What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-30 compared with 2021-03-16 · 875 added, 975 removed, 191 unchanged (91% of the section changed)

3 unchanged sentences

Consolidated Financial Statements

Report of Independent Registered

Public Accounting Firm

Consolidated Balance Sheets

as of December 31, 2020 and 2019

Consolidated Statements

of Operations and Comprehensive Loss for the years ended December 31, 2020 and 2019

Consolidated Statements

of Changes in Stockholders’

Equity for the years ended December 31, 2020 and 2019

Consolidated Statements

of Cash Flows for the years ended December 31, 2020 and 2019

Notes to Consolidated Financial

Report of Independent Registered Public

Accounting Firm

To the Stockholders and the Board of Directors of

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2021 and 2020

Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2021 and 2020

Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2021 and 2020

Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting

To the Stockholders and the Board of Directors

Hoth Therapeutics, Inc.

Opinion on the Consolidated Financial

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated

balance sheets of Hoth Therapeutics, Inc.

(the “Company”) as of December 31, 2020 and 2019, 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, 2020, and the related notes (collectively referred to as the “consolidated financial statements”).

our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position

of the Company as of December 31, 2020 and 2019, and the consolidated results of its operations and its cash flows for each of

the two years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United

States of America.

(the “Company”) as of December 31, 2021 and 2020, 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, 2021,

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, 2021

and 2020, and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31,

2021, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

Thee consolidated financial statements

are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight

Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance

with the standards of the PCAOB.

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

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

The Company is

not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

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 internal control over financial reporting.

Accordingly, we express no such

Our audits included performing procedures

to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing

procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and

disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

that our audits provide a reasonable basis for our opinion.

These consolidated financial statements are the

responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial

statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United

States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the

standards of the PCAOB.

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

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

The Company is not required to have, nor were we

engaged to perform, an audit of its internal control over financial reporting.

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

internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess

the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the

consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by

management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide

a reasonable basis for our opinion.

/S/ WithumSmith+Brown, PC

We have served as the Company’s auditor since 2018.

We have served as the Company's auditor since

New York, New York

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Prepaid expenses

Deferred offering cost

Note receivable - current

Total current assets

Note receivable

Property and equipment, net

Investment in joint venture

Restricted cash

LIABILITIES AND STOCKHOLDERS’

Investment in joint venture at fair value

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

3 unchanged sentences

Total current liabilities

Accrued license fee

Accrued license fee - less current portion

Total liabilities

Commitments and contingencies

Stockholders’

Preferred stock, $0.0001 par value, 5,000,000 shares

authorized, 0 shares issued and outstanding at December 31, 2020 and 2019, respectively

Series A Convertible Preferred Stock, $0.0001 par

value, 1,897,250 and 5,000,000 shares authorized, 0 shares issued and outstanding at December 31, 2020 and 2019, respectively

Common stock, $0.0001 par value, 75,000,000 shares

authorized, 13,438,535 and 10,119,844 shares issued and outstanding at December 31, 2020 and 2019, respectively

Stockholders’ equity

Preferred stock, $ 0.0001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding at December 31, 2021 and 2020, respectively

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

0 shares issued and outstanding at December 31, 2021 and 2020

Common stock, $ 0.0001 par value, 75,000,000 shares authorized, 23,974,546 and 13,438,535 shares issued and outstanding at December 31, 2021 and 2020, respectively

Additional paid-in-capital

2 unchanged sentences

( 19,413,458 )

Accumulated other comprehensive loss

Total stockholders’

Total liabilities and stockholders’

The accompanying notes are an integral

part of these consolidated financial statements.

Accumulated other comprehensive gain (loss)

Total stockholders’ equity

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 Loss

Consolidated Statements of Operations and Comprehensive

For the years ended

4 unchanged sentences

Professional fees (including stock-based compensation)

Other expenses

Other general and administrative expenses

Total operating expenses

Loss from operations

Other income, net

Loss on foreign currency exchange

Total other income

( 14,101,440 )

( 7,301,974 )

Other comprehensive loss

Other income (expenses)

Other income (expenses), net

Total other income (expenses)

$ ( 14,313,705 )

$ ( 7,197,816 )

Other comprehensive gain (loss)

Foreign currency translation adjustment

4 unchanged sentences

Weighted average number of common shares outstanding, basic and diluted

The accompanying notes are an integral

part of these consolidated financial statements.

The accompanying notes are an integral part

of these consolidated financial statements.

Hoth Therapeutics, Inc.

Consolidated Statements of Changes in

Stockholders’

Consolidated Statements of Changes in Stockholders’

Cumulative Translation

Total Stockholders’

Balance at December 31, 2019

$ ( 12,215,642 )

Conversion of preferred stock to common stock upon

completion of the IPO

Issuance of common stock in the IPO (net of offering

costs of $1,159,833)

Issuance of common stock and warrants (net of offering

costs of $426,990)

Cashless warrant exercise

Issuance of common stock and warrants (net of offering costs of $ 806,243 )

Issuance of common stock (net of offering costs of $ 525,000 )

Cancellation of common stock

Warrant exercise

Stock-based compensation

Cumulative translation adjustment

( 7,197,816 )

Balance at December 31, 2020

$ ( 19,413,458 )

Issuance of common stock and warrants (net of offering

costs of $806,243)

Issuance of common stock (net of offering costs

Cancellation of common stock

Issuance of common stock, common stock warrants and prefunded warrants (net of offering costs of $ 1,591,600 )

Issuance of common stock and warrants (net of offering costs of $ 572,500 )

Warrant exercise

1 unchanged sentence

Cumulative translation adjustment

( 14,313,705 )

Balance at December 31, 2021

$ ( 33,727,163 )

The accompanying notes are an integral

part of these consolidated financial statements.

The accompanying notes are an integral part

of these consolidated financial statements.

Hoth Therapeutics, Inc.

Consolidated Statements of Cash Flows

Years Ended Ended December

For the years ended

Cash flows from operating activities

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Stock-based compensation

Realized loss on marketable securities

Unrealized gain on marketable securities

Realized loss (gain) on marketable securities

Unrealized loss (gain) on marketable securities

Loss on foreign currency exchange

Changes in assets and liabilities:

2 unchanged sentences

Net cash used in operating activities

( 12,090,129 )

( 6,133,198 )

Cash flows from investing activities

2 unchanged sentences

Purchase of marketable securities

( 2,556,135 )

( 2,300,015 )

Purchase of convertible promissory note in Isoprene

1 unchanged sentence

Net cash used in investing activities

( 1,837,653 )

Cash flows from financing activities

Proceeds from issuance of common stock in the IPO, net of offering cost

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

Proceeds from issuance common stock and warrants, net of offering cost

3 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents

Net increase in cash

Cash and restricted cash, beginning of period

Cash and restricted cash, end of period

Net change in cash

Cash, beginning of period

Cash, end of period

Non-cash investing and financing activities

Conversion of preferred stock to common stock upon completion of the IPO

Cancellation and retirement of common stock

Cashless warrant exercise

Offering cost included in accrued expenses

The accompanying notes are an integral

part of these consolidated financial statements.

The accompanying notes are an integral part

of these consolidated financial statements.

Hoth Therapeutics, Inc.

Notes to Consolidated Financial Statements

Note 1—Organization and description of business operations

Hoth Therapeutics, Inc.

(together with

its wholly-owned subsidiary, 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 which was formed to initially

focus on developing new generation therapies for dermatological disorders including atopic dermatitis (also known as eczema),

chronic wounds, psoriasis, asthma and acne.

Since its formation, the Company expanded its business to also focus on developing

a topical formulation for treating side effects from drugs used for the treatment of cancer;

a treatment for asthma and allergies

using inhalational administration;

a topical treatment for patients with lupus;

a treatment for mast-cell derived cancers and

and a treatment for lung diseases resulting from bacterial infections.

The Company is focused on potentially developing

a COVID-19 treatment as well as a diagnostic device for the detection of SARS-CoV-2 via a mobile device.

(together with its wholly-owned

subsidiary, 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

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

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

and (iii) a treatment and/or prevention for Alzheimer’s

or other neuroinflammatory diseases.

The Company also has preclinical assets being developed for (i) atopic dermatitis (also known as

(ii) a treatment for asthma and allergies using inhalational administration;

(iii) a treatment for lung diseases resulting from

bacterial infections;

and (iv) a treatment for inflammatory bowel diseases.

In addition, the Company is developing a diagnostic device

via a mobile device.

The Company also has interests in certain other assets being developed by third parties (See Note 6 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 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.

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 would result in dilution to its existing stockholders and future debt securities may contain covenants

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

The Company’s current cash is sufficient

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 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.

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

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

operations or ability to enter into certain transactions.

The Company’s current cash is sufficient

to fund operations for at least the next 12 months from the date that these financial statements are available to be issued.

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 existing and new 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.

Note 2—Significant accounting

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 subsidiary, 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.

Hoth Therapeutics, Inc.

Notes to Consolidated Financial Statements

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.

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 existing and new 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.

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 subsidiary, 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.

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.

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, 2020 and 2019.

Restricted cash

In November 2016, the Financial Accounting

Standards Board (“FASB”) issued ASU No.

2016-18 , Statement of Cash Flows (Topic 230):

Restricted Cash (“ASU

2016-18”) , which clarifies the presentation of restricted cash in the statements of cash flows.

Under ASU 2016-18,

restricted cash is included with cash when reconciling the beginning-of-period and end-of-period total amounts shown on the statements

of cash flows.

The Company adopted ASU 2016-18 during the year ended December 31, 2019 on a retrospective basis.

The following

is a summary of the Company’s cash and restricted cash total as presented in the consolidated statements of cash flows for

the years ended December 31, 2020 and 2019:

Restricted cash

Total cash and restricted cash

The $0.2 million restricted cash was deposited

into a third-party escrow account in order to provide a source of funding for certain indemnification obligations the Company

has pursuant to its Qualified Independent Underwriter Engagement Agreement.

On May 29, 2020, the $0.2 million restricted cash

in the escrow account was returned to the Company.

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, 2021 and 2020.

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 sheet risk

Cash is a financial instrument that is

potentially subject to concentrations of credit risk.

The Company’s cash is deposited in accounts at large financial institutions,

and amounts may exceed federally insured limits.

The Company believes it is not exposed to significant credit risk due to the

financial strength of the depository institutions in which the cash is held.

The Company has no financial instruments with off-balance

sheet risk of loss.

offering costs

Deferred offering costs, which primarily

consist of direct, incremental professional fees incurred in connection with the Company’s initial public offering (“IPO”)

as well as other private equity offerings are capitalized as current assets on the consolidated balance sheet.

