What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-28 compared with 2024-03-28 · 1451 added, 780 removed, 185 unchanged (92% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY

Hoth Therapeutics, Inc.

Consolidated Financial Statements

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Therapeutics, Inc.

Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets as of December 2023 and 2022

Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2023 and 2022

Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2023 and 2022

Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022

Notes to Consolidated Financial Statements

Financial Statements

of Independent Registered Public Accounting Firm (PCAOB ID:

Balance Sheets as of December 2024 and 2023

Statements of Operations and Comprehensive Loss for the years ended December 31, 2024 and 2023

Statements of Changes in Stockholders’ Equity for the years ended December 31, 2024 and 2023

Statements of Cash Flows for the years ended December 31, 2024 and 2023

to Consolidated Financial Statements

of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors

Hoth Therapeutics, Inc.

the Stockholders and the Board of Directors of

Therapeutics, Inc.

Opinion on the Consolidated Financial Statements

1 unchanged sentence

balance sheets of Hoth Therapeutics, Inc.

(the “Company”) as of December 31, 2023 and 2022, the related consolidated statements

of operations, changes in stockholders’ equity and cash flows, for each of the two years in the period ended December 31, 2023,

and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated

financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2023

and 2022, and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31,

2023, in conformity with accounting principles generally accepted in the United States of America.

(the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements

of operations and comprehensive loss, changes in stockholders’ equity and cash flows for each of the two years in the period ended

December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion,

the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31,

2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in

conformity with accounting principles generally accepted in the United States of America.

Restatement of Prior Period Consolidated Financial

Statements and the Unaudited Interim Condensed Consolidated Financial Statements

As discussed in Note 8 to the consolidated financial

statements, the accompanying 2023 consolidated financial statements have been restated to correct certain misstatements.

Additionally,

the Company has restated its unaudited interim condensed consolidated financial statements previously reported in the Forms 10-Q for the

quarters ended March 31, 2023 and 2024, June 30, 2023 and 2024, and September 30, 2023 and 2024, as these interim periods were also affected

by the errors.

Our opinion is not modified with respect to the restatements.

Basis for Opinion

9 unchanged sentences

standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated

financial statements are free of material misstatement, whether due to error or fraud.

2 unchanged sentences

As part of our audits, we are required to obtain an understanding

of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s

of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s

internal control over financial reporting.

9 unchanged sentences

a reasonable basis for our opinion.

/S/ WithumSmith+Brown, PC

We have served as the Company’s auditor

New York, New York

March 28, 2024

Hoth Therapeutics, Inc.

Critical Audit Matters

The critical audit matters communicated below

are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated

to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and

(2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter

in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit

matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Research and Development Expenses, Accrued Clinical

Trial Liabilities, and Prepaid Research and Development Costs

Description of the Matter

The Company recognizes research and development

expenses as incurred.

Advance payments for future research and development activities are deferred and expensed as the related services

are performed.

The Company recognizes its clinical trial expenses based on the services performed pursuant to contracts with research

institutions and clinical research organizations (collectively, "CROs") that conduct and manage clinical trials on the Company's

The Company works closely with its CROs to reconcile

prepaid research and development costs and accrued clinical trial prepaid expenses and liabilities by obtaining reporting from the CROs,

discussing progress or stage of completion of services with internal personnel and external service providers, and comparing this information

to payments made, invoices received, and the agreed-upon fees to be paid for such services in the applicable contract, statements of work,

or purchase orders.

The reconciliation of the amount of work completed is primarily based on the status and timing of services performed

and the completion of project milestones.

We identified research and development expenses,

accrued clinical trial liabilities, and prepaid research and development costs as a critical audit matter given the estimation involved

in accounting for research and development expenses, accrued clinical trial liabilities, and prepaid research and development costs.

addition, as described in Note 8 to the consolidated financial statements, the Company identified errors in the accounting for advance

payments to a clinical research organization (CRO) during the 2024 audit which arose from expensing advance payments in full upon payment

rather than recording them as prepaid expenses and recognizing the expense as services were performed.

The errors led to a material overstatement

of research and development (R&D) expenses and an understatement of prepaid expenses in the affected periods.

This required extensive

audit effort related to the estimation of research and development expenses, accrued clinical trial liabilities and prepaid clinical expenses

and the complexity involved in determining the completeness and accuracy of the restated annual and interim financial data.

How We Addressed the Matter in Our Audit

Our audit procedures related to research and development

expenses, accrued clinical trial liabilities, and prepaid clinical expenses included selecting a sample of amounts recognized as research

and development expense, accrued clinical trial liabilities and prepaid research and development expenses and performing the following

procedures for each item selected:

● We obtained and read related master service agreements, statements

of work, purchase orders and/or other supporting agreements with the CROs.

● We performed corroborating inquiries with the Company's operations

personnel responsible for the oversight of activities regarding the nature and status of work performed under the various CRO agreements.

● We inspected evidence from the third-party vendors regarding

the payments made and the status and timing of services performed.

In addition, we obtained confirmations from selected CROs related

to billings incurred, balances due, work performed, and remaining advance balances.

● We compared the data and evidence obtained from internal

and external sources to the inputs used in the Company's analysis and recalculated the related research and development expense, prepaid

research and development expense, and the accrued clinical liabilities balance.

● We evaluated the Company’s process for identifying

and correcting the prior period errors by testing the restated annual and quarterly amounts, including agreeing the corrected balances

to underlying CRO contracts, payment records, and service performance timelines.

WithumSmith+Brown , PC

have served as the Company’s auditor since 2018.

York, New York

THERAPEUTICS, INC.

AND SUBSIDIARIES

CONSOLIDATED BALANCE

(As Restated)

CURRENT ASSETS:

Marketable equity securities, at fair value

Cash and cash equivalents

Prepaid expenses and other current assets

Total Current Assets

Right of use asset – operating lease

NON-CURRENT ASSETS:

Operating lease right-of-use asset, net

Investment in joint ventures at fair value

Total Non-Current Assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

2 unchanged sentences

Accrued expenses

Accrued license fee - current portion

Lease liability, current

Operating lease liability, current portion

Total Current Liabilities

Lease liability, noncurrent

Accrued license fee - less current portion

LONG-TERM LIABILITIES:

Operating lease liability, less current portion

Total Long-Term Liabilities

Total Liabilities

Commitments and Contingencies (See Note 7)

Commitments and Contingencies (Note 6)

STOCKHOLDERS’ EQUITY:

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3,000,000 shares undesignated;

0 shares issued and outstanding as of December 31, 2023 and December 31, 2022

Series A Convertible Preferred Stock, $ 0.0001 par value, 5,000,000 shares designated;

0 shares issued and outstanding at December 31, 2023 and December 31, 2022

Series B Preferred Stock, $ 0.0001 par value, 2,000,000 shares designated;

0 shares issued and outstanding as of December 31, 2023 and December 31, 2022

Common stock, $ 0.0001 par value, 50,000,000 shares authorized, 4,348,129 and 1,302,113 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively

0 shares issued and outstanding as of December 31, 2024 and 2023

Series A Convertible Preferred Stock, $ 0.0001 par value;

5,000,000 shares designated;

0 shares issued and outstanding on December 31, 2024 and 2023

Series B Preferred Stock, $ 0.0001 par value;

2,000,000 shares designated;

0 shares issued and outstanding on December 31, 2024 and 2023

Common stock, $ 0.0001 par value;

50,000,000 shares authorized;

8,042,747 and 4,348,129 shares issued and outstanding as of December 31, 2024 and 2023, respectively

Additional paid-in capital

5 unchanged sentences

Total Liabilities and Stockholders’ Equity

The accompanying notes are an integral part

of these consolidated financial statements.

Hoth Therapeutics, Inc.

Consolidated Statements of Operations and Comprehensive

The accompanying notes are an integral part of these consolidated financial statements.

THERAPEUTICS, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS

OF OPERATIONS AND COMPREHENSIVE LOSS

For the Year Ended

(As Restated)

OPERATING COSTS AND EXPENSES:

Research and development

Research and development expense

General and administrative expenses

1 unchanged sentence

LOSS FROM OPERATIONS

( 7,692,242 )

( 11,065,554 )

Other income (expense), net

Unrealized gain (loss) on marketable securities

Realized loss on marketable securities

Change in fair value of investments in joint ventures

Interest income

Dividend income

Other income, net

Total other income (expense), net

$ ( 7,845,390 )

$ ( 11,371,953 )

Deemed dividend to Series B Preferred Stock being redeemed

Net Loss Attributable to Common Stockholders

$ ( 7,845,390 )

$ ( 11,370,963 )

Net loss per share - basic and diluted

Weighted average number of common shares outstanding, basic and diluted

OTHER INCOME (EXPENSES), NET:

Unrealized loss on marketable securities

Change in fair value of investment in joint venture

Dividend and interest income

Total other income (expenses), net

NET LOSS PER COMMON SHARE:

Basic and diluted

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:

Basic and diluted

COMPREHENSIVE LOSS:

$ ( 7,845,390 )

$ ( 11,371,953 )

Other comprehensive income

Other comprehensive (loss) income:

Foreign currency translation adjustment

Total comprehensive loss

$ ( 7,840,136 )

$ ( 11,367,533 )

The accompanying notes are an integral part

of these consolidated financial statements.

Hoth Therapeutics, Inc.

Consolidated Statements of Changes in Stockholders’

Preferred Stock

The accompanying notes are an integral part of these consolidated financial statements.

THERAPEUTICS, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS

OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER

31, 2024 AND 2023

Comprehensive

Stockholders’

(As Restated)

Income (Loss)

Balance as of December 31, 2021

Balance, December 31, 2022 (As Restated)

$ ( 44,115,619 )

Exercise of warrants

Stock-based compensation

Vesting of restricted stock

Issuance of common stock (net of offering costs of $ 1,014,896 )

Issuance of Series B preferred stock

Redemption of Series B preferred stock

( 2,000,000 )

Fractional shares adjusted for reverse split

Common stock and warrants issued in private placement, net of offering costs

Vesting of restricted shares

Cumulative translation adjustment

( 8,106,122 )

( 11,371,953 )

Balance as of December 31, 2022

Balance, December 31, 2023 (As Restated)

( 52,221,741 )

Exercise of warrants

Exercise of pre-funded warrants

Stock-based compensation

Common stock and warrants issued in private placement (net of offering costs of $ 1,575,645 )

Vesting of restricted stock awards

Common shares issued for exercise of warrants, net of issuance costs

Common stock issued for cash, net

Vesting of restricted shares

Cumulative translation adjustment

( 8,188,300 )

( 7,845,390 )

Balance as of December 31, 2023

Balance, December 31, 2024

$ ( 60,410,041 )

The accompanying notes are an integral part

of these consolidated financial statements.

Hoth Therapeutics, Inc.

Consolidated Statements of Cash Flows

Year Ended December 31,

accompanying notes are an integral part of these consolidated financial statements.

THERAPEUTICS, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS

OF CASH FLOWS

For the Year Ended

(As Restated)

CASH FLOWS FROM OPERATING ACTIVITIES:

2 unchanged sentences

Adjustments to reconcile net loss to net cash used in operating activities:

Research and development-acquired license, expensed

Gain on termination of license agreement

Change in fair value of investments in joint ventures

Stock-based compensation

Realized loss on marketable securities

Unrealized (gain) loss on marketable securities

Unrealized loss on marketable securities

Change in fair value of investment in joint ventures

Changes in operating assets and liabilities:

Prepaid expenses and other current assets

Prepaid expenses

Accounts payable and accrued expenses

2 unchanged sentences

( 8,447,094 )

Cash flows from investing activities

Purchase of research and development licenses

Sale of marketable securities

Net cash provided by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance common stock, common stock warrants and prefunded warrants, net of offering costs

Proceeds from exercise of warrants

Proceeds from issuance common stock, net of offering costs

Proceeds from issuance of Series B Preferred Stock

Redemption of Series B Preferred Stock

Proceeds from repayment of note receivable and interest received

Proceeds from issuance of common stock, common stock warrants and prefunded warrants, net of offering costs

Proceeds from exercise of warrants, net of issuance costs

NET CASH PROVIDED BY FINANCING ACTIVITIES

Effect of exchange rate changes on cash and cash equivalents

Net change in cash

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

( 2,235,232 )

Cash, beginning of year

Cash, end of year

Supplemental disclosure of cash flow information:

Effect of exchange rate changes on cash and cash equivalents

CASH AND CASH EQUIVALENTS - beginning of year

CASH AND CASH EQUIVALENTS - end of year

NON-CASH INVESTING AND FINANCING ACTIVITIES:

ROU assets obtained in exchange for lease liability

The accompanying notes are an integral part

of these consolidated financial statements.

accompanying notes are an integral part of these consolidated financial statements.

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1-Organization and description of business operations

Hoth Therapeutics, Inc.

(together with its wholly-owned

subsidiaries, merveille.ai and Hoth Therapeutics Australia Pty Ltd, the “Company”) was incorporated under the laws of the

State of Nevada on May 16, 2017 .

The Company is a clinical-stage biopharmaceutical company focused on developing new generation therapies

for unmet medical needs.

The Company is focused on developing (i) a topical formulation for treating side effects from drugs used for

the treatment of cancer (HT-001);

December 31, 2024 and 2023

1 – Organization and Description of Business Operations

Therapeutics, Inc.

(together with its wholly-owned subsidiaries, merveille.ai and Hoth Therapeutics Australia Pty Ltd, the “Company”)

was incorporated under the laws of the State of Nevada on May 16, 2017 .

The Company is a clinical-stage biopharmaceutical company focused

on developing new generation therapies for unmet medical needs.

The Company is focused on developing (i) a topical formulation for treating

side effects from drugs used for the treatment of cancer (HT-001);

(ii) a treatment for mast-cell derived cancers and anaphylaxis (HT-KIT);

(iii) a treatment for traumatic

brain injury and ischemic stroke (HT-TBI);

and (iv) a treatment and/or prevention for Alzheimer’s or other neuroinflammatory diseases

We also have assets being developed for (i) atopic dermatitis (also known as eczema) (BioLexa);

(ii) a treatment for asthma

and allergies using inhalational administration (HT-004);

and (iii) a treatment for acne as well as inflammatory bowel diseases (HT-003).

The Company also has interests in certain other assets being developed by third parties (see Note 5 to the consolidated financial statements

for a discussion of the Company’s agreement with Zylö Therapeutics, Inc.

and Voltron Therapeutics, Inc.).

Liquidity and capital resources

Accounting Standards Update (“ASU”)

2014-15, Presentation of Financial Statements - Going Concern, requires management to evaluate the Company’s ability to continue

as a going concern one year beyond the filing date of the given financial statements.

This evaluation requires management to perform two

First, management must evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability

to continue as a going concern.

