What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-27 compared with 2025-03-28 · 555 added, 1413 removed, 223 unchanged (90% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Therapeutics, Inc.

FINANCIAL STATEMENTS AND SUPPLEMENTARY

Hoth Therapeutics, Inc.

and Subsidiaries

Consolidated Financial Statements

Financial Statements

of Independent Registered Public Accounting Firm (PCAOB ID:

Balance Sheets as of December 2024 and 2023

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

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

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

to Consolidated Financial Statements

of Independent Registered Public Accounting Firm

the Stockholders and the Board of Directors of

Therapeutics, Inc.

Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets as of December 2025 and 2024

Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2025 and 2024

Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2025 and 2024

Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders

Hoth Therapeutics, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated

balance sheets of Hoth Therapeutics, Inc.

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

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

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

In our opinion,

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

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

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

Restatement of Prior Period Consolidated Financial

Statements and the Unaudited Interim Condensed Consolidated Financial Statements

As discussed in Note 8 to the consolidated financial

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

Additionally,

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

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

by the errors.

Our opinion is not modified with respect to the restatements.

We have audited the accompanying consolidated balance sheets of Hoth Therapeutics, Inc.

(the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2025 and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt About the Company’s Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses and negative cash flows from operations since inception and expects to continue incurring losses and negative cash flows in the future.

These matters raise substantial doubt about the Company’s ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 1.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for 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 audit 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 entity’s

internal control over financial reporting.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these 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 audit 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.

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.

Critical Audit Matters

The critical audit matters communicated below

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

to the audit committee and that:

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

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

The communication of critical audit matters does not alter

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

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

Research and Development Expenses, Accrued Clinical

Trial Liabilities, and Prepaid Research and Development Costs

Description of the Matter

The Company recognizes research and development

expenses as incurred.

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

are performed.

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

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

The Company works closely with its CROs to reconcile

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

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

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

or purchase orders.

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

and the completion of project milestones.

We identified research and development expenses,

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

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

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

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

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

The errors led to a material overstatement

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

This required extensive

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

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

How We Addressed the Matter in Our Audit

Our audit procedures related to research and development

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

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

procedures for each item selected:

● We obtained and read related master service agreements, statements

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

● We performed corroborating inquiries with the Company's operations

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

● We inspected evidence from the third-party vendors regarding

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

In addition, we obtained confirmations from selected CROs related

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

● We compared the data and evidence obtained from internal

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

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

● We evaluated the Company’s process for identifying

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

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

WithumSmith+Brown , PC

have served as the Company’s auditor since 2018.

York, New York

THERAPEUTICS, INC.

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Accounting For Warrants

As disclosed in Note 7 to the consolidated financial statements, in June 2025 the Company issued warrants to a consultant in exchange for investor relations services pursuant to a marketing service agreement.

We identified the evaluation of whether the warrants are to be liability or equity classified as a critical audit matter.

The principal considerations for our determination included the subjectivity and judgment required to evaluate the provisions of the agreements when assessing the instruments’ classification.

Auditing the classification of these instruments involved especially challenging auditor judgment, including the extent of specialized skills and knowledge needed.

The primary procedures we performed to address this critical audit matter included:

● Evaluating the appropriateness of management’s application of the accounting guidance in determining the classification of the warrants in the consolidated financial statements by i) reviewing the relevant terms of the related agreements, ii) evaluating the completeness and accuracy of the Company’s technical accounting analysis and the application of the relevant accounting literature.

● Utilizing personnel with specialized knowledge and skills in technical accounting to assist in:

i) evaluating the terms of the related agreements in relation to the relevant accounting literature, and ii) assessing the appropriateness of conclusions reached by the Company.

/s/ WithumSmith+Brown, PC

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

East Brunswick, New Jersey

March 27, 2026

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

CONSOLIDATED BALANCE

(As Restated)

CONSOLIDATED BALANCE SHEETS

CURRENT ASSETS:

1 unchanged sentence

Prepaid expenses and other current assets 366,548 605,948

Crypto assets, at fair value 191,367 -

Deferred offering costs 57,171 -

Total Current Assets 6,862,553 7,644,871

NON-CURRENT ASSETS:

Prepaid expenses and other assets, net of current portion 699,420 -

Operating lease right-of-use asset, net 4,652 31,075

1 unchanged sentence

Total Non-Current Assets 740,891 67,894

Total Assets $ 7,603,444 $ 7,712,765

LIABILITIES AND STOCKHOLDERS’ EQUITY

15 unchanged sentences

5,000,000 shares designated;

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

0 shares issued and outstanding as of December 31, 2025 and 2024 - -

Series B Preferred Stock, $ 0.0001 par value;

2,000,000 shares designated;

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

0 shares issued and outstanding as of December 31, 2025 and 2024 - -

Common stock, $ 0.0001 par value;

3 unchanged sentences

Accumulated deficit ( 72,879,343 ) ( 60,410,041 )

( 60,410,041 )

( 52,221,741 )

Accumulated other comprehensive income 10,831 9,063

2 unchanged sentences

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

THERAPEUTICS, INC.

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS

OF OPERATIONS AND COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

For the Year Ended

(As Restated)

NET REVENUES $ - $ -

OPERATING COSTS AND EXPENSES:

Research and development expense

Research and development expenses 5,946,360 3,249,096

General and administrative expenses 6,414,989 4,966,336

1 unchanged sentence

LOSS FROM OPERATIONS ( 12,361,349 ) ( 8,215,432 )

OTHER INCOME (EXPENSES), NET:

Unrealized loss on marketable securities

OTHER (EXPENSES) INCOME, NET:

Change in fair value of investment in joint venture - ( 581 )

Unrealized loss on crypto assets ( 108,633 ) -

Dividend and interest income 680 27,713

Total other income (expenses), net

Total other (expenses) income, net ( 107,953 ) 27,132

NET LOSS $ ( 12,469,302 ) $ ( 8,188,300 )

NET LOSS PER COMMON SHARE:

3 unchanged sentences

COMPREHENSIVE LOSS:

Other comprehensive (loss) income:

Net loss $ ( 12,469,302 ) $ ( 8,188,300 )

Other comprehensive income (loss):

Foreign currency translation adjustment 1,768 ( 18,197 )

Total comprehensive loss $ ( 12,467,534 ) $ ( 8,206,497 )

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

THERAPEUTICS, INC.

The accompanying notes are an integral

part of these consolidated financial statements.

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

3 unchanged sentences

31, 2025 AND 2024

Accumulated Other

Comprehensive

Stockholders’

(As Restated)

Income (Loss)

Balance, December 31, 2022 (As Restated)

$ ( 44,115,619 )

Exercise of warrants

Stock-based compensation

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

Vesting of restricted shares

Cumulative translation adjustment

( 8,106,122 )

Balance, December 31, 2023 (As Restated)

( 52,221,741 )

Balance, December 31, 2023 4,348,129 $ 435 $ 61,732,106 $ ( 52,221,741 ) $ 27,260 $ 9,538,060

Exercise of pre-funded warrants 55,675 5 ( 5 ) - - -

4 unchanged sentences

Cumulative translation adjustment - - - - ( 18,197 ) ( 18,197 )

( 8,188,300 )

Net loss - - - ( 8,188,300 ) - ( 8,188,300 )

Balance, December 31, 2024 8,042,747 804 67,279,033 ( 60,410,041 ) 9,063 6,878,859

$ ( 60,410,041 )

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

THERAPEUTICS, INC.

Common shares issued for exercise of warrants 3,750,000 375 5,624,625 - - 5,625,000

Stock-based compensation - - 219,929 - - 219,929

Issuance of warrants for professional fees - - 333,150 - - 333,150

Common stock issued for compensation, net of tax withholding 489,256 49 591,951 - - 592,000

Common stock issued for cash, net 2,782,309 278 4,118,587 - - 4,118,865

Common stock issued for patent 450,000 45 850,455 - - 850,500

Cumulative translation adjustment - - - - 1,768 1,768

Net loss - - - ( 12,469,302 ) - ( 12,469,302 )

Balance, December 31, 2025 15,514,312 $ 1,551 $ 79,017,730 $ ( 72,879,343 ) $ 10,831 $ 6,150,769

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

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

2 unchanged sentences

For the Year Ended

(As Restated)

CASH FLOWS FROM OPERATING ACTIVITIES:

$ ( 8,188,300 )

$ ( 8,106,122 )

Net loss $ ( 12,469,302 ) $ ( 8,188,300 )

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

Gain on termination of license agreement

Research and development-acquired patent, expensed 850,500 -

Stock-based compensation 1,187,929 804,277

Unrealized loss on marketable securities

Stock-based professional fees 333,150 -

Change in fair value of investment in joint ventures - 581

Lease costs 1,026 -

Unrealized loss of crypto assets 108,633 -

Changes in operating assets and liabilities:

Prepaid expenses

Prepaid expenses and other current assets ( 460,020 ) 252,178

Accounts payable and accrued expenses 644,166 153,013

NET CASH USED IN OPERATING ACTIVITIES ( 9,803,918 ) ( 6,978,251 )

( 6,978,251 )

( 8,447,094 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of crypto assets ( 300,000 ) -

NET CASH USED IN INVESTING ACTIVITIES ( 300,000 ) -

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stock, net of offering costs 4,118,865 -

Proceeds from issuance of common stock, common stock warrants and prefunded warrants, net of offering costs - 1,060,719

Proceeds from exercise of warrants, net of issuance costs

Proceeds from exercise of warrants 5,625,000 3,682,300

Taxes paid related to net share settlement of equity award ( 376,000 ) -

Payment of deferred offering costs ( 57,171 ) -

NET CASH PROVIDED BY FINANCING ACTIVITIES 9,310,694 4,743,019

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

( 2,235,232 )

NET DECREASE IN CASH AND CASH EQUIVALENTS ( 793,224 ) ( 2,235,232 )

Effect of exchange rate changes on cash and cash equivalents 1,768 ( 18,197 )

2 unchanged sentences

NON-CASH INVESTING AND FINANCING ACTIVITIES:

ROU assets obtained in exchange for lease liability

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

Increase in prepaid expenses and other current assets and additional paid-in capital related to issuance of warrants for future services $ 333,150 $ -

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

HOTH THERAPEUTICS, INC.

2 unchanged sentences

December 31, 2025 and 2024

1 – Organization and Description of Business Operations

Therapeutics, Inc.

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

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

The Company is a clinical-stage biopharmaceutical company focused

on developing new generation therapies for unmet medical needs.

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

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

NOTE 1 – Organization and Description of Business Operations

Hoth Therapeutics, Inc.

(together with its wholly-owned subsidiaries, merveille.ai and Hoth Therapeutics Australia Pty Ltd, the “Company”) was incorporated under the laws of the State of Nevada on May 16, 2017.

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

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

(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).

The Company also has assets

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

(ii) a treatment for asthma and allergies using inhalational

administration (HT-004);

The Company also has assets being developed for (i) atopic dermatitis (also known as eczema) (BioLexa);

(ii) a treatment for asthma and allergies using inhalational administration (HT-004);

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

and Capital Resources

Standards Update (“ASU”) No.

