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Item 7. Management’s Discussion and Analysis

2026-03-30 compared with 2025-04-15 · 148 added, 195 removed, 57 unchanged (86% of the section changed)

5 unchanged sentences

Actual results could differ materially because of the factors discussed in “Risk Factors” elsewhere in this Annual Report on Form 10-K, and other factors that we have not identified.

We are an ophthalmic technology company developing our proprietary Optejet® topical ophthalmic medication dispensing platform.

In November 2024, we received a negative clinical trial result in the development of our development-stage drug-device combination product, MicroPine.

As a result, we restructured our company to minimize expenses and engaged an investment bank to explore strategic options in order to maximize shareholder value.

We have paused the national sales roll-out of our products clobetasol propionate and Mydcombi® until additional funding is obtained.

At the same time, we accelerated our development efforts relating to the Optejet in order to potentially increase the value of that asset in any strategic transaction or capital raising activities.

The ergonomic and functional design of the Optejet allows for horizontal drug delivery and eliminates the need to tilt the head back or the manual dexterity to squeeze a bottle to administer medications.

Drug is delivered in a microscopic array of droplets that is both comfortable and matches the amount of fluid that the front of the eye can hold.

The precise delivery of a low-volume columnar spray by the Optejet device helps ensure instillation success while minimizing contamination risk with a non-protruding nozzle and self-closing shutter.

In clinical trials, the Optejet has demonstrated that its targeted delivery achieves a high rate of successful administration, with 98% of sprays being accurately delivered upon first attempt compared to the established rate reported with traditional eye drops of approximately 50%.

A more physiologically appropriate volume of medication in the range of seven to ten microliters is delivered by the Optejet, which is approximately one-fifth of the 35 to 50 microliter dose typically delivered in a single eye drop.

Lower volume of medication exposes the ocular surface to less active ingredient and preservatives, potentially reducing ocular stress and surface damage and improving tolerability.

The lower volume also minimizes the potential for drug to enter systemic circulation, with the goal of avoiding some common side effects that are related to overdosing of the eye.

We are developing versions of the Optejet with on-board digital technology that records the date and time of each use.

These data may be used to provide reminders via Bluetooth to smart devices and to allow healthcare practitioners to monitor usage.

This information can then be used by practitioners and health care systems to measure treatment compliance and improve medical decision making.

In this way, the Optejet could serve as an extension of the physician’s office by providing information that is not currently possible to collect except through the use of diaries.

MicroLine is our investigational pharmacologic treatment for presbyopia, a non-preventable, age-related hardening of the lens, which causes the gradual loss of the eye’s ability to focus on near objects and impairs near visual acuity.

We have completed two Phase III studies using our Optejet device.

In these studies, patients reported high satisfaction with using the device, and a strong preference over using an eye dropper bottle.

Since completing these studies, the market opportunity has markedly deteriorated, and we have chosen to put this program on hold and reallocate our resources towards larger opportunities.

When and if the market improves, we have kept open the option to continue development of MicroLine, which would include a meeting with the U.S.

Food and Drug Administration (the “FDA”) to review our clinical data to date.

Our first product using the Optejet technology, Mydcombi®, is the only FDA-approved fixed combination of the two leading mydriatic agents, tropicamide and phenylephrine, in the United States.

As an ophthalmic spray delivered with Optejet technology, Mydcombi may present a number of benefits for ophthalmic surgical centers, optometric and ophthalmic offices and patients.

Those benefits may include improved cost-effectiveness in centers that employ single-use bottles for mydriasis, more efficient use of office time and resources, and an overall improved doctor-patient experience.

The first commercial sale of Mydcombi occurred on August 3, 2023 as part of a targeted launch.

On July 24, 2024, we received written comments from the FDA providing direction for the design of a clinical bridging study to transition Mydcombi into our new Gen-2 Optejet device, which has a significantly lower cost to manufacture than the currently approved product.

On August 10, 2020, we entered into a license agreement with Arctic Vision (as amended on September 14, 2021, the “Arctic Vision License Agreement”) pursuant to which Arctic Vision may develop and commercialize MicroPine (Eyenovia’s proprietary drug-device combination of low-dose atropine and the Optejet platform), MicroLine and Mydcombi in Greater China (mainland China, Hong Kong, Macau and Taiwan) and South Korea.

Under the terms of the Arctic Vision License Agreement, as amended, we received an upfront payment of $4.25 million before any payments to Senju Pharmaceutical Co., Ltd.

On October 9, 2020, we entered into a license agreement (the “Bausch License Agreement”) with Bausch + Lomb (“B+L”), pursuant to which B+L had the rights to develop and commercialize MicroPine in the United States and Canada.

Under the terms of the Bausch License Agreement, we received an upfront payment of $10.0 million and we were eligible to receive up to a total of $35.0 million in additional payments, based on the achievement of certain regulatory and launch-based milestones.

B+L also agreed to pay royalties to Eyenovia on a tiered basis (ranging from mid-single digit to mid-teen percentages) on gross profits from sales of MicroPine in the United States and Canada, subject to certain adjustments.

Under the terms of the Bausch License Agreement, B+L assumed sponsorship of the IND as well as ownership and the costs related to the ongoing CHAPERONE study, which was a Phase III efficacy and safety trial of MicroPine.

On January 12, 2024, we entered into a subsequent agreement with B+L to repatriate our rights to MicroPine and take control of the CHAPERONE study.

In this agreement, we agreed to pay B+L $2 million in cash and an additional $3 million in common stock upon successful transfer of the regulatory documents and study elements to Eyenovia.

We also agreed to pay B+L a 2% royalty on net sales once MicroPine is commercialized in the United States, assuming receipt of regulatory approvals.

We believed that this revised arrangement was in our and our shareholders’ best interests, as it could have substantially increased the value of the asset through potential improvements in the conduct of the study, including a planned interim analysis of the data in late 2024.

