Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operation

Critical Accounting Policies and Estimates

In preparing the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP), we have adopted various accounting policies. Our most significant accounting policies are disclosed in Note 1 to the consolidated financial statements.

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Our estimates and assumptions, including those related to the ability to continue as a going concern, the recoverability of inventory and long-lived assets, the fair value of stock-based compensation, the fair value of debt, the fair value of derivative liabilities, recognition of loss contingencies and deferred tax valuation allowances are updated as appropriate, which in most cases is at least quarterly. We base our estimates on historical experience, or various assumptions that are believed to be reasonable under the circumstances and the results form the basis for making judgments about the reported values of assets, liabilities, revenues and expenses. Actual results may materially differ from these estimates.

We believe that our critical accounting policies and estimates include our ability to continue as a going concern, revenue recognition, accounts receivable and allowance for doubtful accounts, inventory obsolescence, accounting for long-lived assets and accounting for stock based compensation.

Ability to Continue as a Going Concern: Our ability to continue as a going concern is contingent upon our ability to secure additional financing, increase ownership equity, and attain profitable operations. In addition, our ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered in established markets and the competitive environment in which we operate.

Revenue Recognition: The Company accounts for revenue from contracts with customers in accordance with Financial Accounting Standard Board ("FASB") Accounting Standard Codification ("ASC") Topic 606, Revenue from Contracts with Customers ("ASC 606"). Under ASC Topic 606, revenue recognition has a five-step process: a) Determine whether a contract exists; b) Identify the performance obligations; c) Determine the transaction price; d) Allocate the transaction price; and e) Recognize revenue when (or as) performance obligations are satisfied.

Our revenues are primarily derived from customer orders for the purchase of our products. We recognize revenues as performance obligations are fulfilled upon shipment of products. We record revenues net of promotions and discounts. For certain product sales to a distributor, we record revenue including a portion of the cash proceeds that is remitted back to the distributor.

Accounts Receivable and Allowance for Credit Losses: We grant credit without collateral to our customers based on our evaluation of a particular customer's credit worthiness. Accounts receivable are due 30 days after the issuance of the invoice. In addition, the Company maintains an allowance for credit losses to reflect the current expected credit losses ("CECL") over the contractual life of the receivables. Accounts receivable are written off after collection efforts have been deemed to be unsuccessful. Accounts written off as uncollectible are deducted from the allowance for doubtful accounts, while subsequent recoveries are netted against the provision for doubtful accounts expense. We generally do not charge interest on accounts receivable. We use third party payment processors and are required to maintain reserve balances, which are included in accounts receivable.

Our accounts receivable are stated at estimated net realizable value. Accounts receivable are comprised of balances due from customers and third party payment processors, net of estimated allowances for uncollectible accounts. In determining collectability, historical trends are evaluated and specific customer issues are reviewed to arrive at appropriate allowances.

Inventory Obsolescence: Inventories are valued at the lower of cost or net realizable value. We periodically perform an evaluation of inventory for excess, impairments and obsolete items. At December 31, 2025, our inventory consisted entirely of raw materials and finished goods that are utilized in the manufacturing of finished goods. These raw materials generally have expiration dates in excess of 10 years. Commencing on October 1, 2019, we classify inventory as short-term or long-term inventory based on timing of when it is expected to be consumed.

Long-Lived Assets: The carrying value of long-lived assets is reviewed annually and when events or changes in circumstances may suggest impairment has occurred. If indicators of impairment are present, we determine whether the sum of the estimated undiscounted future cash flows attributable to the long-lived asset in question is less than its carrying amount. If less, we measure the amount of the impairment based on the amount that the carrying value of the impaired asset exceeds the discounted cash flows expected to result from the use and eventual disposal of the impaired assets.

Derivative Financial Instrument: Management evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For option-based simple derivative financial instruments, the Company uses the Black-Scholes option-pricing model to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks.

Convertible Debt: The Company adheres to ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40). The update eliminates certain separation models, including the beneficial conversion feature and cash conversion models, so convertible instruments issued after adoption are generally accounted for as a single liability or equity instrument, unless a conversion feature requires separate derivative accounting under ASC 815. ASU 2020-06 also amends diluted EPS guidance.

The Fair Value Measurement Option: We have elected the fair value measurement option for convertible debt with embedded derivatives that require bifurcation, and record the entire hybrid financing instrument at fair value under the guidance of ASC Topic 815, Derivatives and Hedging ("ASC Topic 815"). The Company reports interest expense, including accrued interest, related to this convertible debt under the fair value option, within the change in fair value of convertible notes and derivatives in the accompanying consolidated statements of operations.

