# 60 Degrees Pharmaceuticals, Inc.: Form 10-Q for the period ended Mar 31, 2025

- Company: [60 Degrees Pharmaceuticals, Inc.](/companies/sxtp.md) (CIK 1946563)
- Form: 10-Q
- Filed: 2025-05-15
- Accepted by EDGAR: May 15, 2025, 10:07 ET
- Period: 2025-03-31
- Accession: 0001213900-25-043779
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1946563/000121390025043779/ea0241202-10q_60degrees.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1946563/000121390025043779/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-01-01 to 2025-03-31 | $163.6k | us-gaap:Revenues |
| Cost of revenue | 3 months, 2025-01-01 to 2025-03-31 | $73.3k | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2025-01-01 to 2025-03-31 | $90.3k | us-gaap:GrossProfit |
| Research and development | 3 months, 2025-01-01 to 2025-03-31 | $407.6k | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2025-01-01 to 2025-03-31 | −$1.9m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2025-01-01 to 2025-03-31 | $1.8k | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | $63 | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | −$1.9m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | −$1.56 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | −$1.56 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 1,283,462 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | −$1.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2025-01-01 to 2025-03-31 | $2.7k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2025-03-31 | $3.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-03-31 | $5.7m | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-31 | $6.0m | us-gaap:Assets |
| Current liabilities | at 2025-03-31 | $1.8m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-03-31 | $1.9m | us-gaap:Liabilities |
| Long-term debt | at 2025-03-31 | $150.0k | us-gaap:LongTermDebt |
| Current portion of debt | at 2025-03-31 | $8.8k | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2025-03-31 | $4.1m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 50,493 characters.

The following discussion and analysis is intended as a review of significant factors affecting our financial condition and results of operations for the periods indicated. The discussion should be read in conjunction with our unaudited consolidated condensed financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements and the other information set forth in certain of our filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 27, 2025. In addition to historical information, the following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results could differ significantly from those anticipated in these forward-looking statements as a result of certain factors discussed herein and any other periodic reports filed and to be filed with the SEC.

### Overview

We are a specialty pharmaceutical company with a goal of using cutting-edge biological science and applied research to further develop and commercialize new therapies for the prevention and treatment of infectious diseases. We have successfully achieved regulatory approval of Arakoda® (“Arakoda”), a malaria preventative treatment that has been on the market since late 2019. Currently, 60P’s pipeline under development covers development programs for vector-borne, fungal, and viral diseases utilizing three of the Company’s future products: (i) new products that contain the Arakoda regimen of Tafenoquine; (ii) new products that contain Tafenoquine; and (iii) Celgosivir and/or botanical extracts from Australian Chestnut Trees.

Following our initial public offering in July 2023, our initial strategic priority was to conduct a Phase IIB study that would have evaluated the potential of the Arakoda regimen of Tafenoquine to accelerate disease recovery in COVID-19 patients with low risk of disease progression. In October 2023, we made a decision to suspend this study. This was a consequence of advice previously received from the U.S. Food and Drug Administration (FDA), which we interpreted to mean that the agency would not have granted clearance for the study to proceed unless we redesigned it to (i) enroll a patient population in which receipt of Paxlovid or Lagevrio would be medically contraindicated, or (ii) compare Tafenoquine to placebo in patients taking a “standard of care” regimen (defined by the FDA as Lagevrio or Paxlovid). The FDA’s position was somewhat surprising given that neither Paxlovid nor Lagevrio is indicated for treatment of COVID-19 in low-risk patients. We determined that conducting our study in an alternate population in the United States would be unfeasible, and that conducting an add-on-to standard of care study might not be Phase III enabling. Accordingly, we made a decision to pivot back to continue commercialization of Arakoda for malaria, and further evaluation of the Arakoda regimen of Tafenoquine for babesiosis and other diseases. We believe such an approach is both less risky and less expensive.

Moving forward, our general strategy to achieve profitability and grow shareholder value has three facets: (i) increase sales of Arakoda; (ii) conduct clinical trials to expand the number of patients who can use Tafenoquine for new indications in the future; and (iii) reposition small molecule therapeutics with good clinical safety profiles for new indications.

### Business Developments

The following highlights significant business developments in our business during the quarter ended March 31, 2025.

- On January 8, 2025, we announced that the first patient has been enrolled in NCT06478641, an expanded access clinical study intended to confirm the activity of tafenoquine in treating patients with persistent babesiosis who have failed standard of care treatment and are at high risk of experiencing a relapse.
- On January 20, 2025, we issued a total of 15,809 shares of common stock and paid $60,000 in cash to our executives in settlement of 2024 performance bonuses, as approved by our Board in December 2024.
- On January 28, 2025, we announced the approval by an Investigational Review Board (IRB) of a new Phase II clinical study. The study (NCT06656351) will evaluate the efficacy and safety of the ARAKODA® regimen (tafenoquine) over 90 days for treating patients with a presumptive diagnosis of chronic babesiosis who have experienced severe fatigue with significant functional impairment for at least six months upon enrollment. Patient enrollment is expected to begin in Q3 2025.
- In February 2025, the FDA authorized the importation of Kodatef from Australia, to cover any future disruption of Arakoda in the U.S. market. Kodatef is the branded version of tafenoquine for malaria prevention approved by the TGA for use in Australia. The Company made this request of the FDA due to robust demand for Arakoda in late 2024 and early 2025, and the potential for delays in the completion of new lots of Arakoda currently being commercially validated by our key supplier, PCI. Although we anticipate that new commercial Arakoda lots will enter the supply chain prior to the exhaustion of existing inventory, Kodatef will be available to cover any shortage through a specialty pharmacy that already carries Arakoda, and has the capacity to ship to customers in all 50 states.
- We issued an aggregate of 385,200 shares of common stock during the quarter upon the exercise of 385,200 pre-funded warrants issued in September 2024, resulting in proceeds of $1,926.

