What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-10 compared with 2025-03-05 · 717 added, 670 removed, 628 unchanged (69% of the section changed)

Financial Statements and Supplementary Data.

Protara Therapeutics, Inc.

Index to Consolidated Financial Statements

Therapeutics, Inc.

to Consolidated Financial Statements

Protara Therapeutics, Inc.

6 unchanged sentences

Notes to Consolidated Financial Statements 91

Report of Independent Registered

Public Accounting Firm

To the Stockholders and the Board of Directors of Protara Therapeutics,

Opinion on the Financial Statements

We have audited the accompanying

consolidated balance sheets of Protara Therapeutics, Inc.

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

at 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 U.S.

of Independent Registered Public Accounting Firm

To the Stockholders

and the Board of Directors of Protara Therapeutics, Inc.

on the Financial Statements

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

(the Company) as of December 31, 2025 and 2024,

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 at 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 U.S.

generally accepted accounting principles.

Basis for Opinion

These financial statements

are the responsibility of the Company’s management.

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

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

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

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.

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

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 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

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 financial statements.

We believe that our audits provide a reasonable basis for

Critical Audit Matter

The critical audit matter communicated below is a matter arising from

the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective

or complex judgments.

The communication of the critical audit matter 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 matter below, providing a separate opinion on the critical

audit matter or on the account or disclosure to which it relates.

audits included performing procedures to assess the risks of material misstatement of the 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 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 financial statements.

We believe that our audits

provide a reasonable basis for our opinion.

critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated

or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial

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

The communication of the critical audit matter

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 matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

Clinical trial prepaid and accrued expenses

Description of the Matter

As discussed in Note 2 to the consolidated financial statements, depending on the timing of payments to service providers, the Company records clinical trial prepaid or accrued expenses based on management’s estimates of the work performed under the service agreements, milestones achieved and experience with similar contracts.

Auditing the Company’s accounting for clinical trial prepaid and accrued expenses is challenging due to the fact that information necessary to estimate the clinical trial prepaid and accrued expenses is accumulated from multiple sources.

The determination of the clinical trial prepaid and accrued expenses when the Company has either not been invoiced or has not received information regarding actual costs incurred requires evaluation of the extent of completion of the services.

As discussed in Note 2 to the consolidated

financial statements, depending on the timing of payments to service providers, the Company records clinical trial prepaid or accrued

expenses based on management’s estimates of the work performed under the service agreements, milestones achieved and experience

with similar contracts.

Auditing the Company’s accounting for clinical trial prepaid and accrued expenses is challenging due to the

fact that information necessary to estimate the clinical trial prepaid and accrued expenses is accumulated from multiple sources.

The determination of the clinical trial prepaid and accrued expenses when the Company has either not been invoiced or has not received

information regarding actual costs incurred requires evaluation of the extent of completion of the services.

How We Addressed the

Matter in Our Audit

To test the clinical trial prepaid and accrued expenses, our audit procedures included, among others, i) confirming the completeness of the terms and conditions of certain significant service agreements directly with the vendor;

ii) testing the completeness and accuracy of the Company’s clinical trial prepaid and accrued expense models through verification of significant inputs, such as costs incurred and invoices paid, to the terms and conditions of the underlying agreements;

iii) meeting with clinical operations personnel outside of the accounting department to discuss the basis for assumptions used in estimating cost of services provided but not yet invoiced;

and iv) performing a hindsight analysis of invoices received subsequent to the balance sheet date and comparing to the Company’s estimates.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2021

New York, New York

March 5, 2025

Protara Therapeutics, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)

clinical trial prepaid and accrued expenses, our audit procedures included, among others, i) confirming the completeness of the terms

and conditions of certain significant service agreements directly with the vendor;

ii) testing the completeness and accuracy of the

Company’s clinical trial prepaid and accrued expense models through verification of significant inputs, such as costs incurred

and invoices paid, to the terms and conditions of the underlying agreements;

iii) meeting with clinical operations personnel outside

of the accounting department to discuss the basis for assumptions used in estimating cost of services provided but not yet invoiced;

and iv) performing a hindsight analysis of invoices received subsequent to the balance sheet date and comparing to the Company’s

We have served

as the Company’s auditor since 2021

Therapeutics, Inc.

Balance Sheets

thousands, except share and per share data)

Current assets:

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Restricted cash, non-current

Marketable debt securities, non-current

Property and equipment, net

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Preferred stock, $ 0.001 par value, authorized 10,000,000 shares:

Series 1 convertible preferred stock, 8,028 shares authorized at December 31, 2024 and 2023, 7,991 shares issued and outstanding as of December 31, 2024 and 2023.

Series 1 convertible preferred stock, 8,028 shares authorized at December 31, 2025 and 2024, 5,615 and 7,991 shares issued and outstanding as of December 31, 2025 and 2024, respectively.

Common stock, $ 0.001 par value, authorized 100,000,000 shares:

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Total liabilities and stockholders’ equity

See accompanying notes to consolidated financial

Protara Therapeutics, Inc.

Consolidated Statements of Operations

and Comprehensive Loss

(in thousands, except share and per

accompanying notes to consolidated financial statements.

Therapeutics, Inc.

Statements of Operations and Comprehensive Loss

thousands, except share and per share data)

Years Ended December 31,

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Other income (expense), net:

Interest and investment income (expenses)

Interest and investment income (expense)

Other income (expense)

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Weighted-average shares outstanding, basic and diluted

See accompanying notes to consolidated financial

Protara Therapeutics, Inc.

Consolidated Statements of Changes

in Stockholders’ Equity

(in thousands, except share and per

Series 1 Convertible

accompanying notes to consolidated financial statements.

Therapeutics, Inc.

Statements of Changes in Stockholders’ Equity

thousands, except share and per share data)

Preferred Stock

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Issuance of common stock upon settlement of restricted stock units

Issuance of common stock upon exercise of stock options

Stock-based compensation - restricted stock units

Stock-based compensation - stock options

Conversion of Series 1 Convertible Preferred Stock to common stock

Issuance of common stock from April 2024 Private Placement, net of offering costs of $ 3,034

Issuance of common stock from December 2024 Public Offering, net of offering costs of $ 6,665

Issuance of common stock from exercise of common warrants

Unrealized gain (loss) on marketable debt securities

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Stock-based compensation - stock options

Issuance of common stock, pre-funded warrants and warrants from private placement, net of offering costs of $ 3,034

Issuance of common stock and pre-funded warrants from public offering, net of offering costs of $ 6,665

Issuance of common stock from exercise of common warrants

Issuance of common stock upon conversion of Series 1 Preferred Stock

Issuance of common stock upon exercise of pre-funded warrants

Issuance of common stock from December 2024 Public Offering, net of offering costs of $ 214

Issuance of common stock from December 2025 Public Offering, net of offering costs of $ 5,812

Unrealized gain (loss) on marketable debt securities

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$ ( 302,419 )

See accompanying notes to consolidated financial

Protara Therapeutics, Inc.

Consolidated Statements of Cash Flows

(in thousands)

accompanying notes to consolidated financial statements.

Therapeutics, Inc.

Statements of Cash Flows

Years Ended December 31,

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Operating lease right-of-use asset

Realized loss (gain) on redemption of marketable debt securities

Amortization of premium (Accretion of discount) on marketable debt securities

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Cash flows from financing activities:

Proceeds from public offering, net of offering costs of $ 6,051

Proceeds from December 2024 Public Offering, net of offering costs of $ 6,051

Proceeds from private placement, net of offering costs of $ 3,034

Proceeds from exercise of common warrants

Proceeds from exercise of Underwriters’ Option in December 2024 Public Offering, net of offering costs of $ 214

Offering costs paid in connection with the December 2024 Public Offering

Proceeds from exercise of April 2024 Common Warrants

Proceeds from exercise of December 2024 Pre-Funded Warrants

Proceeds from December 2025 Public Offering, net of offering costs of $ 5,286

Proceeds from exercise of stock options

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Cash paid for:

Supplemental disclosure of non-cash investing and financing activities:

Supplemental disclosure of non-cash investing and financing

Proceeds from public offering – offering costs incurred but not paid

See accompanying notes to consolidated financial

accompanying notes to consolidated financial statements.

Protara Therapeutics, Inc.

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Organization and Nature of the Business

Protara Therapeutics, Inc.,

and its consolidated subsidiaries (“Protara” or the “Company”), is a clinical-stage biopharmaceutical company

committed to advancing transformative therapies for the treatment of cancer and rare diseases.

Protara’s portfolio includes two

development programs utilizing TARA-002, an investigational cell therapy in development for the treatment of non-muscle invasive bladder

cancer, or NMIBC, and lymphatic malformations, or LMs.

Additionally, the Company’s portfolio includes Intravenous, or IV, Choline

Chloride, an investigational phospholipid substrate replacement therapy in development for patients receiving parenteral support, or PS.

Protara Therapeutics, Inc., and its consolidated subsidiaries, or Protara

or the Company, is a clinical-stage biopharmaceutical company committed to advancing transformative therapies for the treatment of cancer

and rare diseases.

Protara’s portfolio includes two development programs utilizing TARA-002, an investigational cell therapy in

development for the treatment of non-muscle invasive bladder cancer, or NMIBC, and lymphatic malformations, or LMs.

Additionally, the

Company’s portfolio includes Intravenous, or IV, Choline Chloride, an investigational phospholipid substrate replacement therapy

in development for patients receiving parenteral support, or PS.

Liquidity and Capital Resources

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Basis of Presentation

The accompanying consolidated financial statements have been prepared

in accordance with accounting principles generally accepted in the United States of America, or GAAP.

The accompanying consolidated

financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or

Principles of Consolidation

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reflected in the financial statements of the period in which the change becomes evident.

Cash and Cash Equivalents and Restricted

The Company considers all highly liquid instruments with an original

maturity of three months or less when acquired to be cash equivalents.

Cash and cash equivalents may be held in depository, money market

accounts and/or U.S.

Treasury securities, and are reported at fair value.

Protara Therapeutics,

Protara Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

Cash and Cash Equivalents and Restricted

The Company considers all

highly liquid instruments with an original maturity of three months or less when acquired to be cash equivalents.

Cash and cash equivalents

may be held in depository, money market accounts and/or U.S.

Treasury securities, and are reported at fair value.

The Company’s restricted

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Restricted cash, non-current

Total cash and cash equivalents and restricted cash shown in the consolidated statements of cash flows

Fair Value Measurements

Accounting Standards Codification,

or ASC, Topic 820 “Fair Value Measurements” provides the framework for measuring fair value and establishes a fair value hierarchy

that prioritizes the inputs used in pricing the asset or liability.

The hierarchy gives the highest priority to unadjusted quoted prices

in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements).

or ASC, 820 provides the framework for measuring fair value and establishes a fair value hierarchy that prioritizes the inputs used in

pricing the asset or liability.

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets

or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements).