On September 26, 2024, we announced the U.S.

launch and commercial availability of clobetasol propionate ophthalmic suspension 0.05%.

On November 15, 2024, we announced the outcome of an independent review of the clinical results of the three-year efficacy and safety data from the MicroPine Phase III CHAPERONE study conducted by a Data Monitoring Committee (“DMC”).

The DMC, made up of independent ophthalmologists and optometrists who specialize in pediatric myopia as well as a statistician, reviewed the safety and efficacy data from all evaluable patients.

After the completion of three-year therapy for myopia with MicroPine, statistical superiority was not observed and was deemed unlikely to occur in at least one of the active dose arms compared with placebo, which was the primary efficacy endpoint of the trial.

There were no safety issues or serious adverse events identified.

As a result of this finding, we closed out the CHAPERONE study and put the project on hold in December 2024.

In light of the results from the CHAPERONE study, the Company is considering a variety of steps to maximize value to all stakeholders, to reduce expenses and to evaluate its strategic options, which may include a business combination, reverse merger, asset sales or a combination of those alternatives.

Further information will be made available once the evaluation of strategic options has been completed.

The Company implemented a reduction in force affecting approximately 75% of its workforce.

The estimated total cost of severance-related expenses relating to this reduction in force is $0.3 million.

The remaining staff will be focused on Optejet® Gen-2 development, our dry eye collaborations and clobetasol propionate commercialization.

We successfully expanded our manufacturing capabilities through a partnership with Coastline International, Inc.

located in Tijuana, Mexico, as well as the construction of our new manufacturing facility in Reno, Nevada and the construction of our own fill and finish facility in Redwood City, California.

The FDA approved the use of both Coastline International and our Redwood City facility for the production of Mydcombi cartridges, and the use of our Reno facility for the production of technical elements such as the base unit for the Optejet device.

As part of the Company’s steps to maximize value to all stakeholders, to reduce expenses and to evaluate its strategic options, we made the decision to phase out the production and sale of Mydcombi in the GEN-1 device.

As a result, we have phased out the manufacturing line at Coastline International, Inc.

located in Tijuana, Mexico, and are also modifying the use of our manufacturing facility in Reno, Nevada and our fill and finish facility in Redwood City, California to focus on Optejet® Gen-2 development, our dry eye collaborations and clobetasol propionate commercialization.

In addition to our own development programs, on August 15, 2023, we entered into a license agreement with Formosa Pharmaceuticals, Inc.

(“Formosa”), whereby we acquired the exclusive U.S.

rights to commercialize any product related to a novel formulation of clobetasol propionate ophthalmic suspension 0.05% (the “Formosa Licensed Product”), which was approved by the FDA, for post-operative inflammation and pain after ocular surgery, on March 4, 2024.

The Formosa License will remain in effect for ten years from the date of the first commercial sale of a Formosa Licensed Product, unless earlier terminated.

We paid Formosa an upfront payment in an aggregate amount of $2.0 million which consisted of (a) cash in the amount of $1.0 million and (b) 487,805 shares of common stock valued pursuant to the Formosa License Agreement at $1.0 million.

We also capitalized $122,945 of transaction costs in connection with the Formosa License.

In addition, we agreed to pay Formosa up to $4.0 million upon the achievement of certain development milestones and up to $80 million upon the achievement of certain sales milestones.

The trigger for the initial $2.0 million development milestone payment was FDA approval of the Formosa Licensed Product and the effective date of the acceptance by the Company of the transfer and assignment of the FDA approval, which occurred on March 14, 2024.

Based on the achievement of this milestone, we paid Formosa (a) cash in the amount of $1.0 million on April 26, 2024 and (b) 613,496 shares of common stock (calculated pursuant to the Formosa License Agreement at $1.0 million using a five-day volume-weighted average price on March 14, 2024, but valued at $0.4 million on the April 29, 2024 settlement date).

The remaining $2.0 million development milestone (to be fully paid in cash) was earned and accrued upon FDA approval, but payment will be triggered on the earlier of twelve months after FDA approval of the Formosa Licensed Product or six months following the first commercial sale of the Formosa Licensed Product.

On August 7, 2024, we entered into a non-binding collaboration agreement with Formosa under which the companies intend to work to develop EYEN-530, a combination of Formosa’s clobetasol propionate ophthalmic solution with our Optejet dispensing technology, as a potential treatment for acute dry eye flare-ups.

On November 22, 2024, we entered into the First Amendment (the “First Amendment”) to the Supplement to that certain Loan and Security Agreement, dated November 22, 2022 (the “Loan and Security Agreement”) with Avenue Capital Management II, L.P., as administrative agent and collateral agent, Avenue Venture Opportunities Fund, L.P., as a lender and Avenue Venture Opportunities Fund II, L.P., as a lender (together, “Avenue”).

Pursuant to the First Amendment, Avenue agreed to defer principal and interest payments on amounts outstanding under the Loan and Security Agreement until the end of February 2025.

On February 21, 2025, we entered into the Second Amendment (the “Second Amendment”) to the Supplement to the Loan and Security Agreement with Avenue.

Pursuant to the Second Amendment, Avenue agreed to defer principal and interest payments on amounts outstanding until the end of September 2025.

Deferred interest will accrue on the outstanding principal amount.

On December 12, 2024, we announced the engagement of Chardan, an investment bank, as the Company’s financial advisor in connection with its evaluation of strategic alternatives.

With assistance from Chardan, the Company will continue to assess a full range of strategic alternatives, including but not limited to, a business combination, sale of the Company, reverse merger, asset sale, or a combination of alternatives, while also carefully managing its expenses.

As part of restructuring to minimize expenses during this process, the Company temporarily halted sales and promotion activities and focused its development efforts on completing the verification and validation studies required for regulatory approval of the Optejet UFD.