Upon the closing

of the offerings, the deferred offering costs are offset against the offering proceeds.

Approximately $0 and $30,000 of such offering

costs were accrued but unpaid at December 31, 2020 and 2019, respectively.

Hoth Therapeutics, Inc.

Notes to Consolidated Financial Statements

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

Concentrations of credit risk and off-balance

Cash is a financial instrument that is potentially

subject to concentrations of credit risk.

The Company’s cash is deposited in accounts at large financial institutions, and amounts

may exceed federally insured limits.

The Company believes it is not exposed to significant credit risk due to the financial strength

of the depository institutions in which the cash is held.

The Company has no financial instruments with off-balance sheet risk of loss.

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 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.

Fair value option – Note receivable

The guidance in ASC 825, Financial Instruments , provides a fair

value option election that allows entities to make an irrevocable election of fair value as the initial and subsequent measurement attribute

for certain eligible financial assets and liabilities.

Unrealized gains and losses on items for which the fair value option has been elected

are reported in earnings.

The decision to elect the fair value option is determined on an instrument-by-instrument basis and must be applied

to an entire instrument and is irrevocable once elected.

Assets and liabilities measured at fair value pursuant to this guidance are required

to be reported separately in the Company’s consolidated balance sheets from those instruments using another accounting method.

Investment in joint venture

1 unchanged sentence

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

SEC Staff Announcement:

Accounting for Limited Partnership Investments (codified in Accounting Standards Codification (“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 venture is further described in Note of 7 these consolidated financial

and development costs

Research and development costs, including

acquired in-process research and development expenses for which there is no alternative future use, are expensed as incurred.

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.

value measurement

FASB 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 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 liability.

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.

The following table presents the Company’s

assets and liabilities that are measured at fair value at December 31, 2020 and 2019:

Fair value measured at December

Total at December 31,

Quoted prices in active markets

other observable inputs

Significant unobservable inputs

Marketable securities - mutual funds

Fair value measured at December

Total at December 31,

Quoted prices in active markets

other observable inputs

Significant unobservable inputs

Marketable securities - mutual funds

Hoth Therapeutics, Inc.

Notes to Consolidated Financial Statements

Announcement:

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

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.

determination of whether an investee’s results are recorded on a lag is made on an investment-by-investment basis.

investment in joint venture is further described in Note of 6 these consolidated financial statements.

development costs

Research and development costs, including acquired

in-process research and development expenses for which there is no alternative future use, are expensed as incurred.

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

1 unchanged sentence

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.

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.

These options generally vest over a one to five year period .

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

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.

The Company accounts

for forfeited awards as they occur.

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.

Treasury zero-coupon issues with

an equivalent remaining term.

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.

Effective January 1, 2017, the Company

elected to account for forfeited awards as they occur, as permitted by ASU 2016-09.

Ultimately, the actual expenses recognized

over the vesting period will be for those shares that vested.

Prior to making this election, the Company estimated a forfeiture

rate for awards at 0%, as the Company did not have a significant history of forfeitures.

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 assuming examination by the taxing authority.

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.

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.

Income taxes are recorded in accordance with

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

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

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 assuming examination by the taxing authority.

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:

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:

As of December 31,

1 unchanged sentence

Non-vested restricted stock awards

Hoth Therapeutics, Inc.

Notes to Consolidated Financial Statements

Recent accounting pronouncements

In February 2016, the FASB issued ASU

2016-02, Leases (Topic 842), which supersedes FASB ASC Topic 840, Leases (Topic 840) and provides principles

for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors.

The new standard requires

lessees to apply a dual approach, classifying virtually all leases as either finance or operating leases based on the principle

of whether or not the lease is effectively a financed purchase by the lessee.

This classification will determine whether lease

expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease.

also required to record a right-of-use asset and a lease liability for all leases with a term of greater than twelve months regardless

of classification.

Leases with a term of twelve months or less will be accounted for similar to existing guidance for operating

The standard is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted

upon issuance.

On January 1, 2019, the Company adopted ASU No.

2016-02, and the adoption did not have a material impact on its

consolidated financial statements and related disclosures due to the short-term nature of its operating leases.

In June 2018, the FASB issued ASU 2018-07,

Compensation—Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting (“ASU

2018-07”).

ASU 2018-07 simplifies several aspects of the accounting for nonemployee share-based payment transactions resulting

from expanding the scope of Topic 718, Compensation—Stock Compensation, to include share-based payment transactions for

acquiring goods and services from non-employees.

ASU 2018-07 is effective for public business entities for fiscal years beginning

after December 15, 2018, including interim periods within that fiscal year.

On January 1, 2019, the Company adopted ASU 2018-07,

and the adoption did not have a material impact on its consolidated financial statements.

In December 2019, the FASB issued ASU

2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes (“ASU 2019-12”),

which is intended to simplify various aspects related to accounting for income taxes.

ASU 2019-12 removes certain exceptions to

the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

This guidance

is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption

The Company adopted ASU No.

2019-12 effective January 1, 2021, and the adoption did not have a material impact on its

consolidated financial statements.

Note 3—License agreements

The following summarizes the Company’s

In December 2019, FASB issued ASU No.

“Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to

simplify various aspects related to accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general principles in

Topic 740 and also clarifies and amends existing guidance to improve consistent application.

This guidance is effective for fiscal years,

and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted.

The Company adopted

ASU 2019-12 effective January 1, 2021, and the adoption did not have a material impact on its 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, 2021 and 2020:

For the years ended December 31,

For the years ended

The George Washington University

Chelexa Biosciences, Inc.

and the University of Cincinnati

The George Washington University

University of Maryland and Isoprene Pharmaceuticals, Inc.

North Carolina State University

Virginia Commonwealth University

University of Cincinnati

Army Medical Research and Development Command

Virginia Commonwealth University

Therapeutics, Inc.

Washington University

On February 1, 2020 (“GW the Effective

Date”), the Company entered into a patent license agreement with GW pursuant to which GW granted the Company a license to certain

patent rights to, among other things, make, use, offer and sell certain licensed products throughout the world with respect to HT-001.

On the GW Effective Date, the Company paid GW $2,500, and on February 27, 2020, the Company paid GW $10,000 as a license initiation fee.

Until the first commercial sale of HT-001, the Company shall pay (i) $75,000 per year for the development and commercialization of HT-001,

(ii) $2,000 for license maintenance fees on the first anniversary of the GW Effective Date and (iii) $5,000 for license maintenance fees

commencing on the second anniversary of the GW Effective Date and thereafter.

Furthermore, the Company shall be required to pay GW a

sublicense fee equal to a certain percentage of the sum of payments plus the fair market value of all other consideration of any kind

received by the Company from sublicensees during each quarter as follows:

a 40% sublicense fee until the first anniversary of the GW

Effective Date, a 30% sublicense fee until the third anniversary of the GW Effective Date and a 20% sublicense fee after the third anniversary

of the GW Effective Date;

provided, however, such sublicense fee shall exclude certain fees paid to the Company such as certain royalties,

equity investments, loan proceeds and sponsored research funding.

The Company shall also pay GW milestone payments of up to an aggregate

of $90,000 and sales-based royalties at a low single digit percentage, subject to certain minimum royalty requirements.

Effective as of June 1, 2019, the Company and

GW entered into a sponsored research agreement (the “Sponsored Research Agreement”), as amended on July 29, 2019, May 29,

2020 and September 7, 2021, with respect to the exploration of the potential use of HT-001 for topical and/or systemic therapy to counter

the dermatological related side-effects of Erlotinib therapy in cancer patients.

The Sponsored Research Agreement shall terminate on

May 31, 2022 unless terminated earlier pursuant to the terms of the agreement.

On August 7, 2020 (the “GW Second Effective

Date”), the Company entered into a second Patent License Agreement (the “GW Second Patent License Agreement”) with

GW pursuant to which GW granted the Company an exclusive, worldwide, royalty bearing license to certain intellectual property that can

be used to develop a breath based diagnostic device.

The GW Second Patent License Agreement permits the Company to make, have made, use,

import, offer for sale and sell Licensed Products (as defined in the GW Second Patent License Agreement) in the field of virus sensing

and detection.

The term of the GW Second Patent License Agreement shall continue until the later of:

(a) the expiration or abandonment

of the last patent to expire or become abandoned of the Patent Rights (as defined in the GW Second Patent License Agreement);

ten years after the first Sale (as defined in the GW Second Patent License Agreement) of the first Licensed Product if no patent has

issued from the Patent Rights, unless terminated earlier pursuant to the terms of the agreement.

Pursuant to the GW Second Patent License

Agreement, the Company shall pay GW:

(i) an upfront license initiation fee, (ii) annual maintenance fees commencing on the first anniversary

of the GW Second Effective Date, (iii) milestone payments ranging from the low to mid five figures, (iv) running royalty payments at

a middle single digit percentage of Net Sales (as defined in the GW Second Patent License Agreement), (iv) quarterly minimum payments

ranging from the low four figures for the first four quarters after the first sale to low five figures commencing three years after the

first sale and (v) an annual diligence fee of high five figures.

In addition, the Company has agreed to reimburse GW for certain past

and future patent filing and prosecution costs.

On September 17, 2020, the Company entered into

a second Sponsored Research Agreement (the “Second Agreement”) with GW effective as of September 1, 2020 (the “Second

Agreement Effective Date”).

The Second Agreement relates to the development of a diagnostic device for the detection of SARS-CoV-2

via a mobile device as an aid in the diagnosis of the COVID-19 infection.

The Second Agreement was terminated on February 26, 2021.

During the year ended December 31, 2020, the

Company paid $ 10,000 for license initiation fee, $ 10,000 for option exercise fee and approximately $ 15,000 patent related expense.

Company also recorded an expense of approximately $ 134,000 related with warrants granted to GW pursuant to the GW Patent License Agreement

and GW Second Patent License Agreement.

During the year ended December 31, 2021, the

Company recorded an expense of approximately $ 0.1 million for related to warrants granted to GW pursuant to the GW Patent License Agreement

and the Second GW Patent License Agreement.

Chelexa Biosciences, Inc.

1 unchanged sentence

of Cincinnati

On May 14, 2020, the Company entered into

an Assignment and Assumption Agreement (the “Assignment Agreement”) with Chelexa Biosciences, Inc.

(“Chelexa”)

pursuant to which Chelexa assigned to the Company its rights and obligations in and liabilities under its license agreement with

the University of Cincinnati dated February 27, 2013, as amended (the “University of Cincinnati License Agreement”).

In consideration for the assignment, the Company agreed to forgive all amounts due to it by Chelexa and to pay to Chelexa certain

royalty payments.

Hoth Therapeutics, Inc.

