UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended
or
For the transition period from _______________________to___________________________
Commission
File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of May 26, 2026, there were
TABLE OF CONTENTS
i
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1
Apimeds Pharmaceuticals US, Inc.
Unaudited Condensed Consolidated Balance Sheets
(Unaudited)
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash & Cash Equivalents | $ | $ | ||||||
| Restricted Cash | ||||||||
| Short Term Investments | ||||||||
| Prepaid Expenses | ||||||||
| Other Current Assets | ||||||||
| Total current assets | ||||||||
| Digital assets, at fair value | ||||||||
| Long-term portion of prepaid expenses | ||||||||
| Operating Lease ROU Asset, net | ||||||||
| Property and Equipment, net | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and shareholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accrued offering costs | ||||||||
| Accrued interest - related party | ||||||||
| Advance payable to related party | ||||||||
| Notes payable - related party | ||||||||
| Notes payable, net | ||||||||
| Derivative Liability | ||||||||
| Convertible Notes, net | ||||||||
| Operating Lease Liability | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities | ||||||||
| Long-Term Portion of Operating Lease Liability | ||||||||
| Total liabilities | $ | $ | ||||||
| Commitments and contingencies | ||||||||
| Shareholders’ equity: | ||||||||
| Preferred stock, par value $ | ||||||||
| Common stock, par value $ | ||||||||
| Common shares to be issued | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated Deficit | ( | ) | ( | ) | ||||
| Total shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
Apimeds Pharmaceuticals US, Inc
Unaudited Condensed Consolidated Statements of Operations
| For the three months ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Operating expenses: | ||||||||
| Research and development expenses | $ | $ | ||||||
| General and administrative expenses | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense) | ||||||||
| Unrealized gain (loss)from changes in fair value of digital assets | ( | ) | ||||||
| Realized gain on sale of digital assets | ||||||||
| Trading gains, net | ||||||||
| Foreign currency gains/(losses), net | ( | ) | ||||||
| Change in FV of warrant liability | ||||||||
| Change in FV of derivative | ||||||||
| Interest income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Total other income (expense) | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Net loss per common share - basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average common shares outstanding | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
Apimeds Pharmaceuticals US, Inc
Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity (Deficit)
| Preferred Stock | Common Stock | Shares to be Issued | Additional | |||||||||||||||||||||||||||||||||
| Number of Shares | Amount | Number
of Shares | Amount | Number of Shares | Amount | Paid-in
capital | Accumulated
Deficit | Total | ||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | - | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Net loss for the period ended March 31, 2026 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Stock compensation expense | - | - | - | |||||||||||||||||||||||||||||||||
| Shares committed for issuance in connection with advisory agreement | - | - | ||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | - | $ | $ | - | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||
| Net loss for the period ended March 31, 2025 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance at March 31, 2025 | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
Apimeds Pharmaceuticals US, Inc
Unaudited Condensed Consolidated Statements of Cash Flows
| For the three months ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock based compensation - Option grants | ||||||||
| Advisory Shares committed for issuance | ||||||||
| Depreciation & Amortization expense | ||||||||
| Change in fair value of derivative liability | ( | ) | ||||||
| Interest expense | ||||||||
| Accretion on Convertible notes | ||||||||
| Unrealized gain from changes in fair value of digital assets | ||||||||
| Non-cash digital asset operating expenses | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Operating lease liability | ||||||||
| Net cash used in operating activities | $ | ( | ) | $ | ( | ) | ||
| Cash flows from investing activities: | ||||||||
| Redemption of short term investments | ||||||||
| Purchases of PP&E | ( | ) | ||||||
| Net cash provided by investing activities | $ | $ | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from notes payable | ||||||||
| Payment of issuance costs | ( | ) | ||||||
| Cash advances from related parties | ||||||||
| Net cash provided by financing activities | $ | $ | ||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ) | ||||||
| Cash and cash equivalents, beginning of period | ||||||||
| Restricted cash | ||||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Reconciliation of cash, cash equivalents, and restricted cash: | ||||||||
| Cash and cash equivalents | ||||||||
| Restricted cash | ||||||||
| Total cash, cash equivalents, and restricted cash | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed Consolidated financial statements.
5
Apimeds Pharmaceuticals US, Inc
Notes to the Unaudited Condensed Consolidated Financial Statements
1. DESCRIPTION OF BUSINESS
Business Description
Apimeds
Pharmaceuticals US, Inc. (“APUS” or the “Company”) is a development-stage biopharmaceutical company incorporated
in the State of Delaware as a C-Corporation. The Company is focused on the development of Apitox, a purified honeybee venom-based drug
for the treatment of acute pain and inflammation associated with knee osteoarthritis. On
The Company operates its biopharmaceutical business through Lokahi Therapeutics Inc. (“Lokahi”), a wholly owned subsidiary. As of December 31, 2025, the Company’s corporate structure is as follows:
APUS — Public parent and SEC registrant (Delaware C-Corporation)
Lokahi Therapeutics Inc. (“The BioBusiness”): Wholly owned subsidiary; operates the BioBusiness segment
MindWave Innovations Inc.: (acquired December 1, 2025): Wholly owned subsidiary; operates the Digital Asset segment
The Company has not yet generated revenue from its biopharmaceutical operations and is subject to the risks and uncertainties common to development-stage companies in the biotechnology industry. The success of the Company is dependent on both obtaining the necessary regulatory approvals of its BioBusiness product candidates, and the continuation of the Digital Asset segment, including the accumulation of Bitcoin (“BTC”), Tether (“USDT”), and market adoption of its MindWaveDAO blockchain (“The DAO”) through the sale of its native cryptocurrency, NILA tokens (“NILA”). It is not possible to predict either the outcome of future research and development, or future advancement of digital asset operations, which are subject to the natural volatility concerns of cryptocurrency.
