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Item 1. Financial Statements

2026-05-12 compared with 2025-11-12 · 197 added, 283 removed, 237 unchanged (67% of the section changed)

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CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

Current assets:

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Series B, $ 0.001 par value:

1,804,394 shares issued and outstanding as of September 30, 2025 and December 31, 2024

1,454,545 shares issued and outstanding as of March 31, 2026 and December 31, 2025

Common stock, $ 0.001 par value;

10,000,000 shares authorized as of September 30, 2025 and December 31, 2024;

1,544,840 shares issued as of September 30, 2025 and December 31, 2024;

1,542,139 shares outstanding as of September 30, 2025 and December 31, 2024

10,000,000 shares authorized as of March 31, 2026 and December 31, 2025;

2,293,757 shares issued as of March 31, 2026 and December 31, 2025;

2,291,056 shares outstanding as of March 31, 2026 and December 31, 2025

Additional paid in capital

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED

SEPTEMBER 30,

NINE MONTHS ENDED

SEPTEMBER 30,

Three Months Ended March 31,

Royalty revenue

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Research and development

( 2,292,068 )

( 2,246,077 )

General and administrative

( 2,129,602 )

( 2,710,670 )

Total operating costs and expenses

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( 1,535,670 )

( 4,421,670 )

( 4,956,747 )

Loss from operations

( 2,211,555 )

( 3,105,283 )

Other income:

Other (expense) income:

Other (expense) income

Interest income, net

Total other income

$ ( 509,940 )

$ ( 436,671 )

Total other income, net

$ ( 456,382 )

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS'

THREE MONTHS ENDED SEPTEMBER 30, 2025

Preferred Stock

Additional Paid in

Accumulated Other Comprehensive

Total Stockholders'

Balance as of July 1, 2025

$ 208,260,682

$ ( 198,786,315 )

$ ( 5,281,180 )

Share-based expense

Balance as of September 30, 2025

$ 208,276,537

$ ( 199,296,255 )

$ ( 5,281,180 )

NINE MONTHS ENDED SEPTEMBER 30, 2025

THREE MONTHS ENDED MARCH 31, 2026

Preferred Stock

Additional Paid in

Accumulated Other Comprehensive

Total Stockholders'

Number of Shares

Value ($0.001)

Number of Shares

Value ($0.001)

Accumulated Deficit

Comprehensive Income

Stockholders' Equity

Balance as of January 1, 2026

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Share-based expense

( 2,101,784 )

Balance as of September 30, 2025

$ 208,276,537

$ ( 199,296,255 )

$ ( 5,281,180 )

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

XENETIC BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS'

THREE MONTHS ENDED SEPTEMBER 30, 2024

Preferred Stock

Additional Paid in

Accumulated Other Comprehensive

Total Stockholders'

Balance as of July 1, 2024

$ 208,173,105

$ ( 195,703,279 )

$ ( 5,281,180 )

Exercise of purchase warrants

Share-based expense

Balance as of September 30, 2024

Balance as of March 31, 2026

$ 212,306,163

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$ ( 5,281,180 )

NINE MONTHS ENDED SEPTEMBER 30, 2024

THREE MONTHS ENDED MARCH 31, 2025

Preferred Stock

Additional Paid in

Accumulated Other Comprehensive

Total Stockholders'

Comprehensive

Stockholders'

Balance as of January 1, 2025

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$ ( 5,281,180 )

Exercise of purchase warrants

Issuance of common stock in connection with restricted stock

Share-based expense

( 2,905,754 )

Balance as of September 30, 2024

Balance as of March 31, 2025

$ 208,244,999

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

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( 1,001,892 )

( 2,143,486 )

Net change in cash

( 1,001,892 )

( 2,143,486 )

Cash at beginning of period

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SymbioTec, GmbH (“SymbioTec”), own various United States (“U.S.”) federal trademark registrations and applications

along with unregistered trademarks and service marks, including but not limited to XCART™, OncoHist™, PolyXen ® ,

ErepoXen™, and ImuXen™, which may be used throughout this Quarterly Report.

