Apimeds Pharmaceuticals US Inc(APUS) - 2025 Q1 - Quarterly Report

PART I—FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed financial statements for Apimeds Pharmaceuticals US, Inc. for the three months ended March 31, 2025, and 2024, including balance sheets, statements of operations, changes in shareholders' (deficit) equity, and cash flows, along with comprehensive notes detailing business operations, accounting policies, debt, commitments, and subsequent events Unaudited Condensed Balance Sheets | Metric | March 31, 2025 ($) | December 31, 2024 ($) | | :----------------------------------- | :------------- | :---------------- | | Cash | $250,342 | $3,455 | | Total current assets | $259,904 | $13,057 | | Total assets | $259,904 | $13,057 | | Total current liabilities | $1,770,422 | $1,024,334 | | Total liabilities | $2,020,422 | $1,371,178 | | Total shareholders' (deficit) equity | $(1,760,518) | $(1,358,121) | Unaudited Condensed Statements of Operations | Metric | Three Months Ended March 31, 2025 ($) | Three Months Ended March 31, 2024 ($) | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | General and administrative expenses | $364,368 | $271,726 | | Loss from operations | $(364,368) | $(271,726) | | Interest income | $3 | $2,161 | | Interest expense | $(38,032) | $(26,908) | | Total other expense, net | $(38,029) | $(24,747) | | Net loss | $(402,397) | $(296,473) | | Basic and diluted loss per share | $(0.05) | $(0.04) | Unaudited Condensed Statements of Changes in Shareholders'(Deficit) Equity | Metric | December 31, 2024 ($) | March 31, 2025 ($) | December 31, 2023 ($) | March 31, 2024 ($) | | :------------------- | :---------------- | :--------------- | :---------------- | :--------------- | | Accumulated Deficit | $(4,391,924) | $(4,794,321) | $(3,001,934) | $(3,298,407) | | Total Equity | $(1,358,121) | $(1,760,518) | $31,869 | $(264,604) | | Net Loss | $(402,397) | $(296,473) | Unaudited Condensed Statements of Cash Flows | Metric | Three Months Ended March 31, 2025 ($) | Three Months Ended March 31, 2024 ($) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(20,313) | $(263,100) | | Net cash provided by investing activities | $0 | $0 | | Net cash provided by financing activities | $267,200 | $0 | | Net increase (decrease) in cash | $246,887 | $(263,100) | | Cash, end of period | $250,342 | $147,381 | Notes to Unaudited Condensed Financial Statements 1. DESCRIPTION OF BUSINESS - Apimeds Pharmaceuticals US, Inc. is a clinical-stage biopharmaceutical company developing Apitox™, an intradermally administered bee venom-based toxin. Apitox™ completed a positive Phase 3 trial for Osteoarthritis pain in 2018 and is pursuing FDA approval. Future plans include investigating Apitox™ for multiple sclerosis (MS)[23][24] - The Company's success is contingent on obtaining regulatory approvals, marketing products, and securing additional financing for research, development, and commercialization[25] 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - The Company has an accumulated deficit of $4,794,321 as of March 31, 2025, and incurred a net loss of $402,397 for the three months ended March 31, 2025. Following its IPO on May 12, 2025, which generated $11.9 million in net proceeds, the Company believes it has sufficient cash to fund operations for at least the next twelve months[27] - On February 7, 2025, the Board approved and implemented a 1-for-2.6 reverse stock split, retrospectively adjusting all share and per share amounts[31] - The Company operates as a single operating and reportable segment, focusing on the development of its bee venom-based therapeutic, with no revenue generated and all operations based in the United States[33][34][35] Accounts Payable and Accrued Expenses | Category | March 31, 2025 ($) | December 31, 2024 ($) | | :--------------------------------- | :------------- | :---------------- | | Professional fees payable | $648,153 | $410,641 | | Accrued compensation | $287,050 | $180,550 | | Total accounts payable and accrued expenses | $935,203 | $591,191 | Potential Anti-Dilutive Common Shares | Category | Three Months Ended March 31, 2025 (shares) | Three Months Ended March 31, 2024 (shares) | | :----------------------- | :-------------------------------- | :-------------------------------- | | Employee stock options | 213,693 | 213,693 | | Convertible notes and interest | 295,672 | 283,397 | | Total | 509,365 | 497,090 | - The FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses, effective for annual periods after December 15, 2026, which the Company is currently evaluating for impact[59] 3. LICENSE AGREEMENTS - The Company has a business agreement with Apimeds Korea, granting rights to clinical trials and FDA approvals for Apitox™, with a 5% royalty on earnings before interest and taxes from sales or licenses, excluding merger/acquisition scenarios[60] - An exclusive patent license agreement with Apimeds Korea grants the Company rights to make and sell licensed products in the U.S. for a total consideration of $1[61][62] 4. DEBT - The Company has several related-party debt instruments, including 2022 and 2021 Convertible Notes, and 2024 and 2025 Promissory Notes, primarily with Inscobee and Apimeds Korea[63][67][72][74] - The 2022 and 2021 Convertible Notes were amended in December 2023 to be convertible at $1 per share with a maturity date of December 31, 2026, or consummation of a qualified offering. These notes automatically converted into common stock upon the IPO[64][68][71] Accrued Interest and Outstanding Balances for Convertible Notes | Note Type | Accrued Interest (March 31, 2025) ($) | Accrued