Fair value is defined as

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Marketable Debt Securities

The Company classifies investments

in marketable debt securities with remaining maturities when purchased of greater than three months as available-for-sale.

with a remaining maturity date greater than one year are classified as non-current.

The cost of securities sold is based on the specific

identification method.

Interest earned on securities that are classified as available-for-sale are included in interest and investment

The Company records investments

at fair value with unrealized gains and losses recorded as a component of other comprehensive income (loss) in the consolidated statements

of operations and comprehensive loss until realized.

Realized gains and losses are reflected in interest and investment income in the

consolidated statements of operations and comprehensive loss and are determined using the specific identification method with transactions

recorded on a settlement date basis.

Fair value is determined based on quoted market rates when observable or utilizing data points that

are observable, such as quoted prices, interest rates and yield curves.

To determine whether an other-than-temporary impairment exists,

the Company considers whether it has the ability and intent to hold the investment until a market price recovery, and whether evidence

indicating the recoverability of the cost of the investment outweighs evidence to the contrary.

The Company has the ability to hold such

securities with an unrealized loss until its forecasted recovery.

The Company determined that there was no material change in the credit

risk of these investments.

The Company classifies investments in marketable debt securities with

remaining maturities when purchased of greater than three months as current.

Investments with a remaining maturity date greater than one

year are classified as non-current.

The Company classifies all marketable debt securities as available-for-sale.

The cost of securities

sold is based on the specific identification method.

Interest earned on securities that are classified as available-for-sale are included

in interest and investment income (expense).

The Company records investments at fair value with unrealized gains

and losses recorded as a component of other comprehensive income (loss) in the consolidated statements of operations and comprehensive

loss until realized.

Realized gains and losses are reflected in interest and investment income (expense) in the consolidated statements

of operations and comprehensive loss and are determined using the specific identification method with transactions recorded on a settlement

Fair value is determined based on quoted market rates when observable or utilizing data points that are observable, such

as quoted prices, interest rates and yield curves.

To determine whether an other-than-temporary impairment exists, the Company considers

whether it has the ability and intent to hold the investment until a market price recovery, and whether evidence indicating the recoverability

of the cost of the investment outweighs evidence to the contrary.

The Company has the ability to hold such securities with an unrealized

loss until its forecasted recovery.

The Company determined that there was no material change in the credit risk of these investments.

Protara Therapeutics,

Notes to Consolidated

Financial Statements

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

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Financial instruments, which

potentially subject the Company to concentrations of credit risk, consists principally of cash and cash equivalents, restricted cash and

potentially subject the Company to concentrations of credit risk, consist principally of cash and cash equivalents, restricted cash and

investments in marketable debt securities.

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Laboratory equipment 7 years

Leasehold improvements Shorter of the useful life of asset or the lease term

The Company enters into contracts in the normal course of business

and assesses whether any such contracts contain a lease.

The Company determines if an arrangement is a lease at inception if it conveys

the right to control the identified asset for a period of time in exchange for consideration.

Under Accounting Standards Codification,

or ASC, 842, lease expense is recognized as a single lease cost on a straight-line basis over the lease term.

The lease term consists

of non-cancelable periods and may include options to extend or terminate the lease term, when it is reasonably certain such options will

be exercised.

Leasehold improvements Shorter

of the lease term or useful life of asset

The Company enters into contracts

in the normal course of business and assesses whether any such contracts contain a lease.

The Company determines if an arrangement is

a lease at inception if it conveys the right to control the identified asset for a period of time in exchange for consideration.

ASC 842, lease expense is recognized as a single lease cost on a straight-line basis over the lease term.

The lease term consist of non-cancelable

periods and may include options to extend or terminate the lease term, when it is reasonably certain such options will be exercised.

Leases classified as operating

leases are included in operating lease right-of-use, or ROU, assets, current operating lease liabilities and noncurrent operating lease

liabilities in our consolidated balance sheet.

liabilities in our consolidated balance sheets.

Finance leases are included in property and equipment and finance lease obligations, in

our consolidated balance sheet.

our consolidated balance sheets.

ROU assets represent the right to use an underlying asset for the lease term.

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ROU assets and lease liabilities are recognized at the lease commencement

The Company has elected to

account for the lease and non-lease components for leases as a single component for classes of all underlying assets and allocate all

the contract consideration to the lease component only.

Lease cost for operating leases is recognized on a straight-line basis over the

lease term and is included in operating expenses on the statements of operations and comprehensive loss.

Variable lease payments are included

in lease operating expenses.

The Company has elected

to account for the lease and non-lease components for leases as a single component for classes of all underlying assets and allocate

all the contract consideration to the lease component only.

Lease cost for operating leases is recognized on a straight-line basis over

the lease term and is included in operating expenses on the consolidated statements of operations and comprehensive loss.

Variable lease

payments are included in lease operating expenses.

Protara Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

The Company recognizes costs

1 unchanged sentence

such short-term leases are not recorded on the balance sheet.

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

Impairment of Long-Lived Assets

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Segment Information

In accordance with ASC 280, Segment Reporting, operating segments are

defined as components of an enterprise for which separate discrete information is available for evaluation by the chief operating decision

maker, or CODM, or decision-making group in deciding how to allocate resources and in assessing performance.

The Company views its operations

and manages its business as one operating and reporting segment.

In accordance with ASC 280, operating segments are defined as components

of an enterprise for which separate discrete information is available for evaluation by the chief operating decision maker, or CODM, or

decision-making group in deciding how to allocate resources and in assessing performance.

The Company views its operations and manages

its business as one operating and reporting segment.

See Note 16, Segment Information for further information.

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Research and development costs are expensed as incurred.

Before a compound receives

Before a drug candidate receives

regulatory approval, the Company records upfront and milestone payments made to third parties under licensing arrangements as expense

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expensed when the milestone conditions are met and the amount of payment is reasonably estimable.

Once a compound receives

Once a drug candidate receives

regulatory approval, the Company records any milestone payments in identifiable intangible assets, less accumulated amortization and,

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monitors each of these factors and adjusts estimates accordingly.

Protara Therapeutics,

Notes to Consolidated

Financial Statements

Protara Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

3 unchanged sentences

Amounts incurred are classified as general and administrative expenses.

Interest and Investment Income (Expense)

Interest and investment income

Investment income consists

primarily of interest income, accretion income earned and amortization expense incurred and realized gains or losses related to our

marketable debt securities, interest income related to cash and cash equivalents and restricted cash and dividend income related to money

market funds.

(expense) consist primarily of interest income, accretion income earned and amortization expense incurred and realized gains or losses related

to our marketable debt securities, interest income related to cash and cash equivalents and restricted cash and dividend income related

to money market funds.

Stock-Based Compensation

The Company’s stock-based

compensation programs include stock options, restricted stock units, or RSUs, and an employee stock purchase program, or ESPP.

accounts for stock-based compensation using the fair value method.

The Company’s stock-based compensation programs provide for stock

awards including stock options, restricted stock units, or RSUs, and an employee stock purchase program, or ESPP.

The Company accounts

for stock-based compensation using the fair value method.

The Company measures all

stock options and other stock-based awards granted to employees and directors based on the fair value on the date of the grant and recognizes

compensation expense of those awards over the requisite service period, which is generally the vesting period of the respective award.

stock options and other stock-based awards granted to employees, directors, and consultants based on the fair value on the date of the

grant and recognizes compensation expense of those awards over the requisite service period, which is generally the vesting period of

the respective award.

The Company recognizes forfeitures at the time forfeitures occur.

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Expected volatility for the Company’s common stock

is determined based on an average of the historical volatility of the Company and the historical volatility of a peer-group of similar

public companies.

The expected term of options granted to employees is calculated using the simplified method, which represents the average

of the contractual term of the option and the weighted-average vesting period of the option.

The simplified method is used as the Company

does not have sufficient appropriate exercise data on which to base its own estimate.

The assumed dividend yield is based upon the Company’s

expectation of not paying dividends in the foreseeable future.

is determined based on a weighting of its own historical volatility and the historical volatility of a peer-group of similar public companies.

The expected term of options granted to employees is calculated using the simplified method, which represents the average of the contractual

term of the option and the weighted-average vesting period of the option.

The simplified method is used as the Company does not have sufficient

appropriate exercise data on which to base its own estimate.

The assumed dividend yield is based upon the Company’s expectation

of not paying dividends in the foreseeable future.

The risk-free interest rate is based upon the U.S.

Treasury yield curve

commensurate with the expected term at the time of grant or remeasurement.

Treasury yield curve commensurate

with the expected term at the time of grant or remeasurement.

The stock-based compensation

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based on the fair market value of the Company’s common stock on the date of the grant.

RSUs were historically granted to directors pursuant to the Company’s

Settlement for these RSUs is deferred until the earliest to occur of (i) the director’s termination of service, (ii)

death, (iii) disability or (iv) a change in control of the Company.

In the event of a change in control of the Company, the RSUs will

vest in full.

The fair value of all stock-based awards is recognized as stock-based

compensation expense on a straight-line basis over the vesting period, which is typically three years for RSUs and one or four years for

stock options.

The Company classifies stock-based

compensation expense in its statement of operations and comprehensive loss in the same way the payroll costs or service payments are classified

for the related stock-based award recipients.

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

RSUs were historically granted

to directors pursuant to the Company’s equity plan.

Settlement for these RSUs is deferred until the earliest to occur of:

director’s termination of service, (ii) death, (iii) disability or (iv) a change in control of the Company.

In the event of a change

in control of the Company, the RSUs will vest in full.

The fair value of all stock-based

awards is recognized as stock-based compensation expense on a straight-line basis over the vesting period, which is typically three years

for RSUs and one or four years for stock options.

The Company classifies stock-based compensation expense in its consolidated

statements of operations and comprehensive loss in the same way the payroll costs or service payments are classified for the related stock-based

award recipients.

Deferred tax assets and liabilities

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income, tax-planning strategies, and results of recent operations.

Tax benefits are recognized

only for tax positions that are more likely than not to be sustained upon examination by tax authorities.

The amount recognized is measured

as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement.

A liability for unrecognized tax

benefits is recorded for any tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement

The Company’s policy is to record interest and penalties on uncertain tax positions as a component of income tax expense

in the consolidated statement of operations and comprehensive loss.

Protara Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

Tax benefits are recognized only for tax positions that are more likely

than not to be sustained upon examination by tax authorities.

The amount recognized is measured as the largest amount of benefit that

is greater than 50 percent likely to be realized upon settlement.

A liability for unrecognized tax benefits is recorded for any tax benefits

claimed in the Company’s tax returns that do not meet these recognition and measurement standards.

The Company’s policy is

to record interest and penalties on uncertain tax positions as a component of income tax expense in the consolidated statements of operations

and comprehensive loss.

Net Income (Loss) Per Share Attributable

to Common Stockholders

Basic net income (loss) per share is computed by dividing the net income

(loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

weighted-average number of shares of common stock outstanding during the period includes any contingently issuable shares for which there

is no circumstance under which those shares would not be issued and shares issuable upon the exercise of warrants to purchase common stock

for no or nominal consideration.