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

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

Liquidity and Capital Resources

Accounting Standards Update (“ASU”) No.

2014-15, Presentation of Financial Statements - Going Concern , requires management to evaluate the Company’s ability to continue as a going concern one year beyond the filing date of the given financial statements.

This evaluation requires management to perform two steps.

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

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

Second, if management concludes that substantial

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

Disclosures in the notes to

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

the substantial doubt that was raised.

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

The Company will require significant additional

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

The Company’s ability to successfully raise

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

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

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

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

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

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

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

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

On November 8, 2024, the Company entered into

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

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

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

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

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

Sales of shares of the Company’s common stock through

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

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

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

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

conditions the Company may impose).

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

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

for certain specified expenses in connection with the ATM Agreement.

The offering of shares pursuant to the ATM Agreement will terminate

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

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

In February 2025, the amount that the

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

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

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

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

2 – Summary of Significant Accounting Policies

of Presentation and Principles of Consolidation

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

United States of America (“GAAP”).

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

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

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

All significant intercompany balances and transactions have been eliminated

in consolidation.

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

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

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

The most significant estimates in the Company’s consolidated

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

tax assets resulting from net operating losses.

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

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

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

results may differ materially and adversely from these estimates.

To the extent there are material differences between the estimates

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

and Cash Equivalents

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

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

31, 2024 and 2023, respectively.

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

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

The Company’s foreign bank

accounts are not subject to FDIC insurance.

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

of December 31, 2024 and 2023, respectively.

Concentrations

of Credit Risk and Off-Balance Sheet Risk

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

of $ 250,000 .

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

condition, results of operations, and cash flows.

Value of Financial Instruments

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

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

Under this accounting

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

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

As such, fair value is a

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

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

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

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

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

prices in active markets for identical assets or liabilities.

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

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

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

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

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

that is significant to the fair value measurement.

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

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

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

Operating leases are presented

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

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

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

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

for the duration of the lease term.

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

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

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

are subject to fluctuation from period to period.

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 incurred losses and generated negative cash flows from operations since its inception.

On December 31, 2025, the Company had an accumulated deficit of $ 72,879 ,000, and cash and cash equivalents of $ 6,247 ,000.

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

The Company will require significant additional capital to make the investments it needs to execute its longer-term business plan.

The Company’s ability to successfully raise sufficient funds through the sale of debt or equity securities when needed is subject to many risks and uncertainties and, even if it were successful, future equity issuances may result in dilution to its existing shareholders and future debt securities may contain covenants that limit the Company’s operations or ability to enter into certain transactions.

The Company does not believe its current cash is sufficient to fund operations for the next 12 months from the issuance date of these consolidated financial statements and the Company will need to raise additional funding, through strategic relationships, public or private equity or debt financings, grants or other arrangements, to develop and seek regulatory approvals for the Company’s current and future product candidates.

If such funding is not available, or not available on terms acceptable to the Company, the Company’s current development plan and plans for expansion of its general and administrative infrastructure may be curtailed.

These financial statements have been prepared on a going concern basis and do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary in the event the Company can no longer continue as a going concern.

On November 8, 2024, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”) with H.C.

Wainwright & Co., LLC (“Wainwright”) under which the Company could offer and sell shares of its common stock having an aggregate sales price of up to $ 2,700,000 through Wainwright as the sales agent (See Note 7).

On February 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 .

During the year ended December 31, 2025, the Company sold 2,782,309 shares of its common stock for gross proceeds of $ 4,289,152 , or at a weighted average of $ 1.54 per share.

During the year ended December 31, 2024, the Company sold 1,137,250 shares of its common stock for net proceeds of $ 1,212,541 , or at a weighted average of $ 1.07 per share.

As of March 26, 2026, the Company has sold shares of its common stock having a total aggregate sales price of approximately $ 6,024,500 .

NOTE 2 – Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

The accompanying consolidated financial statements include the accounts of the Company’s wholly-owned subsidiaries, merveille.ai, which was incorporated under the laws of Nevada on October 4, 2023 and Hoth Therapeutics Australia Pty Ltd, which was incorporated under the laws of the State of Victoria in Australia on June 5, 2019.

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

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, the valuation of modified warrants, the valuation of common stock issued for research and development-acquired patent, 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 may 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.

Cash and cash equivalents consist of bank accounts and highly liquid money funds and totaled $ 6,247,467 and $ 7,038,923 as of December 31, 2025 and 2024, respectively.

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits at the three financial institutions the Company utilizes for its banking requirements.

The Company’s foreign bank account is not subject to Federal Deposit Insurance Corporation insurance.

Cash held in foreign bank accounts totaled approximately $ 96,000 and $ 105,000 as of December 31, 2025 and 2024, respectively.

Concentrations of Credit Risk and Off-Balance Sheet Risk

The Company has significant cash balances at financial institutions which, throughout the year, regularly exceed the federally insured limit of $ 250,000 .

Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations, and cash flows.

Fair Value of Financial Instruments

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurements , (“ASC-820”), provides guidance on the development and disclosure of fair value measurements.

Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

The fair value of the Company’s assets and liabilities, which would qualify as financial instruments under ASC-Topic 820, approximates the carrying amounts represented in the Company’s consolidated balance sheets, primarily due to their short-term nature.

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

Quoted prices in active markets for identical assets or liabilities.

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

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

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

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

During the years ended December 31, 2025 and 2024, there were no changes in valuation techniques or transfers between Level 1, Level 2, and Level 3.

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

Operating leases are presented as right-of-use (“ROU”) assets and the corresponding lease liabilities are included in operating lease liability, current and lease liability, on the Company’s consolidated balance sheets.

ROU assets represent the Company’s right to use an underlying asset, and lease liabilities represent the Company’s obligation to make lease payments in exchange for the ability to use the asset for the duration of the lease term.

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

As such, minimum lease payments include fixed payments for non-lease components within a lease agreement but exclude variable lease payments not dependent on an index or rate, such as common area maintenance, operating expenses, utilities, or other costs that are subject to fluctuation from period to period.

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

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

Additionally,

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

commencement.

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

payments over the lease term.

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

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

The estimated incremental borrowing rate considers

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

in Joint Ventures

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

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

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

ROU assets and lease liabilities are recognized at the commencement date and determined using the present value of the future minimum lease payments over the lease term.

The Company uses an incremental borrowing rate based on an estimated rate of interest for collateralized borrowing since the Company’s leases do not include an implicit interest rate.

The estimated incremental borrowing rate considers market data, actual lease economic environment, and the lease term at commencement date.

Investment in Joint Ventures

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

SEC Staff 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 option.

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

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

The determination of whether an investee’s

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

This investment in joint ventures is further described in

Note 4 of these consolidated financial statements.

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Prepaid Expenses

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

other current assets consisted of the following:

As of December 31,

Prepaid clinical trial expenses

Prepaid insurance

R&D credit receivable

Other prepaid expenses

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

subsidiary Hoth Therapeutics Australia Pty Ltd, recorded approximately a $ 260,000 gain due to a settlement agreement on a payable balance

with Novotech, a clinical trial management vendor.

The gain is recognized in the consolidated statements of operations and comprehensive

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

There was no such transaction in the year ended December

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 accrued and then expensed when the activity

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

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

Stock options

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

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

Options are generally issued fully

Accounting for Limited Partnership Investments (codified in ASC 323-30-S99-1) guidance requires the use of the equity method unless the investor’s interest “is so minor that the limited partner may have virtually no influence over partnership operating and financial policies.” The SEC staff’s position is that investments in limited partnerships of greater than 3 % to 5 % are considered more than minor and, therefore, should be accounted for using the equity method or fair value option.

Investments accounted for using the equity method may be reported on a lag up to three months if financial statements of the investee are not available in sufficient time for the investor to apply the equity method as of the current reporting date.

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

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

Digital Assets, at Fair Value

The Company’s digital assets primarily include Bitcoin (BTC), Ethereum (ETH) and Solana (SOL), which are actively traded on public exchanges.

The Company distinguishes between digital assets which fall within the scope of ASC 350-60 and those which do not.

The Company refers to digital assets which fall within the scope of ASC 350-60 (e.g., BTC) as “crypto assets.” Digital assets which do not fall within the scope of ASC 350-60, Accounting for and Disclosure of Crypto Assets , are referred to as “digital intangible assets.” As of December 31, 2025, the Company did not own any digital intangible assets that did not fall within the scope of ASC 350-60.

Crypto assets are recorded at fair value in accordance with ASC 820, Fair Value Measurement .

Changes in fair value are recognized in the Company’s consolidated statements of operations within “other income (expense)” for the period in which they occur.

Digital assets are classified on the balance sheets based on management’s intent and the expected period of use or sale:

● Current assets:

Digital assets held for trading or intended to be sold within 12 months are classified as current assets .

● Non-current assets:

Digital assets held for investment or long-term strategic purposes are classified as non-current assets .

The fair value of each cryptocurrency holding is based on the closing market price on the reporting date.

As of December 31, 2025, the Company held $ 191,367 of crypto assets comprised of BTC, ETH and SOL, which are in the scope of ASC 350-60 at fair value.

In determining the fair value of the crypto assets in accordance with ASC 820, the Company utilizes Coinbase as the principal market.

The Company uses a first-in, first-out methodology to assign costs to crypto assets.

Sales and purchases of crypto assets are reflected as cash flows from investing activities in the consolidated statements of cash flows.

As of February 5, 2026, the Company does not hold any crypto assets.

Research 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 accrued and then expensed when the activity has been performed or when the goods have been received rather than when the payment is made.

Stock-Based Compensation

The Company accounts for 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 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.

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.

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.

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

asset and liability approach.

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

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

Deferred tax assets and liabilities are determined

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

the year in which the differences are expected to reverse.

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

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

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

When uncertain tax positions exist, the Company

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

The determination

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

consideration of the available facts and circumstances.

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Loss per Share

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

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.

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

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns.

Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

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

When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized.

The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances.

On July 4, 2025, the OBBBA was enacted into law.

With the passing of this tax legislation, the most notable corporate tax issue that impacts the Company is the change to IRC §174.

Since 2022, the Company has been required to capitalize U.S.

and foreign research and development expenditures in accordance with IRC §174 and amortize those costs over 5 years for U.S.

costs and 15 years for foreign costs.

The new legislation no longer requires U.S.

research and development costs to be capitalized;

however, foreign costs will continue to be capitalized and amortized over 15 years.

costs that were capitalized in tax years 2022 through 2024 can be expensed in 2025 or over a two-year period, 2025 and 2026.

Pursuant to the OBBBA’s transition rules, the Company elected to expense all unamortized domestic R&E costs previously capitalized between 2022 and 2024.

The Company continues to evaluate various elections available to the Company under OBBBA related to IRC Section 174 capitalized R&D costs.

The effect of expensing of all unamortized domestic R&E was to decrease the Company’s deferred tax assets and decrease the related valuation allowance.