2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company has prepared these unaudited condensed financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”). Except as disclosed herein, there have been no material changes in the information disclosed in the Notes to the Financial Statements included in the Annual Report for the year ended December 31, 2025 (the “Annual Report”). Accordingly, the unaudited condensed financial statements and related disclosures herein should be read in conjunction with the Annual Report.
As permitted under the SEC requirements for interim reporting, certain footnotes or other financial information have been condensed or omitted. These financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of results for the interim periods presented. Revenues, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be representative of those for the full year.
6
Apimeds Pharmaceuticals US, Inc
Notes to the Unaudited Condensed Consolidated Financial Statements
Principals of Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Lokahi Therapeutics Inc. and MindWave Innovations Inc. All intercompany balances and transactions have been eliminated in consolidation.
Liquidity
The
accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates
the realization of assets and the satisfaction of liabilities in the normal course of business. As of March 31, 2026, the Company had
accumulated deficit amount of $
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates, judgements and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates and assumptions made in the accompanying unaudited condensed financial statements include, but are not limited to, the fair value of digital assets, the determination of prepaid clinical development costs, stock-based compensation and estimates that are related to convertible instruments. Actual results could differ from those estimates, and such differences could be material to the financial statements.
Digital Assets
Digital assets consist of Bitcoin (“BTC”), Tether (“USDT”), and MindWaveDAO NILA tokens (“NILA Tokens”). Effective upon the adoption of ASU 2023-08, Accounting for and Disclosure of Crypto Assets, the Company accounts for in-scope crypto assets that meet the definition of an intangible asset and are fungible as follows:
| ● | BTC — Measured at fair value with changes in fair value recognized in the consolidated statement of operations within “Unrealized gain (loss) on digital assets.” BTC meets the criteria of ASU 2023-08 and is classified within Level 1 of the fair value hierarchy based on quoted prices in active markets. |
| ● | USDT — Tether is a stablecoin pegged to the U.S. dollar. The Company measures USDT at fair value and classifies USDT within Level 1 of the fair value hierarchy based on quoted prices on active cryptocurrency exchanges. Because USDT is designed to maintain a stable value relative to the U.S. dollar, changes in fair value are generally not material. |
| ● | NILA Tokens — The NILA Tokens are utility tokens issued within the MindWaveDAO ecosystem. NILA Tokens trade on a limited number of centralized cryptocurrency exchanges, primarily the NILA/USDT trading pair. The Company measures NILA Tokens at fair value and classifies them within Level 2 of the fair value hierarchy based on quoted prices for identical or similar assets in markets that are not considered active due to the limited number of trading venues and relatively low trading volume. Gains and losses realized upon the sale of NILA Tokens are recognized within “Realized gain (loss) on sale of digital assets” in the consolidated statement of operations. Unsold NILA Tokens are remeasured at fair value at each reporting date, with unrealized changes recognized within “Unrealized gain (loss) on digital assets” in the consolidated statement of operations. |
7
Apimeds Pharmaceuticals US, Inc
Notes to the Unaudited Condensed Consolidated Financial Statements
Fair Value Measurement
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
| Level 1 — | Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. | |
| Level 2 — | Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. | |
| Level 3 — | Unobservable inputs based on the Company’s assessment of the assumptions that market participants would use in pricing the asset or liability. |
In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
A financial asset or liability classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The Carrying value of cash, restricted cash and short-term investments approximates their fair value as these assets all represent cash. The tables below summarize the fair values of our financial assets and liabilities as of March 31, 2026:
As of March 31, 2026
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Digital assets — BTC | $ | |||||||||||||||
| Digital assets — USDT | $ | |||||||||||||||
| Digital assets — NILA Tokens | $ | - | ||||||||||||||
| Total assets at fair value | $ | |||||||||||||||
| Liabilities: | ||||||||||||||||
| Warrant liabilities | ||||||||||||||||
| Derivative liability | $ | |||||||||||||||
| Total liabilities at fair value | $ | |||||||||||||||
As of December 31, 2025
| Assets: | ||||||||||||||||
| Digital assets — BTC | $ | |||||||||||||||
| Digital assets — USDT | $ | |||||||||||||||
| Digital assets — NILA Tokens | $ | |||||||||||||||
| Total assets at fair value | $ | |||||||||||||||
| Liabilities: | ||||||||||||||||
| Warrant liabilities | ||||||||||||||||
| Derivative liability | $ | |||||||||||||||
| Total liabilities at fair value | $ | |||||||||||||||
8
Apimeds Pharmaceuticals US, Inc
Notes to the Unaudited Condensed Consolidated Financial Statements
Convertible Instruments
The Company accounts for the embedded conversion feature of its senior secured convertible note as a derivative liability in accordance with FASB ASC Topic 815, Derivatives and Hedging (“ASC 815”). At the time of issuance, the Company evaluates whether the conversion feature meets the definition of a derivative under ASC 815-10 and whether it is required to be bifurcated from the host debt instrument and accounted for separately. The assessment considers whether the embedded feature is clearly and closely related to the host contract, whether the hybrid instrument is measured at fair value through earnings, and whether the feature, if freestanding, would meet the definition of a derivative — including the criteria for equity classification under ASC 815-40, such as whether the feature is indexed to the Company’s own common stock and whether the Company could be required to settle the feature in a manner that precludes equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of issuance and as of each subsequent quarterly period end date while the convertible note remains outstanding.