Basic net income (loss) per

share is computed by dividing the net income (loss) attributable to common stockholders by the weighted-average number of shares of common

stock outstanding during the period.

The weighted-average number of shares of common stock outstanding during the period includes any

contingently issuable shares for which there is no circumstance under which those shares would not be issued and shares issuable upon

the exercise of warrants to purchase common stock for no or nominal consideration.

Diluted net income (loss)

per share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common

stock outstanding during the period plus the common equivalent shares for the period including any dilutive effect from unvested restricted

stock units, outstanding stock options, potential shares issuable under the ESPP, and potential shares issuable upon conversion of preferred

stock or exercise of outstanding warrants to purchase common stock.

The Company accounts for warrants as either equity-classified or liability-classified

instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in the Financial Accounting

Standards Board, or the FASB, ASC, 480, Distinguishing Liabilities from Equity , or ASC 480, and ASC 815, Derivatives and Hedging ,

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 stock and whether the warrant holders could potentially require “net

cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification.

the Company determines if the warrants meet the definition of a derivative based on their contractual terms.

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.

stock outstanding during the period plus the common equivalent shares for the period including any dilutive effect from unvested RSUs,

outstanding stock options, potential shares issuable under the ESPP, and potential shares issuable upon conversion of preferred stock

or exercise of outstanding warrants to purchase common stock.

The Company accounts for

warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms

and applicable authoritative guidance in ASC 480 and 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 stock

and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s

control, among other conditions for equity classification.

Finally, the Company determines if the warrants meet the definition of a derivative

based on their contractual terms.

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 or modified warrants

4 unchanged sentences

the estimated fair value of liability-classified warrants are recognized as a non-cash gain or loss on the consolidated statements of

The Company also evaluates if changes in contractual terms or other considerations would result in the reclassification of

outstanding warrants from liabilities to stockholders’ equity (or vice versa).

operations and comprehensive loss.

The Company also evaluates if changes in contractual terms or other considerations would result in

the reclassification of outstanding warrants from liabilities to stockholders’ equity (or vice versa).

The fair market value of

1 unchanged sentence

nature of the contractual terms.

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update, or ASU,

2023-07 – Improvements to Reportable Segment Disclosures, which enhances the disclosures required for reportable segments in annual

and interim consolidated financial statements, including additional, more detailed information about a reportable segment’s expenses.

The standard 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 for the year ended December 31, 2024 retrospectively to all periods presented in the

consolidated financial statement.

The adoption of this ASU had no impact on reportable segments identified and had no effect on the Company’s

In December 2023, the Financial Accounting Standards Board, or the

FASB, issued Accounting Standards Update, or ASU, 2023-09 – Improvements to Income Tax Disclosures , which enhances the transparency

and decision usefulness of income tax disclosures.

The Company adopted ASU 2023-09 for the year ended December 31, 2025 retrospectively

to all periods presented in the consolidated financial statements.

The adoption of this ASU had no material impact on the Company’s

consolidated financial position, results of operations, or cash flows.

Additional required disclosure has been included within Note 13.

Protara Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

Recent Accounting Pronouncements Not Yet

In December 2023, the FASB

issued ASU 2023-09 – Improvements to Income Tax Disclosures, which enhances the transparency and decision usefulness of income tax

The standard is effective for public companies for annual periods beginning after December 15, 2024.

Early adoption is available.

The Company is still evaluating the full extent of the potential impact of the adoption of ASU 2023-09, but believes it will not have

a material impact on its consolidated financial statements and disclosures.

In November 2024, the FASB

issued ASU 2024-03 – Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures, which enhances

the disclosures for various types of expenses.

The standard is effective for public companies for annual periods beginning after December

issued ASU 2024-03 – Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures ,

which enhances the disclosures for various types of expenses.

The standard is effective for public companies for annual periods beginning

after December 15, 2026.

Early adoption is available.

The Company is still evaluating the full extent of the potential impact of the adoption of ASU

The Company is still evaluating the full extent of the potential impact of the adoption

of ASU 2024-03.

In December 2025, the FASB issued ASU 2025-11 – Interim Reporting

(Topic 270) – Narrow-Scope Improvements , which improves the guidance in Interim Reporting (Topic 270) by improving the

navigability of the required interim disclosures and clarifying when that guidance is applicable.

The standard is effective for public

companies for annual periods beginning after December 15, 2027.

Early adoption is available.

The Company is still evaluating the full

extent of the potential impact of the adoption of ASU 2025-11.

Subsequent Events

The Company evaluated subsequent events and transactions that occurred

after the balance sheet date up to the date that the financial statements were available to be issued.

Other than as described in Notes

11, 12 and 15,the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.

The Company evaluated subsequent

events and transactions that occurred after the balance sheet date up to the date that the financial statements were available to be issued.

Other than as described in Note 11, the Company did not identify any subsequent events that would have required adjustment or disclosure

in the financial statements.

Fair Value of Financial Instruments

6 unchanged sentences

Money market funds (a)

Corporate bonds (a)

Restricted cash, non-current:

1 unchanged sentence

Marketable debt securities:

Corporate bonds (c)

Treasury securities (c)

5 unchanged sentences

Marketable debt securities:

Corporate bonds (c)

Agency bonds (c)

(a) Money market funds with original maturities of 90 days or less are included within cash and cash equivalents in the consolidated balance sheets.

(b) Restricted money market funds are included within Restricted cash, non-current in the consolidated balance sheets.

Treasury securities and bonds with original maturities greater than 90 days are included within Marketable debt securities in the consolidated balance sheets and classified as current or non-current based upon whether the maturity of the financial asset is less than or greater than 12 months.

Protara Therapeutics,

Notes to Consolidated

Financial Statements

Treasury securities (c)

(a) Money market funds and corporate bonds with original maturities of 90 days or less are included within cash and cash equivalents in the consolidated balance sheets.

Protara Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

Money market funds are classified

as Level 1 within the fair value hierarchy, because they are valued using quoted prices in active markets.

Corporate and agency bonds

classified as Level 2 within the fair value hierarchy are valued on the basis of prices from an orderly transaction between market

participants provided by reputable dealers or pricing services.

Prices of these securities are obtained through independent, third-party

pricing services and include market quotations that may include both observable and unobservable inputs.

In determining the value of a

particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from

dealers, pricing matrices and market transactions in comparable investments and various relationships between investments.

no transfers of financial instruments among Level 1, Level 2, and Level 3 during the period presented.

(b) Restricted money market funds are included within restricted cash, non-current in the consolidated balance sheets.

Treasury securities and corporate bonds with original maturities greater than 90 days are included within marketable debt securities in the consolidated balance sheets and classified as current or non-current based upon whether the maturity of the financial asset is less than or greater than 12 months.

Money market funds and U.S.

Treasury securities are classified as Level 1 within the fair value hierarchy, because they are valued using quoted prices in active

Corporate and agency bonds classified as Level 2 within the fair value hierarchy are valued on the basis of prices from

an orderly transaction between market participants provided by reputable dealers or pricing services.

Prices of these securities are obtained

through independent, third-party pricing services and include market quotations that may include both observable and unobservable inputs.

In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such

investments, quotations from dealers, pricing matrices and market transactions in comparable investments and various relationships between

There were no transfers of financial instruments among Level 1, Level 2, and Level 3 during the period presented.

Marketable Debt Securities

Marketable debt securities,

all of which were classified as available-for-sale, consist of the following as of:

all of which were classified as available-for-sale, consist of the following:

As of December 31, 2025

Corporate bonds - presented in marketable debt securities

Corporate bonds - presented in marketable debt securities, non-current

Treasury securities - presented in marketable debt securities

As of December 31, 2024

Corporate bonds - presented in marketable debt securities

Agency bonds - presented in marketable debt securities

Treasury securities – presented in marketable debt securities

The Company has recorded

1 unchanged sentence

other comprehensive income (loss).

For the years ended December 31, 2024 and 2023 there were no realized gains or losses.

Gains, if any,

would be included in investment income within the consolidated statements of operations and comprehensive loss.

For the years ended December 31, 2025 and 2024 realized gains were $ 9 and $ 0 , respectively.

included in interest and investment income (expense) within the consolidated statements of operations and comprehensive loss.

The remaining maturities

of all debt securities held at December 31, 2024 was less than one year.

of all debt securities held at December 31, 2025 were less than five years.

There were no sales of securities in the periods presented.

Credit Losses

Securities with an amortized cost basis in excess

of estimated fair value are assessed to determine what amount of the excess, if any, is caused by expected credit losses.

Protara Therapeutics,

Notes to Consolidated

Financial Statements

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

As of December 31, 2024, no securities were held

in a loss position.

As of December 31, 2023, marketable debt securities in a loss position consist of the following:

Credit Losses

Securities with an amortized

cost basis in excess of estimated fair value are assessed to determine what amount of the excess, if any, is caused by expected credit

As of December 31, 2025, marketable debt securities

in a loss position consist of the following:

As of December 31, 2025

6 unchanged sentences

Corporate bonds – presented in marketable debt securities

Agency bonds – presented in marketable debt securities

As of December 31, 2024 and 2023, it was determined

that there were no expected credit losses.

Interest and Investment Income

Interest and investment income consists of the

Corporate bonds – presented in marketable debt securities, non-current

As of December 31, 2024,

no securities were held in a loss position.

As of December 31, 2025 and 2024, it was determined that there were no expected credit losses.

Interest and Investment Income (Expense)

Interest and investment income (expense) consist

of the following:

For the Year Ended

2 unchanged sentences

Dividend income

Total interest and investment income

Realized gain (loss)

Prepaid Expenses and Other Current Assets

2 unchanged sentences

Prepaid research and development

Accrued interest on marketable debt securities

Prepaid insurance

1 unchanged sentence

Prepaid retention bonuses

Accrued interest on marketable debt securities

Other prepaid expenses

Other current assets

Protara Therapeutics,

Notes to Consolidated

Financial Statements

Protara Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

1 unchanged sentence

Property and equipment, net

consists of the following:

consist of the following:

Computer equipment

5 unchanged sentences

Accumulated depreciation

Total property and equipment, net

Depreciation expense was

$ 332 and $ 341 for the years ended December 31, 2024 and 2023, respectively.

During the year ended December 31, 2024, $ 202 and $ 130 was

included in research and development expense and general and administrative expense, respectively, within the consolidated statements

of operations and comprehensive loss.

During the year ended December 31, 2023, $ 204 and $ 137 was included in research and development

expense and general and administrative expense, respectively, within the consolidated statements of operations and comprehensive loss.

As of December 31, 2024 and 2023, substantially 100 % of the Company’s total property and equipment, net was attributable to the

United States.

Other assets consists of the following:

Depreciation expense was $ 362 and $ 332 for the years ended December

31, 2025 and 2024, respectively.

