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Item 7. Management’s Discussion and Analysis

2026-03-27 compared with 2025-03-28 · 249 added, 232 removed, 33 unchanged (94% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

You should read the following discussion and

1 unchanged sentence

appearing elsewhere in this Annual Report on Form 10-K.

In addition to historical information, this discussion and analysis contains

forward-looking statements that involve risks, uncertainties and assumptions.

Our actual results may differ materially from those discussed

Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those

discussed in the section titled “Risk Factors” included elsewhere in this Annual Report on Form 10-K.

All amounts in this

report are in U.S.

In addition to historical information, this discussion and analysis contains forward-looking

statements that involve risks, uncertainties and assumptions.

Our actual results may differ materially from those discussed below.

that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the

section titled “Risk Factors” included elsewhere in this Annual Report on Form 10-K.

All amounts in this report are in U.S.

dollars, unless otherwise noted.

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

We are focused

on developing (i) a topical formulation for treating side effects from drugs used for the treatment of cancer (HT-001);

(ii) a treatment

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

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

diseases (HT-ALZ).

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

(ii) a treatment for

asthma and allergies using inhalational administration (HT-004);

and (iii) a treatment for obesity, and obesity-related diseases and

conditions (HT-VA).

of Operations

of Our Results of Operations for the Years Ended December 31, 2024 and 2023

Costs and Expenses

and Development Expenses

We are a clinical-stage biopharmaceutical company

focused on developing new generation therapies for unmet medical needs.

We are focused on developing (i) a topical formulation for treating

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

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

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

We also have assets being

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

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

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

Results of Operations

Comparison of Our Results of Operations for the Years Ended December

31, 2025 and 2024

Operating Costs and Expenses

Research and Development Expenses

For the year ended December 31, 2025, research

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(i) HT-001, approximately $3,646,000

million related to manufacturing and clinical activities;

(ii) HT-KIT, approximately $0.6 million related to manufacturing and preclinical

(iii) HT-ALZ, approximately $0.2 million related to preclinical studies;

and (iv) HT-004, approximately $0.1 million related

to sponsored research.

In addition to the foregoing, we also incurred fees of approximately $0.2 million payable to members of our scientific

advisory board for services.

related to manufacturing and clinical activities;

(ii) HT-KIT, approximately $753,000 related to manufacturing and preclinical activities;

(iii) HT-VA, approximately $137,000, and (iv) HT-ALZ, approximately $12,000 related to preclinical studies.

In addition to the foregoing,

we also incurred fees of approximately $131,000 payable to members of our scientific advisory board for services and recorded approximately

$1,268,000 of in-process research and development expenses in connection with the acquisition of patent applications.

For the year ended December 31, 2024, research

5 unchanged sentences

(ii) HT-KIT, approximately $0.6 million related to manufacturing and preclinical

(iii) HT-ALZ, approximately $65,000 related to preclinical studies;

(iv) BioLexa, approximately $56,000 related to manufacturing;

and (v) HT-004, approximately $59,000 related to sponsored research.

In addition to the foregoing, we also incurred fees of approximately

$0.2 million payable to members of our scientific advisory board for services.

expect our research and development activities to increase as we develop our existing product candidates and potentially acquire new

product candidates, reflecting increasing costs associated with the following:

employee-related

expenses, which include salaries and benefits, and rent expenses;

related to in-licensed products and technology;

incurred under agreements with CROs, investigative sites and consultants that conduct our clinical trials and a substantial portion

of our pre-clinical activities;

cost of acquiring and manufacturing clinical trial materials;

associated with non-clinical activities and regulatory approvals.

and Administrative Expenses

(iii) HT-ALZ, approximately $0.2 million related to preclinical studies;

and (iv) HT-004, approximately $0.1 million related

to sponsored research.

In addition to the foregoing, we also incurred fees of approximately $0.2 million payable to members of our scientific

advisory board for services.