For embedded conversion features that meet all the criteria for equity classification under ASC 815-40, no bifurcation is required and the entire instrument is accounted for as debt. For embedded conversion features that do not meet the criteria for equity classification and otherwise meet the bifurcation requirements of ASC 815-15, the feature is bifurcated from the host debt instrument and recorded as a derivative liability at its initial fair value on the date of issuance, with the residual proceeds allocated to the host debt instrument. The derivative liability is remeasured at fair value at each subsequent balance sheet date, with changes in fair value recognized as a non-cash gain or loss in other income (expense) in the consolidated statements of operations. The fair value of the derivative liability was estimated using a Monte Carlo simulation model.
On
December 8, 2025, the Company issued a senior secured convertible note with a principal amount of $
For the Company’s liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3), the following table provides a reconciliation of the beginning and ending balance for each category therein, and gains or losses recognized during the three ended March 31, 2026:
| Balance – December 31, 2025 | $ | |||
| Change in fair value of derivative liability | ( | ) | ||
| Ending balance – March 31, 2026 | $ |
March 31, 2026 (Issuance Remeasurement) | ||||
| Derivative Liability | ||||
| Fair Value | $ | |||
| Valuation technique | ||||
In
connection with the issuance of the senior secured convertible note on December 8, 2025, the Company bifurcated the embedded conversion
feature and recorded it as a derivative liability with an initial fair value of $
During
the period from issuance through December 31, 2025, the Company recognized a gain of $
The fair value of the derivative liability was estimated using a Monte Carlo simulation model, which incorporates assumptions regarding the Company’s stock price, expected volatility, risk-free interest rate, expected term, and the probability and timing of the various conversion, redemption, and contingent payment scenarios contemplated by the note.
9
Apimeds Pharmaceuticals US, Inc
Notes to the Unaudited Condensed Consolidated Financial Statements
Concentrations of Credit Risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in financial institutions which,
at times, may exceed the federal depository insurance corporation limit of $
Segment Information
In
accordance with ASC 280, Segment Reporting, the Company operates as two segments: (i) the BioBusiness segment, which advances the Company’s
lead product candidate, Apitox, and related preclinical and translational research activities; and (ii) the Digital Assets segment, which
encompasses the Company’s digital asset holdings (Bitcoin, Tether, and NILA Tokens) acquired in connection with the MindWave acquisition
and the activities associated with the MindWaveDAO ecosystem.
The CODM assesses each segment’s performance primarily through the analysis of operating expenses, with key categories including research and development and general and administrative expenses. Financial information provided to and utilized by the CODM is consistent with the Company’s U.S. GAAP financial statements. As of March 31, 2026, the Company has not generated any revenue from either segment. For the purposes of this disclosure, all BioBusiness activity pertaining to the three months ended December 31, 2025, and prior to BioBusiness formation as of December 1, 2025 are categorized as BioBusiness expenses given the Company operated as a singular biopharmaceutical entity predating the Merger transaction closed December 1, 2025.
The following tables presents the Company’s segmented results for the three months ended March 31, 2026 and March 31, 2025, respectfully.
For the three months ended March 31, 2026
| BioBusiness Segment | Digital Asset Segment | Corporate | Consolidated | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total operating expenses | $ | $ | $ | $ | ||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense), net: | ||||||||||||||||
| Realized gain on sale of digital assets | ||||||||||||||||
| Trading gains, net | ||||||||||||||||
| Unrealized gain (loss) on digital assets | ( | ) | ( | ) | ||||||||||||
| Change in FV of derivative | ||||||||||||||||
| Change in FV of warrant liability | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ||||||||||
| Foreign currency transaction loss | ( | ) | ( | ) | ||||||||||||
| Total other income (expense), net | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
10
Apimeds Pharmaceuticals US, Inc
Notes to the Unaudited Condensed Consolidated Financial Statements
For the three months ended March 31, 2025
BioBusiness Segment | Digital Asset Segment | Corporate | Consolidated | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total operating expenses | $ | $ | $ | $ | ||||||||||||
| Loss from operations | ( | ) | ( | ) | ||||||||||||
| Other income (expense), net: | - | - | ||||||||||||||
| Realized gain on sale of digital assets | ||||||||||||||||
| Trading gains, net | ||||||||||||||||
| Unrealized gain (loss) on digital assets | ||||||||||||||||
| Change in FV of derivative | ||||||||||||||||
| Change in FV of warrant liability | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ||||||||||||
| Foreign currency transaction loss | ||||||||||||||||
| Total other income (expense), net | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
| Net loss | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
The following tables present the Company’s segmented assets as of March 31, 2026 and December 31, 2025.
As of March 31, 2026
| BioBusiness | Digital Asset | |||||||||||||||
| Segment | Segment | Corporate | Consolidated | |||||||||||||
| Cash & Cash Equivalents | $ | $ | $ | $ | ||||||||||||
| Restricted Cash | ||||||||||||||||
| Short Term Investments | ||||||||||||||||
| Prepaid Expenses | ||||||||||||||||
| Digital assets, at fair value | ||||||||||||||||
| Other Assets | ||||||||||||||||
| Total Assets | $ | $ | $ | $ | ||||||||||||
As of December 31, 2025
| BioBusiness | Digital Asset | |||||||||||||||
| Segment | Segment | Corporate | Consolidated | |||||||||||||
| Cash & Cash Equivalents | $ | $ | $ | $ | ||||||||||||
| Restricted Cash | ||||||||||||||||
| Short Term Investments | ||||||||||||||||
| Prepaid Expenses | ||||||||||||||||
| Digital assets, at fair value | ||||||||||||||||
| Other Assets | ||||||||||||||||
| Total Assets | $ | $ | $ | $ | ||||||||||||
11
Apimeds Pharmaceuticals US, Inc
Notes to the Unaudited Condensed Consolidated Financial Statements
Cash, Cash Equivalents, and Restricted Cash
The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. As of March 31, 2026 and December 31, 2025, the Company had cash equivalents.