Notes to Consolidated Financial Statements

On May 14, 2020, the Company entered into an

Assignment and Assumption Agreement (the “Assignment Agreement”) with Chelexa Biosciences, Inc.

(“Chelexa”) pursuant

to which Chelexa assigned to the Company its rights and obligations in and liabilities under its license agreement with the University

of Cincinnati dated February 27, 2013 (as amended, the “University of Cincinnati License Agreement”).

In consideration for

the assignment, the Company agreed to forgive all amounts due to it by Chelexa and to pay to Chelexa certain royalty payments.

In connection with the Assignment Agreement,

on May 14, 2020, the Company entered into a novation agreement (the “Novation Agreement”) with Chelexa and the University

of Cincinnati pursuant to which the parties agreed that the Company would be substituted in place of Chelexa with respect to the

rights and obligations of Chelexa set forth in the University of Cincinnati License Agreement.

on May 14, 2020, the Company entered into a novation agreement (the “Novation Agreement”) with Chelexa and the University

of Cincinnati pursuant to which the parties agreed that the Company would be substituted in place of Chelexa with respect to the rights

and obligations of Chelexa set forth in the University of Cincinnati License Agreement.

In connection with the Assignment Agreement,

on May 14, 2020, the Company entered into a royalty agreement (the “Royalty Agreement”) with Chelexa pursuant to which

the Company shall pay Chelexa sales-based royalties at percentages which range from mid to high single digits, with high sales

volumes being subject to lower royalty rates and total milestone payments of $3.5 million.

Pursuant to the University of Cincinnati

License Agreement, the Company was granted an exclusive license to make, use, have made, import, offer for sale, and sell products

based upon or involving the use of (i) topical compositions comprising a zinc chelator and gentamicin and (ii) zinc chelators

to inhibit biofilm formation (the “BioLexa Platform”

or “BioLexa”).

In addition, the University of Cincinnati

granted the Company the right to issue exclusive and nonexclusive sublicenses (with the right to further sublicense to third parties)

to make, use, have made, import, offer for sale, and sell products based upon the BioLexa Platform.

The term of such agreement

will expire on the later of April 16, 2034 and the last to expire patent in the patent rights granted to the Company (the “Term”).

The Company shall, in its sole discretion, have the first right of refusal to renew the Term.

The Company is subject to total

milestone payments of $6,000, royalty payments, annual license maintenance fees, and has agreed to pay the University of Cincinnati

for certain out-of-pocket expenses including, but not limited to, payments for patent prosecution.

During the year ended December 31, 2020

the Company paid $5,000 for the annual license maintenance fee and $5,000 for the yearly minimum annual royalty fee.

George Washington University

Effective as of June 1, 2019, the Company

and The George Washington University (“GW”) entered into a sponsored research agreement (the “Sponsored Research

Agreement”), as amended on July 29, 2019 and May 29, 2020, with respect to the exploration of the potential use of HT-001

for topical and/or systemic therapy to counter the dermatological related side-effects of Erlotinib therapy in cancer patients.

Pursuant to the terms of the Sponsored Research Agreement, GW granted the Company a non-exclusive license to certain of GW’s

intellectual property.

The Company has agreed to pay GW for all costs incurred in connection with the research;

provided, however,

such costs shall not exceed approximately $0.5 million.

The Sponsored Research Agreement shall terminate on June 30, 2021.

Sponsored Research Agreement may be terminated by either party upon 30 days written notice.

On June 28, 2019 (the “Effective

Date”), the Company and GW entered into a research option agreement (the “Research Option Agreement”) pursuant

to which GW granted the Company an option (the “Option”) until April 30, 2020 to acquire an exclusive license to certain

products made or used by the Company (the “GW Licensed Product”) that involve certain patents owned by GW (the “Licensed

Patents”).

On February 1, 2020, the Company exercised the Option and entered into a patent license agreement (the “Patent

License Agreement”) with GW.

On the Effective Date, the Company paid GW $2,500, and on February 27, 2020, the Company paid

GW $10,000 as a license initiation fee.

Until the first commercial sale of the GW Licensed Product, the Company shall pay (i)

$75,000 per year for the development and commercialization of the GW Licensed Product, (ii) $2,000 for license maintenance fees

on the first anniversary of the Effective Date and (iii) $5,000 for license maintenance fees commencing on the second anniversary

of the Effective Date and thereafter.

Furthermore, the Company shall be required to pay GW a sublicense fee equal to a certain

percentage of the sum of payments plus the fair market value of all other consideration of any kind received by the Company from

sublicensees during each quarter as follows:

a 40% sublicense fee until the first anniversary of the Effective Date, a 30% sublicense

fee until the third anniversary of the Effective Date and a 20% sublicense fee after the third anniversary of the Effective Date;

provided, however, such sublicense fee shall exclude certain fees paid to the Company such as certain royalties, equity investments,

loan proceeds and sponsored research funding.

The Company shall also pay GW milestone payments of up to an aggregate of $90,000

and sales-based royalties at a low single digit percentage, subject to certain minimum royalty requirements.

In addition, during

each Option Exercise Period and Renewal Period (as defined in the Research Option Agreement) the Company shall pay GW, on a quarterly

basis, for all costs and expenses related to the Licensed Patents.

Hoth Therapeutics, Inc.

Notes to Consolidated Financial Statements

On August 7, 2020 (the “GW Effective

Date”), the Company entered into a Patent License Agreement (the “GW Patent License Agreement”) with the GW.

Pursuant to the GW Patent License Agreement, GW granted the Company an exclusive, worldwide, royalty bearing license to certain

intellectual property that can be used to develop a device designed to detect the presence of SARS-CoV-2.

Specifically, the GW

Patent License Agreement permits the Company to make, have made, use, import, offer for sale and sell Licensed Products (as defined

in the GW Patent License Agreement) in the field of virus sensing and detection.

The GW Patent License Agreement shall commence

on the GW Effective Date and shall continue until the later of:

(a) the expiration or abandonment of the last patent to expire

or become abandoned of the Patent Rights (as defined in the GW Patent License Agreement);

or (b) ten years after the first Sale

(as defined in the GW Patent License Agreement) of the first Licensed Product if no patent has issued from the Patent Rights,

unless terminated earlier pursuant to the terms of the agreement.

Pursuant to the GW Patent License Agreement, the Company shall

(i) an upfront license initiation fee, (ii) annual maintenance fees commencing on the first anniversary of the GW Effective

Date, (iii) milestone payments ranging from the low to mid five figures, (iv) running royalty payments at a middle single digit

percentage of Net Sales (as defined in the GW License Agreement), (iv) quarterly minimum payments ranging from the low four figures

for the first four quarters after the first sale to low five figures commencing three years after the first sale and (v) an annual

diligence fee of high five figures.

In addition, the Company has agreed to reimburse GW for certain past and future patent filing

and prosecution costs.

On September 17, 2020, the Company entered

into a Sponsored Research Agreement (the “Agreement”) with GW effective as of September 1, 2020 (the “Agreement

Effective Date”).

The Agreement relates to the development of a diagnostic device for the detection of SARS-CoV-2 via a

mobile device as an aid in the diagnosis of the COVID-19 infection.

The Agreement commences on the Agreement Effective Date and

terminates on July 31, 2021 unless such term is extended or terminated by the parties.

Pursuant to the Agreement, the Company

shall pay GW up to a mid-six figure fee for all research costs.

During the year ended December 31, 2020

the Company paid $10,000 for license initiation fee, $10,000 for option exercise fee and approximately $15,000 patent related

The Company also recorded an expense of approximately $134,000 related with warrants granted to GW pursuant to Patent

License Agreement.

University of Maryland and Isoprene

Pharmaceuticals, Inc.

On March 8, 2019, the Company entered

into a commercial evaluation sublicense and option agreement (the “Commercial Evaluation Sublicense and Option Agreement”)

with the University of Maryland, Baltimore (“UMB”) and Isoprene Pharmaceuticals, Inc.

(“Isoprene”).

to the agreement, the Company paid an initial option and material access fee of $5,000 to UMB and $5,000 to Isoprene.

that Isoprene enters into a master license agreement with UMB (the “MLA”), UMB shall permit Isoprene to grant an exclusive

option to the Company to negotiate and obtain an exclusive sublicensable, worldwide royalty-bearing license to the subject technology

(the “Isoprene-Hoth Option”);

provided, however, in the event Isoprene does not enter into the MLA, UMB may grant

the Company an option to negotiate and obtain an exclusive sublicensable, worldwide royalty-bearing license to the subject technology

(the “UMB-Hoth Option”).

If the Company exercises the Isoprene-Hoth Option, it shall pay Isoprene an option exercise

fee of $20,000.

If the Company exercises the UMB-Hoth Option, it shall pay UMB an option exercise fee of $20,000.

On July 30, 2020 (the “Isoprene

Effective Date”), the Company entered into a Sublicense Agreement (the “Isoprene Sublicense Agreement”) with

Isoprene pursuant to the Commercial Evaluation Sublicense and Option Agreement.

Pursuant to the Isoprene Sublicense Agreement,

Isoprene granted the Company an exclusive sublicense to certain intellectual property (i) to make, have made, use, sell, offer

to sell and import certain licensed products, (ii) in connection therewith, to use certain inventions and licensed materials and

(iii) to practice the Patent Rights (as defined in the Isoprene Sublicense Agreement) for the treatment of dermatological conditions

The Isoprene Sublicense Agreement will continue on a country-by-country basis until the expiration of the last to

expire of the Patent Rights in such country, unless earlier terminated pursuant to the Isoprene Sublicense Agreement (the “Isoprene

Term”).

Pursuant to the Isoprene Sublicense Agreement, the Company shall pay Isoprene, among other things, (i) a license

fee, (ii) a royalty rate at a middle single digit percentage, (iii) milestone payments of up to $1,375,000 and (iv) revenue interest

at a low single digit percentage based on the net revenue of covered products sold by Isoprene during the Isoprene Term.

Hoth Therapeutics, Inc.

Notes to Consolidated Financial Statements

In March 2019, the Company recorded an

expense of an aggregate of $10,000 for the initial option and materials access fee.

During the year ended 2020, the Company paid

a total of $30,000 for the license fee.

At December 31, 2020, the Company accrued a $5,000 for an upfront license payment.

On December 2, 2020, Hoth Therapeutics,

(the “Company”) entered into an option agreement (the “Option Agreement”) with Isoprene Pharmaceutics,

(“Isoprene”), pursuant to which the Company will have an exclusive option, until June 2, 2021, to negotiate an

exclusive, royalty-bearing and limited term license with respect to certain previously sublicensed intellectual property for the

diagnosis and treatment of inflammatory bowel diseases, including Crohn’s disease and ulcerative colitis.