Derivative Accounting for Convertible Debt: The Company evaluated the terms and conditions of the convertible debt under the guidance of ASC 815, Derivatives and Hedging. The conversion terms of some of the convertible notes are variable based on certain factors, such as the future price of the Company's common stock. The number of shares of common stock to be issued is based on the future price of the Company's common stock. The number of shares of common stock issuable upon conversion of the debt is indeterminate. Due to the fact that the number of shares of common stock issuable could exceed the Company's authorized share limit, the equity environment is tainted, and all additional convertible debt is included in the value of the derivative liabilities. Pursuant to ASC 815-15, Embedded Derivatives, the fair value of the convertible debt and shares to be issued were recorded as derivative liabilities on the issuance date and revalued at each reporting period.

Share-Based Compensation: We record share-based compensation in accordance with FASB ASC 718, Stock Compensation. FASB ASC 718 requires that the cost resulting from all share-based transactions are recorded in the financial statements over the respective service periods. It establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value-based measurement in accounting for share-based payment transactions with employees. FASB ASC 718 also establishes fair value as the measurement objective for transactions in which an entity acquires goods or services from non-employees in share-based payment transactions.

Accomplishments during 2025 & Subsequent Accomplishments

In October of 2025, we expanded our online efforts to include marketing and social media consultants to expand sales of Nyloxin and Pet Pain-Away. This has led to a bigger footprint on Amazon as well as the placement of Pet Pain-Away on Chewy, the largest online pet site.

Throughout 2025, we have worked with our auditors and consultants to bring the Company's financial reporting up to date. That allowed us to file seven reports in 2025 (The annual report for 2022, all reports for 2023 as well as the first two quarters of 2024. To date, we have filed an additional five reports in 2026 (3^rd quarter and annual report for 2024 as well as the first three quarters of 2025).

Results of Operations

Status of Operations

In November 2014, we announced the recertification of our laboratory facility as the first step in re-engaging our drug development activities. In September 2015, we received Orphan designation from the FDA for our lead drug candidate, RPI-78M for the treatment of Pediatric Multiple Sclerosis. This will allow us to shorten the timeline on clinical studies and may allow an eventual Fast Track through the approval process. We are currently working with our consultants to prepare a pre-IND meeting with the FDA in order to gain approval of a protocol for a Phase I/II clinical study in Pediatric MS. Our goal is to begin the study in late 2026.

We estimate that we will require approximately $1,500,000 to fund our existing operations over the next twelve months. These costs include: (i) compensation for seven (7) full-time employees; (ii) compensation for various consultants who we deem critical to our business; (iii) product liability insurance; and (iv) outside legal and accounting services. These costs reflected in (i) - (iv) do not include research and development costs or other costs associated with clinical studies.

We began generating revenues from the sale of Cobroxin in the fourth quarter of 2009 and from the sale of Nyloxin and Nyloxin Extra Strength in January of 2011. We began sales of Pet Pain-Away in December 2014. We began selling private label versions of our OTC products in 2021. While sales have increased year over year, they have been limited and inconsistent. Our ability to meet our future operating expenses is highly dependent on the amount of such future revenues. If future revenues from the sale of our private label products, Nyloxin and Pet Pain-Away are insufficient to cover our operating expenses we may need to raise additional equity capital, which could result in substantial dilution to existing shareholders. There can be no assurance that we will be able to raise sufficient equity capital to fund our working capital requirements on terms acceptable to us, or at all. We may also seek additional loans from our officers and directors; however, there can be no assurance that we will be successful in securing such additional loans.

Comparison of Years Ended December 31, 2025 and 2024

Net sales to unrelated customers were $257,612 for the year ended December 31, 2025, compared to $246,309 for the year ended December 31, 2024, representing an increase of $11,303, or approximately 4.59%. The increase was primarily driven by growth in private label customers and higher order volumes during 2025.

Net sales to a related party were $127,695 for the year ended December 31, 2025, compared to $145,841 for the year ended December 31, 2024, representing a decrease of $18,146, or approximately 12.44%. The decrease was primarily attributable to reduced sales volume and pricing during the current year compared to the prior-year period.