#### 1:5 Reverse Stock Split

On November 6, 2024, our Board of Directors (“Board”) approved a reverse stock split of our common stock at a split ratio ranging between 1:3 and 1:5, as determined by the Board in its sole discretion. On November 6, 2024, a majority of our stockholders approved the proposed reverse stock split. On February 10, 2025, the Board approved a 1-for-5 reverse split ratio. On February 18, 2025, we filed a Certificate of Amendment to the Certificate of Incorporation, as corrected, with the Secretary of State of the State of Delaware that provides for a 1-for-12 split. On February 24, 2025, we effectuated a 1-for-5 reverse stock split of our common stock (the “1:5 Reverse Stock Split”). Beginning February 24, 2025, our common stock traded on The Nasdaq Capital Market on a split adjusted basis.

As a result of the 1:5 Reverse Stock Split, proportional adjustments were made to the number of shares of common stock issuable upon exercise or conversion of our equity awards, warrants, and other equity instruments convertible into common stock, as well as the respective exercise prices, if applicable in accordance with the terms of the instruments. No fractional shares of common stock were issued in connection with the 1:5 Reverse Stock Split and all fractional shares were rounded up to the nearest whole share with respect to outstanding shares of common stock. Unless otherwise noted, all references to numbers of shares of our common stock and per share information presented in this Quarterly Report on Form 10-Q have been retroactively adjusted to reflect the effects of the 1:5 Reverse Stock Split.

#### January 2025 Offering

On January 28, 2025, we entered into a securities purchase agreement (the “January 2025 Securities Purchase Agreement”) with certain institutional investors (the “January 2025 Purchasers”) pursuant to which we sold an aggregate of 204,312 shares of common stock at a purchase price of $5.105 per share in a registered direct offering priced at-the-market under the rules of The Nasdaq Stock Market LLC (“Nasdaq”). In a concurrent private placement, we also issued to the January 2025 Purchasers unregistered warrants (the “January 2025 Warrants”) to purchase up to an aggregate of 408,621 shares of common stock at an exercise price of $3.855 per share. The January 2025 Warrants are exercisable upon issuance and expire twenty-four months from the date of issuance.

The shares were offered pursuant to a “shelf” registration statement on Form S-3 (Registration No. 333-280796), which was declared effective by the Securities and Exchange Commission (the “SEC”) on July 18, 2024 as supplemented by a prospectus supplement dated January 28, 2025, filed with the SEC on January 30, 2025, and accompanying base prospectus, pursuant to Rule 424(b)(5) promulgated under the Securities Act of 1933, as amended (the “Securities Act”).

H.C. Wainwright & Co., LLC (the “Placement Agent”) acted as our exclusive placement agent in connection with the offering. Pursuant to the terms of the placement agent agreement, we paid the Placement Agent a cash transaction fee equal to 7.5% of the aggregate gross cash proceeds in the offering and a management fee equal to 1.0% of the aggregate gross cash proceeds in the offering. In addition, we paid for certain non-accountable expenses in the amount of $15,000 and a clearing fee in the amount of $10,000. We also issued to the Placement Agent (or its designees) warrants to purchase up to 15,325 shares of common stock (the “January 2025 Placement Agent Warrants”). The January 2025 Placement Agent Warrants have an exercise price equal to $6.382 per share and are exercisable upon issuance and expire twenty-four months from the date of issuance.

The registered direct offering and the concurrent private placement (collectively, the “January 2025 Offering”) closed on January 30, 2025, resulting in net proceeds of approximately $804,346, after deducting estimated offering expenses paid by us, including the Placement Agent fees.

Pursuant to the January 2025 Securities Purchase Agreement, within 45 days from the date of the January 2025 Securities Purchase Agreement, we were required to file a registration statement with the SEC providing for the resale by the January 2025 Purchasers of the shares of common stock issuable upon exercise of the January 2025 Warrants. The registration statement was declared effective by the SEC on April 2, 2025. The Company shall use commercially reasonable efforts to keep such registration statement effective at all times until no January 2025 Purchaser owns any January 2025 Warrants or shares underlying the January 2025 Warrants issuable upon exercise thereof.

#### February 2025 Offering

On February 5, 2025, we entered into a securities purchase agreement (the “February 2025 Securities Purchase Agreement”) with certain institutional investors (the “February 2025 Purchasers”) pursuant to which we sold an aggregate of 300,700 shares of common stock at a purchase price of $3.575 per share in a registered direct offering priced at-the-market under the rules of Nasdaq. In a concurrent private placement, we also issued to the February 2025 Purchasers unregistered warrants (the “February 2025 Warrants”) to purchase up to an aggregate of 300,700 shares of common stock at an exercise price of $2.95 per share. The February 2025 Warrants are exercisable upon issuance and expire twenty-four months from the date of issuance.