This Option Agreement

is based upon, and potentially expands, the fields of use in which the Company can license certain Isoprene intellectual property

that is the subject of the Company’s existing Sublicense Agreement, dated July 30, 2020, with Isoprene, and the Master License

Agreement, dated July 8, 2020, by and between Isoprene and the University of Maryland, Baltimore.

During the year ended December 31, 2020

the Company paid $10,000 for license fee and $20,000 for the option exercise fee.

As of December 31, 2020, the Company accrued

a $5,000 for an upfront license payment.

Carolina State University

On November 20, 2019 (the “NC State

Effective Date”), the Company entered into a license agreement with North Carolina State University (“NC State”)

pursuant to which NC State granted the Company an exclusive license to, among other things, develop, make, use, offer and sell

certain licensed products throughout the world with respect to HT-004 for treating allergic diseases.

The term of the license

agreement shall commence on the NC State Effective Date and shall continue until the date of the expiration of the last to expire

patent right granted pursuant to the license agreement unless terminated earlier pursuant to the terms of the agreement.

to the terms of the license agreement, the Company paid NC State a one-time license fee $25,000 and is also required to pay (i)

sales-based royalties at a low single digit percentage, (ii) minimum royalties ranging from $0 to $50,000 and (iii) milestone

payments of up to $585,000.

University of Cincinnati

On May 18, 2018, the Company entered into

an exclusive license agreement with the University of Cincinnati for a patented, novel genetic marker for food allergies.

genetic marker licensed by the Company from the University of Cincinnati may be used to (i) identify at risk infants in predicting

food allergies, including peanut and milk allergies, (ii) identify a person’s predisposition to an allergic reaction, thereby

avoiding such reaction and (iii) determine an individual’s propensity to develop atopic dermatitis, such as eczema.

Company intends to utilize the genetic marker for purposes of determining an individual’s propensity to develop eczema as

well as to identify and treat allergies in at-risk infants.

on May 14, 2020, the Company entered into a royalty agreement (the “Royalty Agreement”) with Chelexa pursuant to which the

Company shall pay Chelexa sales-based royalties at percentages which range from mid to high single digits, with high sales volumes being

subject to lower royalty rates and total milestone payments of $ 3.5 million.

Pursuant to the University of Cincinnati License

Agreement, the Company was granted an exclusive license to make, use, have made, import, offer for sale, and sell products based upon

or involving the use of (i) topical compositions comprising a zinc chelator and gentamicin and (ii) zinc chelators to inhibit biofilm

formation (the “BioLexa Platform” or “BioLexa”).

In addition, the University of Cincinnati granted the Company

the right to issue exclusive and nonexclusive sublicenses (with the right to further sublicense to third parties) to make, use, have

made, import, offer for sale, and sell products based upon the BioLexa Platform.

The term of such agreement will expire on the later

of April 16, 2034 and the last to expire patent in the patent rights granted to the Company (the “Term”).

The Company shall,

in its sole discretion, have the first right of refusal to renew the Term.

The Company is subject to total milestone payments of $ 6,000 ,

royalty payments, annual license maintenance fees, and has agreed to pay the University of Cincinnati for certain out-of-pocket expenses

including, but not limited to, payments for patent prosecution.

During the year ended December 31, 2021, the

Company paid $ 2,500 for the annual license maintenance fee and $ 5,000 for the yearly minimum annual royalty fee.

During the year ended December 31, 2020, the

Company paid a total of $ 2,500 for the annual license maintenance fee, $ 5,000 for the yearly minimum annual royalty fee and approximately

$ 2,000 for patent expense reimbursement.

As of December 31, 2020, the Company accrued a $ 7,500 for an upfront license payment.

was made in 2021.

University of Maryland and Isoprene Pharmaceuticals,

On July 30, 2020 (the “Isoprene Effective

Date”), the Company entered into a Sublicense Agreement (the “Isoprene Sublicense Agreement”) with Isoprene Pharmaceuticals,

(“Isoprene”).

Pursuant to the Isoprene Sublicense Agreement, Isoprene granted the Company an exclusive sublicense to

certain intellectual property (i) to make, have made, use, sell, offer to sell and import certain licensed products, (ii) in connection

therewith, to use certain inventions and licensed materials and (iii) to practice the Patent Rights (as defined in the Isoprene Sublicense

Agreement) for the treatment of dermatological conditions or diseases.

The Isoprene Sublicense Agreement will continue on a country-by-country

basis until the expiration of the last to expire of the Patent Rights in such country, unless earlier terminated pursuant to the Isoprene

Sublicense Agreement (the “Isoprene Term”).

Pursuant to the Isoprene Sublicense Agreement, the Company shall pay Isoprene,

among other things, (i) a license fee, (ii) a royalty rate at a middle single digit percentage, (iii) milestone payments of up to $ 1,375,000

and (iv) revenue interest at a low single digit percentage based on the net revenue of covered products sold by Isoprene during the Isoprene

On December 2, 2020, the Company entered into

an option agreement (the “Option Agreement”) with Isoprene, pursuant to which the Company had an exclusive option, until

June 2, 2021, to negotiate an exclusive, royalty-bearing and limited term license with respect to certain previously sublicensed intellectual

property for the diagnosis and treatment of inflammatory bowel diseases, including Crohn’s disease and ulcerative colitis, which

option was exercised on July 2, 2021.This Option Agreement is based upon and expands the fields of use in which the Company can license

certain Isoprene intellectual property that is the subject of the Company’s existing Sublicense Agreement, dated July 30, 2020,

with Isoprene, and the Master License Agreement, dated July 8, 2020, by and between Isoprene and the University of Maryland, Baltimore.

During the year ended December 31, 2020, the

Company paid $ 10,000 for the license fee and $ 20,000 for the option exercise fee.

As of December 31, 2020, the Company accrued a $ 5,000

for an upfront license payment.

During the year ended December 31, 2021, the

Company paid $ 15,000 for the license fee.

North Carolina

State University

On February 25, 2021 (the “Effective Date”),

the Company entered into a License Agreement (the “License Agreement”) with North Carolina State University (“NC State”)

pursuant to which NC State granted the Company an exclusive, worldwide, royalty bearing license to certain intellectual property to,

among other things, discover, develop, make, have made, use and sell certain licensed products and sell, use and practice certain licensed

services with respect to cancer and anaphylaxis.

The License Agreement commenced on the Effective Date and continues until the later

of (i) the date of expiration of the last to expire patents rights licensed pursuant to such agreement, including any renewals or extensions

thereof and (ii) expiration of any market exclusivity period granted for a licensed product by the applicable regulatory agency.

During the year ended December 31, 2021, the

Company paid $ 30,000 for the license fee.

Commonwealth University

On May 18, 2020 (the “VCU Effective Date”),

the Company entered into an Exclusive License Agreement (the “VCU License Agreement”) with the Virginia Commonwealth University

Intellectual Property Foundation (“VCU”).

Pursuant to the VCU License Agreement, VCU granted the Company an exclusive, royalty

bearing license to a novel peptide developed by researchers at VCU that may be used to slow the transmission of SARS-CoV-2 (the “VCU

Licensed Patent”) and a non-exclusive royalty bearing, worldwide license with respect to the Licensed Technical Information Patents

(as defined in the VCU License Agreement) to make, have made, use, offer to sell, sell and import the Licensed Products (as defined in

the VCU License Agreement) and perform the Licensed Services (as defined in the VCU License Agreement).

The VCU License Agreement commenced

on the VCU Effective Date and shall continue until the expiration of the last to expire VCU Licensed Patent unless terminated earlier

pursuant to the terms of the agreement.

Pursuant to the VCU License Agreement, the Company shall pay VCU:

(i) an upfront license issue

fee, (ii) running royalty payments at a low single digit percentage of Net Sales (as defined in the VCU License Agreement), (iii) annual

maintenance fees commencing on the first anniversary of the VCU Effective Date, (iv) annual minimum payments ranging from the mid five

figures to low six figures commencing on the second anniversary of the VCU Effective Date and (v) milestone payments ranging from the

mid five figures to low six figures.

In addition, the Company has agreed to reimburse VCU for certain patent filing and prosecution costs.

On June 29, 2020, the Company entered into a

Sponsored Project Agreement (the “VCU Sponsored Project Agreement”) with VCU for the development of a potential COVID-19

treatment using the license to a novel peptide granted to the Company by VCU.

The VCU Sponsored Project Agreement was amended on April

28, 2021 to extend the period of research and to add an additional scope of investigation to include the variants of SARS-CoV-2.

In May 2020, the Company paid the signing fee

of $ 50,000 upon execution of the VCU License Agreement.

During the year ended December 31, 2021, the

Company paid $ 30,000 for annual maintenance fees.

As of December 31, 2021 and 2020, the Company

accrued $ 285,000 for five years of annual minimum payments and $ 30,000 for annual maintenance fees.

The University of Cincinnati

On May 18, 2018, the Company entered into an

exclusive license agreement with the University of Cincinnati for a patented, novel genetic marker for food allergies.

The genetic marker

licensed by the Company from the University of Cincinnati may be used to (i) identify at risk infants in predicting food allergies, including

peanut and milk allergies, (ii) identify a person’s predisposition to an allergic reaction, thereby avoiding such reaction and

(iii) determine an individual’s propensity to develop atopic dermatitis, such as eczema.

Pursuant to the terms of the exclusive

license agreement, the Company paid the University of Cincinnati a minimum annual royalty fee of $5,000 and has agreed to pay

the University of Cincinnati an annual license fee of $5,000 initially due and payable within 30 days of the one year anniversary

of the exclusive license agreement and every year thereafter and milestone payments of up to $120,000.

The exclusive license agreement

will continue until the later of (i) the date upon which a valid claim pursuant to the terms of the exclusive license agreement

expires or (ii) ten years after the first commercial sale or unless earlier terminated pursuant to the terms of the exclusive

license agreement.

During the year ended December 31, 2020,

the Company paid a total of $2,500 for the annual license maintenance fee, $5,000 for the yearly minimum annual royalty fee and

approximately $2,000 for patent expense reimbursement.

As of December 31, 2020, the Company accrued a $17,500 for an upfront license

license agreement, the Company paid the University of Cincinnati a minimum annual royalty fee of $ 5,000 and agreed to pay the University

of Cincinnati an annual license fee of $ 5,000 initially due and payable within 30 days of the one year anniversary of the exclusive license

agreement and every year thereafter and milestone payments of up to $ 120,000 .

The exclusive license agreement was terminated by the Company

on October 22, 2021.

During the year ended December 31, 2021, the

Company paid $ 5,000 for the annual license maintenance fee and $ 5,000 for the yearly minimum annual royalty fee.

