Item 7. Management’s Discussion and Analysis
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion of our financial condition and results of operations in conjunction with our audited financial statements and the notes included elsewhere in this Form 10-K. The following discussion contains forward-looking statements that involve certain risks and uncertainties. Our actual results could differ materially from those discussed in these statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Form 10-K, particularly under the “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements and Risk Factors Summary” sections.
Overview
Revelation is a clinical-stage life science company that is focused on rebalancing inflammation to optimize health using its proprietary formulation Gemini. We are developing a pipeline of potential high-value products based on Gemini. Gemini is our proprietary formulation of PHAD an established TLR4 agonist that can stimulate the human body’s innate immune response to prevent and treat disease. Our current Gemini based programs consist of: GEM-AKI, which is being developed as a potential therapy for the prevention and treatment of acute kidney injury; and GEM-CKD, which is being developed as a potential therapy for the prevention and treatment of chronic kidney disease.
Since our inception, we have devoted substantially all of our resources to organizing and staffing our Company, business planning, raising capital, and research and development of our Product Candidates.
We have funded our operations since our inception to December 31, 2025 through the issuance and sale of our capital stock, from which we have raised net proceeds of $69.2 million. Our current cash and cash equivalents balance will not be sufficient to complete all necessary product development or future commercialization efforts. We anticipate that our current cash and cash equivalents balance, which includes approximately $10.7 million as of December 31, 2025, combined with approximately $6.7 million in net proceeds received in January 2026 in connection with a warrant inducement transaction, will not be sufficient to sustain operations within one-year after the date that our audited financial statements for December 31, 2025 were issued, which raises substantial doubt about our ability to continue as a going concern.
We plan to seek additional funding through public or private equity or debt financings. We may not be able to obtain financing on acceptable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of our stockholders. If we are unable to obtain funding we could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect our business operations.
We have incurred recurring losses since our inception, including a net loss of $8.9 million for the year ended December 31, 2025 and $15.0 million for the year ended December 31, 2024. As of December 31, 2025 we had an accumulated deficit of $49.4 million. We expect to continue to generate operating losses and negative operating cash flows for the foreseeable future if and as we:
• continue the research and development of our product candidates;
• initiate clinical studies for, or preclinical development of, our product candidates;
• further develop and refine the manufacturing processes of our product candidates;
• change or add manufacturers or suppliers of product candidate materials;
• seek regulatory and marketing authorizations for any of our product candidates that successfully complete development;
• acquire or license other product candidates, technologies or biological materials;
• make milestone, royalty or other payments under future license agreements;
• obtain, maintain, protect and enforce our intellectual property portfolio;
• seek to attract and retain new and existing skilled personnel;
• create additional infrastructure to support our operations as a public company and incur increased legal, accounting, investor relations and other expenses; and
• experience delays or encounter issues with any of the above.
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Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical studies and our expenditures on other research and development activities.
We have never generated revenue and do not expect to generate revenue from product sales unless and until we successfully complete development and obtain regulatory approval for our Product Candidates or other product candidates, which we expect will not be for at least several years, if ever. Accordingly, until such time as we can generate significant revenue from sales of Product Candidates or other product candidates, if ever, we expect to finance our cash needs through a combination of public or private equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Recent Developments
2026 Reverse Stock Split
On January 28, 2026, the Company effected a 1-for-4 reverse stock split of our outstanding shares of common stock, which had been approved at the 2025 annual meeting of stockholders on June 23, 2025. All share numbers included herein have been adjusted to reflect this reverse split.
Class I Warrant Inducement
On January 23, 2026, the Company entered into warrant inducement offer letters with two holders of 2,136,251 Class I Common Stock Warrants, exercisable for 2,136,251 shares of common stock with an exercise price of $8.80 per share of common stock. Pursuant to the warrant inducement offer letters, the holders agreed to the immediate cash exercise of their 2,136,251 Class I Common Stock Warrants to purchase an aggregate of 2,136,251 shares of the Company’s common stock at an exercise price of $3.44 per share, and the Company’s agreement to issue 4,272,500 Class J Common Stock Warrants exercisable for a total of up to 4,272,500 shares of common stock, at an exercise price of $3.44. The Company received net proceeds of approximately $6.7 million from the warrant exercises.
Research and Development
Research and development expenses consist primarily of costs incurred for the development of our product candidates. Our research and development expenses consist primarily of external costs related to clinical development, costs related to contract research organizations, costs related to consultants, costs related to acquiring and manufacturing clinical study materials, costs related to contract manufacturing organizations and other vendors, costs related to the preparation of regulatory submissions, costs related to laboratory supplies and services, and personnel costs. Personnel and related costs consist of salaries, employee benefits and stock-based compensation for personnel involved in research and development efforts.