This device is designed for users to fill with preserved artificial tears or contact lens rewetting solutions at home, providing greater flexibility while leveraging Optejet’s advanced delivery system.

As of March 2025, Eyenovia is progressing with its development of the Optejet UFD, aiming for a 510K submission in the United States in the fourth quarter of 2025.

On July 26, 2024, we received notice from the staff (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) providing notification that the Company had regained compliance with the $1.00 minimum bid price requirement for continued listing on The Nasdaq Capital Market under Listing Rule 5550(a)(2).

Previously, Nasdaq had notified us on July 2, 2024 that, for the preceding 30 consecutive business days, the closing bid price of our common stock had been below the minimum requirement of $1.00 per share.

The notification letter stated that we would be provided 180 calendar days to regain compliance.

In order to regain compliance, the closing bid price of our common stock had to be at least $1.00 for a minimum of 10 consecutive business days at any time before December 30, 2024.

Subsequently, the Staff determined that, from July 12 to July 25, 2024, the closing bid price of our common stock had been at $1.00 per share or greater.

Accordingly, the Company had regained compliance with Listing Rule 5550(a)(2).

On February 25, 2025, we received notice from the Staff of Nasdaq providing notification that the Company had regained compliance with the $1.00 minimum bid price requirement for continued listing on The Nasdaq Capital Market under Listing Rule 5550(a)(2).

Previously, Nasdaq had notified us on September 18, 2024 that, for the preceding 30 consecutive business days, the closing bid price of our common stock had been below the minimum requirement of $1.00 per share.

The notification letter stated that we would

be provided 180 calendar days to regain compliance.

In order to regain compliance, the closing bid price of our common stock had to be at least $1.00 for a minimum of 10 consecutive business days at any time before March 17, 2025.

On January 31, 2025, the Company effected a reverse stock split of its common stock at a ratio of 1-for-80 (the “Reverse Split”).

Upon the effectiveness of the Reverse Split, every 80 issued shares of common stock were reclassified and combined into one share of common stock and the corresponding price per share increased by a multiple of 80.

Subsequently, the Staff determined that, from February 3 to February 14, 2025, the closing bid price of our common stock had been at $1.00 per share or greater.

Accordingly, the Company had regained compliance with Listing Rule 5550(a)(2).

Historically, we have financed our operations principally through equity offerings.

We have also generated cash through licensing arrangements and our credit facility with Avenue.

However, based upon our current operating plan, there is substantial doubt about our ability to continue as a going concern for at least one year from the date that our financial statements were issued.

Our ability to continue as a going concern depends on our ability to complete additional licensing or business development transactions, raise additional capital through the sale of equity or debt securities to support our future operations or the completion of a transaction consistent with the strategic alternatives that we are exploring.

If we are unable to secure additional capital, we may be required to curtail our research and development initiatives, take additional measures to reduce costs or file for bankruptcy.

Our net losses were $49.8 million and $27.3 million for the years ended December 31, 2024 and 2023.

As of December 31, 2024, we had working capital deficit and an accumulated deficit of approximately $13.3 million and $195.3 million, respectively.

Hyperion DeFi, Inc., formerly known as Eyenovia, Inc., is the first U.S.

publicly listed company building a long-term strategic treasury of HYPE in addition to being a pioneering digital ophthalmic technology company.

We are working to provide our shareholders with simplified exposure to the Hyperliquid ecosystem, which we believe to be one of the highest revenue-generating blockchains in the world.

At the same time, we continue to execute on our planned completion of development and registration of our Optejet ophthalmic microdose mist delivery system.

The Private Placement

On June 20, 2025, we received approximately $50 million in gross proceeds in connection with the closing of a private placement (the “Private Placement”).

Pursuant to the Securities Purchase Agreement, dated as of June 17, 2025, in the Private Placement, the purchasers purchased an aggregate of 5,128,205 shares of the Series A Preferred Stock and warrants to purchase up to 30,769,230 shares of common stock at an exercise price of $3.25 per share.

We used the net proceeds from the Private Placement to build a reserve of HYPE.

In connection with the Private Placement, we entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the purchasers, which provided that the Company would register the resale of the shares of common stock issuable upon conversion of the Series A Preferred Stock and exercise of the warrants.

The Company filed a registration statement with the SEC pursuant to the Registration Rights Agreement on July 18, 2025.

Chardan Capital Markets LLC (“Chardan”) acted as placement agent for us in connection with the Private Placement.

Pursuant to the Engagement Letter, dated as of June 17, 2025, as compensation for its services, we issued to Chardan 307,692 shares of Series A Preferred Stock (convertible into up to 923,076 shares of common stock) and Placement Agent Warrants to purchase up to 1,846,153 shares of common stock at an exercise price of $3.25 per share.

At-The-Market Offering

On September 24, 2025, we entered into Amendment No.

1 (the “Amendment”) to the Amended and Restated Sales Agreement (the “A&R Sales Agreement”) with Chardan Capital Markets, LLC, with respect to our existing at-the-market offering program.

The Amendment increases the aggregate offering amount under the A&R Sales Agreement from $50 million to $100 million.

On November 14, 2025, the Company entered into a new Sales Agreement with Cantor Fitzgerald & Co.

and Chardan Capital Markets with respect to the Company’s at-the-market offering program.

The new agreement, among other things, increases the aggregate offering price from $100 million to $500 million and increases the total fees payable to the two sales agents from 3.0% to 4.0%.

During the years ended December 31, 2025 and 2024, the Company received approximately $39.4 million and $6.0 million in proceeds net of offering costs of $1.3 million and $0.2 million from the sale of 5,607,759 and 70,381 shares of its common stock, respectively.

Fourth Amendment of the Avenue Loan

On June 17, 2025, the Company and the Lenders entered into the Fourth Amendment to Supplement to the Loan and Security Agreement (the “Fourth Amendment”).

