UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended
For the transition period from ________ to _________
Commission
file number
(Exact name of registrant as specified in charter)
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(State or jurisdiction of Incorporation or organization) |
I.R.S. Employer Identification No. |
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(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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The
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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 definition 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 | ☐ |
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☒ | Smaller reporting company |
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| Emerging growth company |
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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 by Rule 12b-2 of the Exchange Act). Yes ☐ No
Number of common shares outstanding as of November 10, 2025 was .
TABLE OF CONTENTS
| 2 |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA
This Quarterly Report on Form 10-Q contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements may be identified by such forward-looking terminology as “may,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. Our forward-looking statements are based on a series of expectations, assumptions, estimates and projections about our company, are not guarantees of future results or performance and involve substantial risks and uncertainty. We may not actually achieve the plans, intentions or expectations disclosed in these forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in these forward-looking statements. Our business and our forward-looking statements involve substantial known and unknown risks and uncertainties, including the risks and uncertainties inherent in our statements regarding:
| ● | our projected financial position and estimated cash burn rate; | |
| ● | our estimates regarding expenses, future revenues and capital requirements; | |
| ● | our ability to continue as a going concern; | |
| ● | our need to raise substantial additional capital to fund our operation; | |
| ● | the success, cost and timing of our clinical trials; | |
| ● | our dependence on third parties in the conduct of our clinical trials; | |
| ● | our ability to obtain the necessary regulatory approvals to market and commercialize our product candidates; | |
| ● | the impact of a health epidemic on our business, our clinical trials, our research programs, healthcare systems, or the global economy as a whole; | |
| ● | the potential that results of pre-clinical and clinical trials indicate our current product candidates or any future product candidates we may seek to develop are unsafe or ineffective; | |
| ● | the results of market research conducted by us or others; | |
| ● | our ability to obtain and maintain intellectual property protection for our current and future product candidates; | |
| ● | our ability to protect our intellectual property rights and the potential for us to incur substantial costs from lawsuits to enforce or protect our intellectual property rights; | |
| ● | the possibility that a third party may claim we or our third-party licensors have infringed, misappropriated or otherwise violated their intellectual property rights and that we may incur substantial costs and be required to devote substantial time defending against claims against us; | |
| ● | our reliance on third-party suppliers and manufacturers; | |
| ● | the success of competing therapies and products that are or become available; | |
| ● | our ability to expand our organization to accommodate potential growth and our ability to retain and attract key personnel; | |
| ● | the potential for us to incur substantial costs resulting from product liability lawsuits against us and the potential for these product liability lawsuits to cause us to limit our commercialization of our product candidates; | |
| ● | market acceptance of our product candidates, the size and growth of the potential markets for our current product candidates and any future product candidates we may seek to develop, and our ability to serve those markets; | |
| ● | the successful development of our commercialization capabilities, including sales and marketing capabilities; and | |
| ● | general business and economic conditions, such as inflationary pressures, geopolitical conditions and other trade barriers. |
All of our forward-looking statements are as of the date of this Quarterly Report on Form 10-Q only, in each case, actual results may differ materially from such forward-looking information. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of, or any material adverse change in, one or more of the risk factors or risks and uncertainties referred to in this Quarterly Report on Form 10-Q or included in our other public disclosures or our other periodic reports or other documents or filings filed with or furnished to the U.S. Securities and Exchange Commission (the “SEC”) could materially and adversely affect our business, prospects, financial condition and results of operations. Except as required by law, we do not undertake or plan to update or revise any such forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections or other circumstances affecting such forward-looking statements occurring after the date of this Quarterly Report on Form 10-Q, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized. Any public statements or disclosures by us following this Quarterly Report on Form 10-Q that modify or impact any of the forward-looking statements contained in this Quarterly Report on Form 10-Q will be deemed to modify or supersede such statements in this Quarterly Report on Form 10-Q.
This Quarterly Report on Form 10-Q may include market data and certain industry data and forecasts, which we may obtain from internal company surveys, market research, consultant surveys, publicly available information, reports of governmental agencies and industry publications, articles and surveys. Industry surveys, publications, consultant surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed. While we believe that such studies and publications are reliable, we have not independently verified market and industry data from third-party sources.
| 3 |
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
THARIMMUNE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, 2025 | December 31, 2024 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ |
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$ |
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||||
| Prepaid expenses and other current assets |
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| Deferred offering costs |
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| Total current assets |
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||||||
| Total assets | $ |
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$ |
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||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ |
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$ |
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| Accrued expenses |
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| Insurance premium financing liability |
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| Note payable |
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| Total current liabilities |
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| Total liabilities |
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| Commitments and contingencies (see Note 5) | ||||||||
| Stockholders’ equity | ||||||||
| Preferred stock, $ par value, shares authorized, shares issued and outstanding as of September 30, 2025 and December 31, 2024 | ||||||||
| Common stock, $ par value, shares authorized, shares and shares issued and shares and shares outstanding as of September 30, 2025 and December 31, 2024, respectively |
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| Additional paid-in capital |
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||||||
| Accumulated deficit |
(
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) |
(
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) | ||||
| Treasury stock, at cost, shares held in treasury as of September 30, 2025 and December 31, 2024 |
(
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) |
(
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) | ||||
| Total stockholders’ equity |
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||||||
| Total liabilities and stockholders’ equity | $ |
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$ |
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||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| F- 1 |
THARIMMUNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
|
For the Three Months
Ended September 30, |
For the Nine Months
Ended September 30, |
|||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Operating expenses | ||||||||||||||||
| Research and development | $ |
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$ |
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$ |
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$ |
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||||||||
| General and administrative |
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||||||||||||
| Total operating expenses |
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| Loss from operations |
(
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) |
(
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) |
(
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) |
(
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) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense |
(
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) |
(
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) |
(
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) |
(
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) | ||||||||
| Interest income |
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||||||||||||
| Total other income (expense), net |
(
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) |
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(
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) |
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||||||||||
| Net loss | $ |
(
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) | $ |
(
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) | $ |
(
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) | $ |
(
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) | ||||
| Net loss per share: | ||||||||||||||||
| Basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average number of common shares outstanding*: | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
| * |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
| F- 2 |
THARIMMUNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024 (UNAUDITED)
| Additional | ||||||||||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Treasury Stock | |||||||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Shares | Amount | Total | ||||||||||||||||||||||
| For the three months ended September 30, 2024: | ||||||||||||||||||||||||||||
| Balance, June 30, 2024 * |
|
$ |
|
$ |
|
$ |
(
|
) |
|
$ |
(
|
) | $ |
|
||||||||||||||
| Issuance costs related to Form S-3 Registration Statement | - |
(
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) | - |
(
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) | ||||||||||||||||||||||
| Cashless exercise of pre-funded warrants |
|
|
(
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) | - | |||||||||||||||||||||||
| Net loss | - |
(
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) | - |
(
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) | ||||||||||||||||||||||
| Stock based compensation | - |
|
- |
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||||||||||||||||||||||||
| Balance, September 30, 2024 |
|
$ |
|
$ |
|
$ |
(
|
) |
|
$ |
(
|
) | $ |
|
||||||||||||||
| For the nine months ended September 30, 2024: | ||||||||||||||||||||||||||||
| Balance, December 31, 2023 * |
|
$ |
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$ |
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$ |
(
|
) |
|
$ |
(
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) | $ |
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||||||||||||||
| Stock issuance pursuant to services agreement |
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- |
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|||||||||||||||||||||||
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Private investment in public equity offering, net of issuance costs of $
|
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- |
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|||||||||||||||||||||||
| Issuance costs related to Form S-3 Registration Statement | - |
(
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) | - |
(
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) | ||||||||||||||||||||||
| Cashless exercise of pre-funded warrants |
|
|
(
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) | - | |||||||||||||||||||||||
| Net loss | - |
(
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) | - |
(
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) | ||||||||||||||||||||||
| Stock based compensation | - |
|
- |
|
||||||||||||||||||||||||
| Balance, September 30, 2024 |
|
$ |
|
$ |
|
$ |
(
|
) |
|
$ |
(
|
) | $ |
|
||||||||||||||
| For the three months ended September 30, 2025: | ||||||||||||||||||||||||||||
| Balance, June 30, 2025 |
|
$ |
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$ |
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$ |
(
|
) |
|
$ |
(
|
) | $ |
|
||||||||||||||
|
Registered direct public offerings, net of issuance costs of $
|
|
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- |
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|||||||||||||||||||||||
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Private investment in public equity offering, net of issuance costs of $
|
|
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- |
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|||||||||||||||||||||||
| Cashless exercise of pre-funded warrants |
|
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(
|
) | - | |||||||||||||||||||||||
| Cashless exercise of common warrants |
|
|
(
|
) | - | |||||||||||||||||||||||
| Net loss | - |
(
|
) | - |
(
|
) | ||||||||||||||||||||||
| Stock based compensation | - |
|
- |
|
||||||||||||||||||||||||
| Balance, September 30, 2025 |
|
$ |
|
$ |
|
$ |
(
|
) |
|
$ |
(
|
) | $ |
|
||||||||||||||
| For the nine months ended September 30, 2025: | ||||||||||||||||||||||||||||
| Balance, December 31, 2024 |
|
$ |
|
$ |
|
$ |
(
|
) |
|
$ |
(
|
) | $ |
|
||||||||||||||
|
Registered direct public offerings, net of issuance costs of $
|
|
|
|
- |
|
|||||||||||||||||||||||
|
Private investment in public equity offerings, net of issuance costs of $
|
|
|
|
- |
|
|||||||||||||||||||||||
| At-the-market offerings, net of issuance costs |
|
|
|
- |
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|||||||||||||||||||||||
| Cashless exercise of pre-funded warrants |
|
|
(
|
) | - | |||||||||||||||||||||||
| Cashless exercise of common warrants |
|
|
(
|
) | - | |||||||||||||||||||||||
| Stock issuance pursuant to bonus liability | - |
|
- |
|
||||||||||||||||||||||||
| Restricted stock unit issuance pursuant to service agreement |
|
|
(
|
) | - | |||||||||||||||||||||||
| Issuance costs related to Form S-8 Options Registration Statement | - |
(
|
) | - |
(
|
) | ||||||||||||||||||||||
| Stock issuance pursuant to termination agreement |
|
|
|
- |
|
|||||||||||||||||||||||
| Net loss | - |
(
|
) | - |
(
|
) | ||||||||||||||||||||||
| Stock based compensation | - |
|
- |
|
||||||||||||||||||||||||
| Balance, September 30, 2025 |
|
$ |
|
$ |
|
$ |
(
|
) |
|
$ |
(
|
) | $ |
|
||||||||||||||
| * | Amounts have been retroactively restated to reflect the 1-for-15 reverse stock split effectuated on May 24, 2024 (See Note 2 to the condensed consolidated financial statements). |
The accompanying notes are an integral part of these condensed consolidated financial statements.
| F- 3 |
THARIMMUNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| For the Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ |
(
|
) | $ |
(
|
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Write-off of deferred offering costs |
|
|||||||
| Stock based compensation |
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|
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| Stock issuance pursuant to termination agreement |
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| Stock issuance pursuant to services agreement |
|
|||||||
| Increase in operating assets: | ||||||||
| Prepaid expenses and other current assets |
(
|
) |
(
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) | ||||
| Increase (decrease) in operating liabilities: | ||||||||
| Accounts payable |
(
|
) |
(
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) | ||||
| Accrued expenses |
(
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) |
|
|||||
| Net cash used in operating activities |
(
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) |
(
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) | ||||
| Net cash provided by (used in) investing activities | ||||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of common stock upon private investment in public equity offerings |
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| Proceeds from issuance of common stock upon registered direct public offerings |
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| Proceeds from issuance of common stock upon at-the-market offerings |
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| Payment of deferred offering costs |
(
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) |
(
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) | ||||
| Proceeds from insurance premium financing liability |
|
|
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| Repayment of insurance premium financing liability |
(
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) |
(
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) | ||||
| Repayment of note payable |
(
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) | ||||||
| Net cash provided by financing activities |
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| Net increase (decrease) in cash |
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(
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) | |||||
| Cash, beginning of period |
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| Cash, end of period | $ |
|
$ |
|
||||
| Supplemental disclosure of non-cash financing activities: | ||||||||
| Placement agent warrants as issuance costs of private investment in public equity offerings | $ |
|
$ |
|
||||
| Amortization of deferred offering costs from ATM offering | $ |
|
$ | |||||
| Reduction of premium related to insurance premium financing | $ |
|
$ | |||||
| Issuance of note payable for settlement of previously incurred professional fees | $ |
|
$ | |||||
| Issuance of options to settle liability | $ |
|
$ | |||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| F- 4 |
THARIMMUNE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 – Description of Business and Liquidity
Nature of Operations
Tharimmune, Inc. (“Tharimmune” or the “Company”) was incorporated on March 28, 2017, as a Delaware C-corporation. At September 30, 2025, Tharimmune had one wholly-owned subsidiary: Hillstream Oncology, Inc. (“Hillstream Oncology”), recently renamed Gravitas Life Sciences, Inc.
