacustris or Spongilla , which is processed into a fine, purified powder and packaged with no additives.

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its distinctive properties.

The combination of a proprietary harvesting protocol, developed by our exclusive supplier, and the post-harvest

processing procedures, produces a cosmetic ingredient that we believe optimizes the Bioneedle for a unique and simple skin renewal routine,

unlike most skincare on the market.

addition to the DTC channel for our products, we believe there is a market for our technology to aid in the intradermal delivery of macromolecules

for various aesthetic conditions.

Typically, for facial aesthetics, botulinum toxins are injected into facial muscles to reduce forehead,

lateral canthal, and glabella deep lines.

However, this is limited to the use of intradermal delivery of botulinum toxin for a variety

of skin diseases and conditions.

Botox is currently the only approved botulinum toxin for the treatment of axillary hyperhidrosis via

intradermal injections.

While effective, intradermal injections, including 10-15 per axilla, of Botox can be painful for patients and

very time consuming for dermatologists.

Therefore, we believe developing a less painful, less time-consuming topical delivery of botulinum

toxin into the dermis for various aesthetic and medical skin diseases and conditions, would provide physicians with an attractive alternative

to intradermal injections of botulinum toxins.

plan to leverage our Bioneedle platform for broad applicability across dermatologic and aesthetic skin conditions, potentially allowing

dermatologists and aestheticians to increase the use of botulinum toxin.

We believe this non-invasive approach could meaningfully expand

the therapeutic and aesthetic utility of botulinum toxin for conditions such as axillary, palmar, and plantar hyperhidrosis, acne, acne

scars, rosacea, and improved facial aesthetics (including improvements in skin luminosity and brightness, reducing pore size and number

of pores, reducing fine lines, and reducing skin oiliness by decreasing sebum production).

While we have no current timeline for the

launch of this program we plan to continue to explore additional uses for this platform and look forward to getting our technology in

the hands of aestheticians and dermatologists so they may better serve the medical and aesthetic needs of their patients.

The combination of a proprietary harvesting protocol, developed by our exclusive supplier over 20 plus years

of harvesting, and the post-harvest processing procedures we developed, produces a cosmetic ingredient that we believe optimizes the

Bioneedle for a unique and simple skin renewal routine, unlike most skincare on the market.

also plan to sell directly to skincare professionals, like aestheticians and dermatologists, as we believe many consumers are still seeking

professional expertise for their skincare.

We believe our Foundational Treatment is safe enough to be used at home but also powerful

enough for the office.

This dual distribution channel will allow consumers to have the product applied in the manner they are most comfortable,

while allowing skincare professionals to provide additional services to their clients.

The unique once weekly application schedule provides

flexibility to skincare professionals to tailor the treatment for each individual patient, whether that patient comes back weekly or

once a month while completing weekly applications at home.

We believe our Foundational Treatment will provide skincare professionals

will a treatment option for patients that may be less intense than microneedling, lasers, or chemical peels, but offers patients the

skin renewal results they seek.

addition to in-office application for skin renewal, based on the mechanism of Bioneedle, we also believe there is a market for our technology

to aid in the intradermal delivery of macromolecules, like botulinum toxin, that must be applied by certified professionals.

botulinum toxins are only approved for intramuscular injections of the face to reduce forehead, lateral canthal, and glabella deep lines.

However, we believe there is an untapped aesthetic market seeking needle free, topical applications of botulinum toxin for superficial

aesthetic conditions, like reducing fine lines, pore size, and sebum product or improving luminosity, brightness and overall aesthetic

Therefore, we believe developing a less painful, less time-consuming topical delivery of botulinum toxin into the dermis

for various aesthetic conditions, would provide physicians with an attractive alternative to intradermal injections of botulinum toxins.

While we have no current timeline for the launch of this program we plan to continue to explore additional uses for this platform and

look forward to getting our technology in the hands of aestheticians and dermatologists so they may better serve the medical and aesthetic

needs of their patients.

have taken steps to secure inventory of Spongilla raw material in advance of the planned launch of our Tome skincare products.

We believe we have sufficient quantities of processed Spongilla raw material inventory on hand to support the anticipated mid-2026

commercial launch and initial commercialization activities thereafter, based on our current operating plans, expected production volumes

and internal assumptions.

We believe we have sufficient quantities of processed Spongilla raw material inventory on hand to support the expected August

25, 2026, commercial launch and initial commercialization activities thereafter, based on our current operating plans, expected production

volumes and internal assumptions.

We continue to evaluate additional inventory procurement opportunities and manufacturing planning activities

to support future commercial demand.

