Eyenovia(EYEN) - 2025 Q2 - Quarterly Report

Cover Page & Filing Information This section provides the basic filing details for the Form 10-Q, including company, filing period, and registrant status - The report is a Form 10-Q for the quarterly period ended June 30, 2025, filed by HYPERION DEFI, INC. (formerly Eyenovia, Inc.)[1][2][25] - The registrant is a non-accelerated filer and a smaller reporting company[4] - As of August 11, 2025, the number of outstanding shares of common stock was 5,694,659[4] Explanatory Note This note clarifies that all share and per share amounts have been retroactively adjusted for a reverse stock split - On January 31, 2025, Hyperion DeFi, Inc. effected a 1-for-80 reverse stock split, retroactively adjusting all share and per share amounts in the financial statements[5][29] Table of Contents This section provides an organized listing of all chapters and sections within the report for easy navigation Part I - Financial Information This part presents the company's unaudited condensed financial statements and management's discussion and analysis Item 1. Financial Statements This section presents the unaudited condensed financial statements, including balance sheets, statements of operations, equity, and cash flows, all adjusted for a reverse stock split Condensed Balance Sheets The balance sheet shows a significant increase in total assets, primarily driven by the acquisition of HYPE digital tokens. Stockholders' equity transitioned from a deficit to a positive balance, reflecting recent financing activities Condensed Balance Sheet Highlights | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :------------------ | | Total Assets | $55,659,636 | $3,667,759 | | HYPE digital tokens | $45,500,000 | — | | Total Liabilities | $18,301,070 | $16,763,711 | | Total Stockholders' Equity (Deficiency) | $37,358,566 | $(13,095,952) | - Total Assets increased significantly from $3.67 million at December 31, 2024, to $55.66 million at June 30, 2025, primarily due to the $45.5 million purchase of HYPE digital tokens[10][45] - Stockholders' Equity shifted from a deficit of $(13.10) million at December 31, 2024, to a positive $37.36 million at June 30, 2025, indicating successful capital raises[10] Unaudited Condensed Statements of Operations The company reported a net loss for both the three and six months ended June 30, 2025, with a notable decrease in R&D expenses but an increase in SG&A, largely due to non-cash stock-based compensation Condensed Statements of Operations Highlights | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenue | $— | $22,625 | $14,720 | $27,618 | | Gross Profit (Loss) | $— | $(467,736) | $14,672 | $(665,770) | | Research and development | $674,578 | $4,597,173 | $1,347,621 | $9,028,774 | | Selling, general and administrative | $7,678,704 | $3,758,835 | $10,051,026 | $7,396,024 | | Net Loss | $(8,690,919) | $(11,053,699) | $(12,174,452) | $(21,975,800) | | Net Loss Per Share - Basic and Diluted | $(2.50) | $(16.65) | $(4.29) | $(35.26) | - Net loss decreased for both the three-month period (from $(11.05) million to $(8.69) million) and six-month period (from $(21.98) million to $(12.17) million) year-over-year[13] - Research and development expenses significantly decreased by 85% for the three months and 86% for the six months ended June 30, 2025, primarily due to layoffs and termination of the CHAPERONE study[13][127][134] - Selling, general and administrative expenses increased by 106% for the three months and 36% for the six months ended June 30, 2025, largely driven by a $5.19 million non-cash stock-based compensation for an inducement grant to a new executive[13][46][128][135] Unaudited Condensed Statements of Changes in Stockholders' Equity (Deficiency) Stockholders' equity transitioned from a deficit to a positive balance, primarily due to significant capital raises through preferred stock and warrant issuances in a private placement, and common stock sales via an 'at-the-market' offering Changes in Stockholders' Equity (Deficiency) Highlights | Metric | January 1, 2025 | June 30, 2025 | | :-------------------------------- | :-------------- | :-------------- | | Total Stockholders' Equity (Deficiency) | $(13,095,952) | $37,358,566 | | Preferred Stock Issued | $— | $544 | | Common Stock Issued | $151 | $485 | | Additional Paid-In Capital | $182,213,889 | $244,841,981 | | Accumulated Deficit | $(195,309,992) | $(207,484,444) | - Total Stockholders' Equity (Deficiency) improved from a deficit of $(13.10) million at January 1, 2025, to a positive $37.36 million at June 30, 