Because of the Company’s loss and full valuation allowance, there was no impact on the Company’s 2025 financial statements related to IRC Section 174 capitalized R&D costs for the 2025 year.

Net Loss per Share

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

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

The following were

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

impact on the Company’s net loss:

The following were excluded from the computation of diluted shares outstanding due to the losses for each period presented, as they would have had an anti-dilutive impact on the Company’s net loss:

Year Ended December 31,

Potentially dilutive securities 2025 2024

Non-vested restricted stock awards

The Company accounts for warrants as either equity-classified

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

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

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

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

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

This assessment,

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

end date while the warrants are outstanding.

For issued warrants that meet all of the criteria

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

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

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

Warrants 1,740,752 5,203,243

Options 1,260,362 1,090,362

Total 3,001,114 6,293,605

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), and ASC 815, Derivatives and Hedging (“ASC 815”).

The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common shares, among other conditions for equity classification.

This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued warrants that meet all of the criteria for equity classification, the warrants are recorded as a component of additional paid-in capital at the time of issuance.

For issued warrants that do not meet all the criteria for equity classification, the warrants are classified as liability and are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter.

Comprehensive Income (Loss)

Comprehensive income (loss) is composed of net

loss and other comprehensive income (loss).

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

to foreign currency translation adjustments.

Comprehensive loss is composed of net loss and other comprehensive income (loss).

During the years ended December 31, 2025 and 2024, other comprehensive income (loss) was attributable to foreign currency translation adjustments.

Foreign Currency

4 unchanged sentences

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

Equity transactions

are translated using historical exchange rates.

The resulting translation adjustments are recorded in accumulated other comprehensive

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

Foreign currency translation adjustments arising from differences in exchange

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

Equity transactions are translated using historical exchange rates.

The resulting translation adjustments are recorded in accumulated other comprehensive income (loss) as a component of stockholders’ equity.

Foreign currency translation adjustments arising from differences in exchange rates from period to period are recorded within “Accumulated other comprehensive income (loss)” in the consolidated balance sheets.

Segment Reporting

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

Segment Reporting (ASC 280):

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

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

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

December 15, 2024.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (ASC 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses among other disclosure requirements.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

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

The Company operates as a single operating segment as

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

In accordance with

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

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

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

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

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

entity holds material assets and reports revenue.

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

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

Since the Company operates

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

financial statements.

Accounting Pronouncements

Taxes (Topic 740)

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

Improvements to Income Tax Disclosures .

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

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

The ASU requires disclosure in the rate reconciliation

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

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

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

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

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

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

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

The amendments should be applied on a prospective basis.

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

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

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

3 – License Agreements

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

during the years ended December 31, 2024 and 2023:

The Company operates as a single operating segment as a clinical-stage biopharmaceutical company focused on developing new generation therapies for unmet medical needs.

In accordance with ASC 280, the Company’s chief operating decision maker has been identified as the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company and decides how to allocate resources based on loss from operations, managing cash flows and evaluating research and development and general and administrative expenses.

Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue.

All material operating units qualify for aggregation under “Segment Reporting” due to their similarities in economic characteristics such as nature of services and procurement processes.

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

Recent Accounting Pronouncements

The Company adopted Accounting Standards Update (“ASU”), 2023-09, Improvements to Income Tax Disclosures in the current year.

The ASU requires greater disaggregation of information about a reporting entity’s effective tax rate reconciliation and information on income taxes paid.

The ASU applies to all entities subject to income taxes and is intended to help investors better understand an entity’s exposure to potential changes in jurisdictional tax legislation and assess income tax information that affects cash flow forecasts and capital allocation decisions.

The ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company adopted ASU 203-09 during the year ended December 31, 2025 using a retrospective approach and is complying with the related disclosure requirements in Note 9, Income Taxes.

In November 2024, the FASB issued 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.

Currently, management does not believe that any other recently issued, but not yet effective accounting pronouncements, if currently adopted, would have a material impact on the Company’s consolidated financial statements.

NOTE 3 – Crypto Assets, at Fair Value

The following table sets forth the units held, cost basis, and fair value of crypto assets held, as shown on the consolidated balance sheet as of December 31, 2025:

Classification Units Held Cost Basis Fair Value on

Balance, December 31, 2025

BTC (Bitcoin) Current 0.85673339 $ 100,000 $ 74,966

ETH (Ethereum) Current 21.96726563 100,000 65,176

SOL (Solana) Current 411.62365256 100,000 51,225

Total $ 300,000 $ 191,367

Cost basis is equal to the cost of the crypto assets plus transaction fees, if any, at the time of purchase or upon receipt.

Fair value represents the quoted crypto asset prices within the crypto assets principal market at the time of measurement.

As of December 31, 2024, the Company did not hold any crypto assets.

The following table represents a reconciliation of crypto assets held:

Fair Value, December 31, 2024 $ -

Additions 300,000

Unrealized loss ( 108,633 )

Fair Value, December 31, 2025 $ 191,367

NOTE 4 – License and Patent Agreements

The following summarizes the Company’s research and development expenses for licenses and patents acquired (including stock-based compensation) during the years ended December 31, 2025 and 2024:

For the Year Ended

1 unchanged sentence

North Carolina State University 3,750 6,250

Virginia Commonwealth University

Department of Veteran Affairs - 54,000

University of Cincinnati 3,333 1,666

Patent applications acquired 1,250,500 -

$ 1,267,583 $ 75,536

George Washington University

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

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

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

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

During the year ended December 31, 2023, the Company

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

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

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

payment pursuant to GW Patent License Agreement.

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

Carolina State University

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

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

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

Commonwealth University

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

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

18, 2020 that was terminated August 16, 2023.

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

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

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

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

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

The George Washington University

During the year ended December 31, 2025 and 2024, the Company recorded expenses of $ 10,000 and $ 13,620 , respectively, related to license fees pursuant to the patent license agreement with The George Washington University (“GW”) dated February 1, 2020 (“GW Patent License Agreement”) and the patent license agreement with GW dated August 7, 2020 (“Second GW Patent License Agreement”).

North Carolina State University

During the years ended December 31, 2025 and 2024, the Company recorded expenses of $ 3,750 and $ 6,250 , respectively, for license fees associated with the license agreement by and between the Company and North Carolina State University dated February 25, 2021.

Department of Veteran Affairs

During the year ended December 31, 2024, the

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

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

During the year ended December 31, 2023, the Company

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

Biosciences, Inc.

During the year ended December 31, 2024, the Company recognized expenses of $ 54,000 for license fees associated with the exclusive license agreement by and between the Company and the US Department of Veteran Affairs dated December 9, 2024.

During the year ended December 31, 2025, the Company did not recognize any expenses for license fees associated with such license agreement.

Chelexa Biosciences, Inc.

and the University of Cincinnati

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

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

dated May 14, 2020, respectively.

4 – Fair Value of Financial Assets and Liabilities

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

During the years ended December 31, 2025 and 2024, the Company recognized expenses of $ 3,333 and $ 1,666 , respectively, for license fees associated with the Assignment and Assumption Agreement by and between the Company and Chelexa Biosciences, Inc.

dated May 14, 2020.

Patent Application Acquisition Agreement

On January 13, 2025, the Company entered into a Patent Application Acquisition Agreement with Med30, LLC (the “Seller”), whereby the Seller sold, conveyed, assigned and transferred to the Company all of Seller’s right, title, and interest in and to certain patent applications and associated rights, subject to the terms and conditions set forth in such agreement for a cash payment of $ 400,000 and the issuance of 450,000 shares of the Company’s common stock with a fair value of $ 850,500 for an aggregate purchase price of $ 1,250,500 .

These common shares were valued at $ 850,500 , or $ 1.89 per share, on the measurement date based on the closing price of the Company’s common stock.

For asset acquisitions, in-process research and development (“IPRD”) is expensed immediately unless there is an alternative future use.

The patent applications acquired do not constitute a business, as defined under ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business (such when there is no substantive process in the acquired entity).

The acquired IPRD intangible asset will be used in research and development projects which have been determined to not have alternative future use at the acquisition date and was expensed immediately.

Accordingly, during the year ended December 31, 2025, the Company recorded $ 1,250,500 in research and development expenses.

NOTE 5 – Fair Value of Financial Assets and Liabilities

The following table presents the Company’s assets and liabilities that are measured at fair value on December 31, 2025 and 2024:

Fair value measured on December 31, 2025

(Level 1) Significant

(Level 2) Significant

Crypto assets $ 191,367 $ 191,367 $ — $ —

Investment in joint ventures $ 36,819 $ — $ — $ 36,819

Fair value measured on December 31, 2024

(Level 1) Significant

(Level 2) Significant

Investment in joint ventures $ 36,819 $ — $ — $ 36,819

3 Measurement

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

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

Level 3 Measurement

The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial assets that are measured at fair value on a recurring basis for the years ended December 31, 2025 and 2024:

Investment in joint venture for the year ended December 31, 2025 and 2024

3 unchanged sentences

Investment in joint ventures at fair value – end of year $ 36,819 $ 36,819

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

in Joint Ventures

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

Under the fair value

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

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

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

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

Investment in Joint Ventures

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

Under the fair value option, bifurcation of an embedded derivative is not necessary, and all related gains and losses on the host contract and derivative due to change in the fair value will be reflected in other income (expenses), net in the consolidated statements of operations and comprehensive loss.

The value at which the Company’s investment in joint ventures is carried on its books is adjusted to estimated fair value at the end of each quarter, taking into account general economic and stock market conditions and those characteristics specific to the underlying investments.

Investment in Zylö Therapeutics

In connection with the Company’s March 2020 underwritten public

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

Class B common stock for $ 60,000 .

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

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

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

Pursuant to the

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

In addition, pursuant

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

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

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

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

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

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

Furthermore, pursuant to the Zylö Amendment, following

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

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

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

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

defined in the Exclusive Sublicense Agreement).

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

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

This value was ratified

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

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

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

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

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

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

The future values of the common stock under the various

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

the Class B common stock.

In connection with the Company’s March 2020 underwritten public offering of shares of its common stock, on May 4, 2020, the Company purchased 120,000 shares of Zylö Therapeutics (“Zylö”) Class B common stock for $ 60,000 .

On December 8, 2021, the Company entered into a third amendment (the “Zylö Amendment”) to the Exclusive Sublicense Agreement with Zylö originally dated August 19, 2019 (as amended, the “Exclusive Sublicense Agreement”), pursuant to which the Company licensed its novel cannabinoid therapeutic, HT-005 for lupus patients, back to Zylö.

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

In addition, pursuant to the Zylö Amendment, within 90 days following a sale by Zylö of all of its assets and rights related to HT-005 to a third-party (a “Sale”), Zylö shall pay the Company a low single digit percent of the net proceeds received by it attributable to HT-005 in the United States and Canada and their respective territories (collectively, the “Territory”) for the purposes of therapeutic uses related to lupus in humans (the “Field”).