During the year ended December 31, 2020, the

Company paid a total of $ 5,000 for the annual license maintenance fee, $ 5,000 for the yearly minimum annual royalty.

As of December 31,

2020, the Company accrued a $ 10,500 for an upfront license payment.

The payment was made in 2021.

Army Medical Research and Development

On December 11, 2020, the Company entered

into a commercial evaluation license agreement with U.S.

Army Medical Research and Development Command (“USAMRDC”).

This agreement was amended on January 12, 2021 to clarify that the license entered into is with Walter Reed Army Institute of

Research, a subsidiary of USAMRDC.

On December 11, 2020, the Company entered into

a commercial evaluation license agreement with U.S.

Army Medical Research and Development Command (“USAMRDC”).

This agreement

was amended on January 12, 2021 to clarify that the license entered into is with Walter Reed Army Institute of Research, a subsidiary

As of December 31, 2020, the Company accrued

a $ 2,000 for an upfront license payment.

Hoth Therapeutics, Inc.

Notes to Consolidated Financial Statements

Commonwealth University

On May 18, 2020 (the “VCU Effective

Date”), the Company entered into an Exclusive License Agreement (the “VCU License Agreement”) with the Virginia

Commonwealth University Intellectual Property Foundation (“VCU”).

Pursuant to the VCU License Agreement, VCU granted

the Company an exclusive, royalty bearing license to a novel peptide developed by researchers at VCU that may be used to slow

the transmission of SARS-CoV-2 (the “VCU Licensed Patent”) and a non-exclusive royalty bearing, worldwide license

with respect to the Licensed Technical Information Patents (as defined in the VCU License Agreement) to make, have made, use,

offer to sell, sell and import the Licensed Products (as defined in the VCU License Agreement) and perform the Licensed Services

(as defined in the VCU License Agreement).

The VCU License Agreement commenced on the VCU Effective Date and shall continue until

the expiration of the last to expire VCU Licensed Patent unless terminated earlier pursuant to the terms of the agreement.

to the VCU License Agreement, the Company shall pay VCU:

(i) an upfront license issue fee, (ii) running royalty payments at a

low single digit percentage of Net Sales (as defined in the VCU License Agreement), (iii) annual maintenance fees commencing on

the first anniversary of the VCU Effective Date, (iv) annual minimum payments ranging from the mid five figures to low six figures

commencing on the second anniversary of the VCU Effective Date and (v) milestone payments ranging from the mid five figures to

low six figures.

In addition, the Company has agreed to reimburse VCU for certain patent filing and prosecution costs.

On June 29, 2020, the Company entered

into a Sponsored Project Agreement (the “VCU Sponsored Project Agreement”) with VCU for the development of a potential

COVID-19 treatment using the license to a novel peptide granted to the Company by VCU.

The VCU Sponsored Project Agreement shall

terminate on January 9, 2021, unless earlier terminated pursuant to the terms thereof.

In May 2020, the Company paid the signing

fee of $50,000 upon execution of the VCU License Agreement.

The Company also accrued $285,000 for five years of annual minimum

payments and $30,000 for annual maintenance fees.

Therapeutics Inc.

On August 19, 2019 (the “Zylö

Effective Date”), the Company entered into an exclusive sublicense agreement (the “Sublicense Agreement”) with

Therapeutics, Inc.

(“Zylö”) pursuant to which Zylö

granted to the Company an exclusive sublicense

to the Licensed Patent Rights (as defined in the Sublicense Agreement) and the Licensed Technology (as defined in the Sublicense

Agreement) to, among other things, develop, make and sell the Licensed Products (as defined in the Sublicense Agreement) and to

practice the Licensed Technology in the United States and Canada for any and all uses within the Field.

“Field”

all therapeutic uses related to lupus in human beings, subject to the Field Expansion Rights (as defined in the Sublicense Agreement).

The term of the Sublicense Agreement shall commence on the Zylö

Effective Date and shall continue until the latest of (i)

ten years from the date of First Commercial Sale (as defined in the Sublicense Agreement) of the Licensed Product in such country

and (ii) expiration of the last to expire Valid Claim (as defined in the Sublicense Agreement) of the Licensed Patent Rights that

would be infringed by the composition, use or sale of such Licensed Product in such country.

Pursuant to the terms of the Sublicense

Agreement, the Company and Zylö

shall establish a joint development committee to plan, review, coordinate and oversee the

Company’s development activities with respect to the Licensed Products in the Field.

Pursuant to the Sublicense Agreement,

the Company paid Zylö

an upfront license fee of $50,000 and is required to pay Zylö

(i) sales-based royalties at percentages

which range from high single digits to low double digits, with low sales volumes being subject to lower royalty rates;

total milestone payments of up to $13.5 million.

In addition, in connection with the Company’s March 2020 underwritten public

offering of shares of its common stock, on May 4, 2020, the Company purchased 30,000 shares of Zylö’s Class B common

stock for $60,000.

Effective January 1, 2018, the Company adopted ASU 2016-01 concerning recognition and measurement of financial

assets and financial liabilities.

In adopting this new guidance, the Company has made an accounting policy election to adopt an

adjusted cost method measurement alternative for its investment in Zylö.

Note 4—Note Receivable

Pursuant to Isoprene Sublicense Agreement

dated July 30, 2020, 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 matures on September 10, 2022 and accrues interest at a rate equal to the

The payment was made in January 2021.

Note 4—Note Receivable

Pursuant to Isoprene Sublicense Agreement dated

July 30, 2020, 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 matures on September 10, 2022 and accrues interest at a rate equal to the lower

(i) the highest lawful rate permitted under applicable law and (ii) 6% per annum.

The Isoprene Note may not be prepaid

without the prior written consent of the Company.

In the event a Qualified Financing (as defined below) occurs before the Isoprene

Note is repaid in full or the conversion of such note pursuant to a Change of Control (as defined in the Isoprene Note) transaction,

the Isoprene Note may be converted into such number of convertible preferred stock issued in the Qualified Financing equal to

the balance of such note divided by the Capped Conversion Price (as defined below).

“Qualified Financing”

first sale of Isoprene’s convertible preferred in a private financing that results in gross proceeds of at least $5 million.

“Capped Conversion Price”

means the lesser of (i) the per share or unit price in the Qualified Financing and (ii)

an amount determined by dividing (A) $15 million by (B) the fully diluted capitalization Isoprene immediately prior to the conversion

of the Isoprene Note.

In the event a Change of Control occurs before the Isoprene Note is repaid in full or the conversion of

such note pursuant to a Qualified Financing, the Isoprene Note may be converted into such number of shares of Isoprene’s

common stock equal to the quotient obtained by dividing (i) the balance of the Isoprene Note by (ii) two times the fair market

value of a share of Isoprene common stock as set for in the acquisition agreement pertaining to such Change of Control.

Hoth Therapeutics, Inc.

Notes to Consolidated Financial Statements

Note 5—Related Party

A former director of the Company, is also

the Executive Chairman of Chelexa.

During the year ended December 31, 2020, that director received $22,500 in cash compensation

for services provided as a member of the Company’s board of directors.

On September 30, 2020, this director resigned as

a member of the Company’s board of directors.

Options issued to him expired on December 30, 2020.

During the year ended

December 31, 2019, that director received $30,000 in cash compensation for services provided as a board member and $5,000 cash

compensation for his services as a member of the Company’s Scientific Advisory Board.

The Company also granted him options

to purchase up to 35,000 of the Company’s common stock pursuant to the Company’s 2018 Equity Incentive Plan.

A former director of the Company, is also

the Chief Executive Officer, Principal Accounting and Financial Officer and a member of the board of directors of AIkido Pharma

During the year ended December 31, 2020, that director received $8,736 in cash compensation for services provided as a member

of the Company’s board of directors.

On April 15, 2020, this director resigned as a member of the Company’s board

of directors.

Options issued to him expired on July 15, 2020.

During the year ended December 31, 2019, that director received

$30,000 in cash compensation for services provided as a board member.

The Company also granted such director options to purchase

up to 35,000 shares of the Company’s common stock pursuant to the Company’s 2018 Equity Incentive Plan.

Note 6—Investments in Marketable

The realized gain or loss, unrealized

gain or loss, and dividend income related to marketable securities for the years ended December 31, 2020 and 2019, which are recorded

as a component of other income (expenses) on the consolidated statements of operations, are as follows:

For the years ended December 31,

The Isoprene Note may not be prepaid without the

prior written consent of the Company.

In the event a Qualified Financing (as defined below) occurs before the Isoprene Note is repaid

in full or the conversion of such note pursuant to a Change of Control (as defined in the Isoprene Note) transaction, the Isoprene Note

may be converted into such number of convertible preferred stock issued in the Qualified Financing equal to the balance of such note

divided by the Capped Conversion Price (as defined below).

“Qualified Financing” means the first sale of Isoprene’s

convertible preferred in a private financing that results in gross proceeds of at least $5 million.

“Capped Conversion Price”

means the lesser of (i) the per share or unit price in the Qualified Financing and (ii) an amount determined by dividing (A) $15 million

by (B) the fully diluted capitalization Isoprene immediately prior to the conversion of the Isoprene Note.

In the event a Change of Control

occurs before the Isoprene Note is repaid in full or the conversion of such note pursuant to a Qualified Financing, the Isoprene Note

may be converted into such number of shares of Isoprene’s common stock equal to the quotient obtained by dividing (i) the balance

of the Isoprene Note by (ii) two times the fair market value of a share of Isoprene common stock as set for in the acquisition agreement

pertaining to such Change of Control.

Note 5—Investments in Marketable Securities

The realized gain or loss, unrealized gain or

loss, and dividend income related to marketable securities for the years ended December 31, 2021 and 2020, which are recorded as a component

of other income (expenses) on the consolidated statements of operations, are as follows:

For the years ended

Unrealized gain

$ ( 176,974 )

Realized loss

1 unchanged sentence

Interest income

Note 7—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.

(“Voltron”) 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.

In addition, 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.

The Company accounts for the foregoing investments under the equity method.

There was no significant change in HaloVax’s

operations from March 23, 2020 to December 31, 2020.

Hoth Therapeutics, Inc.

Notes to Consolidated Financial Statements

Note 8—Stockholders’

$ ( 152,683 )

Note 6—Fair Value of Financial Assets

and Liabilities

The following table presents the Company’s

assets and liabilities that are measured at fair value at December 31, 2021 and 2020:

Fair value measured at December

Quoted prices

Significant other

observable inputs

Marketable securities - mutual funds

Investment in joint venture

Note receivable - current

Fair value measured at December

Quoted prices

Significant other

observable inputs

Marketable securities - mutual funds

Investment in joint venture

Note receivable

Investment in joint venture

The Company has elected to measure the investment

in joint venture 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, net in the consolidated statements of operations.