We expense all research and development expenses in the periods in which they are incurred. We accrue for costs incurred as the services are being provided by monitoring the status of specific activities and the invoices received from our external service providers. We adjust our accrual as actual costs become known.
We expect our research and development expenses to increase substantially for the foreseeable future as we continue the development of Product Candidates and continue to invest in research and development activities. The process of conducting the necessary clinical research and product development to obtain regulatory approval is costly and time consuming, and the successful development of Product Candidates and any future product candidates is highly uncertain. To the extent that our product candidates continue to advance into larger and later stage clinical studies, our expenses will increase substantially and may become more variable.
The actual probability of success for Product Candidates or any future product candidate may be affected by a variety of factors, including the safety and efficacy of our product candidates, investment in our clinical programs, manufacturing capability, regulatory and staffing developments at the FDA and competition with other products. As a result, we are unable to determine the timing of initiation, duration and completion costs of our research and development efforts or when and to what extent we will generate revenue from the commercialization and sale of Product Candidates or any future product candidate.
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General and Administrative
Our general and administrative expenses consist primarily of personnel costs, expenses for outside professional services, including financial advisory, legal, human resource, audit and accounting services and consulting costs. Personnel and related costs consist of salaries, employee benefits and stock-based compensation for personnel involved in executive, finance and other administrative functions. We expect our general and administrative expenses to increase for the foreseeable future as we increase the size of our administrative function to support the growth of our business and support our continued research and development activities. We also anticipate increased expenses as we continue to operate as a public company, including increased expenses related to financial advisory services, audit, legal, regulatory, investor relations costs, director and officer insurance premiums associated with maintaining compliance with exchange listing and SEC requirements.
Other Income (Expense), Net
Other income (expense), net for 2025 primarily consists of the interest income from our cash balances in savings accounts, foreign currency transaction gains and losses, and the change in fair value of the warrant liability. During 2024, other income (expense), net also included the LifeSci Capital LLC judgment expense and reimbursement of legal costs, clinical trial related settlement expenses with A-IR Clinical Research Ltd, and expenses in connection with the deferred underwriting commissions.
Results of Operations
The following table summarizes our results of operations for the periods presented:
Year Ended
December 31,
2025
2024
Change
Operating expenses:
Research and development
$
4,063,857
$
3,548,996
$
514,861
General and administrative
5,006,957
4,426,113
580,844
Total operating expenses
9,070,814
7,975,109
1,095,705
Loss from operations
(9,070,814
)
(7,975,109
)
(1,095,705
)
Total other income (expense), net
157,165
(7,063,427
)
7,220,592
Net loss
$
(8,913,649
)
$
(15,038,536
)
$
6,124,887
Research and Development Expenses
The following table summarizes our research and development expenses for the periods presented:
Year Ended
December 31,
2025
2024
Change
GEM-AKI and GEM-CKD clinical study expenses
$
2,227,649
$
1,681,731
$
545,918
Manufacturing expenses
—
390,022
(390,022
)
Other program expenses
74,812
77,679
(2,867
)
Other expenses
168,536
172,369
(3,833
)
Personnel expenses (including stock-based compensation)
1,592,860
1,227,195
365,665
Total research and development expenses
$
4,063,857
$
3,548,996
$
514,861
Research and development expenses increased by $0.5 million, from $3.5 million for the year ended December 31, 2024 to $4.1 million for the year ended December 31, 2025. The increase was primarily due to increases of $0.5 million in clinical study expenses related to GEM-AKI and GEM-CKD and $0.4 million of personnel expenses, offset by a decrease of $0.4 million in manufacturing expenses.
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General and Administrative Expenses
The following table summarizes our general and administrative expenses for the periods presented:
Year Ended
December 31,
2025
2024
Change
Personnel expenses (including employee stock-based compensation)
$
3,045,968
$
2,768,602
$
277,366
Legal and professional fees
1,725,765
1,274,567
451,198
Other expenses
235,224
382,944
(147,720
)
Total general and administrative expenses
$
5,006,957
$
4,426,113
$
580,844
General and administrative expenses increased by $0.6 million, from $4.4 million for the year ended December 31, 2024 to $5.0 million for the year ended December 31, 2025. The increase was primarily due to an increase of $0.5 million in legal and professional fees and an increase of $0.3 million in personnel expenses, offset by a $0.1 million decrease in other general and administrative expenses.