The Fourth Amendment, among other things, extended the maturity date of the loans under the Loan and Security Agreement to July 1, 2028;

provided for an interest-only period from July 1, 2025 until January 31, 2027;

reduced the interest rate on the loans from 12.0% to 8.0%, payable half in cash and half in kind;

eliminated the option of the Lenders to convert an aggregate amount of up to $10.0 million of the loans outstanding into shares of common stock;

and provided us with the option to prepay debt owed under the Loan and Security Agreement in part.

In connection with the Fourth Amendment, we issued to the Lenders warrants to purchase an aggregate of 350,000 shares of common stock at an exercise price of $4.00 per share.

Nasdaq Compliance

On April 29, 2025, we received a notice from the Staff of Nasdaq stating that the Company’s stockholders’ equity as reported in the 2024 Form 10-K was below the minimum $2,500,000 required for continued listing under Listing Rule 5550(b)(1) (the “Minimum Equity Requirement”).

The Notice had no immediate effect on the listing of the Company’s common stock on the Nasdaq Capital Market.

The Company submitted a plan to regain compliance with the Nasdaq Listing Rules.

On September 2, 2025, we received notice from the Staff of Nasdaq that the Company was now in compliance with the Nasdaq Listing Rules and that the matter was closed.

Implications of Being a Smaller Reporting Company

We are a “smaller reporting company” as defined under the Exchange Act.

We may take advantage of certain of the scaled disclosures available to smaller reporting companies until the last day of the fiscal year in which (i) the market value of our common stock held by non-affiliates exceeds $250 million as of the end of that year’s second fiscal quarter and our annual revenue exceeds $100 million during such completed fiscal year, or (ii) the market value of our common stock held by non-affiliates exceeds $700 million, regardless of our annual revenue, as of the end of that year’s second fiscal quarter.

Our net losses were $45.3 million and $49.8 million for the years ended December 31, 2025 and 2024, respectively.

As of December 31, 2025, we had working capital surplus and an accumulated deficit of approximately $4.5 million and $240.6 million, respectively.

Financial Overview

Revenue and Cost of Revenue

Revenue is mostly earned from the sale of our products, Mydcombi and clobetasol propionate.

The first commercial sale of Mydcombi occurred on August 3, 2023 and the first sale of clobetasol propionate occurred on October 4, 2024, both as part of a targeted launch.

Cost of sales consisted mostly of the cost of the production of the products that were sold, but also write downs of our inventory to their net realizable value.

Digital Assets

We jointly operate a validator node on the Hyperliquid blockchain network and earn HYPE as rewards and commission income for validating transactions and maintaining network security.

These activities include both self-staking (using our own tokens) and providing validation services to third-party delegators.

The provision of services related to transaction validation on the Hyperliquid blockchain network (through both staking rewards and commission income) is an output of our ordinary activities.

We recognize revenue by applying the guidance in ASC 606, Revenue from Contracts with Customers (“ASC 606”).

HYPE earned from validator operations, in the form of staking rewards and commission income, are recognized as revenue when we satisfy our performance obligations (i.e., successfully validate blocks or transactions as determined by the protocol).

The HYPE earned are non-cash consideration and therefore measured at fair value at the inception of each contract.

Prior to December 15, 2025, because we did not unilaterally control the validator, we were not the principal to the validation service;

as such, we presented staking rewards and commission income as revenue on a net basis, reflecting only the portion of protocol rewards and commission to which we are entitled.

On December 15, 2025, we gained unilateral control over the validator.

Therefore, on and after December 15, 2025, we were the principal to the validation service;

as such, we presented staking rewards and commission income as revenue on a gross basis, with the portion of protocol rewards and commission to which third parties are entitled presented as cost of revenue.

We also enter into arrangements with customers under which we provide the temporary use of our HYPE tokens in exchange for consideration.

The Company’s obligation is to make the digital assets available for use over a defined period, which represents a single performance obligation that is satisfied over time as the counterparty simultaneously receives and consumes the benefits of use.

In arrangements where control of the digital assets transfers to the customer, the Company records a receivable representing its right to receive the digital assets at the end of the contractual term, as well as provisions for credit losses against such receivables.

Consideration is primarily based on transaction volume, trading activity, or other usage-based metrics generated during the contract term.

The Company recognizes revenue in the amount to which it has the right to invoice for services performed, consistent with the application of the right-to-invoice practical expedient.

Ophthalmic Technology

Revenue is earned from the sale of our ophthalmological products.

However, we have ceased our sales efforts with respect to our ophthalmological products and had limited revenue from sales of such products during the twelve months ended December 31, 2025.

Cost of sales consisted of the cost of the production of the ophthalmological products that were sold.

Research and Development Expenses

Research and development expenses are incurred in connection with the research and development of our microdose therapeutics and consist primarily of contract service expenses.

Given where we are in our life cycle, we do not separately track research and development expenses by project.

Our research and development expenses consist of:

Ophthalmic Technology

In 2025, our research and development expenses consisted primarily of internal salaries, benefits and non-cash stock-based compensation expenses incurred in connection with the research and development of our Optejet UFD device which we anticipate registering with the FDA in the coming months.

We anticipate that our research and development expenses will decline after the Optejet UFD device is registered.

In 2024, prior to the termination of our CHAPERONE study, our research and development expenses were incurred in connection with the research and development of our prior Optejet microdose therapeutics and consisted primarily of contract service expenses.

Our research and development expenses consisted of:

● direct clinical and non-clinical expenses, which include expenses incurred under agreements with contract research organizations, contract manufacturing organizations, and costs associated with preclinical activities, development activities and regulatory activities;

● personnel- related expenses, which include expenses related to consulting agreements with individuals that have since entered into employment agreements with us as well as salaries, non-cash stock-based compensation and other compensation of employees that is attributable to research and development activities;

● personnel-related expenses, which include expenses related to consulting agreements with individuals that have since entered into employment agreements with us as well as salaries and other compensation of employees that are attributable to research and development activities;

● facilities and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, marketing, insurance and other supplies used in research and development activities.