The
Company considers all cash balances in which the Company maintains legal ownership but does not maintain the ability to effectively draw
upon the balance on a day-to-day basis as restricted cash. As of March 31, 2025, and December 31, 2025, the Company has recorded a balance
of $
Patent Costs
All patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure. Amounts incurred are classified as general and administrative expenses in the accompanying statements of operations.
Leases
The
Company accounts for a contract as a lease when it has the right to direct the use of the asset for a period of time while obtaining
substantially all of the asset’s economic benefits. The Company determines the initial classification and measurement of its right-of-use
assets (“ROU”) and lease liabilities at the lease commencement date and thereafter if modified. ROU assets and liabilities
are to be represented on the balance sheet at the present value of future minimum lease payments to be made over the lease term. The
Company has elected as an accounting policy not to apply the recognition requirements in ASC 842, Leases (“ASC 842”)
to short-term leases. Short-term leases are leases that have a term of
Property and Equipment, net
Property and equipment, net is stated at cost (less) accumulated depreciation. These assets are depreciated over their estimated useful lives of three to seven years using the straight-line method.
The Company adheres to ASC 360 “Property, Plant, and Equipment” and periodically evaluates whether current facts or circumstances indicate that the carrying value of its depreciable assets to be held and used may not be recoverable. If such circumstances are determined to exist, an estimate of undiscounted future cash flows produced by the long-lived assets, or the appropriate grouping of assets, is compared to the carrying value to determine whether impairment exists. If an asset is determined to be impaired, the loss is measured based on the difference between the asset’s fair value and its carrying value. For long-lived assets, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows. The Company reports an asset to be disposed of at the lower of its carrying value or its fair value less costs to sell.
Related Parties
The Company follows ASC 850, “Related Party Disclosures” for the identification of related parties and disclosure of related party transactions.
General and Administrative
12
Apimeds Pharmaceuticals US, Inc
Notes to the Unaudited Condensed Consolidated Financial Statements
Research and Development
Research and development expenses consist primarily of consulting, regulatory and manufacturing related costs, third-party license fees and external costs of vendors engaged to conduct preclinical development activities. These costs are expensed as incurred and non-refundable prepayments for goods or services that will be used or rendered for future research and development activities are deferred and capitalized in prepaid expenses and other current assets.
The Company enters into arrangements with contract research organizations in connection with pre-clinical and clinical trials. Such arrangements often provide for payment prior to commencing the project or based upon predetermined milestones throughout the period during which services are expected to be performed. As part of the process of preparing the Company’s financial statements, management is required to estimate prepaid and accrued clinical trial expenses. The date on which services commence, the level of services performed on or before a given date, and the cost of such services are often determined based on subjective judgments informed by the facts and circumstances known to management from the terms of the contract and the Company’s ongoing monitoring of service performance. The Company makes these judgments based upon the facts and circumstances known to management based on the terms of the contract and the Company’s ongoing monitoring of service performance.
In line with the guidance suggested under ASC 450, Contingencies and ASC 730, Research and Development, all research and development costs will be expensed as incurred. Development and regulatory milestone payments are accounted for by estimating the probability of milestone achievement.
Stock Based Compensation
The Company accounts for share-based compensation in accordance with the fair value recognition provision of FASB ASC 718, Compensation — Stock Compensation (“ASC 718”), which prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the unaudited condensed financial statements based on the estimated grant date fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period). The Company accounts for forfeitures as they occur. The Company classifies share-based compensation expense in its statements of operations in the same manner in which the award recipient’s cash compensation costs are classified.
The fair value of each employee and non-employee stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company is a public company but has limited company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on implied volatility. The expected term of the Company’s stock options for employees has been determined utilizing the “simplified” method for awards. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve. Expected dividend yield is zero based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.
13
Apimeds Pharmaceuticals US, Inc
Notes to the Unaudited Condensed Consolidated Financial Statements
Income Taxes
The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences attributable to differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes and for operating loss and tax credit carryforwards. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes.
The Company’s deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which these temporary differences are expected to be recovered or settled. A valuation allowance is recorded to reduce deferred tax assets if it is determined that it is more likely than not that all or a portion of the deferred tax asset will not be realized. The Company considers many factors when assessing the likelihood of future realization of deferred tax assets, including recent earnings results, expectations of future taxable income, carryforward periods available and other relevant factors. The Company records changes in the required valuation allowance in the period that the determination is made.
The Company assesses its income tax position and records tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances and information available as of the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, the Company records the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, the Company does not recognize a tax benefit in the financial statements. The Company records interest and penalties related to uncertain tax positions, if applicable, as a component of income tax expense.
Basic and Diluted Loss per share
Basic loss per share data for each period presented is computed using the weighted average number of shares of common stock outstanding during each such period. Diluted net loss per share is computed by giving effect to all potential shares of common stock to the extent they are dilutive.
