{"url_path":"/sec/rvph/10-q/2026/item-2","section_key":"item-2","section_title":"Item 2 **  **MANAGEMENT**’**S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-13","source_url":"https://www.sec.gov/Archives/edgar/data/1742927/0001437749-26-016762-index.html","accession_number":"0001437749-26-016762","cik":"0001742927","ticker":"RVPH","issuer_name":"REVIVA PHARMACEUTICALS HOLDINGS, INC.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1742927/0001437749-26-016762-index.html","primary_entity_key":"0001742927","primary_entity_name":"REVIVA PHARMACEUTICALS HOLDINGS, INC."},"word_count":7126,"has_tables":true,"body_markdown":"**ITEM 2.**  **MANAGEMENT**’**S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**\n\n \n\n*The information in this Management*’*s Discussion and Analysis of Financial Condition and Results of Operations (*“*MD&A*”*) should be read in conjunction with the Company*’*s unaudited condensed consolidated financial statements and the related notes set forth in Item 1 of Part I of this Quarterly Report on Form 10-Q, our MD&A set forth in Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and the Company*’*s consolidated financial statements and related notes set forth in Item 8 of Part II of such Annual Report on Form 10-K. See Part II, Item 1A,*“*Risk Factors,*”*below and*“*Cautionary Note Regarding Forward-Looking Statements,*”*and the information referenced therein, for a description of risks that we face and important factors that we believe could cause actual results to differ materially from those in our forward-looking statements. All amounts and percentages are approximate due to rounding and all dollars in the text are in millions, except per share amounts or where otherwise noted. When we cross-reference to a*“*Note,*”*we are referring to our*“*Notes to Condensed Consolidated Financial Statements (Unaudited)*”*included in Part I, Item 1, of this Quarterly Report on Form 10-Q, unless the context indicates otherwise.*\n\n \n\n*All statements other than statements of historical fact included in this section regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. When used in this section, words such as*“*anticipate,*”**“*believe,*”**“*estimate,*”**“*expect,*”**“*intend*”*and similar expressions, as they relate to our management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those contemplated by the forward- looking statements as a result of certain factors detailed herein. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.*\n\n \n\n**CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS**\n\n \n\nThis Quarterly Report on Form 10-Q contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the \"Exchange Act\"). Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as “may,” “can,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “seek,” “estimate,” “continue,” “plan,” “point to,” “project,” “predict,” “could,” “intend,” “target,” “potential” and other similar words and expressions of the future.\n\n \n\nThere are a number of important factors that could cause the actual results to differ materially from those expressed in any forward-looking statement made by us. These factors include, but are not limited to:\n\n \n\n \n\n●\n\nthe success of our current or planned clinical trials through all phases of clinical development, including our ability to conduct and complete clinical trials in accordance with projected timelines, our ability to achieve the desired results, and our ability to successfully complete requisite regulatory review and approval processes;\n\n \n\n●\n\nour ability to obtain the necessary financing to continue to conduct our business operations as planned, and to conduct our ongoing and planned trials, and continue and complete the planned development and commercialization of our product candidates;\n\n \n\n●\n\nour ability to successfully achieve and realize our plans and intentions for extending the long-term value of the brilaroxazine program and preparing for the next phase of development, including with respect to extending patent life and commercial exclusivity, and our plans for switching to a new form of brilaroxazine, our ability to seek and achieve FDA alignment, to successfully complete our planned RECOVER-2 Phase 3 trial, and the expected timing, results and benefits of the Company’s business plans and strategy;\n\n \n\n●\n\nour ability to maintain compliance with the continued listing requirements of the OTCQB Venture Market tier of the OTC Markets Group (“OTCQB Venture Market”);\n\n \n\n●\n\nour ability to raise additional capital while trading on the OTCQB Venture Market may be adversely impacted;\n\n \n\n●\n\nour ability to grow and manage growth economically;\n\n \n\n●\n\nour ability to retain key executives and medical and science personnel;\n\n \n\n●\n\nthe possibility that our products in development succeed in or fail clinical trials or are not approved by the U.S. Food and Drug Administration or other applicable authorities;\n\n \n\n●\n\nthe possibility that we could be forced to delay, reduce or eliminate our planned clinical trials or development programs;\n\n \n\n●\n\nour ability to obtain approval from regulatory agents in different jurisdictions for our current or future product candidates;\n\n \n\n●\n\nchanges in applicable laws or regulations;\n\n \n\n●\n\nchanges to our relationships within the pharmaceutical ecosystem;\n\n \n\n●\n\nthe performance of third-party suppliers and manufacturers and our ability to find additional suppliers and manufacturers and obtain alternative sources of raw materials;\n\n \n\n●\n\nour current and future capital requirements to support our development and commercialization efforts and our ability to satisfy our capital needs;\n\n \n\n●\n\nour ability to access capital on acceptable terms in a rising interest rate and tighter credit environment;\n\n \n\n●\n\nexpectations regarding our ability to continue as a going concern;\n\n \n\n●\n\nthe accuracy of our estimates regarding expenses and capital requirements, including estimated costs of our clinical studies, and our estimates about