All other company and product names may be trademarks

of the respective companies with which they are associated.

along with unregistered trademarks and service marks, including but not limited to XCART™, OncoHist™, PolyXen™, ErepoXen™,

and ImuXen™, which may be used throughout this Quarterly Report.

All other company and product names may be trademarks of the respective

companies with which they are associated.

Going Concern and Management’s Plan

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to fund the Company’s operations for a period of at least twelve months from the date of the issuance of these financial statements.

In addition, subsequent to quarter end, the Company raised approximately $3.9 million in an underwritten offering of common stock as more

fully described in Note 10 to the condensed consolidated interim financial statements.

However, the Company anticipates it will need additional

capital in the long-term to pursue its business initiatives.

While the Company believes it will continue to have access to capital resources

through possible public or private equity offerings, debt financings, corporate collaborations, related party funding, or other means

to continue as a going concern, the terms, timing and extent of any future financing will depend upon several factors, including the achievement

of progress in its product development programs, its ability to identify and enter into licensing or other strategic arrangements, its

continued listing on the Nasdaq Stock Market (“Nasdaq”), and factors related to financial, economic, geo-political, industry

and market conditions, many of which are beyond its control.

The capital markets for the biotech industry can be highly volatile, which

make the terms, timing and extent of any future financing uncertain.

In addition, the Company raised $4.0 million in an underwritten offering of common stock in October 2025.

However, the Company anticipates

it will need additional capital in the long-term to pursue its business initiatives.

While the Company believes it will continue to have

access to capital resources through possible public or private equity offerings, debt financings, corporate collaborations, related party

funding, or other means to continue as a going concern, the terms, timing and extent of any future financing will depend upon several

factors, including the achievement of progress in its product development programs, its ability to identify and enter into licensing or

other strategic arrangements, its continued listing on the Nasdaq Stock Market (“Nasdaq”), and factors related to financial,

economic, geo-political, industry and market conditions, many of which are beyond its control.

The capital markets for the biotech industry

can be highly volatile, which make the terms, timing and extent of any future financing uncertain.

Recent Developments

The Company and its board of directors (the “Board”)

have initiated a formal strategic review process with the assistance of outside financial and legal advisors.

The Company is considering

a wide range of alternatives to maximize shareholder value, including, but not limited to, the sale of all or part of the Company or its

assets or a business combination, including a “reverse merger”.

An independent committee of the Board has engaged in preliminary

discussions with third parties regarding potential transactions.

Any such completed transaction could have a significant impact on the

Company’s stockholders, including if the transaction would result in the current investors of the counterparty holding a substantial

majority of the Company’s outstanding common stock following consummation of the potential transaction.

Given the preliminary stage

of such discussions, at this time there is no way to quantify the potential impact of a transaction, if any.

There is no deadline or definitive

timetable set for the completion of the strategic alternatives process, and there can be no assurance any proposal will be made or accepted,

any agreement will be executed, or any transaction will be consummated in connection with this review.

In addition, if the Company does

enter into definitive agreements with respect to a potential transaction, the Company expects that consummation of the potential transaction

would be subject to a number of conditions, including approval by the Company’s stockholders and Nasdaq, and other customary conditions,

which would be out of the Company’s control and may never be satisfied.

The Company remains committed to advancing its DNase technology

and does not intend to make further announcements regarding the review process unless and until the Board approves a specific transaction

or otherwise determines that further disclosure is appropriate.

The Company and its board of directors (the

“Board”) have initiated a formal strategic review process with the assistance of outside financial and legal advisors.

The Company is considering a wide range of alternatives to maximize shareholder value, including, but not limited to, the sale of

all or part of the Company or its assets or a business combination, including a “reverse merger”, share exchange or

similarly structured transaction.

An independent committee of the Board has engaged in discussions with third parties regarding

potential transactions.