During the year ended December 31, 2025, $ 218 and $ 144 was included in research and development expense

and general and administrative expense, respectively, within the consolidated statements of operations and comprehensive loss.

the year ended December 31, 2024, $ 202 and $ 130 was included in research and development expense and general and administrative expense,

respectively, within the consolidated statements of operations and comprehensive loss.

As of December 31, 2025 and 2024, substantially

100 % of the Company’s total property and equipment, net was attributable to the U.S.

Other assets consist of the following:

Prepaid research and development, non-current

Prepaid insurance, non-current

Other non-current assets

5 unchanged sentences

Other expenses

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

Operating leases

In December 2020, the Company entered into an agreement to lease approximately

10,300 square feet of office space in New York, New York, or the Office Lease, which commenced in April 2021.

Annual rent is approximately

The Office Lease has a term of approximately seven years and contains provisions for a free-rent period, annual rent increases

and an allowance for tenant improvements.

The Company has an option to extend the term by five years, however, the Company determined

at the lease commencement date that it was not reasonably certain to exercise the renewal option and such renewal was excluded from the

operating lease ROU asset and operating lease liability recorded for this lease.

In December 2020, the Company

entered into an agreement to lease approximately 10,000 square feet of office space in New York, New York, or the Office Lease, which

commenced in April 2021.

The Office Lease has a term of approximately seven years and contains provisions for a free-rent period, annual

rent increases and an allowance for tenant improvements.

The Company has an option to extend the term by five years, however, the Company

determined at the lease commencement date that it was not reasonably certain to exercise the renewal option and such renewal was excluded

from the operating lease ROU asset and operating lease liability recorded for this lease.

Protara Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

The Company is responsible

4 unchanged sentences

In June 2021, the Company

amended the existing agreement with its contract development and manufacturing organization, or CDMO, establishing a term of eight-years

amended the existing lease agreement with its contract development and manufacturing organization, or CDMO, establishing a term of eight-years

from the amendment date.

Leases classified as operating leases are included in operating lease

ROU assets, operating lease liabilities and operating lease liabilities, non-current, in the Company’s consolidated balance sheets.

The Office Lease and the CDMO leased spaces are included in operating lease ROU assets and operating lease liabilities within the consolidated

balance sheets.

The Office Lease and the CDMO leased spaces are located within the United States.

Cash paid for operating lease liabilities

was $ 1,327 and $ 1,234 during the years ended December 31, 2024 and 2023, respectively.

Lease expense consists of the following:

Leases classified as operating

leases are included in operating lease ROU assets, operating lease liabilities and operating lease liabilities, non-current in the Company’s

consolidated balance sheets.

The Office Lease and the CDMO leased spaces are included in operating lease ROU assets and operating lease

liabilities within the consolidated balance sheets.

The Office Lease and the CDMO leased spaces are located within the U.S.

for operating lease liabilities was $ 1,395 and $ 1,327 during the years ended December 31, 2025 and 2024, respectively.

Lease expense consist of the following:

For the Year Ended

1 unchanged sentence

Operating lease expense

Variable lease expense for the year ended December 31, 2024 was $ 99 .

Variable lease expense for the year ended December 31, 2023 was not material.

Variable lease expense was

$ 124 and $ 99 for the years ended December 31, 2025 and 2024, respectively.

The weighted average discount

4 unchanged sentences

the expected annual minimum lease payments of the Company’s operating lease liabilities were as follows:

the year ending December 31:

For the year ending December 31:

Total future operating lease payments

1 unchanged sentence

Present value of future minimum lease payments

Protara Therapeutics,

Notes to Consolidated

Financial Statements

Protara Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

13 unchanged sentences

the “Licensed IND”, “Existing Study Data” and the “Licensed Know-How” for one or more of the licensed

Certain milestone and royalty payments may also be payable to Dr.

Regardless of whether development or commercialization is undertaken by the Company under the Choline License Agreement, during the term

of the Choline License Agreement, the Company shall pay Dr.

Buchman a minimum annual royalty that ranges from $ 25 to $ 75 .

will also pay Dr.

Buchman up to $ 775 in additional milestone payments upon the achievement of various regulatory approval milestones.

Certain milestone and royalty

payments may also be payable to Dr.

Regardless of whether development or commercialization is undertaken by the Company under

the Choline License Agreement, during the term of the Choline License Agreement, the Company shall pay Dr.

Buchman a minimum annual royalty

that ranges from $ 25 to $ 75 .

The Company will also pay Dr.

Buchman up to $ 775 in additional milestone payments upon the achievement of

various regulatory approval milestones.

Further, the Company has an obligation to pay Dr.

Buchman sales royalties based on aggregate net sales of IV Choline Chloride in each

calendar quarter, with the tiered royalty rates ranging from 5.0 % to 10.5 % of net sales.

In the event of development or commercialization

activity by any sublicensees, the Company also agreed to pay Dr.

Buchman a royalty in the mid-single digit percentage of (i) net cash

receipts, after payment of taxes, received by the Company from sublicensees for their sales of licensed products and (ii) any other consideration

received by the Company from such sublicensees;

in each case, including a fair monetary value for any transaction that is not a bona fide

arms-length transaction or that is for consideration other than monetary.

Further, in the event of a sale or transfer of a priority review

voucher regarding the license product, regardless of whether any development or commercialization activity is undertaken by the Company

or the Company’s sublicensees, the Company agreed to pay Dr.

Buchman a milestone payment representing the mid-single digit percentage

of (i) net cash receipts, after payment of taxes and (ii) any other consideration;

in each case, received by the Company, the Company’s

affiliates, or the Company’s sublicensees, including a fair monetary value for any transaction that is not a bona fide arms-length

transaction or that is for consideration other than monetary.

Buchman sales royalties based on aggregate net

sales of IV Choline Chloride in each calendar quarter, with tiered royalty rates ranging from 5.0 % to 10.5 % of net sales.

of development or commercialization activity by any sublicensees, the Company also agreed to pay Dr.

Buchman a royalty in the mid-single

digit percentage of:

(i) net cash receipts, after payment of taxes, received by the Company from sublicensees for their sales of licensed

products and (ii) any other consideration received by the Company from such sublicensees;

in each case, including a fair monetary value

for any transaction that is not a bona fide arms-length transaction or that is for consideration other than monetary.

Further, in the

event of a sale or transfer of a priority review voucher regarding the license product, regardless of whether any development or commercialization

activity is undertaken by the Company or the Company’s sublicensees, the Company agreed to pay Dr.

Buchman a milestone payment representing

the mid-single digit percentage of:

(i) net cash receipts, after payment of taxes and (ii) any other consideration;

in each case, received

by the Company, the Company’s affiliates, or the Company’s sublicensees, including a fair monetary value for any transaction

that is not a bona fide arms-length transaction or that is for consideration other than monetary.

During the years ended December

31, 2024 and 2023, the Company recorded research and development expense of $ 52 and $ 27 , in connection with the Choline License Agreement.

31, 2025 and 2024, the Company recorded research and development expense of $ 75 and $ 52 , respectively, in connection with the Choline

License Agreement.

On December 22, 2017, the Company entered into an agreement, or the

Feinstein Agreement, with The Feinstein Institute for Medical Research, or the Feinstein Institute, a not-for-profit corporation with

50 research labs and 2,500 clinical research studies.

Pursuant to the Feinstein Agreement, the Company acquired an exclusive license relating

to treatment of fatty liver diseases in humans for which Choline may be an effective therapeutic.

In consideration for the rights and

license granted, the Feinstein Institute would receive a royalty of one percent ( 1 %) of the first one hundred million dollars ($ 100,000 )

of net sales of IV Choline Chloride and a royalty of one and one-half percent ( 1.5 %) of all net sales thereafter.

In addition, the Company

would pay the Feinstein Institute twelve and one-half percent ( 12.5 %) of net proceeds resulting from agreements entered within two years

from the effective date, and seven and one-half percent ( 7.5 %) of net proceeds resulting from agreements entered into thereafter.

to the Feinstein Agreement additional payments would be due to the Feinstein Institute for license maintenance payments and for meeting

milestone events.

Pursuant to the Feinstein Agreement, upon the achievement of certain future new drug application milestones, the Company

would be obligated to remit an aggregate of $ 275 .

During the years ended December

31, 2024 and 2023, the Company recorded research and development expense of $ 15 and $ 15 , respectively, in connection with the Feinstein

Protara Therapeutics,

Notes to Consolidated

Financial Statements

License Agreement

On December 22, 2017, the

Company entered into an agreement, or the Feinstein Agreement, with The Feinstein Institute for Medical Research, or the Feinstein Institute,

a not-for-profit corporation with 50 research labs and 2,500 clinical research studies.

Pursuant to the Feinstein Agreement, the Company

acquired an exclusive license relating to treatment of fatty liver diseases in humans for which Choline may be an effective therapeutic.

In consideration for the rights and license granted, the Feinstein Institute would receive a royalty of one percent ( 1 %) of the first

one hundred million dollars ($ 100,000 ) of net sales of IV Choline Chloride and a royalty of one and one-half percent ( 1.5 %) of all net

sales thereafter.

In addition, the Company would pay the Feinstein Institute twelve and one-half percent ( 12.5 %) of net proceeds resulting

from agreements entered within two years from the effective date, and seven and one-half percent ( 7.5 %) of net proceeds resulting from

agreements entered into thereafter.

Pursuant to the Feinstein Agreement additional payments would be due to the Feinstein Institute for

license maintenance payments and for meeting milestone events.

Pursuant to the Feinstein Agreement, upon the achievement of certain future

NDA milestones, the Company would be obligated to remit an aggregate of $ 275 .

During each of the years

ended December 31, 2025 and 2024, the Company recorded research and development expense of $ 15 in connection with the Feinstein Agreement.

Protara Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

Sponsored Research and License Agreement

On November 28, 2018, the Company entered into a sponsored research

and license agreement, or the Iowa Agreement, with the University of Iowa.

Pursuant to the Iowa Agreement, the University of Iowa, which

is engaged in clinical research to improve the diagnosis and treatment of lymphangioma using a pharmaceutical product (OK-432), would

assist the Company in collecting case reports, forms, source data, and safety data available to the University of Iowa in support of the

development of the Company’s proprietary Streptococcus Pyogenes investigational product, TARA-002 for the LMs indication.

the term of the services, the Company would generally pay the University of Iowa thirty thousand dollars ($30) per year to fund the project,

plus additional amounts upon the realization of certain milestones.

More specifically, upon forty-five (45) days of an approval of TARA-002

by the Food and Drug Administration, or the FDA, the Company would pay up to $1,750 to the University of Iowa for meeting these milestones.

Furthermore, the Company would pay the University of Iowa royalties of up to 1.75% for net sales ranging from $0 - $25,000, 2.25% for

net sales ranging from $25,000 to $50,000, and 2.50% for net sales in excess of $50,000.

Pursuant to the Iowa Agreement, the University

of Iowa would be entitled to additional payments for the Company achieving annual net sales of product according to the milestones.

annual net sales of product up to $25,000:

On November 28, 2018, the

Company entered into a sponsored research and license agreement, or the Iowa Agreement, with the University of Iowa.