We expect our research and development activities

to increase as we develop our existing product candidates and potentially acquire new product candidates, reflecting increasing costs

associated with the following:

● employee-related expenses,

which include salaries and benefits, and rent expenses;

● fees related to in-licensed

products and technology;

● expenses incurred under agreements

with CROs, investigative sites and consultants that conduct our clinical trials and a substantial portion of our pre-clinical activities;

● the cost of acquiring and manufacturing

clinical trial materials;

● costs associated with non-clinical

activities and regulatory approvals.

General and Administrative Expenses

For the year ended December 31, 2025, general

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During the year ended December 31, 2025, the increase

in general and administrative expenses of approximately $754,000 was primarily attributed to an increase other general and administrative

expenses of approximately $246,000, which primarily consisted of an increase in conference fees of approximately $154,000, and an increase

in travel expenses of approximately $32,000, an increase in compensation and related expenses of approximately $681,000, comprising of

an increase in stock-based compensation of approximately $612,000 related to the issuance of stock options to executives and board of

director members and an increase in health insurance, and an increase in rent of approximately $14,000, offset by a decrease in professional

and consulting expenses of approximately $187,000.

in general and administrative expenses of approximately $1,449,000 was primarily attributed to an increase in compensation and related

expenses of $590,000, primarily attributable to the issuance of 800,000 shares of common stock to our Chief Executive Officer valued at

$968,000 and an increase in other compensation and related expenses of $196,000, which were offset by a decrease in stock-based compensation

of approximately $574,000 in connection with the issuance of stock options during the year ended December 31, 2025 as compared to the

year ended December 31, 2024.

Additionally, during the year December 31, 2025, professional and consulting expenses increased by approximately

$892,000 which was primarily attributable to an increase in legal and consulting fees of approximately $538,000, an increase in stock-based

professional fees of $333,000 an increase in directors’ fees of approximately $21,000, and an increase in rent expense of $1,000.

These increases were offset by a decrease in other general and administrative expenses of approximately $34,000.

We anticipate that our general and administrative

expenses will increase in future periods, reflecting continued and increasing costs associated with:

of our research and development activities;

compensation granted to key employees and non-employees;

of business development activities;

professional fees and other costs associated with regulatory requirements that we are subject to.

Income (Expenses), net

For the year ended December 31, 2024, net other

income was approximately $27,000, which primarily resulted from $27,000 of dividend and interest income.

the year ended December 31, 2023, net other expenses were approximately $0.1 million, which primarily resulted from $0.2 million of unrealized

losses on marketable securities, partially offset by approximately $0.1 million of dividend income.

the year ended December 31, 2024 and 2023, we incurred a net loss of approximately $8.2 million, or $1.28 per common share (basic and

diluted), and $8.1 million, or $2.38 per common share (basic and diluted), respectively.

and Capital Resources

To date we have funded our operations primarily

through the sale of equity and debt securities.

As of December 31, 2024, we had approximately $7.0 million in cash and cash equivalents,

working capital of approximately $6.8 million and an accumulated deficit of approximately $60.4 million.

Net cash used in operating activities

was $7.0 million and $8.4 million for the years ended December 31, 2024 and 2023, respectively.

We incurred net losses of approximately

$8.2 million and $8.1 million for the years ended December 31, 2024 and 2023, respectively.

We have incurred substantial operating losses

since inception and expect to continue to incur significant operating losses for the foreseeable future as we continue our pre-clinical

and clinical development of our product candidates.

We have not yet commercialized any products and have never generated any revenue from

product sales.

We believe that our existing cash as of December 31, 2024 plus cash proceeds we received of $5,625,000 from exercise

of warrants in January 2025 and cash proceeds we received of $1,470,435 from the sale of our common shares under the ATM Agreement during

the period from January 7, 2025 to March 28, 2025 will enable us to fund our operating expenses and capital expenditure requirements for

at least 12 months from the date that our audited financial statements are available to be issued.

the year ended December 31, 2024, we issued 2,500,000 shares (the “Warrant Shares”) of our common stock upon the exercise

of the 2,500,000 January 2023 Existing Warrants (as defined herein) for net proceeds of approximately $3.7 million, after deducting placement

agent fees and other offering expenses of approximately $0.4 million.