The shares were offered pursuant to a “shelf” registration statement on Form S-3 (Registration No. 333-280796), which was declared effective by the Securities and Exchange Commission (the “SEC”) on July 18, 2024 as supplemented by a prospectus supplement dated February 5, 2025, filed with the SEC on February 6, 2025 and accompanying base prospectus, pursuant to Rule 424(b)(5) promulgated under the Securities Act.

The Placement Agent acted as our exclusive placement agent in connection with the offering. Pursuant to the terms of the placement agent agreement, we paid the Placement Agent a cash transaction fee equal to 7.5% of the aggregate gross cash proceeds in the offering and a management fee equal to 1.0% of the aggregate gross cash proceeds in the offering. In addition, we paid for certain non-accountable expenses in the amount of $15,000 and a clearing fee in the amount of $10,000. We also issued to the Placement Agent (or its designees) warrants to purchase up to 22,554 shares of Common Stock (the “February 2025 Placement Agent Warrants”). The February 2025 Placement Agent Warrants have an exercise price equal to $4.469 per share and are exercisable upon issuance and expire twenty-four months from the date of issuance.

The registered direct offering and the concurrent private placement (collectively, the “February 2025 Offering”) closed on February 6, 2025, resulting in net proceeds of approximately $908,627, after deducting estimated offering expenses paid by us, including the Placement Agent fees.

Pursuant to the February 2025 Securities Purchase Agreement, within 45 days from the date of the February 2025 Securities Purchase Agreement, we were required to file a registration statement with the SEC providing for the resale by the February 2025 Purchasers of the shares of common stock issuable upon exercise of the February 2025 Warrants. The registration statement was declared effective by the SEC on April 2, 2025. The Company shall use commercially reasonable efforts to keep such registration statement effective at all times until no February 2025 Purchaser owns any February 2025 Warrants or shares underlying the February 2025 Warrants issuable upon exercise thereof.

### Liquidity and Capital Resources

As of March 31, 2025, we had cash and cash equivalents of $3,451,500 ($1,659,353 as of December 31, 2024). For the three months ended March 31, 2025 and 2024, our net cash used in operating activities was $1,597,366 and $1,140,438, respectively. To date, we have financed our operations primarily through the issuance of common stock, warrants to purchase common stock, and proceeds from the issuance of convertible debt and promissory notes. Based on current internal projections, taking into consideration the net proceeds of approximately $1.9 million received under the ATM Agreement, an additional $5.127 million in cumulative net proceeds received from the September 2024 Private Placement and the January and February 2025 Offerings, and recent growth in Arakoda sales, we estimate that we will have sufficient funds to remain viable through August 31, 2025, excluding the additional costs of conducting the Phase II study for chronic babesiosis patients (currently being planned), and assuming no additional capital raises. We cannot give assurance that we can increase our cash balances or limit our cash consumption and thus maintain sufficient cash balances for our planned operations or future acquisitions. Future business demands may lead to cash utilization at levels greater than recently experienced. We may need to raise additional capital in the future. However, we cannot assure you that we will be able to raise additional capital on acceptable terms, or at all.

### Going Concern

In their audit report for the fiscal year ended December 31, 2024, our auditors have expressed their concern as to our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate cash flows from operations and obtain financing. The audited consolidated financial statements for the year ended December 31, 2024 included an explanatory note referring to our recurring operating losses and expressing substantial doubt in our ability to continue as a going concern.

Our future results are subject to substantial risks and uncertainties. Since our inception, we have not demonstrated the ability to generate enough revenues to date to cover operating expenses and we have accumulated losses to date. To date, we have funded our operations primarily with proceeds from sales of common stock and warrants for the purchase of common stock, sales of preferred stock, proceeds from the issuance of convertible debt and borrowings under loan and security agreements.

Continuation as a going concern is dependent upon our ability to meet our financial requirements, raise additional capital, and achieve gross profitability from our single marketed product. To achieve profitability, we expect we will need to raise additional capital to fund our activities relating to commercial support for our existing product and any future clinical research trials and operating activities. However, there can be no assurance that we will ever achieve or maintain profitability. These conditions, among others, raise substantial doubt about our ability to continue as a going concern for one year from the date these financial statements are issued.

We plan to fund our operations through third party and related party debt/advances, private placement of restricted securities and the issuance of stock in a subsequent offering until such a time as the business achieves profitability or a business combination may be achieved. However, there can be no assurance that we will be successful in raising additional capital or that such capital, if available, will be on terms that are favorable to us. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, or other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.

As such, we have concluded that such plans do not alleviate the substantial doubt about our ability to continue as a going concern for one year from the date the accompanying financial statements are issued.

The accompanying consolidated condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of obligations in the normal course of business, and do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.