Pursuant to the Iowa

Agreement, the University of Iowa, which is engaged in clinical research to improve the diagnosis and treatment of lymphangioma using

a pharmaceutical product (OK-432), would assist the Company in collecting case reports, forms, source data, and safety data available

to the University of Iowa in support of the development of the Company’s proprietary Streptococcus Pyogenes investigational product,

TARA-002 for the LMs indication.

During the term of the services, the Company would generally pay the University of Iowa thirty thousand

dollars ($30) per year to fund the project, plus additional amounts upon the realization of certain milestones.

More specifically, upon

an approval of TARA-002 by the Food and Drug Administration, or the FDA, the Company would pay up to $1,750 to the University of Iowa

for meeting these milestones.

Furthermore, the Company would pay the University of Iowa royalties of up to 1.75% for net sales ranging

from $0 - $25,000, 2.25% for net sales ranging from $25,000 to $50,000, and 2.50% for net sales in excess of $50,000.

Pursuant to the

Iowa Agreement, the University of Iowa would be entitled to additional payments for the Company achieving annual net sales of product

according to the milestones.

For annual net sales of product up to $25,000:

for annual net sales of product of up to $50,000:

and for annual net sales of product

of up to $100,000:

and for annual net sales of product of up to $100,000:

There were no research and

2 unchanged sentences

On June 17, 2019, the Company

entered into an agreement, or the Chugai Pharmaceutical Agreement, with Chugai Pharmaceutical Co., LTD, or Chugai, a drug manufacturing

firm with offices and operations in Japan.

Pursuant to the Chugai Pharmaceutical Agreement, Chugai would help the Company in its goals

to develop and commercialize a therapeutic product, or the New Product, which is comparable to the Chugai existing therapeutic product,

or the Existing Product.

In addition, the Company would be entitled to the use of Chugai materials and technical support as necessary.

On July 14, 2020, the Company and Chugai entered into an amendment, or Chugai Amendment, to the Chugai Pharmaceutical Agreement, with

an effective date of June 30, 2020.

The Chugai Amendment extended the date through which Chugai will exclusively provide the Existing

Product and materials to the Company from June 30, 2020 to June 30, 2021, extended the date through which Chugai will not provide materials

or technical support to any third-party for the purpose of development and commercialization in a given area from the fifth anniversary

to the eleventh anniversary of the original effective date, and provides for further such extensions on the occurrence of certain events

and milestones.

The amendment further provides that, in addition to the designated fee provided upon the initial indication approval in

the Chugai Pharmaceutical Agreement, the Company will pay Chugai a designated fee for each additional indication approval.

is obligated to Chugai for certain payments upon the completion of agreed upon milestones.

As consideration for Chugai’s performance

under the Chugai Pharmaceutical Agreement, the Company agreed to pay Chugai a payment in the low, single-digit millions related to such

initial indication approval, which payment will be made in two installments with an initial payment in July 2020, and the remaining majority

of the payment payable upon FDA approval of the New Product.

entered into an agreement, or the Chugai Pharmaceutical Agreement, with Chugai Pharmaceutical Co., LTD, or Chugai Pharmaceutical, a drug

manufacturing firm with offices and operations in Japan.

Pursuant to the Chugai Pharmaceutical Agreement, Chugai Pharmaceutical would

help the Company in its goals to develop and commercialize a therapeutic product, or the New Product, which is comparable to the Chugai

Pharmaceutical existing therapeutic product, or the Existing Product.

In addition, the Company would be entitled to the use of Chugai

Pharmaceutical materials and technical support as necessary.

On July 14, 2020, the Company and Chugai Pharmaceutical entered into an amendment,

or the Chugai Amendment, to the Chugai Pharmaceutical Agreement, with an effective date of June 30, 2020.

The Chugai Amendment extended

the date through which Chugai Pharmaceutical will exclusively provide the Existing Product and materials to the Company from June 30,

2020 to June 30, 2021, extended the date through which Chugai Pharmaceutical will not provide materials or technical support to any third-party

for the purpose of development and commercialization in a given area from the fifth anniversary to the eleventh anniversary of the original

effective date, and provides for further such extensions on the occurrence of certain events and milestones.

The amendment further provides

that, in addition to the designated fee provided upon the initial indication approval in the Chugai Pharmaceutical Agreement, the Company

will pay Chugai Pharmaceutical a designated fee for each additional indication approval.

The Company is obligated to Chugai Pharmaceutical

for certain payments upon the completion of agreed upon milestones.

As consideration for Chugai Pharmaceutical’s performance under

the Chugai Pharmaceutical Agreement, the Company agreed to pay Chugai Pharmaceutical a payment in the low, single-digit millions related

to such initial indication approval, which payment will be made in two installments with an initial payment in July 2020, and the remaining

majority of the payment payable upon FDA approval of the New Product.

There were no research and

11 unchanged sentences

and warranties in which the Company believes the outcome could result in losses or penalties in the future.

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

Stockholders’ Equity

4 unchanged sentences

common stock are entitled to one vote per share.

Protara Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

Preferred Stock

2 unchanged sentences

of Series 1 Convertible Preferred Stock are authorized for issuance.

As of December 31, 2024 and 2023, 7,991 shares were issued and outstanding.

As of December 31, 2025 and 2024, 5,615 and 7,991 shares were issued

and outstanding, respectively.

Description of Series 1 Convertible Preferred Stock

5 unchanged sentences

entity whose beneficial ownership of the Company’s common stock would be aggregated with such holder’s for purposes of Section

13(d) of the Securities Exchange Act of 1934, as amended, would beneficially own more than 9.99 % of the total number of shares of the

Company’s common stock issued and outstanding after giving effect to such conversion.

Upon written notice to the Company, the holder

may from time to time increase or decrease such limitation to any other percentage not in excess of 19.99 % specified in such notice.

addition, upon the occurrence of certain transactions that involve the merger or consolidation of the Company, an exchange or tender offer,

a sale of all or substantially all of the assets of the Company or a reclassification of its Common Stock, each share of Series 1 Convertible

Preferred Stock will be convertible into the kind and amount of securities, cash and/or other property that the holder of a number of

shares of Common Stock issuable upon conversion of one share of Series 1 Convertible Preferred Stock would receive in connection with

such transaction.

The terms of the Series 1

Convertible Preferred Stock provide that, in the event of a fundamental transaction (as such term is described in the certificate of designation

of preferences, rights and limitations of series 1 convertible non-voting preferred stock), each share of Series 1 Convertible Preferred

Stock outstanding will thereafter be convertible into the kind and amount of securities, cash and/or other property which a holder of

the number of shares of common stock of the Company issuable upon conversion of one share of Series 1 Convertible Preferred Stock immediately

prior to such fundamental transaction would have been entitled to receive pursuant to such fundamental transaction, provided that, if

the value of the aggregate of such securities, cash and/or other property the which the holder of one share of Series 1 Convertible Preferred

Stock would be entitled to upon conversion thereof would be less than the stated value, then each outstanding share of Series 1 Convertible

Preferred Stock will instead be convertible into such kind of securities, cash and/or other property with an aggregate value equal to

the stated value.

13(d) of the Exchange Act would beneficially own more than 9.99 % of the total number of shares of the Company’s common stock issued

and outstanding after giving effect to such conversion.

Upon written notice to the Company, the holder may from time to time increase

or decrease such limitation to any other percentage not in excess of 19.99 % specified in such notice.

In addition, upon the occurrence

of certain transactions that involve the merger or consolidation of the Company, an exchange or tender offer, a sale of all or substantially

all of the assets of the Company or a reclassification of its common stock, each share of Series 1 Convertible Preferred Stock will be

convertible into the kind and amount of securities, cash and/or other property that the holder of a number of shares of common stock issuable

upon conversion of one share of Series 1 Convertible Preferred Stock would receive in connection with such transaction.

The terms of the Series 1 Convertible Preferred Stock provide that,

in the event of a fundamental transaction (as such term is described in the certificate of designation of preferences, rights and limitations

of series 1 convertible non-voting preferred stock), each share of Series 1 Convertible Preferred Stock outstanding will thereafter be

convertible into the kind and amount of securities, cash and/or other property which a holder of the number of shares of common stock

of the Company issuable upon conversion of one share of Series 1 Convertible Preferred Stock immediately prior to such fundamental transaction

would have been entitled to receive pursuant to such fundamental transaction, provided that, if the value of the aggregate of such securities,

cash and/or other property which the holder of one share of Series 1 Convertible Preferred Stock would be entitled to upon conversion

thereof would be less than the stated value, then each outstanding share of Series 1 Convertible Preferred Stock will instead be convertible

into such kind of securities, cash and/or other property with an aggregate value equal to the stated value.

Each share of Series 1 Convertible

3 unchanged sentences

Preferred Stock are not entitled to vote.

During August 2023, approximately

During the year ended December

31, 2025, 2,376 shares of Series 1 Convertible Preferred Stock were converted into 2,376,244 shares of common stock.

Subsequent to December 31,

2024, in February 2025, approximately 1,191 shares of Series 1 Convertible Preferred Stock were converted into 1,190,996 shares of common

Additionally, in March 2025, approximately 1,185 shares of Series 1 Convertible Preferred Stock were converted

into 1,185,248 shares of common stock.

Protara Therapeutics,

Notes to Consolidated

Financial Statements

Protara Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

2024 Private Placement

On April 5, 2024, the Company

entered into a subscription agreement with certain purchasers, or the Purchasers, pursuant to which the Company agreed to sell

and issue to the Purchasers, in a private placement, or the April 2024 Private Placement, an aggregate of 9,143,380 shares of the Company’s

common stock, or the April 2024 Shares, and, for certain purchasers, pre-funded warrants, or the April 2024 Pre-Funded Warrants, to purchase

an aggregate of 1,700,000 shares of the Company’s common stock.

In each case, the April 2024 Shares or April 2024 Pre-Funded Warrants

were issued with warrants, or the Common Warrants, to purchase an aggregate of up to 10,843,380 shares of the Company’s common stock.

Each April 2024 Share, along with its attached Common Warrant, had a purchase price of $ 4.15 , and each April 2024 Pre-Funded Warrant,

along with its attached Common Warrant, had a purchase price of $ 4.149 .

The closing date of the April 2024 Private Placement was April

The April 2024 Private Placement resulted in gross proceeds of approximately $ 44,998 and

net proceeds of approximately $ 41,964 , reflecting approximately $ 3,034 of placement agent’s fees, legal costs and other expenses

connected with the transaction.

The April 2024 Pre-Funded

Warrants are exercisable at any time, at an exercise price of $ 0.001 per share.

The Common Warrants are exercisable on or prior to the

earlier of (i) April 10, 2027 and (ii) 90 days after the public announcement that the Company has demonstrated a six-month complete response

rate of minimum 42% from at least 25 Bacillus Calmette-Guérin, or BCG,-Unresponsive patients in the ADVANCED-2 (Cohort B) clinical

trial, at an exercise price of $ 5.25 per share.