The Warrant Shares were issued as a result of a March 27, 2024

inducement offer agreement, which closed on April 1, 2024, with a holder (the “Holder”) of certain of our existing warrants

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

to purchase shares of our common stock at a reduced exercise price of $1.6775 per share.

On November 8, 2024, we entered into an At The

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

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

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

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

and a prospectus supplement dated November 8, 2024.

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

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

Act of 1933, as amended.

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

to time, based on instructions from us (including any price, time or size limits or other parameters or conditions we may impose).

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

stock sold through Wainwright under the ATM Agreement and will also reimburse Wainwright for certain specified expenses in connection

with the ATM Agreement.

The offering of shares pursuant to the ATM Agreement will terminate on the earlier of (1) the sale, pursuant

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

either us or Wainwright, as set forth therein.

From November 8, 2024 to December 31, 2024 we issued 1,137,250 shares of our common stock

for net proceeds of approximately $1.0 million pursuant to the ATM Agreement.

have entered into certain license, sublicense, sponsored research and option agreements with third parties.

Pursuant to such agreements,

we may be required to make certain:

(i) license maintenance fee payments;

(ii) out-of-pocket expense payments, including, but not limited

to, payments related to intellectual property and research related expenses;

● support of our research and

development activities;

● stock compensation granted

to key employees and non-employees;

● support of business development

● increased professional fees

and other costs associated with regulatory requirements that we are subject to.

Other Income (Expenses), net

For the year ended December 31, 2025, other expense,

net was approximately $108,000, which resulted from the recording of an unrealized loss of crypto assets of $109,000.

For the year ended December 31, 2024, other income, net was approximately

$27,000, which primarily resulted from $27,000 of dividend and interest income.

For the years ended December 31, 2025 and 2024,

we incurred a net loss of approximately $12.5 million, or $0.90 per common share (basic and diluted), and $8.2 million, or $1.28 per common

share (basic and diluted), respectively.

Liquidity and Capital Resources

date we have funded our operations primarily through the sale of equity and debt securities.

As of December 31, 2025, we had

approximately $6.2 million in cash and cash equivalents, working capital of approximately $5.2 million and an accumulated deficit of

approximately $72.9 million.

Net cash used in operating activities was $9.8 million and $7.0 million for the years ended December

31, 2025 and 2024, respectively.

We incurred net losses of approximately $12.5 million and $8.2 million for the years ended December

31, 2025 and 2024, respectively.

We have incurred substantial operating losses since inception and expect to continue to incur

significant operating losses for the foreseeable future as we continue our pre-clinical and clinical development of our product

We have not yet commercialized any products and have never generated any revenue from product sales.

We do not believe

that our existing cash as of December 31, 2025 will enable us to fund our operating expenses and capital expenditure

requirements for at least 12 months from the date that our consolidated financial statements are available to be issued.

On November 8, 2024, we entered into an At The Market Offering Agreement

(the “ATM Agreement”) with H.C.

Wainwright & Co., LLC (“Wainwright”) under which we could offer and sell

shares of our common stock having an aggregate sales price of up to $2,700,000 through Wainwright as the sales manager pursuant to our

effective shelf registration statement on Form S-3 (File No.

333-272620), including an accompanying base prospectus and

a prospectus supplement dated November 8, 2024.

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

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

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

instructions from us (including any price, time or size limits or other parameters or conditions we may impose).

We will pay Wainwright

a commission equal to 3.0% of the aggregate gross proceeds from the sales of shares of the Company’s common stock sold through Wainwright

under the ATM Agreement and will also reimburse Wainwright for certain specified expenses in connection with the ATM Agreement.

7, 2025, the amount that the Company could offer and sell pursuant to the ATM Agreement was increased by $5,000,000 pursuant to a prospectus

supplement dated February 7, 2025.

