Rocket One Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Hoth Therapeutics, Inc. and Subsidiaries Consolidated Financial Statements TABLE OF CONTENTS Page No. Consolidated Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB ID: 100) F- 2 Consolidated Balance Sheets as of December 2025 and 2024 F- 4 Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2025 and 2024 F- 5 Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2025 and 2024 F- 6 Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024 F- 7 Notes to Consolidated Financial Statements F- 8 F- 1 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, 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 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. 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. F- 2 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 PCAOB ID No. 100 F- 3 HOTH THERAPEUTICS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, December 31, 2025 2024 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 6,247,467 $ 7,038,923 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 Investment in joint ventures at fair value 36,819 36,819 Total Non-Current Assets 740,891 67,894 Total Assets $ 7,603,444 $ 7,712,765 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $ 823,674 $ 412,071 Accrued expenses 623,323 390,760 Operating lease liability, current portion 5,678 28,366 Total Current Liabilities 1,452,675 831,197 LONG-TERM LIABILITIES: Operating lease liability, less current portion - 2,709 Total Long-Term Liabilities - 2,709 Total Liabilities 1,452,675 833,906 Commitments and Contingencies (Note 6) STOCKHOLDERS’ EQUITY: Preferred stock, $ 0.0001 par value, 10,000,000 shares authorized; 3,000,000 shares undesignated; 0 shares issued and outstanding as of December 31, 2025 and 2024 - - Series A Convertible Preferred Stock, $ 0.0001 par value; 5,000,000 shares designated; 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 as of December 31, 2025 and 2024 - - Common stock, $ 0.0001 par value; 50,000,000 shares authorized; 15,514,312 and 8,042,747 shares issued and outstanding as of December 31, 2025 and 2024, respectively 1,551 804 Additional paid-in capital 79,017,730 67,279,033 Accumulated deficit ( 72,879,343 ) ( 60,410,041 ) Accumulated other comprehensive income 10,831 9,063 Total Stockholders’ Equity 6,150,769 6,878,859 Total Liabilities and Stockholders’ Equity $ 7,603,444 $ 7,712,765 The accompanying notes are an integral part of these consolidated financial statements. F- 4 HOTH THERAPEUTICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS For the Year Ended December 31, 2025 2024 NET REVENUES $ - $ - OPERATING COSTS AND EXPENSES: Research and development expenses 5,946,360 3,249,096 General and administrative expenses 6,414,989 4,966,336 Total operating expenses 12,361,349 8,215,432 LOSS FROM OPERATIONS ( 12,361,349 ) ( 8,215,432 ) 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 (expenses) income, net ( 107,953 ) 27,132 NET LOSS $ ( 12,469,302 ) $ ( 8,188,300 ) NET LOSS PER COMMON SHARE: Basic and diluted $ ( 0.90 ) $ ( 1.28 ) WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: Basic and diluted 13,805,813 6,375,161 COMPREHENSIVE LOSS: 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. F- 5 HOTH THERAPEUTICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 Additional Accumulated Other Total Common Stock Paid-in Accumulated Comprehensive Stockholders’ Shares Amount Capital Deficit Income (Loss) Equity 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 ) - - - Stock-based compensation - - 804,277 - - 804,277 Common shares issued for exercise of warrants, net of issuance costs 2,500,000 250 3,682,050 - - 3,682,300 Common stock issued for cash, net 1,137,250 114 1,060,605 - - 1,060,719 Vesting of restricted shares 1,693 - - - - - Cumulative translation adjustment - - - - ( 18,197 ) ( 18,197 ) 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 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. F- 6 HOTH THERAPEUTICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Year Ended December 31, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 12,469,302 ) $ ( 8,188,300 ) Adjustments to reconcile net loss to net cash used in operating activities: Research and development-acquired patent, expensed 850,500 - Stock-based compensation 1,187,929 804,277 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 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 ) 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 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 IN CASH AND CASH EQUIVALENTS ( 793,224 ) ( 2,235,232 ) Effect of exchange rate changes on cash and cash equivalents 1,768 ( 18,197 ) CASH AND CASH EQUIVALENTS - beginning of year 7,038,923 9,292,352 CASH AND CASH EQUIVALENTS - end of year $ 6,247,467 $ 7,038,923 NON-CASH INVESTING AND FINANCING ACTIVITIES: 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. F- 7 HOTH THERAPEUTICS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2025 and 2024 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); and (iii) a treatment for obesity, and obesity-related diseases and conditions (HT-VA). 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. 