April 5, 2024, the Company entered into a subscription agreement with certain purchasers, or the Purchasers, pursuant to which

the Company agreed to sell and issue to the Purchasers, in a private placement, or the April 2024 Private Placement, an aggregate of 9,143,380

shares of the Company’s common stock, or the April 2024 Shares, and, for certain purchasers, pre-funded warrants, or the April 2024

Pre-Funded Warrants, to purchase an aggregate of 1,700,000 shares of the Company’s common stock.

In each case, the April 2024 Shares

or April 2024 Pre-Funded Warrants were issued with warrants, or the April 2024 Common Warrants, to purchase an aggregate of up to 10,843,380

shares of the Company’s common stock.

Each April 2024 Share, along with its attached April 2024 Common Warrant, had a purchase price

of $ 4.15 , and each April 2024 Pre-Funded Warrant, along with its attached April 2024 Common Warrant, had a purchase price of $ 4.149 .

closing date of the April 2024 Private Placement was April 10, 2024.

The April 2024 Private Placement

resulted in gross proceeds of approximately $ 44,998 and net proceeds of approximately $ 41,964 , reflecting approximately $ 3,034 of

placement agent’s fees, legal costs and other expenses connected with the transaction.

The April 2024 Pre-Funded Warrants are exercisable at any time, at

an exercise price of $ 0.001 per share.

The April 2024 Common Warrants are exercisable on or prior to the earlier of:

(i) April 10, 2027

or (ii) 90 days after the public announcement that the Company has demonstrated a six-month complete response rate of minimum 42 % from

at least 25 Bacillus Calmette-Guérin, or BCG,-Unresponsive patients in the ADVANCED-2 (Cohort B) clinical trial, at an exercise

price of $ 5.25 per share.

The April 2024 Pre-Funded

Warrants and the Common Warrants are exercisable so long as the aggregate number of shares of the Company’s common stock beneficially

owned by the holder (together with its affiliates) would not exceed 9.99 %, or for certain holders, 4.99 % of the number of shares of the

Company’s common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in

accordance with the terms of such April 2024 Pre-Funded Warrant or Common Warrant, as applicable.

Such percentage may be increased or

decreased to any number not in excess of 19.99 % at the holder’s election upon notice to the Company, any such increase not to take

effect until the sixty-first day after notice to the Company.

Warrants and the April 2024 Common Warrants are exercisable so long as the aggregate number of shares of the Company’s common stock

beneficially owned by the holder (together with its affiliates) would not exceed 9.99 %, or for certain holders, 4.99 % of the number of

shares of the Company’s common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is

determined in accordance with the terms of such April 2024 Pre-Funded Warrant or April 2024 Common Warrant, as applicable.

Such percentage

may be increased or decreased to any number not in excess of 19.99 % at the holder’s election upon notice to the Company, any such

increase shall not take effect until the sixty-first day after notice to the Company.

Both the April 2024 Pre-Funded

Warrants and the Common Warrants contain standard adjustments to the exercise price, inclusive of stock splits, stock dividends and pro

rata distributions and contain customary terms regarding the treatment of such April 2024 Pre-Funded Warrants or Common Warrants in the

event of a fundamental transaction, which include but are not limited to a merger or consolidation involving the Company, a sale of all

or substantially all of the assets of the Company or a business combination resulting in any person acquiring more than 50% of the outstanding

shares of common stock of the Company.

Company concluded that the April 2024 Pre-Funded Warrants and Common Warrants met the requirements to be classified in stockholders’

Warrants and the April 2024 Common Warrants contain standard adjustments to the exercise price, inclusive of stock splits, stock dividends

and pro rata distributions and contain customary terms regarding the treatment of such April 2024 Pre-Funded Warrants or April 2024 Common

Warrants in the event of a fundamental transaction, which include but are not limited to a merger or consolidation involving the Company,

a sale of all or substantially all of the assets of the Company or a business combination resulting in any person acquiring more than

50% of the outstanding shares of common stock of the Company.

Company concluded that the April 2024 Pre-Funded Warrants and April 2024 Common Warrants met the requirements to be classified in stockholders’

fair market value of the April 2024 Pre-Funded Warrants was estimated as the difference between the share price of our stock on the agreement

date and the exercise price of the April 2024 Pre-Funded Warrant.

fair market value of the Common Warrants at their issuance was estimated using the Black-Scholes option-pricing model.

The assumed dividend

yield was based upon the Company’s expectation of not paying dividends in the foreseeable future.

Expected volatility for the Company’s

common stock was determined based on the historical volatility of the Company over the full term of the warrant.

The risk-free interest

rate was based upon the U.S.

fair market value of the April 2024 Common Warrants at their issuance was estimated using the Black-Scholes option-pricing model.

assumed dividend yield was based upon the Company’s expectation of not paying dividends in the foreseeable future.

Expected volatility

for the Company’s common stock was determined based on the historical volatility of the Company over the full term of the warrant.

The risk-free interest rate was based upon the U.S.

Treasury yield curve commensurate with the expected term at the time of grant.

The expected term of the Common

Warrants was calculated utilizing the three-year expiration date, taking into consideration the possibility of an accelerated expiration

date pursuant to the terms of the Common Warrants.

estimated fair market values of the April 2024 Shares, April 2024 Pre-Funded Warrants and Common Warrants have been recorded in additional

paid in capital.

of December 31, 2024, 725,000 Common Warrants have been exercised.

As of December 31, 2024, no Common Warrants have expired and no

April 2024 Pre-Funded Warrants have been exercised or expired.

Protara Therapeutics,

Notes to Consolidated

Financial Statements

expected term of the April 2024 Common Warrants was calculated utilizing the three-year expiration date, taking into consideration the

possibility of an accelerated expiration date pursuant to the terms of the April 2024 Common Warrants.

estimated fair market values of the April 2024 Shares, April 2024 Pre-Funded Warrants and April 2024 Common Warrants have been recorded

in additional paid-in capital.

December 31, 2025, 725,000 April 2024 Common Warrants have been exercised, and none have expired.

As of December 31, 2025, 10,118,380

April 2024 Common Warrants were outstanding.

to December 31, 2025, 370,000 April 2024 Common Warrants were exercised.

December 31, 2025, no April 2024 Pre-Funded Warrants have been exercised.

As of December 31, 2025, 1,700,000 April 2024 Pre-Funded Warrants

were outstanding.

Protara Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

2024 Public Offering

December 9, 2024, the Company entered into an underwriting agreement, or the Underwriting Agreement, with TD Securities (USA) LLC, Cantor

Fitzgerald & Co.

and LifeSci Capital LLC, as representatives, or the Representatives, of the several underwriters named therein, or

collectively, the Underwriters, pursuant to which the Company agreed to sell and issue to the Underwriters an aggregate of 13,690,000

shares, or the December 2024 Shares, of common stock of the Company, par value $ 0.001 per share and, for certain purchasers, pre-funded

warrants, or the December 2024 Pre-Funded Warrants, to purchase an aggregate of 2,325,372 shares of Common Stock, or the December 2024

On December 9, 2024, the Company

entered into an underwriting agreement, or the 2024 Underwriting Agreement, with TD Securities (USA) LLC, Cantor Fitzgerald & Co.

and LifeSci Capital LLC, as representatives, or the 2024 Representatives, of the several underwriters named therein, or collectively,

the 2024 Underwriters, pursuant to which the Company agreed to sell and issue to the 2024 Underwriters an aggregate of 13,690,000 shares,

or the December 2024 Shares, of common stock of the Company, par value $ 0.001 per share and, for certain purchasers, pre-funded warrants,

or the December 2024 Pre-Funded Warrants, to purchase an aggregate of 2,325,372 shares of common stock, or collectively the December 2024

Public Offering.

2 unchanged sentences

Offering, minus the $ 0.001 exercise price per December 2024 Pre-Funded Warrant.

In addition, under the terms of the Underwriting Agreement

the Company granted the Underwriters the option, for 30 days, to purchase up to an additional 2,402,305 shares of common stock at the

public offering price, less underwriting discounts and commissions, or the Underwriters’ Option.

In addition, under the terms of the 2024 Underwriting

Agreement the Company granted the 2024 Underwriters the option, for 30 days, to purchase up to an additional 2,402,305 shares of common

stock at the public offering price, less underwriting discounts and commissions, or the 2024 Underwriters’ Option.

December 2024 Public Offering closed on December 11, 2024, resulting in gross proceeds of approximately $ 100.1 million and net proceeds

12 unchanged sentences

fair market value of the December 2024 Pre-Funded Warrants has been determined as the spread between the price paid by the 2024 Underwriters

and the share price of our stock on the agreement date.

The estimated fair values of the December 2024 Shares and December 2024 Pre-Funded

Warrants have been recorded in additional paid in capital.

of December 31, 2024, no December 2024 Pre-Funded Warrants have expired or have been exercised.

to December 31, 2024, on January 8, 2025, the Underwriters notified the Company of their determination to exercise the Underwriters’

Option in part, and purchased an additional 438,738 shares of Common Stock, at the public offering price less underwriting discounts and

and the share price of the Company’s common stock on the agreement date.

The estimated fair values of the December 2024 Shares and

December 2024 Pre-Funded Warrants have been recorded in additional paid-in capital.

January 8, 2025, the 2024 Underwriters notified the Company of their determination to exercise the 2024 Underwriters’ Option in

part, and purchased an additional 438,738 shares of common stock, at the public offering price less underwriting discounts and commissions.

Closing for the partial exercise of the 2024 Underwriters’ Option occurred on January 13, 2025.

The transaction costs will

be charged to additional paid in capital in the period the Underwriters’ Option was exercised.

The transaction costs were charged

to additional paid-in capital in the period the 2024 Underwriters’ Option was exercised.

exercise of the 2024 Underwriters’ Option resulted in gross proceeds of approximately $ 2.7 million and net proceeds of approximately

$ 2.5 million, reflecting approximately $ 0.2 million of underwriters’ fees, legal costs and other expenses connected with the transaction.

December 31, 2025, 625,100 December 2024 Pre-Funded Warrants have been exercised.

As of December 31, 2025, 1,700,272 December 2024 Pre-Funded

Warrants were outstanding.

2025 Public Offering

December 4, 2025, the Company entered into an underwriting agreement, or the 2025 Underwriting Agreement, with J.P.

Morgan Securities

LLC, TD Securities (USA) LLC and Piper Sandler & Co., as representatives, or the 2025 Representatives, of the several underwriters

named therein, or collectively, the 2025 Underwriters, pursuant to which the Company agreed to sell and issue to the 2025 Underwriters

an aggregate of 13,043,479 shares, or the December 2025 Shares, of common stock of the Company, par value $ 0.001 per share, or collectively

the December 2025 Public Offering.