The following table sets forth the number of potential shares of common stock that have been excluded from basic net loss per share because their effect was anti-dilutive:
| March 31, 2026 | March 31, 2025 | |||||||
| Series A convertible preferred shares (1:20 conversion ratio) | ||||||||
| Stock options | ||||||||
| Warrants | ||||||||
| Convertible notes | ||||||||
| Total anti-dilutive shares excluded | ||||||||
Emerging Growth Company
The Company is an emerging growth company, as defined in Section 2(a) of the Securities Act of 1993, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act allows emerging growth companies to delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these unaudited condensed financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.
14
Apimeds Pharmaceuticals US, Inc
Notes to the Unaudited Condensed Consolidated Financial Statements
Recently Issued Accounting Pronouncements
The Company considers the applicability and impact of all Accounting Standard Updates (ASUs). ASUs not discussed in these unaudited condensed financial statements were assessed and determined to be either not applicable or are expected to have minimal impact on the financial statements.
In November 2024, the FASB issued Accounting Standards Update No. 2024-03, Disaggregation of Income Statement Expenses. This guidance will require additional disclosures and disaggregation of certain costs and expenses presented on the face of the income statement. The amendments are effective for annual reporting periods beginning after December 15, 2026 and interim reporting period beginning after December 15, 2027 with early adoption permitted. The Company is currently evaluating the impact of this new guidance to our financial statements.
We adopted ASU 2023-08, Accounting for and Disclosure of Crypto Assets, effective upon the acquisition of digital assets in connection with the MindWave Merger on December 1, 2025. Under ASU 2023-08, in-scope crypto assets that meet the definition of an intangible asset and are fungible are measured at fair value with changes recognized in earnings each period. The adoption of ASU 2023-08 did not have a cumulative effect on periods prior to adoption, as the Company had no digital asset holdings prior to the Merger.
3. LICENSE AGREEMENTS
On
August 2, 2021, the Company entered into a business agreement with Apimeds Korea. Under the agreement, the Company received the
right to continue any clinical trial and acquire the permits and approval necessary from the U.S. Food and Drug Administration.
The Company will pay Apimeds Korea a royalty of
On October 12, 2021, the Company entered into an exclusive patent license agreement with Apimeds Korea, a shareholder of the Company. Under the agreement, the Company was granted the exclusive right and license under the licensed patents to make and sell the licensed products in the United States of America.
The
agreement commenced on the effective date and shall remain in force for each licensed product on a licensed-product-by-licensed-product
basis for rights and obligations concerning the licensed patent, until the expiration of the last to expire valid claim of a licensed
patent. The total consideration exchanged for the exclusive license agreement was $
4. PREPAID EXPENSE AND OTHER ASSETS
As of March 31, 2026, and December 31, 2025, the prepaid expense and other assets balance consists of the following:
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Prepaid development costs | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Refunds and retainers receivable | ||||||||
| Prepaid insurance | ||||||||
| (Less) Long term portion of prepaid insurance | ( | ) | ( | ) | ||||
| Total Prepaid Expenses | ||||||||
15
Apimeds Pharmaceuticals US, Inc
Notes to the Unaudited Condensed Consolidated Financial Statements
5. ACCOUNTS PAYABLE AND ACCRUED EXPENSE
Accounts payable and accrued expenses consist of balances owed to vendors, as well as others, such as the taxing authority and employees.
As of March 31, 2026, and December 31, 2025, the accounts payable and accrued expense balances consist of the following:
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Professional fees payable | $ | $ | ||||||
| IT expenses payable | ||||||||
| Manufacturing payable | ||||||||
| Accrued development costs | ||||||||
| Accrued compensation | ||||||||
| Wages and benefits payable | ||||||||
| CRO installments payable | ||||||||
| Other | ||||||||
| Total Accounts payable and accrued expenses | ||||||||
6. DEBT
Senior Secured Convertible Note
On
December 1, 2025, the Company entered into a Securities Purchase Agreement (“SPA”) providing for the issuance, in tranches,
of senior secured convertible notes with an aggregate maximum principal amount of $
The
conversion feature embedded in the convertible note has been bifurcated and accounted for as a derivative liability measured at fair
value at each reporting date. No additional tranches were drawn under the SPA. Interest expense and accretion of debt discount for the
three months ended March 31, 2026 and March 31, 2025, totaled $
Related Party Notes Payable
As of March 31, 2026, the Company had outstanding $
2026 Promissory Note
On
March 30, 2026, Lokahi (the BioBusiness) issued a secured promissory note (the “2026 Promissory Note”) to the Keren Eliyahu
Charitable Trust in the principal amount of $
16
Apimeds Pharmaceuticals US, Inc
Notes to the Unaudited Condensed Consolidated Financial Statements
7. ADVANCE PAYABLE — RELATED PARTY
As
of March 31, 2025, and December 31, 2025, the Company had an outstanding balance of $
These advance payables carry no interest and do not have a maturity date. The cash proceeds from these advances were used for operating purposes.
8. COMMITMENTS AND CONTINGENCIES
Legal
Periodically, the Company reviews the status of any significant matters that exist and assesses its potential financial exposure. If the potential loss from any claim or legal claim is considered probable and the amount can be estimated, the Company accrues a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based on the best information available at the time. As additional information becomes available, the Company reassesses the potential liability related to pending claims and litigation. As of March 31, 2026, and December 31, 2025, there are pending claims or litigation that are expected to materially affect the Company’s results going forward.
9. SHAREHOLDERS’ EQUITY
Common Stock
As
of March 31, 2026, and December 31, 2025, the Company had
Warrants
The Company accounts for Representative Warrants as equity-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) and FASB ASC Topic 815, Derivatives and Hedging (“ASC 815”).