We expense research and development costs as incurred.

We record costs for some development activities, such as clinical trials, based on an evaluation of the progress to completion of specific tasks using data such as subject enrollment, clinical site activations or other information our vendors provide to us.

We recorded costs for some development activities, such as clinical trials, based on an evaluation of the progress to completion of specific tasks using data such as subject enrollment, clinical site activations or other information our vendors provide to us.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of payroll and related expenses, legal and other professional services, insurance expense, marketing expense, and non-cash stock-based compensation expense.

General and administrative expenses consist primarily of payroll and related expenses, legal and other professional services, insurance expense, and non-cash stock-based compensation expense.

We anticipate that our general and administrative expenses will decrease in the short term as requirements to support our continued research and development and commercial activities decline and in light of the conclusion of our review of strategic options, as well as a decline in our near term funding requirements following the closing of the Private Placement in June 2025 and subsequent establishment of our treasury strategy.

Gains and Losses in Connection with Digital Assets

HYPE digital assets are initially recorded at cost and then subsequently remeasured at fair value as of the balance sheet date with changes in fair value recognized as unrealized gains or losses in operating income (expense).

Upon derecognition of HYPE, the Company recognizes realized gains or losses in operating income (expense).

Liquid staking tokens and other digital assets are intangible assets with indefinite lives;

they are not amortized but are subject to impairment.

These assets are presented as digital intangible assets in the Balance Sheets at cost, net of any recognized impairments.

The Company tests digital intangible assets for impairment quarterly and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired.

The test for impairment consists of a comparison of the fair value of the digital intangible assets with their carrying amounts.

Should market prices fall below carrying value, the resulting difference is recognized as an impairment charge.

Such impairment charges are presented as impairment of digital intangible assets in operating income (expense).

Results of Operations

1 unchanged sentence

Revenue and Cost of Revenue

Revenue for the year ended December 31, 2024 totaled $57,336, which was offset by cost of revenues of $3,927,228.

Write-down of inventories to net realizable value for the year ended December 31, 2024 totaled approximately $3.9 million, compared to $12,218 for the year ended December 31, 2023.

The $3.9 million was comprised of $0.4 million of adjustments to bring the inventory to list price or net realizable value, a $0.4 million additional write-down of short-dated inventory to net realizable value, and $3.1 million of write-downs of commercial inventory due to the uncertainty associated with the Company’s clobetasol propionate and Mydcombi products and its exploration of strategic alternatives.

Revenue for the year ended December 31, 2023 totaled $3,787, which was offset by cost of revenues of $16,005.

Revenue for the year ended December 31, 2025 totaled $813,455 (of which $798,735 was from digital assets and $14,720 was from sales of our ophthalmological products), partially offset by cost of revenues of $303,290 (of which $303,242 was from digital assets and $48 was from the production of the ophthalmological products that were sold).

Revenue for the year ended December 31, 2024 totaled $57,336, which was offset by cost of revenues of $3,927,228, both of which were entirely from ophthalmic technology.

Research and Development Expenses

Research and development expenses for the year ended December 31, 2024 totaled $14.5 million, an increase of $1.5 million, or 11.5%, as compared to $13.0 million recorded for the year ended December 31, 2023.

Research and development expenses for the year ended December 31, 2025 totaled $1.9 million, a decrease of $12.6 million, or 87%, as compared to $14.5 million recorded for the year ended December 31, 2024.

Research and development expenses consisted of the following:

2 unchanged sentences

Direct clinical and non-clinical expenses

Supplies and materials

Depreciation expense

Facilities expenses

Non-cash stock based compensation expenses

Supplies and materials

Other expenses

Depreciation expense

Total research and development expenses

The increase in direct clinical and non - clinical expenses was primarily due to increased clinical studies costs in connection with the reacquisition of the CHAPERONE license, a reduction in reimbursements from Arctic Vision for GEN - 2 development costs due to GEN - 2 development nearing completion, and R&D work on GEN - 2 formulations for Mydcombi.

The increase in supplies and materials was primarily due to the reduction of engineering cost reimbursements from B+L in connection with the reacquisition of the CHAPERONE license from B+L.

The increase in depreciation expense was primarily due to a new manufacturing line placed in service during fiscal year 2023.

The decrease in personnel - related expenses was primarily due to a decrease in accrued bonuses and amortization period for older equity grants and forfeitures during fiscal year 2024.

The decrease in other expenses was primarily due to the decrease in temporary staff compared to 2023 while in the process of hiring permanent employees.

terminations in fiscal year 2024.

The decrease in facilities expenses was primarily due to lower facilities and manufacturing startup costs incurred in 2024 compared to 2023.

The decrease in non - cash stock - based compensation was primarily due to the ending of the amortization period for older equity grants and forfeitures during fiscal year 2024.

The decrease in other expenses was primarily due to the decrease in temporary staff compared to 2023 while in the process of hiring permanent employees.

The decrease in salaries and benefits and non-cash stock-based compensation was primarily due to the layoffs that occurred in the fourth quarter of 2024 after the termination of our CHAPERONE study and slowdown of our commercial operations relating to our ophthalmology product development in November 2024.

The decrease in direct clinical and non-clinical expenses and supplies and materials was primarily due to the termination of our CHAPERONE study.

The decrease in facilities expense was primarily due the phase out of our Redwood City, California, and Reno, Nevada, R&D and manufacturing locations over 2025, as we consolidated our focus to the development of the Optejet UFD to our Laguna Hills, California facility, as well as the impairment of right-of-use (ROU) assets in the fourth quarter of 2024, which lowered non-cash rent expense.

The decrease in depreciation expense was primarily due to the full impairment of fixed assets that occurred in the fourth quarter of 2024.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the year ended December 31, 2025 totaled $17.2 million, an increase of $2.8 million, or 20%, as compared to $14.3 million recorded for the year ended December 31, 2024.