Tharimmune is a clinical-stage biotechnology company developing therapeutic candidates in immunology and inflammation conditions with high unmet need. On November 3, 2023, the Company entered into a patent license agreement (the “Avior License Agreement”) with Avior Inc. d/b/a Avior Bio, LLC (“Avior”) pursuant to which it received an exclusive sublicensable right and license to Licensed Patent Rights and Licensed Technology to, among other things, Develop, have Developed, make, have made, use, sell, import, export and commercialize TH104 and TH103 and to practice the Licensed Technology in connection with the foregoing, throughout the world (each as defined in the Avior License Agreement). In February 2023, the U.S. Food and Drug Administration (“FDA”) approved an investigational new drug (“IND”) application for TH104. TH104 has a dual mechanism of action by affecting multiple receptors, known to suppress chronic, debilitating pruritus or “uncontrollable itching.” With respect to TH104, the Company originally intended to first seek approval for the treatment of moderate to severe chronic pruritus in patients with primary biliary cholangitis (“PBC”), an orphan rare form of liver disease with no known cure in which more than 70% of patients suffer from debilitating chronic pruritic. The Company engaged and received positive feedback in March 2025 from the FDA regarding the additional proposed indication of temporary prophylaxis of respiratory and/or nervous system depression in military personnel and chemical incident responders entering an area contaminated with high-potency opioids (“PrHPO”), for which it submitted a Pre-Investigational New Drug Application (“PIND”). With respect to the PIND for this additional proposed indication for TH104, the Company received positive feedback from the FDA regarding a regulatory pathway that will allow it to submit a 505(b)(2) New Drug Application (“NDA”) for TH104. The FDA advised that the Company will need to perform additional nonclinical studies ( i.e., in vitro toxicology studies), but the FDA confirmed that it does not believe any additional clinical trials will be required to define the prophylactic dosing window prior to IND or NDA submission for this indication, which the Company expects will be the lead program. The Company intends to pursue the pruritus in PBC indication subsequent to the nearer term opportunity of filing an NDA for PrHPO. The Company intends to conduct a capital efficient strategy to file an NDA for PrHPO, which involves actively progressing its Chemistry, Manufacturing, and Controls (“CMC”) plan to meet the stringent requirements for filing an NDA with the FDA. This comprehensive plan encompasses all aspects of the manufacturing process, quality control measures, and product stability to ensure the consistent production of a high-quality buccal film formulation known as TH104.
On September 11, 2024, Tharimmune entered into a Patent License Agreement (the “Intract Agreement”) with Intract Pharma Limited (“Intract”), pursuant to which the Company exclusively licensed INT-023/TH023, an oral anti-Tumor Necrosis Factor-alpha (TNF-α) monoclonal antibody infliximab. Infliximab is a purified, recombinant DNA-derived chimeric IgG monoclonal antibody protein that contains both murine and human components that inhibit tumor TNF-α. Under the terms of the Intract Agreement, the Company licensed global development and commercialization rights (outside of South Korea) to Intract’s Soteria® and Phloral® delivery platform along with an existing supply agreement for infliximab to be used in the oral product development program.
The Company has developed an early-stage pipeline of novel therapeutic candidates targeting validated high value immuno-oncology (“IO”) targets including human epidermal growth factor (“EGF”) receptor 2 (“HER2”), human EGF receptor 3 (“HER3”) and programmed cell death protein 1 (“PD-1”). The Company is developing antibodies including bispecific antibodies and small molecular weight bovine-derived “knob” domains which have the potential to target and bind more tightly to “undruggable” epitopes differently than full sized antibodies. The Company is advancing HS1940, a bispecific biologic against both PD-1 and vascular endothelial growth receptor antibody which targets both receptors. We have also developed HS3215, a bispecific antibody against both HER2 and HER3 which targets a novel “bridging epitope” encompassing multiple domains of the HER2 extracellular domain (“ECD”) as well as ligand-dependent and independent blocking of the ECD of HER3.
| F- 5 |
Liquidity and Going Concern
The
accompanying condensed consolidated financial statements have been prepared on the basis that the Company will continue as a going concern,
which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. During
the nine months ended September 30, 2025, the Company incurred operating losses in the amount of approximately $
Based on the Company’s limited operating history, recurring negative cash flows from operations, current plans and available resources, the Company may need substantial additional funding to support future operating activities. The Company has concluded that the prevailing conditions and ongoing liquidity risks faced raise substantial doubt about the Company’s ability to continue as a going concern for at least one year following the date these condensed consolidated financial statements are issued. The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. Due to the recent financing activities, the Company will reevaluate the going concern assumption at year-end.
The Company may seek to raise additional funding through the sale of additional equity or debt securities, enter into strategic partnerships, grants, or other arrangements or a combination of the foregoing to support its future operations; however, there can be no assurance that the Company will be able to obtain additional capital on terms acceptable to the Company, on a timely basis or at all. The failure to obtain sufficient additional funding could adversely affect the Company’s ability to achieve its business objectives and product development timelines and may result in the Company delaying or terminating clinical trial activities which could have a material adverse effect on the Company’s results of operations.
Other Risks and Uncertainties
There can be no assurance that the Company’s products, if approved, will be accepted in the marketplace, nor can there be any assurance that any future products can be developed or manufactured at an acceptable cost and with appropriate performance characteristics, or that such products will be successfully marketed, if at all. The Company is subject to risks common to biopharmaceutical and biotechnology companies including, but not limited to, the development of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, product liability, uncertainty of market acceptance of products and the need to obtain additional financing. The Company is dependent on third party suppliers. The Company’s products require approval or clearance from the FDA prior to commencing commercial sales in the United States. Approvals or clearances are also required in foreign jurisdictions in which the Company may license or sell its products. There can be no assurance that the Company’s products will receive all of the required approvals or clearances.
| F- 6 |
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation
These accompanying unaudited condensed consolidated interim financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. These condensed consolidated financial statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary for a fair statement of the balance sheet, operating results, and cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Operating results for the nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2025 or any other future period. Certain information and footnote disclosure normally included in the annual financial statements prepared in accordance with U.S. GAAP have been omitted in accordance with the SEC’s rules and regulations for interim reporting. The Company’s financial position, results of operations, and cash flows are presented in U.S. Dollars. These condensed consolidated financial statements and related notes should be read in conjunction with the audited financial statements and related notes thereto for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 26, 2025.
The Company operates in one segment and the Company’s Chief Executive Officer serves as the chief operating decision maker (“CODM”). The CODM uses net loss, as reported in the condensed consolidated financial statements, to monitor budget versus actual results and allocate resources. The CODM is regularly provided with financial information, including expenses, in a format consistent with the condensed consolidated statements of operations. The CODM does not review assets at a different level than those disclosed in the consolidated balance sheet.
Reverse Stock Split
On
May 24, 2024, the Company effectuated a reverse split of shares of its common stock at a ratio of
Principles of Consolidation
The condensed consolidated financial statements include the accounts of Tharimmune and its wholly-owned subsidiary, Hillstream Oncology. All significant intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes, and management must select an amount that falls within that range of reasonable estimates. Areas of the condensed consolidated financial statements where estimates may have the most significant effect include research and development expense recognition, valuation of common shares and share-based compensation, allowances of deferred tax assets, valuation of debt related instruments, and cash flow assumptions regarding going concern considerations. Although management believes the estimates that have been used are reasonable, actual results could vary from the estimates that were used.
Concentration of Credit Risk
The
Company maintains cash balances with various financial institutions. Account balances at these institutions are insured by the Federal
Deposit Insurance Corporation (“FDIC”) up to $
Cash and Cash Equivalents
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. Cash equivalents, if any, are stated at cost and consist primarily of money market accounts.
| F- 7 |
Research and Development
Research and development costs are expensed as incurred. Research and development expenses include personnel costs associated with research and development activities, including third-party contractors to perform research, conduct clinical trials, and manufacture drug supplies and materials. These expenses also include costs associated with license fee arrangements and collaboration agreements, including milestone payments and ongoing license fees, which are also expensed as incurred. The Company accrues for costs incurred by external service providers, including contract research organizations and clinical investigators, based on its estimates of service performed and costs incurred. These estimates include the level of services performed by third parties, patient enrollment in clinical trials, administrative costs incurred by third parties, and other indicators of the services completed.
The Company recognizes compensation costs resulting from the issuance of stock-based awards to employees, non-employees, and directors as an expense in the condensed consolidated statements of operations over the requisite service period based on a measurement of fair value for each stock-based award. The fair value of common stock issued pursuant to termination agreements as well as restricted stock or restricted stock units is generally measured as the grant-date price of the Company’s common stock. The fair value of each option grant to employees, non-employees, and directors is estimated as of the date of grant using the Black-Scholes option-pricing model, net of actual forfeitures. The fair value is amortized as compensation cost on the straight-line basis over the requisite service period of the awards, which is generally the vesting period.
Prior to January 12, 2022, the Company was a private company and the Company’s common stock has only been publicly traded since that date. As a result, the Company has limited company-specific historical and implied volatility information. Therefore, it has estimated its expected stock volatility based on the historical data of a publicly traded set of peer companies. The expected term of stock options granted was between five and seven years. The risk-free interest rate was determined by reference to the U.S. Treasury yield curve in effect at the time of grant for time periods approximately equal to the expected term of the award.
Fair Value Measurements
The Company applies Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement (“ASC 820”), which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances.
The carrying value of the Company’s cash, prepaid expenses, accounts payable, and accrued expenses approximate fair value because of the short-term maturity of these financial instruments.
The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below:
| Level 1 Inputs: Observable inputs such as quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. | |
| Level 2 Inputs: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for assets or liabilities recently traded in active markets, with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals, as well as quoted prices for identical or similar assets or liabilities in markets that are not active. |
| Level 3 Inputs: Unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities, that reflect the reporting entity’s own assumptions. |
| F- 8 |
Deferred Offering Costs
Deferred
offering costs consists primarily of legal, accounting, underwriters’ fees, printing, and filing fees that are incurred prior to
an offering of the Company’s common stock and are initially capitalized and then subsequently reclassified to additional paid-in
capital upon completion of the offering. If an offering is not completed, any associated offering costs will be expensed immediately
upon termination of the offering. Effective August 31, 2025, the ATM Agreement was terminated and as a result, $
Insurance Premium Financing Liability
In
January 2024, the Company entered into an insurance premium financing agreement for $
In
January 2025, the Company entered into an insurance premium financing agreement for $
Retirement Plan
The
Company has a 401(k) defined contribution plan which covers all employees that meet the plan’s eligibility requirements. Eligible
employees may contribute a percentage of their salary subject to certain limitations. The Company makes a discretionary match which is
currently equal to 3% of employee contributions. Total company contributions to the plan were $
Income Taxes
The Company accounts for income taxes using the asset-and-liability method in accordance with FASB ASC Topic 740, Income Taxes (“ASC 740”). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.
Deferred income taxes are recognized for the tax effect of temporary differences between the financial statement carrying amount of assets and liabilities and the amounts used for income tax purposes and for certain changes in valuation allowances. Valuation allowances are recorded to reduce certain deferred tax assets when, in management’s estimation, it is more-likely-than-not that a tax benefit will not be realized. A full valuation allowance has been recognized for all periods since it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized in future periods.
The Company follows the guidance in FASB ASC Subtopic 740-10 in assessing uncertain tax positions. The standard applies to all tax positions and clarifies the recognition of tax benefits in the financial statements by providing for a two-step approach of recognition and measurement. The first step involves assessing whether the tax position is more-likely-than-not to be sustained upon examination based upon its technical merits. The second step involves measurement of the amount to be recognized. Tax positions that meet the more-likely-than-not threshold are measured at the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate finalization with the taxing authority. The Company recognizes the impact of an uncertain income tax position in the financial statements if it believes that the position is more-likely-than-not to be sustained by the relevant taxing authority. The Company will recognize interest and penalties related to tax positions in income tax expense. At September 30, 2025 and December 31, 2024, the Company had no unrecognized uncertain income tax positions, and therefore no amounts have been recognized in the condensed consolidated financial statements.