In
connection with the merger that closed on December 1, 2025, the Company issued advisory warrants to purchase
17
Apimeds Pharmaceuticals US, Inc
Notes to the Unaudited Condensed Consolidated Financial Statements
Preferred Stock
On
December 5, 2023, the Company authorized
| ● | Conversion: Each share of Series A Preferred Stock is convertible into |
| ● | Voting rights: The Series A Preferred Stock does not maintain any voting rights. |
| ● | Redemption: The Preferred Stock issued is not redeemable |
The Company evaluated the Series A Preferred Stock under ASC 480 and determined that the instrument is classified in permanent equity based on the terms of the Merger.
Common Shares to be Issued
On
February 2, 2026, the Company approved an advisory agreement previously executed on December 1, 2025, with E.F. Hutton (“The Advisor”),
pursuant to which the Company is obligated to issue an aggregate of
The
fair value of the share commitment of $
10. STOCK-BASED COMPENSATION
Stock Options
The
Company maintains the 2024 Equity Incentive Plan (the “Plan”), under which the Company may grant stock options, restricted
stock units, and other equity awards to employees, directors, and consultants. As of March 31, 2026,
Certain
equity awards of the Company have been granted to employees who are now employees of Lokahi Therapeutics (“the BioBusiness”).
Because there is no recharge arrangement (an agreement in which the subsidiary reimburses the parent for the cost of stock-based awards
granted to the subsidiary’s employees), between the Company and the BioBusiness, the Company recognizes the stock-based compensation
expense associated with these awards in its consolidated statement of operations. In the standalone financial statements of Lokahi, the
expense is offset by a corresponding capital contribution from the Company. For the period ended March 31, 2026, a total of $
The Company and its subsidiaries calculate stock-based compensation expense in accordance with ASC 718. The fair value of stock-based awards is amortized over the vesting period of the award.
18
Apimeds Pharmaceuticals US, Inc
Notes to the Unaudited Condensed Consolidated Financial Statements
The following represents a summary of options:
| Number of Options | Weighted Average Exercise Price | Weighted- Average Remaining Contractual Term (In Years) | ||||||||||
| Issued and outstanding, December 31, 2025 | $ | |||||||||||
| Granted | - | |||||||||||
| Exercised | - | |||||||||||
| Forfeited/Expired | - | |||||||||||
| Issued and outstanding, March 31, 2026 | $ | |||||||||||
For the three months ended March 31, 2026, there were no additional stock options issued, exercised, or forfeited.
11. INCOME TAXES
The Company recorded provision or benefit for income tax expense for the three months ended March 31, 2026 and March 31, 2025 respectfully.
For
all periods presented, the pretax losses incurred by the Company received
The Company has open tax audits with any taxing authority as of March 31, 2026.
12. SUBSEQUENT EVENTS
The company’s management has evaluated subsequent events occurring after March 31, 2026, the date of our most recent balance sheet, through the date our financial statements were issued.
After the merger was entered into by all parties, the Apimeds’ Korean Affiliate, owner of a majority of Apimeds’ pre-conversion voting stock purported to remove Apimeds’ directors and CEO and made document requests suggesting it takes issue with the terms of the merger transaction. The former CEO has filed litigation (Erik Emerson v. Inscobee Inc. and Apimeds, Inc.) in the Southern District of New York disputing the validity of the Korean affiliate's actions and seeking to compel the completion of the merger transaction's remaining steps.
On April 29, 2026, the Company and its respective subsidiaries entered into a Settlement Agreement which resolves all outstanding disputes among related parties arising from the merger. On May 5, 2026, the action against the Korean Affiliate was voluntarily dismissed without prejudice.
The holder of the Senior Secured Note delivered notice to the Company of its default under the financing documented because of the Korean affiliate’s actions. On April 30, 2026, The Company the holder entered into a forbearance agreement regarding the defaults under the financing documents. The forbearance will extend until June 30, 2026 or such earlier date as the defaults are cured.
On May 6, 2026, the Company repaid the
original note to Keren Eliyahu Charitable Trust and the BioBusiness issued a $
On May 11, 2026 the Company issued
On
May 12, 2026, the BioBusiness issued a $
19
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Apimeds Pharmaceuticals US, Inc. References to our “management” or our “management team” refer to our officers and directors. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from the results, expectations and plans discussed in these forward-looking statements.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and variations thereof and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on April 15, 2025 (the “Annual Report”) and the “Risk Factors” section of this report. Our securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Overview
Apimeds Pharmaceuticals US, Inc. is a development-stage biopharmaceutical company incorporated in the State of Delaware. Our primary focus is the clinical development of Apitox, a purified honeybee venom-based drug candidate being evaluated for the treatment of acute pain and inflammation associated with knee osteoarthritis. We operate our biopharmaceutical business through our wholly owned subsidiary, Lokahi Therapeutics Inc. (“Lokahi”).
Through MindWave Innovations, the Company holds Bitcoin (“BTC”), Tether (“USDT”), and MindWaveDAO NILA tokens (“NILA”), and participates in the MindWaveDAO blockchain ecosystem through the continued sale of NILA. The Digital Asset segment’s performance is subject to the volatility inherent in cryptocurrency markets. A more detailed discussion of the Digital Asset segment, including the MindWave Merger and the Company’s related accounting policies, is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
20
Our Product Candidate
Our product candidate Apitox is a purified, pharmaceutical grade venom of the Apis mellifera, or honeybee, which is classified by the U.S Food and Drug Administration (“FDA”) as an active pharmaceutical ingredient. Apimeds Korea has developed a proprietary method and process of turning extracted bee venom into a lyophilized powder for reconstitution prior to intradermal dose injections, which they sell in South Korea as Apitoxin. Apimeds Korea has exclusively licensed to us all rights to develop, commercialize, market and sell Apitoxin as “Apitox” in the United States in exchange for a sales royalty.