### Contractual Obligations

The following table summarizes our contractual obligations as of March 31, 2025:

|  | Total | Payments Due By Period Less than 1 year | 1-3 years | 4-5 years | More than 5 Years |
| --- | ---: | ---: | ---: | ---: | ---: |
| Principal obligations on the debt arrangements | $150,000 | $- | $4,455 | $6,870 | $138,675 |
| Interest obligations on the debt arrangements | 102,604 | 8,772 | 13,089 | 10,674 | 70,069 |
| Accounts payable and accrued expenses | 1,157,979 | 1,157,979 | - | - | - |
| Total | $1,410,583 | $1,166,751 | $17,544 | $17,544 | $208,744 |

26

Amounts related to contingent milestone payments are not considered contractual obligations as they are contingent on the achievement of certain milestones. These contingent milestones may or may not be achieved. We have not included any of these amounts in the table above as we cannot estimate or predict when, or if, these amounts will become due.

### Components of Results of Operations

### Product Revenues - net of Discounts and Rebates

We receive the majority of our product revenues from sales of our Arakoda product to resellers in the U.S. and abroad. Foreign sales to both Australia and Europe are further subject to profit sharing agreements for boxes sold to customers. Sales to resellers in the US are subject to considerable discounts and rebates for services provided by our third-party logistics (“3PL”) partner and wholesalers and pharmacy benefit managers (“PBMs”).

### Cost of Revenues, Gross Profit, and Gross Margin

Cost of revenues associated with our products is primarily comprised of direct materials, shipping, manufacturing-related costs incurred in the production process, serialization costs, and inventory write-downs due to expiration.

### Other Operating Revenues

Other operating revenues for the periods presented include research revenue earned from the Australian Tax Authority for research activities conducted in Australia. Beginning in the third quarter of 2024, we began to recognize research revenues associated with our new contract with the United States Army Medical Materiel Development Activity (USAMMDA) for Arakoda supply chain upgrade support. Research revenue under this contract is recognized when we incur the direct costs eligible for reimbursement, up to the maximum allowable amount.

### Operating Expenses

#### Research and Development

Research and development costs for the periods presented primarily consist of contracted R&D services and costs associated with preparation for and conducting our Babesiosis trial. We expense all research and development costs in the period in which they are incurred. Payments made prior to the receipt of goods or services to be used in research and development are recognized as prepaid assets and expensed over the service period as the services are provided. We have also issued shares of our common stock to vendors in exchange for research and development services.

#### General and Administrative Expenses

Our general and administrative expenses primarily consist of salaries, advertising and promotion expenses, professional services fees, such as consulting, audit, accounting and legal fees, general corporate costs and allocated costs, including facilities, information technology and amortization of intangibles.

### Interest and Other Income (Expense), Net

We earn interest income from cash invested in interest-bearing accounts, as well as cash equivalents and short-term investments consisting of certificates of deposits with original maturities ranging from three to six months. Interest expense for the periods presented is limited to a single $150,000 SBA loan that bears interest at 3.75%. Other components of other income (expense) include changes in the fair value of derivative liabilities and other miscellaneous income or expenses.

### Results of Operations

The following table sets forth our results of operations for the periods presented:

| Consolidated Statements of Operations Data: | For the Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Product Revenues – net of Discounts and Rebates | $163,552 | $105,674 |
| Cost of Revenues | 73,272 | 65,437 |
| Gross Profit | 90,280 | 40,237 |
| Research Revenues | 92,731 | 29,631 |
| Net Revenue | 183,011 | 69,868 |
| Operating Expenses: |  |  |
| Research and Development | 407,622 | 337,182 |
| General and Administrative Expenses | 1,686,264 | 1,075,134 |
| Total Operating Expenses | 2,093,886 | 1,412,316 |
| Loss from Operations | (1,910,875) | (1,342,448) |
| Interest Expense | (1,790) | (1,402) |
| Change in Fair Value of Derivative Liabilities | 5,105 | 1,740,847 |
| Other Income, net | 30,322 | 31,051 |
| Total Interest and Other Income, net | 33,637 | 1,770,496 |
| (Loss) Income from Operations before Provision for Income Taxes | (1,877,238) | 428,048 |
| Provision for Income Taxes | 63 | 63 |
| Net (Loss) Income including Noncontrolling Interest | (1,877,301) | 427,985 |
| Net Loss – Noncontrolling Interest | (752) | (2,485) |
| Net (Loss) Income – attributed to 60 Degrees Pharmaceuticals, Inc. | $(1,876,549) | $430,470 |

The following table sets forth our results of operations as a percentage of revenue:

| Consolidated Statements of Operations Data: | For the Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Product Revenues – net of Discounts and Rebates | 100.00% | 100.00% |
| Cost of Revenues | 44.80 | 61.92 |
| Gross Profit | 55.20 | 38.08 |
| Research Revenues | 56.70 | 28.04 |
| Net Revenue | 111.90 | 66.12 |
| Operating Expenses: |  |  |
| Research and Development | 249.23 | 319.08 |
| General and Administrative Expenses | 1,031.03 | 1,017.41 |
| Total Operating Expenses | 1,280.26 | 1,336.48 |
| Loss from Operations | (1,168.36) | (1,270.37) |
| Interest Expense | (1.09) | (1.33) |
| Change in Fair Value of Derivative Liabilities | 3.12 | 1,647.37 |
| Other Income, net | 18.54 | 29.38 |
| Total Interest and Other Income, net | 20.57 | 1,675.43 |
| (Loss) Income from Operations before Provision for Income Taxes | (1,147.79) | 405.06 |
| Provision for Income Taxes | 0.04 | 0.06 |
| Net (Loss) Income including Noncontrolling Interest | (1,147.83) | 405.01 |
| Net Loss – Noncontrolling Interest | (0.46) | (2.35) |
| Net (Loss) Income – attributed to 60 Degrees Pharmaceuticals, Inc. | (1,147.37)% | 407.36% |