The value at which the Company’s investment

in joint venture 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.

In addition, 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.

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.

No change in fair value occurred during the year ended December 31, 2021 and 2020.

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

Class B common stock for $ 60,000 .

No change in fair value occurred during the year ended December 31, 2021 and 2020.

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 “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).

Note receivable

As of December 31, 2021, the fair value of the

Isoprene Note was measured at $ 50,000 , taking into consideration cost of the investment, market participant inputs, market conditions,

liquidity, operating results and other qualitative and quantitative factors.

No change in fair value was recorded during the year ended

December 31, 2021.

Note 7—Stockholders’ 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, 2020, 5,000,000 shares of the Company’s preferred stock has been designated as Series A

Convertible Preferred Stock of which 3,102,480 shares which were previously issued were converted into common stock at the time

of the Company’s IPO.

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, 2021, 5,000,000 shares of the Company’s preferred stock has been designated as Series A Convertible Preferred Stock.

The shares of Series A Convertible Preferred

Stock 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 balance sheets.

The holders’

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

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.

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.

Common Shares

On February 15, 2019, the Company announced

the pricing of its IPO of 1,250,000 shares of its common stock at an initial offering price to the public of $5.60 per share.

The Company issued an aggregate of 1,250,000 shares of common stock and received net proceeds of $5.8 million from the IPO.

On January 15, 2020, pursuant to the termination

and general release agreement between the Company and FON Consulting LLC dated January 7, 2020, 15,000 of the shares of common

stock originally issued to FON Consulting LLC were cancelled.

On February 5, 2020, the Company issued 12,500

12,500 shares of common stock upon exercise of warrants issued to an investor on January 19, 2018, which resulted in gross proceeds

On March 6, 2020, the Company issued 25,000

shares of common stock upon exercise of warrants issued to an investor on December 14, 2017, which resulted in gross proceeds

On May 18, 2020, the Company issued 6,250

shares of common stock upon exercise of warrants issued to an investor on February 2, 2018, which resulted in gross proceeds of

On June 3, 2020, the Company issued 12,500

shares of common stock upon exercise of warrants issued to an investor on November 20, 2017, which resulted in gross proceeds

During the year ended December 31, 2020,

the Company issued an aggregate of 9,984 shares of the Company’s common stock to members of the Company’s Board for

services rendered.

shares of common stock upon exercise of warrants issued to an investor on January 19, 2018, which resulted in gross proceeds of $ 12,500 .

On March 6, 2020, the Company issued 25,000 shares

of common stock upon exercise of warrants issued to an investor on December 14, 2017, which resulted in gross proceeds of $ 25,000 .

On May 18, 2020, the Company issued 6,250 shares

of common stock upon exercise of warrants issued to an investor on February 2, 2018, which resulted in gross proceeds of $ 6,250 .

On June 3, 2020, the Company issued 12,500 shares

of common stock upon exercise of warrants issued to an investor on November 20, 2017, which resulted in gross proceeds of $ 12,500 .

During the year ended December 31, 2020, the

Company issued an aggregate of 9,984 shares of the Company’s common stock to members of the Company’s Board for services

Public Offering of Securities

On March 24, 2020 (the “UA Effective

Date”), the Company entered into an underwriting agreement with Laidlaw & Company (UK) Ltd.

(“Laidlaw”),

the representative of the underwriters, relating to a best efforts underwritten public offering of 1,449,275 shares (the “Shares”)

of the Company’s common stock at a public offering price of $3.45 per Share.

The Company received net proceeds of approximately

$4.2 million, after deducting the underwriting discount and offering expenses.

On March 24, 2020 (the “UA Effective Date”),

the Company entered into an underwriting agreement with Laidlaw & Company (UK) Ltd.

(“Laidlaw”), the representative

of the underwriters, relating to a best efforts underwritten public offering of 1,449,275 shares (the “Shares”) of the Company’s

common stock at a public offering price of $ 3.45 per Share.

The Company received net proceeds of approximately $ 4.2 million, after deducting

the underwriting discount and offering expenses.

In connection with the offering, on March 26,

26, 2020, the Company issued Laidlaw warrants to purchase up to 72,464 shares of the Company’s common stock.

are exercisable for a period of five years from the UA Effective Date at a price per share equal to $4.14, subject to adjustment,

and may be exercised on a cashless basis.

The Company reimbursed Laidlaw for certain of its out-of-pocket expenses incurred in

connection with the offering.

Hoth Therapeutics, Inc.

Notes to Consolidated Financial Statements

On May 21, 2020, the Company entered into

an underwriting agreement with The Benchmark Company, LLC (“Benchmark”), as representative of the several underwriters,

relating to the public offering of 1,818,182 shares of the Company’s common stock at a price to the public of $2.75 per

The Company received net proceeds of approximately $4.5 million, after deducting the underwriting discount and offering

2020, the Company issued Laidlaw warrants to purchase up to 72,464 shares of the Company’s common stock.

The warrants are exercisable

for a period of five years from the UA Effective Date at a price per share equal to $4.14, subject to adjustment, and may be exercised

on a cashless basis.

The Company reimbursed Laidlaw for certain of its out-of-pocket expenses incurred in connection with the offering.

On May 21, 2020, the Company entered into an

underwriting agreement with The Benchmark Company, LLC (“Benchmark”), as representative of the several underwriters, relating

to the public offering of 1,818,182 shares of the Company’s common stock at a price to the public of $ 2.75 per share.

received net proceeds of approximately $ 4.5 million, after deducting the underwriting discount and offering expenses.

In connection with the offering, on May 27, 2020

27, 2020 (the “Benchmark Issue Date”), the Company issued Benchmark warrants to purchase up to 90,909 shares of the

Company’s common stock.

The warrants are exercisable for a period of five years commencing six months from the Benchmark

Issue Date at a price per share equal to $2.75, subject to adjustment, and may be exercised on a cashless basis.

Private Placement of Securities

On August 16, 2019 (the “Closing

Date”), the Company entered into subscription agreements (the “Subscription Agreements”) and unit purchase agreements

(the “Purchase Agreements”) with certain accredited investors (the “Investors”) pursuant to which it sold

units (the “Units”) for aggregate gross proceeds of $2,037,120, exclusive of placement agent commission

and fees and offering and transaction expenses (the “Offering”).

Each Unit was sold at an offering price of $5.00

per Unit and consisted of (i) one share of the Company’s common stock and (ii) a warrant (the “2019 Warrant”)

to purchase one-half share of common stock.

Each Warrant is exercisable for a period

of two years beginning six months from the Closing Date at an exercise price of $8.00 per whole share, subject to adjustment.

The Company is prohibited from effecting an exercise of the Warrant to the extent that, as a result of such exercise, the holder

together with the holder’s affiliates, would beneficially own more than 4.99% of the number of shares of common stock outstanding

immediately after giving effect to the issuance of shares of common stock upon exercise of the Warrant, which beneficial ownership

limitation may be increased by the holder up to, but not exceeding, 9.99%.

In addition, pursuant to the terms of

the Offering, the Company issued Laidlaw warrants (the “Placement Agent Warrants”) to purchase up to 61,113 shares

of the Company’s common stock.

The Placement Agent Warrants are exercisable for a period of five years from the Closing

Date (the “Initial Exercise Date”) at an exercise price of $5.00 per share, subject to adjustment.

The Warrants may

be exercised at any time after the Initial Exercise Date on a cashless basis and contain piggy-back registration rights.

Pursuant to the Offering, the Company

received $1.6 million in net proceeds from the issuance of 407,424 Units.

The Company has determined that the 2019

Warrants should be accounted as a component of stockholders’

For the 2019 Warrants issued on August 16, 2019, the

Company estimated the relative fair value of the warrants at $0.8 million using the Black-Scholes option pricing model using the

following primary assumptions:

fair value of common stock underlying the warrants ranges from $2.55 to $4.33, expected life ranges

from 2.0 to 5.0 years, volatility rate ranges from 107.30% to 110.08%, risk-free interest rate ranges from 1.42% to 1.48% and

expected dividend rate of 0%.

(the “Benchmark Issue Date”), the Company issued Benchmark warrants to purchase up to 90,909 shares of the Company’s

common stock.

The warrants are exercisable for a period of five years commencing six months from the Benchmark Issue Date at a price

per share equal to $ 2.75 , subject to adjustment, and may be exercised on a cashless basis.

Securities Purchase Agreements

On January 5, 2021, the Company entered into

a securities purchase agreement with certain accredited investors pursuant to which the Company offered and sold to the investors an

aggregate of 2,475,248 shares of its common stock and warrants to purchase up to 1,237,624 shares of common stock in a private placement

for aggregate net proceeds to the Company of $ 4.6 million, after deducting estimated offering expenses payable by the Company.

purchase price for each share of common stock and accompanying warrant to purchase one half of a share of common stock was $ 2.02 .

closing of the offering occurred on January 7, 2021.

Each warrant is exercisable for a period of five years from the issuance date at

an exercise price of $ 2.25 per share, subject to adjustment, and may be exercised on a cashless basis.

In addition, pursuant to the terms

of the offering, the Company issued The Benchmark Company, LLC (“Benchmark”) warrants to purchase up to 185,644 shares of

the Company’s common stock.

Benchmark’s warrants are exercisable for a period of five years from the closing date of the

offering at an exercise price of $ 2.25 per share, subject to adjustment, and may be exercised on a cashless basis.

On March 8, 2021, the Company entered into a

securities purchase agreement with certain institutional and accredited investors pursuant to which it offered and sold to the investors

6,826,962 shares of common stock, pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 767,975 shares of common

stock and warrants (the “Common Stock Warrants”) to purchase up to 7,594,937 shares of common stock in a private placement

for aggregate net proceeds to the Company of $ 13.5 million, after deducting estimated offering expenses payable by the Company.

purchase price for each share of common stock and accompanying warrant was $ 1.975 .

The closing of the offering occurred on March 10,

Each Common Stock Warrant is exercisable for a period of three years from the issuance date at an exercise price of $ 1.86 per share,

subject to adjustment, and may be exercised on a cashless basis.

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

exercise price of $ 0.001 per share and may be exercised by means of a cashless exercise.

In addition, pursuant to the terms of the offering,

the Company issued H.C.

Wainwright & Co., LLC warrants (“Wainwright Warrants”) to purchase up to 379,747 shares of the

Company’s common stock.

The Wainwright Warrants are exercisable for a period of three years from the issuance date at an exercise

price of $ 2.4688 per share, subject to adjustment, and may be exercised by on a cashless basis.

2018 Equity Incentive Plan

The Company’s 2018 Equity Incentive

Plan (the “2018 Plan”) was adopted by the Company’s board of directors on May 4, 2018 and by its shareholders

on May 4, 2018.