Other Income (expense), Net
Other income (expense), net was income of $0.2 million for the year ended December 31, 2025, related primarily to interest income on our cash balances in savings accounts and foreign currency transactions gains and losses. Other income (expense), net was expense of approximately $7.1 million for the year ended December 31, 2024, primarily related to the LifeSci Capital LLC judgment expense and reimbursement of legal costs, clinical trial related settlement expenses with A-IR Clinical Research Ltd., and expenses in connection with the deferred underwriting commissions, offset by interest income from our cash balances in savings accounts.
Liquidity and Capital Resources
Since our inception to December 31, 2025, we have funded our operations from the issuance and sale of our common stock, preferred stock and warrants, from which we have raised net proceeds of $69.2 million, of which $12.5 million was received during the year ended December 31, 2025. As of December 31, 2025, we had available cash and cash equivalents of $10.7 million and an accumulated deficit of $49.4 million.
Our use of cash is to fund operating expenses, which consist primarily of research and development expenditures related to the Product Candidates or other products candidates. We plan to increase our research and development expenses substantially for the foreseeable future as we continue the clinical development of our current and future product candidates. At this time, due to the inherently unpredictable nature of product development, we cannot reasonably estimate the costs we will incur and the timelines that will be required to complete development, obtain marketing approval, and commercialize our current product candidate or any future product candidates. For the same reasons, we are also unable to predict when, if ever, we will generate revenue from product sales or any future license agreements which we may enter into or whether, or when, if ever, we may achieve profitability. Clinical and preclinical development timelines, the probability of success, and development costs can differ materially from expectations. In addition, we cannot forecast the timing and amounts of milestone, royalty and other revenue from licensing activities, which future product candidates may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.
We expect to continue to generate substantial operating losses for the foreseeable future as we expand our research and development activities. We will continue to fund our operations primarily through utilization of our current financial resources and through additional raises of capital.
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To the extent that we raise additional capital through partnerships or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates, future revenue streams or research programs or to grant licenses on terms that may not be favorable to us. If we raise additional capital through public or private equity offerings, the ownership interest of our then-existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of or suspend one or more of our clinical studies or preclinical studies, research and development programs or commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.
Going Concern
We have incurred recurring losses since our inception, including a net loss of $8.9 million for the year ended December 31, 2025. As of December 31, 2025 we had an accumulated deficit of $49.4 million, a stockholders’ equity of $8.9 million and available cash and cash equivalents of $10.7 million. We expect to continue to incur significant operating and net losses, as well as negative cash flows from operations, for the foreseeable future as we continue to complete all necessary product development or future commercialization efforts. We have never generated revenue and do not expect to generate revenue from product sales unless and until we successfully complete development and obtain regulatory approval for the Product Candidates or other product candidates, which we expect will not be for at least several years, if ever. We do not anticipate that our current cash and cash equivalents balance, which includes $10.7 million as of December 31, 2025, combined with approximately $6.7 million in net proceeds received subsequent to December 31, 2025 in connection with a warrant inducement transaction, will be sufficient to sustain operations within one-year after the date that our audited financial statements for December 31, 2025 were issued, which raises substantial doubt about our ability to continue as a going concern.
To continue as a going concern, we will need, among other things, to raise additional capital resources. We plan to seek additional funding through public or private equity or debt financings. We may not be able to obtain financing on acceptable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of our stockholders. If we are unable to obtain funding we could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect our business operations.
The audited consolidated financial statements for December 31, 2025, have been prepared on the basis that we will continue as a going concern, and 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 for us to continue as a going concern.
Cash Flows
The following table summarizes our cash flows for the periods presented:
Year Ended
December 31,
2025
2024
Net cash used in operating activities
$
(8,269,581
)
$
(18,321,276
)
Net cash used in investing activities
—
(19,171
)
Net cash provided by financing activities
12,470,894
12,847,764
Net increase (decrease) in cash and cash equivalents
$
4,201,313
$
(5,492,683
)
Net Cash Used in Operating Activities
During the year ended December 31, 2025, net cash used in operating activities was $8.3 million, which consisted of a net loss of $8.9 million offset primarily by $0.6 million in stock-based compensation expense.
During the year ended December 31, 2024, net cash used in operating activities was $18.3 million, which consisted of a net loss of $15.0 million and a change in our net operating assets and liabilities of $3.4 million.
Net Cash Used in Investing Activities
During the year ended December 31, 2025, there was there was no cash used in investing activities.
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During the year ended December 31, 2024, net cash used in investing activities consisted of purchases of lab equipment.
73
Net Cash Provided by Financing Activities
During the year ended December 31, 2025, net cash provided by financing activities was $12.5 million, and was primarily due to net proceeds of $3.4 million received in connection with the May 2025 Public Offering and $8.7 million in net proceeds received in connection with the Class H Warrant Inducement in September 2025.