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### Comparison of the Three Months Ended March 31, 2025 and 2024

### Product Revenues - net of Discounts and Rebates, Cost of Revenues, Gross Profit, and Gross Margin

| Consolidated Statements of Operations Data: | For the Three Months Ended March 31, 2025 | 2024 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Product Revenues – net of Discounts and Rebates | $163,552 | $105,674 | $57,878 | 54.77% |
| Cost of Revenues | 73,272 | 65,437 | 7,835 | 11.97 |
| Gross Profit | $90,280 | $40,237 | $50,043 | 124.37% |
| **Gross Margin %** | **55.20%** | **38.08%** |  |  |

#### Product Revenues - net of Discounts and Rebates

Our product revenues - net of discounts and rebates were $163,552 for the three months ended March 31, 2025, as compared to $105,674 for the three months ended March 31, 2024. For the three months ended March 31, 2025, our U.S. pharmaceutical distributor and Infuserve America accounted for 85% and 6% of our total net product sales of Arakoda, respectively, and Kodatef sales to our Australian distributor accounted for 9% of total net product sales (99%, 0%, and 1% for the three months ended March 31, 2024, respectively). Domestic, commercial product sales are primarily driving increased sales volume during the period.

We offer discounts and rebates to the civilian U.S. supply chain distribution channel. We record sales when our 3PL partner transfers boxes into their title model. Discounts and rebates offered to our 3PL partner amount to 12% (lower rates available upon reaching larger revenue tiers) along with a $5,500 fixed monthly fee. The product is then transferred usually to one of the three large U.S. pharmaceutical distributors where rebates are 10%. Lastly, we have relationships with several large pharmacy benefit managers (“PBMs”) that allow patients to purchase Arakoda at a discount. The rebate associated with PBMs ranges from 30% to 41.25% depending on the amount of coverage provided. For the three months ended March 31, 2025, discounts and rebates were $91,401 compared to $94,869 for the three months ended March 31, 2024.

Arakoda entered the U.S. civilian supply chain in the third quarter of 2019. For the three months ended March 31, 2024, 1,022 boxes were sold to pharmacies and dispensaries. Sales volume increased by 55% to 1,579 boxes sold to pharmacies and dispensaries for the three months ended March 31, 2025. Based on IQVIA data, this growth in sales volume appears to be driven primarily by organic growth in the Lyme disease community, whose prescribers utilize Arakoda for treatment of babesiosis. The sales volume growth to pharmacies and dispensaries ties more closely to the growth in discounts and rebates previously discussed than our reported sales to our 3PL.

Kodatef sales to our distributor Biocelect in Australia for the three months ended March 31, 2025 were $12,066 ($1,004 for the three months ended March 31, 2024). A historical portion of sales to Biocelect remain subject to a profit share distribution once the original transfer price has been recouped. Biocelect, which acts as a distributor in the Australian and New Zealand market, reported (42%) year-over-year decline, the equivalent of 386 boxes sold for the three months ended March 31, 2025, compared to 665 boxes for the three months ended March 31, 2024. As of March 31, 2025, Biocelect’s unsold inventory that remains subject to profit share was the equivalent of 109.5 boxes. Additionally, under a new agreement executed during the quarter, Biocelect began to purchase from the latest manufactured lot of Kodatef at $45 AUD per box which are not subject to historical profit share. For the quarter ended March 31, 2025, 200 boxes of Kodatef were sold to Biocelect. As of March 31, 2025, $5,826 of profit share was due to us ($1,004 as of March 31, 2024).

Arakoda sales volume in Europe continues to grow. We first shipped Arakoda to our distributor Scandinavian Biopharma (“SB”) in September 2022. For the three months ended March 31, 2025, SB reported 73 boxes sold (27 boxes sold for the three months ended March 31, 2024). According to our distributor, this is due to greater interest in treating babesiosis.

#### Cost of Revenues, Gross Profit, and Gross Margin

Cost of revenues was $73,272 for the three months ended March 31, 2025, as compared to $65,437 for the three months ended March 31, 2024. The increase in cost of goods sold is primarily driven by the inflationary increase in fixed COGS charges for serialization and inventory material charges. Despite the increase, the Gross Margin % increased from 38.08% for the three months ended March 31, 2024 to 55.20% for the three months ended March 31, 2025. This is primarily attributable to the growth in revenues. As the sales volume has increased, the gross margin has improved as the variable cost of goods of each unit sold is substantially less than the sales price.

### Other Operating Revenues

| Consolidated Statements of Operations Data: | For the Three Months Ended March 31, 2025 | 2024 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Research Revenues | $92,731 | $29,631 | $63,100 | 212.95% |

The research revenues earned by us were $92,731 for the three months ended March 31, 2025, as compared to $29,631 for the three months ended March 31, 2024. The increase in research revenues is due to the new USAMMDA contract we were awarded in July 2024 to facilitate commercial validation of a new bottle and replacement blister packaging of Arakoda. We recognized research revenues of $77,966 related to this grant for the three months ended March 31, 2025 ($0 for the three months ended March 31, 2024). We also recognized research revenues from the Australian Tax Authority for research activities conducted in Australia of $5,138 for the three months ended March 31, 2025 ($29,631 for the three months ended March 31, 2024).