January 2026, we raised approximately $2.0 million of net proceeds from the sale of 824,283 shares of our Common Stock under our At

The Market Offering Agreement (the “ATM Agreement”) with H.C.

Wainwright &Co., LLC (“HCW”), as sales

We paid HCW a fixed commission rate of 3% of approximately $67,000 and other transactional fees.

have no capacity to sell shares pursuant to the ATM Agreement remaining.

August 5, 2026, we announced the planned commercial launch date of our first direct-to-consumer skincare product, Foundational Treatment.

We expect to start selling the Foundational Treatment on August 25, 2026, with people on the waitlist getting early access to preorder.

The Foundational Treatment will contain 4 weekly treatments and will be priced at $178.00 USD retail, or about $45 per treatment.

Accounting Estimates

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We anticipate that our quarterly and annual results of operations will be impacted for the foreseeable future by several factors, including

the marketing expenses associated with the launch of our first Tome skincare products and resulting revenues, if any, in mid-2026.

to these fluctuations, we believe that the period-to-period comparisons of our operating results are not a good indication of our future

the marketing expenses associated with the launch of our first Tome skincare products and resulting revenues, if any, in the second half

Due to these fluctuations, we believe that the period-to-period comparisons of our operating results are not a good indication

of our future performance.

of Operations

Months Ended March 31, 2026, and 2025

Months Ended June 30, 2026, and 2025

following table summarizes our results of operations for the periods presented:

Three Months Ended

Months Ended June 30,

Operating expenses:

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$ (1,701,093 )

$ (1,265,970 )

and Development Expenses

and development expenses decreased by $0.9 million from $1.3 million for the three months ended March 31, 2025, to $0.4 million for the

three months ended March 31, 2026.

The decrease in research and development expenses resulted from $0.7 million of decreased clinical

expenses from the XYNGARI™ STAR-1 acne study, which was completed during the second quarter of 2025, $0.1 million of decreased

chemistry, manufacturing and controls, or CMC, and non-clinical expenses period over period as result of the Company’s pivot to

focus on DTC product sales, and $0.1 million of decreased personnel expenses, which resulted from the receipt of proceeds of the Employee

Retention Tax Credit refund which partially offset payroll taxes for research and development employees during the first quarter of 2026.

While we continue to focus on designing, packaging, and manufacturing of our first commercial products, as well as product development,

we anticipate that research and development expenses will continue to decrease as we prepare for launching our first product sales in

and development expenses decreased by $0.4 million from $0.6 million for the three months ended June 30, 2025, to $0.2 million for the

three months ended June 30, 2026.

The decrease in research and development expenses resulted primarily from the Company’s decision

to prioritize the commercial launch of its first product, resulting in a decrease in research and development efforts during the three

months ended June 30, 2026.

While we continue to focus on designing, packaging, and manufacturing of our first commercial products, as

well as product development, we anticipate that research and development expenses will continue to decrease as we prepare for launching

our first commercial product, expected on August 25, 2026.

General and Administrative Expenses

general and administrative expenses increased by approximately $0.5 million from $1.1 million for the three months ended March 31, 2025,

to $1.5 million for the three months ended March 31, 2026.

general and administrative expenses increased by approximately $1.6 million from $1.2 million for the three months ended June 30, 2025,

to $2.8 million for the three months ended June 30, 2026.

The increase in selling, general and administrative expenses was primarily

attributable to $0.2 million of marketing expenses incurred, $0.2 million of increased audit fees and $0.1 million of increased legal

We anticipate that selling, general and administrative expenses will continue to increase related to marketing, branding, advertising,

and personnel expenses as we continue to prepare for our first product launches and sales in mid-2026.

attributable to the Company’s decision to prioritize the commercial launch of its first product, resulting in significant pre-launch

commercialization activities during the three months ended June 30, 2026.

This resulted in an increase of $0.6 million of marketing and

other commercialization expenses and an increase of $0.3 million of compensation expense primarily due to a reallocation of employee

duties from research and development to selling, general and administrative expense, as a result of the shift in business focus towards

commercialization.

In addition, legal fees increased by $0.7 million during the three months ended June 30, 2026, due to ongoing litigation

and other legal matters.

We anticipate that selling, general and administrative expenses will continue to increase related to marketing,

branding, advertising, and personnel expenses as we continue to prepare for our first product launch in the third quarter

Income and Expenses

earn interest income via overnight deposits on our cash and cash equivalents.

Interest income was $78,676 for the first quarter of 2026

compared to $36,216 for the first quarter of 2025.

The increase of $42,460 in interest income resulted from increased cash balances due

to financing proceeds related to the December 2025 PIPE and recent ATM sales during the fourth quarter of 2025 and first quarter of 2026,

respectively, as well as interest received related to the Employee Retention Tax Credit payments received during the first quarter of

Interest income was $47,000 for the second quarter of 2026

compared to $72,000 for the second quarter of 2025.