Cost of sales for the year ended December 31, 2025 is $183,679 compared to $84,827 for the year ended December 31, 2024. Our cost of sales includes the direct costs associated with manufacturing, shipping, handling costs, and inventory quality control personnel salaries. Our gross profit margin for the year ended December 31, 2025 is $196,628 or 51.03% compared to $247,323 or 63.07% for the year ended December 31, 2024. This gross margin includes reserves of $5,000 in the current year and $60,000 in the prior-year quarter for undelivered venom and slow-moving inventory. Excluding the reserve, gross margin for the current year would be 52.36% compared to 78.37% for the prior-year period, with the variance primarily attributable to the addition of inventory quality control personnel costs, higher manufacturing costs related to private label product sales to unrelated parties, as well as pricing changes in related party sales.

Operating expenses increased by $533,222, or 47.37%, from $1,125,744 for the year ended December 31, 2024 to $1,658,966 for the year ended December 31, 2025. The increase was primarily attributable to a $52,800 increase in the allowance for credit losses recorded during 2025, higher consulting fees related to general business advisory services, increased payroll and compensation-related expenses associated with expanded operational activities, and professional fees incurred in connection with the Company's resumption of SEC filing activities, partially offset by a decrease in legal fees following the settlement of the SEC lawsuit. Consulting fees increased by approximately $154,000, payroll increased by approximately $75,000, and professional fees increased by approximately $367,000, partially offset by a decrease in legal fees of approximately $130,000, among other changes.

Other income was $58,750 and $103,450 for the years ended December 31, 2025 and 2024, respectively. Amounts attributable to the amortization of debt discounts on convertible notes receivable were $3,750 and $3,450 for the years ended December 31, 2025 and 2024, respectively. $50,000 and $100,000 of other income was recognized under a short-term research and development services contract during the years ended December 31, 2025 and 2024, respectively. The remaining $5,000 relates to a one-time related-party reimbursement for shared equipment usage recognized in the second quarter of 2025.

Interest expense, including related party interest expense, increased $116,492 or 36.00%, from $323,568 for the year ended December 31, 2024 to $440,060 for the year ended December 31, 2025. This increase was primarily due to an increase in amortization of loan discounts in the year ended December 31, 2025 compared to the year ended December 31, 2024.

We carry certain of our debentures at fair value. Due to the fact that the number of shares of common stock issuable could exceed the Company's authorized share limit, the equity environment is tainted, and all additional convertible debt is included in the value of the derivative liabilities. For the years ended December 31, 2025 and 2024, the liability related to these hybrid instruments fluctuated, resulting in a loss of $257,270 and $220,902, respectively. Interest expense on these debentures is included in the change in fair value of convertible notes and derivatives in the accompanying consolidated statements of operations.

Gain on settlement of debts, accrued expense and vendor payable increased $19,748 or 58.46%, from a gain of $33,778 for the year ended December 31, 2024 to a gain of $53,526 for the year ended December 31, 2025. The higher gain in 2025 was primarily attributable to a debt settlement executed during the second quarter. In contrast, the gain recognized in the 2024 period primarily resulted from settlements through the issuance of common stock in the first quarter of 2024, with the amount of gain influenced by fluctuations in the Company's stock price, as well as a gain on settlement of vendor payable recorded during the fourth quarter of 2024.

As a result of the foregoing, our net loss increased by $761,729 or 59.25%, from net loss of $1,285,663 for the year ended December 31, 2024 to a net loss of $2,047,392 for the year ended December 31, 2025.

For the year ended December 31, 2025, net cash used in operating activities was approximately $1.16 million, compared to approximately $0.42 million for the year ended December 31, 2024, representing an increase in cash used of approximately $0.74 million year over year.

The increase in cash used in operating activities was primarily attributable to less favorable changes in working capital during 2025 compared to the prior year, partially offset by higher non-cash adjustments. In 2025, working capital changes resulted in a net cash outflow of approximately $0.21 million, compared to a net cash inflow of approximately $0.39 million in 2024, reflecting a year-over-year unfavorable variance of approximately $0.18 million, largely attributable to higher consulting and professional fees. In 2025, non-cash adjustments totaled approximately $0.67 million, compared to approximately $0.47 million in 2024. The increase was primarily driven by $0.05 million of change in allowance for credit loss, $0.29 million of amortization of loan discounts, $0.26 million related to the change in fair value of convertible notes and derivatives, and $0.09 million of amortization of operating lease right-of-use assets. Additional non-cash items included $0.03 million of stock-based compensation and $0.01 million of depreciation, partially offset by a $0.05 million gain on settlement of debt and accrued expenses. Collectively, these factors led to higher cash used in operating activities in 2025 compared to 2024.