### Operating Expenses

| Consolidated Statements of Operations Data: | For the Three Months Ended March 31, 2025 | 2024 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Research and Development | $407,622 | $337,182 | $70,440 | 20.89% |
| General and Administrative Expenses | 1,686,264 | 1,075,134 | 611,130 | 56.84 |
| Total Operating Expenses | $2,093,886 | $1,412,316 | $681,570 | 48.26% |

#### Research and Development

Research and development costs increased by $70,440 for the three months ended March 31, 2025 when compared to the three months ended March 31, 2024. Research and development costs incurred for the three months ended March 31, 2025 and 2024 primarily consisted of costs related to our babesiosis trial for tafenoquine. Direct trial-related costs represent 68% of the total research and development costs at $275,633 for the three months ended March 31, 2025, compared to 55% of the costs at $186,091 for the three months ended March 31, 2024. We also recorded $63,015 in research and development expenses related to commercial validation and packaging of Arakoda, for which a majority qualifies for reimbursement under the USAMMDA grant discussed above.

#### General and Administrative Expenses

For the three months ended March 31, 2025, our general and administrative expenses increased by approximately 57% or $611,130 from the three months ended March 31, 2024. For the three months ended March 31, 2025, we incurred significantly higher sales, advertising and promotion expenses and investor outreach expenses at $285,287 and $393,687 for the three months ended March 31, 2025, up from $104,064 and $182,164 for the three months ended March 31, 2024, respectively. Additionally, for the three months ended March 31, 2025, we recognized $142,645 in stock-based compensation expense ($0 for the three months ended March 31, 2024). This increase was in part due to new partially vested option grants awarded to two executives in January 2025, as well as the quarterly expense recognized for additional stock options granted in the third quarter of 2024.

### Interest and Other Income, net

| Consolidated Statements of Operations Data: | For the Three Months Ended March 31, 2025 | 2024 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Interest Expense | $(1,790) | $(1,402) | $(388) | 27.67% |
| Change in Fair Value of Derivative Liabilities | 5,105 | 1,740,847 | (1,735,742) | (99.71) |
| Other Income, net | 30,322 | 31,051 | (729) | (2.35) |
| Total Interest and Other Income, net | $33,637 | $1,770,496 | $(1,736,859) | (98.10)% |

#### Interest Expense

For the three months ended March 31, 2025, we recognized $1,790 of interest expense ($1,402 for the three months ended March 31, 2024). Our interest expense for the periods presented relates entirely to our single outstanding loan from the SBA. Cash paid for interest expense was $2,193 and $2,193 for the three months ended March 31, 2025 and March 31, 2024, respectively.

#### Change in Fair Value of Derivative Liabilities

For the three months ended March 31, 2025, we recognized a gain on the change in fair value of derivative liabilities of $5,105 compared to $1,740,847 for the three months ended March 31, 2024. During the periods presented, derivative liabilities include the contingent milestone payment due to Knight upon a future sale of Arakoda or a Change of Control. We use a probability-weighted expected return method to estimate the fair value of this derivative liability.

#### Other Income, net

For the three months ended March 31, 2025, we recognized $30,322 in other income compared to $31,051 for the three months ended March 31, 2024. For the three months ended March 31, 2025, we recognized interest income from cash invested in interest-bearing accounts and investments in certificates of deposit of $31,897 ($21,888 for the three months ended March 31, 2024). Other income for the three months ended March 31, 2024 also includes $10,789 of storage revenue recognized in association with final payment under the legacy contract with the USAMMDA for storing Arakoda purchases. We did not recognize storage revenue for the three months ended March 31, 2025.

### Cash Flows

| Net Cash (Used In) Provided By : | For the Three Months Ended March 31, 2025 | 2024 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Operating Activities | $(1,597,366) | $(1,140,438) | $(456,928) | 40.07% |
| Investing Activities | 1,702,518 | (9,814) | 1,712,332 | (17,447.85) |
| Financing Activities | 1,696,899 | 1,903,291 | (206,392) | (10.84) |
| Effect of Foreign Currency Translation on Cash Flow | (9,904) | (824) | (9,080) | 1,101.94 |
| Net Increase in Cash and Cash Equivalents | $1,792,147 | $752,215 | $1,039,932 | 138.25% |

31

#### Cash Used in Operating Activities

Net cash used in operating activities was $1,597,366 for the three months ended March 31, 2025, as compared to $1,140,438 for the three months ended March 31, 2024. Our net cash used in operating activities increased, primarily due to higher general and administrative expenses at $1,686,264 for the three months ended March 31, 2025 ($1,075,134 for the three months ended March 31, 2024), as a result of higher sales, advertising and promotion costs and investor outreach expenses, as discussed above. In addition, we incurred higher research and development costs at $407,622 for the three months ended March 31, 2025 ($337,182 for the three months ended March 31, 2024), primarily related to conducting our tafenoquine-babesiosis trial.