Patent Costs
Costs associated with the submission of patent applications, including milestone fees and success fees, are expensed as incurred given the uncertainty of the future economic benefits of the patents. Patent and patent related legal and administrative costs are included in general and administrative expenses in the accompanying consolidated statements of operations.
| F- 9 |
The Company reports loss per share in accordance with FASB ASC Subtopic 260-10, Earnings Per Share , which provides for calculation of basic and diluted earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income or loss available to common stockholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. The calculation of diluted net earnings (loss) per share gives effect to common stock equivalents; however, potential common shares are excluded if their effect is anti-dilutive.
Potentially
dilutive securities not included in the computation of loss per share for the nine months ended September 30, 2025 and 2024 included
options to purchase
and
shares of common stock, respectively, and
and
restricted stock units subject to vesting, respectively. Other
potentially dilutive securities not included in the computation of loss per share for the nine months ended September 30, 2025 and 2024
included warrants to purchase
shares of the Company’s common stock related
to the Company’s initial public offering (the “IPO”); warrants to purchase
and
shares of the Company’s common stock issued in the Company’s
May 2023 and November 2023 offerings, respectively; and warrants to purchase
shares of the Company’s common stock issued
in the June 2024 PIPE Offering, December 2024 PIPE Offering, June 2025 PIPE Offering, July 2025 PIPE Offering, July 2025 Direct Offering,
and August 2025 Direct Offering. All common share amounts as of September 30, 2025 and December 31, 2024 and per share amounts for the
nine months ended September 30, 2025 and 2024 have been retroactively adjusted to reflect a
Recently Adopted Accounting Pronouncements
The Company has evaluated all recent accounting pronouncements that were required to be adopted or are required to be adopted in the near future and believes that none of them will have a material effect on the Company’s financial position, results of operations, or cash flows.
Note 3 – Note Payable
The
Company issued a promissory note in the amount of $
As
the promissory note does not have an interest component, imputed interest at
Note 4 – Common Stock
Pursuant
to the Company’s Certificate of Incorporation, the Company has
shares of common stock authorized for issuance. On May
24, 2024, the Company effectuated a reverse split of shares of its common stock at a ratio of
| F- 10 |
On
January 24, 2024, pursuant to a corporate advisory consulting agreement, the Company issued
shares of its common stock with a per
share value of $
, representing total compensation expense of $
On
June 7, 2024, the Company entered into the ATM Agreement with Rodman & Renshaw LLC (the “ATM Sales Manager”) under which
the Company may sell, from time to time through the ATM Sales Manager, shares of common stock in one or more offerings up to a total
dollar amount of $
On
June 21, 2024, the Company closed a private placement offering with certain accredited investors of $
On
December 9, 2024, the Company closed an additional private placement offering with certain accredited investors of $
On
December 20, 2024, the Company sold
shares of its common stock pursuant to the ATM Agreement at an offering price of $
per
share. Net proceeds from the offering were approximately $
During
the nine months ended September 30, 2025, the Company sold
shares of its common stock pursuant to the ATM Agreement at an average
offering price of $
per share. Net proceeds from the offering were approximately $
| F- 11 |
On
June 13, 2025, the Company closed an additional private placement offering with certain accredited investors of $
On
July 25, 2025, the Company closed a registered direct public offering with certain accredited investors of $
On
July 25, 2025, the Company closed an additional private placement offering with certain accredited investors of $
On
August 26, 2025, the Company closed a registered direct public offering with certain investors of $
The fair value of June 2024, December 2024, June 2025, and July 2025 Placement Agent Warrants is estimated at the date of issuance using the Black-Scholes option-pricing model. The estimated fair value of each placement agent warrant is recorded as issuance cost within additional paid-in capital and a corresponding warrant reserve, also within additional paid-in-capital. The determination of fair value using the Black-Scholes model is affected by the Company’s share price as well as assumptions regarding a number of complex and subjective variables, including expected price volatility, expected life, and a risk-free interest rate.
The placement agent warrants were valued using the Black-Scholes option-pricing model with the following assumptions.
| June 2024 | December 2024 | June 2025 | July 2025 | |||||||||||||
| PIPE Offering | PIPE Offering | PIPE Offering | PIPE Offering | |||||||||||||
| Expected volatility | % | % | % | % | ||||||||||||
| Risk-free interest rate | % | % | % | % | ||||||||||||
| Expected dividend yield | % | % | % | % | ||||||||||||
| Expected life of warrants in years | ||||||||||||||||
| Estimated fair value of placement agent warrants | $ | $ | $ | - | $ | |||||||||||
| F- 12 |
Incentive Plans and Options
Under the Company’s 2017 Stock Incentive Plan (the “2017 Plan”), the Company could grant incentive stock options, non-statutory stock options, rights to purchase common stock, stock appreciation rights, restricted stock, performance shares, and performance units to employees, directors, and consultants of the Company and its affiliates. Up to shares of the Company’s common stock may be issued pursuant to the 2017 Plan.
The Company granted options to acquire shares of common stock at $ per share under the 2017 Plan. During the three and nine months ended September 30, 2025, options to acquire shares of common stock were forfeited. At September 30, 2025 and December 31, 2024, there were options outstanding to acquire and shares of common stock, respectively. As of September 30, 2025 and December 31, 2024, all such options were fully vested, and had a weighted average remaining contractual life of approximately and years, respectively.
In July 2019, the Company authorized an additional plan, the 2019 Stock Incentive Plan (the “2019 Plan”). Under the 2019 Plan, the Company could grant incentive stock options, non-statutory stock options, rights to purchase common stock, stock appreciation rights, restricted stock, performance shares, and performance units to employees, directors, and consultants of the Company and its affiliates. At both September 30, 2025 and December 31, 2024, a total of shares were authorized for issuance under the 2019 Plan.
As of both September 30, 2025 and December 31, 2024, the Company has granted options to acquire shares of common stock under the 2019 Plan. During the three and nine months ended September 30, 2025, options to acquire shares of common stock were forfeited. There were stock options outstanding to acquire shares of common stock with a weighted-average exercise price of $ and weighted average contractual terms of years at December 31, 2024. There are stock options outstanding to acquire shares of common stock with a weighted-average exercise price of $ and weighted average contractual terms of years at September 30, 2025.
On August 17, 2023, the Company authorized the Tharimmune, Inc. 2023 Omnibus Incentive Plan (as amended, the “2023 Plan”). Under the 2023 Plan, the Company may grant incentive stock options, non-statutory stock options, rights to purchase common stock, stock appreciation rights, restricted stock, performance shares, and performance units to employees, directors, and consultants of the Company and its affiliates. Initially, there were shares of the Company’s common stock available to be issued pursuant to the 2023 Plan. Under an amendment and restatement to the 2023 Plan approved by the Company’s stockholders on May 14, 2024, a total of up to shares of the Company’s common stock may be issued pursuant to the 2023 Plan. In addition, under the amendment, an “evergreen” provision was added to automatically increase the number of shares available under the 2023 Plan on January 1 annually, beginning January 1, 2025 and ending January 1, 2033, equal to the lesser of five percent of the shares of common stock outstanding (on an as-converted basis) on the final day of the immediately preceding calendar year or such lesser number of shares of the Company’s common stock as determined by the Board of Directors. Effective January 1, 2025, an additional shares of the Company’s common stock were added to the 2023 Plan. Further, effective June 10, 2025, the shareholders approved an amendment to the 2023 Plan, increasing the 2023 Plan by shares, to a total of shares available under the 2023 Plan.
During the three and nine months ended September 30, 2025, the Company granted and options to acquire shares of common stock under the 2023 Plan, respectively. During the three and nine months ended September 30, 2025, options to acquire and shares of common stock were forfeited, respectively. At September 30, 2025, shares of common stock remain available for issuance under the 2023 Plan. As of September 30, 2025 and December 31, 2024, there were stock options outstanding to acquire and shares of common stock with a weighted-average exercise price of $ and $ , respectively, and weighted-average contractual terms of years and years, respectively. In September 2025, the compensation committee of the Board approved accelerating the vesting of options to purchase approximately shares of common stock, resulting in additional non-cash stock-based compensation of approximately $ million.
| Weighted | Weighted | |||||||||||
| Shares | Average | Average | ||||||||||
| Underlying | Exercise | Contractual | ||||||||||
| Options | Price | Terms | ||||||||||
| Outstanding at December 31, 2024 |
|
$ |
|
years | ||||||||
| Granted |
|
$ |
|
years | ||||||||
| Forfeited |
(
|
) | $ |
|
years | |||||||
| Outstanding at September 30, 2025 |
|
$ |
|
years | ||||||||
| Exercisable options at September 30, 2025 |
|
$ |
|
years | ||||||||
| Vested and expected to vest at September 30, 2025 |
|
$ |
|
years | ||||||||
| F- 13 |
The fair value of stock option awards is estimated at the date of grant using the Black-Scholes option-pricing model. The estimated fair value of each stock option is then expensed over the requisite service period, which is generally the vesting period (ranging between immediate vesting and four years). The determination of fair value using the Black-Scholes model is affected by the Company’s share price as well as assumptions regarding a number of complex and subjective variables, including expected price volatility, expected life, risk-free interest rate, and forfeitures. Forfeitures are accounted for as they occur.
| For the three months ended | For the nine months ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Expected volatility | % | % | - % | % | ||||||||||||
| Risk-free interest rate | % | % | - % | % | ||||||||||||
| Expected dividend yield | % | % | % | % | ||||||||||||
| Expected life of options in years | ||||||||||||||||
| Estimated fair value of options granted | $ | $ | $ | - | $ | |||||||||||
The weighted-average grant date fair value of stock options granted during the three and nine months ended September 30, 2025 was approximately $ and $ , respectively. The weighted-average grant date fair value of stock options granted during three and nine months ended September 30, 2024 was approximately $ . The weighted-average fair value of stock options vested during the three and nine months ended September 30, 2025 was approximately $ and $ , respectively, and during the three and nine months ended September 30, 2024 was approximately $ and $ , respectively.
|
For the three months ended
September 30, |
For the nine months ended
September 30, |
|||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Research and development | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
| General and administrative |
|
|
|
|
||||||||||||
| Total stock-based compensation | $ |
|
$ |
|
$ |
|
$ |
|
||||||||
As of September 30, 2025, there was unrecognized compensation expense related to non-vested options.
Warrants
In
connection with the IPO, the Company issued warrants to purchase such number of shares of the Company’s common stock equal to 5%
of the total shares of common stock issued in the IPO, or
In
May 2023, the Company issued warrants to designees of the underwriter (the “Representative’s Warrants”) to purchase
In
November 2023, the Company issued the underwriters from a private placement offering warrants to purchase
| F- 14 |
In
connection with the June 2024 PIPE Offering as described in Note 4 to the condensed consolidated financial statements, the Company issued
the June 2024 Pre-Funded Warrants to purchase
In
connection with the December 2024 PIPE Offering as described in Note 4 to the condensed consolidated financial statements, the Company
issued the December 2024 Pre-Funded Warrants to purchase
In
connection with the June 2025 PIPE Offering as described in Note 4 to the condensed consolidated financial statements, the Company
issued the June 2025 Pre-Funded Warrants to purchase
In
connection with the July 2025 Direct Offering as described in Note 4 to the condensed consolidated financial statements, the Company
issued the July 2025 Direct Pre-Funded Warrants to purchase
In
connection with the July 2025 PIPE Offering as described in Note 4 to the condensed consolidated financial statements, the Company issued
the July 2025 Pre-Funded Warrants to purchase
In
connection with the August 2025 Direct Offering as described in Note 4 to the condensed consolidated financial statements, the Company
issued the August 2025 Direct Pre-Funded Warrants to purchase
| F- 15 |
Terms of the warrants outstanding at September 30, 2025 are as follows:
| Initial | Expiration | Exercise | Warrants | Warrants | Warrants | |||||||||||||||
| Issuance Date | Exercise Date | Date | Price | Issued | Exercised | Outstanding | ||||||||||||||
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$ |
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$ |
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$ |
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N/A | $ |
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$ |
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$ |
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N/A | $ |
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$ |
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$ |
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N/A | $ |
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$ |
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$ |
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$ |
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N/A | $ |
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$ |
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N/A | $ |
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$ |
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N/A | $ |
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| * |
|
Restricted Stock Units
During the nine months ended September 30, 2025, as stock-based consideration for consulting services, the Company granted restricted stock units (“RSUs”) under the 2023 Plan to an individual representing the right to receive shares of the Company’s common stock. .