Interest (December 31, 2024) ($) | Outstanding Balance (March 31, 2025) ($) | Outstanding Balance (December 31, 2024) ($) | | :------------------------ | :-------------------------------- | :----------------------------------- | :----------------------------------- | :------------------------------------ | | 2022 Convertible Notes | $37,844 | $34,745 | $146,066 | $135,466 | | 2021 Convertible Note | $70,904 | $66,137 | $227,555 | $211,378 | - The 2024 and 2025 Promissory Notes, bearing 5% interest, had their maturity dates extended to May 19, 2026, via amendments on May 16, 2025[73][75] 5. ADVANCE PAYABLE — RELATED PARTY Advance Payable to Related Party | Metric | March 31, 2025 ($) | December 31, 2024 ($) | | :---------------- | :------------- | :---------------- | | Outstanding balance | $93,700 | $76,500 | | Interest | None | None | | Maturity Date | None | None | 6. COMMITMENTS AND CONTINGENCIES - As of March 31, 2025, and December 31, 2024, there are no pending legal claims or litigation expected to materially affect the Company's future results[79] - The CEO is eligible for an incentive stock option to purchase 3% of post-IPO capitalization, with 40% vesting immediately upon grant and the remainder vesting in three equal annual installments. The IPO was consummated on May 12, 2025[80] 7. SHAREHOLDERS' DEFICIT - As of March 31, 2025, and December 31, 2024, the Company had 100,000,000 authorized common shares ($0.01 par value) and 7,903,850 issued and outstanding common shares[81] - A 1-for-2.6 reverse stock split was approved and implemented on February 7, 2025, retrospectively adjusting all share and per share amounts[82] - The Company authorized 10,000,000 shares of preferred stock ($0.01 par value) on December 5, 2023, but had no preferred shares issued or outstanding as of March 31, 2025, and December 31, 2024[83] 8. STOCK-BASED COMPENSATION - The Company adopted the 2024 Equity Incentive Plan, reserving 1,000,000 shares of common stock, but no stock options were granted or outstanding under this plan as of the financial statements' issuance date[84] - An executive officer was granted 213,692 nonqualified stock options on May 12, 2020, with an exercise price of $7.33 per share, fully vested by May 12, 2023, and expiring on May 12, 2030[85][86] - No stock-based compensation expense was recognized for the three months ended March 31, 2025, and 2024, and no unrecognized compensation costs remain for unvested options[87][88] 9. INCOME TAXES - The Company recorded no income tax provision or benefit for the three months ended March 31, 2025, and 2024, due to pretax losses and a valuation allowance against deferred tax assets, as realization is not considered more likely than not[89][90] 10. SUBSEQUENT EVENTS - On May 12, 2025, the Company completed its IPO, issuing 3,375,000 common shares at $4.00 per share, generating $13.5 million in gross proceeds[92] - In connection with the IPO, $772,545 of outstanding principal and accrued interest from the 2021 and 2022 Convertible Notes converted into 297,133 shares of common stock at $2.60 per share[93] - The Company issued warrants to purchase 168,750 common shares to underwriters, exercisable at $5.00 per share from November 4, 2025, expiring five years from issuance[94] - On May 16, 2025, the maturity dates for the 2024 and 2025 Promissory Notes were extended to May 19, 2026[95] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition and operational results for the three months ended March 31, 2025, and 2024. It highlights the Company's clinical-stage status, product development, significant operating losses, and reliance on financing, particularly the recent IPO, to sustain operations Overview - Apimeds Pharmaceuticals US, Inc. is a clinical-stage biopharmaceutical company focused on developing Apitox, a bee venom-based toxin, for inflammatory conditions like osteoarthritis (OA) and multiple sclerosis (MS) in the United States[99][100] Our Product Candidate - Apitox is a purified, pharmaceutical-grade bee venom, licensed exclusively from Apimeds Korea for development and commercialization in the U.S. The Company's success hinges on regulatory approvals, marketing, and securing additional financing[101] Financial Results - The Company incurred a net loss of $402,397 for the three months ended March 31, 2025, an increase from $296,473 in the prior year period. As of March 31, 2025, the accumulated deficit was $4,794,321, with a stockholders' deficit of $1,760,518 and a working capital deficit of $1,136,898[102] Liquidity - With an accumulated deficit of $4,794,321 and ongoing net losses, the Company's liquidity was significantly bolstered by $11.9 million in net proceeds from its IPO on May 12, 2025, which is expected to fund operations for at least the next twelve months[103] Results of operations for the three months ended March 31, 2025 and 2024 Operating Expenses and Net Loss (YoY Change) | Metric | 3 Months Ended March 31, 2025 ($) | 3 Months Ended March 31, 2024 ($) | Change ($) | | :-------------------------------- | :------------------------------ | :------------------------------ | :------- | | General and administrative expenses | $364,368 | $271,726 | $92,642 | | Loss from operations | $(364,368) | $(271,726) | $(92,642) | | Interest income | $3 | $2,161 | $(2,158) | | Interest expense | $(38,032) | $(26,908) | $(11,124) | | Net loss | $(402,397) | $(296,473) | $(105,924) | - The Company generated no revenue for the three months ended March 31, 2025, and 2024[105] - General and administrative expenses increased by $92,642 to $364,368, primarily due to a $95,454 increase in professional services