#### Cash Provided by (Used in) Investing Activities

Net cash provided by investing activities was $1,702,518 for the three months ended March 31, 2025, as compared to net cash used in investing activities of $9,814 for the three months ended March 31, 2024. For the three months ended March 31, 2025, we received proceeds of $1,708,000 from maturities of certain short-term investments in certificates of deposit ($0 for the three months ended March 31, 2024). The cash proceeds are partially offset by higher capitalized patent costs of $2,804 and fixed asset purchases of $2,678 for the three months ended March 31, 2025 ($726 and $0 for the three months ended March 31, 2024, respectively). However, we did not capitalize website development costs for the three months ended March 31, 2025 ($9,088 capitalized for the three months ended March 31, 2024 associated with enhancements to the functionality of our corporate website).

#### Cash Provided by Financing Activities

Net cash provided by financing activities was $1,696,899 for the three months ended March 31, 2025, as compared to $1,903,291 for the three months ended March 31, 2024. The decrease in net cash provided by financing activities is mainly attributable to net proceeds of $1,898,296 received in connection with our common stock and warrant offering in January 2024, which exceeded the aggregate net proceeds of $1,712,973 received in connection with our common stock and warrant offerings completed in January 2025 and February 2025. We also received lower proceeds from the exercise of warrants at $1,926 for the three months ended March 31, 2025, compared to $4,995 for the three months ended March 31, 2024. Additionally, for the three months ended March 31, 2025, we withheld shares valued at $18,000 to cover tax withholdings for net share settlement of certain 2024 performance bonuses awarded to our executives ($0 for the three months ended March 31, 2024).

#### Effect of Foreign Currency Translation on Cash

Our foreign operations were small relative to U.S. operations for the three months ended March 31, 2025 and March 31, 2024, thus effects of foreign currency translation have been minor.

### Critical Accounting Policies, Significant Judgments, and Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

### Revenue Recognition

We recognize revenue in accordance with FASB ASC Topic No. 606, *Revenue from Contracts with Customers (“*ASC 606”). Revenues are recognized when control is transferred to customers in amounts that reflect the consideration we expect to be entitled to receive in exchange for those goods. Revenue recognition is evaluated through the following five steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied. As part of the accounting for these arrangements, we may be required to make significant judgments, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each performance obligation.

Revenues from product sales are recorded at the net sales price, or “transaction price,” which may include estimates of variable consideration that result from product returns. We determine the amount of variable consideration by using either the expected value method or the most-likely-amount method. We include the unconstrained amount of estimated variable consideration in the transaction price, which reflects the amount for which it is probable that a significant reversal of cumulative revenue recognized will not occur. At the end of each subsequent reporting period, we re-evaluate the estimated variable consideration included in the transaction price and any related constraint, and if necessary, adjust our estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis in the period of adjustment. Reserves are established for the estimates of variable consideration based on the amounts we expect to be earned or to be claimed on the related sales.

We record U.S. commercial revenues as a receivable when our American distributor transfers shipped product to their title model for 60P. Foreign sales to both Australia and Europe are recognized as a receivable at the point product is shipped to distributor. The shipments to Australia and Europe are further subject to profit sharing agreements for boxes sold to customers.

### Share-Based Payments

We account for share-based payments in accordance with ASC Subtopic 718, *Compensation - Stock Compensation (“*ASC 718”). We measure compensation for all share-based payment awards granted to employees, directors, and nonemployees, based on the estimated fair value of the awards on the date of grant. For awards that vest based on continued service, the service-based compensation cost is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the awards. For service vesting awards with compensation expense recognized on a straight-line basis, at no point in time does the cumulative grant date value of vested awards exceed the cumulative amount of compensation expense recognized. The grant date is determined based on the date when a mutual understanding of the key terms of the share-based awards is established. We account for forfeitures as they occur.

We estimate the fair value of all stock option awards as of the grant date by applying the Black-Scholes option pricing model. The application of this valuation model involves assumptions, including the fair value of the common stock, expected volatility, risk-free interest rate, expected dividends and the expected term of the option. Due to the lack of a public market for our common stock prior to the IPO and lack of company-specific historical implied volatility data, we base our computations of expected volatility on the historical volatility of a representative group of public companies with similar characteristics of the Company, including stage of development and industry focus. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. We generally use the simplified method as prescribed by the SEC Staff Accounting Bulletin Topic 14, *Share-Based Payment*, to estimate the expected term for stock options, whereby, the expected term equals the midpoint of the weighted average remaining time to vest, vesting period and the contractual term of the options due to our lack of historical exercise data. For certain options granted out-of-the-money, our best estimate of the expected term is the contractual term of the award. The risk-free interest rate is based on U.S. Treasury securities with a maturity date commensurate with the expected term of the associated award. The expected dividend yield is assumed to be zero as we have never paid dividends and have no current plans to pay any dividends on our common stock. The assumptions used in calculating the fair value of share-based awards represent our best estimates and involve inherent uncertainties and the application of significant judgment.

We recognize compensation expense for restricted stock units (“RSUs”) with only service-based vesting conditions on a straight-line basis over the vesting period. Compensation cost for service-based RSUs is based on the grant date fair value of the award, which is the closing market price of our common stock on the grant date multiplied by the number of shares awarded.