During the year ended December 31, 2024, net cash provided by financing activities was $12.8 million, primarily from net proceeds of $5.4 million received in connection with the February 2024 Public Offering, $0.2 million received from exercises of the Class D Common Stock Warrants, net proceeds of $3.5 million received in connection with the Class D Warrant Inducement, and net proceeds of $3.7 million received in connection with the Class E Warrant Inducement.
Contractual Obligations and Other Commitments
The following table summarizes our contractual obligations as of December 31, 2025 and the effects such obligations are expected to have on our liquidity and cash flow in future periods:
Less than
1 year
1 to 3
years
3 to 5
years
More than
5 years
Total
Operating lease obligations
$
93,052
$
788,803
$
—
$
—
$
881,855
Total contractual obligations
$
93,052
$
788,803
$
—
$
—
$
881,855
We have entered into an operating lease for laboratory and office space in San Diego, California. The table above includes future minimum lease payments under the non-cancelable lease arrangement.
We enter into contracts in the normal course of business with third party service providers and vendors. These contracts generally provide for termination on notice and, therefore, are cancellable contracts and not considered contractual obligations and commitments. We believe that our non-cancelable obligations under these agreements are not material.
Off-Balance Sheet Arrangements
As of December 31, 2025, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
Quantitative and Qualitative Disclosure about Market Risk
We are exposed to market risks in the ordinary course of our business.
Interest Rate Risk
Our cash and cash equivalents consist primarily of highly liquid investments in money market funds and cash on hand and have an original maturity date of 90 days or less. The fair value of our cash and cash equivalents would not be significantly affected by either an increase or decrease in interest rates due mainly to the short-term nature of these instruments.
Foreign Currency Risk
Our expenses are generally denominated in the currencies in which our operations are located, which is primarily in the United States, England and Australia. We make payments to vendors for research and development services with payments denominated in foreign currencies including Australian Dollars and British Pounds. We are subject to foreign currency transaction gains or losses on our payments denominated in foreign currencies. To date, foreign currency transaction gains and losses have not been material and we have not had a formal hedging program with respect to foreign currency; however, we may consider doing so in the future. A 10% increase or decrease in currency exchange rates would not have a material effect on our financial results.
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Critical Accounting Policies and Significant Judgments and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with the generally accepted accounting principles in the United States (“GAAP”). The preparation of the consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions about future events that affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenue and expenses. These estimates and assumptions are based on management’s best estimates and judgment. Management regularly evaluates its estimates and assumptions using industry experience and other factors; however, actual results could differ materially from these estimates and could have an adverse effect on our consolidated financial statements. While our significant accounting policies are more fully described in the notes to our consolidated financial statements, we believe that the accounting policies discussed below are most critical to understanding and evaluating our historical and future performance.
Research and Development Expenses
All research and development costs are expensed as incurred. Research and development costs consist primarily of salaries, employee benefits, costs associated with preclinical studies and clinical trials (including amounts paid to clinical research organizations and other professional services). Payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.
We record accruals for estimated research and development costs, comprising payments for work performed by third party contractors, laboratories, participating clinical trial sites, and others. Some of these contractors bill monthly based on actual services performed, while others bill periodically based upon achieving certain contractual milestones. For the latter, we accrue the expenses as goods or services are used or rendered. Clinical trial site costs related to patient enrollment are accrued as patients enter and progress through the trial. Upfront costs, such as costs associated with setting up clinical trial sites for participation in the trials, are expensed immediately once incurred as research and development expenses.
Stock-based Compensation
We recognize the compensation expense related to stock options, third-party warrants, restricted stock awards (“RSAs”), and restricted stock units (“RSUs”) granted, based on the estimated fair value of the awards on the date of grant. The fair value of employee stock options and third-party warrants are generally determined using the Black-Scholes option-pricing model using various inputs, including estimates of historic volatility, term, risk-free rate, and future dividends. The fair value of RSAs and RSUs is determined based on the Company’s stock price on the date of grant. The grant date fair value of the stock-based awards, which may have graded vesting, is recognized using the straight-line method over the requisite service period of each stock-based award, which is generally the vesting period of the respective stock-based awards. The Company recognizes forfeitures as they occur.
Recent Accounting Pronouncements
See Note 2 to our consolidated financial statements for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one yet, of their potential impact on our financial condition of results of operations.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 8. Financial Statements and Supplementary Data.
The financial statements required by this item are set forth at the end of this Annual Report on Form 10-K beginning on page F-1 and are incorporated herein by reference.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.
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