Any such completed transaction could have a significant impact on the Company’s stockholders,

including if the transaction would result in the current investors of the counterparty holding a substantial majority of the

Company’s outstanding common stock following consummation of the potential transaction.

Given the current stage of such

discussions, at this time there is no way to quantify the potential impact of a transaction, if any.

There is no deadline or

definitive timetable set for the completion of the strategic alternatives process, and there can be no assurance any proposal will

be made or accepted, any agreement will be executed, or any transaction will be consummated in connection with this review.

addition, if the Company does enter into definitive agreements with respect to a potential transaction, the Company expects that

consummation of the potential transaction would be subject to a number of conditions, including approval by the Company’s

stockholders and Nasdaq, and other customary conditions, which would be out of the Company’s control and may never be

The Company remains committed to advancing its DNase technology and does not intend to make further announcements

regarding the review process unless and until the Board approves a specific transaction or otherwise determines that further

disclosure is appropriate.

Risks and Uncertainties

Impact of Global

Conflicts on Operations

Events and Conflicts on Operations

The short and long-term

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with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended

December 31, 2024 filed with the SEC on March 18, 2025, and amended on April 29, 2025 and May 13, 2025.

December 31, 2025 filed with the SEC on March 12, 2026, and amended on April 24, 2026.

Principles of Consolidation

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Segment Information

The Company is principally engaged in pre-clinical

research and development activities to advance its DNase technology.

Operating segments are identified as components of an enterprise

about which separate discrete financial information is available for evaluation by the chief operating decision maker (“CODM”),

who is the Company’s Chief Executive Officer, in making decisions on how to allocate resources and assess performance.

views its operations and manages its business as a single operating segment.

The Company’s measure of segment profit or loss is

The Company is required to disclose significant

segment expenses that are regularly provided to the chief operating decision maker (“CODM”), a description of other segment

items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate

The Company is principally engaged in pre-clinical research and development activities to advance its DNase technology.

segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation

by the CODM, who is the Company’s Chief Executive Officer, in making decisions on how to allocate resources and assess performance.

The Company views its operations and manages its business as a single operating segment.

The Company’s measure of segment profit

or loss is net loss.

The CODM manages and allocates to the operations of the Company on a total company basis.

Managing and allocating resources

on a consolidated basis enables the CODM to assess the overall level of resources available and how best to deploy these resources across

functions, therapeutic areas and research and development projects that are in line with the Company’s long-term company-wide strategic

Consistent with this decision-making process, the CODM uses consolidated financial information for purposes of evaluating performance,

forecasting future period financial results, allocating resources and setting incentive targets.

Managing and allocating

resources on a consolidated basis enables the CODM to assess the overall level of resources available and how best to deploy these resources

across functions, therapeutic areas and research and development projects that are in line with the Company’s long-term company-wide

strategic goals.

Consistent with this decision-making process, the CODM uses consolidated financial information for purposes of evaluating

performance, forecasting future period financial results, allocating resources and setting incentive targets.

The following table is representative

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A reconciliation

to the condensed consolidated net loss for the three and nine months ended September 30, 2025 and 2024 is as follows:

Schedule of consolidated net loss

Three Months Ended September 30,

Program expenses (1)

Non-program expenses (2)

Salaries and wages

Other segment items (3)

$ ( 509,940 )

$ ( 436,671 )

Nine Months Ended September 30,

to the condensed consolidated net loss for the three months ended March 31, 2026 and 2025 is as follows:

Net loss by segment

Three Months Ended March 31,

Program expenses (1)

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Includes information technology, legal, intellectual property and other general and administrative expenses.

Includes stock-based compensation expense, interest income and other income.

Includes stock-based compensation expense, interest income and other expense (income).

Basic and Diluted Net Loss per Share

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that are outstanding during the period, except where such non-participating securities would be anti-dilutive.

Basic and diluted net loss per share are the same

in each respective three or nine month period due to the Company’s net loss position in each period.