After the Sale, any and all rights of the Company pursuant to the Exclusive Sublicense Agreement, including all amendments thereto, shall terminate.

Furthermore, pursuant to the Zylö Amendment, following the date of the first commercial sale of HT-005 in the Territory, in the Field, Zylö shall pay the Company (i) a low single digit percent of the Net Sales (as defined in the Exclusive Sublicense Agreement) of HT-005 in the event HT-005 is sold in the Territory and (ii) a low double digit percent of any royalty that Zylö receives through the sublicense to a third-party based on Net Sales of HT-005 in the Territory which payments shall continue in each country in the Territory until expiration of the last-to-expire Valid Claim (as defined in the Exclusive Sublicense Agreement).

Zylö conducted a 409A valuation of their Class B common stock in February 2024, and as of December 31, 2025 and 2024, valued its 220,000 Zylö shares at $ 36,740 , or at a price at $ 0.167 and $ 0.167 per share, respectively.

This value was ratified by Zylö’s board of directors in February 2024.

On February 23, 2024, the Company acquired 22,000 shares of Class B Common stock of Atticus Pharma, a subsidiary of Zylö Therapeutics, based upon a 1-for-10 ratio of current shares and was instructed, on July 3, 2024, that the 409A valuation of the shares was $ 79 , or $ 0.0036 per share, pursuant to the February 2024 valuation ratified by Zylö’s board of directors.

On September 23, 2025, the Company received 110,000 shares of Class N common stock of Finch Pharma, a subsidiary of Zylö Therapeutics, based upon a 1-for-2 ratio of current shares and was instructed, on January 26, 2026, that a 409A valuation of $ 0.036 on each Class C Common Share was done on September 23, 2025.

Given that these shares have voting rights and the Class N common stock owned by the Company do not, management reduced the value to $ 0.034 per share of Class N common stock, reflecting the 3 - 5 % premium typically attributed to voting rights, valuing the shares at $ 3,740 .

The Finch Pharma shares were received for no consideration and accordingly, the Company did not increase its investment in Zylö for such shares.

The valuations reflect a probability-weighted present value of expected future investment returns considering certain possible outcomes and the rights of each class of Zylö’s, Atticus Pharma’s, and Finch’s equity.

The future values of the common stock under the various outcomes are discounted back to the valuation date at a risk-adjusted discount rate and probability weighted to determine the value for the Class B common stock.

Significant unobservable inputs in the valuation include:

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

occurrence, (iii) future valuation;

(i) probabilities of each scenario, (ii) timing of occurrence, (iii) future valuation;

(iv) and the risk-adjusted discount rate.

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

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

5 – Stockholders’ Equity

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

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

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

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

by the Company’s shareholders.

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

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

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

A Convertible Preferred Stock

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

obligation to settle in a variable number of equity shares.

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

as permanent equity on the consolidated balance sheets.

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

liquidation events does not preclude permanent equity classification.

Further, the shares of Series A Convertible Preferred Stock are

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

The embedded conversion

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

not bifurcated from the equity host.

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

and outstanding.

B Preferred Stock

On November 2, 2022, the Company filed a Certificate

of Designation of the Series B Preferred Stock (the “Certificate of Designation”) with the Secretary of State of the State

of Nevada to create a new class of Series B Preferred Stock, par value $ 0.0001 per share (the “Series B Preferred Stock”).

The consolidated investment in Zylö was valued at $ 36,819 and $ 36,819 as of December 31, 2025 and 2024, respectively.

NOTE 6 – Prepaid Expenses and Other Assets

As of December 31, 2025 and 2024, prepaid expenses and other assets consisted of the following:

As of December 31,

2025 As of December 31,

Prepaid clinical trial expenses $ 987,605 $ 476,235

Prepaid insurance 40,008 28,479

R&D credit receivable 11,707 46,769

Other prepaid expenses 26,648 54,465

Total 1,065,968 605,948

Prepaid expenses and other assets, current portion ( 366,548 ) ( 605,948 )

Prepaid expenses, long-term portion $ 699,420 $ -

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, 2025 and 2024, 5,000,000 shares of the Company’s preferred stock have been designated as Series A Convertible Preferred Stock, 2,000,000 shares of the Company’s preferred stock have been designated as Series B Preferred Stock, and 3,000,000 shares of the Company’s preferred stock remain undesignated.

Series A Convertible Preferred Stock

The shares of Series A Convertible Preferred Stock, par value $ 0.0001 per share, are not mandatorily redeemable and do not embody an unconditional obligation to settle in a variable number of equity shares.

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

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

Further, the shares of Series A Convertible Preferred Stock are considered an equity-like host for purposes of assessing embedded derivative features for potential bifurcation.

The embedded conversion feature is considered to be clearly and closely related to the associated convertible preferred stock host instrument and therefore was not bifurcated from the equity host.

As of December 31, 2025 and 2024, no shares of Series A Convertible Preferred Stock were issued and outstanding.

Series B Preferred Stock

On November 2, 2022, the Company filed a Certificate of Designation of the Series B Preferred Stock (the “Certificate of Designation”) with the Secretary of State of the State of Nevada to create a new class of Series B Preferred Stock, par value $ 0.0001 per share (the “Series B Preferred Stock”).

The Certificate of Designation designated 2,000,000 shares of authorized preferred stock as Series B Preferred Stock.

The Series B Preferred

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

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

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

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

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

The Series B Preferred Stock

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

dissolution or winding up of the Company.

The Series B Preferred Stock was not entitled to receive dividends or any other distributions.

The Series B Preferred Stock was entitled to ten votes per share and voted together with the Company’s issued and outstanding shares of common stock as a single class exclusively with respect to a proposal to increase the number of shares of common stock that the Company was authorized to issue, together with any ancillary or administrative matters necessary or advisable in connection with the implementation of such increase.

The Series B Preferred Stock had no rights as to any distribution or assets of the Company upon liquidation, bankruptcy, reorganization, merger, acquisition, sale, dissolution or winding up of the Company.

As of December 31, 2025 and 2024, no shares of Series B Preferred Stock were issued and outstanding.

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

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

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

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

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

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

other offering expenses.

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

Each December Common Stock Warrant is exercisable for

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

certain circumstances, be exercised on a cashless basis.

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

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

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

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

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

and expected dividend rate of 0 %).

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

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

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

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

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

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

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

to be equity classified.

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

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

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

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

The December Wainwright Warrants

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

The December Wainwright Warrants are exercisable for a period of

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

circumstances, be exercised on a cashless basis.

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

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

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

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

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

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

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

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

price of $ 2.629 per September Pre-Funded Warrant.

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

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

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

Gross proceeds from the offering were approximately $ 2.9 million,

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

$ 2.4 million.

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

Each September Common Stock Warrant is exercisable for a period

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

be exercised on a cashless basis.

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

per share and may be exercised on a cashless basis.

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

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

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

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

and expected dividend rate of 0 %).

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

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

equity classified.

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

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

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

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

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

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

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

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

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

The September Wainwright

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

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

As the September Wainwright Warrants were issued

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

as an equity issuance cost on the issuance date.

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

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

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

dividend rate of 0 %).

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

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

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

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

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

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

by the Company.

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

2022 by and between the Company and the Holder.

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

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

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

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

The April 2024 Inducement Warrants

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

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

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

Additionally, in connection with the exercise of the January

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

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

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

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

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

The modification is consistent with the “Equity Issuance”

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

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

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

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

prior to and immediately after the modification).

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

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

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

guidance of ASU 2021-04.

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

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

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

fees and other offering expenses of $ 0.5 million).

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

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

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

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

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

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

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

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

On January 8, 2024, the Company issued 55,675 common shares in connection with the exercise of the remaining 55,675 pre-funded warrants that were issued in connection with a securities purchase agreement dated September 13, 2023.

On March 27, 2024, the Company entered into an inducement offer agreement with a holder (the “Holder”) of certain of the Company’s existing warrants (the “January 2023 Existing Warrants”) to immediately exercise for cash an aggregate 2,500,000 of the January 2023 Existing Warrants to purchase shares of the Company’s common stock at a reduced exercise price of $ 1.6775 per share for gross proceeds to the Company of approximately $ 4,194,000 before deducting placement agent fees and other offering expenses payable by the Company.

The exercised January 2023 Existing Warrants were issued pursuant to a securities purchase agreement dated December 29, 2022 by and between the Company and the Holder.

Each January 2023 Existing Warrant was exercisable for a period of five and one-half years from the issuance date at an original exercise price of $ 5.00 per share.

As an inducement to such exercise, the Company agreed to issue new unregistered warrants to purchase up to 3,750,000 shares of the Company’s common stock at an exercise price of $ 1.50 per share (the “April 2024 Inducement Warrants”) to the Holder.

The April 2024 Inducement Warrants are exercisable immediately upon issuance and will expire on July 3, 2028 .

On April 1, 2024, the Holder exercised the January 2023 Existing Warrants, and the Company issued the Holder 3,750,000 April 2024 Inducement Warrants.

Additionally, in connection with the exercise of the January 2023 Existing Warrants, the Company issued 125,000 placement agent warrants to the designees of the placement agent, Wainwright, which are immediately exercisable and expire on July 3, 2028 at an exercise price of $ 2.0969 per share.

The amendment to the January 2023 Existing Warrants on March 27, 2024 to lower the exercise price thereof was considered a modification of the January 2023 Existing Warrants under the guidance of ASU 2021-04.

This was modification of an equity classified financial instrument under that guidance and the exercise was treated as an equity issuance as the reason for the modification was to induce the holders to cash exercise their warrants, resulting in the exercise of the January 2023 Existing Warrants on April 1, 2024.

On March 27, 2024, the Company calculated the total fair value of the consideration for the modification of the January 2023 Existing Warrants, which includes the incremental fair value of the January 2023 Existing Warrants (determined by comparing the fair values immediately prior to and immediately after the modification).

The fair values were calculated using the Black-Scholes option-pricing model, and the Company determined that the total fair value of the consideration related to the modification of the January 2023 Existing Warrants amounted to $ 550,500 , which are considered offering costs and were netted against the net proceeds received by the warrant exercise under the guidance of ASU 2021-04.

On April 1, 2024, in connection with the March 27, 2024 inducement offer agreement with the Holder of the January 2023 Existing Warrants, the Holder exercised the January 2023 Existing Warrants for cash at a reduced exercise price of $ 1.6775 per share resulting in gross proceeds to the Company of approximately $ 4,194,000 (net proceeds of approximately $ 3,682,000 , after deducting placement agent fees and other offering expenses of $ 512,000 ).

In connection with such exercise, during the year ended December 31, 2024, the Company issued 2,500,000 shares of common stock upon the exercise of the January 2023 Existing Warrants.

On April 1, 2024, in connection with the issuance of the April 2024 Inducement Warrants and the placement agent warrants, the Company calculated the fair value of such warrants using the Black-Scholes option-pricing model, and the Company determined that the aggregate total fair value of the April 2024 Inducement Warrants and placement agent warrants amounted to $ 4,166,800 , which are considered offering costs and were netted against the net proceeds received by the warrant exercise under the guidance of ASU 2021-04.