On November 13, 2025, the amount that the Company could offer and sell pursuant to the ATM Agreement

was increased by $2,439,256 pursuant to a prospectus supplement dated November 13, 2025 for a current offering up to $4,821,200.

of shares pursuant to the ATM Agreement will terminate on the earlier of (1) the sale, pursuant to the ATM Agreement, of shares having

an aggregate offering price of $10,139,256 and (2) the termination of the ATM Agreement by either us or Wainwright, as set forth

During the year ended December 31, 2025 we issued an aggregate of 2,782,309 shares of our common stock for net proceeds of approximately

$4.1 million, after deducting approximately $142,000 in sales agent commissions and other offering expenses payable by us pursuant to

the ATM Agreement.

We have entered into certain license, sublicense, sponsored research

and option agreements with third parties.

Pursuant to such agreements, we may be required to make certain:

(i) license maintenance fee

(ii) out-of-pocket expense payments, including, but not limited to, payments related to intellectual property and research related

(iii) development and commercialization expense payments;

(iv) annual and quarterly minimum payments;

(v) diligence expense payments;

(v) diligence expense

and (vi) revenue interest payments.

In addition, subject

to the achievement of certain development and/or commercialization events, we may also be required to make certain:

(i) minimum royalty

payments, ranging from middle to high five figures, (ii) sales-based royalties and running royalties, ranging from low single digits

to low double digits;

and (iii) milestone payments, of up to approximately $30 million (if all milestones in all of our current agreements

are achieved).

funding will be necessary to fund our future clinical and pre-clinical activities.

We may obtain additional financing through sales of

our equity and debt securities or entering into strategic partnership arrangements, or a combination of the foregoing.

There are no assurances

that we will be successful in obtaining an adequate level of financing as and when needed to finance our operations on terms acceptable

to us or at all, particularly in light of the economic downturn.

If we are unable to secure adequate additional funding as and when needed,

we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our product candidates.

Flows from Operating Activities

the year ended December 31, 2024, net cash used in operating activities was approximately $7.0 million, which primarily resulted from

a net loss of approximately $8.2 million, offset by $0.8 million in stock-based compensation, a decrease in prepaid expense of $0.2 million

and an increase in accounts payable and accrued expenses of $0.2 million.

the year ended December 31, 2023, net cash used in operating activities was approximately $8.4 million, which primarily resulted from

a net loss of approximately $8.1 million, a $0.3 million gain on termination of license agreement, offset by $0.2 million unrealized

loss on marketable securities, $0.2 million stock-based compensation and changes in operating assets and liabilities of approximately

$0.5 million.

Flows from Investing Activities

Company did not have any cash flows from investing activities for the years ended December 31, 2024 or December 31, 2023.

Flows from Financing Activities

the year ended December 31, 2024, net cash provided by financing activities was approximately $4.7 million, which primarily resulted

from net proceeds from the issuance of common stock, common stock warrants, and prefunded warrants of $1.0 million and proceeds from

the exercise of warrants of approximately $3.7 million.

the year ended December 31, 2023, net cash provided by financing activities was approximately $11.3 million, which primarily resulted

from net proceeds from the issuance of common stock, common stock warrants, and prefunded warrants.

ultimate success is dependent on our ability to obtain additional financing and generate sufficient cash flow to meet our obligations

on a timely basis.

We will require significant amounts of capital to sustain operations, and we will need to make the investments we

need to execute our longer-term business plan to support new technologies and help advance innovation.

Absent generation of sufficient

revenue from the execution of our long-term business plan, we will need to obtain debt or equity financing, especially if we experience

downturns in our business that are more severe or longer than anticipated, or if we experience significant increases in expense levels

resulting from being a publicly traded company or from operations.

Such additional debt or equity financing may not be available to us

on favorable terms, if at all.

plan to pursue our plans with respect to the research and development of our pre-clinical products which will require resources beyond

those that we currently have, ultimately requiring additional capital from third-party sources.