For the year ended December 31, 2025, net cash used in investing activities was approximately $0.05 million, primarily consisting of $0.03 million of purchases of property and equipment and $0.03 million of advances on convertible notes receivable. Unlike the prior year, there were no repayments on convertible notes receivable in 2025.

For the year ended December 31, 2025, net cash provided by financing activities was approximately $1.19 million. Financing inflows were primarily driven by $1.05 million of proceeds from convertible notes, $0.55 million of advances from the Company's former CEO and an entity majority controlled by him, and $0.11 million from other notes payable, partially offset by $0.29 million of repayments of other notes payable, $0.20 million of repayments of officer loans, and $0.04 million of repayments of convertible notes. Overall, financing activity in 2025 reflects a significant increase in capital raising through convertible debt compared to the prior year, which was the primary source of liquidity during 2025.

Liquidity and Capital Resources

During December 31, 2025 and 2024, respectively, we had negative cash from operations of approximately $1.16 million and $0.42 million. Our lack of cash, significant losses and working capital deficits and stockholders' deficits raise substantial doubt about our ability to continue as a going concern. For the years ended December 31, 2025 and 2024, we have experienced net loss of $2,047,392 and a net loss of $1,285,663, respectively, and had an accumulated deficit of $78,278,529 for the period from our inception to December 31, 2025. In addition, we had working capital and stockholders' deficits at December 31, 2025 of $16,813,637 and $16,825,306, respectively.

Our ability to continue as a going concern is contingent upon our ability to secure additional financing, increase ownership equity and attain profitable operations. In addition, our ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered in established markets and the competitive environment in which we operate.

As of December 31, 2025, we had $12,181 in cash and owed approximately $5.10 million in vendor payables and accrued expenses. We currently do not have sufficient cash to sustain our operations for the next 12 months and will require additional financing or an increase in sales in order to execute our operating plan and continue as a going concern. Our plan is to continue to increase sales of our products and attempt to secure adequate funding to bridge the commercialization of our Nyloxin and Pet Pain-Away products. We cannot predict whether additional financing will be in the form of equity, debt, or another form and we may be unable to obtain the necessary additional capital on a timely basis, on acceptable terms, or at all. In the event that these financing sources do not materialize, or that we are unsuccessful in increasing our revenues and profits, we may be unable to implement our current plans for expansion, repay our obligations as they become due or continue as a going concern, any of which circumstances would have a material adverse effect on our business prospects, financial condition and results of operations.

Current operations are primarily being funded through a combination of product sales, promissory notes and convertible notes. During the year ended December 31, 2025, the Company raised $1,051,805 from the issuance of convertible notes and $112,650 from promissory notes.

Historically, we have relied upon loans from our former Chief Executive Officer, Rik J Deitsch, to fund costs associated with our operations. As of December 31, 2025, the outstanding balance was $1,339,794, consisting entirely of amounts due to companies majority-owned and controlled by this officer, and is non-interest bearing. During the year ended December 31, 2025, the Company repaid an aggregate of $199,637 and received advances totaling $552,504.

Uncertainties and Trends

Our operations and possible revenues are dependent now and in the future upon the following factors:

	●	Whether we successfully develop and commercialize products from our research and development activities.
	●	If we fail to compete effectively in the intensely competitive biotechnology area, our operations and market position will be negatively impacted.
	●	If we fail to successfully execute our planned partnering and out-licensing of products or technologies, our future performance will be adversely affected.
	●	The recent economic downturn and related credit and financial market crisis may adversely affect our ability to obtain financing, conduct our operations and realize opportunities to successfully bring our technologies to market.
	●	Biotechnology industry related litigation is substantial and may continue to rise, leading to greater costs and unpredictable litigation.
	●	If we fail to comply with extensive legal/regulatory requirements affecting the healthcare industry, we will face increased costs, and possibly penalties and business losses.

Off-Balance Sheet Arrangements

We have not entered into any transaction, agreement or other contractual arrangement with an entity unconsolidated with us under whom we have:

	●	An obligation under a guarantee contract.
	●	A retained or contingent interest in assets transferred to the unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to such entity for such assets.
	●	Any obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument.
	●	Any obligation, including a contingent obligation, arising out of a variable interest in an unconsolidated entity that is held by us and material to us where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or research and development services with us.

We do not have any off-balance sheet arrangements or commitments that have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material, other than those which may be disclosed in this Management's Discussion and Analysis of Financial Condition and the audited Consolidated Financial Statements and related notes.