The success of the Company is dependent on obtaining the necessary regulatory approvals of its product candidates, as well as the continued advancement of it’s Digital Asset segment, which includes the appreciation of its cryptocurrency holdings consisting of Bitcoin (“BTC”), Tether (“USDT”), and NILA tokens (“NILA”), and the advancement and continued sale of NILA on the MindWaveDAO blockchain. The continuation of the research and development activities and the commercialization of its products, if approved, are dependent on the Company’s ability to successfully complete these activities and to obtain additional financing through a combination of financing activities and operations. It is not possible to predict either the outcome of future research and development or cryptocurrency market sentiment or the advancement of the MindWaveDAO blockchain.
Financial Results
Since inception, Apimeds has incurred significant operating losses. For the three months ended March 31, 2026 and 2025, Apimeds Pharmaceuticals US, Inc. net loss was $35,059,852, and $402,397, respectively.
Liquidity and Capital Resources
As of March 31, 2026, the Company had accumulated deficit amount of $45,452,914. The Company incurred net losses of $35,059,852 for the three months ended March 31, 2026, and expects to continue to incur substantial losses in the future. On December 8, 2025, the Company completed a PIPE financing (the “PIPE”) with an aggregate maximum amount of $120,900,000 drawn in tranches at the Company’s discretion, given the market conditions allow. As of March 31, 2026, the Company has drawn a total amount of $10,900,000 from the PIPE (see note 6) wherein $8,000,000 in proceeds have been recorded as restricted cash. Based on cash that is available and cash that is predicted to become unrestricted for Company operations, together with continued Tether (“USDT”) proceeds from the digital assets segment, and projections of future Company operations, the Company believes that its cash will be sufficient to fund the Company’s current operating plan through at least the next twelve months from the date of issuance of the accompanying condensed financial statements. Proceeds in the form of USDT have been included in evaluation of liquidity concerns given the fact that the Company uses these proceeds to satisfy select operating expenses that pertain directly to the maintenance and management of the Digital Asset segment.
Results of operations for the three months ended March 31, 2026, and 2025
Operating Expense
The following table sets forth the Company’s selected statements of operations data for the following periods:
| Three Months Ended | ||||||||||||
| March 31, | ||||||||||||
| 2026 | 2025 | Change | ||||||||||
| Operating expenses | ||||||||||||
| Research and development expenses | $ | 901,144 | $ | - | $ | 901,144 | ||||||
| General and administrative expenses | 11,284,550 | 364,368 | 10,920,182 | |||||||||
| Total operating expenses | 12,185,694 | 364,368 | 11,821,326 | |||||||||
| Total other income (expense) | (22,874,158 | ) | (38,029 | ) | (22,836,129 | ) | ||||||
| Net loss | $ | (35,059,852 | ) | $ | (402,397 | ) | $ | (34,657,455 | ) | |||
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Revenues
For the three months ended March 31, 2026, and 2025, the Company had no revenue.
General and Administrative Expenses
For the three months ended March 31, 2026, included in General and administrative expense is $8,113,318 non-cash charge for stock issued to our financial advisor. This charge is not expected to be recur.
Other income expense
The $22,836,129 increase in other expense for the three months ended March 31, 2026 compared to March 31, 2025 was principally the result of $22,078,601 of unrealized losses on the Company digital asset holdings. The Company did not hold any digital assets during the three months ended March 31, 2025. Digital asset market volatility can be expected to be significant in future periods.
Net Loss
Net loss was $35,059,852 for the three months ended March 31, 2026, compared to net loss of $402,397 in the same period of 2025, representing an increase in loss of $34,657,455. The increase was mainly due to the loss on fair value of cryptocurrency holdings and stock compensation expenses (see Cash Flows).
Cash Flows
The following table presents selected financial information and statistics for each of the periods shown below:
| Three Months Ended | ||||||||||||
| March 31, | ||||||||||||
| 2026 | 2025 | Change | ||||||||||
| Net cash used in operating activities | $ | (2,067,727 | ) | $ | (20,313 | ) | $ | (2,047,414 | ) | |||
| Net cash provided by investing activities | 490,606 | - | 490,606 | |||||||||
| Net cash provided by financing activities | 920,000 | 267,200 | 652,800 | |||||||||
| Net increase (decrease) in cash | $ | (657,121 | ) | $ | 246,887 | $ | (904,008 | ) | ||||
During the three months ended March 31, 2026, operating activities used approximately $2,067,727 of cash, differing drastically from a reported net loss of $35,059,852 due in large part to noncash additions of $22,061,472 of changes in fair value of cryptocurrency and stock compensation expenses of $8,113,318, respectively. Other material noncash additions include accretion expense of approximately $851,018, and changes in operating assets and liabilities of approximate increase of $1,839,261, due to the netting of an increase in prepaid research costs and increases in accounts payable and accrued expenses.
Comparatively, during the three months ended March 31, 2025, operating activities used $20,313 of cash, primarily resulting from a net loss of $402,397, partially offset by non-cash interest expense-related parties of $11,256, accretion expense of $26,776, and changes in operating assets and liabilities of $344,051.
Investing activities
During the three months ended March 31, 2026, and 2025, investing activities used approximately $490,606 and $0, respectively. For the period ended 2026, this value consists of $500,000 received as a transfer from short term investments and a decrease of $9,394 incurred due to purchases of furniture and fixtures.