2025[15] - Additional Paid-In Capital increased by over $62 million, largely from the issuance of preferred stock and warrants in a private placement ($49.37 million) and common stock in 'at-the-market' offerings ($8.22 million)[15][16][65][69] Unaudited Condensed Statements of Cash Flows Cash and cash equivalents significantly increased due to substantial financing activities, primarily from a private placement and 'at-the-market' offerings, which offset cash used in operating and investing activities, including a large purchase of HYPE digital tokens Condensed Statements of Cash Flows Highlights (Six Months Ended June 30) | Cash Flow Activity | 2025 | 2024 | | :-------------------------------- | :-------------- | :-------------- | | Net Cash Used In Operating Activities | $(7,889,797) | $(18,066,228) | | Net Cash Used In Investing Activities | $(45,522,959) | $(159,853) | | Net Cash Provided By Financing Activities | $58,823,584 | $5,677,876 | | Net Increase (Decrease) in Cash and Cash Equivalents | $5,410,828 | $(12,548,205) | | Cash and Cash Equivalents - End of Period | $7,532,291 | $2,300,852 | - Net cash provided by financing activities increased dramatically to $58.82 million in H1 2025 from $5.68 million in H1 2024, driven by a $50 million private placement and $8.51 million from 'at-the-market' offerings[20][144] - Net cash used in investing activities surged to $45.52 million in H1 2025, primarily due to the $45.5 million purchase of HYPE digital tokens[20][45][143] - Cash and cash equivalents at the end of the period increased to $7.53 million in H1 2025 from $2.30 million in H1 2024[20] Notes to Unaudited Condensed Financial Statements These notes provide detailed explanations of the company's business, significant accounting policies, financial performance, and capital structure changes, including the new HYPE digital token strategy, liquidity plans, and recent financing activities Note 1 – Business Organization, Nature of Operations and Basis of Presentation Hyperion DeFi, Inc., formerly Eyenovia, Inc., is now building a strategic treasury of HYPE digital tokens to provide shareholders exposure to the Hyperliquid ecosystem, while also continuing development of its Optejet ophthalmic liquid delivery device. The financial statements reflect a 1-for-80 reverse stock split effective January 31, 2025 - Hyperion DeFi, Inc. (formerly Eyenovia, Inc.) is now focused on building a long-term strategic treasury of HYPE digital tokens to provide shareholders with exposure to the Hyperliquid ecosystem[25][95] - The company continues development and registration of its Optejet ophthalmic liquid delivery device[25][27][95] - All share and per share amounts presented have been retroactively adjusted for a 1-for-80 reverse stock split effective January 31, 2025[5][29] Note 2 – Management's Liquidity Plans The company has a history of recurring net losses and working capital deficits, raising substantial doubt about its ability to continue as a going concern. Management plans to mitigate this through expense reduction, future financings, and potential sales of HYPE digital tokens - As of June 30, 2025, the Company had a working capital deficit of $923,797 and a net loss of $12,174,452 for the six months ended June 30, 2025, raising substantial doubt about its going concern ability[32] - Management's plans to mitigate liquidity concerns include reducing operating expenses upon Optejet UFD registration, raising additional funds through future financings, and potentially selling HYPE digital tokens[33] Note 3 – Summary of Significant Accounting Policies The company adopted ASU 2023-08 for digital assets, requiring HYPE digital tokens to be measured at fair value with gains/losses recognized as non-operating income/expense. HYPE tokens are intended as a long-term investment - The Company adopted ASU 2023-08 for digital assets, measuring HYPE digital tokens at fair value and recognizing gains/losses as non-operating income or expense[37] - HYPE digital tokens are held as a long-term investment[38] Note 4 - Net Loss Per Share of Common Stock Net loss per share is calculated using the two-class method, but it has no impact on loss per share as participating securities (Series A Preferred Stock) are not required to absorb losses. Potentially dilutive securities are excluded due to anti-dilutive effects Net Loss Per Share (Basic and Diluted) | Period | Net Loss Attributable to Common Stockholders | Weighted Average Shares Outstanding | Net Loss Per Share | | :--------------------------- | :------------------------------------------- | :---------------------------------- | :------------------- | | 