Potentially dilutive, non-participating

securities have not been included in the calculations of diluted net loss per share, as their inclusion would be anti-dilutive.

For the three months ended March 31, 2026 and

2025, basic and diluted net loss per share are the same for each respective period due to the Company’s net loss position.

dilutive, non-participating securities have not been included in the calculations of diluted net loss per share, as their inclusion would

be anti-dilutive.

Significant Strategic Collaborations

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Royalty payments

of approximately $ 1 .0 million and $ 2.2 million were recorded as revenue by the Company during the three and nine months ended September

30, 2025, respectively, and approximately $ 0.6 million and $ 1.9 million were recorded as revenue by the Company during the three and nine

months ended September 30, 2024, respectively.

These payments are based on single digit royalties on net sales of certain covered products.

The Company’s policy is to recognize royalty payments as revenue when they are reliably measurable, which is upon receipt of reports

The Company receives these reports in the quarter subsequent to the actual sublicensee sales.

At the time the revenue was

received, there were no remaining performance obligations and all other revenue recognition criteria were met.

of approximately $ 0.8 million and $ 0.6 million were recorded as revenue during the three months ended March 31, 2026 and 2025, respectively,

and are based on single digit royalties on net sales of certain covered products.

The Company’s policy is to recognize royalty payments

as revenue when they are reliably measurable, which is upon receipt of reports from Takeda.

The Company receives these reports in the

quarter subsequent to the actual sublicensee sales.

At the time the revenue was received, there were no remaining performance obligations

and all other revenue recognition criteria were met.

Catalent Pharma Solutions LLC (“Catalent”)

On June 30, 2022, the Company entered into a Statement of Work (the “SOW”)

with Catalent to outline the general scope of work, timeline, and pricing pursuant to which Catalent will provide certain services to

the Company to perform current Good Manufacturing Principles (“cGMP”) of the Company’s recombinant protein, Human DNase

agreed to enter into a Master Services Agreement that will contain terms and conditions to govern the project contemplated by the SOW

and that will supersede the addendum to the SOW containing Catalent's standard terms and conditions.

The Company has paid Catalent approximately

$ 2.8 million through September 30, 2025, of which approximately $ 0.3 million has been recognized as an advance payment and is included

in prepaid expenses and other current assets as of September 30, 2025, and approximately $ 140,000 has been recognized as a liability including

approximately $ 70,000 in accounts payable and approximately $ 70,000 in accrued expenses and other current liabilities as of September

As of December 31, 2024, approximately $ 28,000 was recognized as an advance payment and is included in prepaid expenses and

other current assets and approximately $ 0.1 million had been recognized as a liability and is included in accrued expenses and other current

In addition, approximately $ 0.3 million was recognized within other assets as of December 31, 2024.

On June 30, 2022, the Company entered into a Statement

of Work (the “SOW”) with Catalent to outline the general scope of work, timeline, and pricing pursuant to which Catalent will

provide certain services to the Company to perform current Good Manufacturing Practices manufacturing of the Company’s recombinant

protein, human DNase I.

The parties agreed to enter into a Master Services Agreement that will contain terms and conditions to govern

the project contemplated by the SOW and that will supersede the addendum to the SOW containing Catalent’s standard terms and conditions.

The Company has paid Catalent approximately $ 3.0 million through March 31, 2026, of which $ 28,000 and $ 53,000 has been recognized as an

advance payment and is included in prepaid expenses and other current assets as of March 31, 2026 and December 31, 2025, respectively,

and approximately $ 0.1 million has been recognized as a liability and is included in accrued expenses and other current liabilities as

of both March 31, 2026 and December 31, 2025.

In addition, approximately $ 0.3 million has been recognized as long-term within other assets

as of both March 31, 2026 and December 31, 2025.