The decrease in interest income resulted from decreased cash balances.

Months Ended June 30, 2026, and 2025

following table summarizes our results of operations for the periods presented:

Six Months Ended June 30,

Operating expenses:

Research and development

$ (1,302,689 )

Selling, general and administrative

Total operating expenses

Loss from operations

Other income and expenses:

Interest income

$ (4,814,769 )

$ (4,004,680 )

and Development Expenses

and development expenses decreased by $1.3 million from $1.9 million for the six months ended June 30, 2025, to $0.6 million for the

six months ended June 30, 2026.

The decrease in research and development expenses resulted from $0.6 million of decreased clinical expenses

from the XYNGARI™ STAR-1 acne study, which was completed during the second quarter of 2025.

Additionally, research and development

expenses decreased another $0.7 million, as a result of the Company’s decision to prioritize the commercial launch of its first

product, resulting in a decrease in research and development efforts during the six months ended June 30, 2026.

General and Administrative Expenses

general and administrative expenses increased by $2.1 million from $2.2 million for the six months ended June 30, 2025, to $4.3 million

for the six months ended June 30, 2026.

The increase in selling, general and administrative expenses was primarily attributable to the

Company’s decision to prioritize the commercial launch of its first product, resulting in significant pre-launch commercialization

activities during the six months ended June 30, 2026.

This resulted in an increase of $0.9 million of marketing and other commercialization

expenses and an increase of $0.3 million of compensation expense primarily due to a reallocation of employee duties from research and

development to selling, general and administrative expense, as a result of the shift in business focus towards commercialization.

addition, legal fees increased by $0.8 million during the six months ended June 30, 2026, due to ongoing litigation and other legal matters,

and audit fees increased by $0.1 million.

Income and Expenses

earn interest income via overnight deposits on our cash and cash equivalents.

Interest income was $125,000 for the six months ended June

30, 2026 compared to $108,000 for the six months June 30, 2025.

The increase of $17,000 in interest income resulted primarily from interest

received related to the Employee Retention Tax Credit payments received during the first quarter of 2026.

following table summarizes our cash flows from operating and financing activities:

Three Months Ended

Months Ended June 30,

Statements of cash flows data:

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$ (4,624,547 )

Investing activities

Financing activities

Increase (decrease) in cash and cash equivalents

used in operations of approximately $2.5 million for the three months ended March 31, 2026, was the result of the net loss of $1.8 million

as well as increases in prepaid and other current assets of $0.1 million and increased inventory of $0.1 million, as well as decreases

in accounts payable and accrued and other current liabilities of approximately $0.5 million.

used in operations of $1.9 million for the three months ended March 31, 2025, was the result of the net loss of $2.3 million, offset

by increases in accounts payable and accrued and other current liabilities of approximately $0.3 million, as well as the decrease of

prepaid expenses and other current assets of approximately $0.1 million.

provided by financing activities of $1.9 million for the three months ended March 31, 2026, was the result of approximately $2.0 million

$ (3,109,214 )

used in operations of approximately $4.9 million for the six months ended June 30, 2026, was the result of the net loss of $4.8 million

as well as increases in prepaid and other current assets of $0.3 million and increased inventories of $0.1 million, as well as a decrease

accrued and other current liabilities of approximately $0.5 million, partially offset by an increase in accounts payable of $0.7 million

and non-cash stock-based compensation of $0.1 million.

used in operations of $4.6 million for the six months ended June 30, 2025, was the result of the net loss of $4.0 million and decreases

in accounts payable and accrued and other current liabilities of approximately $0.9 million, partially offset by the decrease of prepaid

expenses and other current assets of approximately $0.2 million and non-cash stock-based compensation of $0.1 million.

used in investing activities of $0.1 million for the six months ended June 30, 2026 consisted of the purchases of property and equipment.

provided by financing activities of $1.9 million for the six months ended June 30, 2026, was the result of approximately $2.0 million

in net proceeds from ATM sales during the first quarter of 2026, partially offset by approximately $0.1 million of payments for issuance-related

costs from the December 2025 PIPE financing.

provided by financing activities of $8.5 million for the three months ended March 31, 2025, was the result of the January 2025 PIPE financing

provided by financing activities of $7.9 million for the six months ended June 30, 2025, was the result of the January 2025 PIPE financing

which raised net proceeds of $2.2 million, and the March 2025 Inducement financing which raised net proceeds of $5.7 million.

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our inception, we have not generated any revenue or commercialized any products.