3 Months Ended June 30, 2025 | $(8,788,086) | 3,518,906 | $(2.50) | | 3 Months Ended June 30, 2024 | $(11,053,699) | 664,022 | $(16.65) | | 6 Months Ended June 30, 2025 | $(12,271,619) | 2,857,596 | $(4.29) | | 6 Months Ended June 30, 2024 | $(21,975,800) | 623,303 | $(35.26) | - The two-class method for EPS calculation has no impact on loss per share as preferred stockholders are not required to absorb losses[41] - As of June 30, 2025, 34,412,515 potentially dilutive shares (warrants, stock options, RSUs) were excluded from diluted EPS calculation due to their anti-dilutive effect[42] Note 5 – Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets increased to $967,006 as of June 30, 2025, from $645,736 at December 31, 2024, primarily due to higher prepaid insurance and general and administrative expenses Prepaid Expenses and Other Current Assets | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :------------------ | | Prepaid insurance expenses | $532,181 | $148,117 | | Prepaid general and administrative expenses | $152,875 | $61,610 | | Payroll tax receivable | $120,980 | $288,705 | | Total prepaid expenses and other current assets | $967,006 | $645,736 | Note 6 – HYPE Digital Tokens In June 2025, the company purchased 1,306,452 HYPE digital tokens for $45.5 million, which are recognized at fair value and held as a long-term investment - In June 2025, the Company purchased 1,306,452 HYPE digital tokens for a total cost of $45.5 million[45] - HYPE digital tokens are recognized at fair value and held as a long-term investment[37][38][45] Note 7 – Accrued Inducement Grant As of June 30, 2025, the company accrued $5.19 million for a fully vested inducement grant of 500,000 common shares to an executive, reflecting the mark-to-market increase in fair value since the contract date - An accrued inducement grant of $5,190,000 was recorded as of June 30, 2025, for a commitment to issue 500,000 fully vested common shares to an executive[46] - The fair value of these shares increased from $3,485,000 on the contract date (June 17, 2025) to $5,190,000 by June 30, 2025, due to an increase in common stock price[46] Note 8 – Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities increased to $1.497 million at June 30, 2025, from $1.323 million at December 31, 2024, with new accruals for offering costs, franchise tax, and dividends. The company also terminated a license agreement with Formosa, releasing it from $2.2 million in obligations Accrued Expenses and Other Current Liabilities | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :------------------ | | Accrued licensee reimbursement | $295,711 | $295,711 | | Accrued offering costs | $275,568 | — | | Accrued rework of clinical supply returns | $250,000 | $250,000 | | Accrued professional services | $196,730 | $111,750 | | Accrued dividend | $97,167 | — | | Total accrued expenses and other current liabilities | $1,496,804 | $1,322,674 | - The Company terminated its license agreement with Formosa Pharmaceuticals, Inc. on June 6, 2025, resulting in a release from $2.2 million in obligations[48][50] Note 9 – Notes Payable and Convertible Notes Payable The company restructured its Avenue Loan through multiple amendments in H1 2025. The Fourth Amendment extended maturity to July 2028, reduced interest to 8%, eliminated the conversion option, and resulted in the issuance of warrants to lenders, accounted for as a troubled debt restructuring Notes Payable and Convertible Notes Payable | Category | June 30, 2025 (Net) | December 31, 2024 (Net) | | :-------------------- | :-------------------- | :---------------------- | | Avenue - Note payable | $7,516,735 | $5,212,532 | | Avenue - Convertible note payable | — | $4,736,070 | | Total Net Notes Payable | $7,516,735 | $9,948,602 | - The Fourth Amendment to the Avenue Loan Agreement (June 17, 2025) extended maturity to July 1, 2028, reduced the interest rate from 12.0% to 8.0%, and eliminated the $10.0 million conversion option into common stock[60] - In connection with the Fourth Amendment, the Company issued warrants to lenders to purchase 350,000 shares of common stock, valued at $858,270, which was capitalized as additional debt discount[61][62] - The Fourth Amendment was accounted for as a troubled debt restructuring, establishing a new effective interest rate[62] Note 10 – Commitments and Contingencies The company may be involved in legal proceedings in the ordinary course of business, accruing for probable and estimable settlements and expensing legal costs as