Scripps Research Institute (“Scripps

On March 17, 2023, the Company and Scripps Research

entered into a Research Funding and Option Agreement (the “Agreement”), pursuant to which the Company had agreed to provide

entered into a Research Funding and Option Agreement (the “Agreement”), pursuant to which the Company has agreed to provide

Scripps Research an aggregate of up to $ 0.9 million to fund research relating to advancing the pre-clinical development of the Company’s

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entered into a Second Amendment to the Agreement (the “Second Amendment”) extending the term of the Agreement for an additional

twelve (12) month period and to provide Scripps Research additional funding in an aggregate amount of up to approximately $ 0.4 million

to fund continuing research.

The research funding was payable by the Company to Scripps Research on a monthly basis in accordance with

a negotiated budget, which provided for an initial payment of approximately $65,000 on the date of the Second Amendment and subsequent

twelve (12) month period and to provide Scripps Research additional funding in an aggregate amount of up to approximately $ 400,000 to

fund continuing research.

The research funding was payable by the Company to Scripps Research on a monthly basis in accordance with a

negotiated budget, which provided for an initial payment of approximately $65,000 on the date of the Second Amendment and subsequent monthly

payments of approximately $65,000 over a 5-month period.

All other terms of the Agreement remain unchanged.

Effective May 1, 2025, the Company and Scripps

Research entered into a Third Amendment to the Agreement (the “Third Amendment”), pursuant to which the Company expanded the

services to be performed under the Agreement and provided Scripps Research additional funding in an aggregate amount of up to approximately

$ 0.4 million to fund continuing research.

The research funding was payable by the Company to Scripps Research on a monthly basis in accordance

with a negotiated budget, which provided for an initial payment of approximately $70,000 on the date of the Third Amendment and subsequent

monthly payments of approximately $70,000 over a 5-month period.

All other terms of the Agreement remained unchanged.

Effective May 1, 2025, the Company and Scripps

Research entered into a Third Amendment to the Agreement (the “Third Amendment”), pursuant to which the Company expanded the services to be performed under the Agreement and provided Scripps Research additional funding in an

aggregate amount of up to approximately $ 0.4 million to fund continuing research.

The research funding is payable by the Company to Scripps

Research on a monthly basis in accordance with a negotiated budget, which provides for an initial payment of approximately $70,000 on

the date of the Third Amendment and subsequent monthly payments of approximately $70,000 over a 5-month period.

All other terms of the

Agreement remain unchanged.

Subsequent to quarter end, the Company and

Scripps Research entered into a Fourth Amendment to the Agreement (the “Fourth Amendment”), pursuant to which the

Company extended and expanded the services to be performed under the Agreement and to provide Scripps Research additional funding in an

aggregate amount of up to approximately $ 0.3

Effective November 1, 2025, the research funding is payable by the Company to Scripps Research on a monthly basis in

accordance with a negotiated budget, which provides for an initial payment of approximately $85,000 on the effective date of the

Fourth Amendment and subsequent monthly payments of approximately $85,000 over a 3-month period.

All other terms of the Agreement

remain unchanged.

The Company has incurred approximately $ 1.7 million

under the Agreement through September 30, 2025, of which approximately $ 0.1 million was included in accounts payable.

At December 31, 2024, approximately $ 0.4 million was recognized as

an advance payment and was included in prepaid expenses and other current assets.

There were no advance payments as of September 30,

In addition, approximately

$ 0.1 million was accrued and reflected in accrued expenses and other current liabilities as of September 30, 2025.

There were no amounts

accrued as of December 31, 2024.

Effective November 1, 2025, the Company and Scripps

Research entered into a Fourth Amendment to the Agreement (the “Fourth Amendment”), pursuant to which the Company extended

and expanded the services to be performed under the Agreement and provided Scripps Research with additional funding in an aggregate amount

of up to approximately $ 0.3 million .

The research funding was payable by the Company to Scripps Research on a monthly basis in accordance

with a negotiated budget, which provided for an initial payment of approximately $85,000 on the effective date of the Fourth Amendment

and subsequent monthly payments of approximately $85,000 over a 3-month period.