As of March 31, 2026, our cash and cash equivalents

totaled $6.9 million, and we had an accumulated deficit of $75.1 million.

For the three months ended March 31, 2026, and the year ended

December 31, 2025, we used cash of $2.5 million and approximately $7.8 million, respectively, in operations.

We expect our current cash

resources to fund operations into the first quarter of 2027.

As of June 30, 2026, our cash and cash equivalents totaled

$4.4 million, and we had an accumulated deficit of $78.0 million.

For the six months ended June 30, 2026, and the year ended December

31, 2025, we used cash of $4.9 million and approximately $7.8 million, respectively, in operations.

We expect our current cash resources

to fund operations into the fourth quarter of 2026.

anticipate that we will continue to incur net losses for at least the next twelve months from the date of this filing.

While we plan

to launch our first DTC product in mid-2026, it is uncertain when we will generate operating income to sustain operations, if ever.

factors raise substantial doubt about our ability to continue as a going concern for the one-year period following the date that these

financial statements were issued.

to launch our first DTC product, expected on August 25, 2026, it is uncertain when we will generate operating income to sustain operations, if

These factors raise substantial doubt about our ability to continue as a going concern for the one-year period following the date

that these financial statements were issued.

Historically,

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believe that our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements

into the first quarter of 2027.

into the fourth quarter of 2026.

We have based this estimate of cash runway on assumptions that may prove to be wrong, and we could utilize

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products, and to pursue in-licenses or acquisitions of other drug candidates.

Accordingly, beyond our current cash and any proceeds from

the sales of our common stock pursuant to the ATM Agreement, if any, we will require substantial additional financing to support our

We expect our expenses and capital requirements to increase in connection with our ongoing activities, including the commercial

launch of our first Tome skincare products.

funds may not be available on a timely basis, on favorable terms, or at all, and such funds, if raised, may not be sufficient to enable

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pressures would be significantly limited.

inception, we have devoted substantially all of our resources to research and development activities.

In September 2025, we made a strategic

pivot from research and developing prescription products to becoming a science-driven leader in dermatologic solutions, anticipating

our first DTC product launch from our Tome skincare brand in mid-2026.

We have not generated revenues and have not yet achieved profitable

operations, nor have we ever generated positive cash flow from operations.

There is no assurance that profitable operations, if achieved,

could be sustained on a continuing basis.

In addition, we operate in an environment of rapid technological change, and we are largely

dependent on the services of our employees and consultants.

Further, our future operations are dependent on the success of our efforts

to raise additional capital.

These uncertainties raise substantial doubt about our ability to continue as a going concern for 12 months

after the issuance date of our financial statements.

inception, we have devoted substantially all of our resources to research and development activities, and during 2026, on marketing and

other pre-launch commercial activities in preparation of its first product launch.

In September 2025, we made a strategic pivot from

research and developing prescription products to becoming a science-driven leader in dermatologic solutions, anticipating our first DTC

product launch from our Tome skincare brand, expected on August 25, 2026.

We have not generated revenues and have not yet achieved profitable operations,

nor have we ever generated positive cash flow from operations.

There is no assurance that profitable operations, if achieved, could be

sustained on a continuing basis.

In addition, we operate in an environment of rapid technological change, and we are largely dependent

on the services of our employees and consultants.

Further, our future operations are dependent on the success of our efforts to raise

additional capital.

These uncertainties raise substantial doubt about our ability to continue as a going concern for 12 months after

the issuance date of our financial statements.

The accompanying financial statements have been prepared on a going concern basis.

The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification

of assets or the amounts and classification of liabilities that may result from the possible inability of the company to continue as

a going concern, which contemplates the continuation of operations, realization of assets and liquidation of liabilities in the ordinary

course of business.

We incurred a net loss of $1.8 million for the quarter ended March 31, 2026, and had an accumulated deficit of $75.1

million as of March 31, 2026.

We anticipate incurring additional losses until such time, if ever, we can generate sufficient revenue

from our products currently in development, or products we are in the process commercializing.

Our primary source of capital has been

the issuance of equity and equity-linked securities.

financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of

assets or the amounts and classification of liabilities that may result from the possible inability of the company to continue as a going

concern, which contemplates the continuation of operations, realization of assets and liquidation of liabilities in the ordinary course

We incurred a net loss of $4.8 million for the six months ended June 30, 2026, and had an accumulated deficit of $78.0 million

as of June 30, 2026.

We anticipate incurring additional losses until such time, if ever, we can generate sufficient revenue from our

products currently in development, or products we are in the process commercializing.

Our primary source of capital has been the issuance

of equity and equity-linked securities.

Act Accounting Election

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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