Financing activities
During the three months ended March 31, 2026, financing activities provided approximately $920,000 of cash. This was primarily attributable to net proceeds from the issuance of notes payable, partially offset by issuance costs paid upon closing of the debt offering of $75,000.
Comparatively, during the three months ended March 31, 2025, financing activities provided $267,200 of cash resulting from $250,000 in proceeds from notes payable from related parties and cash advances from related parties of $17,200.
Contractual Obligations and Commitments
See Note 6 – Debt, and Note 8 – Commitments and Contingencies, of the notes to the Company’s financial statements as of and for the three months ended March 31, 2026, included elsewhere in this Quarterly Report for further discussion of the Company’s commitments and contingencies.
22
Off-Balance Sheet Arrangements
The Company is not party to any off-balance sheet transactions. The Company has no guarantees or obligations other than those which arise out of normal business operations.
Critical Accounting Policies and Significant Judgments and Estimates
The Company’s management’s discussion and analysis of its financial condition and results of operations is based on its financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed financial statements requires Apimeds Pharmaceuticals US, Inc. to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the balance sheet and the reported amounts of expenses during the reporting period. In accordance with U.S. GAAP, Apimeds Pharmaceuticals US, Inc. evaluates its estimates and judgments on an ongoing basis. The most significant estimates relate to convertible instruments. Apimeds Pharmaceuticals US, Inc. bases its estimates and assumptions on current facts, historical experiences, and various other factors that Apimeds Pharmaceuticals US, Inc. believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
The Company defines its critical accounting policies as those accounting principles that require it to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on its financial condition and results of operations, as well as the specific manner in which the Company applies those principles. While its significant accounting policies are more fully described in Note 2 to its financial statements, the Company believes the following are the critical accounting policies used in the preparation of its unaudited condensed financial statements that require significant estimates and judgments.
Convertible Instruments
The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815 “Derivatives and Hedging Activities”.
The Company accounts for convertible instruments (when we have determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, we have elected not to provide the disclosure required by this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Management, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Disclosure controls and procedures are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
23
Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this Quarterly Report in providing reasonable assurance of achieving the desired control objectives. This was due to deficiencies that existed in the design and operation of our internal controls over financial reporting, involving internal controls and procedures, that were considered to be material weaknesses, as described below.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Internal control over financial reporting refers to the process designed by, or under the supervision of, our principal executive officer and principal financial officer, and effected by our board of directors (the “Board”), management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:
| (1) | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets |
| (2) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and that our receipts and expenditures are being made only in accordance with authorization of our management and directors; and |
| (3) | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of our assets that could have a material effect on the financial statements. |
Internal control over financial reporting has inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
We have conducted an assessment of the effectiveness of our internal control over financial reporting as of the end of the period covered by this Quarterly Report, based on the framework established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO Framework). This assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of those controls. Based on that evaluation, as a result of the material weaknesses described below, management has concluded that our internal control over financial reporting was not effective as of the end of the period covered by this Quarterly Report.
A material weakness in internal controls is a deficiency in internal control, or combination of control deficiencies, that adversely affects our ability to initiate, authorize, record, process, or report external financial data reliably in accordance with U.S. GAAP such that there is more than a remote likelihood that a material misstatement of our annual or interim financial statements that is more than inconsequential will not be prevented or detected. In the course of making our assessment of the effectiveness of internal controls over financial reporting, we identified material weaknesses in our internal control over financial reporting. Specifically, we do not have sufficiently documented procedures or control activities in place to support a reliable financial reporting process. This includes an absence of controls over the review and approval of journal entries, segregation of duties, reconciliations, and other fundamental accounting processes.
Based on our assessment under the criteria described above, we have concluded that our internal control over financial reporting was not effective as of the end of the period covered by this Quarterly Report.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting, as defined in Rules 13a-15(f) of the Exchange Act, during the quarter ended March 31, 2026, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. The Company continues to review its disclosure controls and procedures, including its internal control over financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that the Company’s systems evolve with its business.
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PART II-OTHER INFORMATION
Item 1. Legal Proceedings.
We are not currently subject to any legal proceedings. However, we may from time to time become a party to various legal proceedings arising in the ordinary course of our business.
Item 1A. Risk Factors.
As a smaller reporting company under Rule 12b-2 of the Exchange Act, we are not required to include risk factors in this Quarterly Report. However, as of the date of this Quarterly Report, there have been no material changes with respect to those risk factors previously disclosed in the “Risk Factors” section of the Annual Report. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a)
Shares of Common Stock Issued Pursuant to E.F. Hutton Agreement.
On February 2, 2026, the Company approved that certain Financial Advisory Agreement (the “Advisory Agreement”), previously executed on December 1, 2025, with E.F. Hutton & Co. LLC (the “Advisor”), pursuant to which the Company agreed to issue an aggregate of 4,558,044 shares of its common stock as consideration for advisory services provided by the Advisor. Because the Advisory Agreement was not approved by the Company until February 2, 2026, no obligation with respect thereto was recognized prior to such date. Pursuant to the Advisory Agreement, the Company has issued a total of 2,515,194 shares of the Company’s common stock to the Advisor as of the date of this filing
(b) Not applicable.
(c) None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
(a) None.
(b) None.
(c) During the quarter ended March 31, 2026, no
director or officer of the Company
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Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report.
| * | Filed or furnished with this Quarterly Report. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| APIMEDS PHARMACEUTICALS US, INC. | ||
| Date: May 26, 2026 | By: | /s/ Erick Frim |
| Name: | Erick Frim | |
| Title: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) | ||
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