All other terms of the Agreement remained unchanged.

Effective March 1, 2026, the Company and Scripps

Research entered into a Fifth Amendment to the Agreement (the “Fifth Amendment”), pursuant to which the Company extended and

expanded the services to be performed under the Agreement and agreed to provide Scripps Research additional funding in an aggregate amount

of up to approximately $ 0.5 million .

The research funding is payable by the Company to Scripps Research on a monthly basis in accordance

with a negotiated budget, which provides for an initial payment of approximately $80,000 on the effective date of the Fifth Amendment

and subsequent monthly payments of approximately $80,000 over a 5-month period.

All other terms of the Agreement remain unchanged.

The Company paid Scripps Research approximately

$ 2.0 million under the Agreement through March 31, 2026, of which approximately $ 0.1 million was included in accounts payable as of March

31, 2026 and $ 0.2 million was included in accrued expenses and other current liabilities as of December 31, 2025.

University of Virginia (“UVA”)

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Allan Tsung, MD, a member of the Company’s Scientific Advisory Board and Chair

of the Department of Surgery at the UVA School of Medicine, oversees the research conducted

of the Department of Surgery at the UVA School of Medicine, will oversee the research conducted

under the UVA Agreement.

In November 2024, the Company and UVA entered into an amendment to extend the UVA Agreement through December

Pursuant to the UVA agreement, as amended, UVA will build on the preclinical and translational data produced to date and continue

to investigate combinations of DNase I with immunotherapies in models of primary and metastatic colorectal cancer.

paid UVA approximately $ 0.5 million under the UVA Agreement through September 30, 2025, of which approximately $ 30,000 and $ 0.1 million

had been recognized as an advance payment and was included within prepaid expenses and other current assets as of September 30, 2025 and

December 31, 2024, respectively.

UVA produced preclinical and translational data under the UVA Agreement and has investigated combinations of DNase I with immunotherapies

in models of primary and metastatic colorectal cancer.

The Company is currently in discussions with UVA concerning potential expansion

of the scope of work under the UVA Agreement.

The Company paid UVA approximately $ 0.6 million under the UVA Agreement through

March 31, 2026, of which approximately $ 77,000 was recorded within accounts payable as of March 31, 2026 and approximately $ 31,000 was

recorded within accrued expenses and other current liabilities as of December 31, 2025.

Other Agreements

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The Company and its collaborative partners continue

to engage in research and development activities with no resultant commercial products through September 30, 2025.

to engage in research and development activities with no resultant commercial products through March 31, 2026.

No amounts were recognized

as revenue related to the Serum Institute, Pharmsynthez or SynBio agreements during the three and nine months ended September 30, 2025

and 2024, respectively.

as revenue related to the Serum Institute, Pharmsynthez or SynBio agreements during the three months ended March 31, 2026 and 2025, respectively.

Fair Value Measurements

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for the asset or liability at the measurement date.

As of September 30, 2025 and December 31, 2024, the carrying amounts of the Company’s

financial instruments approximates fair value due to their short maturities.

As of March 31, 2026 and December 31, 2025, the carrying amounts of the Company’s

financial instruments approximate fair value due to their short maturities.

There were no financial instruments classified as Level 3

in the fair value hierarchy during the three and nine months ended September 30, 2025 and 2024.

in the fair value hierarchy during the three months ended March 31, 2026 and 2025.

Stockholders’ Equity

Company had warrants to purchase approximately 462,963

shares of the Company’s common stock (the “Series A Warrants”) outstanding as of December 31, 2024.

These warrants

expired in February

2025 and, as a result, no

Series A Warrants were outstanding as of September 30, 2025.

The Series A Warrants were immediately exercisable at a price of $ 33.00

per share of common stock.

Series A Warrants were exercised or forfeited during the three and nine months ended September 30, 2025 and 2024.

The Company also has warrants to purchase approximately

800 shares of the Company’s common stock outstanding as of both September 30, 2025

and December 31, 2024.