and an $7,500 increase in payroll expenses[106] - Other expense increased by $13,282 to $38,029, mainly driven by an $11,124 increase in interest expense[107] - Net loss increased by $105,924 to $402,397, primarily due to higher general and administrative expenses (professional fees for SEC filings and pre-IPO expenses) and increased payroll[108] Liquidity and Capital Resources - The Company has no revenue and expects continued operating losses, relying on equity and/or debt financing for operations. There is no assurance that additional financing will be available on acceptable terms[109] Cash Flow Summary (YoY Change) | Cash Flow Activity | 2025 ($) | 2024 ($) | Change ($) | | :-------------------------------- | :--------- | :---------- | :--------- | | Net cash used in operating activities | $(20,313) | $(263,100) | $242,787 | | Net cash used in investing activities | $0 | $0 | $0 | | Net cash provided by financing activities | $267,200 | $0 | $267,200 | | Net increase (decrease) in cash | $246,887 | $(263,100) | $509,987 | - Operating activities used $20,313 in cash for Q1 2025, a significant improvement from $263,100 used in Q1 2024, primarily due to changes in operating assets and liabilities offsetting the net loss[110][111] - Financing activities provided $267,200 in cash for Q1 2025, from $250,000 in notes payable and $17,200 in cash advances from related parties, compared to $0 in Q1 2024[113][114] Contractual Obligations and Commitments - Refer to Note 4 (Debt) and Note 6 (Commitments and Contingencies) for detailed discussions of the Company's contractual obligations and commitments[115] Off-Balance Sheet Arrangements - The Company is not party to any off-balance sheet transactions, guarantees, or obligations beyond normal business operations[116] Critical Accounting Policies and Significant Judgments and Estimates - The preparation of financial statements requires significant estimates and judgments, particularly concerning convertible instruments, which are evaluated and accounted for in accordance with ASC 815[117][118][119][120] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Apimeds Pharmaceuticals US, Inc. has elected not to provide quantitative and qualitative disclosures about market risk - The Company, as a smaller reporting company, has elected not to provide disclosures regarding market risk[121] Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures and internal control over financial reporting were not effective as of March 31, 2025, due to material weaknesses, specifically a lack of sufficiently documented procedures and control activities Evaluation of Disclosure Controls and Procedures - The CEO and CFO concluded that the Company's disclosure controls and procedures were not effective as of March 31, 2025, due to material weaknesses in internal controls over financial reporting[123] Management's Report on Internal Control over Financial Reporting - Management concluded that the Company's internal control over financial reporting was not effective as of March 31, 2025, due to material weaknesses[126][128] - Material weaknesses identified include insufficient documented procedures and control activities to support a reliable financial reporting process, specifically an absence of controls over journal entry review and approval, segregation of duties, reconciliations, and other fundamental accounting processes[127] Changes in Internal Control Over Financial Reporting - There have been no material changes in the Company's internal control over financial reporting during the quarter ended March 31, 2025[129] PART II—OTHER INFORMATION Item 1. Legal Proceedings The Company is not currently subject to any significant legal proceedings, though it may encounter them in the ordinary course of business - The Company is not currently subject to any legal proceedings that are expected to materially affect its business[132] Item 1A. Risk Factors As a smaller reporting company, Apimeds Pharmaceuticals US, Inc. is not required to include risk factors in this Quarterly Report, and there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K - As a smaller reporting company, the Company is not required to include risk factors in this report. No material changes to previously disclosed risk factors in the Annual Report on Form 10-K have occurred[133] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds occurred during the reporting period[134][135][136] Item 3. Defaults Upon Senior Securities The Company reported no defaults upon senior securities - There were no defaults upon senior securities[137] Item 4. Mine Safety Disclosures Mine safety disclosures are not applicable to the Company's operations - Mine safety disclosures are not applicable to the Company[138] Item 5. Other Information No other material information was reported, including no changes to Rule 10b5-1 trading arrangements by directors or officers during the quarter - No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the quarter ended March 31, 2025[140] Item 6. Exhibits This section lists all exhibits filed as part of, or incorporated by reference into, this Quarterly Report, including corporate governance documents, debt agreements, and certifications - Exhibits include Amended and Restated Certificate of Incorporation, Bylaws, March 2025 Promissory Note, Rule 13a-14(a) Certifications by Principal Executive and Financial Officers, Section 1350 Certifications, and Inline XBRL documents[143] SIGNATURES - The report was signed on May 19, 2025, by Erik Emerson, Chief Executive Officer (Principal Executive Officer) of Apimeds Pharmaceuticals US, Inc[146][147][148]