The fair value of the January 2023 Existing Warrants on the modification date and the fair value of the April 2024 Inducement Warrants were estimated using the Black-Scholes option-pricing model with the following assumptions:

Exercise price $ 1.50 to $ 5.00

Term (years) 4.25

Expected stock price volatility 109.8 %

Risk-free rate of interest 4.18 % to 4.34 %

On January 7, 2025, the Company issued 3,750,000 common shares in connection with the exercise of the 3,750,000 April 2024 Inducement Warrants for cash proceeds of $ 5,625,000 .

On June 4, 2025, pursuant to a six-month marketing service agreement, the Company issued warrants to purchase up to 300,000 shares of the Company’s common stock at an exercise price of $ 1.00 per share to a consultant of the Company for investor relations services.

The warrants expire on June 4, 2027.

The grant date fair value of these warrants was $ 333,150 , which was recorded as a prepaid expense and was expensed as stock-based professional fees over the term of the marketing service agreement.

In connection with this warrant, during the year ended December 31, 2025, the Company recorded stock-based professional fees of $ 333,150 .

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

Exercise price $ 1.00

$ 1.50 to $ 5.00

Term (years) 2.0

Expected stock price volatility 129.68 %

Risk-free rate of interest 3.87 %

4.18 % to 4.34 %

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

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

A summary of warrant activity for the years ended December 31, 2025 and 2024 is as follows:

Warrants Weighted

3 unchanged sentences

Issued 3,875,000 1.52 — —

Expired ( 329,597 ) 49.08 — —

Exercised ( 2,555,675 ) 0.67 — —

5 unchanged sentences

Warrants exercisable as of December 31, 2025 1,740,752 $ 4.38 $ — 2.37

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

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

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

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

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

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

Concurrently with

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

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

Gross proceeds from

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

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

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

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

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

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

December Common Stock Warrants.

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

Common Shares

On January 8, 2024, the Company issued 55,675 common shares in connection with the exercise of 55,675 pre-funded warrants that were issued in connection with a securities purchase agreement dated September 13, 2023.

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

See Warrants section above.

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

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

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

333-272620), and a

prospectus supplement dated November 8, 2024.

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

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

Act of 1933, as amended.

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

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

Company may impose).

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

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

expenses in connection with the ATM Agreement.

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

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

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

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

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

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

On January 7, 2025, the Company issued 3,750,000 common shares in connection with the exercise of the 3,750,000 April 2024 Inducement Warrants for cash proceeds of $ 5,625,000 .

See Warrants section above.

On January 13, 2025, the Company entered into a Patent Application Acquisition Agreement with the Seller, whereby the Seller sold, conveyed, assigned and transferred to the Company all of Seller’s right, title, and interest in and to certain patent applications and associated rights, subject to the terms and conditions set forth in such agreement for a cash payment of $ 400,000 and the issuance of 450,000 shares of the Company’s common stock.

These common shares were valued at $ 850,500 , or $ 1.89 per share, on the measurement date based on quoted closing price of the Company’s common stock (see Note 4).

On November 8, 2024, the Company entered into the ATM Agreement with Wainwright under which the Company could offer and sell shares of its common stock having an aggregate sales price of up to $ 2,700,000 through Wainwright as the sales agent pursuant to the Company’s effective shelf registration statement on Form S-3 (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 Act of 1933, as amended.

Wainwright will use commercially reasonable efforts to sell shares of the Company’s common stock from time to time, based on instructions from the Company (including any price, time or size limits or other parameters or conditions the Company may impose).

The Company will pay Wainwright a commission equal to 3.0 % of the aggregate gross proceeds from the sales of shares of the Company’s common stock sold through Wainwright under the ATM Agreement and will also reimburse Wainwright for certain specified expenses in connection with the ATM Agreement.

On February 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.

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 $ 10,139,256 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, the Company issued 1,137,250 shares of its common stock for net proceeds of approximately $ 1,061,000 pursuant to the ATM Agreement.

During the year ended December 31, 2025, pursuant to the ATM Agreement, the Company issued an aggregate of 2,782,309 shares of its common stock for net proceeds of $ 4,118,865 .

On August 28, 2025, the Company issued 800,000 shares of common stock to the Company’s Chief Executive Officer as compensation under its equity incentive plan.

The total grant-date fair value of the awards was $ 968,000 , which was recognized as compensation expense in the consolidated statements of operations for the year ended December 31, 2025.

In connection with the issuance, the Company withheld 310,744 shares with a total fair value of $ 376,000 to satisfy employees’ minimum statutory tax withholding obligations.

As a result, the Company issued a net of 489,256 shares to the Chief Executive Officer.

The shares withheld for taxes are accounted for as a repurchase of shares and do not reduce the amount of compensation expense recognized.

The Company remitted the related cash obligation to taxing authorities during the period.

The Company’s policy is to allow net-share settlement of equity awards for tax withholding purposes.

Cash paid to tax authorities in connection with such share withholding arrangements is classified as a financing activity in the consolidated statement of cash flows, in accordance with ASC 718-20-45.

The following table summarizes share activity related to stock compensation during the year ended December 31, 2025:

Activity Number of

Shares granted (gross) 800,000

shares withheld for taxes ( 310,744 )

Net shares issued to employee 489,256

2018 Equity Incentive Plan

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

2018 Equity Incentive Plan (the “2018 Plan”)

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

The 2018 Plan became effective on May

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

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

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

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

On June 24, 2021, at the annual meeting

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

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

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

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

On January 11,

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

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

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

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

On January 6, 2025, the compensation

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

to 186,878 shares.

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

2018 Equity Incentive Plan (the “2018 Plan”) initially reserving 40,000 shares of the Company’s common stock for issuance thereunder.

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

The compensation committee of the board of directors increased the number of shares reserved pursuant to the 2018 Plan by 26,878 shares effective as of January 1, 2021, such that as of January 1, 2021, the Company had an aggregate of 66,878 shares of common stock reserved for issuance pursuant to the 2018 Plan.

On June 24, 2021, at the annual meeting of shareholders, shareholders of the Company approved an amendment to the 2018 Plan to further increase the number of shares reserved for issuance thereunder from 66,878 shares to 146,878 shares.

On February 2, 2022, the compensation committee of the board of directors further increased the number of shares reserved for issuance under the 2018 Plan from 146,878 shares to 156,878 shares.

On January 11, 2023, the compensation committee of the board of directors further increased the number of shares reserved for issuance under the 2018 Plan from 156,878 shares to 166,878 shares.

On January 4, 2024, the compensation committee of the board of directors further increased the number of shares reserved for issuance under the 2018 Plan from 166,878 shares to 176,878 shares.

On January 6, 2025, the compensation committee of the board of directors further increased the number of shares reserved for issuance under the 2018 plan from 176,878 shares to 186,878 shares.

As of December 31, 2025, there were 738 shares of Company common stock available for grant under the 2018 Plan.

2022 Equity Incentive Plan

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

2022 Omnibus Equity Incentive Plan (the “2022

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

The 2022 Plan became effective

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

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

Amended and Restated 2022 Omnibus Equity Incentive

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

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

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

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

shares (“2024 Increase”).

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

2022 Omnibus Equity Incentive Plan (the “2022 Plan”) initially reserving 96,000 shares of the Company’s common stock for issuance thereunder.

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

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

Amended and Restated 2022 Omnibus Equity Incentive Plan (the “Amended and Restated 2022 Plan”) which, among other things, increased the number of shares reserved under the plan by 495,317 shares, which Amended and Restated 2022 Plan was approved by stockholders on August 18, 2023.

On May 15, 2024, the Company’s compensation committee recommended, and the board of directors approved an increase to the number of shares of common stock reserved for issuance under the Amended and Restated 2022 Plan by 500,000 shares from 591,317 shares to 1,091,317 shares (“2024 Increase”).

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

As of December

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

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

and 2023 is as follows:

On May 9, 2025, the Company’s compensation committee recommended, and the board of directors approved an increase to the number of shares of common stock reserved for issuance under the Amended and Restated 2022 Plan by 2,000,000 shares from 1,091,317 shares to 3,091,317 shares (“2025 Increase”).

The 2025 Increase was approved by shareholders of the Company on August 5, 2025.

On August 27, 2025, the Company’s compensation committee granted 800,000 shares of restricted stock with a cost basis of $ 1.21 per share, to the Company’s Chief Executive Officer.

Such shares were fully vested on the grant date.

As of December 31, 2025, there were 1,201,317 shares of Company common stock available for grant under the Amended and Restated 2022 Plan.

Restricted Stock Awards

A summary of the Company’s restricted stock awards granted under the equity incentive plans during the years ended December 31, 2025 and 2024 is as follows:

Restricted Stock

Awards Weighted

Average Grant

1 unchanged sentence

Nonvested on December 31, 2023 1,693 $ 3.16

Vested ( 1,693 ) ( 3.16 )

Nonvested on December 31, 2024 — —

Shares granted 800,000 1.21

Vested ( 800,000 ) ( 1.21 )

Nonvested on December 31, 2025 — $ —

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

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

with restricted stock awards.

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

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

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

December 31, 2023.

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

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

an exercise price of $ 1.36 per share.

During the years ended December 31, 2025 and 2024, the Company recognized stock-based compensation of $ 968,000 and $ 2,543 , respectively, in connection with restricted stock awards.

Stock Options

On January 5, 2024, pursuant to and subject to the available number of shares reserved under the Amended and Restated 2022 Plan, the Company issued options to the Company’s employees and directors to purchase up to 450,000 shares of the Company’s common stock at an exercise price of $ 1.36 per share.

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

The aggregate grant date fair value

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

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

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

an exercise price of $ 0.7548 per share.

The aggregate grant date fair value of these options was $ 512,685 , which was recorded as stock-based compensation during the year ended December 31, 2024.

On August 19, 2024, pursuant to and subject to the available number of shares reserved under the Amended and Restated 2022 Plan, the Company issued options to the Company’s employees and directors to purchase up to 473,000 shares of the Company’s common stock at an exercise price of $ 0.7548 per share.

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

The aggregate

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

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

The aggregate grant date fair value of these options was $ 281,388 , which was recorded as stock-based compensation during the year ended December 31, 2024.

On January 14, 2025, pursuant to and subject to the available number of shares reserved under the 2018 Plan, the Company issued options to the Company’s Chief Executive Officer to purchase up to 93,000 shares of the Company’s common stock at an exercise price of $ 1.55 per share.

Additionally, on January 14, 2025, pursuant to and subject to the available number of shares reserved under the Amended and Restated 2022 Plan, the Company issued options to the Company’s Chief Executive Officer and an employee to purchase up to 77,000 shares of the Company’s common stock at an exercise price of $ 1.55 per share.

The options vested immediately in full upon grant and expire on January 14, 2035.

The aggregate grant date fair value of these options was $ 219,929 , which was recorded as stock-based compensation in January 2025.