We currently do not expect to generate

Accounting Estimates

preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of

America requires management to make estimates and assumptions that affect the reported amounts and related disclosures in the financial

Management considers an accounting estimate to be critical if:

requires assumptions to be made that were uncertain at the time the estimate was made;

in the estimate or different estimates that could have been selected could have a material impact in our results of operations or

financial condition.

we base our estimates and judgments on our experience and on various other factors that we believe to be reasonable under the circumstances,

actual results could differ from those estimates and the differences could be material.

Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for an additional discussion of

our significant accounting policies.

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

Stock options

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

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

Options are generally issued fully

The Company accounts for forfeited awards as they occur.

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

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

of management’s judgment.

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

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

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

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

Treasury zero-coupon issues

with an equivalent remaining term.

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

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

Company grants restricted stock awards under its equity incentive plan.

In addition, subject to the achievement of certain development and/or commercialization

events, we may also be required to make certain:

(i) minimum royalty payments, ranging from middle to high five figures, (ii) sales-based

royalties and running royalties, ranging from low single digits to low double digits;

and (iii) milestone payments, of up to approximately

$25 million (if all milestones in all of our current agreements are achieved).

Additional funding will be necessary to fund our

future clinical and pre-clinical activities.

We may obtain additional financing through sales of our equity and debt securities or entering

into strategic partnership arrangements, or a combination of the foregoing.

There are no assurances that we will be successful in obtaining

an adequate level of financing as and when needed to finance our operations on terms acceptable to us or at all, particularly in light

of the economic downturn.

If we are unable to secure adequate additional funding as and when needed, we may have to significantly delay,

scale back or discontinue the development and commercialization of one or more of our product candidates.

Cash Flows from Operating Activities

For the year ended December 31, 2025, net cash used in operating activities

was approximately $9.8 million, which primarily resulted from a net loss of approximately $12.5 million and an increase in prepaid expenses

and other current assets of approximately $460,000 and an increase in accounts payable and accrued expenses of approximately $644,000,

offset by approximately $850,000 of non-cash research and development-acquired patent, $1.5 million in stock-based compensation and professional

fees, and unrealized loss on crypto assets of $109,000.

For the year ended December 31, 2024, net cash

used in operating activities was approximately $7.0 million, which primarily resulted from a net loss of approximately $8.2 million, offset

by $0.8 million in stock-based compensation, a decrease in prepaid expense of $0.2 million and an increase in accounts payable and accrued

expenses of $0.2 million.

Cash Flows from Investing Activities

During the year ended December 31, 2025, the Company purchased $300,000

in crypto assets.

The Company did not have any cash flows from investing activities for

the year ended December 31, 2024.

Cash Flows from Financing Activities

For the year ended December 31, 2025, net cash provided by financing

activities was approximately $9.3 million, which primarily resulted from net proceeds from the issuance of common stock of approximately

$4.1 million and proceeds from the exercise of warrants of approximately $5.6 million, offset by the payment of taxes related to the net

share settlement of an equity award of $376,000.

For the year ended December 31, 2024, net cash

provided by financing activities was approximately $4.7 million, which primarily resulted from net proceeds from the issuance of common

stock, common stock warrants, and prefunded warrants of $1.0 million and proceeds from the exercise of warrants of approximately $3.7

Our ultimate success is dependent on our ability

to obtain additional financing and generate sufficient cash flow to meet our obligations on a timely basis.

We will require significant

amounts of capital to sustain operations, and we will need to make the investments we need to execute our longer-term business plan to

support new technologies and help advance innovation.

Absent generation of sufficient revenue from the execution of our long-term business

plan, we will need to obtain debt or equity financing, especially if we experience downturns in our business that are more severe or longer

than anticipated, or if we experience significant increases in expense levels resulting from being a publicly traded company or from operations.

Such additional debt or equity financing may not be available to us on favorable terms, if at all.

We plan to pursue our plans with respect to the

research and development of our pre-clinical products which will require resources beyond those that we currently have, ultimately requiring

additional capital from third-party sources.

We currently do not expect to generate any revenue.

Critical Accounting

The preparation of consolidated financial statements

in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and

assumptions that affect the reported amounts and related disclosures in the financial statements.