Selling, general and administrative expenses consisted of the following:

For the Year Ended

Salaries and benefits

Professional fees

Non-cash stock based compensation

Insurance expense

Sales and marketing

Investor relations

FDA PDUFA fees

Travel, lodging and meals

Facilities expense

Director fees and expense

Total selling, general and administrative expenses

The increase in personnel-related expenses was primarily due to new staff additions related to commercialization efforts into fiscal year 2024.

The increase in professional fees was primarily due to the short-term need for temporary staff while in the process of hiring permanent employees and increased costs due to additional SEC filings in 2024.

The increase in regulatory expenses was primarily due to the FDA Prescription Drug User Fee Act (“PDUFA”) fees for Mydcombi and clobetasol propionate in 2024.

The increase in investor relations costs during 2024 was primarily due to increased filings and shareholder communications related to our January 2025 special meeting of shareholders.

The increase in travel, lodging and meals was primarily due to increased travel by the sales team to promote Mydcombi and clobetasol propionate.

The decrease in non-cash stock-based compensation was primarily due to the ending of the amortization period for older equity grants and forfeitures during fiscal year 2024.

The decrease in sales and marketing was primarily due to the decrease in expenditure on conferences and conference exhibits and meetings in fiscal year 2024.

The decrease in insurance expense was primarily due to a reduction in D&O insurance premiums from 2023.

The increase in other expenses was primarily due to foreign tax and development of our pharmacy network in fiscal year 2024.

The increase primarily resulted from increases in professional fees and general and administrative compensation expenses, offset by a decrease in sales and marketing expense.

Gains and Losses in Connection with Digital Assets

Digital assets are initially recorded at cost and then subsequently remeasured at fair value as of the balance sheet date with changes in fair value recognized as unrealized gains or losses in operating income (expense).

In the year ended December 31, 2025, the unrealized losses on digital assets totaled $9.0 million.

Upon conversion of HYPE to liquid staking tokens, or liquid staking tokens to HYPE, the Company recognizes realized gains or losses in operating income (expense).

In addition, in 2025, the Company received KNTQ digital assets through a network-initiated token distribution by Kinetiq.

The Company did not provide goods or services in exchange for the tokens and did not enter into a contractual arrangement in connection with the distribution.

The receipt of the tokens was accounted for as a non-reciprocal transaction within “Realized gain – digital assets” totaling $0.3 million.

In the year ended December 31, 2025, realized gains – digital assets totaled $8.3 million.

Liquid staking tokens and other digital assets are intangible assets with indefinite lives;

they are not amortized but are subject to impairment.

These assets are presented as digital intangible assets in the Balance Sheets at cost, net of any recognized impairments.

The Company tests digital intangible assets for impairment quarterly and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired.

The test for impairment consists of a comparison of the fair value of the digital intangible assets with their carrying amounts.

Should market prices fall below carrying value, the resulting difference is recognized as an impairment charge.

Such impairment charges are presented as impairment of digital intangible assets in operating income (expense).

In the year ended December 31, 2025, impairment loss on digital intangible assets totaled $27.2 million.

The Company operates an options strategy on the price of HYPE to mitigate risk and enhance yield on its digital asset treasury.

In 2025, the Company only executed out of the money covered call option agreements, on the price of HYPE sold against and collateralized by HYPE owned by the Company (including liquid staking tokens such as HiHYPE and kHYPE).

In the year ended December 31, 2025, total realized gains in connections with covered call options strategies totaled $0.2 million.

As of December 31, 2025, the Company had no outstanding HYPE options outstanding.

KNTQ digital assets are subsequently remeasured at fair value as of the balance sheet date with changes in fair value recognized as unrealized gains or losses in operating income (expense).

In the year ended December 31, 2025, the unrealized losses on KNTQ digital assets totaled $0.2 million.

There were no gains or losses in connection with digital assets for the year ended December 31, 2024.

Reacquisition of License Rights

Reacquisition of license rights for the year ended December 31, 2024 totaled $4.9 million, compared to no expense for the year ended December 31, 2023.

The $4.9 million is comprised of the aggregate $5.0 million of payments ($2.0 million of cash and $3.0 million settled in common stock) to B+L in connection with the reacquisition of the Bausch Licensed Product (which we are recording as an operating expense), partially offset by $0.1 million allocated to the repurchase of equipment.

Asset Impairments

Asset impairments expense for the year ended December 31, 2024 was $11.2 million, compared to no expense for the year ended December 31, 2023.

Uncertainty associated with our business and our exploration of our strategic options has led us to record impairments of our intangible assets of $6.1 million, property and equipment of $2.5 million, equipment deposits of $0.7 million, prepaid expenses of $0.7 million, operating lease right-of-use asset of $0.4 million, deferred clinical supply costs of $0.4 million and other assets of $0.4 million.

There was no Reacquisition of license rights for the year ended December 31, 2025.

Reacquisition of license rights for the year ended December 31, 2024 totaled $4.9 million, comprised of the aggregate $5.0 million of payments ($2.0 million of cash and $3.0 million settled in common stock) to Bausch + Lomb in connection with the reacquisition of the Bausch Licensed Product (which we are recording as an operating expense), partially offset by $0.1 million allocated to the repurchase of equipment.

Asset Impairments (excluding digital assets)

There were no asset impairments for the year ended December 31, 2025 excluding digital asset activity.

Asset impairments expense for the year ended December 31, 2024 was approximately $11.2 million.

Uncertainty associated with our business and our exploration of our strategic options has led us to record impairments for the year ended December 31, 2024 of our intangible assets of $6.1 million, property and equipment of $2.5 million, equipment deposits of $0.7 million, prepaid expenses of $0.7 million, operating lease right-of-use asset of $0.4 million, deferred clinical supply costs of $0.4 million and other assets of $0.4 million.

