Rocket One Inc. (RKTO) deepens losses while shifting to AI semiconductor focus
Rocket One Inc. (RKTO), formerly Hoth Therapeutics, reports no revenue and a larger loss while shifting its focus from purely biopharmaceuticals to AI semiconductor infrastructure. For the six months ended June 30, 2026, net loss was $6,527,116 versus $5,675,312 a year earlier, driven by higher research and development and general and administrative expenses.
Total assets increased to $9,584,874 from $7,603,444 at year-end 2025, including cash and cash equivalents of $7,891,911. Operating cash outflow was $6,019,382 for the first half of 2026. The company has an accumulated deficit of $79,406,459, but management states current cash is sufficient to fund operations for at least 12 months from issuance.
Rocket One funded operations through equity: it sold 4,193,178 shares via an at-the-market program for net proceeds of $5,847,063 and completed an April 2026 registered direct and concurrent private placement raising net $1,611,880 and issuing new warrants. Shares outstanding rose to 23,184,634 at June 30, 2026. The company exited its prior crypto asset positions and began reporting two segments: a legacy biopharmaceutical segment and a new AI Infrastructure and Technologies segment.
Positive
- Cash runway: Cash and cash equivalents of $7,891,911 and management’s assessment that this is sufficient to fund operations for at least the next 12 months provide short-term liquidity visibility.
- Capital raised: The company raised equity financing, including $5,847,063 via at-the-market sales and $1,611,880 net from an April 2026 offering, strengthening the balance sheet.
Negative
- Rising losses and cash burn: Six‑month net loss increased to $6,527,116 from $5,675,312, and net cash used in operating activities rose to $6,019,382, reflecting higher spending without offsetting revenues.
Filing Explained
Potential share issuance extends beyond 24,897,581 shares outstanding on August 14 through 4,683,821 warrants and 2,310,362 options.
Form 10-Q is the company’s unaudited quarterly report; this report covers the quarter ended
As of June 30, 4,683,821 warrants were outstanding, including 1,826,677 exercisable warrants, and 2,310,362 options were outstanding and exercisable. These are rights to acquire shares rather than shares already issued, so they represent potential future issuance, not current dilution; if exercised and issued, they would increase the share count and reduce existing holders’ percentage ownership absent offsets.
The company also approved a 3,250,000-share increase to its 2022 equity plan, but that increase remains subject to shareholder approval; it is additional issuance capacity rather than issued shares.
Key Figures
Key Terms
going concern financial
At The Market Offering Agreement financial
crypto assets financial
in-process research and development financial
fair value option financial
FAQ
What were Rocket One Inc. (RKTO)’s net losses for Q2 and the first half of 2026?
How much cash does Rocket One Inc. (RKTO) have and what is its cash runway?
How did Rocket One Inc. (RKTO) finance its operations in the first half of 2026?
What strategic shift did Rocket One Inc. (RKTO) make in 2026?
How many Rocket One Inc. (RKTO) shares are outstanding and how much dilution occurred?
Does Rocket One Inc. (RKTO) have any revenue or crypto assets currently?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
For the Quarterly Period Ended:
or
For the transition period from:
Commission File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
| | ||
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Hoth Therapeutics, Inc.
(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 | ||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The number of shares of the issuer’s common stock, $0.0001 par value per share, outstanding at August 14, 2026 was
Table of Contents
| Page | ||
| PART I - FINANCIAL INFORMATION | 1 | |
| ITEM 1. | Financial Statements | 1 |
| Condensed Consolidated Balance Sheets as of June 30, 2026 (Unaudited) and December 31, 2025 | 1 | |
| Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2026 and 2025 (Unaudited) | 2 | |
| Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2026 and 2025 (Unaudited) | 3 | |
| Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2026 and 2025 (Unaudited) | 4 | |
| Notes to Unaudited Condensed Consolidated Financial Statements | 5 | |
| ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 27 |
| ITEM 3. | Quantitative and Qualitative Disclosures About Market Risk | 33 |
| ITEM 4. | Controls and Procedures | 33 |
| PART II - OTHER INFORMATION | 34 | |
| ITEM 1. | Legal Proceedings | 34 |
| ITEM 1A. | Risk Factors | 34 |
| ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 37 |
| ITEM 3. | Defaults Upon Senior Securities | 38 |
| ITEM 5. | Other Information | 38 |
| ITEM 6. | Exhibits | 38 |
| SIGNATURES | 39 | |
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA
This Quarterly Report on Form 10-Q contains certain 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”). Any statements in this Quarterly Report on Form 10-Q about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “believes,” “will,” “expects,” “anticipates,” “estimates,” “predicts,” “potential,” “continues,” “intends,” “plans” and “would” or the negative of these terms or other comparable terminology. For example, statements concerning financial condition, possible or assumed future results of operations, growth opportunities, industry ranking, plans and objectives of management, markets for our common stock and future management and organizational structure are all forward-looking statements. 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. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to differ materially from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement. We may not actually achieve the plans, intentions or expectations disclosed in these forward-looking statements. Any forward-looking statements are qualified in their entirety by reference to the risk factors discussed in this Quarterly Report on Form 10-Q. 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 business strategies, including our strategic repositioning; |
| ● | the development potential of the licensed technologies and the suitability of those technologies for orbital, defense, and other applications; | |
| ● | anticipated future operations and market opportunities; | |
| ● | risks related to market acceptance of our products and technologies; | |
| ● | intellectual property risks; | |
| ● | our industry environment; | |
| ● | our anticipated financial and operating results, including anticipated sources of revenues; | |
| ● | assumptions regarding the size of the available market, benefits of our products and technologies, pricing and timing of product launches; | |
| ● | management’s expectation with respect to future acquisitions; | |
| ● | statements regarding our goals, intentions, plans and expectations, including the introduction of new products, technologies and markets; | |
| ● | general business and economic conditions, such as inflationary pressures, geopolitical conditions and tariffs and other trade barriers; | |
| ● | government regulations; | |
| ● | our cash needs and financing plans; |
-ii-
| ● | our ability to execute our growth strategy and scale our operations efficiently, including managing costs, timelines, and operational complexity; | |
| ● | our ability to design, develop and successfully commercialize new and innovative technologies, products, and services; | |
| ● | the amount, nature and timing of our capital expenditures and the impact of such capital expenditures on our growth and performance, including our ability to fund such expenditures, manage costs and achieve expected returns on investment; | |
| ● | our ability to obtain and maintain required regulatory approvals, licenses and authorizations in the United States and internationally, and the timing, scope, and conditions of such approvals; | |
| ● | the competitive landscape in the industries in which we operate and our ability to compete effectively; | |
| ● | the implementation, interpretation, and impact of current or future regulations including laws and regulations relating to space operations, communications, AI, data privacy, and other areas; | |
| ● | the timing of regulatory submissions; |
| ● | our ability to obtain and maintain regulatory approval of our existing product candidates and any other product candidates we may develop, and the labeling under any approval we may obtain; |
| ● | compromise, damage or interruptions from cybersecurity incidents or other data or system security risks; |
| ● | risks relating to the timing and costs of clinical trials and the timing and costs of other expenses; |
| ● | the ultimate impact of any public health crisis on our business, our clinical trials, our research programs, healthcare systems or the global economy as a whole; and |
| ● | risks associated with our reliance on third-party organizations. |
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.
-iii-
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
ROCKET ONE INC. AND SUBSIDIARIES
(FORMERLY HOTH THERAPEUTICS, INC.)
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses and other current assets | ||||||||
| Crypto assets, at fair value | - | |||||||
| Deferred offering costs | - | |||||||
| Total Current Assets | ||||||||
| NON-CURRENT ASSETS: | ||||||||
| Prepaid expenses and other assets, net of current portion | ||||||||
| Operating lease right-of-use asset, net | - | |||||||
| Investment in joint ventures at fair value | ||||||||
| Total Non-Current Assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Operating lease liability, current portion | - | |||||||
| Total Current Liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (Note 8) | ||||||||
| STOCKHOLDERS’ EQUITY: | ||||||||
| Preferred stock, $ | - | - | ||||||
| Series A Convertible Preferred Stock, $ | - | - | ||||||
| Series B Preferred Stock, $ | - | - | ||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
-1-
ROCKET ONE INC. AND SUBSIDIARIES
(FORMERLY HOTH THERAPEUTICS, INC.)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| NET REVENUES | $ | - | $ | - | $ | - | $ | - | ||||||||
| OPERATING COSTS AND EXPENSES: | ||||||||||||||||
| Research and development expense | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OTHER INCOME (EXPENSES), NET: | ||||||||||||||||
| Realized loss on crypto assets | - | - | ( | ) | - | |||||||||||
| Interest income | ||||||||||||||||
| Total other income (expenses), net | ( | ) | ||||||||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| NET LOSS PER COMMON SHARE: | ||||||||||||||||
| Basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
| COMPREHENSIVE LOSS: | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other comprehensive income (loss): | ||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ||||||||||||||
| Total comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
-2-
ROCKET ONE INC. AND SUBSIDIARIES
(FORMERLY HOTH THERAPEUTICS, INC.)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025
(Unaudited)
| Additional | Accumulated Other | Total | ||||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Income (Loss) | Equity | |||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Common stock issued for cash, net | - | - | ||||||||||||||||||||||
| Cumulative translation adjustment | - | - | - | - | ||||||||||||||||||||
| Net loss | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||
| Balance, March 31, 2026 (unaudited) | ( | ) | ||||||||||||||||||||||
| Common stock issued for cash, net | - | - | ||||||||||||||||||||||
| Common stock and warrants issued for cash, net | - | - | ||||||||||||||||||||||
| Issuance of common stock for professional fees | - | - | ||||||||||||||||||||||
| Stock-based stock option expense | - | - | - | - | ||||||||||||||||||||
| Cumulative translation adjustment | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Net loss | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||
| Balance, June 30, 2026 (unaudited) | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Additional | Accumulated Other | Total | ||||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Income (Loss) | Equity | |||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Common shares issued for exercise of warrants | - | - | ||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | ||||||||||||||||||||
| Common stock issued for cash, net | - | - | ||||||||||||||||||||||
| Common stock issued for patent | - | - | ||||||||||||||||||||||
| Cumulative translation adjustment | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Net loss | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||
| Balance, March 31, 2025 (unaudited) | ( | ) | ||||||||||||||||||||||
| Issuance of warrants for professional fees | - | - | - | - | ||||||||||||||||||||
| Common stock issued for cash, net | - | - | ||||||||||||||||||||||
| Cumulative translation adjustment | - | - | - | - | ||||||||||||||||||||
| Net loss | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||
| Balance, June 30, 2025 (unaudited) | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
-3-
ROCKET ONE INC. AND SUBSIDIARIES
(FORMERLY HOTH THERAPEUTICS, INC.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Six Months Ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Research and development-acquired patent, expensed | - | |||||||
| Stock-based compensation | ||||||||
| Stock-based professional fees | ||||||||
| Lease costs | ( | ) | ||||||
| Realized loss on crypto assets | - | |||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ( | ) | ( | ) | ||||
| NET CASH USED IN OPERATING ACTIVITIES | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Proceeds from sale of crypto assets | - | |||||||
| NET CASH PROVIDED BY INVESTING ACTIVITIES | - | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from issuance of common stock, net of offering costs | ||||||||
| Proceeds from issuance of common stock and warrants, net of offering costs | - | |||||||
| Proceeds from exercise of warrants | - | |||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | ||||||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | ||||||||
| CASH AND CASH EQUIVALENTS - beginning of period | ||||||||
| CASH AND CASH EQUIVALENTS - end of period | $ | $ | ||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Common stock issued for future services | $ | $ | - | |||||
| Reclassification of deferred offering costs to additional paid-in capital | $ | $ | - | |||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
-4-
ROCKET ONE INC. AND SUBSIDIARIES
(FORMERLY HOTH THERAPEUTICS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
NOTE 1 – Organization and Description of Business Operations
Rocket One Inc. (together with its wholly-owned subsidiaries, merveille.ai, Hoth Therapeutics LLC, Rocket One.0 Inc, and Hoth Therapeutics Australia Pty Ltd, the “Company”) was incorporated under the laws of the State of Nevada on May 16, 2017. On May 26, 2026, the Company changed its name from Hoth Therapeutics, Inc. to Rocket One Inc. The Company is an Artificial Intelligence (“AI”) semiconductor infrastructure company building nanomagnetic and spintronic computing for ultra-low-power AI, resilient edge, defense, and space. The Company is focused on developing (i) a nanomagnetic matrix multiplier; (ii) Skyrmion Spintronic memory; and (iii) Swarm Stage AI. The Company also has preclinical and clinical assets that will be developed under its wholly owned subsidiary Hoth Therapeutics LLC for (i) a topical formulation for treating side effects from drugs used for the treatment of cancer (HT-001); (ii) a treatment for mast-cell derived cancers and anaphylaxis (HT-KIT); (iii) a treatment for obesity, and obesity-related diseases and conditions (HT-VA); and (iv) a treatment for Alzheimer’s Disease (HT-ALZ).
Going Concern Considerations
Accounting Standards Update (“ASU”) No. 2014-15, Presentation of Financial Statements - Going Concern, requires management to evaluate the Company’s ability to continue as a going concern one year beyond the filing date of the given financial statements. This evaluation requires management to perform two steps. First, management must evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern. Second, if management concludes that substantial doubt is raised, management is required to consider whether it has plans in place to alleviate that doubt. Disclosures in the notes to the unaudited condensed consolidated financial statements are required if management concludes that substantial doubt exists or that its plans alleviate the substantial doubt that was raised.
The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company’s ability to continue as a going concern is dependent on its ability to raise additional capital to fund its research and development (“R&D”) activities and meet its obligations on a timely basis. The Company has incurred losses and generated negative cash flows from operations since its inception. On June 30, 2026, the Company had an accumulated deficit of $
The Company believes its current cash is sufficient to fund operations for at least the next 12 months from the issuance date of these unaudited condensed consolidated financial statements. However, the Company will need to raise additional funding, through strategic relationships, public or private equity or debt financings, grants or other arrangements, to develop and seek regulatory approvals for the Company’s current and future products and technologies. If such funding is not available, or not available on terms acceptable to the Company, the Company’s current development plan and plans for expansion of its general and administrative infrastructure may be curtailed.
On November 8, 2024, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”) under which the Company could offer and sell shares of its common stock through Wainwright as the sales agent (see Note 7). The aggregate market value of the shares of common stock eligible for sale is currently $
-5-
ROCKET ONE INC. AND SUBSIDIARIES
(FORMERLY HOTH THERAPEUTICS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
On April 1, 2026, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional investors, pursuant to which the Company agreed to sell to such investors
NOTE 2 – Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Certain information and footnote disclosures normally included in the Company’s annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. These unaudited condensed consolidated financial statement results are not necessarily indicative of results to be expected for the full fiscal year or any future period. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K filed by the Company with the Securities and Exchange Commission (the “SEC”) on March 27, 2026.
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company’s wholly-owned subsidiaries, merveille.ai, which was incorporated under the laws of Nevada on October 4, 2023, Rocket One.0 Inc., which was incorporated under the laws of Nevada on April 22, 2026, Hoth Therapeutics LLC, a limited liability company which was formed under the laws of Nevada on June 17, 2026, and Hoth Therapeutics Australia Pty Ltd, which was incorporated under the laws of the State of Victoria in Australia on June 5, 2019. All significant intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of expenses during the reporting periods. The most significant estimates in the Company’s unaudited condensed consolidated financial statements relate to stock-based compensation, the valuation of common stock issued for services, and the valuation allowance of deferred tax assets resulting from net operating losses. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations may be affected.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with original maturities of 90 days or less at acquisition to be cash equivalents. Cash and cash equivalents consist of bank accounts and highly liquid money funds and totaled $
Concentrations of Credit Risk and Off-Balance Sheet Risk
The Company has significant cash balances at financial institutions which, throughout the year, regularly exceed the federally insured limit of $
-6-
ROCKET ONE INC. AND SUBSIDIARIES
(FORMERLY HOTH THERAPEUTICS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
Fair Value of Financial Instruments
Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurements (“ASC 820”), provides guidance on the development and disclosure of fair value measurements. Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.
The fair value of the Company’s assets and liabilities, which would qualify as financial instruments under ASC 820, approximates the carrying amounts represented in the Company’s condensed consolidated balance sheets, primarily due to their short-term nature.
The accounting guidance classifies fair value measurements in one of the following three categories for disclosure purposes:
| Level 1: | Quoted prices in active markets for identical assets or liabilities. | |
| Level 2: | Inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace. | |
| Level 3: | Unobservable inputs which are supported by little or no market activity and values determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation. |
In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement. During the six months ended June 30, 2026 and 2025, there were no changes in valuation techniques or transfers between Level 1, Level 2, and Level 3.
Leases
The Company determines if an arrangement is a lease at inception and classifies its leases at commencement. Operating leases are presented as right-of-use (“ROU”) assets and the corresponding lease liabilities are included in operating lease liability, current and lease liability, on the Company’s condensed consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset, and lease liabilities represent the Company’s obligation to make lease payments in exchange for the ability to use the asset for the duration of the lease term.
The Company may have lease agreements which contain both lease and non-lease components, which it has elected to account for as a single lease component. As such, minimum lease payments include fixed payments for non-lease components within a lease agreement but exclude variable lease payments not dependent on an index or rate, such as common area maintenance, operating expenses, utilities, or other costs that are subject to fluctuation from period to period. Certain of the leases may contain an option to extend the term of the lease. The option to extend a lease is included in the lease term only when it is reasonably certain that the Company will elect that option. Additionally, the Company does not record ROU assets or lease liabilities for short-term leases that have a term of twelve months or less at lease commencement.
ROU assets and lease liabilities are recognized at the commencement date and determined using the present value of the future minimum lease payments over the lease term. The Company uses an incremental borrowing rate based on an estimated rate of interest for collateralized borrowing since the Company’s leases do not include an implicit interest rate. The estimated incremental borrowing rate considers market data, actual lease economic environment, and the lease term at commencement date.
-7-
ROCKET ONE INC. AND SUBSIDIARIES
(FORMERLY HOTH THERAPEUTICS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
Investment in Joint Ventures
Ownership interests in entities for which the Company has significant influence that are not consolidated are accounted for as equity method investments. SEC Staff Announcement: Accounting for Limited Partnership Investments (codified in ASC 323-30-S99-1) guidance requires the use of the equity method unless the investor’s interest “is so minor that the limited partner may have virtually no influence over partnership operating and financial policies.” The SEC staff’s position is that investments in limited partnerships of greater than
Digital Assets, at Fair Value
The Company’s digital assets primarily included Bitcoin (“BTC”), Ethereum (“ETH”) and Solana (“SOL”), which are actively traded on public exchanges. The Company distinguishes between digital assets which fall within the scope of ASC 350-60 and those which do not. The Company refers to digital assets which fall within the scope of ASC 350-60 (e.g., BTC) as “crypto assets.” Digital assets which do not fall within the scope of ASC 350-60, Accounting for and Disclosure of Crypto Assets, are referred to as “digital intangible assets.” As of June 30, 2026 and December 31, 2025, the Company did not own any digital intangible assets that did not fall within the scope of ASC 350-60.
Crypto assets are recorded at fair value in accordance with ASC 820, Fair Value Measurement. Changes in fair value are recognized in the Company’s unaudited condensed consolidated statements of operations within “other income (expenses), net” for the period in which they occur.
Digital assets are classified on the condensed consolidated balance sheets based on management’s intent and the expected period of use or sale:
| ● | Current assets: Digital assets held for trading or intended to be sold within 12 months are classified as current assets. |
| ● | Non-current assets: Digital assets held for investment or long-term strategic purposes are classified as non-current assets. |
The fair value of each cryptocurrency holding is based on the closing market price on the reporting date.
As of December 31, 2025, the Company held $
Research and Development Costs
Research and development costs, including acquired in-process research and development expenses for which there is no alternative future use, are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are accrued and then expensed when the activity has been performed or when the goods have been received rather than when the payment is made.
-8-
ROCKET ONE INC. AND SUBSIDIARIES
(FORMERLY HOTH THERAPEUTICS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
Stock-Based Compensation
The Company accounts for stock-based payment awards exchanged for services at the estimated grant date fair value of the award. Stock options issued under the Company’s long-term incentive plans are granted with an exercise price equal to no less than the market price of the Company’s stock at the date of grant and expire up to ten years from the date of grant. Options are generally issued fully vested. The Company accounts for forfeited awards as they occur.
The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.
Expected Term - The expected term of options represents the period that the Company’s stock-based awards are expected to be outstanding based on the simplified method, which is the half-life from vesting to the end of its contractual term.
Expected Volatility - The Company computes stock price volatility over expected terms based on its historical common stock trading prices.
Risk-Free Interest Rate - The Company bases the risk-free interest rate on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term.
Expected Dividend - The Company has never declared or paid any cash dividends on its common shares and does not plan to pay cash dividends in the foreseeable future, and, therefore, uses an expected dividend yield of zero in its valuation models.
The Company grants restricted stock awards under its equity incentive plan. Restricted stock awards are granted to employees and non-employees. The restricted stock awards are measured based on the grant-date fair value. In general, the restricted stock awards vest over a service period of zero to three years. Stock-based compensation expense is generally recognized based on the straight-line basis over the requisite service period and forfeitures are accounted for as they occur.
The Company has issued warrants to non-employees. The warrants are measured based on the grant-date fair value. In general, the warrants vest over a term of zero to ten years. Stock-based compensation expense is generally recognized based on the straight-line basis over the vesting term.
Income Taxes
Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the unaudited condensed consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law. With the passing of this tax legislation, the most notable corporate tax issue that impacts the Company is the change to Internal Revenue Code (“IRC”) §174. Since 2022, the Company has been required to capitalize U.S. and foreign research and development expenditures in accordance with IRC §174 and amortize those costs over
-9-
ROCKET ONE INC. AND SUBSIDIARIES
(FORMERLY HOTH THERAPEUTICS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
Net Loss per Share
Net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Since the Company had a net loss in the periods presented, basic and diluted net loss per share of common stock are the same.
| Six Months Ended June 30, | ||||||||
| Potentially dilutive securities | 2026 | 2025 | ||||||
| Warrants | ||||||||
| Options | ||||||||
| Total | ||||||||
Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued warrants that meet all of the criteria for equity classification, the warrants are recorded as a component of additional paid-in capital at the time of issuance. For issued warrants that do not meet all the criteria for equity classification, the warrants are classified as liability and are required to be recorded at their initial fair value on the date of issuance, and each condensed consolidated balance sheet date thereafter.
Comprehensive Loss
Comprehensive loss is composed of net loss and other comprehensive income (loss). During the three and six months ended June 30, 2026 and 2025, other comprehensive income (loss) was attributable to foreign currency translation adjustments.
Foreign Currency
The reporting currency of the Company is the U.S. dollar. For the Company’s subsidiary with non-U.S. dollar functional currencies, assets and liabilities are translated into U.S. dollars at period-end exchange rates. Revenue and expenses are translated at the average exchange rates during the period. Equity transactions are translated using historical exchange rates. The resulting translation adjustments are recorded in accumulated other comprehensive income – foreign currency translation as a component of stockholders’ equity. Foreign currency translation adjustments arising from differences in exchange rates from period to period are recorded within “Accumulated other comprehensive income – foreign currency translation” in the condensed consolidated balance sheets.
-10-
ROCKET ONE INC. AND SUBSIDIARIES
(FORMERLY HOTH THERAPEUTICS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
Segment Reporting
On January 1, 2024, the Company adopted FASB ASU 2023-07, Segment Reporting (ASC 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses among other disclosure requirements. Through March 31, 2026, the Company operated as a single operating segment as a clinical-stage biopharmaceutical company focused on developing new generation therapies for unmet medical needs. During the three months ended June 30, 2026, the Company began the process of transitioning primarily into an AI semiconductor infrastructure company building nanomagnetic and spintronic computing for ultra-low-power AI, resilient edge, defense, and space. Accordingly, beginning in the second quarter of 2026, the Company began operating in two reportable segments which consist of (1) a clinical-stage biopharmaceutical company, herein known as the “Biopharmaceutical” segment, and (2) an AI semiconductor infrastructure and other technologies company, herein known as the “AI Infrastructure and Technologies” segment. The Company has determined that these reportable segments are strategic business units that offer different products. These reportable segments shall be managed separately based on the fundamental differences in their operations.
In accordance with ASC 280, the Company’s chief operating decision maker has been identified as the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company and decides how to allocate resources based on loss from operations, managing cash flows and evaluating research and development and general and administrative expenses. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. The Company has enhanced its segment disclosures in this report to include the presentation of two segments. The adoption of this ASU only affects the Company’s disclosures with no impact on its consolidated financial condition or results of operations.
Recent Accounting Pronouncements
The Company adopted ASU 2023-09, Improvements to Income Tax Disclosures, during the year ended December 31, 2025 using a retrospective approach. The ASU requires greater disaggregation of information about a reporting entity’s effective tax rate reconciliation and information on income taxes paid. The ASU applies to all entities subject to income taxes and is intended to help investors better understand an entity’s exposure to potential changes in jurisdictional tax legislation and assess income tax information that affects cash flow forecasts and capital allocation decisions. The ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The adoption of ASU 2023-09 had no impact on the Company’s unaudited condensed consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires entities to provide more detailed disaggregation of expenses in the income statement, focusing on the nature of the expenses rather than their function. The new disclosures will require entities to separately present expenses for significant line items, including, but not limited to, depreciation, amortization, and employee compensation. Entities will also be required to provide a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, disclose the total amount of selling expenses and, in annual reporting periods, provide a definition of what constitutes selling expenses. This pronouncement is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company does not expect the adoption of this new guidance to have a material impact on its unaudited condensed consolidated financial statements.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270), Narrow-Scope Improvements, to provide clarity about the current requirements, rather than evaluate whether to expand or reduce interim disclosure requirements. The amendments in ASU 2025-11 result in a comprehensive list of interim disclosures that are required by GAAP. The amendments in ASU 2025-11 also include a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The amendments in ASU 2025-11 are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027 and early adoption is permitted. The amendments in ASU 2025-11 can be applied either prospectively or retrospectively to any or all prior periods presented in the unaudited condensed consolidated financial statements. The Company is currently evaluating the disclosure impact that ASU 2025-11 may have on its financial statement presentation and disclosures.
Currently, management does not believe that any other recently issued, but not yet effective accounting pronouncements, if currently adopted, would have a material impact on the Company’s unaudited condensed consolidated financial statements.
-11-
ROCKET ONE INC. AND SUBSIDIARIES
(FORMERLY HOTH THERAPEUTICS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
NOTE 3 – Crypto Assets, at Fair Value
As of June 30, 2026, the Company held no crypto assets.
The following table sets forth the units held, cost basis, and fair value of crypto assets held, as shown on the condensed consolidated balance sheet as of December 31, 2025:
| Classification | Units Held | Cost Basis | Fair Value at December 31, 2025 | |||||||||||
| Balance, December 31, 2025 | ||||||||||||||
| BTC (Bitcoin) | $ | $ | ||||||||||||
| ETH (Ethereum) | ||||||||||||||
| SOL (Solana) | ||||||||||||||
| Total | $ | $ | ||||||||||||
Cost basis is equal to the cost of the crypto assets plus transaction fees, if any, at the time of purchase or upon receipt. Fair value represents the quoted crypto asset prices within the crypto assets principal market at the time of measurement.
The following table represents a reconciliation of crypto assets held:
| For the Three and Six Months Ended June 30, 2026 | ||||
| Fair Value, December 31, 2025 | $ | |||
| Crypto units sold, at fair value | ( | ) | ||
| Realized loss | ( | ) | ||
| Fair Value, June 30, 2026 | $ | - | ||
NOTE 4 – License, Patents, Software and Other Technologies Agreements
The following summarizes the Company’s research and development expenses for licenses, patents, software and other technologies acquired (including stock-based compensation) during the three and six months ended June 30, 2026 and 2025:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| The George Washington University | $ | - | $ | $ | - | $ | ||||||||||
| North Carolina State University | - | - | ||||||||||||||
| University of Cincinnati | - | - | ||||||||||||||
| Virginia Commonwealth University | - | - | ||||||||||||||
| U.S. Department of Veterans Affairs | - | - | ||||||||||||||
| Patent applications, software and other technologies acquired | - | |||||||||||||||
| $ | $ | $ | $ | |||||||||||||
-12-
ROCKET ONE INC. AND SUBSIDIARIES
(FORMERLY HOTH THERAPEUTICS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
The George Washington University
During the three and six months ended June 30, 2026, the Company recorded expenses of $0 and $0, respectively, related to license fees pursuant to the patent license agreement with The George Washington University (“GW”) dated February 1, 2020 (“GW Patent License Agreement”) and the patent license agreement with GW dated August 7, 2020.
During the three and six months ended June 30, 2025, the Company recorded expenses of $
North Carolina State University
During the three months ended June 30, 2026 and 2025, the Company recorded expenses of $0 and $
During the six months ended June 30, 2026 and 2025, the Company recorded expenses of $0 and $
University of Cincinnati
During the three months ended June 30, 2026 and 2025, the Company recognized expenses of $0 and $
During the six months ended June 30, 2026 and 2025, the Company recognized expenses of $0 and $
Virginia Commonwealth University
During the three and six months ended June 30, 2026 and 2025, the Company recognized expenses of $
During the three and six months ended June 30, 2025, the Company did not recognize any expenses for license fees associated with the VCU License Agreement.
U.S. Department of Veterans Affairs
During the three and six months ended June 30, 2026 and 2025, the Company recognized expenses of $
During the three and six months ended June 30, 2025, the Company did not recognize any expenses for license fees associated with the VA Agreement.
Patent Applications, Software and Other Technologies
During the six months ended June 30, 2026 and 2025, the Company recorded $0 and $
On June 18, 2026, the Company entered into an Asset Purchase Agreement with Skystage, Inc., whereby the Company purchased software and related technologies for the delivery of custom drone light shows using drone cluster technologies for $
-13-
ROCKET ONE INC. AND SUBSIDIARIES
(FORMERLY HOTH THERAPEUTICS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
NOTE 5 – Fair Value of Financial Assets and Liabilities
The following tables present the Company’s assets and liabilities that are measured at fair value on June 30, 2026 and December 31, 2025:
| Fair value measured on June 30, 2026 | ||||||||||||||||
| Total at June 30, 2026 | Quoted prices in active markets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | |||||||||||||
| Assets: | ||||||||||||||||
| Investment in joint ventures | $ | $ | - | $ | - | $ | ||||||||||
| Fair value measured on December 31, 2025 | ||||||||||||||||
| Total at December 31, 2025 | Quoted prices in active markets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | |||||||||||||
| Assets: | ||||||||||||||||
| Crypto assets | $ | $ | $ | - | $ | - | ||||||||||
| Investment in joint ventures | $ | $ | - | $ | - | $ | ||||||||||
Level 3 Measurement
The following table sets forth a summary of the changes in the fair value of the Company’s level 3 financial assets that are measured at fair value on a recurring basis for the three and six months ended June 30, 2026 and 2025:
| Investment in joint venture for the three months ended June 30, 2026 and 2025 | ||||||||
| For the Three Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Investment in joint ventures at fair value – beginning of period | $ | $ | ||||||
| Change in fair value of investment in joint ventures | - | - | ||||||
| Investment in joint ventures at fair value – end of period | $ | $ | ||||||
| Investment in joint venture for the six months ended June 30, 2026 and 2025 | ||||||||
| For the Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Investment in joint ventures at fair value – beginning of period | $ | $ | ||||||
| Change in fair value of investment in joint ventures | - | - | ||||||
| Investment in joint ventures at fair value – end of period | $ | $ | ||||||
-14-
ROCKET ONE INC. AND SUBSIDIARIES
(FORMERLY HOTH THERAPEUTICS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
Investment in Joint Ventures
The Company has elected to measure the investment in joint ventures using the fair value option at each reporting date. Under the fair value option, bifurcation of an embedded derivative is not necessary, and all related gains and losses on the host contract and derivative due to change in the fair value will be reflected in other income (expenses), net in the unaudited condensed consolidated statements of operations and comprehensive loss.
The value at which the Company’s investment in joint ventures is carried on its books is adjusted to estimated fair value at the end of each quarter, taking into account general economic and stock market conditions and those characteristics specific to the underlying investments.
Investment in Zylö Therapeutics
In connection with the Company’s March 2020 underwritten public offering of shares of its common stock, on May 4, 2020, the Company purchased
On February 23, 2024, the Company acquired
On September 23, 2025, the Company received
The valuations reflect a probability-weighted present value of expected future investment returns considering certain possible outcomes and the rights of each class of Zylö’s, Atticus Pharma’s, and Finch’s equity. The future values of the common stock under the various outcomes are discounted back to the valuation date at a risk-adjusted discount rate and probability weighted to determine the value for the Class B common stock. Significant unobservable inputs in the valuation include (i) probabilities of each scenario, (ii) timing of occurrence, (iii) future valuation; (iv) and the risk-adjusted discount rate.
The consolidated investment in Zylö was valued at $
-15-
ROCKET ONE INC. AND SUBSIDIARIES
(FORMERLY HOTH THERAPEUTICS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
NOTE 6 – Prepaid Expenses and Other Assets
As of June 30, 2026 and December 31, 2025, prepaid expenses and other assets consisted of the following:
| As of June 30, 2026 | As of December 31, 2025 | |||||||
| Prepaid clinical trial expenses | $ | $ | ||||||
| Prepaid stock-based compensation | - | |||||||
| Prepaid insurance | ||||||||
| R&D credit receivable | ||||||||
| Other prepaid expenses | ||||||||
| Total | ||||||||
| Prepaid expenses and other assets, current portion | ( | ) | ( | ) | ||||
| Prepaid expenses and other assets, long-term portion | $ | $ | ||||||
NOTE 7 – Stockholders’ Equity
Preferred Stock
The Company is authorized to issue up to
Series A Convertible Preferred Stock
The shares of Series A Convertible Preferred Stock, par value $
-16-
ROCKET ONE INC. AND SUBSIDIARIES
(FORMERLY HOTH THERAPEUTICS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
Series B Preferred Stock
On November 2, 2022, the Company filed a Certificate of Designation of the Series B Preferred Stock (the “Certificate of Designation”) with the Secretary of State of the State of Nevada to create a new class of Series B Preferred Stock, par value $
Common Shares
2025
On January 7, 2025, the Company issued
On January 13, 2025, the Company entered into a Patent Application Acquisition Agreement with Med30 LLC (the “Seller”), whereby the Seller sold, conveyed, assigned and transferred to the Company all of Seller’s right, title, and interest in and to certain patent applications and associated rights, subject to the terms and conditions set forth in such agreement for a cash payment of $
On November 8, 2024, the Company entered into the ATM Agreement with Wainwright under which the Company could offer and sell shares of its common stock through Wainwright as the sales agent pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-272620), including an accompanying base prospectus and a prospectus supplement dated November 8, 2024. Sales of shares of the Company’s common stock through Wainwright, if any, will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended. Wainwright will use commercially reasonable efforts to sell shares of the Company’s common stock from time to time, based on instructions from the Company (including any price, time or size limits or other parameters or conditions the Company may impose). The Company will pay Wainwright a commission equal to
-17-
ROCKET ONE INC. AND SUBSIDIARIES
(FORMERLY HOTH THERAPEUTICS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
During the three months ended June 30, 2025, pursuant to the ATM Agreement, the Company issued an aggregate of
2026
During the three months ended June 30, 2026, pursuant to the ATM Agreement, the Company issued an aggregate of
On April 1, 2026, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional investors, pursuant to which the Company sold to such investors
On May 14, 2026, the Company issued
On June 10, 2026, the Company issued an aggregate of
Warrants
On March 27, 2024, as an inducement to exercise certain warrants, the Company issued new unregistered warrants to purchase up to
On June 4, 2025, pursuant to a six-month marketing service agreement, the Company issued warrants to purchase up to
On April 2, 2026, in connection with the Purchase Agreement, the Company issued the investors the April 2026 Warrants to purchase up to
The measurement of fair value of the April 2026 Warrants and April Placement Agent Warrants was determined utilizing a Black-Scholes model considering all relevant assumptions current on April 2, 2026, the date of issuance. The grant date fair value of these April 2026 Warrants and April Placement Agent Warrants was estimated to be $
-18-
ROCKET ONE INC. AND SUBSIDIARIES
(FORMERLY HOTH THERAPEUTICS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
The fair value of the April 2026 Warrants, April Placement Agent Warrants and other warrants were estimated using the Black-Scholes option-pricing model with the following assumptions:
| April 2, 2026 | June 4, 2025 | |||||||
| Exercise price | $ | $ | ||||||
| Term (years) | ||||||||
| Expected stock price volatility | % | % | ||||||
| Risk-free rate of interest | % | % | ||||||
A summary of warrant activity for the six months ended June 30, 2026 is as follows:
| Number of Warrants | Weighted Average Exercise Price | Total Intrinsic Value | Weighted Average Remaining Contractual Life (in years) | |||||||||||||
| Outstanding as of December 31, 2025 | $ | $ | - | |||||||||||||
| Granted | - | - | ||||||||||||||
| Expired | ( | ) | - | - | ||||||||||||
| Outstanding as of June 30, 2026 | - | |||||||||||||||
| Warrants exercisable as of June 30, 2026 | $ | $ | - | |||||||||||||
The Company has determined that the warrants should be accounted for as a component of stockholders’ equity.
2018 Equity Incentive Plan
On May 4, 2018, the Company’s board of directors adopted the Rocket One Inc. 2018 Equity Incentive Plan (the “2018 Plan”) initially reserving
The Committee increased the number of shares reserved pursuant to the 2018 Plan by
-19-
ROCKET ONE INC. AND SUBSIDIARIES
(FORMERLY HOTH THERAPEUTICS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
2022 Equity Incentive Plan
On March 24, 2022, the Company’s board of directors adopted the Rocket One Inc. 2022 Omnibus Equity Incentive Plan (the “2022 Plan”) initially reserving
On June 2, 2023, the Company’s board of directors approved the Rocket One Inc. Amended and Restated 2022 Omnibus Equity Incentive Plan (the “Amended and Restated 2022 Plan”) which, among other things, increased the number of shares reserved under the plan by
On May 15, 2024, the Committee recommended, and the board of directors approved an increase to the number of shares of common stock reserved for issuance under the Amended and Restated 2022 Plan by
On May 9, 2025, the Committee recommended, and the board of directors approved an increase to the number of shares of common stock reserved for issuance under the Amended and Restated 2022 Plan by
On April 30, 2026, the Committee recommended, and the board of directors approved an increase to the number of shares of common stock reserved for issuance under the Amended and Restated 2022 Plan by
As of June 30, 2026, there were
Stock Options
On January 14, 2025, pursuant to the 2018 Plan, the Company issued options to the Company’s Chief Executive Officer to purchase up to
On May 26, 2026, pursuant to the 2022 Plan, the Company issued options to the Company’s Chief Executive Officer, employees and directors to purchase up to an aggregate of
-20-
ROCKET ONE INC. AND SUBSIDIARIES
(FORMERLY HOTH THERAPEUTICS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
The fair value of option grants was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:
| Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Exercise price | $ | $ | ||||||
| Term (years) | ||||||||
| Expected stock price volatility | % | % | ||||||
| Risk-free rate of interest | % | % | ||||||
A summary of option activity under the Company’s equity incentive plans for the six months ended June 30, 2026 is presented below:
| Number of Shares | Weighted Average Exercise Price | Total Intrinsic Value | Weighted Average Remaining Contractual Life (in years) | |||||||||||||
| Outstanding as of December 31, 2025 | $ | $ | ||||||||||||||
| Employee options issued | - | - | ||||||||||||||
| Expired | - | - | - | - | ||||||||||||
| Outstanding as of June 30, 2026 | $ | $ | ||||||||||||||
| Options vested and exercisable as of June 30, 2026 | $ | $ | ||||||||||||||
A summary of stock options outstanding as of June 30, 2026 by price range is as follows:
| Options outstanding and exercisable | ||||||||||||
| Range of Exercise Prices | Number of Shares | Weighted Average Remaining Contractual Life (in years) | Weighted Average Exercise Price | |||||||||
| Up to $2.59 | $ | |||||||||||
| $14.75 to $76.25 | $ | |||||||||||
| Above $76.25 | $ | |||||||||||
| Options outstanding and exercisable as of June 30, 2026 | $ | |||||||||||
All stock compensation associated with the amortization of employee stock option expense was recorded as a component of general and administrative expenses in the unaudited condensed consolidated statements of operations and comprehensive loss.
Estimated future stock-based compensation expense relating to unvested stock options is $
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ROCKET ONE INC. AND SUBSIDIARIES
(FORMERLY HOTH THERAPEUTICS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
Stock-Based Compensation
Stock-based compensation expense for the three and six months ended June 30, 2026 and 2025 was as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Employee stock option awards | $ | $ | — | $ | $ | |||||||||||
| Non-employee restricted stock awards | — | — | ||||||||||||||
| Non-employee stock warrant awards | — | — | ||||||||||||||
| $ | $ | $ | $ | |||||||||||||
For the three and six months ended June 30, 2026 and 2025, the amount of stock-based compensation expense included within research and development and general and administrative expenses was as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Research and development | $ | - | $ | - | $ | - | $ | - | ||||||||
| Professional fees | ||||||||||||||||
| General and administrative | - | |||||||||||||||
| $ | $ | $ | $ | |||||||||||||
NOTE 8 – Commitments and Contingencies
Office Lease
On December 9, 2024, the Company and the landlord entered into a lease agreement (the “December 2024 Lease”). Pursuant to the December 2024 Lease, effective December 20, 2024, the Company leased office space for a term of
The table below presents certain information related to the Company’s lease costs, which are included in general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Operating lease expense | $ | - | $ | $ | $ | |||||||||||
| Short-term lease expense | ||||||||||||||||
| Total lease cost | $ | $ | $ | $ | ||||||||||||
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ROCKET ONE INC. AND SUBSIDIARIES
(FORMERLY HOTH THERAPEUTICS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
ROU asset for operating leases was recorded in the accompanying unaudited condensed consolidated balance sheets as follows:
| June 30, 2026 | December 31, 2025 | |||||||
| Office lease ROU asset | $ | - | $ | |||||
| Less accumulated amortization | - | ( | ) | |||||
| Total ROU asset, net | $ | - | $ | |||||
Operating lease liability for operating leases was recorded in the accompanying unaudited condensed consolidated balance sheets as follows:
| June 30, 2026 | December 31, 2025 | |||||||
| Current portion of operating lease liability | $ | — | $ | |||||
| Long-term portion of operating lease liability | — | — | ||||||
| Total operating lease liability | $ | — | $ | |||||
Supplemental cash flow information related to the Company’s leases for the six months ended June 30, 2026 was as follows:
| Cash paid for amounts included in the measurement of lease liabilities: | ||||
| Operating cash flows for operating leases | $ | |||
NOTE 9 – Segment Reporting
Through March 31, 2026, the Company operated as a single operating segment as a clinical-stage biopharmaceutical company focused on developing new generation therapies for unmet medical needs. During the three months ended June 30, 2026, the Company began the process of transitioning primarily into an AI semiconductor infrastructure company building nanomagnetic and spintronic computing for ultra-low-power AI, resilient edge, defense, and space. Accordingly, beginning in the second quarter of 2026, the Company began operating in two reportable segments which consist of (1) a clinical-stage biopharmaceutical company, herein known as the “Biopharmaceutical” segment, and (2) an AI semiconductor infrastructure and other technologies company, herein known as the “AI Infrastructure and Technologies” segment. The Company has determined that these reportable segments are strategic business units that offer different products. These reportable segments shall be managed separately based on the fundamental differences in their operations.
Through June 30, 2026, corporate and administrative amounts have been allocated to the Biopharmaceutical segment since substantially all of the Company’s operations are attributable to this segment.
The Company’s
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ROCKET ONE INC. AND SUBSIDIARIES
(FORMERLY HOTH THERAPEUTICS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
Information with respect to these reportable business segments for the three and six months ended June 30, 2026 and 2025 was as follows:
Three Months Ended June 30, 2026
| Biopharmaceutical segment | AI Infrastructure and Technologies segment | Consolidated | ||||||||||
| Net revenues | $ | - | $ | - | $ | - | ||||||
| Operating expenses | ||||||||||||
| Depreciation and amortization | - | - | - | |||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ||||||
| Interest expense | - | - | - | |||||||||
| Other income | - | |||||||||||
| Loss before provision for income taxes | ( | ) | ( | ) | ( | ) | ||||||
| Provision for income taxes | - | - | - | |||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Three Months Ended June 30, 2025
| Biopharmaceutical segment | AI Infrastructure and Technologies segment | Consolidated | ||||||||||
| Net revenues | $ | - | $ | - | $ | - | ||||||
| Operating expenses | - | |||||||||||
| Depreciation and amortization | - | - | - | |||||||||
| Loss from operations | ( | ) | - | ( | ) | |||||||
| Interest expense | - | - | - | |||||||||
| Other income | - | |||||||||||
| Loss before provision for income taxes | ( | ) | - | ( | ) | |||||||
| Provision for income taxes | - | - | - | |||||||||
| Net loss | $ | ( | ) | $ | - | $ | ( | ) | ||||
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ROCKET ONE INC. AND SUBSIDIARIES
(FORMERLY HOTH THERAPEUTICS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
Six Months Ended June 30, 2026
| Biopharmaceutical segment | AI Infrastructure and Technologies segment | Consolidated | ||||||||||
| Net revenues | $ | - | $ | - | $ | - | ||||||
| Operating expenses | ||||||||||||
| Depreciation and amortization | - | - | - | |||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ||||||
| Interest expense | - | - | - | |||||||||
| Realized loss on crypto assets | ( | ) | - | ( | ) | |||||||
| Other income | - | |||||||||||
| Loss before provision for income taxes | ( | ) | ( | ) | ( | ) | ||||||
| Provision for income taxes | - | - | - | |||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Six Months Ended June 30, 2025
| Biopharmaceutical segment | AI Infrastructure and Technologies segment | Consolidated | ||||||||||
| Net revenues | $ | - | $ | - | $ | - | ||||||
| Operating expenses | - | |||||||||||
| Depreciation and amortization | - | - | - | |||||||||
| Loss from operations | ( | ) | - | ( | ) | |||||||
| Interest expense | - | - | - | |||||||||
| Other income | - | |||||||||||
| Loss before provision for income taxes | ( | ) | - | ( | ) | |||||||
| Provision for income taxes | - | - | - | |||||||||
| Net loss | $ | ( | ) | $ | - | $ | ( | ) | ||||
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ROCKET ONE INC. AND SUBSIDIARIES
(FORMERLY HOTH THERAPEUTICS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
Total assets by segment on June 30, 2026 and December 31, 2025 were as follows:
| June 30, 2026 | December 31, 2025 | |||||||
| Biopharmaceutical segment | $ | $ | ||||||
| AI Infrastructure and Technologies segment | - | - | ||||||
| $ | $ | |||||||
NOTE 10 – Subsequent Events
The Company has evaluated subsequent events and transactions that occurred up to the date the unaudited condensed consolidated financial statements were issued. Based upon this review, except for as noted below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed consolidated financial statements.
From July 1 to August 13, 2026, pursuant to the ATM Agreement, the Company issued an aggregate of
On July 14, 2026, the Company entered into a Simple Agreement for Future Equity (“SAFE”) with Placeve Inc., a Delaware company (“Placeve”). In connection with the SAFE, the Company made an initial investment of $
On July 28, 2026 the Company entered into a License Agreement with the National Aeronautics and Space Administration (“NASA”).
On July 31, 2026, the Company filed a prospectus supplement to update the total offering available under the ATM Agreement such that the current offering amount is $
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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 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, 2025 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.
In May 2026, we announced a strategic repositioning pursuant to which we are now pursuing opportunities in artificial intelligence (“AI”) infrastructure, next-generation semiconductor technologies, and ultra-low-power AI computing. Specifically, we are an AI semiconductor infrastructure company building nanomagnetic and spintronic computing for ultra-low-power AI, resilient edge, defense, and space. We are also focused on developing (i) a nanomagnetic matrix multiplier; (ii) Skyrmion Spintronic memory; and (iii) Swarm Stage AI. Additionally, we also continue to have preclinical and clinical assets that will developed under our wholly owned subsidiary, Hoth Therapeutics LLC, for (i) a topical formulation for treating side effects from drugs used for the treatment of cancer (HT-001); (ii) a treatment for mast-cell derived cancers and anaphylaxis (HT-KIT); (iii) a treatment for obesity, and obesity-related diseases and conditions (HT-VA); and (iv) a treatment for Alzheimer’s Disease (HT-ALZ).
Results of Operations
Comparison of Our Results of Operations for the Three Months Ended June 30, 2026 and 2025
Operating Costs and Expenses
Research and Development Expenses
For the three months ended June 30, 2026, research and development expenses were approximately $1,955,000. Specifically, during the three months ended June 30, 2026, our research and development costs consisted primarily of the following costs for each of our key research and development projects: (i) HT-001, approximately $1,634,000 related to manufacturing and clinical activities; and (ii) HT-VA approximately $35,000 related to preclinical studies. In addition to the foregoing, we also incurred fees of approximately $29,000 payable to members of our scientific advisory board for services, $47,000 in licensing fees, and $210,000 of in-process research and development expenses in connection with the acquisition of software and other technologies.
For the three months ended June 30, 2025, research and development expenses were approximately $1,040,000. Specifically, during the three months ended June 30, 2025, our research and development costs consisted primarily of the following costs for each of our key research and development projects: (i) HT-001, approximately $652,000 related to manufacturing and clinical activities; and (ii) HT-KIT, approximately $351,000 related to manufacturing and preclinical activities. In addition to the foregoing, we also incurred fees of approximately $31,000 payable to members of our scientific advisory board for services.
We expect our research and development activities to continue to increase as we develop our existing product candidates and potentially acquire new product candidates, reflecting increasing costs associated with the following:
| ● | employee-related expenses, which include salaries and benefits, and rent expenses; |
| ● | fees related to in-licensed products and technology; |
| ● | expenses incurred under agreements with CROs, investigative sites and consultants that conduct our clinical trials and a substantial portion of our technology and development activities; |
| ● | the cost of acquiring and manufacturing materials; and |
| ● | costs associated with development activities and regulatory approvals. |
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General and Administrative Expenses
For the three months ended June 30, 2026, general and administrative expenses amounted to approximately $1,879,000 as compared to $1,160,000 for the three months ended June 30, 2025, an increase of $719,000, or 62.0%. For the three months ended June 30, 2026 and 2025, general and administrative expenses consisted of the following (rounded to the nearest $1,000):
| Three Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Compensation and related expenses | $ | 1,026,000 | $ | 358,000 | ||||
| Professional and consulting expenses | 700,000 | 581,000 | ||||||
| Rent expense | 6,000 | 13,000 | ||||||
| Other general and administrative expenses | 147,000 | 208,000 | ||||||
| Total | $ | 1,879,000 | $ | 1,160,000 | ||||
During the three months ended June 30, 2026, the increase in general and administrative expenses of approximately $719,000 was primarily attributed to an increase in compensation and related expenses of $668,000 primarily attributable to an increase in stock-based compensation of approximately $625,000 in connection with the issuance of stock options during the three months ended June 30, 2026 as compared to none during the three months ended June 30, 2025, as well as an increase in other compensation and related expenses of $43,000 and an increase in professional and consulting expenses of approximately $119,000 which was primarily attributable to an increase in legal and consulting fees of approximately $51,000, an increase in accounting fees of approximately $45,000, and an increase in directors’ fees of approximately $27,000 offset by a decrease in rent expense of $7,000 and a decrease in other general and administrative expenses of $61,000, primarily attributable to a decrease in travel expense.
We anticipate that our general and administrative expenses will continue to increase in future periods, reflecting continued and increasing costs associated with:
| ● | support for our research and development activities; |
| ● | stock compensation granted to key employees and non-employees; |
| ● | support of business development activities; and |
| ● | increased professional fees and other costs associated with regulatory requirements that we are subject to. |
Other Income
For the three months ended June 30, 2026 and 2025, other income was approximately $149 and $173, respectively, which resulted from interest income.
Net Loss
For the three months ended June 30, 2026 and 2025, we incurred a net loss of approximately $3,835,000, or $0.19 per common share (basic and diluted), and $2,199,000, or $0.17 per common share (basic and diluted), respectively.
Comparison of Our Results of Operations for the Six Months Ended June 30, 2026 and 2025
Operating Costs and Expenses
Research and Development Expenses
For the six months ended June 30, 2026, research and development expenses were approximately $3,474,000. Specifically, during the six months ended June 30, 2026, our research and development costs consisted primarily of the following costs for each of our key research and development projects: (i) HT-001, approximately $3,065,000 related to manufacturing and clinical activities; (ii) HT-KIT, approximately $12,000 related to manufacturing and preclinical activities; and (iii) HT-VA approximately $80,000 related to preclinical studies. In addition to the foregoing, we also incurred fees of approximately $60,000 payable to members of our scientific advisory board for services, $47,000 in licensing fees, and $210,000 of in-process research and development expenses in connection with the acquisition of software and other technologies.
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For the six months ended June 30, 2025, research and development expenses were approximately $2,998,000. Specifically, during the six months ended June 30, 2025, our research and development costs consisted primarily of the following costs for each of our key research and development projects: (i) HT-001, approximately $1,110,000 related to manufacturing and clinical activities; (ii) HT-KIT, approximately $549,000 related to manufacturing and preclinical activities; and (iii) HT-ALZ, approximately $12,000 related to preclinical studies. In addition to the foregoing, we also incurred fees of approximately $69,000 payable to members of our scientific advisory board for services and recorded approximately $1,258,000 of in-process research and development expenses in connection with the acquisition of patent applications.
We expect our research and development activities to continue to increase as we develop our existing product candidates and potentially acquire new product candidates, reflecting increasing costs associated with the following:
| ● | employee-related expenses, which include salaries and benefits, and rent expenses; |
| ● | fees related to in-licensed products and technology; |
| ● | expenses incurred under agreements with CROs, investigative sites and consultants that conduct our clinical trials and a substantial portion of our technology and development activities; |
| ● | the cost of acquiring and manufacturing materials; and |
| ● | costs associated with development activities and regulatory approvals. |
General and Administrative Expenses
For the six months ended June 30, 2026, general and administrative expenses amounted to approximately $3,009,000 as compared to $2,677,000 for the six months ended June 30, 2025, an increase of $332,000, or 12.4%. For the six months ended June 30, 2026 and 2025, general and administrative expenses consisted of the following (rounded to the nearest $1,000):
| Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Compensation and related expenses | $ | 1,420,000 | $ | 1,008,000 | ||||
| Professional and consulting expenses | 1,252,000 | 1,252,000 | ||||||
| Rent expense | 17,000 | 26,000 | ||||||
| Other general and administrative expenses | 320,000 | 391,000 | ||||||
| Total | $ | 3,009,000 | $ | 2,677,000 | ||||
During the six months ended June 30, 2026, the increase in general and administrative expenses of approximately $332,000 was primarily attributed to an increase in compensation and related expenses of $412,000 primarily attributable to an increase in stock-based compensation of approximately $406,000 in connection with the issuance of stock options during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, and an increase in other compensation and related expenses of $6,000, offset by a decrease in rent expense of $9,000, and a decrease in other general and administrative expenses of $71,000, primarily attributable to a decrease in travel expense.
We anticipate that our general and administrative expenses will continue to increase in future periods, reflecting continued and increasing costs associated with:
| ● | support for our research and development activities; |
| ● | stock compensation granted to key employees and non-employees; |
| ● | support of business development activities; and |
| ● | increased professional fees and other costs associated with regulatory requirements that we are subject to. |
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Other Income (Expenses), net
For the six months ended June 30, 2026, other expense, net was approximately $44,000, which resulted from the recording of a realized loss of crypto assets of $44,000.
For the six months ended June 30, 2025, other income, net was $354, which resulted from $354 of interest income.
Net Loss
For the six months ended June 30, 2026 and 2025, we incurred a net loss of approximately $6,527,000, or $0.36 per common share (basic and diluted), and $5,675,000, or $0.44 per common share (basic and diluted), respectively.
Liquidity and Capital Resources
Our unaudited condensed consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Our ability to continue as a going concern is dependent on our ability to raise additional capital to fund our research and development (“R&D”) activities and meet our obligations on a timely basis. To date we have funded our operations primarily through the sale of equity and debt securities. As of June 30, 2026, we had approximately $7,892,000 in cash and cash equivalents, working capital of approximately $7,197,000 and an accumulated deficit of approximately $79,406,000. Net cash used in operating activities was $6,019,000 and $5,161,000 for the six months ended June 30, 2026 and 2025, respectively. We incurred net losses of approximately $6,527,000 and $5,675,000 for the six months ended June 30, 2026 and 2025, respectively. We have incurred substantial operating losses since inception and expect to continue to incur significant operating losses for the foreseeable future as we continue to execute our longer-term business plans and development. We have not yet commercialized any products and have never generated any revenue from product sales. We believe that our existing cash as of June 30, 2026 will enable us to fund our operating expenses and capital expenditure requirements for at least 12 months from the date that our unaudited condensed consolidated financial statements are available to be issued.
On November 8, 2024, we entered into an At The Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”) under which we could offer and sell shares of our common stock through Wainwright. We have agreed to pay Wainwright a commission equal to 3.0% of the aggregate gross proceeds from the sales of shares of our stock sold through Wainwright under the ATM Agreement and will also reimburse Wainwright for certain specified expenses in connection with the ATM Agreement. The aggregate market value of the shares of common stock eligible for sale is currently $5,257,000. From November 8, 2024 through August 13, 2026, the Company sold 9,825,684 shares of common stock through the ATM Agreement which resulted in approximately $13.56 million in gross proceeds. During the three and six months ended June 30, 2026, we sold an aggregate of 3,436,991 and 4,193,178 shares of common stock for net proceeds of $5,145,579 and $5,847,063, respectively. Furthermore, from July 1 to August 13, 2026, pursuant to the ATM Agreement, we issued an aggregate of 1,712,947 shares of common stock for net proceeds of $1,938,593.
On April 1, 2026, we entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional investors, pursuant to which we agreed to sell to such investors 2,857,144 shares of common stock at a purchase price of $0.70 per share. For each share of common stock purchased by the investors, in a private placement pursuant to the Purchase Agreement, we concurrently issued to such investors an unregistered warrant (each a “April Warrant” and, collectively, the “April Warrants”) to purchase one share of common stock at an exercise price of $0.85 per share. The April Warrants are exercisable six months from the date of issuance (the “Initial Exercise Date”) for a period of five years from the Initial Exercise Date. We received gross proceeds of approximately $2,000,000, and net proceeds of approximately $1,611,880, after deducting placement agent’s fees and other offering expenses paid by us of $388,121. Additionally, in connection with the offering, we issued placement agent warrants to the designees of the placement agent, Wainwright, to purchase up to 142,857 shares of common stock (the “April Placement Agent Warrants”). The April Placement Agent Warrants are immediately exercisable at an exercise price of $0.875 per share and expire on April 1, 2031.
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We have entered into certain license, sublicense, sponsored research and option agreements with third parties. Pursuant to such agreements, we may be required to make certain: (i) license maintenance fee payments; (ii) out-of-pocket expense payments, including, but not limited to, payments related to intellectual property and research related expenses; (iii) development and commercialization expense payments; (iv) annual and quarterly minimum payments; (v) diligence expense payments; and (vi) revenue interest payments. In addition, subject to the achievement of certain development and/or commercialization events, we may also be required to make certain: (i) minimum royalty payments, ranging from middle to high five figures, (ii) sales-based royalties and running royalties, ranging from low single digits to low double digits; and (iii) milestone payments, of up to approximately $29 million (if all milestones in all of our current agreements are achieved).
Additional funding will be necessary to fund our future business and development activities. We may obtain additional financing through sales of our equity and debt securities or entering into strategic partnership arrangements, or a combination of the foregoing. There are no assurances that we will be successful in obtaining an adequate level of financing as and when needed to finance our operations on terms acceptable to us or at all, particularly in light of the economic downturn. If we are unable to secure adequate additional funding as and when needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our product candidates.
Cash Flows from Operating Activities
For the six months ended June 30, 2026, net cash used in operating activities was approximately $6,019,000, which primarily resulted from a net loss of approximately $6,527,000, an increase in prepaid expenses and other current assets of approximately $149,000, a decrease in accounts payable and accrued expenses of approximately $64,000, offset by approximately $44,000 of realized loss on crypto assets and $677,000 in stock-based compensation and professional fees.
.
For the six months ended June 30, 2025, net cash used in operating activities was approximately $5,161,000, which primarily resulted from a net loss of approximately $5,675,000, an increase in prepaid expenses and other current assets of approximately $155,000 and a decrease in accounts payable and accrued expenses of approximately $460,000, offset by approximately $851,000 of non-cash research and development-acquired patent, and $275,000 in stock-based compensation and professional fees.
Cash Flows from Investing Activities
During the six months ended June 30, 2026, the Company received proceeds of approximately $147,000 from the sale of crypto assets.
The Company did not have any cash flows from investing activities for the six months ended June 30, 2025.
Cash Flows from Financing Activities
For the six months ended June 30, 2026, net cash provided by financing activities was approximately $7,516,000, which resulted from net proceeds from the issuance of common stock of approximately $5,847,000 and from net proceeds from the issuance of common stock and warrants of approximately $1,669,000.
For the six months ended June 30, 2025, net cash provided by financing activities was approximately $7,133,000, which primarily resulted from net proceeds from the issuance of common stock of approximately $1,508,000 and proceeds from the exercise of warrants of $5,625,000.
Our ultimate success is dependent on our ability to obtain additional financing and generate sufficient cash flow to meet our obligations on a timely basis. We will require significant amounts of capital to sustain operations, and we will need to make the investments we need to execute our longer-term business plan to support new technologies and help advance innovation. Absent generation of sufficient revenue from the execution of our long-term business plan, we will need to obtain debt or equity financing, especially if we experience downturns in our business that are more severe or longer than anticipated, or if we experience significant increases in expense levels resulting from being a publicly traded company or from operations. Such additional debt or equity financing may not be available to us on favorable terms, if at all.
We plan to pursue our plans with respect to the research and development of our technology products, as well as our pre-clinical products, which will require resources beyond those that we currently have, ultimately requiring additional capital from third-party sources. We currently do not expect to generate any revenue.
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Critical Accounting Estimates
The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and related disclosures in the financial statements. Management considers an accounting estimate to be critical if:
| ● | it requires assumptions to be made that were uncertain at the time the estimate was made; and |
| ● | changes in the estimate or different estimates that could have been selected could have a material impact on our results of operations or financial condition. |
While we base our estimates and judgments on our experience and on various other factors that we believe to be reasonable under the circumstances, actual results could differ from those estimates and the differences could be material.
See Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for an additional discussion of our significant accounting policies.
Stock-based compensation
The Company accounts for stock-based payment awards exchanged for services at the estimated grant date fair value of the award. Stock options issued under the Company’s long-term incentive plans are granted with an exercise price equal to no less than the market price of the Company’s stock at the date of grant and expire up to ten years from the date of grant. Options are generally issued fully vested. The Company accounts for forfeited awards as they occur.
The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.
Expected Term - The expected term of options represents the period that the Company’s stock-based awards are expected to be outstanding based on the simplified method, which is the half-life from vesting to the end of its contractual term.
Expected Volatility - The Company computes stock price volatility over expected terms based on its historical common stock trading prices.
Risk-Free Interest Rate - The Company bases the risk-free interest rate on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term.
Expected Dividend - The Company has never declared or paid any cash dividends on its common shares and does not plan to pay cash dividends in the foreseeable future, and, therefore, uses an expected dividend yield of zero in its valuation models.
The Company grants restricted stock awards under its equity incentive plan. Restricted stock awards are granted to employees and non-employees. The restricted stock awards are measured based on the grant-date fair value. In general, the restricted stock awards vest over a service period of zero to three years. Stock-based compensation expense is generally recognized based on the straight-line basis over the requisite service period and forfeitures are accounted for as they occur.
The Company has issued warrants to non-employees. The warrants are measured based on the grant-date fair value. In general, the warrants vest over a term of zero to ten years. Stock-based compensation expense is generally recognized based on the straight-line basis over the vesting term.
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Recently Issued Accounting Standards Not Yet Effective or Adopted
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires entities to provide more detailed disaggregation of expenses in the income statement, focusing on the nature of the expenses rather than their function. The new disclosures will require entities to separately present expenses for significant line items, including, but not limited to, depreciation, amortization, and employee compensation. Entities will also be required to provide a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, disclose the total amount of selling expenses and, in annual reporting periods, provide a definition of what constitutes selling expenses. This pronouncement is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270), Narrow-Scope Improvements, to provide clarity about the current requirements, rather than evaluate whether to expand or reduce interim disclosure requirements. The amendments in ASU 2025-11 result in a comprehensive list of interim disclosures that are required by GAAP. The amendments in ASU 2025-11 also include a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The amendments in ASU 2025-11 are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027 and early adoption is permitted. The amendments in ASU 2025-11 can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the disclosure impact that ASU 2025-11 may have on its financial statement presentation and disclosures.
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.
ITEM 4. CONTROLS AND PROCEDURES
As required by Rule 13a-15(b) of the Exchange Act, our management, with the participation of our principal executive officer and principal financial officer, has evaluated as of the end of the period covered by this report, the effectiveness of our disclosure controls and procedures. 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. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2026, our disclosure controls and procedures were effective to reasonably ensure that information required to be disclosed and filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified, and that management will be timely alerted to material information required to be included in our periodic reports filed with the SEC.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may be subject to litigation and claims arising in the ordinary course of business. We are not currently a party to any material legal proceedings and we are not aware of any pending or threatened legal proceeding against us that we believe could have a material adverse effect on our business, operating results, cash flows or financial condition.
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, 2025 as filed with the SEC on March 27, 2026 (“Annual Report”), as subsequently updated, amended or superseded by our other filings made with the SEC. Except as otherwise set forth herein, there have been no material changes in our risk factors from those previously disclosed in our Annual Report and other filings made with the SEC. You should carefully consider the risks in our filings with the SEC which could materially affect our business, financial condition or future results. The risks in our SEC filings 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.
Risks Related to the Company
Our technologies are based on early-stage technologies that have not been demonstrated at commercial scale, and if we are unable to advance these technologies beyond their current developmental stage, our business, financial condition, and prospects could be materially adversely affected.
Our three core platforms — the nanomagnetic matrix multiplier, skyrmion-mediated spintronic memory, and Swarm Stage AI — are at early stages of development. We license our intellectual property Virginia Commonwealth University and our technologies have only been validated in laboratory or simulation environments, not in commercial products. Our development path depends on advancing device simulation, chip architecture modeling, and experimental device characterization through sponsored university research, and we currently lack our own manufacturing capabilities. There can be no assurance that these technologies, which operate on potentially novel principles, can be successfully translated into commercially viable, manufacturable products Even if these technologies are commercially viable, there is no guarantee that they will achieve market acceptance.. If we are unable to advance these technologies beyond their current developmental stage, our business, financial condition, and prospects could be materially adversely affected.
Many of our initiatives, including those to develop our nanomagnetic matrix multiplier, skyrmion-mediated spintronic memory, and Swarm Stage AI, may involve significant technical complexity, unproven technologies, or technologies that do not exist or may require significant advancement, and such initiatives may not achieve commercial viability.
Our initiatives to develop our nanomagnetic matrix multiplier, skyrmion-mediated spintronic memory, and Swarm Stage AI are in developmental stages of conception, design and development and have not yet been proven at commercial scale, or at all, and may ultimately be unsuccessful. In particular, the timeline for these initiatives, may be difficult or impossible to determine. These efforts require substantial and ongoing investments of financial, technical, and human resources over extended time horizons, including, but not limited to, research and development, testing, infrastructure, regulatory approvals, and mission execution. The technologies, systems, and operational capabilities required for each of these initiatives involve significant technical complexity and are subject to design, engineering, and performance risks, many of which may only become apparent as development and testing progress. Many of these technologies, systems and operational capabilities are novel and untested, and we expect to incur significant capital expenditures before our products and services and other strategic initiatives become profitable, which may never occur. We may be required to devote financial, technical, human or other resources in excess of our current expectations, and there can be no assurance that these investments will generate adequate revenue, which could adversely affect our business, financial condition, results of operations, and future prospects.
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Our products are dependent on the market for commercial satellite manufacturing, launch and data services for satellites which is not well established, is still emerging and may not achieve the growth potential we expect or may grow more slowly than expected.
The market for in-space infrastructure services, in particular commercial satellite manufacturing, launch and data services for small satellites, has not been well established and is still emerging. Sales of our future products and technology will be dependent on this market. Our estimates for the total addressable market are based on several internal and third-party estimates and while we believe our assumptions and the data underlying our estimates are reasonable, these assumptions and estimates may not be correct and the conditions supporting our assumptions or estimates may change at any time, thereby reducing the accuracy of these underlying factors. As a result, our estimates of the total addressable market for our future products and services, as well as the expected growth rate for the total addressable market for our future products and services, may prove to be incorrect.
Any delays in the development and manufacture of satellites and related technology may adversely impact our business, financial condition and results of operations.
We may, in the future, experience delays or other complications in the design, manufacture, launch, production, delivery and servicing ramp of satellites and related technology. Our ability to sell our products and generate revenue may be impacted by delays in the manufacturing of satellites and related technology. If delays like this arise or recur, we could experience issues in sustaining sales of our products which could result in adverse publicity and damage to our brand and reputation, all of which could have a material adverse effect on our business and results of operations.
Developing AI can be capital intensive and we operate in a nascent and rapidly evolving market in which the potential of AI remains uncertain.
AI is a nascent and rapidly evolving technology, and although we believe AI holds significant promise for consumers and enterprises, its long-term impact will depend on the degree to which AI products and services prove to be broadly useful in real-world applications. There can be no assurance that demand for AI solutions will develop or be sustained at the levels we anticipate, or at all. While industry interest in AI has grown substantially, the commercial value proposition of AI models remains largely unproven, and long-term market acceptance of the use of AI in our products and services is uncertain. Developing, training, and providing inference for AI models requires substantial and growing capital expenditures, including investments in specialized computing hardware, data center infrastructure, energy procurement, and technical personnel, and we expect these costs to continue to increase for the foreseeable future. Furthermore, the continued improvement of AI model capabilities has historically depended in part on scaling laws, the empirical observation that model performance improves with increased compute, data, and model size, but there is uncertainty as to how long these scaling relationships will continue to hold. As a result of these factors, the use of AI in our products may not achieve the growth or returns we expect.
The semiconductor industry is highly cyclical and has experienced severe downturns that have materially adversely affected, and may continue to materially adversely affect, our business in the future.
The semiconductor industry is highly cyclical and has experienced significant downturns, often alongside constant and rapid technological change, wide fluctuations in supply and demand, continuous new product introductions, price erosion and declines in general economic conditions. The growth of AI is further creating pressure on the semiconductor industry to timely design, manufacture and deliver semiconductor products and solutions to meet customer demand for computing power and AI infrastructure. Furthermore, global economic uncertainty and weakness have in the past impacted the semiconductor market as consumers and businesses have deferred purchases, which may negatively impact demand for our products. Our financial performance may in the future be negatively affected by these downturns.
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Our products may be subject to security vulnerabilities that could have a material adverse effect on us.
The products that we intend to sell will be complex and may be subject to security vulnerabilities that could result in, among other things, the loss, corruption, theft or misuse of confidential data or system performance issues. Our efforts to prevent and address security vulnerabilities may decrease performance, be only partially effective or not successful at all. We may depend on vendors to create mitigations to their technology that we incorporate into our products and they may delay or decline to make such mitigations. We may also depend on third parties, such as customers and end-users, to deploy our mitigations alone or as part of their own mitigations, and they may delay, decline or modify the implementation of such mitigations. Our relationships with our customers could be adversely affected as some of our customers may stop purchasing our products, reduce or delay future purchases of our products, or use competing products. Any of these actions by our customers could adversely affect our revenue. In addition, we may be subject to claims and litigation related to security vulnerabilities. Actual or perceived security vulnerabilities of our products may subject us to adverse publicity, damage to our brand and reputation, and could materially harm our business or results of operations.
If essential equipment, materials, or manufacturing processes are not available to manufacture our products, we could be materially adversely affected.
We may purchase equipment and materials for manufacturing use and our operations depend upon obtaining deliveries of adequate supplies of equipment and materials of acceptable quality on a timely basis. In addition, if our products increase in technical complexity, we may rely on third-party suppliers to update their processes to meet our back-end manufacturing needs. There is currently an industry-wide memory shortage as the demand for such components has outpaced supply. The price of memory has also increased as a result of the shortage. If we are unable to procure a stable supply of memory, equipment or materials of acceptable quality on an ongoing basis and at reasonable costs to meet our production requirements, we could experience a shortage in memory, equipment materials or supply or an increase in production costs, which could have a material adverse effect on our business. Because some of the equipment and materials that we may purchase may be complex, it may be difficult to substitute one equipment or materials supplier for another.
From time to time, suppliers may extend lead times, limit supply or increase prices due to capacity constraints or other factors. Also, some of these materials and components may be subject to rapid changes in price, quality and availability. Interruption of supply or increased demand in the industry could cause shortages and price increases in various essential materials. If we are unable to procure certain of these materials for our back-end manufacturing operations, or our third-party manufacturers are unable to procure materials for manufacturing our products, our business would be materially adversely affected.
Risk Relating to Government Regulations
Our business is subject to a wide variety of extensive and evolving government laws and regulations. Failure to comply with such laws and regulations could have a material adverse effect on our business.
We are subject to a wide variety of laws and regulations relating to various aspects of our business, including with respect to export controls, defense procurement and contracting, intellectual property, semiconductor development and manufacturing, employment and labor, tax, privacy and data security, health and safety, and environmental issues. Laws and regulations at the foreign, federal, state, and local levels frequently change, especially in relation to new and emerging industries such as artificial intelligence, and we cannot always reasonably predict the impact from, or the ultimate cost of compliance with, current or future regulatory or administrative changes. We monitor these developments and intend to devote a significant amount of management’s time and external resources towards compliance with these laws, regulations and guidelines, and anticipate that such compliance will place a significant burden on management’s time and other resources, and it may limit our ability to expand into certain jurisdictions. Moreover, changes in law, the imposition of new or additional regulations or the enactment of any new or more stringent legislation that impacts our business could require us to change the way we operate and could have a material adverse effect on our sales, profitability, cash flows and financial condition.
Failure to comply with these laws, such as with respect to obtaining and maintaining licenses, certificates, authorizations and permits critical for the operation of our business, may result in civil penalties or private lawsuits, or the suspension or revocation of licenses, certificates, authorizations or permits, which would prevent us from operating our business. For example, deploying space assets such as satellites in the United States require licenses and permits from certain agencies of the Department of Transportation, including the Federal Aviation Administration and review by other agencies of the U.S. Government, including the National Oceanic and Atmospheric Administration, the Department of Defense, Department of State, NASA, Federal Communications Commission and the International Telecommunications Union. License approval includes an interagency review of safety, operational, national security, and foreign policy and international obligations implications, as well as a review of foreign ownership. Delays in licensing and approvals allowing us to deploy our commercial satellites could adversely affect our ability to operate our business and our financial results.
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Moreover, regulation of our industry is still evolving, and new or different laws or regulations could affect our operations, increase direct compliance costs for us or cause any third-party suppliers or contractors to raise the prices they charge us because of increased compliance costs. Application of these laws to our business may negatively impact our performance in various ways, limiting the collaborations we may pursue, further regulating the export and re-export of our products, services, and technology from the United States and abroad, and increasing our costs and the time necessary to obtain required authorization. The adoption of a multi-layered regulatory approach to any one of the laws or regulations to which we are or may become subject, particularly where the layers are in conflict, could require alteration of our manufacturing processes or operational parameters which may adversely impact our business. We may not be in complete compliance with all such requirements at all times and, even when we believe we are in complete compliance, a regulatory agency may determine that we are not.
Issues related to the responsible use of AI may result in reputational, competitive and financial harm and liability.
We intend to offer products that include capabilities to support AI deployment. As with many new emerging technologies, AI presents risks and challenges and increasing legal, social and ethical concerns relating to its responsible use that could affect the adoption of AI, and thus our business. Third-party misuse of AI applications, models, or solutions, or ineffective or inadequate AI development or deployment practices by us or our customers, could cause harm to individuals or society and impair the public’s acceptance of AI. Moreover, we may be subject to competitive harm, regulatory action and legal liability as a result of new and proposed legislation regulating AI, as well as new applications of existing data protection, privacy and intellectual property and other laws. Such regulations and changes thereto could cause us to incur greater compliance costs, could impact our ability to sell or the ability of our customers and users worldwide to acquire, deploy and use systems that include our AI-related products and services and reduce the number of customers, which could negatively impact our business and financial results. As there continues to be an increasing focus on risks related to AI technologies, there may be an increasing focus on regulatory restrictions that target products and services that enable or facilitate AI and that may negatively impact some of our AI-related products and services. If the AI-related products that we offer have unintended consequences, infringe intellectual property rights or rights of publicity, or are misused by our customers or are otherwise controversial due to their perceived or actual impact on human rights, privacy, cybersecurity, employment or other social, economic or political issues the public’s acceptance of AI may be impaired and this may also result in reputational, competitive and financial harm and liability to our business.
Risks Related to Our Intellectual Property Rights
If we fail to adequately protect our proprietary intellectual property rights, including our rights under our exclusive license agreements, our competitive position could be impaired and we may lose valuable assets and incur costly litigation to protect our rights.
Our success depends, in part, on our ability to protect our proprietary intellectual property rights, including our exclusive licenses from Virginia Commonwealth University. To date, we have relied primarily on our exclusive license agreements and other intellectual property laws to protect our intellectual property and intend to continue to rely on these and other means, including patent protection, in the future. However, the steps we take to protect our intellectual property may be inadequate, and we may choose not to pursue or maintain protection for our intellectual property in the United States or foreign jurisdictions. We will not be able to protect our intellectual property if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property. Despite our precautions, it may be possible for unauthorized third parties to copy our technology and use information that we regard as proprietary to create technology that competes with ours.
Further, the laws of some countries do not protect proprietary rights to the same extent as the laws of the United States, and mechanisms for enforcement of intellectual property rights in some foreign countries may be inadequate. To the extent we expand our international activities, our exposure to unauthorized copying and use of our technologies and proprietary information may increase. Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon, misappropriating or otherwise violating our technology and intellectual property.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On May 14, 2026, we issued 500,000 shares of our common stock for business development and consulting services rendered and to be rendered.
On June 10, 2026, we issued 60,000 shares of our common stock for business development and consulting services rendered and to be rendered.
The shares were not registered under the Securities Act or the securities laws of any state and were issued in reliance on the exemption from registration under the Securities Act, afforded by Section 4(a)(2) thereof.
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 5. OTHER INFORMATION
Rule 10b5-1 Trading Plans
During the fiscal quarter ended June 30, 2026, none of the Company’s directors or executive officers
ITEM 6. EXHIBITS
| Exhibit No. | Description | |
| 3.1 | Certificate of Amendment to Articles of Incorporation dated May 20, 2026 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 27, 2026) | |
| 4.1 | Form of Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 2, 2026) | |
| 4.2 | Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the SEC on April 2, 2026) | |
| 10.1 | Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 2, 2026) | |
| 10.2# | Exclusive License Agreement between the Company and Virginia Commonwealth University Intellectual Property Foundation dated May 15, 2026 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 21, 2026) | |
| 10.3# | Exclusive License Agreement between the Company and Virginia Commonwealth University Intellectual Property Foundation dated May 15, 2026 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on May 21, 2026) | |
| 31.1* | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2* | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1** | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2** | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS* | Inline XBRL Instance Document | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104* | Cover Page Interactive Data File - the cover page from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 is formatted in Inline XBRL |
| * | Filed herewith. |
| ** | Furnished herewith. |
| # | Pursuant to Item 601(b)(10) of Regulation S-K, certain confidential portions of this exhibit were omitted by means of marking such portions with an asterisk because the identified confidential portions (i) are not material and (ii) is the type that the Company treats as private or confidential |
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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.
| ROCKET ONE INC. | ||
| Date: August 14, 2026 | By: | /s/ Robb Knie |
| Robb Knie, | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: August 14, 2026 | By: | /s/ David Briones |
| David Briones, | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) | ||
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