The price to the public in the December 2025 Public Offering was $ 5.75 per December 2025 Share.

addition, under the terms of the 2025 Underwriting Agreement the Company granted the 2025 Underwriters the option, for 30 days, to purchase

up to an additional 1,956,521 shares of common stock at the public offering price, less underwriting discounts and commissions, or the

2025 Underwriters’ Option.

Protara Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

December 2025 Public Offering closed on December 8, 2025, resulting in gross proceeds of approximately $ 75.0 million and net proceeds

of approximately $ 69.9 million, reflecting approximately $ 5.1 million of underwriters’ fees, legal costs and other expenses connected

with the transaction.

December 11, 2025, the 2025 Underwriters notified the Company of their determination to exercise the 2025 Underwriters’ Option in

full, and purchased an additional 1,956,521 shares of common stock, at the public offering price less underwriting discounts and commissions.

Closing for the full exercise of the 2025 Underwriters’ Option occurred on December 15, 2025.

The exercise of the 2025 Underwriters’

Option resulted in gross proceeds of approximately $ 11.3 million and net proceeds of approximately $ 10.5 million, reflecting approximately

$ 0.8 million of underwriters’ fees, legal costs and other expenses connected with the transaction.

Stock-Based Compensation

6 unchanged sentences

On January 1, 2020, Protara Therapeutics,

amended its Amended and Restated 2014 Equity Incentive Plan to increase the number of shares of stock available for issuance under

the 2014 Equity Incentive Plan to 1,048,300 shares and made conforming changes and updates pursuant to Section 162(m) of the Code.

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

amended its Amended and Restated 2014 Plan to increase the number of shares of stock available for issuance under the Amended and

Restated 2014 Plan to 1,048,300 shares and made conforming changes and updates pursuant to Section 162(m) of the Internal Revenue Code

of 1986, as amended.

The Amended and Restated

2014 Plan provided for the grant of incentive and non-statutory stock options, stock appreciation rights, restricted stock and stock unit

awards, performance units, stock grants and qualified performance-based awards.

The Amended and Restated 2014 Plan provided that the number

of shares reserved and available for issuance would automatically increase each January 1, by four percent of the Company’s common

stock on the immediately preceding December 31, adjusted for the number of shares of the Company’s common stock issuable upon conversion

of any security that the Company may issue that is convertible into or exchangeable for the Company’s common stock, or such lesser

number of shares as determined by the Company’s Board of Directors.

Terms of the stock awards,

including vesting requirements, are determined by the Board of Directors, subject to the provisions of the plans.

Certain awards provide

for accelerated vesting if there is a change in control as defined in the Amended and Restated 2014 Plan.

On January 1, 2023, pursuant

to the annual evergreen feature of the Amended and Restated 2014 Plan, the number of shares authorized under the Amended and Restated

2014 Plan, was increased by 861,933 shares to 3,563,303 shares.

2014 Plan, as amended, provides for the grant of incentive and non-statutory stock options, stock appreciation rights, restricted stock

and stock unit awards, performance units, stock grants and qualified performance-based awards.

The Amended and Restated 2014 Plan, as

amended, provided that the number of shares reserved and available for issuance would automatically increase each January 1, by four percent

of the Company’s common stock on the immediately preceding December 31, adjusted for the number of shares of the Company’s

common stock issuable upon conversion of any security that the Company may issue that is convertible into or exchangeable for the Company’s

common stock, or such lesser number of shares as determined by the Company’s Board of Directors.

Terms of the stock awards, including

vesting requirements, are determined by the Board of Directors, subject to the provisions of the Amended and Restated 2014 Plan, as amended.

Certain awards provide for accelerated vesting if there is a change in control as defined in the Amended and Restated 2014 Plan, as amended.

On January 1, 2024, pursuant

to the annual evergreen feature of the Amended and Restated 2014 Plan, the number of shares authorized under the Amended and Restated

2014 Plan, was increased by 911,380 shares to 4,474,683 shares.

Following the approval of the Company’s 2024 Equity Incentive

Plan, or 2024 EIP, by the stockholders of the Company on June 7, 2024, no additional awards will be made under the Amended and Restated

to the annual evergreen feature of the Amended and Restated 2014 Plan, as amended, the number of shares authorized under the Amended and

Restated 2014 Plan, as amended, was increased by 911,380 shares to 4,474,683 shares.

Following the approval of the Company’s 2024

Equity Incentive Plan, or 2024 EIP, by the stockholders of the Company on June 7, 2024, no additional awards will be made under the Amended

and Restated 2014 Plan, as amended.

As of December 31, 2025,

there were 3,700,664 shares of common stock subject to outstanding awards.

there were 3,537,989 shares of common stock subject to outstanding awards under the Amended and Restated 2014 Plan, as amended.

2017 Equity Incentive Plan

On August 10, 2017, Private

ArTara, (a predecessor of the Company), its Board of Directors and its stockholders approved the ArTara Therapeutics, Inc.

Incentive Plan to enable Private ArTara and its affiliates to recruit and retain highly qualified personnel and to incentivize personnel

for productivity and growth.

The 2017 Equity Incentive

Plan provided for the grant of a total of 2,000,000 shares for the issuance of stock options, stock appreciation rights, restricted stock

and restricted stock units to among others, members of the Board of Directors, employees, consultants and service providers to the Company

and its affiliates.

As of January 9, 2020, in connection with the Merger, no additional awards will be made under the 2017 Equity Incentive

On August 10, 2017, ArTara

Subsidiary, Inc.

(a predecessor of the Company), or Private ArTara, along with its Board of Directors and its stockholders approved the

ArTara Therapeutics, Inc.

2017 Equity Incentive Plan to enable Private ArTara and its affiliates to recruit and retain highly qualified

personnel and to incentivize personnel for productivity and growth.

Protara Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

The total number of shares

authorized under the 2017 Equity Incentive Plan was 2,000,000 for the issuance of stock options, stock appreciation rights, restricted

stock and RSUs to among others, members of the Board of Directors, employees, consultants and service providers to the Company and its

As of January 9, 2020, in connection with the Merger, no additional awards will be made under the 2017 Equity Incentive Plan.

As of December 31, 2025,

there were 134,328 shares of common stock subject to outstanding awards.

there were 134,328 shares of common stock subject to outstanding awards under the 2017 Equity Incentive Plan.

2020 Inducement Plan

On March 26, 2020, the Compensation

Committee of the Board of Directors, or the Compensation Committee, approved the ArTara Therapeutics, Inc.

Inducement Plan, or the 2020

Inducement Plan, in order to award nonstatutory stock options, restricted stock awards, restricted stock unit awards and other stock-based

awards to persons not previously an employee or director of the Company, or following a bona fide period of non-employment, as an inducement

material to such persons entering into employment with the Company.

The 2020 Inducement Plan provides for a total of 600,000 shares for

the issuance of the Company’s common stock.

The Compensation Committee also adopted a form of stock option grant notice and stock

option agreement and forms of restricted stock unit grant notice and restricted stock unit agreement for use with the 2020 Inducement

Committee of the Board of Directors, or the Compensation Committee, approved the 2020 Inducement Plan in order to award non-statutory

stock options, restricted stock awards, restricted stock unit awards and other stock-based awards to persons not previously an employee

or director of the Company, or following a bona fide period of non-employment, as an inducement material to such persons entering into

employment with the Company.

The Compensation Committee also adopted a form of stock option grant notice and stock option agreement and

forms of restricted stock unit grant notice and restricted stock unit agreement for use with the 2020 Inducement Plan.

The 2020 Inducement

Plan provided for a total of 600,000 shares for the issuance of the Company’s common stock.

On March 3, 2025, the Compensation

Committee approved a Certificate of First Amendment to the 2020 Inducement Plan, or the Amended 2020 Inducement Plan, to increase

the number of shares provided for under the Amended 2020 Inducement Plan by 600,000 shares to 1,200,000 shares.

As of December 31,

there were 512,900 shares of common stock subject to outstanding awards and 87,100 shares of common stock available for future issuance

under the 2020 Inducement Plan.

Subsequent to December 31, 2024, on March 3, 2025, the Compensation

Committee approved a Certificate of First Amendment to the 2020 Inducement Plan to increase the number of shares provided for under the

plan by 600,000 shares to 1,200,000 shares.

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

2025, there were 1,182,800 shares of common stock subject to outstanding awards and 17,200 shares of common stock available for future

issuance under the Amended 2020 Inducement Plan.

2024 Equity Incentive

1 unchanged sentence

approved the 2024 EIP.

The 2024 EIP provides for the grant of 1,500,000 shares of common stock for stock options, stock appreciation rights,

restricted stock, restricted stock units, performance units, performance shares and other stock and cash awards.

The 2024 EIP provided for the grant of 1,500,000 shares of common stock for stock options, stock appreciation rights,

restricted stock, RSUs, performance units, performance shares and other stock and cash awards.

On June 11, 2025, the stockholders approved

an amendment to the 2024 EIP, or the Amended 2024 EIP, increasing the number of shares available for grant under the Amended 2024 EIP

by 2,800,000 shares to 4,300,000 shares.

Terms of the stock awards,

including vesting requirements, are determined by the Board of Directors, subject to the provisions of the 2024 EIP.

including vesting requirements, are determined by the Board of Directors, or the Compensation Committee thereof, subject to the provisions

of the Amended 2024 EIP.

As of December 31, 2025,

there were 1,699,419 shares of common stock subject to outstanding awards and 2,600,581 shares of common stock available for future issuance

under the 2024 EIP.

under the Amended 2024 EIP.

2024 Employee Stock

4 unchanged sentences

As of December 31, 2025,

the number of shares available for issuance was 1,000,000 .

During year ended December 31, 2024, no shares were issued under the 2024 ESPP.

the number of shares available for issuance under the 2024 ESPP was 1,000,000 .

During the years ended December 31, 2025 and 2024, no shares

were issued under the 2024 ESPP.

Protara Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

Restricted Stock Units

1 unchanged sentence

unit activity:

Average Grant

Non-vested at December 31, 2023

Non-vested at December 31, 2024

The fair value of RSUs is

amortized on a straight-line basis over the requisite service period of the respective awards.

As of December 31, 2024, the unamortized

value of RSUs was $ 376 .

As of December 31, 2024, the weighted average remaining amortization period was 1.58 years.

As of December 31,

2024 and 2023, 289,500 RSUs have vested that have not yet been settled into shares of the Company’s common stock.

Non-vested as of December 31, 2024

Non-vested as of December 31, 2025

The fair value of RSUs is amortized on a straight-line basis over the

requisite service period of the respective awards.

As of December 31, 2025, the unamortized value of RSUs was $ 1,369 and the weighted

average remaining amortization period was 1.82 years.

As of December 31, 2025 and 2024, 289,500 RSUs have vested that have not yet been

settled into shares of the Company’s common stock.