We ceased exploration of strategic options in June 2025.

Other Income (Expense)

Total other expense for the year ended December 31, 2024 was approximately $1.1 million, a decrease of $0.8 million, compared to approximately $1.9 million for the year ended December 31, 2023.

Total other expense for the year ended December 31, 2024 primarily consisted of approximately $2.5 million of interest expense related to the Avenue loan, partially offset by $1.2 million of changes in fair value of equity consideration (the equity payable for the B+L and Formosa transactions) and $0.2 million of interest income, primarily from Treasury bills.

Total other expense for the year ended December 31, 2023, primarily consisted of approximately $2.4 million of interest expense related to the Avenue loan and $0.4 million for the potential replacement cost for returned products,

primarily offset by $0.2 million of income from the sale of clinical supplies and $0.7 million of interest income, mainly from Treasury bills.

Liquidity and Going Concern

Total other income for the year ended December 31, 2025 was approximately $1.4 million, compared to total other expense of approximately $1.1 million for the year ended December 31, 2024.

Total other income for the year ended December 31, 2025 primarily consisted of approximately (a) $2.3 million gain on extinguishment of liabilities, including $2.2 million from the release of obligations related to a license agreement (see Note 6 – Other Intangible Assets), (b) $0.4 million other income, and (c) $0.2 million of interest income, partially offset by $1.6 million of interest expense related to the loan pursuant to the Avenue Loan Agreement (the “Avenue Loan).

Total other expense for the year ended December 31, 2024 primarily consisted of approximately $2.5 million of interest expense related to the Avenue Loan, partially offset by $1.2 million of changes in fair value of equity consideration (the equity payable for the Bausch + Lomb and Formosa Pharmaceuticals) and approximately $0.2 million of interest income, primarily from Treasury bills.

Liquidity and Capital Resources

We measure our liquidity in a number of ways, including the following:

Cash and Cash Equivalents

Working Capital

Working Capital (Deficit)

Notes Payable (Gross)

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At December 31, 2025, our accumulated deficit since inception was $240.6 million.

As of December 31, 2024, we had a cash and cash equivalents balance of $2.1 million, a working capital deficit of approximately $13.1 million and stockholders’ deficiency of $12.7 million.

As of December 31, 2025, we had a cash and cash equivalents balance of $6.4 million, a working capital surplus of approximately $4.5 million and stockholders’ equity of $41.1 million.

As of December 31, 2025 and December 31, 2024, we had $8.3 million and $10.7 million, respectively, of gross debt outstanding.

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Net cash used in operating activities for the year ended December 31, 2024 was approximately $30.1 million, which includes cash used to fund a net loss of $49.8 million, increased by $0.3 million of net cash used by changes in the levels of operating assets and liabilities, partially offset by $20.0 million of non-cash expenses.

Net cash used in investing activities for the year ended December 31, 2025 was approximately $72.0 million, which was primarily related to the purchase of HYPE digital assets.

Net cash used in investing activities for the year ended December 31, 2024 was approximately $0.2 million, which was primarily related to the purchase of property and equipment.

Net cash used in investing activities for the year ended December 31, 2023 was approximately $4.0 million, which includes $2.9 million attributable to purchases of property and equipment and $1.1 million attributable to the license agreement with Formosa.

Net cash provided by financing activities for the year ended December 31, 2025 totaled approximately $91.0 million, which was primarily attributable to $49.4 million of net proceeds from the sale of Series A Preferred Stock and warrants in the Private Placement, $39.4 million of net proceeds from the sale of common stock in our “at-the-market” offering and $4.8 million of net proceeds from the exercise of warrants partially offset by $1.5 million from the repayment of notes payable and $0.9 million from payment of preferred dividends.

Net cash provided by financing activities for the year ended December 31, 2024 totaled approximately $17.6 million, which was primarily attributable to $17.0 million of net proceeds from the sale of common stock and warrants in equity offerings and, $6.1 million of net proceeds from the sale of common stock in our “at-the-market” offering, partially offset by $5.5 million from the repayment of notes payable.

Net cash provided by financing activities for the year ended December 31, 2023 totaled approximately $19.8 million, which was primarily attributable to $10.9 million of net proceeds from the sale of common stock and warrants from an equity offering, $4.6 million of net proceeds from the sale of common stock in our at-the-market offering and $4.9 million of net proceeds from the credit facility with Avenue, partially offset by $0.6 million from the repayment of notes payable.

We believe that our existing cash, cash equivalents and restricted cash as of December 31, 2025, will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months.

Our financial condition is substantially dependent on the market price and liquidity of HYPE tokens, which are subject to extreme volatility and limited trading venues.

Substantially all of our treasury assets are concentrated in HYPE tokens and HYPE LSTs.

HYPE tokens have experienced significant price volatility, and our financial results and carrying value of our digital assets will fluctuate materially based on HYPE token price movements.

We depend on the continued success and adoption of the Hyperliquid protocol for the value of our treasury holdings.

We plan to continue to pursue additional capital through our at-the-market offering program in the future, however, such funding may not be available on terms acceptable to us or at all.

Although we believe that such capital sources will continue to be available, there can be no assurances that financing will be available to us when needed, or if available, on terms acceptable to us.

If we are unable to obtain adequate financing on terms that are satisfactory to us, our ability to continue to grow or support the business and to respond to business challenges could be significantly limited, which may adversely affect our business plans.

We may require proceeds from sales of digital assets in order to fund ongoing operations.

USDH is Hyperliquid’s native stablecoin which powers gas-free payments and enables noncustodial financial primitives.

As part of its regular operations, the Company began adopting USDH as a method of settling certain digital assets transactions as purchasing HYPE digital assets or receiving fees for its temporary HYPE Asset Use Service agreements.

USDH is accounted for as a financial instrument that can be redeemed one USDC for one U.S.

dollar on demand from the issuer.