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

Exercise price $ 1.55 $0.7548 to $ 1.36

2 unchanged sentences

Risk-free rate of interest 4.59 % 3.75 % to 4.02 %

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

A summary of option activity under the Company’s equity incentive plans for the years ended December 31, 2025 and 2024 is presented below:

Shares Weighted

8 unchanged sentences

Options vested and exercisable as of December 31, 2025 1,260,362 $ 4.34 $ 111,250 8.2

A summary of stock options outstanding at December

31, 2024 by price range is as follows:

A summary of stock options outstanding as of December 31, 2025 by price range is as follows:

Options outstanding and exercisable

1 unchanged sentence

Shares Weighted

(in years) Weighted

1,013,000 $ 9.3 1.19

Average Remaining

Life (in years) Weighted

Average Exercise

Up to $2.59 1,183,000 8.3 $ 1.24

$14.75 to $76.25 62,562 5.7 $ 32.95

Above $76.25 14,800 4.0 $ 131.50

14,800 $ 5.0 131.50

Options outstanding and exercisable as of December 31, 2025 1,260,362 8.2 $ 4.34

1,090,362 $ 9.1 4.78

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

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

expenses in the consolidated statements of operations and comprehensive loss.

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

All stock compensation associated with the amortization of employee stock option expense was recorded as a component of general and administrative expenses in the consolidated statements of operations and comprehensive loss.

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

Stock Based Compensation

Stock based compensation expense for the years

ended December 31, 2024 and 2023 was as follows:

Stock based compensation expense for the years ended December 31, 2025 and 2024 was as follows:

Employee stock option awards $ 219,929 $ 794,073

Employee restricted stock award 968,000 -

Non-employee restricted stock awards - 2,543

Non-employee stock warrant awards (a)

(a) Represents accretion of stock based compensation expense for non-employee stock warrants

issued in 2021.

the years ended December 31, 2024 and 2023, the amount of stock-based compensation expense included within research and development and

general and administrative expenses was as follows:

Non-employee stock warrant awards 333,150 7,661

$ 1,521,079 $ 804,277

For the years ended December 31, 2025 and 2024, the amount of stock-based compensation expense included within research and development and general and administrative expenses was as follows:

Research and development $ - $ 7,661

General and administrative 1,521,079 796,616

6 – Commitments and Contingencies

November 2023, the Company leased office space for a two-year term.

$ 1,521,079 $ 804,277

NOTE 8 – Commitments and Contingencies

Effective November 2023, the Company leased office space for a two-year term.

The Company’s office lease contained a renewal option.

Company evaluated several factors in assessing whether there is reasonable certainty that the Company will exercise its contractual renewal

option concluding that it is not reasonably certain to exercise such option.

As it is not reasonably certain to be exercised, the Company

excluded the renewal term in determining the lease term used in calculating the right-of-use asset and lease liability.

In December 2024,

the landlord notified the Company that it will be closing its operations at the Company’s location and offering to relocate the

Company to a new location.

The Company agreed to relocate and accordingly, on December 9, 2024, the Company and the landlord entered

into a new lease agreement (the “December 2024 Lease”).

Pursuant to the December 2024 Lease, effective December 20, 2024,

the Company leased office space for a term of 14 months, expiring on February 28, 2026.

Pursuant to such lease agreement, the Company

is required to pay a monthly base rent of $ 2,732 from March 1, 2025 through February 2026.

In connection with December 2024 Lease, in

December 2024, the Company increased right-of-use assets and lease liabilities by $ 31,075 and removed all remaining right-of-use assets

and lease liabilities associated with the November 2023 lease.

table below presents certain information related to the Company’s lease costs, which are included in general and administrative

expenses in the accompanying consolidated statements of operation and comprehensive loss:

The Company evaluated several factors in assessing whether there is reasonable certainty that the Company will exercise its contractual renewal option concluding that it is not reasonably certain to exercise such option.

As it is not reasonably certain to be exercised, the Company excluded the renewal term in determining the lease term used in calculating the ROU asset and lease liability.

In December 2024, the landlord notified the Company that it will be closing its operations at the Company’s location and offered to relocate the Company to a new location.

The Company agreed to relocate and accordingly, on December 9, 2024, the Company and the landlord entered into a new lease agreement (the “December 2024 Lease”).

Pursuant to the December 2024 Lease, effective December 20, 2024, the Company leased office space for a term of 14 months, expiring on February 28, 2026.

Pursuant to the December 2024 Lease, the Company is required to pay a monthly base rent of $ 2,732 from March 1, 2025 through February 2026.

In connection with December 2024 Lease, in December 2024, the Company increased ROU assets and lease liabilities by $ 31,075 and removed all remaining ROU assets and lease liabilities associated with the November 2023 lease.

The table below presents certain information related to the Company’s lease costs, which are included in general and administrative expenses in the accompanying consolidated statements of operation and comprehensive loss:

Operating lease expense $ 29,089 $ 34,000

1 unchanged sentence

Total lease cost $ 53,799 $ 53,135

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

asset for operating leases were recorded in the consolidated balance sheets as follows:

Right-of-use asset for operating leases were recorded in the consolidated balance sheets as follows:

2025 December 31,

Office lease right-of-use asset $ 31,075 $ 31,075

1 unchanged sentence

Total right-of-use asset, net $ 4,652 $ 31,075

lease liability for operating leases were recorded in the consolidated balance sheets as follows:

Operating lease liability for operating leases were recorded in the consolidated balance sheets as follows:

2025 December 31,

Current portion of operating lease liability $ 5,678 $ 28,366

1 unchanged sentence

Total operating lease liability $ 5,678 $ 31,075

cash flow information related to the Company’s leases for the year ended December 31, 2024 were as follows:

Supplemental cash flow information related to the Company’s leases for the year ended December 31, 2025 were as follows:

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows for operating leases $ 25,397

weighted-average remaining lease term for the operating lease is 1.2 years and the weighted-average incremental borrowing rate is 10 %

as of December 31, 2024 and 2023.

of December 31, 2024, future annual minimum lease payments required under operating leases are as follows:

The weighted-average remaining lease term for the operating lease is 0.17 years and the weighted-average incremental borrowing rate is 10 % as of December 31, 2025 and 2024.

As of December 31, 2025, future annual minimum lease payments required under operating leases are as follows:

Total minimum lease payments 5,750

1 unchanged sentence

Present value of future minimum lease payments $ 5,678

7 – Income Taxes

table below presents the components of the provision for taxes:

Company’s provision is primarily driven by the full valuation allowance in 2024 and 2023.

NOTE 9 – Income Taxes

The table below presents the components of the provision for taxes:

For the years ended December 31, 2025 and 2024, the components of loss before income taxes were as follows:

Domestic $ ( 12,401,413 ) $ ( 8,110,743 )

Foreign (Australia) ( 67,889 ) ( 77,557 )

Total loss before income taxes $ ( 12,469,302 ) $ ( 8,188,300 )

The Company’s provision is primarily driven by the full valuation allowance in 2025 and 2024.

As of December 31,

(As Restated)

Federal $ - $ -

Total current provision

2 unchanged sentences

Total provision for income taxes $ - $ -

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

December 31, 2024 and 2023, the tax effects of the temporary differences and carryforwards that give rise to deferred tax assets consist

of the following:

The following table reconciles the U.S.

federal statutory income tax rate to the Company’s effective income tax rate for the year ended December 31, 2025:

December 31, 2025

Amount Percent

Statutory federal income tax benefit $ 2,618,553 21.0 %

State taxes, net of federal benefit - 0.0 %

Permanent items ( 210,698 ) ( 1.7 )%

Foreign rate differential 6,796 0.1 %

Change in valuation allowance ( 2,414,651 ) ( 19.4 )%

Total $ - 0.0 %

As previously disclosed for the year ended December 31, 2024, prior to the adoption of ASU 2023-09, the effective income tax rate differed from the federal statutory income tax rate as follows:

Statutory federal income tax benefit 21.0 %

State taxes, net of federal benefit 9.9 %

Impact of non-U.S.

earnings 0.0 %

Permanent items 0.0 %

Credits 0.0 %

Equity compensation 0.0 %

Foreign rate differential 0.1 %

Previous tax year adjustment ( 0.5 )%

Change in valuation allowance ( 30.5 )%

At December 31, 2025 and 2024, the tax effects of the temporary differences and carryforwards that give rise to deferred tax assets consist of the following:

As of December 31,

Deferred tax assets

(As Restated)

Net operating loss carryforwards $ 18,646,669 $ 13,388,457

1 unchanged sentence

Equity based compensation 733,745 681,546

Licenses acquired

Licenses and other technology acquired 605,254 254,947

Accruals and other temporary differences 273,254 302,231

1 unchanged sentence

Less valuation allowance ( 21,257,217 ) ( 17,671,982 )

( 17,671,982 )

( 15,193,712 )

Deferred tax assets, net of allowance $ - $ -

reconciliation of the statutory income tax rates and the Company’s effective tax rate for the years ended December 31, 2024 and

2023 is as follows:

Statutory federal income tax rate

State taxes, net of federal benefit

Impact of non-U.S.

Permanent items

Equity compensation

Foreign rate differential

Previous tax year adjustment

Change in valuation allowance

Company has determined, based upon available evidence, that it is more likely than not that the net deferred tax assets will not be realized

and, accordingly, has provided a full valuation allowance against its net deferred tax assets.

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

As of December 31, 2024 and 2023, the Company

has Federal net operating loss carryforwards of approximately $ 42.0 million and $ 36.8 million, respectively, available to reduce future

taxable income, if any, for Federal tax purposes.

Approximately $ 1.5 million of Federal net operating losses can be carried forward to

future tax years and expire in 2037.

The Federal net operating loss generated during the years ended after December 31, 2017 of approximately

$ 40.5 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.

In ad dition,

the Company had approximately $ 0.6 million and $ 0.5 million of net operating losses at its subsidiary located in Australia, as of December

31, 2024 and 2023, respectively.

required by the 2017 Tax Cuts and Jobs Act and effective in 2022, the deferred tax asset as of December 31, 2024 and 2023, included $ 3.0

million and $ 2.3 million related to the mandatory capitalization of research and development expenses, respectively.

August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law.

The IRA increased and modified the qualified

small business (“QSB”) payroll tax credit for increasing research activities.

Provision 13902 of the IRA of 2022 increased

the maximum amount of payroll tax research credit that a QSB can elect to apply against payroll tax liability from $ 250,000 to $ 500,000

for tax years beginning after December 31, 2022.

This payroll tax credit is a creditable tax credit against the employer’s portion

of social security taxes, and the IRA also modified IRC 3111(f) to allow a portion of the payroll tax credit to apply against the employer’s

portion of Medicare tax.

For the year ended December 31, 2023, the Company recorded $ 0.1 million of other income for the payroll tax

credit and $ 0.2 million is still outstanding.