During the year ended December

8 unchanged sentences

2.80 - $ 6.74

1.91 - $ 5.18

Dividend yield

5 unchanged sentences

3.69 % - 4.49

Expected life (in years)

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

Expected term (in

The following table summarizes

3 unchanged sentences

Term (years) Aggregate

Outstanding at December 31, 2023 2,900,205 $ 9.50 8.03 $ 20

Outstanding as of December 31, 2024 3,855,478 $ 7.30 7.66 $ 6,736

Granted 1,902,863 4.18

2 unchanged sentences

Expired ( 5,739 ) 5.02

Outstanding at December 31, 2024 3,855,478 $ 7.30 7.66 $ 6,736

Vested or expected to vest at December 31, 2024 3,855,478 $ 7.30 7.66 $ 6,736

Outstanding as of December 31, 2025 5,693,891 $ 6.30 7.51 $ 8,982

Vested or expected to vest as of December 31, 2025 5,693,891 $ 6.30 7.51 $ 8,982

Exercisable as of December 31, 2025 2,904,405 $ 8.90 6.32 $ 4,072

(1) Aggregate intrinsic

value represents the difference between the exercise price of the option and the closing market price of our common stock on December 31,

(1) Aggregate intrinsic value represents the difference between the exercise price of the option and the closing market price of our common stock on December 31, 2025.

The intrinsic value of options exercised during the years ended December 31, 2025 and 2024 were $ 7 and $ 23 , respectively.

Protara Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

The weighted average grant

date fair value per share of the options granted during the years ended December 31, 2025 and 2024 was $ 3.01 and $ 1.62 , respectively.

As of December 31, 2024, there was approximately $ 3,566 of unrecognized share-based compensation for unvested stock option grants which

As of December 31, 2025, there was approximately $ 5,881 of unrecognized stock-based compensation for unvested stock option grants which

is expected to be recognized over a weighted average period of 2.44 years.

The total unrecognized share-based compensation cost will be

The total unrecognized stock-based compensation cost will be

adjusted for actual forfeitures as they occur.

Summary of Stock-Based Compensation Expense

The following tables summarize total stock-based compensation expense

The following tables summarize

total stock-based compensation expense recognized:

For the Year Ended

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Research and development

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

Federal and State income tax expense is as follows:

For financial reporting purposes, income (loss)

before taxes includes the following components:

For the Year Ended

United States

Total income (loss) before taxes

Federal and State income tax expense (benefit)

is as follows:

For the Year Ended

Total current

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applicable, are provided for the differences between the basis of assets and liabilities for financial reporting and income tax purposes.

Protara Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

The tax effects of temporary

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Stock option expense

Research and development credits

Research and development tax credits

Operating lease liability

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Deferred tax liabilities:

Operating right-of-use asset

Operating ROU asset

Total deferred tax liabilities

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federal statutory rate

State taxes, net of federal benefit

State rate change

Research and development credits

True-up to prior years return

Stock-based compensation

Change in valuation allowance

State and local income taxes, net of the federal benefit (a)

Foreign tax effects

Research and development tax credits

Orphan drug tax credits

Changes in valuation allowance

Nontaxable or nondeductible items

Changes in unrecognized tax benefits

Effective tax rate

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(a) State and local taxes in New York and New York City comprise the majority of the state taxes, net of the federal benefit.

Protara Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

For the year ended December

31, 2024, the Company’s effective tax rate was 0% , which consisted principally of a federal rate of 21 %, and the Company’s

estimate of state taxes, net of federal benefit, of 11.8 %, as well as state tax rate and apportionment changes of 8.1 %, which collectively

are offset by a valuation allowance impact of 44.5 %.

For the year ended December 31, 2023, the Company’s effective tax rate was

0% , which consisted principally of a federal rate of 21 %, the Company’s estimate of state taxes, net of federal benefit, of 7.8 %,

state tax rate and apportionment changes of 4.0 %, which collectively are offset by a valuation allowance impact of 33.9 %.

As of December 31, 2024 and

December 31, 2023 for U.S.

federal and state income tax reporting purposes, the Company has approximately $ 244,842 and $ 187,492 , respectively,

of unused net operating losses, or NOLs, available for carry forward to future years.

As a result of the Tax Cuts and Jobs Act of 2017,

or TCJA, for U.S.

income tax purposes, NOLs generated in tax years beginning before January 1, 2018 can be carried forward for up to 20

years, but net operating losses generated for tax years beginning after December 31, 2017 may be carried forward indefinitely and can

be used to offset 80 % of taxable income.

Of the total Federal NOL carried forward, $ 600 can be carried forward until 2037 ;

and $ 148,192

can be carried forward indefinitely.

The New York state and city NOLs may be carried forward through the year 2044 and may be applied

against future taxable income.

Further, the benefit from utilization of NOL carry forwards could be subject to limitations due to material

ownership changes that could occur as the Company continues to issue additional shares of common stock pursuant to its capital raising

Based on such limitations, the Company has significant NOLs for which realization of tax benefits is uncertain.

The Company has

not performed a study to determine whether or not there is such a limitation.

Income taxes paid (net of refunds received) consisted of the following:

For the Year Ended

Effective tax rate

For the years ended December

31, 2025 and 2024, the Company’s effective tax rate was 0% , which consisted principally of a federal rate of 21 %, the Company’s

estimate of state income taxes, primarily driven by changes in tax rate and apportionment changes net of the federal benefit, research

and development related tax credits, and the change in the valuation allowance recorded against its deferred tax assets.

As of December 31, 2025 and 2024 for U.S.

federal and state income

tax reporting purposes, the Company has approximately $ 300,069 and $ 244,842 , respectively, of unused net operating losses, or NOLs, available

for carry forward to future years.

As a result of the Tax Cuts and Jobs Act of 2017, or TCJA, for U.S.

income tax purposes, NOLs generated

in tax years beginning before January 1, 2018 can be carried forward for up to 20 years, but NOLs generated for tax years beginning after

December 31, 2017 may be carried forward indefinitely and can be used to offset 80 % of taxable income.

Of the total federal NOLs carried

forward, $ 600 can be carried forward until 2037 ;

and $ 177,416 can be carried forward indefinitely.

The New York state and city NOLs may

be carried forward through the year 2045 and may be applied against future taxable income, while Massachusetts NOLs may be carried forward

through the year 2038 to apply against future taxable income.

Further, the benefit from utilization of NOL carry forwards could be subject

to limitations due to material ownership changes that may have occurred or could occur in the future as the Company continues to issue

additional shares of common stock pursuant to its capital raising plans.

Based on such limitations, the Company has significant NOLs for

which realization of tax benefits is uncertain.

The Company has not performed a study to determine whether or not there is such a limitation.

The Company remains subject

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Based on a history of cumulative

losses at the Company and the results of operations for the years ended December 31, 2024 and December 31, 2023, the Company determined

that it is more likely than not that it will not realize benefits from the net deferred tax assets.

The Company will not record income

tax benefits in the financial statements until it is determined that it is more likely than not that the Company will generate sufficient

taxable income to realize the deferred income tax assets.

As a result of the analysis, the Company determined that a full valuation allowance

against the deferred tax assets, net, was required.

As of December 31, 2024 and December 31, 2023, the Company has recorded a valuation

allowance of $ 72.5 million and $ 52.7 million, respectively.

As of December 31, 2024 and

December 31, 2023, management does not believe that the Company has any material uncertain tax positions that would require it to measure

and reflect the potential lack of sustainability of a position on audit in its consolidated financial statements.

losses at the Company and the results of operations for the years ended December 31, 2025 and 2024, the Company determined that it is

more likely than not that it will not realize benefits from the net deferred tax assets.

The Company will not record income tax benefits

in the financial statements until it is determined that it is more likely than not that the Company will generate sufficient taxable income

to realize the deferred income tax assets.

As a result of the analysis, the Company determined that a full valuation allowance against

the deferred tax assets, net, was required.

As of December 31, 2025 and 2024, the Company has recorded a valuation allowance of $ 83.6

million and $ 72.5 million, respectively.

In July 2025, U.S.

tax legislation

known as the “One Big Beautiful Bill Act”, or OBBBA, was signed into law which makes permanent many of the tax provisions

enacted in 2017 as part of the TCJA that were set to expire at the end of 2025.

In addition, the OBBBA makes changes to certain U.S.

tax provisions, many of which are generally not effective until January 1, 2026.

The OBBBA did not have a material effect on the Company’s

consolidated financial statements for the year ended December 31, 2025.

As of December 31, 2025

and 2024, management does not believe that the Company has any material uncertain tax positions that would require it to measure and

reflect the potential lack of sustainability of a position on audit in its consolidated financial statements.

The Company will continue

to evaluate its uncertain tax positions in future periods to determine if measurement and recognition in its financial statements is necessary.

to evaluate its uncertain tax positions in future periods to determine if measurement and recognition in its consolidated financial statements

is necessary.

The Company does not believe there will be any material changes in its unrecognized tax positions over the next year.

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The Company maintains a defined

contribution benefit plan under section 401(k) of the Internal Revenue Code covering substantially all qualified employees of the Company,

or the 401(k) Plan.

Under the 401(k) Plan, the Company matches 100 % of employee contributions up to 4 % of employee compensation.

years ended December 31, 2024 and 2023, the Company recorded expenses of $ 251 and $ 237 , respectively, representing employer contributions

under the 401(k) Plan.

contribution benefit plan under section 401(k) of the Internal Revenue Code of 1986, as amended, covering substantially all qualified

employees of the Company, or the 401(k) Plan.

Under the 401(k) Plan, the Company matches 100 % of employee contributions up to 4 % of employee

compensation.

For the years ended December 31, 2025 and 2024, the Company recorded expenses of $ 342 and $ 251 , respectively, representing

employer contributions under the 401(k) Plan.

Protara Therapeutics, Inc.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share data)

Net Income (Loss) per Common Share

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Net income (loss) per share attributable to common stockholders, basic and diluted

Protara Therapeutics,

Notes to Consolidated

Financial Statements

(amounts in thousands, except share and per share data)

Since the Company was in

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net income (loss) per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive

Common Warrants

April 2024 Common Warrants

Series 1 Convertible Preferred Stock

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Subject to the terms of the

Underwriting Agreement, the Underwriters’ Option allowed for the purchase of an additional 2,402,305 shares of common stock.

to December 31, 2024, on January 8, 2025, the Underwriters notified the Company of their determination to exercise the Underwriters’

2024 Underwriting Agreement, the 2024 Underwriters’ Option allowed for the purchase of an additional 2,402,305 shares of common

On January 8, 2025, the 2024 Underwriters notified the Company of their determination to exercise the 2024 Underwriters’

Option in part, and purchased an additional 438,738 shares of common stock, see Note 11 for further discussion.

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The CODM allocates resources and assesses performance of the Company’s single reportable segment

by regularly reviewing the segment net income (loss) that also is reported on the income statement as consolidated net income (loss).

The measure of segment assets is reported on the balance sheet as total consolidated assets.

by regularly reviewing the segment net income (loss) that also is reported on the consolidated statements of operations and comprehensive

loss as consolidated net income (loss).

The measure of segment assets is reported on the consolidated balance sheets as total consolidated

The following table sets

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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