The Company holds $81,422 USDH on its Balance Sheet within prepaid expenses and other current assets as of December 31, 2025.

The Company did not own any USDH as of December 31, 2024.

Contractual Obligations and Commitments

During the next twelve months we have commitments to pay (a) $5.5 million to settle our December 31, 2024 accounts payable, accrued expenses and other current liabilities, (b) $0.6 million relating to our non-cancelable operating lease commitments, and (c) $10.7 million of gross payments due under our notes payable and convertible notes payable (if not previously converted).

After the next twelve months we have commitments to pay (a) $0.7 million relating to our non-cancelable operating lease commitments.

Avenue Loan and Security Agreement

As discussed in Note 8 – Notes Payable and Convertible Notes Payable, on November 22, 2022, we entered into the Loan and Security Agreement with Avenue, for an aggregate principal amount of up to $15,000,000.

The initial tranche of the Loan and Security

Agreement was $10,000,000.

On May 22, 2023, pursuant to the Loan and Security Agreement, we received an additional tranche of debt funding in the amount of $5,000,000.

The Avenue Loan bears interest at an annual rate equal to the greater of (A) 7.0% and (B) the prime rate as reported in The Wall Street Journal plus 4.45%.

The Avenue Loan maturity date is November 1, 2025.

The additional funding triggered the extension of the interest-only period from the original 12 months to 18 months (through May 2024) for the entire outstanding balance due under the Loan and Security Agreement (initial and additional tranches).

Following the interest-only period, we will make equal monthly payments of principal until the maturity date, plus interest.

We must also make a final payment equal to 4.25% of the initial and additional tranches, amounting to a premium of $637,500 on the aggregate borrowing.

If we prepay the Avenue Loan, we will be required to pay a prepayment fee of 2% if the Avenue Loan is prepaid during the second year and 1% if the Avenue Loan is repaid during the third year.

On November 22, 2024, we entered into an amendment of the Avenue Loan whereby the Lender agreed to defer principal and interest payments on the amounts outstanding until March 2025.

On February 21, 2025, we entered into a second amendment of the Avenue Loan whereby the Lender agreed to defer principal and interest payments on amounts outstanding until the end of September 2025.

Deferred interest will accrue on the outstanding principal amount at the interest rate stated in the original Avenue Loan.

Pursuant to the amendment, up to $10,000,000 of the principal amount outstanding may be converted at the option of the Lender into shares of our common stock at a conversion price of $1.68 per share, subject to typical anti - dilution adjustments

The Avenue Loan requires us to make and maintain representations and warranties and other agreements that are customary in Loan agreements of this type.

The Avenue Loan is secured by all of our assets globally, including intellectual property.

The Avenue Loan also contains customary events of default, including non-payment of principal or interest, violations of covenants, bankruptcy and material judgments.

Upon the occurrence of an event of default, all interest and principal will be accelerated and immediately become due and payable.

In addition, Avenue will have the right to exercise any other right or remedy provided by applicable law.

Going Concern

As of December 31, 2024, we had cash and cash equivalents of approximately $2.1 million and an accumulated deficit of approximately $195.3 million.

For the years ended December 31, 2024 and 2023, we incurred net losses of approximately $49.8 million and $27.3 million, respectively, and used cash in operations of approximately $30.1 million and $23.8 million, respectively.

We do not have recurring revenue and have not yet achieved profitability.

We expect to continue to incur cash outflows from operations.

These circumstances raise substantial doubt about our ability to continue as a going concern for at least one year from the date that these financial statements are issued.

Implementation of our plans and our ability to continue as a going concern will depend upon our ability to generate sufficient recurring revenues, ability to raise further capital, through the sale of additional equity or debt securities or the completion of a transaction consistent with the strategic alternatives that we are exploring or otherwise, to support our future operations.

Our operating needs include the planned costs to operate our business, including amounts required to fund working capital and capital expenditures.

Our future capital requirements and the adequacy of our available funds will depend on many factors, including our ability to successfully commercialize our products and services, competing technological and market developments, and the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement our product and service offerings.

If we are unable to generate sufficient recurring revenues, secure additional capital, or the completion of a transaction consistent with the strategic alternatives that we are exploring.

we may be required to curtail our research and development initiatives, take additional measures to reduce costs in order to conserve our cash or file for bankruptcy.

During the next twelve months we have commitments to pay (a) $2.2 million to settle our December 31, 2025 accounts payable, accrued expenses and other current liabilities and (b) $0.5 million relating to our non-cancelable operating lease commitments.

The Avenue Loan is in an interest-only period, with half of the accruing interest being paid-in-kind, until 2027.

After the next twelve months we have commitments to pay (a) $0.2 million relating to our non-cancelable operating lease commitments and (b) $8.3 million relating to our notes payable.

Risks and Uncertainties

The continuing worldwide implications of the war between Russia and Ukraine and the conflict in the Middle East remain difficult to predict at this time.

The imposition of sanctions on Russia by the United States and other countries and counter sanctions by Russia, and the resulting economic impacts on oil prices and other materials and goods, could affect the price of materials used in the manufacture of our product candidates.

If the price of materials used in the manufacturing of our product candidates increase, that would adversely affect our business and the results of our operations.

These events, such as the interruption in telecommunications or internet services, cyber-related terrorist acts, civil disturbances, war or other catastrophes, could also negatively affect the digital asset economy in one or more jurisdictions.

Moreover, foreign laws, regulations or directives may conflict with those of the United States and may negatively impact the acceptance of one or more digital assets by users, merchants and service providers outside the United States and may therefore impede the growth or sustainability of the digital asset economy in the United States and globally.

Critical Accounting Estimates

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We consider an accounting estimate to be critical if:

(i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.

impact on our financial condition or results of operations.

There are items within our financial statements that require estimation but are not deemed critical, as defined above.

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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-K

Item 7. Management’s Discussion and Analysis