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”). F- 8 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: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace. Level 3: 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. F- 9 Leases 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. 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. 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. F- 10 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. 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. 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. Income Taxes 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. U.S. 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. F- 11 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: Year Ended December 31, Potentially dilutive securities 2025 2024 Warrants 1,740,752 5,203,243 Options 1,260,362 1,090,362 Total 3,001,114 6,293,605 Warrants 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 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 The reporting currency of the Company is the U.S. dollar. For the Company’s subsidiary with non-U.S. dollar functional currencies, assets and liabilities are translated into U.S. dollars at period-end exchange rates. Revenue and expenses are translated at the average exchange rates during the period. Equity transactions are translated using historical exchange rates. The resulting translation adjustments are recorded in accumulated other comprehensive income (loss) as a component of stockholders’ equity. Foreign currency translation adjustments arising from differences in exchange rates from period to period are recorded within “Accumulated other comprehensive income (loss)” in the consolidated balance 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. 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. 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. F- 12 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 December 31, 2025 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: For the Year Ended December 31, 2025 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 December 31, 2025 2024 The George Washington University $ 10,000 $ 13,620 North Carolina State University 3,750 6,250 U.S. Department of Veteran Affairs - 54,000 University of Cincinnati 3,333 1,666 Patent applications acquired 1,250,500 - $ 1,267,583 $ 75,536 F- 13 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. U.S. 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, 2025, the Company did not recognize any expenses for license fees associated with such license agreement. Chelexa Biosciences, Inc. and the University of Cincinnati 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 Total at December 31, 2025 Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Assets: Crypto assets $ 191,367 $ 191,367 $ — $ — Investment in joint ventures $ 36,819 $ — $ — $ 36,819 Fair value measured on December 31, 2024 Total at December 31, 2024 Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Assets Investment in joint ventures $ 36,819 $ — $ — $ 36,819 F- 14 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 For the Year Ended December 31, 2025 2024 Investment in joint ventures at fair value – beginning of year $ 36,819 $ 37,400 Change in fair value of investment in joint ventures - ( 581 ) Investment in joint ventures at fair value – end of year $ 36,819 $ 36,819 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, 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; (iv) and the risk-adjusted discount rate. The consolidated investment in Zylö was valued at $ 36,819 and $ 36,819 as of December 31, 2025 and 2024, respectively. F- 15 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, 2024 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. As of December 31, 2025 and 2024, no shares of Series B Preferred Stock were issued and outstanding. Warrants 2024 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. F- 16 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: March 27, 2024 to April 1, 2024 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 % 2025 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: June 4, 2025 Exercise price $ 1.00 Term (years) 2.0 Expected stock price volatility 129.68 % Risk-free rate of interest 3.87 % F- 17 A summary of warrant activity for the years ended December 31, 2025 and 2024 is as follows: Number of Warrants Weighted Average Exercise Price Total Intrinsic Value Weighted Average Remaining Contractual Life (in years) Outstanding as of December 31, 2023 4,213,515 $ 7.01 — 4.5 Issued 3,875,000 1.52 — — Expired ( 329,597 ) 49.08 — — Exercised ( 2,555,675 ) 0.67 — — Outstanding as of December 31, 2024 5,203,243 2.62 — 3.52 Issued 300,000 1.00 — — Expired ( 12,491 ) 55.96 — — Exercised ( 3,750,000 ) 1.50 — — Outstanding as of December 31, 2025 1,740,752 4.38 — 2.37 Warrants exercisable as of December 31, 2025 1,740,752 $ 4.38 $ — 2.37 The Company has determined that the warrants should be accounted for as a component of stockholders’ equity. Common Shares 2024 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. 2025 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. 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 . 