Second, if management concludes that substantial doubt is raised, management is required to consider whether

it has plans in place to alleviate that doubt.

Disclosures in the notes to the consolidated financial statements are required if management

concludes that substantial doubt exists or that its plans alleviate the substantial doubt that was raised.

The Company has funded its operations from proceeds

from the sale of equity and debt securities.

The Company will require significant additional capital to make the investments it needs

to execute its longer-term business plan.

The Company’s ability to successfully raise sufficient funds through the sale of debt

or equity securities when needed is subject to many risks and uncertainties and, even if it were successful, future equity issuances may

result in dilution to its existing shareholders and future debt securities may contain covenants that limit the Company’s operations

or ability to enter into certain transactions.

The Company believes its current cash is sufficient

to fund operations for at least the next 12 months from the issuance date of these financial statements.

However, the Company will need

to raise additional funding, through strategic relationships, public or private equity or debt financings, grants or other arrangements,

to develop and seek regulatory approvals for the Company’s current and future product candidates.

If such funding is not available,

or not available on terms acceptable to the Company, the Company’s current development plan and plans for expansion of its general

and administrative infrastructure may be curtailed.

On September 13, 2023, the Company entered into

a securities purchase agreement with certain institutional investors pursuant to which it sold (i) 549,275 shares of common stock and

(ii) pre-funded warrants (the “September Pre-Funded Warrants”) to purchase up to 550,725 shares of common stock at

a purchase price of $ 2.63 per share of common stock and a purchase price of $ 2.629 per September Pre-Funded Warrant.

Concurrently with

the sale of common stock and/or the September Pre-Funded Warrants, pursuant to the securities purchase agreement, in

a private placement, the Company issued and sold warrants (the “September Common Stock Warrants”) to purchase up to

1,100,000 shares of common stock.

Proceeds from the offering were approximately $ 2.9 million, prior

to deducting placement agent’s fees and other offering expenses payable by the Company .

The closing of the offering occurred

on September 15, 2023.

Each September Common Stock Warrant is exercisable for a period of five years from the issuance date at an exercise

price of $ 2.505 per share, subject to adjustment, and may, under certain circumstances, be exercised on a cashless basis.

Each September

Pre-Funded Warrant is exercisable until exercised in full at an exercise price of $ 0.001 per share and may be exercised on a cashless

In addition, pursuant to the terms of the offering, the Company issued to designees of H.C.

Wainwright & Co., LLC warrants

(“September Wainwright Warrants”) to purchase up to 55,000 shares of the Company’s common stock.

The September Wainwright

Warrants are exercisable for a period of five years from the commencement of sales pursuant to the offering at an exercise price of $ 3.2875

per share, subject to adjustment, and may, under certain circumstances, be exercised on a cashless basis.

Note 2-Significant accounting policies

Basis of presentation

and principles of consolidation

The Company’s consolidated financial statements

have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

The accompanying consolidated financial statements

include the accounts of the Company’s wholly-owned subsidiaries, merveille.ai which was incorporated under the laws of Nevada on

October 4, 2023 and Hoth Therapeutics Australia Pty Ltd, which was incorporated under the laws of the State of Victoria in Australia on

June 5, 2019.

All significant intercompany balances and transactions have been eliminated in consolidation.

Reclassifications

Certain line items on the statement of operations

and comprehensive loss for the year ended December 31, 2022 have been reclassified to conform to the current period presentation.

and development - licenses acquired (including stock-based compensation) of $ 0.1 million was reclassified to research and development.

Compensation and related expenses (including stock-based compensation) of $ 2.6 million, professional fees (including stock-based compensation)

of $ 2.5 million, rent of $ 0.1 million, and other general and administrative expense of $ 1.0 million were consolidated into one general

and administrative line item.

Dividend income and realized and unrealized gains and losses have been separately presented within other

income (expense), net.

These reclassifications did not change our reported net loss or comprehensive loss for the year ended December

Emerging growth

As an emerging growth company, the Company may

take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging

growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404

of the Sarbanes-Oxley Act of 2002, as amended, reduced disclosure obligations regarding executive compensation in its periodic reports

and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder

approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the Jumpstart Our

Business Startups Act of 2012 (“JOBS Act”) exempts emerging growth companies from being required to comply with new or revised

financial accounting standards until private companies (that is, those that have not had a Securities Act of 1933, as amended, registration

statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended) are

required to comply with the new or revised financial accounting standards.

The JOBS Act provides that an emerging growth company can elect

to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such

election to opt out is irrevocable.

The Company has elected not to opt out of such extended transition period which means that when a

standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth

company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

This may make comparison

of the Company’s financial statement with another public company that is neither an emerging growth company nor an emerging growth

company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting

standards used.

However, beginning December 31, 2024, we will no longer be an “emerging growth company,” and will no longer

have the ability to delay adoption of these new or revised accounting standards, or to take advantage of reduced corporate governance

Use of estimates

The preparation of consolidated financial statements

in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities

and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses

during the reporting periods.

The most significant estimates in the Company’s consolidated financial statements relate to stock-based

compensation and the valuation allowance of deferred tax assets resulting from net operating losses.

These estimates and assumptions are

based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results

of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are

not readily apparent from other sources.

Actual results may differ materially and adversely from these estimates.

To the extent there

are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

Cash and cash equivalents

The Company considers all highly liquid investments

purchased with original maturities of 90 days or less at acquisition to be cash equivalents.

There were no cash equivalents as of December

31, 2023 and December 31, 2022, respectively.

Cash held in foreign bank accounts totaled $ 0.1 million and $ 0.4 million as of December

31, 2023 and December 31, 2022, respectively.

Marketable securities

Marketable securities are classified as trading

and are carried at fair value.

The Company’s marketable securities consist of a mutual fund which is valued at a quoted market price.

Concentrations of credit risk and off-balance

The Company has significant cash balances at financial institutions

which, throughout the year, regularly exceed the federally insured limit of $ 250,000 .

Any loss incurred or a lack of access to such funds

could have a significant adverse impact on the Company’s financial condition, results of operations, and cash flows.

Fair Value of Financial Instruments

Financial Accounting Standards Board (“FASB”)

Accounting Standards Codification (“ASC”) 820, Fair Value Measurements , provides guidance on the development and disclosure

of fair value measurements.

Under this accounting guidance, fair value is defined as an exit price, representing the amount that would

be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement

As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would

use in pricing an asset or a liability.

The fair value of the Company’s assets and

liabilities, which would qualify as financial instruments under ASC Topic 820, approximates the carrying amounts represented in the Company’s

balance sheet, primarily due to their short-term nature.

The accounting guidance classifies fair value

measurements in one of the following three categories for disclosure purposes:

Quoted prices in active markets for identical assets or liabilities.

Inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace.

Unobservable inputs which are supported by little or no market activity and values determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.

In some circumstances, the inputs used to measure

fair value might be categorized within different levels of the fair value hierarchy.

In those instances, the fair value measurement is

categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.

During the years ended December 31, 2023 and December 31, 2022, there were no changes in valuation techniques or transfers between Level

1, Level 2, and Level 3.

The Company determines if an arrangement is a

lease at inception and classifies its leases at commencement.

Operating leases are presented as right-of-use (“ROU”) assets

and the corresponding lease liabilities are included in lease liability, current and lease liability, on the Company’s balance sheets.

ROU assets represent the Company’s right to use an underlying asset, and lease liabilities represent the Company’s obligation

to make lease payments in exchange for the ability to use the asset for the duration of the lease term.

The Company has lease agreements which contain

both lease and non-lease components, which it has elected to account for as a single lease component.

As such, minimum lease payments

include fixed payments for non-lease components within a lease agreement but exclude variable lease payments not dependent on an index

or rate, such as common area maintenance, operating expenses, utilities, or other costs that are subject to fluctuation from period to

and (iii) a treatment and/or prevention for Alzheimer’s or other neuroinflammatory diseases (HT-ALZ).

The Company also has assets

being developed for (i) atopic dermatitis (also known as eczema) (BioLexa);

(ii) a treatment for asthma and allergies using inhalational

administration (HT-004);

and (iii) a treatment for obesity, and obesity-related diseases and conditions (HT-VA).

and Capital Resources

Standards Update (“ASU”) No.

2014-15, Presentation of Financial Statements - Going Concern , requires management to

evaluate the Company’s ability to continue as a going concern one year beyond the filing date of the given financial statements.

This evaluation requires management to perform two steps.

First, management must evaluate whether there are conditions and events that

raise substantial doubt about the entity’s ability to continue as a going concern.

Second, if management concludes that substantial

doubt is raised, management is required to consider whether it has plans in place to alleviate that doubt.

Disclosures in the notes to

the consolidated financial statements are required if management concludes that substantial doubt exists or that its plans alleviate

the substantial doubt that was raised.

Company has funded its operations from proceeds from the sale of equity and debt securities.

The Company will require significant additional

capital to make the investments it needs to execute its longer-term business plan.

The Company’s ability to successfully raise

sufficient funds through the sale of debt or equity securities when needed is subject to many risks and uncertainties and, even if it

were successful, future equity issuances may result in dilution to its existing shareholders and future debt securities may contain covenants

that limit the Company’s operations or ability to enter into certain transactions.

Company believes its current cash is sufficient to fund operations for at least the next 12 months from the issuance date of these financial

However, the Company will need to raise additional funding, through strategic relationships, public or private equity or

debt financings, grants or other arrangements, to develop and seek regulatory approvals for the Company’s current and future product

If such funding is not available, or not available on terms acceptable to the Company, the Company’s current development

plan and plans for expansion of its general and administrative infrastructure may be curtailed.

On November 8, 2024, the Company entered into

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

Wainwright & Co., LLC (“Wainwright”) under

which the Company may offer and sell shares of its common stock having an aggregate sales price of up to $ 2,700,000 through Wainwright

as the sales agent pursuant to the Company’s effective shelf registration statement on Form S-3, including an accompanying prospectus

333-272620), and a prospectus supplement dated November 8, 2024.

Sales of shares of the Company’s common stock through

Wainwright, if any, will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule

415(a)(4) under the Securities Act of 1933, as amended.

Wainwright will use commercially reasonable efforts to sell shares of the Company’s

common stock from time to time, based on instructions from the Company (including any price, time or size limits or other parameters or

conditions the Company may impose).

The Company will pay Wainwright a commission equal to 3.0 % of the aggregate gross proceeds from the

sales of shares of the Company’s common stock sold through Wainwright under the ATM Agreement and will also reimburse Wainwright

for certain specified expenses in connection with the ATM Agreement.

The offering of shares pursuant to the ATM Agreement will terminate

on the earlier of (1) the sale, pursuant to the ATM Agreement, of shares having an aggregate offering price of $ 2,700,000 and (2) the

termination of the ATM Agreement by either the Company or Wainwright, as set forth therein.

In February 2025, the amount that the

Company could offer and sell pursuant to the ATM Agreement was increased to $ 5,000,000 .

As of March 28, 2025, the Company has sold shares

of its common stock having a total aggregate sales price of $ 2.7 million.

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

2 – Summary of Significant Accounting Policies

of Presentation and Principles of Consolidation

Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the

United States of America (“GAAP”).

accompanying consolidated financial statements include the accounts of the Company’s wholly-owned subsidiaries, merveille.ai which

was incorporated under the laws of Nevada on October 4, 2023 and Hoth Therapeutics Australia Pty Ltd, which was incorporated under the

laws of the State of Victoria in Australia on June 5, 2019.

All significant intercompany balances and transactions have been eliminated

in consolidation.

preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect

the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial

statements and the reported amounts of expenses during the reporting periods.

The most significant estimates in the Company’s consolidated

financial statements relate to stock-based compensation, the valuation of modified warrants, and the valuation allowance of deferred

tax assets resulting from net operating losses.

These estimates and assumptions are based on current facts, historical experience and

various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about

the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources.

results may differ materially and adversely from these estimates.

To the extent there are material differences between the estimates

and actual results, the Company’s future results of operations may be affected.

and Cash Equivalents

Company considers all highly liquid investments purchased with original maturities of 90 days or less at acquisition to be cash equivalents.

Cash and cash equivalents consist of bank accounts and highly liquid money funds and totaled $ 7,038,923 and $ 9,292,352 as of December

31, 2024 and 2023, respectively.

Financial instruments that potentially subject the Company to concentration of credit risk consist principally

of cash deposits at the three financial institutions the Company utilizes for its banking requirements.

The Company’s foreign bank

accounts are not subject to FDIC insurance.

Cash held in foreign bank accounts totaled approximately $ 0.1 million and $ 0.1 million as

of December 31, 2024 and 2023, respectively.

Concentrations

of Credit Risk and Off-Balance Sheet Risk

Company has significant cash balances at financial institutions which, throughout the year, regularly exceed the federally insured limit

of $ 250,000 .

Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial

condition, results of operations, and cash flows.

Value of Financial Instruments

Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurements ,

(“ASC-820”), provides guidance on the development and disclosure of fair value measurements.

Under this accounting

guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to

transfer a liability in an orderly transaction between market participants at the measurement date.

As such, fair value is a

market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a

fair value of the Company’s assets and liabilities, which would qualify as financial instruments under ASC-Topic 820, approximates

the carrying amounts represented in the Company’s consolidated balance sheets, primarily due to their short-term nature.

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

accounting guidance classifies fair value measurements in one of the following three categories for disclosure purposes:

prices in active markets for identical assets or liabilities.

other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace.

inputs which are supported by little or no market activity and values determined using pricing models, discounted cash flow methodologies,

or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.

some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy.

those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input

that is significant to the fair value measurement.

During the years ended December 31, 2024 and 2023, there were no changes in valuation

techniques or transfers between Level 1, Level 2, and Level 3.

Company determines if an arrangement is a lease at inception and classifies its leases at commencement.

Operating leases are presented

as right-of-use (“ROU”) assets and the corresponding lease liabilities are included in operating lease liability, current

and lease liability, on the Company’s consolidated balance sheets.

ROU assets represent the Company’s right to use an underlying

asset, and lease liabilities represent the Company’s obligation to make lease payments in exchange for the ability to use the asset

for the duration of the lease term.

Company has lease agreements which contain both lease and non-lease components, which it has elected to account for as a single lease

As such, minimum lease payments include fixed payments for non-lease components within a lease agreement but exclude variable

lease payments not dependent on an index or rate, such as common area maintenance, operating expenses, utilities, or other costs that

are subject to fluctuation from period to period.

Certain of the leases contain an option to extend the term of the lease.

The option to extend a lease is included in the lease

term only when it is reasonably certain that the Company will elect that option.

Additionally, the Company does not record ROU assets

or lease liabilities for short-term leases that have a term of twelve months or less at lease commencement.

ROU assets and lease liabilities are recognized

at the commencement date and determined using the present value of the future minimum lease payments over the lease term.

uses an incremental borrowing rate based on an estimated rate of interest for collateralized borrowing since the Company’s leases

do not include an implicit interest rate.