These warrants have an exercise price of $ 29.09 per share of common stock and expire on July 3, 2026 .

None of these

warrants were exercised or forfeited during the three and nine months ended September 30, 2024.

has warrants to purchase approximately 800 shares of the Company’s common stock outstanding

as of both March 31, 2026 and December 31, 2025.

These warrants have an exercise price of $ 29.09 per share of common stock and expire

on July 3, 2026 .

None of these warrants were exercised or forfeited during the three months ended March 31, 2026 and 2025.

Share-Based Expense

Total share-based expense related to stock options

and restricted stock units (“RSUs”) was approximately $ 16,000 and $ 28,000 for the three months ended September 30, 2025 and

2024, respectively, and approximately $ 0.1 million for both the nine months ended September 30, 2025 and 2024.

Share-based expense is classified in the condensed consolidated statements

of operations as follows:

Schedule of share-based compensation expense

Three Months Ended September 30,

Nine Months Ended September 30,

was approximately $11,000 and $19,000 during each of the three months ended March 31, 2026 and 2025, respectively.

Share-based expense is classified in the condensed

consolidated statements of operations as follows:

Allocation of share-based compensation expense

Three Months Ended March 31,

Research and development expenses

General and administrative expenses

Employee Stock Options and RSUs

No stock option awards to purchase shares of common

stock were granted during the three and nine months ended September 30, 2025.

During the nine months ended September 30, 2024, 20,000

stock options to purchase shares of common stock were granted by the Company.

No stock options to purchase shares of common stock were

granted during the three months ended September 30, 2024.

No RSUs were granted during each of the three and nine months ended September

30, 2025 and 2024.

The Company recognized a total of approximately $ 16,000 and $ 28,000 of share-based expense related to employee stock

options during the three months ended September 30, 2025 and 2024, respectively, and approximately $ 0.1 million during both the nine months

ended September 30, 2025 and 2024.

No employee stock options or RSUs were exercised during the three and nine months ended September 30,

The Company issued 417 shares of common stock during the nine months ended September 30, 2024 related to RSUs representing all RSUs

No employee stock options were exercised during the three and nine months ended September 30, 2024.

During the three and

nine months ended September 30, 2025, options to purchase 1,585 shares and 91,463 shares of common stock expired.

During each of the three

and nine months ended September 30, 2024 stock options to purchase 20,847 shares of common stock were cancelled and, during the nine months

ended September 30, 2024, stock options to purchase 11,667 shares of common stock were forfeited.

Employee Stock Options

No employee stock option awards to purchase shares

of common stock were granted or exercised during the three months ended March 31, 2026 and 2025.

During the three months ended March 31,

2026 and 2025, options to purchase 102 shares of common stock and 25,836 shares of common stock expired, respectively.

The Company recognized

a total of approximately $ 11,000 and $ 19,000 of share-based expense related to employee stock options during each of the three months

ended March 31, 2026 and 2025.

Non-Employee Stock Options

There were no

non-employee options outstanding as of both March 31, 2026 and December 31, 2025.

There were no non-employee stock options granted

or exercised during each of the three and nine months ended September 30, 2025 and 2024.

During the three and nine months ended September

30, 2025, options to purchase 253 shares of common stock expired.

As of September 30, 2025 no non-employee stock options were outstanding.

No non-employee stock option grants expired during each of the three and nine months ended September 30, 2025 and 2024.

The Company did

not recognize any expense related to non-employee stock options during each of the three and nine months ended September 30, 2025 and

During each of the three and nine months ended

September 30, 2025 and 2024, there was no provision for income taxes as the Company incurred losses during both periods.

assets and liabilities reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial

reporting purposes and the amounts used for income tax purposes.

The Company records a valuation allowance against its deferred tax assets

as the Company believes it is more likely than not the deferred tax assets will not be realized.

The valuation allowance against deferred

tax assets was approximately $ 41.7 million and $ 41.1 million as of September 30, 2025 and December 31, 2024, respectively.