The remaining research credit carryforward of $ 0.2 million will be utilized in the future

as an offset against payroll taxes at the time the payroll tax is incurred.

utilization of the Company’s net operating loss carryforwards and research tax credit carryovers could be subject to annual limitations

under Section 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), and similar state tax provisions,

due to ownership change limitations that may have occurred previously or that could occur in the future.

These ownership changes limit

the amount of net operating loss carryforwards and other deferred tax assets that can be utilized to offset future taxable income and

tax, respectively.

In general, an ownership change, as defined by Section 382 and 383 of the Code, results from transactions increasing

ownership of certain stockholders or public groups in the stock of the corporation by more than 50 percent points over a three-year period.

The Company has 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, 2025 and 2024, the Company has Federal net operating loss carryforwards of approximately $ 58,700,000 and $ 42,000,000 , respectively, available to reduce future taxable income, if any, for Federal tax purposes.

Approximately $ 1,500,000 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 $ 57,200,000 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.

In addition, the Company had approximately $ 683,000 and $ 613,000 of net operating losses at its subsidiary located in Australia, as of December 31, 2025 and 2024, respectively.

On July 4, 2025, the OBBBA was enacted into law by the United States Congress, which included among other provisions the restoration of immediate expensing of domestic research and experimental (“R&E”) expenditures under Section 174.

Pursuant to the OBBBA’s transition rules, the Company elected to expense all unamortized domestic R&E costs previously capitalized between 2022 and 2024.

The Company continues to evaluate various elections available to the Company under OBBBA related to IRC Section 174 capitalized R&D costs.

The effect of expensing of all unamortized domestic R&E was to decrease the Company’s deferred tax assets and decrease the related valuation allowance.

Because of the Company’s loss and full valuation allowance, there was no impact on the Company’s 2025 financial statements related to IRC Section 174 capitalized R&D costs the 2025 year.

As required by the 2017 Tax Cuts and Jobs Act, effective in 2022, and the OBBBA, deferred tax asset as of December 31, 2025 and 2024 still includes the mandatory capitalization of foreign research and development expenses.

On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law.

The IRA increased and modified the qualified small business (“QSB”) payroll tax credit for increasing research activities.

Provision 13902 of the IRA of 2022 increased the maximum amount of payroll tax research credit that a QSB can elect to apply against payroll tax liability from $ 250,000 to $ 500,000 for tax years beginning after December 31, 2022.

This payroll tax credit is a creditable tax credit against the employer’s portion of social security taxes, and the IRA also modified IRC 3111(f) to allow a portion of the payroll tax credit to apply against the employer’s portion of Medicare tax.

For the year ended December 31, 2023, the Company recorded approximately $ 47,000 of other income for the payroll tax credit and $ 200,000 is still outstanding.

The remaining research credit carryforward of $ 0.2 million will be utilized in the future as an offset against payroll taxes at the time the payroll tax is incurred.

The utilization of the Company’s net operating loss carryforwards and research tax credit carryovers could be subject to annual limitations under Section 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), and similar state tax provisions, due to ownership change limitations that may have occurred previously or that could occur in the future.

These ownership changes limit the amount of net operating loss carryforwards and other deferred tax assets that can be utilized to offset future taxable income and tax, respectively.

In general, an ownership change, as defined by Section 382 and 383 of the Code, results from transactions increasing ownership of certain stockholders or public groups in the stock of the corporation by more than 50 percent points over a three-year period.

The Company has not conducted an analysis of an ownership change under Section 382 of the Code.

To the extent that a study is completed

and an ownership change is deemed to occur, the Company’s net operating losses and tax credits could be limited.

December 31, 2024 and 2023, the Company did not have any significant uncertain tax positions.

The Company will recognize interest and

penalties related to uncertain tax positions, as applicable, in income tax expense.

As of December 31, 2024 and 2023, the Company had

no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s statements

of operations.

To the extent that a study is completed and an ownership change is deemed to occur, the Company’s net operating losses and tax credits could be limited.

At December 31, 2025 and 2024, the Company did not have any significant uncertain tax positions.

The Company will recognize interest and penalties related to uncertain tax positions, as applicable, in income tax expense.

As of December 31, 2025 and 2024, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s statements of operations.

The Company does not anticipate a material change to unrecognized tax benefits in the next twelve months.

of the Company’s tax years will remain open for examination by the Federal and state tax authorities from the date of utilization

of the net operating loss.

asserts that its foreign earnings are permanently reinvested, and therefore, have not provided deferred taxes on foreign cash.

Additionally,

no additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax, or

any additional outside basis differences inherent in our foreign subsidiaries, as these amounts continue to be indefinitely reinvested

in foreign operations.

The Company will continue to monitor the foreign cash position as they maintain the assertion that foreign earnings

are permanently reinvested.

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

NOTE 8 – Restatement of Previously Issued

Audited and Unaudited Financial Statements

During the preparation of the Company’s

2024 audited consolidated financial statements and notes thereto, the Company concluded that there were material research and development

expenses and related balance sheet errors in its previously issued audited consolidated financial statements as of and for the year ended

December 31, 2023, 2022 and 2021, and there were material research and development expenses and related balance sheet errors in its previously

issued unaudited condensed consolidated financial statements as of and for each of the quarterly and year to date periods ended March

31, 2024 and 2023, June 30, 2024 and 2023, and September 30, 2024 and 2023, relating to the recording of prepaid expenses, and the timing

of recognition of research and development expenses.

The Company noted the following items were improperly recorded as of December 31, 2023, 2022 and 2021, and for the year ended December 31, 2023

As of December 31, 2023, 2022 and

2021, the Company’s consolidated balance sheets did not reflect prepa id

expenses and other current assets related to advance payments made in 2022 and 2021 for clinical studies.

These errors in the accounting

for prepaid expenses and other current assets and research and development expenses resulted in an understatement of prepaid assets and

other current assets of $ 722,765 , $ 983,497 , and $ 972,567 as of December 31, 2023, 2022 and 2021, respectively, an understatement of research

and development expenses, operating expenses and net loss of $ 260,732 for the year ended December 31, 2023, and an overstatement of research

and development expenses, operating expenses and net loss of $ 10,929 and $ 972,567 for the years ended December 31, 2022 and 2021, respectively.

The December 31, 2022 understatement of

prepaid expenses and other current assets of $ 983,497 and the overstatement of research and development expenses of $ 10,929 and

$ 972,567 during the years ended December 31, 2022 and 2021, respectively, which aggregated to $ 983,497 , was corrected by increasing

prepaid expenses and other current assets and decreasing accumulated deficit as of December 31, 2022 by $ 983,497 , as reflected in

the consolidated statements of changes in stockholders’ equity as of December 31, 2022.

2) The Company noted the following items were improperly recorded

as of March 31, 2024 and 2023, and during the three months ended March 31, 2024 and 2023:

of March 31, 2024, prepaid expenses and other current assets were understated by $ 617,019 and for the three months ended March 31, 2024,

research and development expenses were understated by $ 105,746 .

of March 31, 2023, prepaid expenses and other current assets were understated by $ 931,456 and for the three months ended March 31, 2023,

research and development expenses were understated by $ 52,041 .

3) The Company noted the following items were improperly recorded

as of June 30, 2024 and 2023, and during the three and six months ended June 30, 2024 and 2023:

of June 30, 2024, prepaid expenses and other current assets were understated by $ 539,329 and for the three and six months ended June

30, 2024, research and development expenses were understated by $ 77,690 and $ 183,436 , respectively.

of June 30, 2023, prepaid expenses and other current assets were understated by $ 908,416 and for the three and six months ended June

30, 2023, research and development expenses were understated by $ 23,040 and $ 75,081 , respectively.

4) The Company noted the following items were improperly recorded

as of September 30, 2024 and 2023, and during the three and nine months ended September 30, 2024 and 2023:

of September 30, 2024, prepaid expenses and other current assets were understated by $ 442,365 and for the three and nine months ended

September 30, 2024, research and development expenses were understated by $ 96,964 and $ 280,400 , respectively.

of September 30, 2023, prepaid expenses and other current assets were understated by $ 817,340 and for the three and nine months ended

September 30, 2023, research and development expenses were understated by $ 91,076 and $ 166,157 , respectively.

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

For all periods presented, the errors in the accounting

for research and development expenses resulted in an understatement of prepaid assets and other current assets and an understatement of

research and development expenses, operating expenses and net losses for the periods presented, respectively.

As a result of such errors, the Company concluded

that the previously issued 2023 consolidated financial statements and the previously issued interim periods during 2024 and 2023 were

materially misstated and has restated herein its previously issued audited consolidated financial statements for the year ended December

31, 2023, and its unaudited condensed consolidated financial statements for each interim period within the fiscal years ended December

31, 2024 and 2023.

The restatement corrections impact certain components within operating cash flows of the respective consolidated statements

of cash flows.

Total operating cash flows, investing activities, financing activities, and cash and cash equivalents are unchanged as

a result of the restatements.

The following tables present the amounts previously

reported, the restatement impact and the amount as restated.

The 2024 and 2023 quarterly restatements will be effective with the filing

of our future 2025 unaudited interim condensed financial statement filings in Quarterly Reports on Form 10-Q.

The values “as reported” on the following

respective consolidated financial statements were derived from:

1) Our Annual Report on Form 10-K for the year ended December 31, 2023 filed on March 28, 2024;

2) Our Quarterly Report on Form 10-Q for the period ended March 31, 2024 filed on May 14, 2024;

3) Our Quarterly Report on Form 10-Q for the period ended June 30, 2024 filed on August 9, 2024;

4) Our Quarterly Report on Form 10-Q for the period ended September 30, 2024 filed on November 12, 2024;

5) Our Quarterly Report on Form 10-Q for the period ended March 31, 2023 filed on May 15, 2023;

6) Our Quarterly Report on Form 10-Q for the period ended June 30, 2023 filed on August 11, 2023;

7) Our Quarterly Report on Form 10-Q for the period ended September 30, 2023 filed on November 13, 2023.