The estimated incremental borrowing rate considers market data, actual lease economic environment,

and the lease term at commencement date.

Investment in joint ventures

Ownership interests in entities for which the

Company has significant influence that are not consolidated are accounted for as equity method investments.

to extend a lease is included in the lease term only when it is reasonably certain that the Company will elect that option.

Additionally,

the Company does not record ROU assets or lease liabilities for short-term leases that have a term of twelve months or less at lease

commencement.

assets and lease liabilities are recognized at the commencement date and determined using the present value of the future minimum lease

payments over the lease term.

The Company uses an incremental borrowing rate based on an estimated rate of interest for collateralized

borrowing since the Company’s leases do not include an implicit interest rate.

The estimated incremental borrowing rate considers

market data, actual lease economic environment, and the lease term at commencement date.

in Joint Ventures

interests in entities for which the Company has significant influence that are not consolidated are accounted for as equity method investments.

SEC Staff Announcement:

for Limited Partnership Investments” (codified in ASC 323-30-S99-1) guidance requires the use of the equity method unless the investor’s

interest “is so minor that the limited partner may have virtually no influence over partnership operating and financial policies.”

The SEC staff’s position is that investments in limited partnerships of greater than 3 % to 5 % are considered more than minor and,

therefore, should be accounted for using the equity method or fair value option.

Investments accounted for using the equity method may

be reported on a lag up to three months if financial statements of the investee are not available in sufficient time for the investor

to apply the equity method as of the current reporting date.

The determination of whether an investee’s results are recorded on

a lag is made on an investment-by-investment basis.

This investment in joint ventures is further described in Note 5 of these consolidated

financial statements.

Accounts Payable

Accounting for Limited Partnership Investments (codified in ASC 323-30-S99-1) guidance requires the use of the

equity method unless the investor’s interest “is so minor that the limited partner may have virtually no influence over partnership

operating and financial policies.” The SEC staff’s position is that investments in limited partnerships of greater than 3 %

to 5 % are considered more than minor and, therefore, should be accounted for using the equity method or fair value option.

accounted for using the equity method may be reported on a lag up to three months if financial statements of the investee are not available

in sufficient time for the investor to apply the equity method as of the current reporting date.

The determination of whether an investee’s

results are recorded on a lag is made on an investment-by-investment basis.

This investment in joint ventures is further described in

Note 4 of these consolidated financial statements.

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Prepaid Expenses

As of December 31, 2024 and 2023, prepaid expenses and

other current assets consisted of the following:

As of December 31,

Prepaid clinical trial expenses

Prepaid insurance

R&D credit receivable

Other prepaid expenses

For the year ended December 31, 2023, the Company’s

3 unchanged sentences

loss following a manner consistent with how the expense was originally recorded.

There was no such transaction in the year ended December

Development Costs

2 unchanged sentences

Advance payments

for goods and services that will be used in future research and development activities are expensed when the activity has been performed

or when the goods have been received rather than when the payment is made.

Stock-based compensation

The Company accounts for share-based payment awards

exchanged for services at the estimated grant date fair value of the award.

Stock options issued under the Company’s long-term incentive

plans are granted with an exercise price equal to no less than the market price of the Company’s stock at the date of grant and

expire up to ten years from the date of grant.

Options are generally issued fully vested.

The Company accounts for forfeited awards as

The Company estimates the fair value of stock

option grants using the Black-Scholes option pricing model and the assumptions used in calculating the fair value of stock-based awards

represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.

Expected Term - The

expected term of options represents the period that the Company’s stock-based awards are expected to be outstanding based on the

simplified method, which is the half-life from vesting to the end of its contractual term.

Expected Volatility -

The Company computes stock price volatility over expected terms based on its historical common stock trading prices.

Risk-Free Interest Rate

- The Company bases the risk-free interest rate on the implied yield available on U.S.

Treasury zero-coupon issues with an equivalent

remaining term.

Expected Dividend -

The Company has never declared or paid any cash dividends on its common shares and does not plan to pay cash dividends in the foreseeable

future, and, therefore, uses an expected dividend yield of zero in its valuation models.

The Company grants restricted stock awards under

its equity incentive plan.

for goods and services that will be used in future research and development activities are accrued and then expensed when the activity

has been performed or when the goods have been received rather than when the payment is made.

Company accounts for share-based payment awards exchanged for services at the estimated grant date fair value of the award.

Stock options

issued under the Company’s long-term incentive plans are granted with an exercise price equal to no less than the market price

of the Company’s stock at the date of grant and expire up to ten years from the date of grant.

Options are generally issued fully

The Company accounts for forfeited awards as they occur.

Company estimates the fair value of stock option grants using the Black-Scholes option pricing model and the assumptions used in calculating

the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application

of management’s judgment.

Term - The expected term of options represents the period that the Company’s stock-based awards are expected to be outstanding

based on the simplified method, which is the half-life from vesting to the end of its contractual term.

Volatility - The Company computes stock price volatility over expected terms based on its historical common stock trading prices.

Interest Rate - The Company bases the risk-free interest rate on the implied yield available on U.S.

Treasury zero-coupon issues

with an equivalent remaining term.

Dividend - The Company has never declared or paid any cash dividends on its common shares and does not plan to pay cash dividends

in the foreseeable future, and, therefore, uses an expected dividend yield of zero in its valuation models.

Company grants restricted stock awards under its equity incentive plan.

Restricted stock awards are granted to employees and non-employees.

The restricted stock awards are measured

based on the grant-date fair value.

In general, the restricted stock awards vest over a service period of zero to three years.

compensation expense is generally recognized based on the straight-line basis over the requisite service period and forfeitures are accounted

for as they occur.

The Company has issued warrants to non-employees.

The restricted stock awards are measured based on the grant-date fair value.

In general, the restricted stock awards vest over a service

period of zero to three years.

Stock-based compensation expense is generally recognized based on the straight-line basis over the requisite

service period and forfeitures are accounted for as they occur.

Company has issued warrants to non-employees.

The warrants are measured based on the grant-date fair value.

In general, the warrants vest over a term of zero to ten years.

compensation expense is generally recognized based on the straight-line basis over the vesting term.

Income taxes are recorded in accordance with ASC

740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach.

The Company recognizes

deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial

statements or tax returns.

Deferred tax assets and liabilities are determined based on the difference between the financial statement

and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the

deferred tax assets will not be realized.

The Company accounts for uncertain tax positions

in accordance with the provisions of ASC 740.

When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions

to the extent that the benefit would more likely than not be realized.

The determination as to whether the tax benefit will more likely

than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances.

Net loss per share

Net loss per share is computed by dividing net

loss by the weighted average number of common stock outstanding during the period.

Since the Company had a net loss in the periods presented,

basic and diluted net loss per common share are the same.

The following were excluded from the computation of diluted shares outstanding

due to the losses for each period presented, as they would have had an anti-dilutive impact on the Company’s net loss:

In general, the warrants

vest over a term of zero to ten years.

Stock-based compensation expense is generally recognized based on the straight-line basis over

the vesting term.

taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an

asset and liability approach.

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of

events that have been included in the consolidated financial statements or tax returns.

Deferred tax assets and liabilities are determined

based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for

the year in which the differences are expected to reverse.

Valuation allowances are provided, if based upon the weight of available evidence,

it is more likely than not that some or all of the deferred tax assets will not be realized.

Company accounts for uncertain tax positions in accordance with the provisions of ASC 740.

When uncertain tax positions exist, the Company

recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized.

The determination

as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as

consideration of the available facts and circumstances.

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Loss per Share

loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period.

Since the Company had a net loss in the periods presented, basic and diluted net loss per common share are the same.

The following were

excluded from the computation of diluted shares outstanding due to the losses for each period presented, as they would have had an anti-dilutive

impact on the Company’s net loss:

Year Ended December 31,

1 unchanged sentence

Non-vested restricted stock awards

Recent accounting pronouncements

Currently, management does not believe that any

recently issued, but not yet effective accounting pronouncements, if currently adopted, would have a material impact on the Company’s

consolidated financial statements.

Note 3-License Agreements

The following summarizes the Company’s research

and development expenses for licenses acquired during the years ended December 31, 2023 and 2022:

Year Ended December 31,

The Company accounts for warrants as either equity-classified

or liability-classified instruments based on an assessment of the warrant’s specific terms and in accordance with ASC 480, “Distinguishing

Liabilities from Equity” (“ASC 480”), and ASC 815, “Derivatives and Hedging” (“ASC 815”).

assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability

pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether

the warrants are indexed to the Company’s own ordinary shares, among other conditions for equity classification.

This assessment,

which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period

end date while the warrants are outstanding.

For issued warrants that meet all of the criteria

for equity classification, the warrants are recorded as a component of additional paid-in capital at the time of issuance.

warrants that do not meet all the criteria for equity classification, the warrants are classified as liability and are required to be

recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter.

Comprehensive Income (Loss)

Comprehensive income (loss) is composed of net

loss and other comprehensive income (loss).

During the years ended December 31, 2024 and 2023, other comprehensive (loss) income was attributable

to foreign currency translation adjustments.

Foreign Currency

The reporting currency of the Company is the U.S.

For the Company’s subsidiary with non-U.S.

dollar functional currencies, assets and liabilities are translated into U.S.

dollars at period-end exchange rates.

Revenue and expenses are translated at the average exchange rates during the period.

Equity transactions

are translated using historical exchange rates.

The resulting translation adjustments are recorded in accumulated other comprehensive

income (loss) as a component of stockholders’ equity.

Foreign currency translation adjustments arising from differences in exchange

rates from period to period are recorded within "Accumulated other comprehensive income (loss)" in the consolidated balance

Segment Reporting

In November 2023, the FASB issued ASU 2023-07,

Segment Reporting (ASC 280):

Improvements to Reportable Segment Disclosures (ASU 2023-07), which improves reportable segment disclosure

requirements, primarily through enhanced disclosures about significant segment expenses among other disclosure requirements.

is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after

December 15, 2024.

The Company adopted ASU 2023-07 on January 1, 2024.

The Company operates as a single operating segment as

a clinical-stage biopharmaceutical company focused on developing new generation therapies for unmet medical needs.

In accordance with

ASC 280, the Company’s chief operating decision maker has been identified as the Chief Executive Officer, who reviews operating

results to make decisions about allocating resources and assessing performance for the entire Company and decides how to allocate resources

based on loss from operations, managing cash flows and evaluating research and development and general and administrative expenses.

guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information

quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the

entity holds material assets and reports revenue.

All material operating units qualify for aggregation under “Segment Reporting”

due to their similarities in economic characteristics such as nature of services and procurement processes.

Since the Company operates

in one segment, all financial information required by “Segment Reporting” can be found in the accompanying notes to consolidated

financial statements.

Accounting Pronouncements

Taxes (Topic 740)

December 2023, the FASB issued guidance within ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The amendments in the ASU are intended to provide more transparency about income tax information through improvements to income tax disclosures

primarily related to the rate reconciliation and income taxes paid information.

The ASU requires disclosure in the rate reconciliation

of specific categories as well as additional information for reconciling items that meet a quantitative threshold.

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

ASU requires disclosure of the following information about income taxes paid on an annual basis:

taxes paid (net of refunds received), disaggregated by federal and state taxes and by individual jurisdictions in which income taxes

paid (net of refunds received) is equal to or greater than five percent of total income taxes paid (net of refunds received).

tax expense (or benefit) from continuing operations disaggregated by federal and state jurisdictions.

ASU is effective for annual periods beginning after December 15, 2024.

The amendments should be applied on a prospective basis.

believes the adoption of this ASU will not have any impact on the Company’s consolidated financial statements.

management does not believe that any other recently issued, but not yet effective accounting pronouncements, if currently adopted, would

have a material impact on the Company’s consolidated financial statements.

3 – License Agreements

following summarizes the Company’s research and development expenses for licenses acquired (including stock-based compensation)

during the years ended December 31, 2024 and 2023:

For the Year Ended

The George Washington University

1 unchanged sentence

Virginia Commonwealth University

Department of Veteran Affairs

University of Cincinnati

$ ( 201,328 )

The George Washington University

George Washington University

the year ended December 31, 2024, the Company recorded expenses of $ 13,620 for license fees, including an expense of $ 7,661 for the year

ended December 31, 2024 related to warrants granted to The George Washington University (“GW”) pursuant to the patent license

agreement with GW dated February 1, 2020 (“GW Patent License Agreement”) and the patent license agreement with GW dated August

7, 2020 (“Second GW Patent License Agreement”).

During the year ended December 31, 2023, the Company

recorded an expense of approximately $ 29,000 related to warrants granted to The George Washington University (“GW”) pursuant

to the patent license agreement with GW dated February 1, 2020 (“GW Patent License Agreement”) and the patent license agreement

with GW dated August 7, 2020 (“Second GW Patent License Agreement”).

recorded expenses of $ 66,172 for license fees, including an expense of approximately $ 29,000 related to warrants granted to GW pursuant

to the GW Patent License Agreement and the Second GW Patent License Agreement.

The Company recorded an expense of $ 30,000 for a milestone

payment pursuant to GW Patent License Agreement.

The Company also recorded $ 7,500 the year ended December 31, 2023 for license maintenance

During the year ended December 31, 2022, the Company

recorded an expense of approximately $ 53,000 related to warrants granted to The George Washington University (“GW”) pursuant

to the patent license agreement with GW dated February 1, 2020 (“GW Patent License Agreement”) and the patent license agreement

with GW dated August 7, 2020 (“Second GW Patent License Agreement”).

The Company also recorded $ 14,000 the year ended December

31, 2022 for license maintenance fees.

North Carolina

State University

During the year ended December 31, 2023, the Company

paid $ 0 for the license fee associated with the license agreement by and between the Company and North Carolina State University dated

February 25, 2021.

During the year ended December 31, 2022, the Company

paid approximately $ 28,000 for the license fee associated with the license agreement by and between the Company and North Carolina State

University dated February 25, 2021.

Virginia Commonwealth

On August 16, 2023, the Company terminated its

license agreement by and between the Company and Virginia Commonwealth University dated May 18, 2020.

As of December 31, 2023, the Company

reversed its prior accrual of $ 150,000 for five years of annual minimum payments and $ 125,000 for annual maintenance fees.

As of December 31, 2022, the Company accrued $ 150,000

for five years of annual minimum payments and $ 125,000 for annual maintenance fees.

Chelexa Biosciences, Inc.

and the University

of Cincinnati

During the year ended December 31, 2023, the Company

paid $ 2,500 for the annual license maintenance fee and $ 5,000 for the minimum royalty fee to the University of Cincinnati associated with

the Assignment and Assumption Agreement by and between the Company and Chelexa Biosciences dated May 14, 2020.