our forecasted cash runway;\n\n \n\n●\n\nour limited operating history;\n\n \n\n●\n\nour history of operating losses in each year since inception and expectation that we will continue to incur operating losses for the foreseeable future;\n\n \n\n●\n\nchanges in the markets that we target;\n\n \n\n●\n\nour ability to maintain or protect the validity of our patents and other intellectual property;\n\n \n\n●\n\nour exposure to any liability, protracted and costly litigation or reputational damage relating to data security;\n\n \n\n●\n\nthe sufficiency of our existing capital resources to fund our future operating expenses and capital expenditure requirements;\n\n \n\n●\n\nany disruption to our business that may occur on a longer-term basis should we be unable to remediate the material weaknesses we have identified in our internal controls; and\n\n \n\n●\n\nthe possibility that we may be adversely affected by other economic, business, and/or competitive factors.\n\n \n\n1\n\n \n\n \n\nThe foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we are faced with that may cause our actual results to differ from those anticipated in such forward-looking statements. Please see “Part II-Item 1A-Risk Factors” for additional risks which could adversely impact our business and financial performance.\n\n \n\nAll forward-looking statements are expressly qualified in their entirety by this cautionary notice. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this report or the date of the document incorporated by reference into this report. We have no obligation, and expressly disclaim any obligation, to update, revise or correct any of the forward-looking statements, whether as a result of new information, future events or otherwise. We have expressed our expectations, beliefs and projections in good faith and believe they have a reasonable basis. However, we cannot assure you that our expectations, beliefs or projections will result or be achieved or accomplished.\n\n \n\n**Company Overview**\n\n \n\nWe are a late-stage pharmaceutical company that discovers, develops, and seeks to commercialize next-generation therapeutics for diseases representing significant unmet medical needs and burdens to society, patients, and their families. Our current pipeline focuses on the central nervous system, inflammatory, and cardiometabolic diseases. We use a chemical genomics driven technology platform and proprietary chemistry to develop new medicines. Our pipeline currently has two drug candidates, brilaroxazine (RP5063) and RP1208. Both are new chemical entities discovered in-house. We have been granted composition of matter patents for both brilaroxazine and RP1208 in the United States (U.S.), Europe, and several other countries.\n\n \n\nOur lead drug candidate, brilaroxazine, is in clinical development and is intended to treat multiple neuropsychiatric indications. These include schizophrenia, bipolar disorder (“BD”), major depressive disorder (“MDD”), attention-deficit/hyperactivity disorder (“ADHD”), behavioral and psychotic symptoms of dementia and Alzheimer’s disease (“BPSD”), and Parkinson’s disease psychosis (“PDP”). Furthermore, brilaroxazine is also ready for clinical development for two respiratory indications - pulmonary arterial hypertension (“PAH”) and idiopathic pulmonary fibrosis (“IPF”). The U.S. Food and Drug Administration (\"FDA\") granted Orphan Drug Designation to brilaroxazine for the treatment of PAH in November 2016 and IPF in April 2018. Brilaroxazine also is in pre-clinical development for the treatment of psoriasis.\n\n \n\nOur primary focus is to complete the clinical development of brilaroxazine for the treatment of acute and maintenance schizophrenia.\n\n \n\n**Recent Developments**\n\n \n\n**Nasdaq Delisting & OTC Quotation**\n\n \n\nOur common stock was previously listed on The Nasdaq Capital Market (“Nasdaq”). As previously disclosed, our common stock was not in compliance with the requirement under Nasdaq Listing Rule 5550(a)(2) to maintain a minimum bid price of $1.00 per share for continued listing on Nasdaq (the “Bid Price Requirement”), and we had until May 11, 2026, which was the maximum extent of the discretionary authority of the Nasdaq Hearings Panel (the “Panel”).\n\n \n\nHaving not regained compliance with the Bid Price Requirement by such date, we received a letter from the Panel dated May 12, 2026 indicating that the Panel had determined to delist our common stock from Nasdaq. Our common stock will be suspended from trading on Nasdaq as of the open of trading on May 14, 2026.\n\n \n\nBeginning on May 14, 2026, our common stock will be quoted on the OTCQB Venture Market operated by OTC Markets Group Inc. under its existing symbol “RVPH.”\n\n \n\n**Reverse Stock Split**\n\n \n\nAt our annual stockholders meeting held on December 18, 2025, our stockholders adopted and approved an amendment to our Amended and Restated Certificate of Incorporation, as amended, to effect a reverse stock split of our issued and outstanding shares of common stock, at a specific ratio, ranging from one-for-two (1:2) to one-for-twenty (1:20), at any time prior to December 31, 2026, with such ratio to be determined by our Board in its discretion.\n\n \n\nOn March 4, 2026, we filed an amendment to our Amended and Restated Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to effect a reverse stock split of our issued and outstanding common stock at a ratio of one-for-twenty (1:20) (the “Reverse Split”). The Reverse Split became effective in accordance with the terms of the amendment at 12:01 a.m. Eastern Time on March 9, 2026 under a new CUSIP number, 76152G209. All share, common stock warrant, prefunded warrant, restricted common stock and common stock option amounts, and per share, per common stock warrant, per prefunded warrant, per restricted common stock and per common stock option amounts, in this Quarterly Report on Form 10-Q, have been retrospectively adjusted as appropriate to reflect the Reverse Split.