incurred - The Company records legal costs associated with loss contingencies as incurred and accrues for all probable and estimable settlements[63] Note 11 – Stockholders' Equity (Deficiency) Stockholders' equity significantly increased due to a $50 million private placement of Series A Preferred Stock and warrants, and ongoing 'at-the-market' common stock offerings. Stock-based compensation also increased due to an executive inducement grant, and warrant activity included an inducement offer and new issuances - Stockholders approved an amendment to the 2018 Omnibus Stock Incentive Plan, reserving an additional 350,000 shares of common stock[64] - The Company received $2.6 million and $8.2 million in net proceeds from 'at-the-market' common stock offerings for the three and six months ended June 30, 2025, respectively[65] - Stock-based compensation expense for the six months ended June 30, 2025, was $5,953,282, significantly higher than $1,087,288 in the prior year, primarily due to a $5.19 million accrued inducement grant[67] - On June 17, 2025, the Company closed a private placement, issuing 5,128,205 shares of Series A Preferred Stock and warrants to purchase 30,769,230 common shares for $50 million gross proceeds[69] - An inducement offer in Q1 2025 led to the exercise of warrants for 197,118 common shares, generating $0.9 million in net proceeds, and the issuance of additional warrants[75] Note 12 - Segment Reporting The company operates as a single segment (ophthalmic technology) for reporting purposes, with the CEO making operating decisions based on aggregate financial information. Segment assets include cash, digital assets, and other assets - The Company has one operating and reporting segment: ophthalmic technology, focused on the development and commercialization of ophthalmic solutions[80] Segment Assets (June 30, 2025) | Asset Category | Ophthalmic Technology | Corporate & Other | Total | | :---------------- | :-------------------- | :---------------- | :-------------- | | Cash | $7,532,291 | $— | $7,532,291 | | Digital assets | — | $45,500,000 | $45,500,000 | | All other assets | $2,627,345 | $— | $2,627,345 | | Total Assets | $10,159,636 | $45,500,000 | $55,659,636 | Note 13 - Subsequent Events Subsequent to June 30, 2025, the company continued its 'at-the-market' offering, purchased additional HYPE digital tokens, and entered into a separation agreement with its Chief Operating Officer - Subsequent to June 30, 2025, the Company received approximately $6.6 million in gross proceeds from the sale of 511,207 common shares through its 'at-the-market' offering[89] - The Company purchased approximately 229,320 additional HYPE digital tokens for $10.0 million after June 30, 2025[90] - On July 1, 2025, the Company entered into a Separation and Release Agreement with its Chief Operating Officer, entitling the COO to 12 months of base salary and health benefits continuation[91] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, results of operations, strategic shifts, liquidity, and critical accounting estimates Forward Looking Statements This section cautions readers that the report contains forward-looking statements subject to risks and uncertainties, including those related to expenses, future revenue, capital requirements, the cryptocurrency treasury strategy, and intellectual property, and advises against undue reliance on these statements - The report contains forward-looking statements regarding expenses, future revenue, capital requirements, the cryptocurrency treasury strategy, and other financial items, which are subject to risks and uncertainties[94] Overview Hyperion DeFi, Inc. is transitioning its strategy to build a long-term treasury of HYPE digital tokens to offer shareholders exposure to the Hyperliquid ecosystem, while simultaneously advancing the development and registration of its Optejet ophthalmic liquid delivery device - Hyperion DeFi is the first U.S. publicly listed company building a long-term strategic treasury of HYPE digital tokens to provide shareholders with exposure to the Hyperliquid ecosystem[95] - The company continues to develop and register its Optejet ophthalmic liquid delivery device[95] HYPE Treasury Hyperion DeFi's HYPE treasury strategy aims to leverage the native token of Hyperliquid, a high-frequency Layer-1 blockchain. HYPE serves multiple purposes, including staking for reduced trading fees, transaction utility on HyperEVM, and collateral in DeFi. The company plans to run a co-branded validator and deploy HYPE into HyperEVM for yield, aiming to accelerate ecosystem