The grant date fair value of an RSU represents the closing price of the Company’s common stock on the date of grant. The estimated fair value of each RSU is then expensed over the requisite service period, which is generally the vesting period (approximately a year and a half).
The total stock compensation expense related to RSUs for the three and nine months ended September 30, 2025 was $ and $ , respectively. The total estimated fair value of RSUs at September 30, 2025 was $ , of which $ remains to be vested quarterly through June 30, 2026. As of September 30, 2025, there are outstanding unvested RSUs, which will fully vest on June 30, 2026.
Termination Agreement
In
connection with the resignation of a board member, effective June 23, 2025,
shares of the Company’s common stock were issued
as stock-based compensation at an estimated fair value of $
| F- 16 |
Note 6 – Commitments and Contingencies
Research Collaboration and Product License Agreement with Minotaur Therapeutics, Inc. (“Minotaur”) and Commercial License Agreement with Taurus Biosciences, LLC (“Taurus”)
The Company has entered into a research collaboration and product license agreement with Minotaur (as amended, the “Minotaur Agreement”) and a commercial license agreement with Taurus (the “Taurus Agreement”) for use of certain technology, including OmniAb antibodies, to advance Picobodies against novel, unreachable, and undruggable epitopes in high-value validated targets starting with PD-1. The Minotaur Agreement and Taurus Agreement are for the development of proprietary targeted biologics, including TH 1940, against PD-1. It is anticipated that the Company will collaborate with Minotaur under the license from Taurus to discover, develop, and advance biotherapeutics against high-value validated IO targets starting with PD-1.
The
Minotaur Agreement included an up-front payment of $
During
the three and nine months ended September 30, 2025, the Company incurred success fees of $
Research and Development Collaboration and License Agreement with Applied Biomedical Science Institute
On July 5, 2023 (the “ABSI Effective Date”), the Company entered into a Research and Development Collaboration and License Agreement (the “ABSI Agreement”) with ABSI pursuant to which ABSI granted the Company an exclusive royalty-bearing, sublicensable license to the ABSI Patents (as defined in the ABSI Agreement) and a non-exclusive, royalty-bearing, sublicensable license to the ABSI Know-How (as defined in the ABSI Agreement) to Exploit (as defined in the ABSI Agreement) the ABSI Products (as defined in the ABSI Agreement) for the treatment, diagnosis, prediction, detection or prevention of disease in humans and animals worldwide (the “Territory”).
Pursuant to the ABSI Agreement, the parties shall form a committee to manage the preclinical, investigational new drug enabling studies and such other activities as shall lead to the initiation of a Phase 1 clinical trial of the ABSI Product. The parties will collaborate on a Target-by-Target basis to identify and evaluate ABSI Products directed against such Target (as defined below) with a view to identifying or generating suitable Products (as defined in the ABSI Agreement) for the Company to Exploit. “Target” means ErB2 (Her2) and ErbB3. Upon completion of the Discovery Timeline (as defined in the ABSI Agreement) for a Target, subject to the terms and conditions of ABSI Agreement, the Company shall exclusively own any ABSI Products against such Target. In the event the committee determines that the discovery activities are unsuccessful with respect to a Target, the Company may propose an additional target, which, upon approval by ABSI, shall replace a failed Target.
Pursuant
to the ABSI Agreement: (i) the Company issued ABSI
shares of its common stock which is equal to $
| F- 17 |
On a Product-by-Product basis, upon the expiration of the last Royalty Term of such Product in the Territory, licenses granted to the Company with respect to such Product shall be deemed non-exclusive, fully paid, royalty-free, perpetual and irrevocable. The ABSI Agreement shall expire upon the expiration of the last Royalty Term of the last Product, unless such agreement is terminated earlier pursuant to its terms. The ABSI Agreement may also be terminated (i) by either the Company or ABSI for (A) a material breach of the ABSI Agreement or (B) bankruptcy, (ii) ABSI may terminate the ABSI Agreement upon the commencement of a Challenge Proceeding (as defined in the ABSI Agreement) or (iii) the Company may terminate the ABSI Agreement at any time upon 90 days prior written notice to ABSI. Upon termination or expiration of the ABSI Agreement other than as a result of a bankruptcy or Challenge Proceeding, all licenses granted to the Company pursuant to such agreement will terminate and all rights under such licenses shall revert to ABSI.
On
March 11, 2024, the Company entered into an addendum to the ABSI Agreement to fund research services with quarterly payments of $
Avior Patent License Agreement
On
November 3, 2023 (the “Avior Effective Date”), the Company entered into the Avior Patent License Agreement with Avior pursuant
to which the Company received an exclusive sublicensable right and license to Licensed Patent Rights and Licensed Technology to, among
other things, Develop, have Developed, make, have made, use, sell, import, export and commercialize TH104 and TH103 and to practice the
Licensed Technology in connection with the foregoing, throughout the world. Pursuant to the Avior Patent License Agreement, the Company
paid Avior an up front license fee of $
During
the three and nine months ended September 30, 2025, the Company paid
| F- 18 |
Enkefalos License Agreement
On
June 17, 2024 (the “Enkefalos Effective Date”), the Company signed a letter of intent to enter into the Enkefalos
License Agreement with Enkefalos Biosciences Inc. (“Enkefalos”) pursuant to which the Company is licensing the global
rights in all fields of use for the products related to the compounds knows as cyclotides to deliver HER2 antibodies across the
blood-brain barrier and all associated know-how, technology, intellectual property and related information and constructs, and any
associated authorized generic rights and all related assets (collectively, the “Products” referred to in this letter as
ENBI-01) from Enkefalos. This agreement was terminated during the six months ended June 30, 2025. Pursuant to the Enkefalos License
Agreement, the Company paid Enkefalos an up-front license fee of $
Intract Patent License Agreement
On
September 11, 2024, the Company entered into the Intract Agreement pursuant to which the Company exclusively licensed INT-023/TH023,
an oral anti-Tumor Necrosis Factor-alpha (TNF-α) monoclonal antibody infliximab. Under the terms of the Intract Agreement, the
Company licensed global development and commercialization rights (outside of South Korea) to Intract’s Soteria® and Phloral®
delivery platform along with an existing supply agreement for infliximab to be used in the oral product development program. Pursuant
to the Intract Agreement, the Company paid Intract an up-front license fee of $
Employment Agreements
On
July 6, 2023, the Company entered into an amended and restated employment agreement (the “Former CEO Employment Agreement”)
with the now former CEO. The Former CEO Employment Agreement had the same terms as the COO Employment Agreement (as defined below) except,
the CEO (i) would receive a base salary of $
| F- 19 |
In
connection with the appointment of the Company’s Chief Operating Officer on July 11, 2023, the Company entered into an employment
agreement (the “COO Employment Agreement”) with the COO. The COO Employment Agreement shall continue for a period of five
years and, thereafter, shall automatically renew for successive one-year terms unless either party provides the other party with written
notice of non-renewal at least 60 days prior to the last day of the then-current term. Pursuant to the COO Employment Agreement, the
COO would: (i) receive a base salary of $
In accordance with the Former CEO Employment Agreement and COO Employment Agreement, the compensation committee of the Board approved a bonus of 50% in equity compensation and 50% in cash compensation on January 13, 2025, based on corporate performance objectives earned during the year ended December 31, 2024. The former CEO’s equity bonus for the year ended December 31, 2024 was made up of options to purchase up to shares of the Company’s common stock, which had a grant date fair value of $ . The COO’s equity bonus for the year ended December 31, 2024 was made up of options to purchase up to shares of the Company’s common stock, which had a grant date fair value of $ .
In
connection with the appointment of the Company’s Executive Chairman of the Board (the “Chairman”), on June 11, 2025,
the Company entered into an employment agreement with the Chairman (as amended, the “Chairman Employment Agreement”). The
Chairman Employment Agreement shall continue for a period of five years and, thereafter, shall automatically renew for successive one
year terms unless either party provides the other party with written notice of non-renewal at least 60 days prior to the last day of
the then current term. Pursuant to the Chairman Employment Agreement, the Chairman received a base salary of $
In the event that the Chairman’s employment is terminated by the Company other than as a result of his death or disability and other than for cause, or if the Chairman terminates his employment for Good Reason (as defined in the Chairman Employment Agreement), then, in addition to accrued compensation, the Company shall (i) continue to pay his base salary and provide health benefits for a period of 12 months following the termination date or, in the case of benefits, such time as he receives equivalent coverage and benefits under plans and programs of a subsequent employer; and (ii) provide such other or additional benefits, if any, as may be provided under applicable employee benefit plans, programs and/or arrangements of the Company (other than any severance plans or programs). In addition, all unvested time-based equity awards (including restricted shares and stock options) shall be immediately and fully accelerate and become vested. Moreover, stock options that have vested as of the termination date shall remain exercisable until the earlier of (i) 60 months following such termination and (ii) the expiration date of the stock option. On September 2, 2025, the compensation committee of the Board approved an increase in the payment that the Chairman would receive in the event his employment was terminated within 12 months of a change of control of the Company from two times base salary and target bonus to three times base salary and target bonus.
On September 2, 2025, the compensation committee of the Board approved
an increase of $
| F- 20 |
Note 7 – Related Party Transactions
Related Party Ownership
The
Company’s Chairman is a partner and licensed broker at President Street Global, a consultant for the Company. His combined ownership,
both individually and through President Street Global and an additional company, is approximately
The
CEO, individually as well as through companies he serves as managing member and managing partner, collectively owns
Note 8 – Subsequent Events
Warrant Amendments
In October 2025, the exercise and expiration dates for the June Series A and B Warrants, the July 2025 PIPE Warrants, and the July 2025 Private Placement Warrants were amended to be immediately exercisable on October 1, 2025 and an expiration date of five and one-half years from the issuance date. See Note 5 to the condensed consolidated financial statements.
Warrant Exercises
Since
September 30, 2025,
Shareholder Approval
On October 9, 2025, the shareholders of the Company approved an amendment to the 2023 Plan, increasing the 2023 Plan by shares, to a total of shares available under the 2023 Plan.
In addition, on October 10, 2025, the Company filed a Certificate of Amendment to its Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware pursuant to which it increased the total number of shares of common stock authorized for issuance thereunder from shares to .
Related Party
In
October 2025, the Company agreed to pay an early lump-sum payment of approximately $
Securities Purchase Agreements
On November 3, 2025, the Company entered into
securities purchase agreement (the “Cash Securities Purchase Agreements”) with certain accredited investors (the
“Cash Purchasers”) pursuant to which the Company agreed to sell and issue to the Cash Purchasers in a private placement
offering (the “Cash Offering”) an aggregate of
shares of common stock of the Company (the “Cash Shares”), par value $
per share (“Common Stock”) and/or pre-funded warrants (the “Cash Pre-Funded Warrants”) to purchase
| F- 21 |
Additionally, on November 3, 2025, the Company
entered into securities purchase agreements (the “Cryptocurrency Securities Purchase Agreements”) with certain
accredited investors (the “Cryptocurrency Purchasers”) pursuant to which the Company agreed to sell in a private
placement (the “Cryptocurrency Offering”) pre-funded warrants (the “Cryptocurrency Pre-Funded Warrants”) to
purchase
Strategic Advisor Agreement
Contemporaneously with the sale of the securities
in the Cash Offering ad the Cryptocurrency Offering, the Company will issue to certain strategic advisors warrants to purchase
shares of Common Stock (the “Strategic Advisor Warrants”) equal to 5% of the aggregate number of shares of Common Stock on
a fully diluted basis (including all outstanding shares of Common Stock, and shares of Common Stock issuable pursuant to outstanding options,
warrants and other convertible securities) sold in such offering at an exercise price of $
Compensatory Arrangements
In
October 2025, the compensation committee of the Board approved cash bonuses to the Company’s employees of approximately $
million. In connection with the Cash Offering and Cryptocurrency
Offering (the “Offerings”),
In connection with the Offerings, on November 6, 2025, Nancy Davis and Sanam Parikh resigned as members of the board of directors. Mark Wendland was appointed as Chief Executive Officer and director of the Board of Tharimmune and Sireesh Appajosyula, former Chief Executive Officer was appointed Chief Executive Officer of Tharimmune’s subsidiary, Gravitas Life Sciences, formerly known as Hillstream Oncology, Inc. Mark Toomey was appointed as President of Tharimmune.
The Company entered into an employment agreement with
Mr. Wendland to receive (i) an annual base salary of $
The Company entered into an employment agreement with
Mr. Toomey to receive (i) an annual base salary of $
The employment agreements for Mr. Wendland and Mr.
Toomey provide that in the event the executive terminates their employment for “good reason” or the Company terminates their
employment without “cause” (in each case as defined in their employment agreement), they are entitled to receive 12 months
of base salary. However, if Mr. Wendland is terminated by the Company without “cause” or if Mr. Wendland terminates for “good
reason” prior to the payment of 2027 bonus, he will be paid a bonus for his service in 2026 and receive severance of $
November 2025 ATM Agreement
On November 6, 2025, the Company entered into an
at-the-market agreement (the “November 2025 ATM Agreement”) with Clear Street LLC and President Street Global LLC (the “ATM
Sales Agents”) under which the Company may sell, from time to time through the ATM Sales Agents, shares of common stock in one
or more offerings up to a total dollar amount of $
| F- 22 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited interim condensed consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as may be amended, supplemented, or superseded from time to time by other reports we file with the SEC. All amounts in this report are in U.S. dollars, unless otherwise noted.
Throughout this Quarterly Report on Form 10-Q, references to “we,” “our,” “us,” the “Company,” or “Tharimmune,” refer to Tharimmune, Inc., individually, or as the context requires, collectively with its subsidiary.
Overview
Tharimmune is a clinical-stage biotechnology company developing therapeutic candidates in immunology and inflammation conditions with high unmet need. On November 3, 2023, we entered into a patent license agreement (the “Avior License Agreement”) with Avior Inc. d/b/a Avior Bio, LLC (“Avior”) pursuant to which we received an exclusive sublicensable right and license to Licensed Patent Rights and Licensed Technology to, among other things, Develop, have Developed, make, have made, use, sell, import, export and commercialize TH104 and TH103 and to practice the Licensed Technology in connection with the foregoing, throughout the world (each as defined in the Avior License Agreement). In February 2023, the U.S. Food and Drug Administration (“FDA”) approved an investigational new drug (“IND”) application for TH104. TH104 has a dual mechanism of action by affecting multiple receptors, known to suppress chronic, debilitating pruritus or “uncontrollable itching.” With respect to TH104, we originally intended to first seek approval for the treatment of moderate-to-severe chronic pruritus in patients with primary biliary cholangitis (“PBC”), an orphan rare form of liver disease with no known cure in which more than 70% of patients suffer from debilitating chronic pruritic. In March 2025, we engaged and received positive feedback from the FDA regarding the additional proposed indication of temporary prophylaxis of respiratory and/or nervous system depression in military personnel and chemical incident responders entering an area contaminated with high-potency opioids (“PrHPO”), for which we submitted a Pre-Investigational New Drug Application (“PIND”). With respect to our PIND for this additional proposed indication for TH104, the Company received positive feedback from the FDA regarding a regulatory pathway that will allow the Company to submit a 505(b)(2) New Drug Application (“NDA”) for TH104. The FDA advised that we will need to perform additional nonclinical studies ( i.e., in vitro toxicology studies), but the FDA confirmed that it does not believe any additional clinical trials will be required to define the prophylactic dosing window prior to IND or NDA submission for this indication, which we expect will be the lead program for the Company. The Company intends to pursue the pruritus in PBC indication subsequent to the nearer term opportunity of filing an NDA for PrHPO. The Company intends to conduct a capital efficient strategy to file an NDA for PrHPO, which involves actively progressing its Chemistry, Manufacturing, and Controls (“CMC”) plan to meet the stringent requirements for filing an NDA with the FDA. This comprehensive plan encompasses all aspects of the manufacturing process, quality control measures, and product stability to ensure the consistent production of a high-quality buccal film formulation known as TH104.
On September 11, 2024, we entered into a Patent License Agreement (the “Intract Agreement”) with Intract Pharma Limited (“Intract”), pursuant to which, we exclusively licensed INT-023/TH023, an oral anti-Tumor Necrosis Factor-alpha (TNF-α) monoclonal antibody infliximab. Infliximab is a purified, recombinant DNA-derived chimeric IgG monoclonal antibody protein that contains both murine and human components that inhibit tumor TNF-α. Under the terms of the Intract Agreement, we licensed global development and commercialization rights (outside of South Korea) to Intract’s Soteria® and Phloral® delivery platform along with an existing supply agreement for infliximab to be used in the oral product development program.
We are also developing an early-stage pipeline of novel therapeutic candidates targeting validated high value immuno-oncology (“IO”) targets including human epidermal growth factor (“EGF”) receptor 2 (“HER2”), human EGF receptor 3 (“HER3”) and programmed cell death protein 1 (“PD-1”). We are developing antibodies including bispecific antibodies, antibody drug conjugates and small molecular weight bovine-derived “knob” domains which have the potential to target and bind more tightly to “undruggable” epitopes better than full sized antibodies. We are advancing HS1940, a bispecific biologic against both PD-1 and vascular endothelial growth receptor (“VEGF”) antibody which targets both receptors. In addition, we have completed initial pre-clinical in-vitro testing for HS3215, a HER2/HER3 bispecific antibody.
| 4 |
Recent Developments
Warrant Amendments
In October 2025, the exercise and expiration dates for the June Series A and B Warrants, the July 2025 PIPE Warrants, and the July 2025 Private Placement Warrants were amended to be immediately exercisable on October 1, 2025 with an expiration date of five and one-half years from the issuance date.
Related Party
In October 2025, we agreed to pay an early lump-sum payment of approximately $0.9 million in lieu of the remaining monthly installments of its consulting agreement with President Street Global. In addition, on October 1, 2025, we entered into an advisory agreement with President Street Global for a period of six months, with monthly payments of $150,000.
Compensatory Arrangements
In October 2025, the compensation committee of the Board approved cash bonuses to our employees of approximately $1.0 million. In connection with the Cash Offering and Cryptocurrency Offering (the “Offerings”), the Board approved cash bonus to Vincent LoPriore, Chairman, of $2.05 million, Sireesh Appajosyula, CEO of Gravitas Life Sciences, of $1.9 million and other non-executive employees combined bonuses of $2.05 million.
In connection with the Offerings, on November 6, 2025, Nancy Davis and Sanam Parikh resigned as members of the board of directors. Mark Wendland was appointed as Chief Executive Officer and director of the Board of Tharimmune and Sireesh Appajosyula, former Chief Executive Officer was appointed Chief Executive Officer of Tharimmune’s subsidiary, Gravitas Life Sciences, formerly known as Hillstream Oncology, Inc. Mark Toomey was appointed as President of Tharimmune.
We entered into an employment agreement with Mr. Wendland to receive (i) an annual base salary of $500,000, subject to review and adjustment by the Board from time to time, (ii) a one-time sign-on bonus of $150,000, (iii) eligibility for an annual performance-based cash bonus of at least $125,000 for 2025 and equal to $500,000 plus an additional amount as determined by the Board for 2026 and for calendar years after 2026, an amount determined by the Board, in each case subject to continuous employment with the Company. Mr. Wendland will be eligible to receive time-based and performance-based restricted sock units equal to 1% of our common stock on a fully diluted basis, subject to Board approval.
We entered into an employment agreement with Mr. Toomey to receive (i) an annual base salary of $500,000, subject to review and adjustment by the Board from time to time, (ii) a one-time sign-on bonus of $150,000, (iii) eligibility for an annual performance-based cash bonus of at least $125,000 for 2025 and at least $500,000 for 2026 and for calendar years after 2026, an amount determined by the Board, in each case subject to continuous employment with the Company. Mr. Toomey will be eligible to receive time-based and performance-based restricted sock units equal to 0.9% of our common stock on a fully diluted basis, subject to Board approval.
See Note 8 – Subsequent Events for additional details.
Securities Purchase Agreements
On November 3, 2025, we entered into securities purchase agreements (the “Cash Securities Purchase Agreements”) with certain accredited investors (the “Cash Purchasers”) pursuant to which we agreed to sell and issue to the Cash Purchasers in a private placement offering (the “Cash Offering”) an aggregate of 25,966,048 shares of common stock of the Company (the “Cash Shares”), par value $0.0001 per share (“Common Stock”) and/or pre-funded warrants (the “Cash Pre-Funded Warrants”) to purchase 6,351,021 shares of Common Stock (the “Cash Pre-Funded Warrant Shares”) at an offering price of $3.075 per share (the “Per Share Cash Purchase Price”) for gross proceeds of approximately $99.4 million. Each of the Cash Pre-Funded Warrants is immediately exercisable for one share of Common Stock subject to certain beneficial ownership limitations set forth therein.
Additionally, on November 3, 2025, we entered into securities purchase agreements (the “Cryptocurrency Securities Purchase Agreements”) with certain accredited investors (the “Cryptocurrency Purchasers”) pursuant to which we agreed to sell in a private placement (the “Cryptocurrency Offering”) pre-funded warrants (the “Cryptocurrency Pre-Funded Warrants”) to purchase 145,105,094 shares of Common Stock at an offering price of $3.075 less $0.0001 per shares for gross proceeds in Canton Coin of approximately $446.2 million. The Cryptocurrency Purchasers will tender Canton Coin (“CC”) to us as consideration for the Cryptocurrency Pre-Funded Warrants. The exercise of the Cryptocurrency Pre-Funded Warrants into Common Stock is subject to shareholder approval (“Shareholder Approval”) and such warrants will not be exercisable until such Shareholder Approval is received.
| 5 |
Strategic Advisor Agreement
Contemporaneously with the sale of the securities in the Cash Offering ad the Cryptocurrency Offering, we will issue to certain strategic advisors warrants to purchase shares of Common Stock (the “Strategic Advisor Warrants”) equal to 5% of the aggregate number of shares of Common Stock on a fully diluted basis (including all outstanding hares of Common Stock, and shares of Common Stock issuable pursuant to outstanding options, warrants and other convertible securities) sold in such offering at an exercise price of $0.001 per share. The Strategic Advisor Warrants will first become vested and exercisable on the later of (i) the effectiveness of registration statement registering the issuance of the shares underlying the Strategic Advisor Warrants or (ii) the effective date of the Shareholder Approval.
Canton-centric Digital Asset Treasury Strategy
We believe that the Canton Network’s blockchain technology is transforming the future of global finance, connecting some of the world’s most trusted institutions on a single, secure, and interoperable blockchain. With trillions in assets on the chain and the support of leading institutions, the Canton Network delivers real-world performance, privacy, and atomic settlements. Our strategic digital asset reserve of Canton Coin (“CC”), a utility token used to support interoperability and settlement across the Canton Network, reflects our conviction in the potential of the Canton Network to drive efficiency, transparency, and resiliency in global markets.
Canton Network is a public, permissionless blockchain with privacy proven to work at institutional scale. Unlike traditional public blockchains, Canton operates as a “network of networks,” where independently governed applications interoperate securely through decentralized public infrastructure called the Global Synchronizer. Major institutions, fintechs and a fast-growing builder community create applications on Canton to transact and synchronize assets and data atomically, 24/7, with highly configurable privacy. Today, applications running on Canton enable cross-market settlement and asset mobility without compromising confidentiality and process more than $6 trillion in tokenized real-world assets, including over $350 billion in daily U.S. Treasury repo. The Global Synchronizer is independently stewarded by the neutral Canton Foundation, which facilitates open governance, covering protocol oversight and improvement proposals.
Canton’s protocol implements ‘proof-of-stakeholder’ validation which, unlike traditional proof-of-stake networks, ensures that only the parties to a transaction can see and validate it. The Global Synchronizer uses Byzantine Fault Tolerant consensus to time-order cross-application transactions, keep participants in sync and prevent conflicts. It doesn’t replicate and broadcast all data globally; it coordinates proofs between participants, ensuring everyone reaches the same outcome, while always preserving privacy. CC is the native utility token of the network, used to pay traffic fees for the Global Synchronizer, and to reward those who contribute measurable utility to the ecosystem. Every coin in circulation is earned through network participation only. Such participation includes participation as application providers building high utility apps, users driving activity and infrastructure operators. CC’s fair-launch and incentive alignment across the network anchors the token in real-world transactions and utility over speculation.
CC supply follows a declining issuance curve designed to reward early contributors while trending toward long-term sustainability. CC issuance started high to bootstrap participation and app development, then halves periodically (with the next halving in January 2026) to balance inflation and burn. The share of new CC issuances is now shifting from favoring Super Validators (those who operate network infrastructure) to applications and users. Unlike other networks, two-thirds of total supply over the first 10 years is available as rewards for app providers and users, with a third to Super Validators.
CC follows a burn-and-mint equilibrium model that ties supply to verified network activity rather than fixed inflation or pre-minted reserves. It provides a dynamic balance between fixed, dollar-denominated fees, and a floating CC market price against a known issuance curve. Fees are fixed in $ terms, with users paying a set $ / MB for transactions that use the Global Synchronizer. The quantity of CC burned depends on market price: Users pay for network fees by burning the $USD equivalent of CC amount at the onchain conversion rate. If the price is too high relative to onchain activity, then mint exceeds burn (net inflation), creating downward pressure on price. If price is too low relative to activity, then burn exceeds mint (net deflation), creating upward pressure on price. Over time, the system seeks an equilibrium where long-run net supply change approaches zero. Because equilibrium can occur at different price/ activity combinations, the ultimate total CC supply is not predetermined. This mechanism ensures that Canton’s token economy remains sustainable and utility-aligned, with disciplined supply growth tied directly to real network activity.
Our Canton digital asset strategy was adopted by us as part of our broader strategy to enhance our platform with capital efficiency, to diversify treasury management practices, and engage with emerging financial technologies. In addition, we intend to execute a diverse strategy that, along with CC acquisition via capital markets activities, includes generation of CC rewards by applying to be a Super Validator and investing in the development of applications on the Canton Network that drive institutional utility, scalability and adoption across capital markets.
Our adoption of a digital asset treasury strategy is not expected to materially alter our day-to-day operations, which remain focused on developing a portfolio of therapeutic candidates for inflammation and immunology. The strategy is designed to supplement our capital allocation framework by integrating a forward-looking, technology-driven approach to treasury management. Over time, participation in the Canton Network may offer strategic advantages for product development and global expansion.
| 6 |
Components of Results of Operations
Revenue
We did not recognize revenues for the three and nine months ended September 30, 2025 and 2024.
Research and Development Expenses
Research and development expenses include personnel costs associated with research and development activities, including third-party contractors to perform research, conduct clinical trials, and manufacture drug supplies and materials as well as stock-based compensation for our research and development personnel. Research and development expenses are charged to operations as incurred.
We accrue costs incurred by external service providers, including contract research organizations and clinical investigators, based on estimates of service performed and costs incurred. These estimates include the level of services performed by third parties, patient enrollment in clinical trials, administrative costs incurred by third parties, and other indicators of the services completed. Based on the timing of amounts invoiced by service providers, we may also record payments made to those providers as prepaid expenses that will be recognized as expense in future periods as the related services are rendered.
We have incurred research and development expenses related to the development of HSB-1216, which has been deprioritized. We expect that our research and development expenses will increase as we plan for and commence our clinical trials of HS1940 and HS3215.
We cannot determine with certainty the duration and costs of future clinical trials of our product candidates, HS1940 and HS3215, or any other product candidates we may develop or if, when or to what extent we will generate revenue from the commercialization and sale of any of our product candidates for which we obtain marketing approval. We may never succeed in obtaining marketing approval for any of our product candidates. The duration, costs and timing of clinical trials and development of our current and future product candidates will depend on a variety of factors, including:
| ● | the scope, rate of progress, expense and results of clinical trials of our current product candidates, as well as of any future clinical trials of our future product candidates and other research and development activities that we may conduct; |
| ● | uncertainties in clinical trial design and patient enrollment rates; |
| ● | the actual probability of success for our product candidates, including their safety and efficacy, early clinical data, competition, manufacturing capability and commercial viability; |
| ● | significant and changing government regulations and regulatory guidance; and |
| ● | the timing and receipt of any marketing approvals. |
A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if the FDA or another regulatory authority were to require us to conduct clinical trials beyond those that we anticipate will be required for the completion of clinical development of a product candidate, or if we experience significant delays in our clinical trials due to slower than expected patient enrollment or other reasons, we would be required to expend significant additional financial resources and time on the completion of clinical development.
General and Administrative Expenses
General and administrative expenses consist primarily of compensation and consulting related expenses, including stock-based compensation for our general and administrative personnel. General and administrative expenses also include professional fees and other corporate expenses, including legal fees relating to corporate matters; professional fees for accounting, auditing, tax, and consulting services; insurance costs; travel expenses and other operating costs that are not specifically attributable to research activities.
We expect that our general and administrative expenses will increase in the future as we increase our personnel headcount to support our continued research activities and development of our product candidates. We also incur expenses associated with being a public company, including expenses related to compliance with the rules and regulations of the SEC and Nasdaq, directors and officers insurance expenses, corporate governance expenses, investor relations activities and other administrative and professional services.
| 7 |
Interest Income
Interest income consists of interest income from funds held in our cash accounts.
Deferred Offering Costs
Deferred offering costs consisted of legal, accounting, printing, and filing fees that were capitalized and offset against the proceeds from our securities offerings. At September 30, 2025, deferred offering costs of approximately $92,000 representing professional services incurred related to the At the Market Offering Agreement (the “ATM Agreement”), through which the Company may sell, from time to time through the applicable sales manager, shares of common stock in one or more offerings up to a total dollar amount of $1.65 million, were written off as the ATM Agreement was terminated effective August 31, 2025. See Notes 2 and 4 to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Results of Operations
Three Months Ended September 30, 2025 Compared to the Three Months Ended September 30, 2024
|
Three Months Ended September 30, |
||||||||||||
| 2025 | 2024 | Change | ||||||||||
| Condensed Consolidated Statements of Operations Data: | ||||||||||||
| Operating expenses: | ||||||||||||
| Research and development | $ | 277,803 | $ | 2,281,827 | $ | (2,004,024 | ) | |||||
| General and administrative | 1,815,775 | 1,583,744 | 232,031 | |||||||||
| Total operating expenses | 2,093,578 | 3,865,571 | (1,771,993 | ) | ||||||||
| Other expense: | ||||||||||||
| Interest expense | (9,648 | ) | (3,009 | ) | (6,639 | ) | ||||||
| Interest income | 1,388 | 72,728 | (71,340 | ) | ||||||||
| Total other income (expense), net | (8,260 | ) | 69,719 | (77,979 | ) | |||||||
| Net loss | $ | (2,101,838 | ) | $ | (3,795,852 | ) | $ | 1,694,014 | ||||
Research and Development Expenses
The table below summarizes by program our research and development expenses for the periods presented:
|
Three Months Ended September 30, |
||||||||||||
| 2025 | 2024 | Change | ||||||||||
| HS1940 | $ | 39,890 | $ | 118,540 | $ | (78,650 | ) | |||||
| HS3215 | 61,696 | - | 61,696 | |||||||||
| TH023 | - | 400,000 | (400,000 | ) | ||||||||
| TH104 | 152,193 | 782,506 | (630,313 | ) | ||||||||
| Other research and development | 24,024 | 980,781 | (956,757 | ) | ||||||||
| Total research and development expenses | $ | 277,803 | $ | 2,281,827 | $ | (2,004,024 | ) | |||||
Research and development expenses decreased by approximately $2.0 million, or 88%, to approximately $0.3 million for the three months ended September 30, 2025 from approximately $2.3 million for three months ended September 30, 2024. The decrease was primarily the result of a decrease in pre-clinical vendor expenses of approximately $0.2 million, license fees of approximately $1.4 million, and clinical trials of approximately $0.4 million.
General and Administrative Expenses
General and administrative expenses increased by $0.2 million, or 15%, to $1.8 million for the three months ended September 30, 2025 from $1.6 million for the three months ended September 30, 2024. The change in general and administrative expenses was primarily due to an increase in general and administrative personnel and non-cash stock compensation expense.
| 8 |
Interest Expense
Interest expense increased by approximately $7,000, or 221%, to $9,648 for the three months ended September 30, 2025 from $3,009 for the three months ended September 30, 2024. The increase in interest expense was primarily related to the director and officer insurance premium financing liability as well as a note payable related to a legal fees settlement.
Interest Income
Interest income decreased by approximately $71,000, or 98%, to $1,388 for the three months ended September 30, 2025 from $72,728 for the three months ended September 30, 2024. The decrease in interest income was primarily due to the decrease in cash from September 2024 and a decrease in interest rates.
Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024
|
Nine Months Ended September 30, |
||||||||||||
| 2025 | 2024 | Change | ||||||||||
| Condensed Consolidated Statements of Operations Data: | ||||||||||||
| Operating expenses: | ||||||||||||
| Research and development | $ | 1,418,077 | $ | 4,306,638 | $ | (2,888,561 | ) | |||||
| General and administrative | 5,073,330 | 4,279,690 | 793,640 | |||||||||
| Total operating expenses | 6,491,407 | 8,586,328 | (2,094,921 | ) | ||||||||
| Other expense: | ||||||||||||
| Interest expense | (24,280 | ) | (12,926 | ) | (11,354 | ) | ||||||
| Interest income | 16,992 | 222,236 | (205,244 | ) | ||||||||
| Total other income (expense), net | (7,288 | ) | 209,310 | (216,598 | ) | |||||||
| Net loss | $ | (6,498,695 | ) | $ | (8,377,018 | ) | $ | 1,878,323 | ||||
Research and Development Expenses
The table below summarizes by program our research and development expenses for the periods presented:
|
Nine Months Ended September 30, |
||||||||||||
| 2025 | 2024 | Change | ||||||||||
| HS1940 | $ | 179,924 | $ | 382,687 | $ | (202,763 | ) | |||||
| HS3215 | 182,649 | 281,219 | (98,570 | ) | ||||||||
| TH023 | 132,557 | 400,000 | (267,443 | ) | ||||||||
| TH104 | 731,461 | 1,396,838 | (665,377 | ) | ||||||||
| Other research and development | 191,486 | 1,845,894 | (1,654,408 | ) | ||||||||
| Total research and development expenses | $ | 1,418,077 | $ | 4,306,638 | $ | (2,888,561 | ) | |||||
Research and development expenses decreased by $2.9 million, or 67%, to $1.4 million for the nine months ended September 30, 2025 from $4.3 million for nine months ended September 30, 2024. The decrease was primarily the result of a decrease in pre-clinical vendor expenses of approximately $0.7 million, license fees of approximately $1.8 million, and clinical trials of approximately $0.6 million, offset by an increase in stock-based compensation of less than $0.2 million.
General and Administrative Expenses
General and administrative expenses increased by $0.8 million, or 19%, to $5.1 million for the nine months ended September 30, 2025 from $4.3 million for the nine months ended September 30, 2024. The change in general and administrative expenses was primarily due to increases of approximately $0.6 million in non-cash stock compensation expense, approximately $0.2 million in investor relations, and approximately $0.3 million in general corporate expenses. The increases were offset by approximately $0.2 million in decreases in personnel expense and approximately $0.1 million in professional fees.
Interest Expense
Interest expense increased by approximately $11,000, or 89%, to $24,280 for the nine months ended September 30, 2025 from $12,926 for the nine months ended September 30, 2024. The increase in interest expense was primarily related to the director and officer insurance premium financing liability as well as the note payable related to the legal fees settlement.
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Interest Income
Interest income decreased by approximately $0.2 million, or 92%, to $16,992 for the nine months ended September 30, 2025 from $222,236 for the nine months ended September 30, 2024. The decrease in interest income was primarily due to the decrease in cash from September 2024 and a decrease in interest rates.
Liquidity and Capital Resources
The accompanying condensed consolidated financial statements have been prepared on the basis that we will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. During the nine months ended September 30, 2025, we incurred operating losses in the amount of approximately $6.5 million, expended approximately $5.7 million of net cash in operating activities, and had an accumulated deficit of approximately $43.4 million as of September 30, 2025. Through September 30, 2025, we have primarily financed our operations through public and private offerings of our equity securities. During the nine months ended September 30, 2025, we raised net proceeds from public and private offerings of approximately $9.7 million.
In April and May 2025, we raised net proceeds of $0.2 million pursuant to the ATM Agreement from the sale of 163,359 shares of our common stock at an average price of $1.63 per share, after deducting sales agent commissions and other offering fees.
Further, on June 17, 2024, December 9, 2024, June 13, 2025, and July 25, 2025, we closed private placement offerings (the “June 2024 PIPE Offering,” “December 2024 PIPE Offering,” “June 2025 PIPE Offering,” and “July 2025 PIPE Offering,” respectively) with certain accredited investors, consisting of offerings of shares of our common stock and/or pre-funded warrants to acquire shares of our common stock and warrants to acquire shares of our common stock.
In addition, on July 25, 2025 and August 26, 2025, we closed registered direct public offerings (the “July 2025 Direct Offering” and the “August 2025 Direct Offering”) with certain investors, consisting of offerings of shares of our common stock and/or pre-funded warrants to acquire shares of our common stock.
In November 2025, we closed the Cash Offering for gross proceeds of approximately $99.4 million and the Crypto Offering for gross proceeds in Canton Coin of approximately $446.2 million.
Based on our limited operating history, recurring negative cash flows from operations, current plans and available resources, we may need substantial additional funding to support future operating activities. We have concluded that the prevailing conditions and ongoing liquidity risks faced by us raise substantial doubt about our ability to continue as a going concern for at least one year following the date the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q are issued. The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern. Due to the recent financing activities, we will reevaluate the going concern assumption at year-end.
We may seek to raise additional funding through the sale of additional equity or debt securities, enter into strategic partnerships, grants or other arrangements or a combination of the foregoing to support our future operations; however, there can be no assurance that we will be able to obtain additional capital on terms acceptable to us, on a timely basis, or at all. The failure to obtain sufficient additional funding could adversely affect our ability to achieve our business objectives and product development timelines and may result in us delaying or terminating clinical trial activities which could have a material adverse effect on our results of operations.
Cash Flow Activities for the Nine Months Ended September 30, 2025 and 2024
The following table sets forth a summary of our cash flows for the periods presented.
| Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Net cash used in operating activities | $ | (5,686,700 | ) | $ | (7,868,344 | ) | ||
| Net cash provided by financing activities | 9,737,679 | 1,707,229 | ||||||
| Net increase (decrease) in cash | $ | 4,050,979 | $ | (6,161,115 | ) | |||
Cash Flows from Operating Activities
Cash used in operating activities for the nine months ended September 30, 2025 was $5.7 million, which consisted of net loss of $6.5 million and net changes in operating assets and liabilities of approximately $0.5 million, partially offset by non-cash stock-based compensation of approximately $1.3 million.
Cash used in operating activities for the nine months ended September 30, 2024 was $7.9 million, which consisted of net loss of $8.4 million and an increase in prepaid and other current assets of $0.4 million, offset by a decrease in operating liabilities of $0.3 million, and non-cash stock-based compensation of $0.5 million.
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Cash Flows from Financing Activities
Cash provided by financing activities for the nine months ended September 30, 2025 was $9.7 million. The net increase in financing activities was due to gross proceeds from the June 2025 and July 2025 PIPE Offerings of $3.7 million, and from the July 2025 and August 2025 Direct Offerings of $7.1 million, proceeds from ATM offerings of $0.3 million, and insurance premium financing liability of $0.3 million, offset by payments of deferred offering costs of $1.2 million, repayments of insurance premium financing liability of $0.3 million, and repayments of a note payable of $0.2 million.
Cash provided by financing activities for the nine months ended September 30, 2024 was $1.7 million. The net increase in financing activities was due to proceeds from the June 2024 PIPE Offering of $2.1 million and insurance premium financing liability of $0.4 million, offset by payments of deferred offering costs of $0.5 million and repayments of insurance premium financing liability of $0.3 million.
Reverse Stock Split
On May 24, 2024, the Company effectuated an additional reverse split of shares of its common stock at a ratio of 1-for-15 pursuant to an amendment to the Company’s Certificate of Incorporation, as amended, filed with the Delaware Secretary of State and approved by the Company’s board of directors and stockholders. The par value of the Company’s common stock was not adjusted as a result of this or any prior reverse split. All issued and outstanding common stock share and per share amounts contained in the accompanying condensed consolidated financial statements have been retroactively adjusted to reflect this and any prior reverse split for all periods presented.
Critical Accounting Policies and Use of Estimates
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes, and management must select an amount that falls within that range of reasonable estimates. Estimates are used in the following areas, among others: research and development expense recognition, stock-based compensation, allowances of deferred tax assets, and cash flow assumptions regarding going concern considerations. Although management believes the estimates that have been used are reasonable, actual results could vary from the estimates that were used.
Critical Accounting Policies
Research and development
Research and development costs are expensed as incurred. Research and development expenses include personnel costs associated with research and development activities, including third-party contractors to perform research, conduct clinical trials and manufacture drug supplies and materials. We accrue for costs incurred by external service providers, including contract research organizations and clinical investigators, based on our estimates of service performed and costs incurred. These estimates include the level of services performed by third parties, patient enrollment in clinical trials, administrative costs incurred by third parties, and other indicators of the services completed.
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Stock-based compensation
Stock-based compensation represents the cost related to stock-based awards granted to our employees, directors, consultants, and affiliates. We measure stock-based compensation costs at the grant date, based on the estimated fair value of the award and recognize the cost over the requisite service period.
We recognize compensation costs resulting from the issuance of stock-based awards to employees, non-employees and directors as an expense in the condensed consolidated statements of operations over the requisite service period based on a measurement of fair value for each stock-based award. The fair value of each option grant to employees, non-employees and directors is estimated as of the date of grant using the Black-Scholes option-pricing model, net of actual forfeitures. The fair value is amortized as compensation cost on a straight-line basis over the requisite service period of the awards, which is generally the vesting period.
The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. Prior to January 12, 2022, we were a private company and our common stock has only been publicly traded since that date. As a result, we lack company-specific historical and implied volatility information. Therefore, we have estimated our expected stock price volatility based on the historical volatility of a publicly traded set of peer companies. The expected term of stock options granted was between five and seven years. The risk-free interest rate was determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award.
Recently Issued and Adopted Accounting Standards
See Note 2 to our condensed consolidated financial statements included elsewhere in this quarterly Report on Form 10-Q.
JOBS Act
On April 5, 2012, the Jumpstart Our Business Startups Act (the “JOBS Act”) was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We have chosen to take advantage of the extended transition periods available to emerging growth companies under the JOBS Act for complying with new or revised accounting standards until those standards would otherwise apply to private companies provided under the JOBS Act. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates for complying with new or revised accounting standards.
Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we intend to rely on certain of these exemptions, including, without limitation, (i) providing an auditor’s attestation report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended, and (ii) complying with the requirement adopted by the Public Company Accounting Oversight Board regarding the communication of critical audit matters in the auditor’s report on financial statements. We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of our initial public offering; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act.
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ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Our principal executive officer and principal financial officer evaluated the effectiveness of our “disclosure controls and procedures” as of September 30, 2025, the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files 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 under the Exchange Act is accumulated and communicated to a company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Based on the evaluation of our disclosure controls and procedures as of September 30, 2025, our Chief Executive Officer concluded that, as of such date, our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
Except as set forth above, there were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedure, management recognizes that any controls and procedures, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedure relative to their costs.
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.
ITEM 1A. RISK FACTORS.
Risk factors that affect our business and financial results are discussed in Part I, Item 1A “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on March 26, 2025 (“Annual Report”). There have been no material changes in our risk factors from those previously disclosed in our Annual Report, except the following:
We may be subject to regulatory developments related to crypto assets and crypto asset markets, which could adversely affect our business, financial condition, and results of operations.
As Canton Coin and other digital assets are relatively novel and the application of state and federal securities laws and other laws and regulations to digital assets is unclear in certain respects, it is possible that regulators in the United States or foreign countries may interpret or apply existing laws and regulations in a manner that adversely affects the price of Canton Coin. The U.S. federal government, states, regulatory agencies, and foreign countries may also enact new laws and regulations, or pursue regulatory, legislative, enforcement or judicial actions, that could materially impact the price of Canton Coin or the ability of individuals or institutions such as us to own or transfer Canton Coin.
If Canton Coin is determined to constitute a security for purposes of the federal securities laws, the additional regulatory restrictions imposed by such a determination could adversely affect the market price of Canton Coin and in turn adversely affect the market price of our Common Stock. Moreover, the risks of us engaging in a Canton Coin treasury strategy have created, and could continue to create complications due to the lack of experience that third parties have with companies engaging in such a strategy, such as increased costs of director and officer liability insurance or the potential inability to obtain such coverage on acceptable terms in the future.
Our Digital Asset Treasury (“DAT”) exposure to Canton Coin (“CC”) involves novel and significant risks—including market volatility, accounting, regulatory, custody, cybersecurity, liquidity and reputational risks—that could result in the loss of assets and have a material adverse effect on our business, results of operations and financial condition.
We intend to implement a digital asset treasury (“DAT”) by holding our treasury assets in Canton Coin (“CC”), a privately issued digital asset that is not legal tender and is not backed or insured by any government or governmental program. The market for CC may be less mature than markets for traditional assets and can exhibit extreme price volatility driven by factors beyond our control, including market sentiment, macroeconomic conditions, regulatory developments, protocol or governance changes, technological vulnerabilities and the actions of significant market participants. These price movements could result in substantial realized and unrealized gains or losses. Under applicable U.S. GAAP, crypto assets that meet the relevant criteria are measured at fair value each reporting period with changes recognized in earnings, which can produce meaningful volatility in our reported results and adversely affect the market price of our securities.
Our CC activities depend on third-party service providers—such as trading venues, custodians, wallet-infrastructure vendors and banking or payment partners—over which we have limited control. Failures or outages at these providers, trading suspensions or delistings, withdrawal moratoria, insolvencies, hacking, fraud, operational errors, inadequate asset segregation or adverse legal determinations could lead to the partial or total loss of CC, delays or an inability to access or deploy CC, or disputes regarding ownership and control. Safeguarding the private keys necessary to access and transfer CC presents unique cybersecurity and internal-control challenges; loss, theft or compromise of keys—through cyberattack, insider malfeasance, software defects, misconfiguration, phishing or social engineering—may be irreversible.
The legal and regulatory framework for digital assets, including CC, continues to evolve and may be subject to inconsistent interpretation across U.S. federal, state and international jurisdictions. Authorities could determine that CC is a security, commodity or other regulated instrument, which could impose registration, licensing, disclosure, custody, capital or other obligations. Changes in, or differing interpretations of, securities, commodities, money-transmission, sanctions/AML, consumer-protection, tax and data-security laws and regulations could increase our compliance costs, restrict or prohibit aspects of our CC activities, limit access to fiat banking or payment rails, or subject us to examinations, enforcement actions, penalties or private litigation.
Liquidity in markets for CC may be limited or impaired during periods of stress due to exchange outages, extreme volatility, order-book dislocations, widening spreads and slippage, or adverse developments in related market infrastructure (including stablecoins and key service providers). If we seek to sell, transfer or hedge CC during such periods, we may be unable to do so on acceptable terms, or at all. Our holdings may also be concentrated in CC, increasing our exposure to idiosyncratic risks and potentially causing our stock price to correlate with movements in the price of CC.
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Allocating cash, offering proceeds or debt financing to acquire or hold CC could affect our capital needs and financing plans, increase dilution or leverage, and subject us to covenant constraints. In addition, certain stakeholders may view digital-asset exposure unfavorably—whether due to environmental, social or governance concerns, perceived risk or other reasons—which could impair our reputation and access to capital, customers and partners. We may modify, suspend or discontinue our CC activities at any time, and there can be no assurance that our DAT strategy will achieve its objectives or that losses will not occur.
Regulatory change reclassifying Canton Coin as a security could lead to our classification as an “investment company” under the Investment Company Act of 1940, as amended, or the 1940 Act, and could adversely affect the market price of Canton Coin and the market price of our Common Stock.
Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if (1) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (2) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. We do not believe that we are an “investment company,” as such term is defined in the 1940 Act, and are not registered as an “investment company” under the 1940 Act as of the date of this prospectus.
While senior SEC officials have not stated their view as to whether Canton Coin is or is not a “security” for purposes of the federal securities laws, a contrary determination by the SEC could lead to our classification as an “investment company” under the 1940 Act, if the portion of our assets consists of investments in Canton Coins exceeds 40% safe harbor limits prescribed in the 1940 Act, which would subject us to significant additional regulatory controls that could have a material adverse effect on our business and operations and may also require us to change the manner in which we conduct our business.
We monitor our assets and income for compliance under the 1940 Act and seek to conduct our business activities in a manner such that we do not fall within its definitions of “investment company” or that we qualify under one of the exemptions or exclusions provided by the 1940 Act and corresponding SEC regulations. Furthermore, if Canton Coin is determined to constitute a security for purposes of the federal securities laws, we would take steps to reduce the percentage of Canton Coins that constitute investment assets under the 1940 Act. These steps may include, among others, selling Canton Coins that we might otherwise hold for the long term and deploying our cash in non-investment assets, and we may be forced to sell our Canton Coins at unattractive prices. We may also seek to acquire additional non-investment assets to maintain compliance with the 1940 Act, and we may need to incur debt, issue additional equity or enter into other financing arrangements that are not otherwise attractive to our business. Any of these actions could have a material adverse effect on our results of operations and financial condition. Moreover, we can make no assurance that we would successfully be able to take the necessary steps to avoid being deemed to be an investment company in accordance with the safe harbor. If we were unsuccessful, and if Canton Coin is determined to constitute a security for purposes of the federal securities laws, then we would have to register as an investment company, and the additional regulatory restrictions imposed by 1940 Act could adversely affect the market price of Canton Coin and in turn adversely affect the market price of our Common Stock.
Our financial results and the market price of our Common Stock may be affected by the prices of Canton Coin.
As part of our capital allocation strategy for assets that are not required to provide working capital for our ongoing operations, we intend to invest in Canton Coin tokens. The price of Canton Coin has historically been subject to dramatic price fluctuations and is highly volatile. Moreover, digital assets, such as Canton Coin, are relatively novel and the application of securities laws and other regulations to such assets is unclear in many respects. It is possible that regulators may interpret laws in a manner that adversely affects the liquidity or value of Canton Coin.
Any decrease in the fair value of Canton Coin below our carrying value for such assets could require us to incur a loss due to the decrease in fair market value, and such charge could be material to our financial results for the applicable reporting period, which may create significant volatility in our reported earnings. Any decrease in reported earnings or increased volatility of such earnings could have a material adverse effect on the market price of our Common Stock. In addition, the application of generally accepted accounting principles in the United States, with respect to Canton Coin, may change in the future and could have a material adverse effect on our financial results and the market price of our Common Stock.
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In addition, if investors view the value of our Common Stock as dependent upon or linked to the value or change in the value of our Canton Coin holdings, the price of Canton Coin may significantly influence the market price of our Common Stock. Additionally, if the price of Canton Coin falls, and our Common Stock price falls as a result, then the Notes may not be converted and we may, in certain situations, need to repay them in cash. To the extent the value of the Notes exceeds the value of the Canton Coin held as collateral, we may need to obtain additional financing, which might not be available on satisfactory terms or at all. Any deficiency could substantially exceed the value of our other assets and could be many multiples of our historical earnings.
We face risks relating to the custody of our Canton Coin tokens, including the loss or destruction of private keys required to access our Canton Coin tokens and cyberattacks or other data loss relating to our Canton Coin tokens, including smart contract related losses and vulnerabilities.
We hold our Canton Coin tokens with a single regulated custodian that has duties to safeguard our private keys. In light of the significant amount of Canton Coin tokens we anticipate that we will hold, we may need to engage additional custodians to achieve a greater degree of diversification in the custody of our Canton Coin tokens as the extent of potential risk of loss is dependent, in part, on the degree of diversification. However, multiple custodians may utilize similar wallet infrastructure, cloud service providers or software systems, which could increase systemic technology risk.
If there is a decrease in the availability of digital asset custodians that we believe can safely custody our Canton Coin tokens, for example, due to regulatory developments or enforcement actions that cause custodians to discontinue or limit their services in the United States, we may need to enter into agreements that are less favorable than our current agreements or take other measures to custody our Canton Coin tokens, and our ability to seek a greater degree of diversification in the use of custodial services would be materially adversely affected. While we will conduct due diligence on our custodians and any smart contract platforms we may use, there can be no assurance that such diligence will uncover all risks, including operational deficiencies, hidden vulnerabilities or legal noncompliance.
Currently, the insurance that covers losses of our Canton Coin holdings may cover none or only a small fraction of the value of the entirety of our Canton Coin holdings, and there can be no guarantee that such insurance will be maintained as part of the custodial services we have or that such coverage will cover losses with respect to our Canton Coin. Moreover, our use of custodians exposes us to the risk that the Canton Coin our custodians hold on our behalf could be subject to insolvency proceedings and we could be treated as a general unsecured creditor of the custodian, inhibiting our ability to exercise ownership rights with respect to such Canton Coin. Any loss associated with such insolvency proceedings is unlikely to be covered by any insurance coverage we maintain related to our Canton Coin. The legal framework governing digital asset ownership and rights in custodial or insolvency contexts remains uncertain and continues to evolve, which could result in unexpected losses, protracted recovery processes or adverse treatment in insolvency proceedings.
Canton Coin tokens are controllable only by the possessor of both the unique public key and private key(s) relating to the local or online digital wallet in which the Canton Coin is held. While the Canton Coin blockchain ledger requires a public key relating to a digital wallet to be published when used in a transaction, private keys must be safeguarded and kept private in order to prevent a third party from accessing the Canton Coin held in such wallet. To the extent the private key(s) for a digital wallet are lost, destroyed, or otherwise compromised and no backup of the private key(s) is accessible, neither we nor our custodians will be able to access the Canton Coin held in the related digital wallet. Furthermore, we cannot provide assurance that our digital wallets, nor the digital wallets of our custodians held on our behalf, will not be compromised as a result of a cyberattack. The Canton Coin and blockchain ledger, as well as other digital assets and blockchain technologies, have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities.
As part of our treasury management strategy, we may engage in staking, restaking, or other permitted activities that involve the use of “smart contracts” or decentralized applications. The use of smart contracts or decentralized applications entails certain risks including risks stemming from the existence of an “admin key” or coding flaws that could be exploited, potentially allowing a bad actor to issue or otherwise compromise the smart contract or decentralized application, potentially leading to a loss of our Canton Coin tokens. Like all software code, smart contracts are exposed to risk that the code contains a bug or other security vulnerability, which can lead to loss of assets that are held on or transacted through the contract or decentralized application. Smart contracts and decentralized applications may contain bugs, security vulnerabilities or poorly designed permission structures that could result in the irreversible loss of Canton Coin tokens or other digital assets. Exploits, including those stemming from admin key misuse, admin key compromise, or protocol flaws, have occurred in the past and may occur in the future.
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If we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our Canton Coin, or if our private keys are lost or destroyed, or other similar circumstances or events occur, we may lose some or all of our Canton Coin and our financial condition and results of operations could be materially adversely affected.
Substantially all of the Canton Coin we own is held in custody accounts at U.S.-based institutional-grade digital asset custodians. Security breaches and cyberattacks are of particular concern with respect to our Canton Coin. Canton Coin and other blockchain-based cryptocurrencies and the entities that provide services to participants in the Canton Coin ecosystem have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities. For example, in October 2021 it was reported that hackers exploited a flaw in the account recovery process and stole from the accounts of at least 6,000 customers of the Coinbase exchange, although the flaw was subsequently fixed and Coinbase reimbursed affected customers. Similarly, in November 2022, hackers exploited weaknesses in the security architecture of the FTX Trading digital asset exchange and reportedly stole over $400 million in digital assets from customers. A successful security breach or cyberattack could result in:
| ● | a partial or total loss of our Canton Coin in a manner that may not be covered by insurance or the liability provisions of the custody agreements with the custodians who hold our Canton Coin; | |
| ● | improper disclosure of data and violations of applicable data privacy and other laws; or | |
| ● | significant regulatory scrutiny, investigations, fines, penalties, and other legal, regulatory, contractual and financial exposure. |
Further, any actual or perceived data security breach or cybersecurity attack directed at other companies with digital assets or companies that operate digital asset networks, regardless of whether we are directly impacted, could lead to a general loss of confidence in the broader Canton Coin ecosystem or in the use of the Canton Coin network to conduct financial transactions, which could negatively impact the market price of Canton Coin and in turn negatively impact our financial condition and results of operations and the market price of our Common Stock.
Attacks upon systems across a variety of industries, including industries related to Canton Coin, are increasing in frequency, persistence, and sophistication, and, in many cases, are being conducted by sophisticated, well-funded and organized groups and individuals, including state actors. The techniques used to obtain unauthorized, improper or illegal access to systems and information (including personal data and digital assets), disable or degrade services, or sabotage systems are constantly evolving, may be difficult to detect quickly, and often are not recognized or detected until after they have been launched against a target. These attacks may occur on our systems or those of our third-party service providers or partners. We may experience breaches of our security measures due to human error, malfeasance, insider threats, system errors or vulnerabilities or other irregularities. In particular, we expect that unauthorized parties will attempt to gain access to our systems and facilities, as well as those of our partners and third-party service providers, through various means, such as hacking, social engineering, phishing and fraud. Threats can come from a variety of sources, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, and insiders. In addition, certain types of attacks could harm us even if our systems are left undisturbed. For example, certain threats are designed to remain dormant or undetectable, sometimes for extended periods of time, or until launched against a target and we may not be able to implement adequate preventative measures. Further, there has been an increase in such activities due to the increase in work-from-home arrangements. The risk of cyberattacks could also be increased by cyberwarfare in connection with ongoing or future armed conflicts, including potential proliferation of malware into systems unrelated to such conflicts. Any future breach of our operations or those of others in the Canton Coin industry, including third-party services on which we rely, could materially and adversely affect our financial condition and results of operations.
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We face other risks related to our Canton Coin treasury reserve business model.
Our Canton Coin treasury reserve business model exposes us to various risks, including the following:
| ● | Canton Coin and other digital assets are subject to significant legal, commercial, regulatory, and technical uncertainty, and our Canton Coin strategy subjects us to enhanced regulatory oversight; | |
| ● | regulatory changes could impact our ability to operate validators or receive rewards; | |
| ● | regulatory scrutiny of the Company’s activities may increase, potentially limiting our operations; | |
| ● | potential litigation risks exist related to smart contract vulnerabilities, validator operations, or our business activities; | |
| ● | uncertainty around Canton Coin’s regulatory status may impact our ability to list on certain exchanges; | |
| ● | changes in political administration may not guarantee a favorable regulatory environment for Canton Coin; and | |
| ● |
increased regulatory focus on Layer-1 blockchains beyond Bitcoin and Ethereum could result in new compliance requirements. |
The foregoing factors could lead to disruption in the market for Canton Coin, which could adversely affect the market price of Canton Coin and in turn adversely affect the market price of our Common Stock.
We do not currently have a permanent chief financial officer or internal accounting and finance staff, and failing to maintain effective internal controls in accordance with Section 404(a) of the Sarbanes-Oxley Act could result in material weaknesses in our internal controls and have a material adverse effect on our business and stock price.
As a publicly traded company, we are required to comply with the SEC rules implementing Sections 302 and 404(a) of the Sarbanes-Oxley Act, which requires management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of controls over financial reporting. Our former Chief Executive Officer, Sireesh Appajosyula, is currently serving as our interim chief financial officer. We do not currently have any internal accounting and finance staff. Currently, we rely on independent third-party consultants to provide important finance and accounting services. If the consultants to which we outsource these functions do not perform effectively, we may experience errors in recording, disclosure, and presentation of our consolidated financial information in quarterly, annual, and other filings. Such errors may also lead to, among other things, business disruption, increased operating costs, significant deficiencies or material weaknesses in our internal controls over financial reporting.
Although we review our internal controls over financial reporting in order to ensure compliance with Section 404 requirements, having a permanent chief financial officer and additional staff focused on accounting and finance would reduce the likelihood of errors related to the recording, disclosure, and presentation of consolidated financial information in quarterly, annual, and other filings. Material weaknesses could result in an adverse reaction in the financial marketplace due to a loss of investor confidence in the reliability of our financial statements, which ultimately could negatively impact our stock price as well as adversely affect our business, prospects, liquidity, financial condition and results of operations.
There are inherent limitations in the effectiveness of any control system, including the potential for human error and the possible circumvention or overriding of controls and procedures. Additionally, judgments in decision-making can be faulty and breakdowns can occur because of a simple error or mistake. An effective control system can provide only reasonable, not absolute, assurance that the control objectives of the system are adequately met.
You should carefully consider the risks described in our Annual Report which could materially affect our business, financial condition or future results. The risks described in our Annual Report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results. If any of the risks actually occur, our business, financial condition, and/or results of operations could be negatively affected.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 5. OTHER INFORMATION.
During
the fiscal quarter ended September 30, 2025, none of the Company’s directors or executive officer
ITEM 6. EXHIBITS.
| * | Filed herewith. |
| ** | Furnished herewith. |
| + | Indicates a management contract or any compensatory plan, contract or arrangement. |
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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.
| THARIMMUNE, INC. | ||
| Date: November 12, 2025 | By: | /s/ Mark Wendland |
| Mark Wendland | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: November 12, 2025 | By: | /s/ Sireesh Appajosyula |
| Sireesh Appajosyula | ||
| Interim Chief Financial Officer | ||
| (Interim Principal Financial and Accounting Officer) | ||
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