The Company also recorded $ 7,500 for the year ended December 31, 2023 for license maintenance

Carolina State University

the year ended December 31, 2024, the Company recorded expenses of $ 6,250 for license fees associated with the license agreement by and

between the Company and North Carolina State University dated February 25, 2021.

the year ended December 31, 2023, the Company did not recognize any expenses for license fees associated with such license agreement.

Commonwealth University

the year ended December 31, 2024, the Company did not recognize any expenses for license fees associated with the exclusive license agreement

(the “VCU License Agreement”) by and between the Company and Virginia Commonwealth University (“VCU”) dated May

18, 2020 that was terminated August 16, 2023.

the year ended December 31, 2023, the Company recognized a gain of $ 275,000 for license fees associated with the VCU License Agreement.

On August 16, 2023, the Company terminated the VCU License Agreement.

As of December 31, 2023, the Company reversed its prior accrual

of $ 150,000 for five years of annual minimum payments and $ 125,000 for annual maintenance fees.

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Department of Veteran Affairs

During the year ended December 31, 2024, the

Company recognized expenses of $ 54,000 for license fees associated with the exclusive license agreement by and between the Company and

the US Department of Veteran Affairs dated December 9, 2024.

During the year ended December 31, 2023, the Company

paid $ 2,500 for the annual license maintenance fee and $ 5,000 for the minimum royalty fee associated to the University of Cincinnati with

the Assignment and Assumption Agreement by and between the Company and Chelexa Biosciences dated May 14, 2020.

Note 4-Note Receivable

Pursuant to the sublicense agreement dated July

30, 2020 by and between the Company and Isoprene Pharmaceuticals, Inc.

(“Isoprene”), the Company made an investment of $ 50,000

in Isoprene in the form of a convertible promissory note (the “Isoprene Note”) on September 10, 2020.

The Isoprene Note was

due to mature on September 10, 2022 and accrued interest at a rate equal to the lower of:

(i) the highest lawful rate permitted under

applicable law and (ii) 6 % per annum.

The Isoprene Note could not be prepaid without the prior written consent of the Company;

however, that if the Isoprene Note had not been converted in connection with a Qualified Financing (as defined or a Change of Control

(as defined) by the two year anniversary of the date of the issuance of the Isoprene Note, Isoprene could elect, in its sole discretion,

to repay the Isoprene Note and any accrued interest thereon.

As of the maturity date of the Isoprene Note, neither a Qualified Financing

nor a Change of Control had occurred, and the Isoprene Note of $ 50,000 and accrued interest of approximately $ 6,000 was paid off on October

Note 5-Fair Value of Financial Assets and

The following tables present the Company’s

assets and liabilities that are measured at fair value at December 31, 2023 and 2022:

Fair value measured at December 31, 2023

Marketable securities - mutual fund

Investment in joint ventures

Fair value measured at December 31, 2022

Marketable securities - mutual fund

did not recognize any expenses for license fees associated with such license agreement.

Biosciences, Inc.

and the University of Cincinnati

the years ended December 31, 2024 and 2023, the Company recognized expenses of $ 1,666 and $ 7,500 for license fees associated with the

Assignment and Assumption Agreement by and between the Company and Chelexa Biosciences, Inc.

dated May 14, 2020, respectively.

4 – Fair Value of Financial Assets and Liabilities

following table presents the Company’s assets and liabilities that are measured at fair value on December 31, 2024 and 2023:

Fair value measured on December 31, 2024

Investment in joint ventures

Level 3 Measurement

The following table sets forth a summary of the

changes in the fair value of the Company’s Level 3 financial assets that are measured at fair value on a recurring basis:

Investment in joint ventures at fair value at December 31, 2021

Change in fair value of investments in joint ventures

Investment in joint ventures at fair value at December 31, 2022

Change in fair value of investments in joint ventures

Investment in joint ventures at fair value at December 31, 2023

Fair value measured on December 31, 2023

Investment in joint ventures

The Company has elected to measure the investment

in joint ventures using the fair value option at each reporting date.

Under the fair value option, bifurcation of an embedded derivative

is not necessary, and all related gains and losses on the host contract and derivative due to change in the fair value will be reflected

in interest income and other income (expense), net in the consolidated statements of operations and comprehensive loss.

The value at which the Company’s investment

in joint ventures is carried on its books is adjusted to estimated fair value at the end of each quarter, taking into account general

economic and stock market conditions and those characteristics specific to the underlying investments.

Investment in HaloVax

On March 23, 2020, the Company entered into a

Development and Royalty Agreement (the “Development and Royalty Agreement”) with Voltron Therapeutics, Inc.

to form a joint venture entity named HaloVax, LLC (“HaloVax”) to jointly develop potential product candidates for the prevention

of COVID-19 based upon certain technology that had been exclusively licensed by Voltron from The General Hospital Corporation (d/b/a Massachusetts

General Hospital).

Pursuant to the Development and Royalty Agreement, the Company is entitled to receive sales-based royalties.

pursuant to the terms of the Development and Royalty Agreement, on March 23, 2020, the Company and HaloVax entered into a Membership Interest

Purchase Agreement pursuant to which the Company purchased 5 % of HaloVax’s outstanding membership interests for $ 250,000 on March

27, 2020 (the “Initial Closing Date”) and had the option to purchase up to an additional 25 % of HaloVax’s membership

interests (for $ 3,000,000 (inclusive of the $ 250,000 )), which option expired 30 days after the Initial Closing Date.

On May 28, 2020,

the Company entered into a Membership Interest Purchase Agreement to purchase 1 % of HaloVax’s outstanding membership interest for

a purchase price of $ 100,000 .

During the fourth quarter of 2022, the Company

identified indicators of impairment for the HaloVax investment as a result of adverse changes in HaloVax’s business operations,

including liquidity concerns.

As a result, the Company recorded an impairment charge of approximately $ 0.4 million in the fourth quarter

The investment in HaloVax was valued at $ 0 as of December 31, 2023 and 2022.

Investment in Zylö

In connection with the Company’s March 2020

underwritten public offering of shares of its common stock, on May 4, 2020, the Company purchased 120,000 shares of Zylö’s

3 Measurement

following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial assets that are measured

at fair value on a recurring basis for the years ended December 31, 2024 and 2023:

Investment in joint venture for the year ended December 31, 2024 and 2023

For the Year Ended

Investment in joint ventures at fair value – beginning of year

Change in fair value of investment in joint ventures

Investment in joint ventures at fair value – end of year

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

in Joint Ventures

Company has elected to measure the investment in joint ventures using the fair value option at each reporting date.

Under the fair value

option, bifurcation of an embedded derivative is not necessary, and all related gains and losses on the host contract and derivative

due to change in the fair value will be reflected in other income (expenses), net in the consolidated statements of operations and comprehensive

value at which the Company’s investment in joint ventures is carried on its books is adjusted to estimated fair value at the end

of each quarter, taking into account general economic and stock market conditions and those characteristics specific to the underlying

Investment in Zylö Therapeutics

In connection with the Company’s March 2020 underwritten public

offering of shares of its common stock, on May 4, 2020, the Company purchased 120,000 shares of Zylö Therapeutics (“Zylö”)

Class B common stock for $ 60,000 .

On December 8, 2021, the Company entered into a third amendment (the “Zylö Amendment”)

to the Exclusive Sublicense Agreement with Zylö originally dated August 19, 2019, pursuant to which the Company licensed its novel

cannabinoid therapeutic, HT-005 for lupus patients, back to Zylö.

Pursuant to the Zylö Amendment, on December 6, 2021, Zylö

issued the Company 100,000 shares of its Class B common stock.

In addition, pursuant to the Zylö Amendment, within 90 days following

a sale by Zylö of all of its assets and rights related to HT-005 to a third-party (a “Sale”), Zylö shall pay the

Company a low single digit percent of the net proceeds received by it attributable to HT-005 in the United States and Canada and their

respective territories (collectively, the “Territory”) for the purposes of therapeutic uses related to lupus in humans (the

After the Sale, any and all rights of the Company pursuant to the Exclusive Sublicense Agreement, including all

amendments thereto, shall terminate.

Furthermore, pursuant to the Zylö Amendment, following the date of the first commercial sale

of HT-005 in the Territory, in the Field, Zylö shall pay the Company (i) a low single digit percent of the Net Sales (as defined

in the Exclusive Sublicense Agreement) of HT-005 in the event HT-005 is sold in the Territory and (ii) a low double digit percent of any

royalty that Zylö receives through the sublicense to a third-party based on Net Sales of HT-005 in the Territory which payments shall

continue in each country in the Territory until expiration of the last-to-expire Valid Claim (as defined in the Exclusive Sublicense Agreement).

During December 2022, Zylö conducted a 409A valuation of their Class B common stock and valued its share price at $ 0.15 per share.

This value was ratified by Zylö’s board of directors in December 2022.

In December 2023, Zylö conducted a 409A valuation

of their Class B common stock and valued its share price at $ 0.17 per share.

This value was ratified by Zylö’s board of directors

in December 2023.

The valuation reflects a probability-weighted present value of expected future investment returns considering certain

possible outcomes and the rights of each class of Zylö’s equity.

The future values of the common stock under the various outcomes

are discounted back to the valuation date at a risk-adjusted discount rate and probability weighted to determine the value for the Class

B common stock.

to the Exclusive Sublicense Agreement with Zylö originally dated August 19, 2019 (as amended, the “Exclusive Sublicense Agreement”),

pursuant to which the Company licensed its novel cannabinoid therapeutic, HT-005 for lupus patients, back to Zylö.

Pursuant to the

Zylö Amendment, on December 6, 2021, Zylö issued the Company 100,000 shares of its Class B common stock.

In addition, pursuant

to the Zylö Amendment, within 90 days following a sale by Zylö of all of its assets and rights related to HT-005 to a third-party

(a “Sale”), Zylö shall pay the Company a low single digit percent of the net proceeds received by it attributable to

HT-005 in the United States and Canada and their respective territories (collectively, the “Territory”) for the purposes of

therapeutic uses related to lupus in humans (the “Field”).

After the Sale, any and all rights of the Company pursuant to the

Exclusive Sublicense Agreement, including all amendments thereto, shall terminate.

Furthermore, pursuant to the Zylö Amendment, following

the date of the first commercial sale of HT-005 in the Territory, in the Field, Zylö shall pay the Company (i) a low single digit

percent of the Net Sales (as defined in the Exclusive Sublicense Agreement) of HT-005 in the event HT-005 is sold in the Territory and

(ii) a low double digit percent of any royalty that Zylö receives through the sublicense to a third-party based on Net Sales of HT-005

in the Territory which payments shall continue in each country in the Territory until expiration of the last-to-expire Valid Claim (as

defined in the Exclusive Sublicense Agreement).

Zylö conducted a 409A valuation of their Class B common stock in February 2024, and

as of December 31, 2024 and 2023, valued its share price at $ 0.167 and $ 0.17 per share, respectively.

This value was ratified

by Zylö’s board of directors in February 2024 and December 2023, respectively.

February 23, 2024, the Company acquired 22,000 shares of Class B Common stock of Atticus Pharma, a subsidiary of Zylö Therapeutics,

based upon a 1-for-10 ratio of current shares and was instructed, on July 3, 2024, that the 409A valuation of the shares was $ 79 , or

$ 0.0036 per share, pursuant to the February 2024 valuation ratified by Zylö’s board of directors.

valuations reflect a probability-weighted present value of expected future investment returns considering certain possible outcomes and

the rights of each class of Zylö’s and Atticus Pharma’s equity.

The future values of the common stock under the various

outcomes are discounted back to the valuation date at a risk-adjusted discount rate and probability weighted to determine the value for

the Class B common stock.

Significant unobservable inputs in the valuation include:

(i) probabilities of each scenario, (ii) timing of occurrence,

(iii) future valuation;

(i) probabilities of each scenario, (ii) timing of

occurrence, (iii) future valuation;

(iv) and the risk-adjusted discount rate.

During the years ended December 31, 2023 and 2022,

the Company recorded approximately $ 4,400 in unrealized gain on this investment and $ 27,000 in unrealized loss on this investment, respectively.

The investment in Zylö was valued at $ 37,400 and $ 33,000 as of December 31, 2023 and 2022, respectively.

Note 6-Stockholder’s Equity

Preferred Stock

The Company is authorized to issue up to 10,000,000

shares of preferred stock.

This preferred stock may be issued in one or more series, and shall have such designations, preferences and

relative, participating, optional or other special rights and qualifications, limitations or restrictions thereof as shall be determined

at the time of issuance by the Company’s board of directors without further action by the Company’s shareholders.

As of December

31, 2023, 5,000,000 shares of the Company’s preferred stock has been designated as Series A Convertible Preferred Stock and 2,000,000

shares of the Company’s preferred stock has been designated as Series B Preferred Stock.

Series A Convertible Preferred Stock

The shares of Series A Convertible Preferred Stock,

par value $ 0.0001 per share, are not mandatorily redeemable and do not embody an unconditional obligation to settle in a variable number

of equity shares.

As such, the shares of Series A Convertible Preferred Stock are classified as permanent equity on the consolidated balance

The holders’ contingent redemption right in the event of certain deemed liquidation events does not preclude permanent equity

classification.

Further, the shares of Series A Convertible Preferred Stock are considered an equity-like host for purposes of assessing

embedded derivative features for potential bifurcation.

The embedded conversion feature is considered to be clearly and closely related

to the associated convertible preferred stock host instrument and therefore was not bifurcated from the equity host.

Series B Preferred Stock

consolidated investment in Zylö was valued at $ 36,819 and $ 37,400 as of December 31, 2024 and 2023, respectively.

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

5 – Stockholders’ Equity

Company is authorized to issue up to 10,000,000 shares of preferred stock.

This preferred stock may be issued in one or more series,

and shall have such designations, preferences and relative, participating, optional or other special rights and qualifications, limitations

or restrictions thereof as shall be determined at the time of issuance by the Company’s board of directors without further action

by the Company’s shareholders.

As of December 31, 2024 and 2023, 5,000,000 shares of the Company’s preferred stock have been

designated as Series A Convertible Preferred Stock, 2,000,000 shares of the Company’s preferred stock have been designated as Series

B Preferred Stock, and 3,000,000 shares of the Company’s preferred stock remain undesignated.

A Convertible Preferred Stock

shares of Series A Convertible Preferred Stock, par value $ 0.0001 per share, are not mandatorily redeemable and do not embody an unconditional

obligation to settle in a variable number of equity shares.

As such, the shares of Series A Convertible Preferred Stock are classified

as permanent equity on the consolidated balance sheets.

The holders’ contingent redemption right in the event of certain deemed

liquidation events does not preclude permanent equity classification.

Further, the shares of Series A Convertible Preferred Stock are

considered an equity-like host for purposes of assessing embedded derivative features for potential bifurcation.