growth - HYPE is the native token of Hyperliquid, a decentralized Layer-1 blockchain for high-frequency, transparent trading with 70-millisecond block times[26][96][100] - HYPE's utility includes staking for reduced trading fees, transactions on HyperEVM, and collateral in DeFi applications[100][103] - Hyperliquid's network mechanism allocates approximately 97% of daily trading fees to autonomously purchase and remove HYPE tokens from circulation[100] - The Company announced a co-branded Hyperliquid validator, Kinetiq x Hyperion, to directly access HYPE staking yield and support network stability[102] The Optejet The Optejet User Filled Device (UFD) is a proprietary ophthalmic liquid delivery device designed for ease of use, enhanced safety, and superior compliance monitoring, delivering a precise, low-volume spray. The company anticipates registering its second generation based on prior FDA approval experience with MydCombi® - The Optejet UFD is designed for topical ophthalmic liquids, offering ease of use, enhanced safety, and potential for superior compliance monitoring compared to standard eye drops[27][105] - It delivers a precise, low-volume columnar spray (7-10 microliters, one-fifth of a typical eye drop) with a 98% first-attempt success rate in clinical trials[106][107][108] - The company anticipates registering the second generation of the Optejet UFD as a liquid drug delivery device, leveraging experience from the FDA-approved MydCombi®[109] Nasdaq Compliance The company received a Nasdaq notice for failing to meet the minimum $2.5 million stockholders' equity requirement. It submitted a compliance plan and believes it has regained compliance with $37.4 million in stockholders' equity as of June 30, 2025 - On April 29, 2025, Nasdaq notified the Company of non-compliance with the $2.5 million Minimum Equity Requirement[110] - The Company submitted a plan to regain compliance and reported $37.4 million in total stockholders' equity as of June 30, 2025, which it believes demonstrates compliance[110] The Private Placement On June 20, 2025, the company closed a private placement, raising $50 million in gross proceeds by issuing Series A Preferred Stock and warrants. The net proceeds were used to build a reserve of HYPE tokens, and a registration statement for resale of underlying common stock was filed - On June 20, 2025, the Company received approximately $50 million in gross proceeds from a private placement[111] - The private placement involved the issuance of 5,128,205 shares of Series A Convertible Non-Voting Preferred Stock and warrants to purchase up to 30,769,230 shares of common stock[111] - Net proceeds from the private placement were used to build a reserve of HYPE digital tokens[111] Fourth Amendment of the Avenue Loan On June 17, 2025, the company amended its Avenue Loan, extending maturity to July 2028, reducing the interest rate to 8% (half cash, half in kind), eliminating the conversion option, and issuing warrants to lenders. This was accounted for as a troubled debt restructuring - On June 17, 2025, the Fourth Amendment to the Avenue Loan Agreement extended the maturity date to July 1, 2028[114] - The interest rate on the loans was reduced from 12.0% to 8.0% (payable half in cash and half in kind), and the lenders' option to convert up to $10.0 million of loans into common stock was eliminated[114] - The Company issued warrants to the Lenders to purchase 350,000 shares of common stock at an exercise price of $4.00 per share[114] Corporate Information The company, formerly Eyenovia, Inc., reincorporated in Delaware in 2014 and changed its name to Hyperion DeFi, Inc. on July 1, 2025. Its principal executive office is in Laguna Hills, CA - The Company was incorporated in Florida on March 12, 2014, reincorporated in Delaware on October 6, 2014, and changed its name to Hyperion DeFi, Inc. on July 1, 2025[115] Implications of Being a Smaller Reporting Company As a 'smaller reporting company,' Hyperion DeFi benefits from scaled disclosures until it exceeds certain market value or revenue thresholds. The company reported net losses of $12.2 million and $22.0 million for the six months ended June 30, 2025 and 2024, respectively, with an accumulated deficit of $207.5 million - The Company is a 'smaller reporting company,' allowing it to take advantage of scaled disclosures[116] - Net losses were $12.2 million and $22.0 million for the six months ended June 30, 2025 and 2024, respectively, with an accumulated deficit of approximately $207.5 million as of June 30, 2025[117] Financial Overview This section