For awards that vest upon a liquidity event or a change in control, the performance condition is not probable of being achieved until the event occurs. As a result, no compensation expense is recognized until the performance-based vesting condition is achieved, at which time the cumulative compensation expense is recognized. Compensation cost related to any remaining time-based service for share-based awards after the liquidity-based event is recognized on a straight-line basis over the remaining service period.

For fully vested, nonforfeitable equity instruments that are granted at the date we enter into an agreement for goods or services with a nonemployee, we recognize the fair value of the equity instruments on the grant date. The corresponding cost is recognized as an immediate expense or a prepaid asset and expensed over the service period depending on the specific facts and circumstances of the agreement with the nonemployee.

### Derivative Liabilities

We analyze all financial instruments with features of both liabilities and equity under ASC Topic 480, *Distinguishing Liabilities from Equity (“*ASC 480”) and ASC Topic 815, *Derivatives and Hedging (“*ASC 815”). The classification of derivative financial instruments is reassessed each reporting period. Derivative liabilities are adjusted to reflect fair value at each reporting period, with any increase or decrease in the fair value recorded in the results of operations (other income/expense) as change in fair value of derivative liabilities. As of March 31, 2025, derivative liabilities consist of contingent payment arrangements. We use a probability-weighted expected return method to determine the fair value of these instruments.

Upon conversion or repayment of a debt or equity instrument in exchange for equity shares, where the embedded conversion option has been bifurcated and accounted for as a derivative liability (generally convertible debt and warrants), we record the equity shares at fair value on the date of conversion, relieve all related debt, derivative liabilities, and unamortized debt discounts, and recognize a net gain or loss on debt extinguishment, if any.

Equity or liability instruments that become subject to reclassification under ASC Topic 815 are reclassified at the fair value of the instrument on the reclassification date.

### Off-Balance Sheet Arrangements

During 2025 and 2024, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

### JOBS Act Accounting Election

In April 2012, the JOBS Act was enacted. Section 107(b) of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this exemption and, therefore, we will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

### Recent Accounting Pronouncements

From time to time, the FASB issues Accounting Standards Updates (“ASU”) to amend the authoritative literature in the ASC. The Company regularly evaluates new ASUs to determine the impact that these pronouncements may have on the consolidated condensed financial statements. Other than the pronouncements listed below, management believes that those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, or (iii) are not applicable to the Company’s consolidated condensed financial statements or related disclosures.

In November 2023, the FASB issued ASU 2023-07, *Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“*ASU 2023-07”) which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses and segment profit or loss. ASU 2023-07 also requires entities with a single reportable segment to provide all segment disclosures under ASC 280, including the new required disclosures under the ASU. We adopted ASU 2023-07 on a retrospective basis for the 2024 annual period, and for interim periods beginning in 2025. The impact is limited to our financial statement disclosures, which are presented in Note 2 to the accompanying consolidated condensed financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (ASC 740): *Improvements to Income Tax Disclosures (“*ASU 2023-09”) which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact that ASU 2023-09 will have on our financial statement disclosures.

In November 2024, the FASB issued ASU 2024-03, *Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“*ASU 2024-03”), which applies to all public business entities that file financial statements with the SEC. The amendments in this ASU require public business entities to disclose on an annual and interim basis, disaggregated information about certain income statement expense line items. The new standard is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. We are currently evaluating the impact that ASU 2024-03 will have on our financial statement disclosures.

## Market risk

As filed, 273 characters.

As a smaller reporting company as defined by Rule 12b-2 of the Exchange Act of 1934, as amended and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this item.

## Controls and procedures

As filed, 3,452 characters.

#### Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2025. Based on that evaluation, the Company’s Chief Executive Officer and the Company’s Chief Financial Officer have concluded that as of March 31, 2025, due to the existence of the material weakness in the Company’s internal control over financial reporting described below, the Company’s disclosure controls and procedures were not effective.

Management is responsible for establishing and maintaining adequate internal control over our financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting. Management has used the framework set forth in the report entitled “Internal Control-Integrated Framework (2013)” published by the Committee of Sponsoring Organizations of the Treadway Commission to evaluate the effectiveness of our internal control over financial reporting. Based on that assessment, our management has identified certain material weaknesses in our internal control over financial reporting.

Our management concluded that as of March 31, 2025, our internal control over financial reporting was not effective, and that material weaknesses existed in the following areas:

(1) we do not employ full time in-house personnel with the technical knowledge to identify and address some of the reporting issues surrounding certain complex or non-routine transactions. With respect to material, complex and non-routine transactions, management has and will continue to seek guidance from third-party experts and/or consultants to gain a thorough understanding of these transactions;

(2) we have inadequate segregation of duties consistent with the control objectives including but not limited to the disbursement process, transaction or account changes, and the performance of account reconciliations and approval; and

(3) we have ineffective controls over the period end financial disclosure and reporting process caused by insufficient accounting staff.

#### Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

#### Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 410 characters.

As a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and in item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this item. In any event, there have been no material changes in our risk factors as previously disclosed in the Registration Statement.

Filed May 15, 2025.
Source: SEC EDGAR, the filing index for accession 0001213900-25-043779. Last ingested by Listed: Nov 6, 2026, 12:18 ET. No prices; not investment advice.