The embedded conversion

feature is considered to be clearly and closely related to the associated convertible preferred stock host instrument and therefore was

not bifurcated from the equity host.

As of December 31, 2024 and 2023, no shares of Series A Convertible Preferred Stock were issued

and outstanding.

B Preferred Stock

On November 2, 2022, the Company filed a Certificate

3 unchanged sentences

The Series B Preferred

Stock were not entitled to receive dividends or any other distributions.

The Series B Preferred Stock were entitled to ten votes per share

and voted together with the Company’s issued and outstanding shares of common stock as a single class exclusively with respect to

the Authorized Stock Increase (as defined herein).

The Series B Preferred Stock had no rights as to any distribution or assets of the

Company upon a liquidation, bankruptcy, reorganization, merger, acquisition, sale, dissolution or winding up of the Company.

On November 2, 2022, the Company entered into

a Subscription and Investment Representation Agreement with an investor pursuant to which the Company issued and sold 2,000,000 shares

of its newly designated Series B Preferred Stock to such purchaser for an aggregate purchase price of $ 1,000 .

On December 12, 2022, the Company’s shareholders

approved an increase to the number of authorized shares of the Company’s common stock from 3,000,000 to 50,000,000 shares (the “Authorized

Stock Increase”).

On December 13, 2022, upon filing a Certificate of Amendment to its Articles of Incorporation, as amended, to

increase its authorized shares of common stock, the outstanding shares of Series B Preferred Stock were redeemed in whole for an aggregate

price of $ 10 automatically and effective immediately after the effectiveness of the Authorized Stock Increase.

Common Shares

On December 12, 2022, shareholders of the Company

approved an increase to the number of authorized shares of the Company’s common stock from 3,000,000 shares to 50,000,000 shares,

and on December 13, 2022, the Company filed a Certificate of Amendment to its Articles of Incorporation, as amended, to effectuate such

Securities Purchase Agreements

On September 13, 2023, the Company entered into

a securities purchase agreement with certain institutional investors pursuant to which it sold (i) 549,275 shares of common stock and

(ii) pre-funded warrants (the “September Pre-Funded Warrants”) to purchase up to 550,725 shares of common stock at

a purchase price of $ 2.63 per share of common stock and a purchase price of $ 2.629 per September Pre-Funded Warrant.

Concurrently with

the sale of common stock and/or the September Pre-Funded Warrants, pursuant to the securities purchase agreement, in

a private placement, the Company issued and sold warrants (the “September Common Stock Warrants”) to purchase up to

1,100,000 shares of common stock.

Proceeds from the offering were approximately $ 2.9 million, prior

to deducting placement agent’s fees and other offering expenses payable by the Company .

The closing of the offering occurred

on September 15, 2023.

Each September Common Stock Warrant is exercisable for a period of five years from the issuance date at an exercise

price of $ 2.505 per share, subject to adjustment, and may, under certain circumstances, be exercised on a cashless basis.

Each September

Pre-Funded Warrant is exercisable until exercised in full at an exercise price of $ 0.001 per share and may be exercised on a cashless

In addition, pursuant to the terms of the offering, the Company issued to designees of H.C.

Wainwright & Co., LLC warrants

Stock was not entitled to receive dividends or any other distributions.

The Series B Preferred Stock was entitled to ten votes per share

and voted together with the Company’s issued and outstanding shares of common stock as a single class exclusively with respect

to a proposal to increase the number of shares of common stock that the Company was authorized to issue, together with any ancillary

or administrative matters necessary or advisable in connection with the implementation of such increase.

The Series B Preferred Stock

had no rights as to any distribution or assets of the Company upon liquidation, bankruptcy, reorganization, merger, acquisition, sale,

dissolution or winding up of the Company.

As of December 31, 2024 and 2023, no shares of Series B Preferred Stock were issued and outstanding.

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

December 29, 2022, the Company entered into a securities purchase agreement with an accredited investor pursuant to which it sold (i)

140,000 shares of common stock, (ii) pre-funded warrants to purchase up to 1,860,000 shares of common stock (“December Pre-Funded

Warrants”) and (iii) common stock warrants to purchase up to 2,500,000 shares of common stock (“December Common Stock Warrants”)

at a purchase price of $ 5.00 per share and accompanying December Common Stock Warrants (less $ 0.001 for each December Pre-Funded Warrant),

in a private placement, for aggregate gross proceeds of approximately $ 10 million, exclusive of placement agent commission and fees and

other offering expenses.

The closing of the offering occurred on January 3, 2023.

Each December Common Stock Warrant is exercisable for

a period of five and one-half years from the issuance date at an exercise price of $ 5.00 per share, subject to adjustment, and may, under

certain circumstances, be exercised on a cashless basis.

Each December Pre-Funded Warrant is exercisable until exercised in full at an

exercise price of $ 0.001 per share and may be exercised on a cashless basis.

measurement of fair value of the December Pre-Funded Warrants was determined utilizing a Black-Scholes model considering all relevant

assumptions current at January 3, 2023, the date of issuance (i.e., share price of $ 6.56 , exercise price of $ 0.001 , term of 30

years beginning January 3, 2023 (as these do not have an expiration date), volatility of 135.07 %, risk-free rate of 3.88 %,

and expected dividend rate of 0 %).

The grant date fair value of the December Pre-Funded Warrants was estimated to be $ 12.2 million

on January 3, 2023 and was reflected within additional paid-in capital as the Pre-Funded Warrants were determined to be equity classified.

measurement of fair value of the December Common Stock Warrants was determined utilizing a Black-Scholes model considering all relevant

assumptions current at January 3, 2023, the date of issuance (i.e., share price of $ 6.56 , exercise price of $ 5.00 , term of five

and a half years beginning January 3, 2023, volatility of 135.07 %, risk-free rate of 3.94 %, and expected dividend rate

The grant date fair value of these December Common Stock Warrants was estimated to be $ 15.0 million on January 3,

2023 and is reflected within additional paid-in capital as of December 31, 2024 and 2023 as the December Common Stock Warrants were determined

to be equity classified.

a result of exercising the December Pre-Funded Warrants on various dates in February 2023, the investor exercised all the December Pre-Funded

Warrants for an aggregate of 1,860,000 shares of the Company’s common stock for aggregate net proceeds to the Company of $ 1,860 .

addition, pursuant to the terms of the offering, the Company issued the designees of the placement agent, Wainwright, warrants to purchase

up to 100,000 shares of the Company’s common stock (“December Wainwright Warrants”).

The December Wainwright Warrants

had a determined fair value of $ 591,090 as of the date of issuance.

The December Wainwright Warrants are exercisable for a period of

five and one-half years from the issuance date at an exercise price of $ 6.25 per share, subject to adjustment, and may, under certain

circumstances, be exercised on a cashless basis.

As the December Wainwright Warrants were issued for services provided in facilitating

the private placement, the Company recorded the fair value of such December Wainwright Warrants as an equity issuance cost on the issuance

The measurement of fair value was determined utilizing a Black-Scholes model considering all relevant assumptions current at January

3, 2023, the date of issuance (i.e., share price of $ 6.56 , exercise price of $ 6.25 , term of five and a half years beginning

January 3, 2023, volatility of 135.07 %, risk-free rate of 3.94 %, and expected dividend rate of 0 %).

September 13, 2023, the Company entered into a securities purchase agreement with certain institutional investors (the “September

Investors”) pursuant to which it sold (i) 549,275 shares of common stock and (ii) pre-funded warrants (the “September Pre-Funded

Warrants”) to purchase up to 550,725 shares of common stock at a purchase price of $ 2.63 per share of common stock and a purchase

price of $ 2.629 per September Pre-Funded Warrant.

Concurrently with the sale of common stock and/or the September Pre-Funded Warrants,

pursuant to the securities purchase agreement, in a private placement, the Company issued and sold warrants (the “September Common

Stock Warrants”) to purchase up to 1,100,000 shares of common stock.

Gross proceeds from the offering were approximately $ 2.9 million,

prior to deducting placement agent’s fees and other offering expenses payable by the Company, with aggregate net proceeds of approximately

$ 2.4 million.

The closing of the offering occurred on September 15, 2023.

Each September Common Stock Warrant is exercisable for a period

of five years from the issuance date at an exercise price of $ 2.505 per share, subject to adjustment, and may, under certain circumstances,

be exercised on a cashless basis.

Each September Pre-Funded Warrant is exercisable until exercised in full at an exercise price of $ 0.001

per share and may be exercised on a cashless basis.

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

measurement of fair value of the September Pre-Funded Warrants was determined utilizing a Black-Scholes model considering all relevant

assumptions current at September 15, 2023, the date of issuance (i.e., share price of $ 1.84 , exercise price of $ 0.001 , term of 30

years beginning September 15, 2023 (as these do not have an expiration date), volatility of 146.89 %, risk-free rate of 4.42 %,

and expected dividend rate of 0 %).

The grant date fair value of the September Pre-Funded Warrants was estimated to be $ 1.0 million

on September 15, 2023 and was reflected within additional paid-in capital as the September Pre-Funded Warrants were determined to be

equity classified.

measurement of fair value of the September Common Stock Warrants was determined utilizing a Black-Scholes model considering all relevant

assumptions current at September 15, 2023, the date of issuance (i.e., share price of $ 1.84 , exercise price of $ 2.505 , term of five

years beginning September 15, 2023, volatility of 146.89 %, risk-free rate of 4.45 %, and expected dividend rate of 0 %).

The grant date fair value of these September Common Stock Warrants was estimated to be $ 1.8 million on September 15, 2023 and was

reflected within additional paid-in capital as the September Common Stock Warrants were determined to be equity classified.

various dates in September 2023, the September Investors exercised 495,050 of the September Pre-Funded Warrants for an aggregate of 495,050

shares of common stock for aggregate gross proceeds to the Company of $ 495 .

addition, pursuant to the terms of the September offering, the Company issued designees of the placement agent, Wainwright warrants (the

“September Wainwright Warrants”) to purchase up to 55,000 shares of the Company’s common stock.

The September Wainwright

Warrants are exercisable for a period of five years from the commencement of sales pursuant to the offering at an exercise price of $ 3.2875

per share, subject to adjustment, and may, under certain circumstances, be exercised on a cashless basis.

On December 29, 2022, the Company entered into

a securities purchase agreement with an accredited investor pursuant to which it agreed to sell an aggregate of (i) 140,000 shares of

common stock, (ii) December Pre-Funded Warrants to purchase up to 1,860,000 shares of common stock and (iii) December Common Stock Warrants

to purchase up to 2,500,000 shares of common stock at a purchase price of $ 5.00 per share and accompanying warrant (less $ 0.001 for each

December Pre-Funded Warrant and accompanying warrant) in a private placement for aggregate gross proceeds of approximately $ 10 million,

exclusive of placement agent commission and fees and other offering expenses.

The closing of the offering occurred on January 3, 2023.

Each December Common Stock Warrant is exercisable for a period of five and one-half years from the issuance date at an exercise price

of $5.00 per share, subject to adjustment, and may, under certain circumstances, be exercised on a cashless basis.

Each December Pre-Funded

Warrant is exercisable until exercised in full at an exercise price of $ 0.001 per share and may be exercised on a cashless basis.

pursuant to the terms of the offering, the Company issued H.C.

Wainwright & Co., LLC the December Wainwright Warrants to purchase

up to 100,000 shares of the Company’s common stock.

The December Wainwright Warrants are exercisable for a period of five and one-half

years from the issuance date at an exercise price of $6.25 per share, subject to adjustment, and may, under certain circumstances, be

exercised on a cashless basis.

Public Offering of Securities

On April 14, 2022, the Company closed an underwritten

public offering of 329,412 shares of the Company’s common stock at a price to the public of $ 21.25 per share (the “Offering

Pursuant to the terms of an underwriting agreement dated April 11, 2022 between the Company and EF Hutton, division of

Benchmark Investments, LLC, as representative of the several underwriters (the “Underwriters”), the Company granted the Underwriters

a 45-day option to purchase up to an additional 49,412 shares of the Company’s common stock to cover over-allotments, if any, at

the Offering Price less the underwriting discounts and commissions.

The net proceeds to the Company from the sale of the shares, after

deducting the underwriting discounts and commissions and other estimated offering expenses payable by the Company, were $ 6.0 million.

The Underwriters did not exercise their over-allotment option.

Warrants are exercisable for a period of five years from the commencement of sales at an exercise price of $ 3.2875 per share, subject

to adjustment, and may, under certain circumstances, be exercised on a cashless basis.

As the September Wainwright Warrants were issued

for services provided in facilitating the September offering, the Company recorded the fair value of such September Wainwright Warrants

as an equity issuance cost on the issuance date.

The measurement of fair value was determined utilizing a Black-Scholes model considering

all relevant assumptions current at September 15, 2023, the date of issuance (i.e., share price of $ 1.84 , exercise price of $ 3.2875 ,

term of five years beginning September 15, 2023, volatility of 146.89 %, risk-free rate of 4.45 %, and expected

dividend rate of 0 %).

January 8, 2024, the Company issued 55,675 common shares in connection with the exercise of the remaining 55,675 September Pre-Funded

Warrants that were issued in connection with a securities purchase agreement dated September 13, 2023.

March 27, 2024, the Company entered into an inducement offer agreement with a holder (the “Holder”) of certain of the Company’s

existing warrants (the “January 2023 Existing Warrants”) to immediately exercise for cash an aggregate 2,500,000 of the January

2023 Existing Warrants to purchase shares of the Company’s common stock at a reduced exercise price of $ 1.6775 per share for gross

proceeds to the Company of approximately $ 4.2 million before deducting placement agent fees and other offering expenses payable

by the Company.

The exercised January 2023 Existing Warrants were issued pursuant to a securities purchase agreement dated December 29,

2022 by and between the Company and the Holder.

Each January 2023 Existing Warrant was exercisable for a period of five and one-half

years from the issuance date at an original exercise price of $ 5.00 per share.

an inducement to such exercise, the Company agreed to issue new unregistered warrants to purchase up to 3,750,000 shares of the Company’s

common stock at an exercise price of $ 1.50 per share (the “April 2024 Inducement Warrants”).

The April 2024 Inducement Warrants

are exercisable immediately upon issuance and will expire on July 3, 2028 .

On April 1, 2024, the Holder exercised such warrants, and

the Company issued the Holder 3,750,000 April 2024 Inducement Warrants.

Additionally, in connection with the exercise of the January

2023 Existing Warrants, the Company issued 125,000 placement agent warrants to the designees of the placement agent, Wainwright, which

are immediately exercisable and expire on July 3, 2028 at an exercise price of $ 2.0969 per share.

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

amendment to the January 2023 Existing Warrants on March 27, 2024 to lower the exercise price thereof was considered a modification of

the January 2023 Existing Warrants under the guidance of ASU 2021-04.

The modification is consistent with the “Equity Issuance”

classification under that guidance as the reason for the modification was to induce the holders to cash exercise their warrants, resulting

in the exercise of the January 2023 Existing Warrants on April 1, 2024.

March 27, 2024, the Company calculated the total fair value of the consideration for the modification of the January 2023 Existing Warrants,

which includes the incremental fair value of the January 2023 Existing Warrants (determined by comparing the fair values immediately

prior to and immediately after the modification).

The fair values were calculated using the Black-Scholes option-pricing model, and the

Company determined that the total fair value of the consideration related to the modification of the January 2023 Existing Warrants amounted

to $ 550,500 , which are considered offering costs and were netted against the net proceeds received by the warrant exercise under the

guidance of ASU 2021-04.

April 1, 2024, in connection with the March 27, 2024 inducement offer agreement with the Holder of the January 2023 Existing Warrants,

the Holder exercised the January 2023 Existing Warrants for cash at a reduced exercise price of $ 1.6775 per share resulting in gross

proceeds to the Company of approximately $ 4.2 million (net proceeds of approximately $ 3.7 million, after deducting placement agent

fees and other offering expenses of $ 0.5 million).

In connection with such exercise, during the year ended December 31, 2024, the Company

issued 2,500,000 shares of common stock upon the exercise of the January 2023 Existing Warrants.

April 1, 2024, in connection with the issuance of the April 2024 Inducement Warrants and the placement agent warrants, the Company calculated

the fair value of such warrants using the Black-Scholes option-pricing model, and the Company determined that the aggregate total fair

value of the April 2024 Inducement Warrants and placement agent warrants amounted to $ 4,166,800 , which are considered offering costs

and were netted against the net proceeds received by the warrant exercise under the guidance of ASU 2021-04.

fair value of the January 2023 Existing Warrants on the modification date and the fair value of the April 2024 Inducement Warrants were

estimated using the Black-Scholes option-pricing model with the following assumptions:

Exercise price

$ 1.50 to $ 5.00

Expected stock price volatility

Risk-free rate of interest

4.18 % to 4.34 %

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

summary of warrant activity for the years ended December 31, 2024 and 2023 is as follows:

Warrants Weighted

Value Weighted

Contractual Life

Outstanding as of December 31, 2022 402,840 $ 49.83 —

Issued 6,165,725 2.61 — 4.5

Exercised ( 2,355,050 ) —

Outstanding as of December 31, 2023 4,213,515 7.01 —

Issued 3,875,000 1.52 — —

Expired ( 329,597 ) 49.08 — —

Exercised ( 2,555,675 ) 0.67 — —

Outstanding as of December 31, 2024 5,203,243 2.62 —

Warrants exercisable as of December 31, 2024 5,203,243 $ 2.62 $ —

Company has determined that the warrants should be accounted for as a component of stockholders’ equity.

a result of exercising the December Pre-Funded Warrants on various dates in February 2023, the investor exercised all the December Pre-Funded

Warrants for an aggregate of 1,860,000 shares of the Company’s common stock for aggregate net proceeds to the Company of $ 1,860 .

September 13, 2023, the Company entered into a securities purchase agreement with certain institutional investors pursuant to which it

sold (i) 549,275 shares of common stock and (ii) September Pre-Funded Warrants to purchase up to 550,725 shares of common stock at a

purchase price of $ 2.63 per share of common stock and a purchase price of $ 2.629 per September Pre-Funded Warrant.

Concurrently with

the sale of common stock and/or the September Pre-Funded Warrants, pursuant to the securities purchase agreement, in a private placement,

the Company issued and sold the September Common Stock Warrants to purchase up to 1,100,000 shares of common stock.

Gross proceeds from

the offering were approximately $ 2.9 million, prior to deducting placement agent’s fees and other offering expenses payable by

the Company, with aggregate net proceeds of approximately $ 2.4 million.

The closing of the offering occurred on September 15, 2023.

January 8, 2024, the Company issued 55,675 common shares in connection with the exercise of 55,675 pre-funded warrants that were issued

in connection with a securities purchase agreement dated September 13, 2023.

the year ended December 31, 2024, the Company issued 2,500,000 shares of its common stock in connection with the exercise of 2,500,000

December Common Stock Warrants.

See Warrants section above.

November 8, 2024, the Company entered into the ATM Agreement with Wainwright under which the Company may offer and sell shares of

its common stock having an aggregate sales price of up to $ 2,700,000 through Wainwright as the sales agent pursuant to the Company’s

effective shelf registration statement on Form S-3, including an accompanying prospectus (File No.

333-272620), and a

prospectus supplement dated November 8, 2024.

Sales of shares of the Company’s common stock through Wainwright, if any, will be

made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities

Act of 1933, as amended.

Wainwright will use commercially reasonable efforts to sell shares of the Company’s common stock from

time to time, based on instructions from the Company (including any price, time or size limits or other parameters or conditions the

Company may impose).

The Company will pay Wainwright a commission equal to 3.0 % of the aggregate gross proceeds from the sales of shares

of the Company’s common stock sold through Wainwright under the ATM Agreement and will also reimburse Wainwright for certain specified

expenses in connection with the ATM Agreement.

The offering of shares pursuant to the ATM Agreement will terminate on the earlier of

(1) the sale, pursuant to the ATM Agreement, of shares having an aggregate offering price of $ 2,700,000 and (2) the termination

of the ATM Agreement by either the Company or Wainwright, as set forth therein.

From November 8, 2024 to December 31, 2024, the Company

issued 1,137,250 shares of its common stock for net proceeds of approximately $ 1.0 million pursuant to the ATM Agreement.

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Equity Incentive Plan

The compensation committee of the board of directors

increased the number of shares reserved pursuant to the Company’s 2018 Equity Incentive Plan (“2018 Plan”) by 26,878

shares effective as of January 1, 2021, such that as of January 1, 2021, the Company had an aggregate of 66,878 shares of common stock

reserved for issuance pursuant to the 2018 Plan.

On June 24, 2021, at the annual meeting of shareholders, shareholders of the Company

approved an amendment to the 2018 Plan to further increase the number of shares reserved for issuance thereunder from 66,878 shares to

146,878 shares.

On February 2, 2022, the compensation committee of the board of directors further increased the number of shares reserved

for issuance under the 2018 Plan from 146,878 shares to 156,878 shares.

On January 11, 2023, the compensation committee of the board of

directors further increased the number of shares reserved for issuance under the 2018 Plan from 156,878 shares to 166,878 shares.

May 4, 2018, the Company’s board of directors adopted the Hoth Therapeutics, Inc.

2018 Equity Incentive Plan (the “2018 Plan”)

initially reserving 40,000 shares of the Company’s common stock for issuance thereunder.

The 2018 Plan became effective on May

14, 2018 upon written approval of the 2018 Plan by shareholders holding a majority of the Company’s voting capital.

compensation committee of the board of directors increased the number of shares reserved pursuant to the Company’s 2018 Equity

Incentive Plan (“2018 Plan”) by 26,878 shares effective as of January 1, 2021, such that as of January 1, 2021, the Company

had an aggregate of 66,878 shares of common stock reserved for issuance pursuant to the 2018 Plan.

On June 24, 2021, at the annual meeting

of shareholders, shareholders of the Company approved an amendment to the 2018 Plan to further increase the number of shares reserved

for issuance thereunder from 66,878 shares to 146,878 shares.

On February 2, 2022, the compensation committee of the board of directors

further increased the number of shares reserved for issuance under the 2018 Plan from 146,878 shares to 156,878 shares.

On January 11,

2023, the compensation committee of the board of directors further increased the number of shares reserved for issuance under the 2018

Plan from 156,878 shares to 166,878 shares.

On January 4, 2024, the compensation committee of the board of directors further increased

the number of shares reserved for issuance under the 2018 Plan from 166,878 shares to 176,878 shares.

On January 6, 2025, the compensation

committee of the board of directors further increased the number of shares reserved for issuance under the 2018 plan from 176,878 shares

to 186,878 shares.

As of December 31, 2024, there were 83,738 shares of Company common stock available for grant under the 2018 Plan.

Equity Incentive Plan

On March 24, 2022, the Company’s board of

directors adopted the Hoth Therapeutics, Inc.

2022 Omnibus Equity Incentive Plan (the “2022 Plan”) initially reserving 96,000

shares of the Company’s common stock for issuance thereunder.

The 2022 Plan became effective on June 23, 2022 upon approval of the

2022 Plan by the Company’s shareholders at the Company’s annual meeting of shareholders.

On June 2, 2023, the Company’s

board of directors approved the Hoth Therapeutics, Inc.

Amended and Restated 2022 Omnibus Equity Incentive Plan (the “Amended and

Restated 2022 Plan”) which was approved by stockholders on August 18, 2023.

Under the Amended and Restated 2022 Plan there are 591,317

shares of Company common stock available for grant.

Restricted Stock Awards

A summary of the Company’s restricted stock

awards granted under the equity incentive plans during the years ended December 31, 2023 and 2022 is as follows:

March 24, 2022, the Company’s board of directors adopted the Hoth Therapeutics, Inc.

2022 Omnibus Equity Incentive Plan (the “2022

Plan”) initially reserving 96,000 shares of the Company’s common stock for issuance thereunder.

The 2022 Plan became effective

on June 23, 2022 upon approval of the 2022 Plan by the Company’s shareholders at the Company’s annual meeting of shareholders.

June 2, 2023, the Company’s board of directors approved the Hoth Therapeutics, Inc.

Amended and Restated 2022 Omnibus Equity Incentive

Plan (the “Amended and Restated 2022 Plan”) which, among other things, increased the number of shares reserved under the

plan by 495,317 shares, which Amended and Restated 2022 Plan was approved by stockholders on August 18, 2023.

May 15, 2024, the Company’s compensation committee recommended, and the board of directors approved an increase to the number of

shares of common stock reserved for issuance under the Amended and Restated 2022 Plan by 500,000 shares from 51,317 shares to 551,317

shares (“2024 Increase”).

The 2024 Increase was approved by shareholders of the Company on August 7, 2024.

As of December

31, 2024, there were 78,317 shares of Company common stock available for grant under the Amended and Restated 2022 Plan.

summary of the Company’s restricted stock awards granted under the equity incentive plans during the years ended December 31, 2024

and 2023 is as follows:

Restricted Stock

Nonvested at December 31, 2021

Nonvested at December 31, 2022

Nonvested at December 31, 2023

As of December 31, 2023, approximately $ 3,000

of unrecognized stock-based compensation expense was related to restricted stock awards.

The weighted average remaining contractual term

of unvested restricted stock awards was approximately 1.0 year at December 31, 2023.

Stock Options

During the year ended December 31, 2023, pursuant

to and subject to the available number of shares reserved under the 2022 Plan, the Company issued an aggregate of 90,000 options to the

Company’s employees and directors.

The aggregate grant date fair value of these options was approximately $ 0.2 million.

During the year ended December 31, 2022, pursuant

to and subject to the available number of shares reserved under the 2018 Plan, the Company issued an aggregate of 51,800 options to the

Company’s directors.

The aggregate grant date fair value of these options was approximately $ 0.6 million.

The fair value of options granted in 2023 and

2022 was estimated using the following assumptions:

Year Ended December 31,

Exercise price

Expected stock price volatility

Risk-free rate of interest

A summary of option activity under the Company’s

stock option plan for the years ended December 31, 2023 and 2022 is presented below:

Average Grant

Day Fair Value

Nonvested on December 31, 2022

Nonvested on December 31, 2023

Nonvested on December 31, 2024

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

the years ended December 31, 2024 and 2023, the Company recognized stock-based compensation of $ 2,543 and $ 7,734 , respectively, in connection

with restricted stock awards.

On July 17, 2023, pursuant to and subject to the available number of

shares reserved under the 2022 Plan, the Company issued an aggregate of 90,000 options to the Company’s employees and directors.

The aggregate grant date fair value of these options was $ 216,428 , which was recorded as stock-based compensation during the year ended

December 31, 2023.

January 5, 2024, pursuant to and subject to the available number of shares reserved under the Amended and Restated 2022 Plan, the Company

issued options to the Company’s employees and directors to purchase up to 450,000 shares of the Company’s common stock at

an exercise price of $ 1.36 per share.

The options vested immediately and expire on January 5, 2034.

The aggregate grant date fair value

of these options was $ 512,685 , which was recorded as stock-based compensation during the year ended December 31, 2024.

August 19, 2024, pursuant to and subject to the available number of shares reserved under the Amended and Restated 2022 Plan, the Company

issued options to the Company’s employees and directors to purchase up to 473,000 shares of the Company’s common stock at

an exercise price of $ 0.7548 per share.

The options vested immediately in full upon grant and expire on August 19, 2034.

The aggregate

grant date fair value of these options was $ 281,388 , which was recorded as stock-based compensation during the year ended December 31,

fair value of option grants was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Exercise price $ 0.7548 to $ 1.36 $ 2.59

Term (years) 5.0 10.0

Expected stock price volatility 106.65 % to 120.00 % 105.00 %

Risk-free rate of interest 3.75 % to 4.02 % 4.02 %

summary of option activity under the Company’s equity incentive plans for the years ended December 31, 2024 and 2023 is presented

Shares Weighted

Value Weighted

Outstanding as of December 31, 2022 104,651 $ 49.80 $ —

Options issued

Employee options issued 90,000 2.59 —

Expired ( 25,289 ) 46.10 —

Outstanding as of December 31, 2023 169,362 26.78 —

Options expired

Options issued

Employee options issued 923,000 1.05 —

Expired ( 2,000 ) 147.0 —

Outstanding as of December 31, 2024 1,090,362 $ 4.78 $ —

Options vested and exercisable as of December 31, 2024 1,090,362 $ 4.78 $ —

All outstanding stock options are fully vested.

A summary of stock options outstanding at December

31, 2024 by price range is as follows:

Options outstanding and exercisable

Range of Exercise Prices Number of

Shares Weighted

(in years) Weighted

1,013,000 $ 9.3 1.19

$ 14.75 to $ 76.25 62,562 6.7 32.95

Above $ 76.25

14,800 $ 5.0 131.50

Options outstanding and exercisable as of December 31, 2024

1,090,362 $ 9.1 4.78

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

stock compensation associated with the amortization of employee stock option expense was recorded as a component of general and administrative

expenses in the consolidated statements of operations and comprehensive loss.

future stock-based compensation expense relating to unvested stock options is $ 0 .

Stock Based Compensation

1 unchanged sentence

ended December 31, 2024 and 2023 was as follows:

Year Ended December 31,

Employee and director stock option awards

Employee and director restricted stock awards

Non-employee stock warrant awards

For the years ended December 31, 2023 and 2022,

the amount of stock-based compensation expense included within research and development and general and administrative expenses was as

Year Ended December 31,

Employee stock option awards

Non-employee restricted stock awards

Non-employee stock warrant awards (a)

(a) Represents accretion of stock based compensation expense for non-employee stock warrants

issued in 2021.

the years ended December 31, 2024 and 2023, the amount of stock-based compensation expense included within research and development and

general and administrative expenses was as follows:

Research and development

General and administrative

A summary of warrant activity for the years ended

December 31, 2023 and 2022 is presented below:

Outstanding as of December 31, 2021

Outstanding as of December 31, 2022

( 2,355,050 )

Outstanding as of December 31, 2023

Warrants exercisable as of December 31, 2023

The Company has determined that the warrants should

be accounted as a component of stockholders’ equity.

Note 7-Commitments and Contingencies

Effective November 2023, the Company leased office

space for a two year term.

The Company’s office lease contains a renewal option.

The Company has evaluated several factors in assessing

whether there is reasonable certainty that the Company will exercise its contractual renewal option concluding that it is not reasonably

certain to exercise such option.

As it is not reasonably certain to be exercised, the Company excluded the renewal term in determining

the lease term used in calculating the right-of-use asset and lease liability.

Prior to entering into this lease, the Company has not

entered into any lease arrangements in excess of 12 months.

The table below presents certain information related

to the Company’s lease cost:

Year Ended December 31,

6 – Commitments and Contingencies

November 2023, the Company leased office space for a two-year term.

The Company’s office lease contained a renewal option.

Company evaluated several factors in assessing whether there is reasonable certainty that the Company will exercise its contractual renewal

option concluding that it is not reasonably certain to exercise such option.

As it is not reasonably certain to be exercised, the Company

excluded the renewal term in determining the lease term used in calculating the right-of-use asset and lease liability.

In December 2024,

the landlord notified the Company that it will be closing its operations at the Company’s location and offering to relocate the

Company to a new location.

The Company agreed to relocate and accordingly, on December 9, 2024, the Company and the landlord entered

into a new lease agreement (the “December 2024 Lease”).

Pursuant to the December 2024 Lease, effective December 20, 2024,

the Company leased office space for a term of 14 months, expiring on February 28, 2026.

Pursuant to such lease agreement, the Company

is required to pay a monthly base rent of $ 2,732 from March 1, 2025 through February 2026.

In connection with December 2024 Lease, in

December 2024, the Company increased right-of-use assets and lease liabilities by $ 31,075 and removed all remaining right-of-use assets

and lease liabilities associated with the November 2023 lease.

table below presents certain information related to the Company’s lease costs, which are included in general and administrative

expenses in the accompanying consolidated statements of operation and comprehensive loss:

Operating lease expense

1 unchanged sentence

Total lease cost

Right-of-use asset and lease liability for operating

leases were recorded in the consolidated balance sheets as follows:

Lease right of use assets

Total lease assets

Current liabilities:

Lease liability - current portion

Noncurrent liabilities:

Lease liability, net of current portion

Total lease liability

Supplemental cash flow information related to the Company’s leases

for the year ended December 31, 2023 were as follows:

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

asset for operating leases were recorded in the consolidated balance sheets as follows:

Office lease right-of-use asset

Less accumulated amortization

Total right-of-use asset, net

lease liability for operating leases were recorded in the consolidated balance sheets as follows:

Current portion of operating lease liability

Long-term portion of operating lease liability

Total operating lease liability

cash flow information related to the Company’s leases for the year ended December 31, 2024 were as follows:

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows for operating leases

The weighted-average remaining lease term for

the operating lease is 1.8 years and the weighted-average incremental borrowing rate is 10 % as of December 31, 2023.

As of December 31, 2023, future minimum lease

payments required under operating leases are as follows:

weighted-average remaining lease term for the operating lease is 1.2 years and the weighted-average incremental borrowing rate is 10 %

as of December 31, 2024 and 2023.

of December 31, 2024, future annual minimum lease payments required under operating leases are as follows:

Total minimum lease payments

1 unchanged sentence

Present value of future minimum lease payments

The Company is not currently a party to any material

legal proceedings and is not aware of any pending or threatened claims.

From time to time, the Company may be subject to various legal

proceedings and claims that arise in the ordinary course of its business activities.

Note 8-Income taxes

The table below presents the components of the

provision for taxes:

The Company’s provision is primarily driven

by the full valuation allowance in 2023 and 2022.

7 – Income Taxes

table below presents the components of the provision for taxes:

Company’s provision is primarily driven by the full valuation allowance in 2024 and 2023.

As of December 31,

(As Restated)

Total current provision

2 unchanged sentences

Total provision for income taxes

At December 31, 2023 and 2022, the tax effects

of the temporary differences and carryforwards that give rise to deferred tax assets consist of the following:

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

December 31, 2024 and 2023, the tax effects of the temporary differences and carryforwards that give rise to deferred tax assets consist

of the following:

As of December 31,

Deferred tax assets

(As Restated)

Net operating loss carryforwards

Research and development credits

Capitalized research costs

7 unchanged sentences

Deferred tax assets, net of allowance

A reconciliation of the statutory income tax rates

and the Company’s effective tax rate for the years ended December 31, 2023 and 2022 is as follows:

reconciliation of the statutory income tax rates and the Company’s effective tax rate for the years ended December 31, 2024 and

2023 is as follows:

Statutory federal income tax rate

6 unchanged sentences

Change in valuation allowance

The Company has determined, based upon available

evidence, that it is more likely than not that the net deferred tax assets will not be realized and, accordingly, has provided a full

valuation allowance against its net deferred tax assets.

As of December 31, 2023 and December 31, 2022,

the Company has Federal net operating loss carryforwards of approximately $ 37.7 million and $ 32.9 million available to reduce future taxable

income, if any, for Federal tax purposes.

Approximately $ 1.5 million of Federal net operating losses can be carried forward to future

tax years and expire in 2037.

Company has determined, based upon available evidence, that it is more likely than not that the net deferred tax assets will not be realized

and, accordingly, has provided a full valuation allowance against its net deferred tax assets.

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

As of December 31, 2024 and 2023, the Company

has Federal net operating loss carryforwards of approximately $ 42.0 million and $ 36.8 million, respectively, available to reduce future

taxable income, if any, for Federal tax purposes.

Approximately $ 1.5 million of Federal net operating losses can be carried forward to

future tax years and expire in 2037.

The Federal net operating loss generated during the years ended after December 31, 2017 of approximately

1 unchanged sentence

after January 1, 2018 is limited to 80 % of annual taxable income.

In addition, the Company had approximately $ 0.5 million and $ 0.3 million

of net operating losses at its subsidiary located in Australia, as of December 31, 2023 and December 31, 2022, respectively.

As required by the 2017 Tax Cuts and Jobs Act

and effective in 2022, the deferred tax asset as of December 31, 2023 and December 31, 20222, included $ 2.3 million and $ 1.2 million related

to the mandatory capitalization of research and development expenses.

On August 16, 2022, the Inflation Reduction Act

of 2022 (“IRA”) was signed into law.

The IRA increased and modified the qualified small business (“QSB”) payroll

tax credit for increasing research activities.

Provision 13902 of the IRA of 2022 increased the maximum amount of payroll tax research

credit that a QSB can elect to apply against payroll tax liability from $ 250,000 to $ 500,000 for tax years beginning after December 31,

This payroll tax credit is a creditable tax credit against the employer’s portion of social security taxes, and the IRA also

modified IRC 3111(f) to allow a portion of the payroll tax credit to apply against the employer’s portion of Medicare tax.

year ended December 31, 2023, the Company recorded $ 0.1 million of other income for the payroll tax credit and $ 0.2 million is still outstanding.

The remaining research credit carryforward of $ 0.2 million will be utilized in the future as an offset against payroll taxes at the time

the payroll tax is incurred.

The utilization of the Company’s net operating

loss carryforwards and research tax credit carryovers could be subject to annual limitations under Section 382 and 383 of the Internal

Revenue Code of 1986, as amended (the “Code”), and similar state tax provisions, due to ownership change limitations that

may have occurred previously or that could occur in the future.

These ownership changes limit the amount of net operating loss carryforwards

and other deferred tax assets that can be utilized to offset future taxable income and tax, respectively.

In general, an ownership change,

as defined by Section 382 and 383 of the Code, results from transactions increasing ownership of certain stockholders or public groups

in the stock of the corporation by more than 50 percent points over a three-year period.

The Company has not conducted an analysis of

an ownership change under Section 382 of the Code.

To the extent that a study is completed and an ownership change is deemed to occur,

the Company’s net operating losses and tax credits could be limited.

At December 31, 2023 and 2022, the Company did

not have any significant uncertain tax positions.

The Company will recognize interest and penalties related to uncertain tax positions,

as applicable, in income tax expense.

As of December 31, 2023 and 2022, the Company had no accrued interest or penalties related to uncertain

tax positions and no amounts have been recognized in the Company’s statements of operations.

The Company does not anticipate a material

change to unrecognized tax benefits in the next twelve months.

All of the Company’s tax years will remain

open for examination by the Federal and state tax authorities from the date of utilization of the net operating loss.

Management asserts that its foreign earnings are

permanently reinvested, and therefore, have not provided deferred taxes on foreign cash.

Additionally, no additional income taxes have

been provided for any remaining undistributed foreign earnings not subject to the transition tax, or any additional outside basis differences

inherent in our foreign subsidiaries, as these amounts continue to be indefinitely reinvested in foreign operations.

The company will

continue to monitor the foreign cash position as they maintain the assertion that foreign earnings are permanently reinvested.

In ad dition,

the Company had approximately $ 0.6 million and $ 0.5 million of net operating losses at its subsidiary located in Australia, as of December

31, 2024 and 2023, respectively.

required by the 2017 Tax Cuts and Jobs Act and effective in 2022, the deferred tax asset as of December 31, 2024 and 2023, included $ 3.0

million and $ 2.3 million related to the mandatory capitalization of research and development expenses, respectively.

August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law.

The IRA increased and modified the qualified

small business (“QSB”) payroll tax credit for increasing research activities.

Provision 13902 of the IRA of 2022 increased

the maximum amount of payroll tax research credit that a QSB can elect to apply against payroll tax liability from $ 250,000 to $ 500,000

for tax years beginning after December 31, 2022.

This payroll tax credit is a creditable tax credit against the employer’s portion

of social security taxes, and the IRA also modified IRC 3111(f) to allow a portion of the payroll tax credit to apply against the employer’s

portion of Medicare tax.

For the year ended December 31, 2023, the Company recorded $ 0.1 million of other income for the payroll tax

credit and $ 0.2 million is still outstanding.

The remaining research credit carryforward of $ 0.2 million will be utilized in the future

as an offset against payroll taxes at the time the payroll tax is incurred.

utilization of the Company’s net operating loss carryforwards and research tax credit carryovers could be subject to annual limitations

under Section 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), and similar state tax provisions,

due to ownership change limitations that may have occurred previously or that could occur in the future.

These ownership changes limit

the amount of net operating loss carryforwards and other deferred tax assets that can be utilized to offset future taxable income and

tax, respectively.

In general, an ownership change, as defined by Section 382 and 383 of the Code, results from transactions increasing

ownership of certain stockholders or public groups in the stock of the corporation by more than 50 percent points over a three-year period.

The Company has not conducted an analysis of an ownership change under Section 382 of the Code.

To the extent that a study is completed

and an ownership change is deemed to occur, the Company’s net operating losses and tax credits could be limited.

December 31, 2024 and 2023, the Company did not have any significant uncertain tax positions.

The Company will recognize interest and

penalties related to uncertain tax positions, as applicable, in income tax expense.

As of December 31, 2024 and 2023, the Company had

no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s statements

of operations.

The Company does not anticipate a material change to unrecognized tax benefits in the next twelve months.

of the Company’s tax years will remain open for examination by the Federal and state tax authorities from the date of utilization

of the net operating loss.

asserts that its foreign earnings are permanently reinvested, and therefore, have not provided deferred taxes on foreign cash.

Additionally,

no additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax, or

any additional outside basis differences inherent in our foreign subsidiaries, as these amounts continue to be indefinitely reinvested

in foreign operations.

The Company will continue to monitor the foreign cash position as they maintain the assertion that foreign earnings

are permanently reinvested.

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

NOTE 8 – Restatement of Previously Issued

Audited and Unaudited Financial Statements

During the preparation of the Company’s

2024 audited consolidated financial statements and notes thereto, the Company concluded that there were material research and development

expenses and related balance sheet errors in its previously issued audited consolidated financial statements as of and for the year ended

December 31, 2023, 2022 and 2021, and there were material research and development expenses and related balance sheet errors in its previously

issued unaudited condensed consolidated financial statements as of and for each of the quarterly and year to date periods ended March

31, 2024 and 2023, June 30, 2024 and 2023, and September 30, 2024 and 2023, relating to the recording of prepaid expenses, and the timing

of recognition of research and development expenses.

The Company noted the following items were improperly recorded as of December 31, 2023, 2022 and 2021, and for the year ended December 31, 2023

As of December 31, 2023, 2022 and

2021, the Company’s consolidated balance sheets did not reflect prepa id

expenses and other current assets related to advance payments made in 2022 and 2021 for clinical studies.

These errors in the accounting

for prepaid expenses and other current assets and research and development expenses resulted in an understatement of prepaid assets and

other current assets of $ 722,765 , $ 983,497 , and $ 972,567 as of December 31, 2023, 2022 and 2021, respectively, an understatement of research

and development expenses, operating expenses and net loss of $ 260,732 for the year ended December 31, 2023, and an overstatement of research

and development expenses, operating expenses and net loss of $ 10,929 and $ 972,567 for the years ended December 31, 2022 and 2021, respectively.

The December 31, 2022 understatement of

prepaid expenses and other current assets of $ 983,497 and the overstatement of research and development expenses of $ 10,929 and

$ 972,567 during the years ended December 31, 2022 and 2021, respectively, which aggregated to $ 983,497 , was corrected by increasing

prepaid expenses and other current assets and decreasing accumulated deficit as of December 31, 2022 by $ 983,497 , as reflected in

the consolidated statements of changes in stockholders’ equity as of December 31, 2022.

2) The Company noted the following items were improperly recorded

as of March 31, 2024 and 2023, and during the three months ended March 31, 2024 and 2023:

of March 31, 2024, prepaid expenses and other current assets were understated by $ 617,019 and for the three months ended March 31, 2024,

research and development expenses were understated by $ 105,746 .

of March 31, 2023, prepaid expenses and other current assets were understated by $ 931,456 and for the three months ended March 31, 2023,

research and development expenses were understated by $ 52,041 .

3) The Company noted the following items were improperly recorded

as of June 30, 2024 and 2023, and during the three and six months ended June 30, 2024 and 2023:

of June 30, 2024, prepaid expenses and other current assets were understated by $ 539,329 and for the three and six months ended June

30, 2024, research and development expenses were understated by $ 77,690 and $ 183,436 , respectively.

of June 30, 2023, prepaid expenses and other current assets were understated by $ 908,416 and for the three and six months ended June

30, 2023, research and development expenses were understated by $ 23,040 and $ 75,081 , respectively.

4) The Company noted the following items were improperly recorded

as of September 30, 2024 and 2023, and during the three and nine months ended September 30, 2024 and 2023:

of September 30, 2024, prepaid expenses and other current assets were understated by $ 442,365 and for the three and nine months ended

September 30, 2024, research and development expenses were understated by $ 96,964 and $ 280,400 , respectively.

of September 30, 2023, prepaid expenses and other current assets were understated by $ 817,340 and for the three and nine months ended

September 30, 2023, research and development expenses were understated by $ 91,076 and $ 166,157 , respectively.

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

For all periods presented, the errors in the accounting

for research and development expenses resulted in an understatement of prepaid assets and other current assets and an understatement of

research and development expenses, operating expenses and net losses for the periods presented, respectively.

As a result of such errors, the Company concluded

that the previously issued 2023 consolidated financial statements and the previously issued interim periods during 2024 and 2023 were

materially misstated and has restated herein its previously issued audited consolidated financial statements for the year ended December

31, 2023, and its unaudited condensed consolidated financial statements for each interim period within the fiscal years ended December

31, 2024 and 2023.

The restatement corrections impact certain components within operating cash flows of the respective consolidated statements

of cash flows.

Total operating cash flows, investing activities, financing activities, and cash and cash equivalents are unchanged as

a result of the restatements.

The following tables present the amounts previously

reported, the restatement impact and the amount as restated.

The 2024 and 2023 quarterly restatements will be effective with the filing

of our future 2025 unaudited interim condensed financial statement filings in Quarterly Reports on Form 10-Q.

The values “as reported” on the following

respective consolidated financial statements were derived from:

1) Our Annual Report on Form 10-K for the year ended December 31, 2023 filed on March 28, 2024;

2) Our Quarterly Report on Form 10-Q for the period ended March 31, 2024 filed on May 14, 2024;

3) Our Quarterly Report on Form 10-Q for the period ended June 30, 2024 filed on August 9, 2024;

4) Our Quarterly Report on Form 10-Q for the period ended September 30, 2024 filed on November 12, 2024;

5) Our Quarterly Report on Form 10-Q for the period ended March 31, 2023 filed on May 15, 2023;

6) Our Quarterly Report on Form 10-Q for the period ended June 30, 2023 filed on August 11, 2023;

7) Our Quarterly Report on Form 10-Q for the period ended September 30, 2023 filed on November 13, 2023.

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Reconciliation of the Original and Restated

Consolidated Balance Sheet

As of December 31, 2022

As Previously

CURRENT ASSETS:

Prepaid expenses and other current assets

Total Current Assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

STOCKHOLDERS’ EQUITY:

Accumulated deficit

$ ( 45,099,116 )

$ ( 44,115,619 )

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

As of December 31, 2023

As Previously

CURRENT ASSETS:

Prepaid expenses and other current assets

Total Current Assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

STOCKHOLDERS’ EQUITY:

Accumulated deficit

$ ( 52,944,506 )

$ ( 52,221,741 )

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

Statement of Operations and Comprehensive Loss

For the Year Ended December 31, 2023

Research and development expense

Total operating expenses

LOSS FROM OPERATIONS

NET LOSS PER COMMON SHARE:

Basic and diluted

COMPREHENSIVE LOSS:

Total comprehensive loss

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Reconciliation of the Original and Restated Consolidated Statements

of Stockholders’ Equity

For the Year Ended December 31, 2023

Accunulated Deficit ACTIVITIES:

Changes in operating assets and liabilities:

Prepaid expenses

NET CASH USED IN OPERATING ACTIVITIES

Reconciliation of the Original and Restated Consolidated Statements

of Cash Flows

For the Year Ended December 31, 2023

CASH FLOWS FROM OPERATING ACTIVITIES:

Changes in operating assets and liabilities:

Prepaid expenses

NET CASH USED IN OPERATING ACTIVITIES

Reconciliation of the Original and Restated Consolidated Balance

As of March 31, 2024

CURRENT ASSETS:

Prepaid expenses and other current assets

Total Current Assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

STOCKHOLDERS’ EQUITY:

Accumulated deficit

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Reconciliation of the Original and Restated Consolidated Statement

of Operations and Comprehensive Loss

For the Three Months Ended

March 31, 2024

OPERATING COSTS AND EXPENSES:

Research and development expense

General and administrative expenses

Total operating expenses

LOSS FROM OPERATIONS

NET LOSS PER COMMON SHARE:

Basic and diluted

COMPREHENSIVE LOSS:

Total comprehensive loss

Reconciliation of the Original and Restated Consolidated Statements

of Cash Flows

For the Three Months Ended

March 31, 2024

CASH FLOWS FROM OPERATING ACTIVITIES:

Prepaid expenses

NET CASH USED IN OPERATING ACTIVITIES

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Reconciliation of the Original and Restated Consolidated Balance

As of June 30, 2024

CURRENT ASSETS:

Prepaid expenses and other current assets

Total Current Assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

STOCKHOLDERS’ EQUITY:

Accumulated deficit

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

Reconciliation of the Original and Restated Consolidated Statement

of Operations and Comprehensive Loss

For the Three Months Ended

June 30, 2024

For the Six Months Ended

June 30, 2024

OPERATING COSTS AND EXPENSES:

Research and development expense

Total operating expenses

LOSS FROM OPERATIONS

NET LOSS PER COMMON SHARE:

Basic and diluted

COMPREHENSIVE LOSS:

Total comprehensive loss

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Reconciliation of the Original and Restated Consolidated Statements

of Cash Flows

For the Six Months Ended

June 30, 2024

As Previously

CASH FLOWS FROM OPERATING ACTIVITIES:

Changes in operating assets and liabilities:

Prepaid expenses

NET CASH USED IN OPERATING ACTIVITIES

Reconciliation of the Original and Restated Consolidated Balance

As of September 30, 2024

As Previously

CURRENT ASSETS:

Prepaid expenses and other current assets

Total Current Assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

STOCKHOLDERS’ EQUITY:

Accumulated deficit

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Reconciliation of the Original and Restated Consolidated Statement

of Operations and Comprehensive Los

the Three Months Ended

September 30, 2024

the Nine Months Ended

September 30, 2024

COSTS AND EXPENSES:

and development expense

operating expenses

FROM OPERATIONS

( 2,132,253 )

( 2,229,217 )

( 5,832,250 )

( 6,112,650 )

$ ( 2,132,053 )

$ ( 2,229,017 )

$ ( 5,805,310 )

$ ( 280,400 )

$ ( 6,085,710 )

NET LOSS PER COMMON SHARE:

COMPREHENSIVE

comprehensive loss

$ ( 2,129,563 )

$ ( 2,226,527 )

$ ( 5,806,954 )

$ ( 280,400 )

$ ( 6,087,354 )

Reconciliation of the Original and Restated Consolidated Statements

of Cash Flows

the Nine Months Ended

September 30, 2024

CASH FLOWS FROM OPERATING ACTIVITIES:

$ ( 5,805,310 )

$ ( 280,400 )

$ ( 6,085,710 )

Changes in operating assets

and liabilities:

NET CASH USED IN OPERATING

( 4,950,245 )

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Reconciliation of the Original and Restated Consolidated Balance

of March 31, 2023

CURRENT ASSETS:

expenses and other current assets

Current Assets

AND STOCKHOLDERS’ EQUITY

STOCKHOLDERS’

$ ( 47,282,623 )

$ ( 46,351,167 )

Stockholders’ Equity

Liabilities and Stockholders’ Equity

Reconciliation of the Original and Restated Consolidated Statement

of Operations and Comprehensive Loss

the Three Months Ended

March 31, 2023

OPERATING COSTS AND EXPENSES:

and development expense

operating expenses

FROM OPERATIONS

( 2,192,817 )

( 2,244,858 )

$ ( 2,183,507 )

$ ( 2,235,548 )

NET LOSS PER COMMON SHARE:

COMPREHENSIVE

comprehensive loss

$ ( 2,178,137 )

$ ( 2,230,178 )

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Reconciliation of the Original and Restated Consolidated Statements

of Cash Flows

the Three Months Ended

March 31, 2023

CASH FLOWS FROM OPERATING ACTIVITIES:

$ ( 2,183,507 )

$ ( 2,235,548 )

in operating assets and liabilities:

CASH USED IN OPERATING ACTIVITIES

( 2,289,418 )

Reconciliation of the Original and Restated Consolidated Balance

As of June 30, 2023

As Previously

CURRENT ASSETS:

Prepaid expenses and other current assets

Total Current Assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

STOCKHOLDERS’ EQUITY:

Accumulated deficit

$ ( 49,155,654 )

$ ( 48,247,238 )

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Reconciliation of the Original and Restated Consolidated Statement

of Operations and Comprehensive Loss

the Three Months Ended

June 30, 2023

the Six Months Ended

June 30, 2023

COSTS AND EXPENSES:

and development expense

operating expenses

FROM OPERATIONS

( 1,708,629 )

( 1,731,669 )

( 3,901,446 )

( 3,976,527 )

$ ( 1,873,031 )

$ ( 1,896,071 )

$ ( 4,056,538 )

$ ( 4,131,619 )

NET LOSS PER COMMON SHARE:

COMPREHENSIVE

$ ( 1,873,031 )

$ ( 1,896,071 )

$ ( 4,056,538 )

$ ( 4,131,619 )

comprehensive loss

$ ( 1,924,119 )

$ ( 1,947,159 )

$ ( 4,102,256 )

$ ( 4,177,337 )

Reconciliation of the Original and Restated Consolidated Statements

of Cash Flows

the Six Months Ended

June 30, 2023

CASH FLOWS FROM OPERATING ACTIVITIES:

$ ( 4,056,538 )

$ ( 4,131,619 )

CASH USED IN OPERATING ACTIVITIES

$ ( 3,739,115 )

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Reconciliation of the Original and Restated Consolidated Balance

As of September 30, 2023

As Previously

CURRENT ASSETS:

Prepaid expenses and other current assets

Total Current Assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

STOCKHOLDERS’ EQUITY:

$ ( 51,242,237 )

$ ( 50,424,897 )

Stockholders’ Equity

Liabilities and Stockholders’ Equity

Reconciliation of the Original and Restated Consolidated Statement

of Operations and Comprehensive Loss

the Three Months Ended

September 30, 2023

the Nine Months Ended

September 30, 2023

COSTS AND EXPENSES:

and development expense

operating expenses

FROM OPERATIONS

( 2,092,980 )

( 2,184,056 )

( 5,994,426 )

( 6,160,583 )

$ ( 2,086,583 )

$ ( 2,177,659 )

$ ( 6,143,121 )

$ ( 166,157 )

$ ( 6,309,278 )

NET LOSS PER COMMON SHARE:

COMPREHENSIVE

comprehensive loss

$ ( 2,040,122 )

$ ( 2,131,198 )

$ ( 6,142,378 )

$ ( 166,157 )

$ ( 6,308,535 )

Reconciliation of the Original and Restated Consolidated Statements

of Cash Flows

For the Nine Months Ended

September 30, 2023

As Previously

CASH FLOWS FROM OPERATING ACTIVITIES:

$ ( 6,143,121 )

$ ( 166,157 )

$ ( 6,309,278 )

Prepaid expenses

NET CASH USED IN OPERATING ACTIVITIES

( 5,375,695 )

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

NOTE 9 – Subsequent Events

4 unchanged sentences

On January 6, 2025, the compensation committee

of the board of directors increased the number of shares reserved for issuance under the 2018 Plan from 166,878 shares to 176,878 shares.

On January 26, 2024, the Company provided 60 days

notice to the George Washington University of its termination of the license agreement for its breath based diagnostic device.

of the board of directors further increased the number of shares reserved for issuance under the 2018 Plan from 176,878 shares to 186,878

On January 7, 2025, the Company issued 3,750,000

common shares in connection with the exercise of the 3,750,000 April 2024 Inducement Warrants for cash proceeds of $ 5,625,000 .

On January 7, 2025 through March 5, 2025, pursuant

to the ATM Agreement (See Note 5), the Company issued an aggregate of 927,968 shares of its common stock for net proceeds of $ 1,470,435 .

On January 13, 2025, the Company entered into

a Patent Application Acquisition Agreement with Med30, LLC (the “Seller”), whereby the Seller sold, conveyed, assigned and

transferred to the Company all of Seller’s right, title, and interest in and to certain patent applications and associated rights,

subject to the terms and conditions set forth in such agreement for a cash payment of $ 400,000 and the issuance of 450,000 shares of the

Company’s common stock.

On January 14, 2025, pursuant to and subject to

the available number of shares reserved under the 2018 Plan, the Company issued options to the Company’s Chief Executive Officer

to purchase up to 93,000 shares of the Company’s common stock at an exercise price of $ 1.55 per share.

Additionally, on January

14, 2025, pursuant to and subject to the available number of shares reserved under the 2022 Plan, the Company issued options to the Company’s

Chief Executive Officer and an employee to purchase up to 77,000 shares of the Company’s common stock at an exercise price of $ 1.55

The options vested immediately in full upon grant and expire on January 14, 2035.

The aggregate grant date fair value of these

options was $ 219,283 , which was recorded as stock-based compensation in January 2025.

December 23, 2024, the Company provided notice to Isoprene Pharmaceutical, Inc.

(“Isoprene”) of its intent to terminate the

exclusive license agreement (the “Isoprene Agreement”) by and between the Company and Isoprene dated July 2, 2021.

Agreement terminated on March 23, 2025.

On February 6, 2024, the Company received notice

that its office lease was to be terminated.

The Company and its landlord agreed to relocate its office space to another location under

substantially the same terms and conditions as its existing lease.

Monthly payments for the new office lease are unchanged and term of

the lease expires in February 2026.

On March 27, 2024, the Company entered into a

warrant inducement agreement with a holder of certain of its existing warrants to immediately exercise for cash an aggregate 2,500,000

warrants to purchase shares of the Company’s common stock at a reduced exercise price of $ 1.6675 per share for gross proceeds to

the Company of approximately $ 4.2 million.

The exercised warrants were issued pursuant to a securities purchase agreement dated December

29, 2022, by and between the Company and a certain accredited investor.

Each warrant was exercisable for a period of five and one-half

years from the issuance date at an original exercise price of $ 5.00 per share.

As an inducement to such exercise, the Company agreed to

issue new unregistered warrants to purchase up to 3,750,000 shares of the Company’s common stock at an exercise price of $ 1.50 per

The warrants are exercisable immediately upon issuance and will expire on July 3, 2028.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data