outlines the company's revenue, cost of revenue, and operating expenses. Revenue from ophthalmological products has ceased. R&D expenses are expected to decline post-Optejet UFD registration, while SG&A expenses are anticipated to decrease in the short term following strategic evaluations and the private placement Revenue and Cost of Revenue The company has ceased sales efforts for its ophthalmological products, resulting in no revenue from sales in the current period. Cost of sales previously consisted of production costs for these products - The Company has ceased sales efforts for its ophthalmological products and reported no revenue from sales in the current period[118] Research and Development Expenses R&D expenses for 2025 primarily consist of internal salaries, benefits, and non-cash stock-based compensation related to the Optejet UFD. These expenses are expected to decline after the device's FDA registration. In 2024, R&D was dominated by contract service expenses for the terminated CHAPERONE study - R&D expenses in 2025 primarily consist of internal salaries, benefits, and non-cash stock-based compensation for the Optejet UFD development[120] - R&D expenses are anticipated to decline after the Optejet UFD device is registered[120] - Prior to the termination of the CHAPERONE study in November 2024, R&D expenses were mainly contract service expenses[121] Selling, General and Administrative Expenses SG&A expenses primarily include payroll, legal, insurance, and non-cash stock-based compensation. These expenses are expected to decrease in the short term following the conclusion of strategic option reviews, the private placement, and the establishment of the treasury strategy - SG&A expenses consist primarily of payroll, legal and professional services, insurance, and non-cash stock-based compensation[124] - SG&A expenses are anticipated to decrease in the short term after the conclusion of strategic option reviews, the private placement, and the establishment of the treasury strategy[124] Results of Operations This section details the financial performance for the three and six months ended June 30, 2025, compared to 2024, highlighting significant changes in revenue, operating expenses (R&D, SG&A), reacquisition of license rights, and other income/expense Three Months Ended June 30, 2025 Compared with Three Months Ended June 30, 2024 For Q2 2025, the company reported no revenue, a significant decrease in R&D expenses due to layoffs and study termination, and a substantial increase in SG&A expenses driven by a non-cash inducement grant. Other income shifted to a net expense - No revenue or cost of revenue was recorded for the three months ended June 30, 2025, compared to $22,625 revenue and $490,361 cost of revenue (including $0.5 million inventory write-down) in Q2 2024[125][126] - R&D expenses decreased by $3.9 million (85%) to $0.7 million in Q2 2025, primarily due to layoffs, impairment of ROU assets, and termination of the CHAPERONE study[127] - SG&A expenses increased by $3.9 million (106%) to $7.7 million in Q2 2025, mainly due to a $5.5 million non-cash stock-based compensation for an executive inducement grant and increased legal/consulting fees[128] - Other income (expense) shifted from $0.6 million net income in Q2 2024 to $0.3 million net expense in Q2 2025, primarily due to interest expense and the absence of a gain from change in fair value of equity consideration[130] Six Months Ended June 30, 2025 Compared with Six Months Ended June 30, 2024 For H1 2025, revenue remained minimal, while R&D expenses significantly decreased due to operational restructuring. SG&A expenses increased due to non-cash stock-based compensation and professional fees related to strategic alternatives. Reacquisition of license rights had no cost in 2025, and other income/expense remained a net expense - Revenue for H1 2025 was $14,720, with minimal cost of revenue, compared to $27,618 revenue and $693,388 cost of revenue (including $0.7 million inventory write-down) in H1 2024[131][133] - R&D expenses decreased by $7.7 million (86%) to $1.3 million in H1 2025, driven by layoffs, termination of the CHAPERONE study, and reduced facilities/depreciation expenses[134] - SG&A expenses increased by $2.7 million (36%) to $10.1 million in H1 2025, primarily due to a $5.7 million non-cash stock-based compensation for an executive inducement grant and increased professional fees related to strategic alternatives[135] - Reacquisition of license rights was $0 in H1 2025, compared to $4.9 million in H1 2024 (including $3.0 million settled in