Management considers an accounting estimate

to be critical if:

● it requires assumptions to

be made that were uncertain at the time the estimate was made;

● changes in the estimate or

different estimates that could have been selected could have a material impact in our results of operations or financial condition.

While we base our estimates and judgments on our

experience and on various other factors that we believe to be reasonable under the circumstances, actual results could differ from those

estimates and the differences could be material.

See Note 2 to our consolidated financial statements

included elsewhere in this Annual Report on Form 10-K for an additional discussion of our significant accounting policies.

Stock-based compensation

The Company accounts for stock-based payment awards

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

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

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

expire up to ten years from the date of grant.

Options are generally issued fully vested.

The Company accounts for forfeited awards as

The Company estimates the fair value of stock

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

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

Expected Term - The

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

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

Expected Volatility

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

Risk-Free Interest Rate

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

Treasury zero-coupon issues with an equivalent

remaining term.

Expected Dividend -

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

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

The Company grants restricted stock awards under

its equity incentive plan.

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

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

In general, the restricted stock awards vest over a service

period of zero to three years.

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

service period and forfeitures are accounted for as they occur.

Company has issued warrants to non-employees.

The restricted stock awards are measured

based on the grant-date fair value.

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

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

for as they occur.

The Company has issued warrants to non-employees.

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

In general, the warrants

vest over a term of zero to ten years.

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

the vesting term.

taxes are recorded in accordance with Accounting Standards Codification (“ASC”) 740, Income Taxes (“ASC 740”)

which provides for deferred taxes using an asset and liability approach.

We recognize deferred tax assets and liabilities for the expected

future tax consequences of events that have been included in our consolidated financial statements or tax returns.

Deferred tax assets

and liabilities are determined based on the difference between our 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.

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

When uncertain tax positions exist, we recognize the

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

The determination as to whether the

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

the available facts and circumstances.

Issued Accounting Standards Not Yet Effective or Adopted

Taxes (Topic 740)

December 2023, the Financial Accounting Standards Board (“FASB”) issued guidance within Accounting Standards Update (“ASU”)

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The amendments in the ASU are intended to provide more

transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation

and income taxes paid information.

The ASU requires disclosure in the rate reconciliation of specific categories as well as additional

information for reconciling items that meet a quantitative threshold.

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

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

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

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

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

The amendments should be applied on a prospective basis.

is evaluating the impact that the adoption of this ASU will have on the Company’s consolidated financial statements, as it may

require additional disclosures in the notes to our condensed consolidated financial statements.

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

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

Income taxes are recorded in accordance with Accounting

Standards Codification (“ASC”) 740, Income Taxes (“ASC 740”) which provides for deferred taxes using an asset

and liability approach.

We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have

been included in our consolidated financial statements or tax returns.

Deferred tax assets and liabilities are determined based on the

difference between our 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.

We account for uncertain tax positions in accordance

with the provisions of ASC 740.

When uncertain tax positions exist, we recognize the tax benefit of tax positions to the extent that the

benefit would more likely than not be realized.

The determination as to whether the tax benefit will more likely than not be realized

is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances.

Recently Issued Accounting Standards Not Yet

Effective or Adopted

In November 2024, the Financial Accounting Standards

Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement—Reporting Comprehensive

Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires entities to provide more detailed disaggregation of

expenses in the income statement, focusing on the nature of the expenses rather than their function.

The new disclosures will require

entities to separately present expenses for significant line items, including but not limited to, depreciation, amortization, and employee

compensation.

Entities will also be required to provide a qualitative description of the amounts remaining in relevant expense captions

that are not separately disaggregated quantitatively, disclose the total amount of selling expenses and, in annual reporting periods,

provide a definition of what constitutes selling expenses.

This pronouncement is effective for fiscal years beginning after December 15,

2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

The Company does not expect

the adoption of this new guidance to have a material impact on its consolidated financial statements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined

in Rule 12b-2 of the Exchange Act.

The Company is not required to provide the information

required by this Item as it is a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis