Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (the "Quarterly Report") contains forward-looking statements. These forward-looking statements include statements about our expectations, beliefs or intentions regarding our product development efforts, business, financial condition, results of operations, strategies and prospects. All statements other than statements of historical fact included in this Quarterly Report, including statements regarding our future activities, events or developments, including such things as future revenues, capital raising and financing, product development, clinical trials, regulatory approval, market acceptance, responses from competitors, capital expenditures (including the amount and nature thereof), business strategy and measures to implement strategy, competitive strengths, goals, expansion and growth of our business and operations, plans, references to future success, projected performance and trends, and other such matters, are forward-looking statements. The words "believe," "expect," "anticipate," "intend," "estimate," "plan," "may," "will," "could," "would," "should" and other similar words and phrases, are intended to identify forward-looking statements. The forward-looking statements made in this Quarterly Report are based on certain historical trends, current conditions and expected future developments as well as other factors we believe are appropriate in the circumstances. These statements relate only to events as of the date on which the statements are made and we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. All of the forward-looking statements made in this Quarterly Report are qualified by these cautionary statements and there can be no assurance that the actual results anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to or effects on us or our business or operations. Whether actual results will conform to our expectations and predictions is subject to a number of risks and uncertainties that may cause actual results to differ materially. Risks and uncertainties, the occurrence of which could adversely affect our business, include the risks identified under the caption "Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the U.S. Securities and Exchange Commission (the "SEC") on March 30, 2026 (the "Annual Report"). The following discussion should be read in conjunction with the condensed consolidated financial statements and the notes thereto included in Item 1 of this Quarterly Report.

Overview

The Company was incorporated on May 18, 2010 under the laws of the State of Delaware. The Company is a holding company with two operating subsidiaries: (1) Lokahi Therapeutics, Inc., a Nevada corporation ("Lokahi"), a clinical stage biopharmaceutical company focused on developing innovative therapies for inflammation and pain management, including LT-100, an intradermally administered bee venom-based toxin for knee osteoarthritis and multiple sclerosis; and (2) Glucotrack Technologies Inc., a Nevada corporation ("Glucotrack Technologies"), a medical device company focused on the development of an implantable continuous blood glucose monitor ("CBGM") for persons with Type 1 diabetes and Type 2 diabetes using insulin or at risk for hypoglycemia (the "Glucotrack CBGM").

Lokahi Therapeutics Inc.

Lokahi is a clinical stage biopharmaceutical company developing LT-100, an intradermally administered bee venom-based toxin. Lokahi's primary focus is on developing innovative therapies addressing inflammation and pain management symptoms associated with knee osteoarthritis and, to a lesser extent, multiple sclerosis. LT-100 is currently marketed and sold by Apimeds Inc. in South Korea as "Apitoxin" for the treatment of osteoarthritis; however, Lokahi is not associated with the market, sale, or revenues generated from Apitoxin in South Korea, and LT-100 has not yet been approved by the FDA for any indication. Lokahi has also established the ai² platform to support business development, opportunity evaluation, and talent development activities, which is used to identify and assess therapeutic, biotechnology, medical device, and other healthcare-related opportunities for potential acquisition, licensing, strategic partnership, or development.

Glucotrack Technologies Inc.

Glucotrack Technologies was founded with a mission to develop Glucotrack®, a non-invasive glucose monitoring device designed to help people with diabetes and pre-diabetics obtain glucose level readings without the pain, inconvenience, cost and difficulty of conventional (invasive) spot finger stick devices. The first generation Glucotrack, which successfully received CE Mark approval, obtained glucose measurements via a small sensor clipped onto one's earlobe. A limited release beta test in Europe and the Middle East demonstrated the need for an updated product with improved accuracy and human factors. As the glucose monitoring landscape has since rapidly moved away from point-in-time measurement to continuous measurement, Glucotrack Technologies determined in 2023 that it would focus its efforts on developing the Glucotrack CBGM. As such, Glucotrack Technologies withdrew the CE Mark for Glucotrack and is no longer pursuing commercialization of this product or development of any further iterations.

On October 7, 2022, Glucotrack Technologies acquired certain intellectual property related to the Glucotrack CBGM from Paul V. Goode, Glucotrack Technologies' Chief Executive Officer and intends to develop the technology to address the growing Type 1 and Type 2 diabetes market.

Glucotrack Technologies is currently developing the Glucotrack CBGM for use by Type 1 diabetes patients as well as Type 2 diabetes patients using insulin or at risk for hypoglycemia. Implant longevity is key to the success of such a device. Glucotrack Technologies has demonstrated that a 3-year longevity is feasible leveraging both in-vitro and in-silico test results. Glucotrack Technologies has also completed multiple animal studies with initial prototype systems which demonstrated a simple implant procedure with good safety and functionality. The results of both were presented in poster form at the 2024 American Diabetes Association annual conference. In 2024, two peer-reviewed scientific articles were published related to the CBGM technology. One article, published in the IEEE Sensors Journal, characterized the long-term in-vitro stability of electrochemical glucose sensors of the type used in the CBGM system, including the first year-long measurements of glucose oxidase enzyme decay reported in the literature. A second peer-reviewed article, published in The Journal of Diabetes Research, evaluated the long-term accuracy and stability of the CBGM system in an in-vivo ovine model, providing externally validated evidence supporting the long-term performance of the technology. Glucotrack Technologies believes its technology, if successful, has the potential to be more accurate, more convenient and have a longer duration than other implantable glucose monitors that are either in the market or currently under development.

Further to the above progress on the Glucotrack CBGM, Glucotrack Technologies has also successfully demonstrated continuous glucose sensing in the epidural space. This latter approach is of importance for patients with diabetes already contemplating spinal cord stimulation therapy for their condition. Glucotrack Technologies believes this approach may enable integrated chronic disease management with one system that provides dual benefits of pain relief and glucose monitoring.

Glucotrack Technologies completed a first in human study in 2025. This study was an acute study intended to demonstrate device performance and safety, as well as safety of the implant and removal procedures. The study used the planned commercial version of the implantable sensor connected to an externalized prototype electronics device. Patients were monitored in hospital for 4 days. Results of the study were positive, meeting the endpoints of no serious safety events while demonstrating similar performance and accuracy as observed in longer-term animal studies. Initial results were presented in poster form at the 2025 Advanced Technologies & Treatments for Diabetes annual meeting and final results were presented in poster form at the 2025 American Diabetes Association annual conference.

Glucotrack Technologies initiated a long-term, multicenter feasibility study in Australia to evaluate the CBGM product performance and safety. The first phase of the clinical study provided early product learnings about how the complexity of certain health conditions may impact study eligibility as well as identified certain product improvements. Following a reassessment of the study in light of planned product updates and anticipated protocol modifications, Glucotrack Technologies determined that continuation of the study in its current form was no longer practical and elected to close the study.

Glucotrack Technologies submitted an Investigational Device Exemption ("IDE") application to the U.S. Food and Drug Administration ("FDA") in May 2026 to initiate a U.S. clinical study of its CBGM technology. The IDE submission represents an important milestone for Glucotrack Technologies and reflects progress in its preclinical development and underlying technical foundation. Glucotrack Technologies has also engaged a clinical research organization and identified the trial site in preparation for study commencement.

Glucotrack Technologies initially obtained ISO13485 certification in 2024 and successfully passed the 2025 annual audit, both efforts without any major nonconformities. ISO 13485 is an internationally agreed-upon standard of quality system requirements for the design, production, distribution, and sale of medical devices. Certification of compliance to the standard is recognized and accepted by the FDA, the European Medicines Agency (EMA), and many other regulatory authorities worldwide.

Recent Events

All information below is stated in thousands of U.S. dollars.

Business Combination

On July 14, 2026 (the "Closing Date"), we entered into an Agreement and Plan of Merger (the "Merger Agreement") with Glucotrack Merger Sub, Inc., a Nevada corporation ("Merger Sub"), Lokahi Therapeutics, Inc., a Nevada corporation ("Lokahi"), Glucotrack Technologies Inc. ("Glucotrack Technologies"), and Paul V. Goode, solely in his capacity as representative for Glucotrack Technologies (the "Glucotrack Technologies Representative"). The transactions contemplated by the Merger Agreement are referred to herein as the "Business Combination" and the closing of the Business Combination is referred to herein as the "Closing". Immediately prior to the Closing, articles of merger (the "Articles of Merger") were filed with the Secretary of State of the State of Nevada. Pursuant to the Articles of Merger, Merger Sub merged with and into Lokahi (the "Merger"), with Lokahi surviving as a direct wholly owned subsidiary of the Company. The Closing occurred simultaneously with the execution and delivery of the Merger Agreement on the Closing Date. For additional information regarding the Business Combination, see Note 5, "Subsequent Events," in this Quarterly Report on Form 10-Q.

Bridge Financing

On July 14, 2026, in connection with the Business Combination, the Company entered into a securities purchase agreement (the "Purchase Agreement") with certain investors (the "Bridge Investors"), pursuant to which the Company issued senior secured convertible promissory notes (the "Bridge Notes") and common stock purchase warrants (the "Bridge Warrants") for gross proceeds of approximately $4,450 (the "Bridge Financing"). The Bridge Notes include an original issue discount of 22%, bear interest at a rate of 8% per annum, and mature nine months from the date of issuance. The Bridge Notes and Bridge Warrants are secured by a first priority security interest in all assets of the Company and its subsidiaries (excluding the Glucotrack Technologies Assets). On August 4, 2026, the Company closed a follow-on investment in the Bridge Financing (the "Bridge Follow-On") with additional investors who joined the Purchase Agreement and the Security Agreement and invested aggregate gross proceeds of $3,500 in exchange for senior secured convertible promissory notes in the aggregate principal amount of approximately $4,487 (reflecting a 22% original issue discount) and common stock purchase warrants, in each case on substantially identical terms to the Bridge Notes and Bridge Warrants. Approximately $3,081 of the proceeds was used to pay off the Bridge Notes issued to the original investors on July 14, 2026. For additional information regarding the Bridge Financing and the Bridge Follow-On, see Note 5, "Subsequent Events," in this Quarterly Report on Form 10-Q.

Interim PIPE

On August 4, 2026, the Company entered into a Securities Purchase Agreement (the "Interim PIPE SPA") with an investor for a private placement of securities (the "Interim PIPE"). At the closing, the Company issued 2,666,667 pre-funded warrants to purchase shares of Common Stock and common stock purchase warrants to purchase 2,666,667 shares of Common Stock, for aggregate gross proceeds to the Company of $2,000. For additional information regarding the Interim PIPE, see Note 5, "Subsequent Events," in this Quarterly Report on Form 10-Q.

2025 Reverse Stock Splits and Increase in Authorized Common Stock

February 2025 1-for-20 Reverse Stock Split

We filed with the Delaware Secretary of State a Certificate of Amendment to its Certificate of Incorporation which became effective at 4:30 p.m. on February 3, 2025, to implement a reverse stock split at a ratio of 1-for-20 (the "February 2025 Reverse Stock Split") of the shares of our Common Stock. The February 2025 Reverse Stock Split was approved by our stockholders at the special meeting of stockholders held on January 3, 2025 (the "Special Meeting").

On January 3, 2025, the stockholders approved at the Special Meeting the increase in our authorized shares of Common Stock from 100,000,000 to 250,000,000, as well as the full issuance of shares of Common Stock issuable by us upon the exercise of Series A Warrants (defined below) and the cashless exchange of Series B Warrants (defined below). On February 3, 2025, we filed an amendment to our Certificate of Incorporation to increase the our authorized shares of Common Stock from 100,000,000 to 250,000,000.

June 2025 1-for-60 Reverse Stock Split

We filed with the Delaware Secretary of State a Certificate of Amendment to our Certificate of Incorporation which became effective at 4:30 p.m. on June 13, 2025, to implement a reverse stock split at a ratio of 1-for-60 (the "June 2025 Reverse Stock Split") of the shares of our Common Stock. The June 2025 Reverse Stock Split was approved by our stockholders at the 2025 annual meeting of the stockholders on May 22, 2025.

All shares, options and warrants to purchase shares of Common Stock and loss per share amounts have been adjusted to give retroactive effect to the February and June 2025 reverse share splits, (the "Reverse Stock Splits") for all periods presented in these condensed consolidated financial statements. Any fractional shares resulting from the Reverse Stock Splits were rounded up to the nearest whole share.

6B ELOC Financing

During the six months ended June 30, 2026, we sold 2,060,000 shares of Common Stock pursuant to the 6B ELOC, generating net proceeds of $1,692 after deducting related offering fees.

Financial Overview

Operating Expenses

Research and Development

Research and development expenses consist primarily of salaries and other personnel-related expenses, including stock-based compensation expenses, materials, travel expenses, clinical trials and other expenses. We expect research and development expenses to increase in 2026 and beyond, primarily due to expanding clinical trial activities, hiring additional personnel, as well as the development of Glucotrack CBGM; however, we may adjust or allocate the level of our research and development expenses based on available financial resources and based on our commercial needs, including the FDA registration process, specific requirements from customers, development of new Glucotrack CBGM models and other product candidates.

General and Administrative

General and administrative expenses consist primarily of professional services, salaries, travel expenses and other related expenses for executive, finance and administrative personnel, including stock-based compensation expenses. Other general and administrative costs and expenses include facility-related costs not otherwise included in research and development costs and expenses, and professional fees for legal, accounting, media, and public and investor relation services.

Other (Income) Expense

Other income expense, consist primarily of the change in fair value of derivative liabilities, loss on the issuance of equity, loss on settlement of debt to equity and finance income.

Results of Operations

The following discussion of our operating results explains material changes in our results of operations for the three and six months ended June 30, 2026 compared with the same period ended June 30, 2025. The discussion should be read in conjunction with the financial statements and related notes included elsewhere in this report.

Consolidated Results of Operations for the Three Months Ended June 30, 2026 and 2025

Research and Development Expense

Research and development expenses were approximately $2,016 for the three-month period ended June 30, 2026, as compared to approximately $3,150 for the prior-year period. The decrease is attributable to a reduction in product and manufacturing costs we accrued during the period related to the development of the Glucotrack CBGM model.

General and Administrative Expense

General and administrative expenses were approximately $1,384 for the three-month period ended June 30, 2026, as compared to approximately $1,646, for the prior-year period. The decrease is primarily attributable to decreased professional fees, and personnel costs.

Other (Income) Expense, net

Other expense was $414 for the three months ended June 30, 2026, as compared to $96 for the prior-year period. The increase in other expense was primarily attributable to (i) the loss on extinguishment of debt recognized in connection with the issuance of Common Stock in exchange for the forgiveness of principal outstanding under the promissory note and (ii) the amortization of the original issue discount associated with the promissory note.

Net Loss

Net loss was $3,814 for the three months ended June 30, 2026, as compared to a net loss of $4,756 for the prior-year period. The decrease in net loss was primarily attributable to lower research and development and general and administrative expenses, as discussed above.

Consolidated Results of Operations for the Six Months ended June 30, 2026 and 2025

Research and development expenses

Research and development expenses were approximately $4,148 for the six-month period ended June 30, 2026, as compared to approximately $5,021 for the prior-year period. The decrease is attributable to a reduction in product and manufacturing costs we accrued during the period related to the development of the Glucotrack CBGM model.

General and administrative expenses

General and administrative expenses were approximately $3,455 for the six-month period ended June 30, 2026, as compared to approximately $3,273, for the prior-year period. The increase is primarily attributable to increased professional fees, personnel costs.

Change in derivative liability

The change in derivative liability was an increase of $1 for the six months ended June 30, 2026, compared with a decrease of $3,269 for the corresponding period in 2025. The decrease in the prior-year period was primarily attributable to changes in the estimated fair value of the remaining 4,368 Series A and Series B Warrants.

Other (income) expense, net

Other expense was $546 for the six-month period ended June 30, 2026, as compared to approximately $92, for the prior-year period. The increase in other expense was primarily attributable to (i) the loss on extinguishment of debt recognized in connection with the issuance of Common Stock in exchange for the forgiveness of principal outstanding under the promissory note and (ii) the amortization of the original issue discount associated with the promissory note.

Net Loss

Net loss was $8,148 for the six-month period ended June 30, 2026, as compared to $11,589 for the prior-year period. The decrease in net loss was primarily attributable to lower research and development, general and administrative and derivative expenses, as discussed above.

Liquidity and Going Concern

As of June 30, 2026, we had $1,124 in cash and cash equivalents compared with $7,383 in cash and cash equivalents as of December 31, 2025. The net decrease in cash and cash equivalents was attributable to $7,664 of cash used in operating activities offset by net proceeds received from financing activities of $1,394.

We have a history of recurring losses, and as of June 30, 2026, we have an accumulated deficit of $159,986. During the six months ended June 30, 2026, we recorded a net loss of $8,148. Our primary requirements for liquidity have been to fund product and clinical development activities and to satisfy our general corporate and working capital needs.

Based on our operating plans, we do not expect that our current cash and cash equivalents as of June 30, 2026, will be sufficient to fund our operating cash flow needs for at least the next twelve months, assuming our programs advance as currently contemplated. Based upon this review and our current financial condition, we have concluded that substantial doubt exists as to our ability to continue as a going concern. We have raised and believe we will continue to be able to raise additional capital through debt financings, private or public equity financings, license agreements, collaborative agreements or other arrangements with other companies, or other sources of financing. However, there can be no assurances that such financing will be available or will be on terms acceptable to us, or at all. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce, or eliminate our clinical trials or other operations. If any of these events occur, our ability to achieve our operational goals would be adversely affected. Our future capital requirements and the adequacy of available funds will depend on many factors, including those described in the section titled "Risk Factors." Depending on the severity and direct impact of these factors on us, we may be unable to secure additional financing to meet our operating requirements on commercially acceptable terms favorable to us, or at all.

Critical Accounting Policies

This Management's Discussion and Analysis of Financial Condition and Results of Operations discuss our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our condensed consolidated financial statements are prepared. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

The summary of our significant accounting policies is included under Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably possible could materially impact the financial statements. There have been no material changes to the critical accounting policies and estimates as filed in such report.

Off Balance Sheet Arrangements

We do not have any off balance sheet agreements.