\n\n \n\n**FDA Pre-NDA Meeting Feedback on Brilaroxazine Development for Schizophrenia Indication**\n\n \n\nIn November 2025, we met with FDA regarding the potential submission of a new drug application (“NDA”) for brilaroxazine for the treatment of schizophrenia in adults and the associated data, and patient enrollment requirements. We received written feedback from FDA in December 2025. FDA informed us that it strongly encouraged us to conduct, prior to submission of an NDA, an additional Phase 3 trial that will be similar in design to the successfully completed RECOVER Phase 3 trial of brilaroxazine utilizing 30 mg and 50 mg doses of brilaroxazine. We indicated to FDA that we will conduct a Phase 3 study incorporating this feedback before submitting an NDA.\n\n \n\n2\n\n \n\n \n\nFDA also provided us with guidance on, among other topics, methods of data analysis, methods of data presentation, and data requirements for studies of animal pharmacokinetics, human abuse potential, and renal and hepatic impairment.\n\n \n\nWe plan to initiate trial related activities for the RECOVER-2 Phase 3 study for brilaroxazine in schizophrenia (the “RECOVER-2 Trial”) in Q2-2026 and begin patient enrollment in the United States in Q3-2026. As previously reported, the FDA has already cleared the protocol for the RECOVER-2 Trial, and we currently expect study completion in Q4-2027. We anticipate that the RECOVER-2 Trial will be similar in design to our completed RECOVER Phase 3 trial of brilaroxazine.\n\n \n\n**Brilaroxazine Program and Intellectual Property Updates**\n\n \n\nOn April 15, 2026, we announced certain business updates, including in connection with our program for the development of brilaroxazine for the treatment of schizophrenia and regarding our intellectual property strategy.\n\n \n\nWe announced certain efforts centered on extending the long-term value of the brilaroxazine program and preparing for the next phase of development. A component of that strategy is our effort to extend patent life and commercial exclusivity for brilaroxazine, potentially through 2046. To support this objective, we have filed a composition of matter provisional patent application on a new form of brilaroxazine and will be pursuing an accelerated review process for that application.\n\n \n\nBased on the pre-clinical development package for this new form of brilaroxazine, we are preparing to seek FDA alignment on using this new form of brilaroxazine product in our future NDA submission. This would include switching the drug substance of brilaroxazine and its formulation in the second Phase 3 trial in schizophrenia. We believe this type of change is not uncommon in the pharmaceutical industry during late-stage development and prior to NDA filing, particularly when it may strengthen lifecycle management and long-term intellectual property. We are optimistic about receiving FDA alignment on this strategy, with feedback expected mid-year 2026.\n\n \n\nIf successful, this initiative has the potential to meaningfully extend the commercial exclusivity of brilaroxazine and strengthen our ability to realize the full value of the program over time. Importantly, a longer exclusivity runway could enhance the opportunity to develop brilaroxazine not only in schizophrenia, but also in bipolar disorder, major depressive disorder, and other potential high-value indications. We believe this strategy could materially increase the long-term value of the asset and further improve its attractiveness in future investment and strategic partnering discussions.\n\n \n\n**May 2025 ATM Sales Agreement**\n\n \n\nOn May 30, 2025, we entered into an at market issuance sales agreement (the “May 2025 ATM Sales Agreement”) with B. Riley Securities, Inc. and Alliance Global Partners serving as agents (the “Agents”), with respect to an at-the-market (ATM) offering program under which we may offer and sell, from time to time at our sole discretion, shares of our common stock having an aggregate offering price of up to $50 million through the Agents. During the three months ended March 31, 2026, we sold 570,845 shares of common stock pursuant to the May 2025 ATM Sales Agreement for net proceeds of $2.5 million after deducting sales agent commissions and other offering expenses of approximately $0.1 million. \n\n \n\n**March 2026 Public Offering**\n\n \n\nOn March 20, 2026, we closed a public offering (the “March 2026 Public Offering”) pursuant to a placement agency agreement and a securities purchase agreements with certain investors participating in the offering, pursuant to which we issued and sold (i) an aggregate of 6,283,334 shares (the “Shares”) of our common stock, (ii) pre-funded warrants (the “March 2026 Pre-Funded Warrants”) exercisable for an aggregate of up to 383,333 shares of our common stock, (iii) Series G warrants (the “Series G Warrants”) exercisable for an aggregate of up to 6,666,667 shares of our common stock and (iv) Series H warrants (the “Series H Warrants” and together with the Series G Warrants, the “March 2026 Common Stock Warrants”) exercisable for an aggregate of up to 6,666,667 shares of our common stock, for aggregate gross proceeds of $10.0 million. Each Share of common stock (or March 2026 Pre-Funded Warrant in lieu thereof) was sold together with (i) a Series G Warrant to purchase one share of common stock and (ii) a Series H Warrant to purchase one share of common stock, at a combined public offering price of $1.50 per share of common stock and accompanying March 2026 Common Stock Warrants (or a combined public offering price of $1.4999 per March 2026 Pre-Funded Warrant and accompanying March 2026 Common Stock Warrants). The March 2026 Pre-Funded Warrants have an exercise price of $0.0001 per share and will expire when exercised in full. The Series G Warrants are exercisable immediately, have a term of five years from the date of issuance and have an exercise price of $1.50 per share. The Series H Warrants are exercisable immediately, have a term of twelve months and have an exercise price of $1.50 per share. The net proceeds to us from the March 2026 Public Offering were approximately $8.9 million, after deducting placement agent fees and expenses and other offering expenses payable by us.\n\n \n\n3\n\n \n\n \n\n**Intellectual Property Overview**\n\n \n\nWe are the sole owner of our patent portfolio that includes issued patents and pending patent applications covering compositions of matter and methods of use of our product candidates RP5063 (brilaroxazine) and RP1208, as well as related compounds. As of March 31, 2026, our portfolio of intellectual property consists of 76 granted patents and 22 pending patent applications in the United States and in over 26 foreign countries.\n\n \n\nBrilaroxazine is our first intended commercial product. The original brilaroxazine patents include composition of matter, and methods of use in treating acute mania, autism, BD, depression, psychosis, and schizophrenia. One brilaroxazine original patent (U.S. Patent No. 8,188,076) and its 7 divisional/continuation patents have been granted in the U.S. The original brilaroxazine patents have also been granted in the following foreign countries: Australia, Brazil, Canada, Germany, Spain, France, Great Britain, Hong Kong, Israel, India, Italy, Japan, S. Korea, Liechtenstein, Mexico, Russia, Slovakia, and Thailand. We believe that our patent portfolio provides good protection of brilaroxazine. All the U.S. and foreign original brilaroxazine granted patents and pending patent applications will expire or are expected to expire in 2030, if a patent term extension is not obtained. If and when brilaroxazine receives regulatory approval, we intend to apply for patent term extensions on patents covering brilaroxazine in any jurisdiction where patent term extension is available. For example, the expiration date of the first U.S. original brilaroxazine patent may be extendable up to 2035.\n\n \n\nWe also own additional brilaroxazine granted patents and pending patent applications for additional indications. We own attention hyperactivity disorder patents in the U.S., which will expire in 2035. We own pulmonary arterial hypertension patents in the U.S., Europe, China, Japan, and Hong Kong; all of which will expire in 2036. We own pulmonary fibrosis patents in the U.S., China, Europe, Japan, and Hong Kong, and pending applications in Brazil, which are all expected to expire in 2038.\n\n \n\nWe have one family of pending applications directed to a formulation of brilaroxazine, which are filed in Brazil, Canada, China, Europe, India, Japan, Korea, Mexico, and the U.S.\n\n \n\nWe have one family of pending applications directed to a method of using brilaroxazine for treating psoriasis, which are filed in Brazil, Canada, China, Europe, Japan, Korea, Mexico, and the U.S.\n\n \n\nWe have one U.S. pending application directed to a brilaroxazine composition.\n\n \n\nWe have one international application pending directed to a method of using brilaroxazine for treating a specific symptom.\n\n \n\nWe also have two U.S. provisional applications pending directed to brilaroxazine composition.\n\n \n\n4\n\n \n\n \n\n**Financial Overview**\n\n \n\nWe are a clinical-stage biopharmaceutical company and have not generated any revenues from the sale of products. We have never been profitable and have incurred losses since inception. As of March 31, 2026, we had a working capital surplus of approximately $17.4 million, an accumulated deficit of $187.3 million and cash and cash equivalents on hand of approximately $22.2 million. Our net loss for the three months ended March 31, 2026 and 2025, was approximately $3.2 million and $6.4 million, respectively. We expect our expenses to increase in connection with our ongoing activities to research, develop and commercialize our product candidates. Furthermore, we continue to expect to incur additional costs associated with operating as a public company, which may increase as we continue our efforts to remediate the material weaknesses in our internal control over financial reporting that we identified as more particularly described in Part II, Item 9A of our fiscal year 2025 Annual Report on Form 10-K, and in this Quarterly Report on Form 10-Q below in “Item 4. Controls and Procedures.” We will need to generate significant revenues to achieve profitability, and we may never do so.\n\n \n\nWe expect our expenses will increase in connection with our ongoing activities, as we:\n\n \n\n \n\n●\n\ninvest significantly to further research and develop, through clinical trials for brilaroxazine, including completion of remaining OLE activities, initiating and conducting our Phase 3 RECOVER-2 Trial, and pre-clinical research for RP1208, and seek regulatory approval for our product candidates brilaroxazine and RP1208;\n\n \n\n●\n\nidentify and develop additional product candidates;\n\n \n\n●\n\nhire additional clinical, scientific and management personnel;\n\n \n\n●\n\nseek regulatory and marketing approvals for any product candidates that we may develop;\n\n \n\n●\n\nultimately establish a sales, marketing and distribution infrastructure to commercialize any drugs for which we may obtain marketing approval;\n\n \n\n●\n\nmaintain, expand and protect our intellectual property portfolio;\n\n \n\n●\n\nacquire or in-license other drugs and technologies; and\n\n \n\n●\n\nadd operational, financial and management information systems and personnel, including personnel to support our product candidate development, and any future commercialization efforts, and our ongoing compliance with and maintenance of public company controls, procedures and regulatory requirements and standards. and including in connection with our continuing efforts to remediate the material weaknesses in our internal control over financial reporting that we identified as more particularly described in Part I, Item 4 of this Quarterly Report on form 10-Q Controls and Procedures.\n\n \n\n*Research and Development Expenses*\n\n \n\nWe focus our resources on research and development activities, including the conduct of pre-clinical and clinical studies and product development and expense such costs as they are incurred. We have not historically tracked or recorded research and development expenses on a project-by-project basis, primarily because we use our employee and infrastructure resources across multiple research and development projects, and it is not practical for us to allocate such costs on a project-by-project basis. Our research and development expenses primarily consist of clinical trial expenses and employee-related expenses, including deferred salaries, salaries, benefits and taxes for personnel in research and development functions.\n\n \n\nThe largest recurring component of our total operating expenses has historically been research and development activities. We expect our research and development expenses will increase for the next several years as we advance our development programs, pursue regulatory approval of our product candidates in the U.S. and other jurisdictions and prepare for potential commercialization, which would require a significant investment in costs related to contract manufacturing and inventory buildup.\n\n \n\n5\n\n \n\n \n\nOur primary product candidates and their current status are as follows:\n\n \n\n**Drug Candidate**\n\n**Indication**\n\n**Status**\n\nBrilaroxazine (RP5063)\n\nSchizophrenia\n\n- Conducted pivotal Phase 3 RECOVER-1 and long-term safety studies. Topline data for the RECOVER-1 Trial double-blind part announced October 30, 2023\n\n- OLE positive preliminary topline data readout reported in December 2024, with full data-set and successful completion of the OLE announced in June 2025\n\n- Feedback from FDA received in Q4-2025\n\n- We plan to initiate trial-related activities for RECOVER-2 Trial in Q2-2026 and begin patient enrollment in the United States in Q3-2026.*\n\nBrilaroxazine\n\nBipolar Disorder\n\nPhase 1 complete**\n\nBrilaroxazine\n\nDepression-MDD\n\nPhase 1 complete**\n\nBrilaroxazine\n\nAlzheimer’s (AD-Psychosis/Behavior)\n\nPhase 1 complete**\n\nBrilaroxazine\n\nParkinson’s\n\nPhase 1 complete**\n\nBrilaroxazine\n\nADHD/ADD\n\nPhase 1 complete**\n\nBrilaroxazine\n\nPAH\n\nPhase 1 complete**\n\nBrilaroxazine\n\nIPF\n\nPhase 1 complete**\n\nBrilaroxazine\n\nPsoriasis\n\nIn pre-clinical development\n\nRP1208\n\nDepression\n\nIn pre-clinical development. Completed studies including in vitro receptor binding studies, animal efficacy studies, and PK studies. Compound ready for IND enabling studies.\n\nRP1208\n\nObesity\n\nIn pre-clinical development. Completed studies, including in vitro receptor binding studies and PK studies. Compound ready for animal efficacy studies.\n\n \n\n* We plan to initiate trial related activities for the RECOVER-2 Phase 3 study for brilaroxazine in schizophrenia (the “RECOVER-2 Trial”) in Q2-2026 and begin patient enrollment in the United States in Q3-2026. As previously reported, the FDA has already cleared the protocol for the RECOVER-2 Trial, and we currently expect study completion in Q4-2027. We anticipate that the RECOVER-2 Trial will be similar in design to our completed RECOVER Phase 3 trial of brilaroxazine. We announced certain efforts centered on extending the long-term value of the brilaroxazine program and preparing for the next phase of development. As described above, in connection with our effort to extend patent life and commercial exclusivity for brilaroxazine potentially through 2046, we have filed a composition of matter provisional patent application on a new form of brilaroxazine and will be pursuing an accelerated review process for that application. Based on the pre-clinical development package for this new form of brilaroxazine, we are preparing to seek FDA alignment on using this new form of brilaroxazine product in our future new drug application (“NDA”) submission. This would include switching the drug substance of brilaroxazine and its formulation in the RECOVER-2 Trial. We are optimistic about receiving FDA alignment on this strategy, with feedback expected mid-year 2026.\n\n \n\n** We completed the Phase 1 clinical study for brilaroxazine prior to starting the Phase 2 study in schizophrenia and schizoaffective disorder, and completed our RECOVER-1 Trial double-blind part in acute schizophrenia patients for which we announced topline data in October 2023. In these three studies, we collected safety data for brilaroxazine in over 800 patients, including healthy subjects and patients with stable schizophrenia, acute schizophrenia and schizoaffective disorder. Generally, no separate Phase 1 study is required for conducting a Phase 2 study for an additional indication, provided the treatment doses in the Phase 2 study for an additional indication are within the range of doses tested in the previously completed Phase 1 study.\n\n \n\n6\n\n \n\n \n\n*General Administrative Expenses*\n\n \n\nGeneral and administrative expenses primarily consist of payroll and related costs for employees in executive, business development, finance, and administrative functions. Other significant general and administrative expenses include professional fees for accounting and legal services.\n\n \n\nWe expect general and administrative expenses to increase as we expand infrastructure and continue the development of our clinical programs. Other increases could potentially include increased costs for director and officer liability insurance, costs related to the hiring of additional personnel, and increased fees for directors, outside consultants, lawyers, and accountants. We expect to incur significant costs to comply with corporate governance, internal controls, and similar requirements applicable to public companies.\n\n \n\n**Critical Accounting Estimates**\n\n \n\nOur critical accounting estimates are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 30, 2026. Since the date of such Annual Report, there have been no material changes in our critical accounting estimates\n\n \n\n**Results of Operations**\n\n \n\n**Comparison of the three months ended March 31, 2026 and 2025:**\n\n \n\nThe following table summarizes our results of operations for the three months ended March 31, 2026 and 2025:\n\n \n\n \n \n\n**Three Months Ended March 31,**\n\n \n \n\n**Change**\n\n \n \n\n**Change**\n\n \n\n \n \n\n**2026**\n\n \n \n\n**2025**\n\n \n \n\n**Amount**\n\n \n \n\n**Percentage**\n\n \n\nOperating expenses\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nResearch and development\n\n \n$\n1,435,135\n \n \n$\n4,113,537\n \n \n$\n(2,678,402\n)\n \n \n(65.1\n)%\n\nGeneral and administrative\n\n \n \n1,836,817\n \n \n \n2,424,630\n \n \n \n(587,813\n)\n \n \n(24.2\n)%\n\nTotal operating expenses\n\n \n \n3,271,952\n \n \n \n6,538,167\n \n \n \n \n \n \n \n \n \n\nLoss from operations\n\n \n \n(3,271,952\n)\n \n \n(6,538,167\n)\n \n \n \n \n \n \n \n \n\nGain on remeasurement of warrant liabilities\n\n \n \n—\n \n \n \n61,194\n \n \n \n(61,194\n)\n \n \n(100.0\n)%\n\nInterest expense\n\n \n \n(6,653\n)\n \n \n(11,620\n)\n \n \n4,967\n \n \n \n(42.7\n)%\n\nInterest income\n\n \n \n89,354\n \n \n \n86,111\n \n \n \n3,243\n \n \n \n3.8\n%\n\nOther expense, net\n\n \n \n(3,390\n)\n \n \n(25,145\n)\n \n \n21,755\n \n \n \n(86.5\n)%\n\nTotal other income, net\n\n \n \n79,311\n \n \n \n110,540\n \n \n \n \n \n \n \n \n \n\nLoss before provision for income taxes\n\n \n \n(3,192,641\n)\n \n \n(6,427,627\n)\n \n \n \n \n \n \n \n \n\nProvision for income taxes\n\n \n \n3,346\n \n \n \n5,213\n \n \n \n(1,867\n)\n \n \n(35.8\n)%\n\n**Net loss**\n\n \n$\n(3,195,987\n)\n \n$\n(6,432,840\n)\n \n \n \n \n \n \n \n \n\n \n\n*Research and Development Expenses*\n\n \n\nResearch and development costs are expensed as incurred. These expenses represent both internal and external costs.\n\n \n\n7\n\n \n\n \n\nFor the three months ended March 31, 2026 and 2025, research and development expenses were approximately $1.4 million and $4.1 million, respectively. Specifically, during the three months ended March 31, 2026 and 2025, our research and development costs consisted primarily of the following costs associated with our key research and development projects for advancing the clinical development of brilaroxazine during the reporting periods, which during such periods consisted primarily of our OLE Trial for our Phase 3 clinical study for brilaroxazine: (i) internal salaries, wages and other payroll related costs for employees involved in research and development activities, of approximately $0.5 million and $0.8 million in each period, respectively; (ii) internal stock-based compensation expenses with respect to employees involved in research and development activities, of approximately $0.3 million and $0.3 million, respectively; and (iii) external research and development expenses of approximately $0.6 million and $3.0 million, respectively (which includes clinical (including clinical consulting) research and development costs of approximately $0.4 million and $2.1 million, respectively, non-clinical safety related costs of an insignificant amount and approximately $0.6 million, respectively, non-clinical manufacturing related costs of approximately $0.1 million and $0.3 million, respectively, and non-clinical consulting and other related costs of approximately $0.1 million and an insignificant amount, respectively).\n\n \n\nThe decrease in research and development expenses for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 was primarily attributed to a decrease in external clinical research and development costs, partially attributed to a decrease in costs associated with patient visits as the OLE Trial proceeded toward completion during 2025 with the remaining OLE activities thereafter consisting of post-data readout activities and trial wind-down matters.\n\n \n\nWe expect our research and development activities to substantially increase as we develop our existing product candidates and potentially acquire new product candidates, reflecting increasing costs associated with our ongoing operations, including expenses associated with activities required to complete the development of brilaroxazine in schizophrenia including expenses associated with our Phase 3 RECOVER-2 Trial, expenses to take us through the submission of the planned NDA for brilaroxazine, together with additional costs post-NDA submission in preparation of potential commercialization if approved. For additional information, please see the discussion appearing above in the introductory section of this Part I-Item 2, *Management*’*s Discussion and Analysis of Financial Condition and Results of Operations.*\n\n \n\n*General and Administrative Expenses*\n\n \n\nFor the three months ended March 31, 2026 and 2025, general and administrative expenses were approximately $1.8 million and $2.4 million, respectively. Specifically, during the three months ended March 31, 2026 and 2025, our general and administrative expenses consisted primarily of: (i) stock-based compensation expense of approximately $0.3 million and $0.6 million, respectively; (ii) consultant and professional expenses of approximately $0.6 million and $0.9 million, respectively; (iii) legal expenses of approximately $0.3 million and $0.2 million, respectively; (iv) employee related expenses of approximately $0.5 million and $0.6 million, respectively; (v) and Directors and Officers insurance expenses of approximately $0.1 million in each period.\n\n \n\n*Gain on Remeasurement of Warrant Liabilities* \n\n \n\nWe recognized a remeasurement of warrant liabilities gain of approximately $61 thousand for the three months ended March 31, 2025 resulting from a decrease in the calculated fair value of the warrants, principally as a result of the decrease in our stock price. Our previously outstanding liability classified warrants expired in December 2025; accordingly, no gain or loss was recognized for the three months ended March 31, 2026.\n\n \n\n*Interest Expense*\n\n \n\nWe incurred interest expense of approximately $7 thousand and $12 thousand for the three months ended March 31, 2026 and 2025, respectively. The decrease in interest expense is attributed to the reduced interest rate on short term debt obtained by us related to Directors and Officers liability insurance policy premiums.\n\n \n\n8\n\n \n\n \n\n*Interest Income*\n\n \n\nInterest income was approximately $89 thousand and $86 thousand for the three months ended March 31, 2026 and 2025, respectively. The interest income increase of approximately $3 thousand was primarily due to an increase in average cash balances during the three months ended March 31, 2026 compared to the three months ended March 31, 2025.\n\n \n\n*Other Expense, net*\n\n \n\nOther expense, net was approximately $3 thousand for the three months ended March 31, 2026 and approximately $25 thousand for the three months ended March 31, 2025. The decrease of approximately $22 thousand was primarily attributable to a lower period-over-period foreign currency transaction loss from foreign currency fluctuations related to the consolidation of our Indian subsidiary.\n\n \n\n**Liquidity and Capital Resources**\n\n \n\n \n \n** **\n** **\n** **\n \n\n**December 31,**\n\n \n \n\n**Change**\n\n \n\n \n \n**March 31, 2026**\n \n \n**2025**\n \n \n\n**Amount**\n\n \n \n\n**Percentage**\n\n \n\n**Balance Sheet Data:**\n\n \n** **\n** **\n** **\n \n** **\n** **\n** **\n \n** **\n** **\n** **\n \n** **\n** **\n** **\n\nCash and cash equivalents\n\n \n$\n22,190,231\n \n \n$\n14,438,792\n \n \n$\n7,751,439\n \n \n \n53.7\n%\n\nWorking capital surplus\n\n \n \n17,440,481\n \n \n \n7,827,924\n \n \n \n9,612,557\n \n \n \n122.8\n%\n\nTotal assets\n\n \n \n23,559,636\n \n \n \n15,923,198\n \n \n \n7,636,438\n \n \n \n48.0\n%\n\nTotal stockholders' equity\n\n \n \n17,440,481\n \n \n \n8,647,645\n \n \n \n8,792,836\n \n \n \n101.7\n%\n\n \n\n \n \n\n**Three Months Ended March 31,**\n\n \n \n\n**Change**\n\n \n\n \n \n\n**2026**\n\n \n \n\n**2025**\n\n \n \n\n**Amount**\n\n \n \n\n**Percentage**\n\n \n\n**Statement of Cash Flow Data:**\n\n \n** **\n** **\n** **\n \n** **\n** **\n** **\n \n** **\n** **\n** **\n \n** **\n** **\n** **\n\nNet cash used in operating activities\n\n \n$\n(3,801,296\n)\n \n$\n(8,194,198\n)\n \n$\n4,392,902\n \n \n \n(53.6\n)%\n\nNet cash provided by financing activities\n\n \n \n11,552,735\n \n \n \n7,271\n \n \n \n11,545,464\n \n \n \n158787.8\n%\n\nNet increase (decrease) in cash and cash equivalents\n\n \n$\n7,751,439\n \n \n$\n(8,186,927\n)\n \n$\n15,938,366\n \n \n \n(194.7\n)%\n\n \n\n**Capital Resources**\n\n \n\nWe have funded our operations to date primarily from the issuance and sale of our equity and convertible equity securities. As of March 31, 2026, we had cash and cash equivalents of approximately $22.2 million. To fund our current operating plans, we will need to raise significant additional capital. Our existing cash and cash equivalents will not be sufficient for us to complete development of our product candidates and, if applicable, to prepare for commercializing any product candidate that may receive approval. Accordingly, we will continue to require substantial additional capital beyond our existing cash to continue our clinical development and potential commercialization activities. We believe that we have adequate cash on hand, including the net proceeds of the March 2026 Public Offering, to cover anticipated outlays into early 2027 but will need additional fundraising activities and cash on hand prior to such time. We have based this estimate, however, on assumptions that may**prove to be wrong, and could spend available financial resources much faster than we currently expect. We will need to raise additional funds to continue funding our development efforts and operations. We intend to secure such additional funding, although there are no guarantees or commitments for additional funding. These conditions raise substantial doubt regarding our ability to continue as a going concern for a period of one year after the date the consolidated financial statements are issued. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our clinical development efforts. We will seek to fund our operations through public or private equity, debt financings or other sources, which may include collaborations with third parties. Adequate additional financing may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a negative impact on our financial condition, and our ability to pursue our business strategy, and our ability to continue as a going concern. We cannot assure you that we will ever be profitable or generate positive cash flow from operating activities.\n\n \n\n9\n\n \n\n \n\nWe expect to continue to incur significant expenses and operating losses for the foreseeable future as we continue our research and pre-clinical and clinical development of our product candidates including our planned RECOVER-2 Phase 3 Trial for brilaroxazine in schizophrenia and other activities to continue development of our brilaroxazine program; expand the scope of our current studies for our product candidates; initiate additional pre-clinical, clinical or other studies for our product candidates; change or add additional manufacturers or suppliers; seek regulatory and marketing approvals for any of our product candidates that successfully complete clinical studies; seek to identify, evaluate and validate additional product candidates; acquire or in-license other product candidates and technologies; maintain, protect and expand our intellectual property portfolio; attract and retain skilled personnel; add operational, financial and management information systems and personnel, including personnel to support our product candidate development, and any future commercialization efforts, and our ongoing compliance with and maintenance of public company controls, procedures and regulatory requirements and standards, including in connection with our ongoing remediation efforts regarding the material weaknesses in our internal controls as disclosed in Part I, Item 4, “Controls and Procedures,” of this Quarterly Report on Form 10-Q; and experience any delays or encounter issues with any of the above. See also the discussion set forth under the caption “Financial Overview” appearing in this Management’s Discussion and Analysis of Financial Condition and Results of Operation section above.\n\n \n\nOn March 20, 2026, we closed a public offering (the “March 2026 Public Offering”) conducted pursuant to a placement agency agreement (the “March 2026 Placement Agency Agreement”) and securities purchase agreements with certain investors participating in the offering (the “March 2026 Securities Purchase Agreements”), pursuant to which we issued and sold (i) an aggregate of 6,283,334 shares of common stock, (ii) pre-funded warrants (the “March 2026 Pre-Funded Warrants”) exercisable for an aggregate of up to 383,333 shares of common stock (the “March 2026 Pre-Funded Warrant Shares”), (iii) Series G warrants (the “Series G Warrants”) exercisable for an aggregate of up to 6,666,667 shares of common stock (the “Series G Warrant Shares”) and (iv) Series H warrants (the “Series H Warrants” and together with the Series G Warrants, the “March 2026 Common Stock Warrants”) exercisable for an aggregate of up to 6,666,667 shares of common stock (the “Series H Warrant Shares” and together with the March 2026 Pre-Funded Warrant Shares and Series G Warrant Shares, the “March 2026 Warrant Shares”), for aggregate gross proceeds of $10.0 million. Each share of common stock (or March 2026 Pre-Funded Warrant in lieu thereof) was sold together with (i) a Series G Warrant to purchase one share of common stock and (ii) a Series H Warrant to purchase one share of common stock, at a combined public offering price of $1.50 per share of common stock and accompanying March 2026 Common Stock Warrants (or a combined public offering price of $1.4999 per March 2026 Pre-Funded Warrant and accompanying March 2026 Common Stock Warrants). The March 2026 Pre-Funded Warrants have an exercise price of $0.0001 per share and will expire when exercised in full. The Series G Warrants are exercisable immediately, have a term of five years from the date of issuance and have an exercise price of $1.50 per share. The Series H Warrants are exercisable immediately, have a term of twelve months and have an exercise price of $1.50 per share. The net proceeds to us from the March 2026 Public Offering were approximately $8.9 million, after deducting Placement Agent fees and expenses and other offering expenses payable by us.\n\n \n\nDuring the three months ended March 31, 2026, we sold 570,845 shares of common stock pursuant to the May 2025 ATM Sales Agreement for net proceeds of $2.5 million after deducting sales agent commissions and other offering expenses of approximately $0.1 million. Subsequent to March 31, 2026 and through the filing date of this Quarterly Report on Form 10-Q, we have not sold any shares of common stock pursuant to the May 2025 ATM Sales Agreement.\n\n \n\nUntil such time as we can generate substantial product revenue, if ever, we expect to finance our cash needs through a combination of equity or debt financings and collaboration agreements. We do not currently have any committed external sources of capital. To the extent that we raise additional capital through the future sale of equity or debt, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing stockholders. If we raise additional funds through collaboration agreements in the future, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. Adequate additional financing may not be available to us on acceptable terms, or at all. If we are not able to secure additional funding when needed, we may have to delay, reduce the scope of or eliminate one or more of our clinical trials or research and development programs or make changes to our operating plan, or curtail or cease operations. We will need to generate significant revenues to achieve profitability, and we may never do so.\n\n \n\n10\n\n \n\n \n\n**Cash Flows**\n\n \n\n**Net Cash Used in Operating Activities**\n\n \n\nNet cash used in operating activities for the three months ended March 31, 2026 was approximately $3.8 million, consisting primarily of a net loss of approximately $3.2 million, adjusted for non-cash items, including stock-based compensation expense of approximately $0.6 million, coupled with a decrease in our operating assets and liabilities totaling approximately $1.2 million. The $1.2 million decrease in net operating assets and liabilities was primarily due to a decrease in accounts payable.\n\n \n\nNet cash used in operating activities for the three months ended March 31, 2025, was approximately $8.2 million, consisting primarily of a net loss of approximately $6.4 million, adjusted for non-cash items, including a change in fair value of warrant liabilities gain of approximately $0.1 million, and stock-based compensation expense of approximately $0.9 million, coupled with a decrease in our operating assets and liabilities totaling approximately $2.6 million. The $2.6 million decrease in net operating assets and liabilities was primarily due to a decrease in accrued clinical expenses and other accrued expenses and accounts payable coupled with an increase in prepaid expenses and other current assets, net with a decrease in prepaid clinical trial costs.\n\n \n\n**Net Cash Provided by Financing Activities**\n\n \n\nNet cash provided by financing activities for the three months ended March 31, 2026 was approximately $11.6 million. Cash provided by financing activities during the three months ended March 31, 2026 was attributable to approximately $9.2 million in proceeds from issuance of common stock, common stock warrants, and pre-funded warrants, net of transaction costs paid, and $2.6 million in net proceeds from the issuance of common stock in ATM offering, which was offset by the repayments of short-term debt of approximately*$*0.2**million.\n\n \n\nNet cash provided by financing activities for the three months ended March 31, 2025 was approximately $7.3 thousand. Cash provided by financing activities was attributable to approximately $0.2 million in proceeds from the exercise of common stock warrants, which is offset by repayments on the short-term debt of approximately $0.2 million.\n\n \n\n**Off-Balance Sheet Arrangements**\n\n \n\nWe did not have during the periods presented, and do not currently have, any off-balance sheet arrangements, as defined under SEC rules."}