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Reconciliation of the Original and Restated

Consolidated Balance Sheet

As of December 31, 2022

As Previously

CURRENT ASSETS:

Prepaid expenses and other current assets

Total Current Assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

STOCKHOLDERS’ EQUITY:

Accumulated deficit

$ ( 45,099,116 )

$ ( 44,115,619 )

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

As of December 31, 2023

As Previously

CURRENT ASSETS:

Prepaid expenses and other current assets

Total Current Assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

STOCKHOLDERS’ EQUITY:

Accumulated deficit

$ ( 52,944,506 )

$ ( 52,221,741 )

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

Statement of Operations and Comprehensive Loss

For the Year Ended December 31, 2023

Research and development expense

Total operating expenses

LOSS FROM OPERATIONS

NET LOSS PER COMMON SHARE:

Basic and diluted

COMPREHENSIVE LOSS:

Total comprehensive loss

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Reconciliation of the Original and Restated Consolidated Statements

of Stockholders’ Equity

For the Year Ended December 31, 2023

Accunulated Deficit ACTIVITIES:

Changes in operating assets and liabilities:

Prepaid expenses

NET CASH USED IN OPERATING ACTIVITIES

Reconciliation of the Original and Restated Consolidated Statements

of Cash Flows

For the Year Ended December 31, 2023

CASH FLOWS FROM OPERATING ACTIVITIES:

Changes in operating assets and liabilities:

Prepaid expenses

NET CASH USED IN OPERATING ACTIVITIES

Reconciliation of the Original and Restated Consolidated Balance

As of March 31, 2024

CURRENT ASSETS:

Prepaid expenses and other current assets

Total Current Assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

STOCKHOLDERS’ EQUITY:

Accumulated deficit

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Reconciliation of the Original and Restated Consolidated Statement

of Operations and Comprehensive Loss

For the Three Months Ended

March 31, 2024

OPERATING COSTS AND EXPENSES:

Research and development expense

General and administrative expenses

Total operating expenses

LOSS FROM OPERATIONS

NET LOSS PER COMMON SHARE:

Basic and diluted

COMPREHENSIVE LOSS:

Total comprehensive loss

Reconciliation of the Original and Restated Consolidated Statements

of Cash Flows

For the Three Months Ended

March 31, 2024

CASH FLOWS FROM OPERATING ACTIVITIES:

Prepaid expenses

NET CASH USED IN OPERATING ACTIVITIES

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Reconciliation of the Original and Restated Consolidated Balance

As of June 30, 2024

CURRENT ASSETS:

Prepaid expenses and other current assets

Total Current Assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

STOCKHOLDERS’ EQUITY:

Accumulated deficit

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

Reconciliation of the Original and Restated Consolidated Statement

of Operations and Comprehensive Loss

For the Three Months Ended

June 30, 2024

For the Six Months Ended

June 30, 2024

OPERATING COSTS AND EXPENSES:

Research and development expense

Total operating expenses

LOSS FROM OPERATIONS

NET LOSS PER COMMON SHARE:

Basic and diluted

COMPREHENSIVE LOSS:

Total comprehensive loss

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Reconciliation of the Original and Restated Consolidated Statements

of Cash Flows

For the Six Months Ended

June 30, 2024

As Previously

CASH FLOWS FROM OPERATING ACTIVITIES:

Changes in operating assets and liabilities:

Prepaid expenses

NET CASH USED IN OPERATING ACTIVITIES

Reconciliation of the Original and Restated Consolidated Balance

As of September 30, 2024

As Previously

CURRENT ASSETS:

Prepaid expenses and other current assets

Total Current Assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

STOCKHOLDERS’ EQUITY:

Accumulated deficit

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Reconciliation of the Original and Restated Consolidated Statement

of Operations and Comprehensive Los

the Three Months Ended

September 30, 2024

the Nine Months Ended

September 30, 2024

COSTS AND EXPENSES:

and development expense

operating expenses

FROM OPERATIONS

( 2,132,253 )

( 2,229,217 )

( 5,832,250 )

( 6,112,650 )

$ ( 2,132,053 )

$ ( 2,229,017 )

$ ( 5,805,310 )

$ ( 280,400 )

$ ( 6,085,710 )

NET LOSS PER COMMON SHARE:

COMPREHENSIVE

comprehensive loss

$ ( 2,129,563 )

$ ( 2,226,527 )

$ ( 5,806,954 )

$ ( 280,400 )

$ ( 6,087,354 )

Reconciliation of the Original and Restated Consolidated Statements

of Cash Flows

the Nine Months Ended

September 30, 2024

CASH FLOWS FROM OPERATING ACTIVITIES:

$ ( 5,805,310 )

$ ( 280,400 )

$ ( 6,085,710 )

Changes in operating assets

and liabilities:

NET CASH USED IN OPERATING

( 4,950,245 )

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Reconciliation of the Original and Restated Consolidated Balance

of March 31, 2023

CURRENT ASSETS:

expenses and other current assets

Current Assets

AND STOCKHOLDERS’ EQUITY

STOCKHOLDERS’

$ ( 47,282,623 )

$ ( 46,351,167 )

Stockholders’ Equity

Liabilities and Stockholders’ Equity

Reconciliation of the Original and Restated Consolidated Statement

of Operations and Comprehensive Loss

the Three Months Ended

March 31, 2023

OPERATING COSTS AND EXPENSES:

and development expense

operating expenses

FROM OPERATIONS

( 2,192,817 )

( 2,244,858 )

$ ( 2,183,507 )

$ ( 2,235,548 )

NET LOSS PER COMMON SHARE:

COMPREHENSIVE

comprehensive loss

$ ( 2,178,137 )

$ ( 2,230,178 )

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Reconciliation of the Original and Restated Consolidated Statements

of Cash Flows

the Three Months Ended

March 31, 2023

CASH FLOWS FROM OPERATING ACTIVITIES:

$ ( 2,183,507 )

$ ( 2,235,548 )

in operating assets and liabilities:

CASH USED IN OPERATING ACTIVITIES

( 2,289,418 )

Reconciliation of the Original and Restated Consolidated Balance

As of June 30, 2023

As Previously

CURRENT ASSETS:

Prepaid expenses and other current assets

Total Current Assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

STOCKHOLDERS’ EQUITY:

Accumulated deficit

$ ( 49,155,654 )

$ ( 48,247,238 )

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Reconciliation of the Original and Restated Consolidated Statement

of Operations and Comprehensive Loss

the Three Months Ended

June 30, 2023

the Six Months Ended

June 30, 2023

COSTS AND EXPENSES:

and development expense

operating expenses

FROM OPERATIONS

( 1,708,629 )

( 1,731,669 )

( 3,901,446 )

( 3,976,527 )

$ ( 1,873,031 )

$ ( 1,896,071 )

$ ( 4,056,538 )

$ ( 4,131,619 )

NET LOSS PER COMMON SHARE:

COMPREHENSIVE

$ ( 1,873,031 )

$ ( 1,896,071 )

$ ( 4,056,538 )

$ ( 4,131,619 )

comprehensive loss

$ ( 1,924,119 )

$ ( 1,947,159 )

$ ( 4,102,256 )

$ ( 4,177,337 )

Reconciliation of the Original and Restated Consolidated Statements

of Cash Flows

the Six Months Ended

June 30, 2023

CASH FLOWS FROM OPERATING ACTIVITIES:

$ ( 4,056,538 )

$ ( 4,131,619 )

CASH USED IN OPERATING ACTIVITIES

$ ( 3,739,115 )

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

Reconciliation of the Original and Restated Consolidated Balance

As of September 30, 2023

As Previously

CURRENT ASSETS:

Prepaid expenses and other current assets

Total Current Assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

STOCKHOLDERS’ EQUITY:

$ ( 51,242,237 )

$ ( 50,424,897 )

Stockholders’ Equity

Liabilities and Stockholders’ Equity

Reconciliation of the Original and Restated Consolidated Statement

of Operations and Comprehensive Loss

the Three Months Ended

September 30, 2023

the Nine Months Ended

September 30, 2023

COSTS AND EXPENSES:

and development expense

operating expenses

FROM OPERATIONS

( 2,092,980 )

( 2,184,056 )

( 5,994,426 )

( 6,160,583 )

$ ( 2,086,583 )

$ ( 2,177,659 )

$ ( 6,143,121 )

$ ( 166,157 )

$ ( 6,309,278 )

NET LOSS PER COMMON SHARE:

COMPREHENSIVE

comprehensive loss

$ ( 2,040,122 )

$ ( 2,131,198 )

$ ( 6,142,378 )

$ ( 166,157 )

$ ( 6,308,535 )

Reconciliation of the Original and Restated Consolidated Statements

of Cash Flows

For the Nine Months Ended

September 30, 2023

As Previously

CASH FLOWS FROM OPERATING ACTIVITIES:

$ ( 6,143,121 )

$ ( 166,157 )

$ ( 6,309,278 )

Prepaid expenses

NET CASH USED IN OPERATING ACTIVITIES

( 5,375,695 )

HOTH THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 and 2023

All of the Company’s tax years will remain open for examination by the Federal and state tax authorities from the date of utilization of the net operating loss.

Management asserts that its foreign earnings are permanently reinvested, and therefore, have not provided deferred taxes on foreign cash.

Additionally, no additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax, or any additional outside basis differences inherent in our foreign subsidiaries, as these amounts continue to be indefinitely reinvested in foreign operations.

The Company will continue to monitor the foreign cash position as they maintain the assertion that foreign earnings are permanently reinvested.

NOTE 10 – Subsequent Events

The Company has evaluated subsequent events and

transactions that occurred up to the date the consolidated financial statements were issued.

Based upon this review, except for as noted

below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the consolidated financial

On January 6, 2025, the compensation committee

of the board of directors further increased the number of shares reserved for issuance under the 2018 Plan from 176,878 shares to 186,878

On January 7, 2025, the Company issued 3,750,000

common shares in connection with the exercise of the 3,750,000 April 2024 Inducement Warrants for cash proceeds of $ 5,625,000 .

On January 7, 2025 through March 5, 2025, pursuant

to the ATM Agreement (See Note 5), the Company issued an aggregate of 927,968 shares of its common stock for net proceeds of $ 1,470,435 .

On January 13, 2025, the Company entered into

a Patent Application Acquisition Agreement with Med30, LLC (the “Seller”), whereby the Seller sold, conveyed, assigned and

transferred to the Company all of Seller’s right, title, and interest in and to certain patent applications and associated rights,

subject to the terms and conditions set forth in such agreement for a cash payment of $ 400,000 and the issuance of 450,000 shares of the

Company’s common stock.

On January 14, 2025, pursuant to and subject to

the available number of shares reserved under the 2018 Plan, the Company issued options to the Company’s Chief Executive Officer

to purchase up to 93,000 shares of the Company’s common stock at an exercise price of $ 1.55 per share.

Additionally, on January

14, 2025, pursuant to and subject to the available number of shares reserved under the 2022 Plan, the Company issued options to the Company’s

Chief Executive Officer and an employee to purchase up to 77,000 shares of the Company’s common stock at an exercise price of $ 1.55

The options vested immediately in full upon grant and expire on January 14, 2035.

The aggregate grant date fair value of these

options was $ 219,283 , which was recorded as stock-based compensation in January 2025.

December 23, 2024, the Company provided notice to Isoprene Pharmaceutical, Inc.

(“Isoprene”) of its intent to terminate the

exclusive license agreement (the “Isoprene Agreement”) by and between the Company and Isoprene dated July 2, 2021.

Agreement terminated on March 23, 2025.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE

Effective January 1, 2026, the Company entered into a second amendment to its lease agreement.

Pursuant to the second amendment to the lease agreement, the Company renewed its lease for a one-year term expiring om December 31, 2026.

On February 4, 2026, the Company liquidated all crypto currency holdings.

On February 10, 2026 through March 26, 2026, pursuant to the ATM Agreement (See Note 7), the Company issued an aggregate of 756,187 shares of its common stock for net proceeds of $ 706,484 .

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

AND FINANCIAL DISCLOSURE

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data