The Company has reserved 1,000,000 shares of common stock for issuance pursuant to the 2018 Plan.

Hoth Therapeutics, Inc.

Notes to Consolidated Financial Statements

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 671,926

shares effective as of January 1, 2021, such that as of January 1, 2021, the Company had an aggregate of 1,671,926 shares of common stock

reserved for issuance pursuant to the 2018 Plan.

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

an amendment to the 2018 Plan to further increase the number of shares reserved for issuance thereunder from 1,671,926 shares to 3,671,926

Restricted Stock Awards

A summary of the Company’s restricted

stock awards granted under the 2018 Plan during the years ended December 31, 2020 and 2019 is as follows:

Number of Restricted Stock

Weighted Average Grant Day

A summary of the Company’s restricted stock

awards granted under the 2018 Plan during the years ended December 31, 2021 and 2020 is as follows:

Number of Restricted Stock Awards

Weighted Average Grant Day Fair Value

Nonvested at December 31, 2019

1 unchanged sentence

Nonvested at December 31, 2021

As of December 31, 2020, approximately

As of December 31, 2021, there is approximately

$ 2,000 of unrecognized stock-based compensation expense related to restricted stock awards.

2 unchanged sentences

Stock Options

The fair value of options granted in 2020

and 2019 was estimated using the following assumptions:

the years ended December 31,

During the year ended December 31, 2021, pursuant

to and subject to the available number of shares reserved under the 2018 Plan, the Company issued an aggregate of 632,000 options to

the Company’s directors.

The aggregate grant date fair value of these options was approximately $ 1.1 million.

During the year ended December 31, 2020, pursuant

to and subject to the available number of shares reserved under the 2018 Plan, the Company issued an aggregate of 200,000 options to

the Company’s directors.

The aggregate grant date fair value of these options was approximately $ 0.5 million.

The Company also

issued 49,212 options to purchase common stock of the Company to a third party for consulting services.

The aggregate grant date fair

value of these options was approximately $ 0.1 million.

The fair value of options granted in 2021 and

2020 was estimated using the following assumptions:

For the years ended

Exercise price

Expected stock price volatility

$ 2.54 - 3.05

Expected stock price volatility

114.2 % - 114.5 %

Risk-free rate of interest

A summary of option activity under the

Company’s stock option plan for years ended December 31, 2020 and 2019 is presented below:

A summary of option activity under the Company’s

stock option plan for the years ended December 31, 2021 and 2020 is presented below:

Number of Shares

Weighted Average Exercise

Weighted Average Exercise Price

Total Intrinsic Value

Weighted Average Remaining

Contractual Life (in years)

Weighted Average Remaining Contractual

Life (in years)

Outstanding as of December 31, 2019

2 unchanged sentences

Outstanding as of December 31, 2020

Options vested and exercisable

Hoth Therapeutics, Inc.

Notes to Consolidated Financial Statements

Employee options issued

Outstanding as of December 31, 2021

Options vested and exercisable as of December 31, 2021

Stock-based compensation associated with the

amortization of stock option expense was approximately $ 1.1 million and $ 0.6 for the year ended December 31, 2021 and 2020,

respectively.

All stock compensation associated with the amortization of employee stock option expense was recorded as a component of

compensation and related expense in the statement of operations.

All stock compensation associated with the amortization of nonemployee

stock option expense was recorded as a component of professional fees in the statement of operations.

Estimated future stock-based compensation expense

relating to unvested stock options is approximately $ 0 .

Stock Based Compensation

Stock-based compensation expense for the

years ended December 31, 2020 and 2019 was approximately $0.7 million and $2.5 million, respectively, and comprised of the following:

For the years ended December 31,

Stock-based compensation expense for the years

ended December 31, 2021 and 2020 was as follows:

For the years ended

Employee stock option awards

3 unchanged sentences

Non-employee stock warrant awards

Employee and director related stock-based

compensation was included in compensation and related expenses, and non-employee related stock-based compensation was included

in professional fees on the consolidated statements of operations.

Pursuant to the Patent License Agreement

between the Company and GW dated February 1, 2020, on February 27, 2020 (the “February Warrant Date of Issuance”),

the Company issued GW ten year warrants (the “February Warrants”) to purchase up to 22,988 shares of the Company’s

common stock at an exercise price of $4.35 per share.

Employee and director related stock-based compensation

was included in compensation and related expenses, and non-employee related stock-based compensation was included in professional fees

and research and development related with licenses acquisition in the consolidated statements of operations and comprehensive loss.

Pursuant to the Patent License Agreement between

the Company and GW dated February 1, 2020, on February 27, 2020 (the “February Warrant Date of Issuance”), the Company issued

GW ten year warrants (the “February Warrants”) to purchase up to 22,988 shares of the Company’s common stock at an

exercise price of $ 4.35 per share.

The February Warrants vest as follows:

20% on the February Warrant Date

of Issuance and the balance, or 80% of the February Warrants, vest in four equal annual installments of 20% on each anniversary

of the February Warrant Date of Issuance.

20% on the February Warrant Date of Issuance and the balance,

or 80% of the February Warrants, vest in four equal annual installments of 20% on each anniversary of the February Warrant Date of Issuance.

Pursuant to the GW Patent License Agreement,

between the Company and GW dated August 7, 2020, on August 10, 2020 (the “August Warrant Date of Issuance”), the Company

issued GW ten year warrants (the “August Warrants”) to purchase up to 72,463 shares of the Company’s common

stock at an exercise price of $2.76 per share.

The August Warrants vest as follows:

20% on the August Warrant Date of Issuance

and the balance, or 80% of the August Warrants, shall vest in four equal annual installments of 20% on each anniversary of the

August Warrant Date of Issuance.

In connection with the public offering

of securities discussed above, the Company granted to Laidlaw and Benchmark warrants to purchase up to 72,464 and 90,909 shares

of the Company’s common stock, respectively.

A summary of warrant activity for the

years ended December 31, 2020 and 2019 is presented below:

on August 10, 2020 (the “August Warrant Date of Issuance”), the Company issued GW ten year warrants (the “August Warrants”)

to purchase up to 72,463 shares of the Company’s common stock at an exercise price of $ 2.76 per share.

The August Warrants vest

20% on the August Warrant Date of Issuance and the balance, or 80% of the August Warrants, shall vest in four equal annual

installments of 20% on each anniversary of the August Warrant Date of Issuance.

In connection with the public offering of securities

discussed above, the Company granted to Laidlaw and Benchmark warrants to purchase up to 72,464 and 90,909 shares of the Company’s

common stock, respectively.

A summary of warrant activity for the years ended

December 31, 2021 and 2020 is presented below:

Number of Warrants

Weighted Average

Exercise Price

Total Intrinsic Value

Weighted Average Remaining

Contractual Life (in years)

Weighted Average

Remaining Contractual

Life (in years)

Outstanding as of December 31, 2019

Outstanding as of December 31, 2020

( 1,126,720 )

Outstanding as of December 31, 2021

Warrants exercisable as of December 31, 2021

Hoth Therapeutics, Inc.

Notes to Consolidated Financial Statements

Note 9—Commitments and contingencies

The Company has determined that the warrants

should be accounted as a component of stockholders’ equity.

Note 8—Commitments and contingencies

The Company leases office space for approximately

1 unchanged sentence

Rent expense for the years ended December 31, 2021 and 2020 was approximately $ 47,000 and $ 25,000 , respectively.

The Company is not a party to a lease that is in excess of 12 months.

The Company is not 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 10—Income taxes

The table below presents the components

of the provision for taxes:

As of December 31,

Company is not a party to a lease that is in excess of 12 months.

The Company is not 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 9—Income taxes

The table below presents the components of the

provision for taxes:

The Company’s provision is driven by refundable tax credits generated

by its subsidiary in Australia.

Total current provision

2 unchanged sentences

Total provision for income taxes

At December 31, 2020 and 2019, the tax

effects of the temporary differences and carryforwards that give rise to deferred tax assets consist of the following:

At December 31, 2021 and 2020, 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:

Net operating loss carryforward

License acquired

Stock Compensation

Total deferred income tax assets

Deferred income tax assets liabilities:

Depreciation fixed assets

Total deferred income tax liabilities

Net deferred income tax assets

Valuation allowance

Deferred tax asset, net of allowance

Hoth Therapeutics, Inc.

Notes to Consolidated Financial Statements

A reconciliation of the statutory income

tax rates and the Company’s effective tax rate for the year ended December 31, 2020 and 2019 is as follows:

Net operating loss carryforwards

Research and development credits

Equity based compensation

Licenses acquired

Accruals and other temporary differences

Gross deferred tax assets

Accruals and other temporary differences

Less valuation allowance

( 8,284,693 )

( 4,025,205 )

Net deferred taxes

A reconciliation of the statutory income tax

rates and the Company’s effective tax rate for the year ended December 31, 2021 and 2020 is as follows:

Years Ended December 31,

Statutory federal income tax rate

State taxes, net of federal tax benefit

Return to Provison

Change in valuation allowance

Income taxes provision (benefit)

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, 2020, the Company has

net operating loss carryforwards of approximately $15.9 million available to reduce future taxable income, if any, for Federal

and state income 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 December 31, 2018 and 2019 of approximately

$14.4 million can be carried forward indefinitely.

However, the deduction for net operating losses incurred in tax years beginning

after January 1, 2018 is limited to 80% of annual taxable income.

At December 31, 2020 and 2019, the Company

did not have any significant uncertain tax positions.

The Company will recognize interest and penalties related to uncertain tax

positions in income tax expense.

As of December 31, 2020 and 2019, the Company had no accrued interest or penalties related to

uncertain tax positions and no amounts have been recognized in the Company’s statement 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.

Note 10—Risk and Uncertainties

The outbreak of the novel Coronavirus

(COVID-19) evolved into a global pandemic.

Tax provision at statutory rate

State taxes, net of federal benefit

Permanent items

Equity compensation

Foreign rate differential

Increase/(decrease) in valuation reserve

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, 2021, the Company has net operating loss carryforwards

of approximately $ 26.7 million and 22.4 million available to reduce future taxable income, if any, for Federal and state income tax purposes,

respectively.

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 $ 25.2 million can be carried

forward indefinitely;

however, the deduction for net operating losses incurred in tax years beginning after December 31, 2017 is limited

to 80 % of annual taxable income.

As of December 31, 2021, the Company has research

and development credits of approximately $ 0.4 million and $ 0 available to reduce future income taxes, if any, for Federal and state income

tax purposes, respectively.

The Federal credits expire if not utilized by 2041.

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.

The following table summarizes the activity related

to the Company’s gross unrecognized tax benefits at the beginning and end of the years ended December 31, 2021 and December 31,

2020, respectively (in thousands):

As of December 31,

Gross unrecognized tax benefits at the beginning of the year

Increases related to current year positions

Increases related to prior year positions

Decreases related to prior year positions

Expiration of unrecognized tax benefits

Gross unrecognized tax benefits at the end of the year

At December 31, 2021 and 2020, the Company did

not have any significant uncertain tax positions.

The Company will recognize interest and penalties related to uncertain tax positions

in income tax expense.

As of December 31, 2021 and 2020, the Company had no accrued interest or penalties related to uncertain tax positions

and no amounts have been recognized in the Company’s statement 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.

Note 10—Risk and Uncertainties

The outbreak of the novel Coronavirus (COVID-19)

evolved into a global pandemic.

The Coronavirus has spread to many regions of the world.

The extent to which the Coronavirus

impacts the Company’s business and operating results will depend on future developments that are highly uncertain and cannot

be accurately predicted, including new information that may emerge concerning the Coronavirus and the actions to contain the Coronavirus

The extent to which the Coronavirus impacts

the Company’s business and operating results will depend on future developments that are highly uncertain and cannot be accurately

predicted, including new information that may emerge concerning the Coronavirus, including variants, and the actions to contain the Coronavirus

or treat its impact, among others.

As a result of the continuing spread of

the Coronavirus, certain aspects of the Company’s business operations have been delayed, and the Company may be subject

to additional delays or interruptions.

Specifically, as a result of the shelter-in-place orders and other mandated local travel

restrictions, among other things, the research and development activities of certain of the Company’s partners may be affected,

which may result in delays to the Company’s clinical trials, and the Company can provide no assurance as to when such trials,

if delayed, will resume at this time or the revised timeline to complete trials once resumed.

Furthermore, site initiation, participant

recruitment and enrollment, participant dosing, distribution of clinical trial materials, study monitoring and data analysis may

be paused or delayed due to changes in hospital or university policies, federal, state or local regulations, prioritization of

hospital resources toward pandemic efforts, or other reasons related to the pandemic.

If the Coronavirus continues to spread,

some participants and clinical investigators may not be able to comply with clinical trial protocols.

For example, quarantines

or other travel limitations (whether voluntary or required) may impede participant movement, affect sponsor access to study sites,

or interrupt healthcare services, and the Company may be unable to conduct its clinical trials.

Further, if the spread of the

Coronavirus pandemic continues and the Company’s operations are adversely impacted, the Company risks a delay, default and/or

nonperformance under existing agreements which may increase its costs.

These cost increases may not be fully recoverable or adequately

covered by insurance.

Hoth Therapeutics, Inc.

Notes to Consolidated Financial Statements

As a result of the continuing spread of the Coronavirus,

certain aspects of the Company’s business operations have been delayed, and the Company may be subject to additional delays or

interruptions.

Specifically, as a result of the shelter-in-place orders and other mandated local travel restrictions, among other things,

the research and development activities of certain of the Company’s partners may be affected, which may result in delays to the

Company’s clinical trials, and the Company can provide no assurance as to when such trials, if delayed, will resume at this time

or the revised timeline to complete trials once resumed.

Furthermore, site initiation, participant recruitment

and enrollment, participant dosing, distribution of clinical trial materials, study monitoring and data analysis may be paused or delayed

due to changes in hospital or university policies, federal, state or local regulations, prioritization of hospital resources toward pandemic

efforts, or other reasons related to the pandemic.

If the Coronavirus continues to spread, some participants and clinical investigators

may not be able to comply with clinical trial protocols.

For example, quarantines or other travel limitations (whether voluntary or required)

may impede participant movement, affect sponsor access to study sites, or interrupt healthcare services, and the Company may be unable

to conduct its clinical trials.

Further, if the spread of the Coronavirus pandemic continues and the Company’s operations are adversely

impacted, the Company risks a delay, default and/or nonperformance under existing agreements which may increase its costs.

increases may not be fully recoverable or adequately covered by insurance.

Infections and deaths related to the pandemic

may disrupt the United States’

healthcare and healthcare regulatory systems.

may disrupt the United States’ healthcare and healthcare regulatory systems.

Such disruptions could divert healthcare resources

away from, or materially delay FDA review and/or approval with respect to, the Company’s clinical trials.

It is unknown

how long these disruptions could continue, were they to occur.

Any elongation or de-prioritization of the Company’s clinical

trials or delay in regulatory review resulting from such disruptions could materially affect the development and study of the

Company’s product candidates.

away from, or materially delay FDA review and/or approval with respect to, the Company’s clinical trials.

It is unknown how long

these disruptions could continue, were they to occur.

Any elongation or de-prioritization of the Company’s clinical trials or delay

in regulatory review resulting from such disruptions could materially affect the development and study of the Company’s product

The Company currently utilizes third parties

1 unchanged sentence

If any third-party party in the supply chain for materials used in the production

of the Company’s product candidates are adversely impacted by restrictions resulting from the Coronavirus outbreak, the

Company’s supply chain may be disrupted, limiting the Company’s ability to manufacture its product candidates for

its clinical trials and research and development.

The spread of the Coronavirus, which has

caused a broad impact globally, including restrictions on travel and quarantine policies put into place by businesses and governments,

may have a material economic effect on the Company’s business.

While the potential economic impact brought by and the duration

of the pandemic may be difficult to assess or predict, it has already caused, and is likely to result in further, significant

disruption of global financial markets, which may reduce our ability to access capital either at all or on favorable terms.

addition, a recession, depression or other sustained adverse market event resulting from the spread of the Coronavirus could materially

and adversely affect the Company’s business and the value of its common stock.

of the Company’s product candidates are adversely impacted by restrictions resulting from the Coronavirus outbreak, the Company’s

supply chain may be disrupted, limiting the Company’s ability to manufacture its product candidates for its clinical trials and

research and development.

The spread of the Coronavirus, which has caused

a broad impact globally, including restrictions on travel and quarantine policies put into place by businesses and governments, may have

a material economic effect on the Company’s business.

While the potential economic impact brought by and the duration of the pandemic

may be difficult to assess or predict, it has already caused, and is likely to result in further, significant disruption of global financial

markets, which may reduce our ability to access capital either at all or on favorable terms.

In addition, a recession, depression or

other sustained adverse market event resulting from the spread of the Coronavirus could materially and adversely affect the Company’s

business and the value of its common stock.

The ultimate impact of the current pandemic,

or any other health epidemic, is highly uncertain and subject to change.

The Company does not yet know the full extent of potential

delays or impacts on its business, its clinical trials, its research programs, healthcare systems or the global economy as a whole.

However, these effects could have a material impact on the Company’s operations, and the Company will continue to monitor

the situation closely.

Note 12—Subsequent Events

The compensation committee of the board

of directors increased the number of shares reserved pursuant to the Company’s 2018 Plan by 671,926 shares effective as

of January 1, 2021 such that as of January 1, 2021, the Company had an aggregate of 1,671,926 shares of common stock reserved

for issuance pursuant to the 2018 Plan.

On January 5, 2021, the Company entered

into a Securities Purchase Agreement with certain accredited investors identified on the signature pages thereto (the “Purchasers”)

pursuant to which the Company offered and sold to the Purchasers an aggregate of 2,475,248 shares of its common stock and warrants

to purchase up to 1,237,624 shares of common stock in a private placement for aggregate gross proceeds to the Company of $5 million,

before deducting estimated offering expenses payable by the Company.

The combined purchase price for each share of common stock

and accompanying warrant to purchase 0.5 of a share of common stock was $2.02.

The closing of the offering occurred on January

7, 2021.Each warrant is immediately exercisable for a period of five years at an exercise price of $2.25 per Warrant Share, subject

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

In addition, pursuant to the terms of the offering, the Company issued

Benchmark Company, LLC warrants to purchase up to 185,644 shares of common stock.

Benchmark’s warrants are exercisable for

a period of five years from the closing date of the offering at an exercise price of $2.25 per share, subject to adjustment.

On February 25, 2021, the Company entered

into an exclusive, worldwide, royalty bearing license with NC State pursuant to which NC State granted the Company an exclusive,

worldwide, royalty bearing license to certain intellectual property to, among other things, discover, develop, make, have made,

use and sell certain licensed products and sell, use and practice certain licensed services with respect to cancer and anaphylaxis.

On March 8, 2021, the Company entered into

a securities purchase agreement with certain institutional and accredited investors pursuant to which it offered and sold to the

purchaser 6,826,962 shares of common stock, pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 767,975

shares of common stock and warrants (the “Common Stock Warrants”) to purchase up to 7,594,937 shares

of common stock.

in a private placement for aggregate gross proceeds to the Company of $15 million, before deducting estimated

offering expenses payable by the Company.

The combined purchase price for each share of common stock and accompanying warrant was

The closing of the offering occurred on March 10, 2021.

Each warrant is immediately exercisable for a period of five years

at an exercise price of $2.25 per warrant share, subject to adjustment, and may be exercised on a cashless basis.

Each Pre-Funded

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

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

Wainwright & Co., LLC warrants

to purchase up to 379,747 shares of common stock.

The warrants are exercisable for a period of three years from the issuance date

at an exercise price of $2.4688 per share, subject to adjustment and may be exercised by means of a cashless exercise.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND

FINANCIAL DISCLOSURE

The Company does not yet know the full extent of potential delays

or impacts on its business, its clinical trials, its research programs, healthcare systems or the global economy as a whole.

these effects could have a material impact on the Company’s operations, and the Company will continue to monitor the situation

Nasdaq Delisting Notice

On December 30,

2021, the Company received a written notice from the Nasdaq Stock Market LLC (“Nasdaq”) informing the Company that the bid

price of its common stock, par value $0.0001 per share, failed to comply with the $1.00 minimum bid price required for continued

listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2).

Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company

was granted an initial 180 calendar day compliance period, or until June 28, 2022, to regain compliance with the minimum bid price requirement.

To regain compliance, the closing bid price of the Company’s common stock must meet or exceed $1.00 per share for at least

10 consecutive business days during the initial 180 calendar day compliance period.

In the event the Company does not regain compliance

by June 28, 2022, the Company may be eligible for an additional 180 calendar day grace period if the Company meets the continued listing

standards for The Nasdaq Capital Market, with the exception of bid price, and the Company provides written notice to Nasdaq of its intention

to cure the deficiency during the second compliance period.

Note 11—Subsequent Events

On February 2, 2022, the compensation committee

of the Board of Directors of the Company approved an increase in the number of shares of common stock reserved for issuance under the

2018 Plan by 250,000 shares from 3,671,926 shares to 3,921,926 shares.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL

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