As of September 30, 2025 and December 31,

or exercised during the three months ended March 31, 2026 and 2025.

No non-employee stock option grants expired during the three

months ended March 31, 2026 and 2025.

The Company did no t recognize any share-based expense related to non-employee stock options

during the three months ended March 31, 2026 and 2025.

During the three months ended March 31, 2026 and

2025, there was no provision for income taxes as the Company incurred losses during both periods.

Deferred tax assets and liabilities

reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes

and the amounts used for income tax purposes.

The Company records a valuation allowance against its deferred tax assets as the Company

believes it is more likely than not the deferred tax assets will not be realized.

The valuation allowance against deferred tax assets

was approximately $ 39.9 million and $ 39.8 million as of March 31, 2026 and December 31, 2025, respectively.

As of March 31, 2026 and December 31, 2025,

the Company did no t record any unrecognized tax positions.

1 unchanged sentence

The Company has entered into various research,

development, license and supply agreements with Peri-Ness Ltd.

(“Peri-Ness”), Serum Institute and Pharmsynthez, each a related

development, license and supply agreements with PeriNess Ltd.

(“PeriNess”), Serum Institute and Pharmsynthez, each a related

party whose relationship has not materially changed from that disclosed in the Company’s Annual Report on Form 10-K for the year

ended December 31, 2024 filed with the SEC on March 18, 2025, as amended on April 29, 2025 and May 13, 2025.

The Company paid Peri-Ness

approximately $ 83,000 during the nine months ended September 30, 2025.

As of September 30, 2025 and December 31, 2024, approximately $ 50,000

was recorded as an advanced payment and included in prepaid expenses and other.

In addition, approximately $ 9,000 and $ 8,000 was reflected

in accounts payable as of September 30, 2025 and December 31, 2024, respectively.

No amounts were incurred in connection with agreements

with Serum Institute and Pharmsynthez during the nine months ended September 30, 2025 and 2024.

ended December 31, 2025 filed with the SEC on March 12, 2026, as amended on April 24, 2026.

The Company has paid PeriNess approximately

$ 0.3 million to date under this contract through March 31, 2026.

As of March 31, 2026 and December 31, 2025, approximately $ 50,000 was

recorded as an advanced payment and included in prepaid expenses and other current assets.

In addition, approximately $ 9,000 and $ 8,000

was reflected in accounts payable on the March 31, 2026 and 2025 consolidated balance sheet, respectively.

No amounts were incurred in

connection with agreements with Serum Institute and Pharmsynthez during the three months ended March 31, 2026 and 2025.

During the first quarter of 2025, the Company

2 unchanged sentences

DNase-based oncology program.

This agreement was effective January 1, 2025 and the Company paid Dr.

This agreement was effective January 1, 2025 and the Company has paid Dr.

Genkin approximately $ 0.5 million

and $ 0.3 million during the three and nine months ended September 30, 2025, of which approximately $ 30,000 was reflected within accounts

payable as of September 30, 2025.

through March 31, 2026, of which approximately $ 30,000 was reflected within accounts payable as of both March 31, 2026 and December 31,

Genkin does not receive any fees for his service as a member of the Board.

2 unchanged sentences

to the balance sheet date through the date the financial statements were issued and determined that there were no such events requiring

recognition or disclosure in the financial statements except as described in Note 4 and below.

Underwritten Offering

On October 10, 2025, the Company entered into an underwriting agreement

(the “Underwriting Agreement”) with Canaccord Genuity LLC as representative of the underwriters named therein, relating to

an underwritten public offering (the “Offering”) of 735,000 shares of the Company’s common stock, par value $0.001 per

share, at a public offering price of $6.12 per share.

The Company estimates that the net proceeds from the Offering will be approximately

$3.9 million after deducting underwriting discounts and commissions and other estimated offering expenses to be paid by the Company.

recognition or disclosure in the financial statements.

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-Q

Item 1. Financial Statements