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. F- 18 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 Shares granted (gross) 800,000 Less: shares withheld for taxes ( 310,744 ) Net shares issued to employee 489,256 2018 Equity Incentive Plan 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 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. 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. F- 19 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: Number of Restricted Stock Awards Weighted Average Grant Day Fair Value 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 — $ — 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. 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, 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: Year Ended December 31, 2025 2024 Exercise price $ 1.55 $0.7548 to $ 1.36 Term (years) 5.0 5.0 Expected stock price volatility 118.32 % 106.65 % to 120.00 % Risk-free rate of interest 4.59 % 3.75 % to 4.02 % F- 20 A summary of option activity under the Company’s equity incentive plans for the years ended December 31, 2025 and 2024 is presented below: Number of Shares Weighted Average Exercise Price Total Intrinsic Value Weighted Average Remaining Contractual Life (in years) Outstanding as of December 31, 2023 169,362 $ 26.78 $ — 8.4 Employee options issued 923,000 1.05 — — Expired ( 2,000 ) 147.0 — — Outstanding as of December 31, 2024 1,090,362 4.78 — 9.1 Employee options issued 170,000 1.55 — — Expired — — — — Outstanding as of December 31, 2025 1,260,362 $ 4.34 $ 111,250 8.2 Options vested and exercisable as of December 31, 2025 1,260,362 $ 4.34 $ 111,250 8.2 A summary of stock options outstanding as of December 31, 2025 by price range is as follows: Options outstanding and exercisable Range of Exercise Prices Number of Shares Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price 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 Options outstanding and exercisable as of December 31, 2025 1,260,362 8.2 $ 4.34 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, 2025 and 2024 was as follows: Year Ended December 31, 2025 2024 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 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: Year Ended December 31, 2025 2024 Research and development $ - $ 7,661 General and administrative 1,521,079 796,616 $ 1,521,079 $ 804,277 F- 21 NOTE 8 – Commitments and Contingencies Office Lease Effective November 2023, the Company leased office space for a two-year term. The Company’s office lease contained a renewal option. 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: Year Ended December 31, 2025 2024 Operating lease expense $ 29,089 $ 34,000 Short term lease expense 24,710 19,135 Total lease cost $ 53,799 $ 53,135 Right-of-use asset for operating leases were recorded in the consolidated balance sheets as follows: December 31, 2025 December 31, 2024 Office lease right-of-use asset $ 31,075 $ 31,075 Less accumulated amortization ( 26,423 ) - Total right-of-use asset, net $ 4,652 $ 31,075 Operating lease liability for operating leases were recorded in the consolidated balance sheets as follows: December 31, 2025 December 31, 2024 Current portion of operating lease liability $ 5,678 $ 28,366 Long-term portion of operating lease liability — 2,709 Total operating lease liability $ 5,678 $ 31,075 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 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: 2026 $ 5,750 Total minimum lease payments 5,750 Less: effects of discounting ( 72 ) Present value of future minimum lease payments $ 5,678 F- 22 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: 2025 2024 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, 2025 2024 Current U.S. Federal $ - $ - U.S. State - - U.S. Foreign - - Total current provision Deferred - - U.S. Federal - - U.S. State - - U.S. Foreign - - Total deferred benefit - - Change in valuation allowance - - Total provision for income taxes $ - $ - 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: Year Ended 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 % F- 23 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: Year Ended December 31, 2024 Percent 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 )% Other 0.0 % Change in valuation allowance ( 30.5 )% Total 0.0 % 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, 2025 2024 Deferred tax assets Net operating loss carryforwards $ 18,646,669 $ 13,388,457 Capitalized research costs 998,295 3,044,801 Equity based compensation 733,745 681,546 Licenses and other technology acquired 605,254 254,947 Accruals and other temporary differences 273,254 302,231 Total deferred tax assets 21,257,217 17,671,982 Less valuation allowance ( 21,257,217 ) ( 17,671,982 ) Deferred tax assets, net of allowance $ - $ - The Company has determined, based upon available evidence, that it is more likely than not that the net deferred tax assets will not be realized and, accordingly, has provided a full valuation allowance against its net deferred tax assets. F- 24 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. 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. 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 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 . F- 25 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE None.