common stock to Bausch + Lomb)[136] - Net other expense for H1 2025 was $0.8 million, primarily from $1.1 million interest expense, partially offset by other income and a gain on debt extinguishment[137] Liquidity and Going Concern The company has historically relied on equity and debt financing due to negative operating cash flows and recurring net losses. While cash and equity improved significantly by June 30, 2025, a working capital deficit persists. Management plans to address going concern issues through expense reduction, further financing, and potential HYPE token sales Liquidity Metrics | Metric | June 30, 2025 | December 31, 2024 | | :---------------------- | :-------------- | :------------------ | | Cash and Cash Equivalents | $7,532,291 | $2,121,463 | | Working (Deficit) Capital | $(923,797) | $(13,279,008) | | Notes Payable (Gross) | $8,170,886 | $10,740,402 | - The Company has a history of negative cash flows from operations and recurring net losses, with an accumulated deficit of $207.5 million as of June 30, 2025[140][141] - Cash and cash equivalents increased to $7.5 million, and HYPE digital tokens were valued at $45.5 million as of June 30, 2025, significantly improving the financial position compared to December 31, 2024[141] - Net cash used in operating activities decreased to $7.9 million in H1 2025 from $18.1 million in H1 2024[142] - Management's plans to alleviate going concern doubts include reducing operating expenses, raising additional funds, and potentially selling HYPE digital tokens[33] Risks and Uncertainties The company acknowledges risks from global conflicts (Russia-Ukraine, Middle East, India-Pakistan) which could impact material prices and adversely affect business operations - Global conflicts (Russia-Ukraine, Middle East, India-Pakistan) could lead to increased material prices, adversely affecting the company's business and operations[146] Off-Balance Sheet Arrangements The company has no material off-balance sheet arrangements that would significantly affect its financial condition or results of operations - The Company has no material off-balance sheet arrangements[147] Critical Accounting Estimates The company's financial statements rely on management's estimates, particularly for highly uncertain matters, where changes could materially impact financial condition or results. These estimates are evaluated continuously - Critical accounting estimates involve assumptions about highly uncertain matters, and changes in these estimates could materially impact financial condition or results of operations[148][149] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Hyperion DeFi, Inc. is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, Hyperion DeFi, Inc. is exempt from providing quantitative and qualitative disclosures about market risk[150] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses in accounting for complex, non-routine transactions (equity shares, debt modification) and identifying/recording ROU asset impairments. Despite this, the financial statements are believed to fairly present the financial position - As of June 30, 2025, disclosure controls and procedures were deemed not effective due to material weaknesses[153] - Material weaknesses include failures to properly design and implement effective controls over accounting for significant and complex non-routine transactions (equity shares, debt modification) and identifying/recording impairments of Right-of-Use (ROU) assets[157] - Despite material weaknesses, management believes the financial statements fairly present the company's financial position, results of operations, and cash flows[155] - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[156] Part II - Other Information This part covers legal proceedings, risk factors, equity sales, defaults, and other miscellaneous information Item 1. Legal Proceedings The company is not currently a party to any material legal proceedings, though it may become involved in ordinary course litigation, which could have adverse impacts regardless of the outcome - The Company is not currently a party to any material legal proceedings[159] Item 1A. Risk Factors This section outlines significant risks, particularly those related to the company's new HYPE digital token treasury strategy. Key risks include HYPE price volatility, regulatory uncertainty for digital assets, enhanced regulatory oversight due to the HYPE strategy, potential classification of HYPE as a 'security,' and risks associated with digital asset custody and smart contracts. Delisting from Nasdaq is also a concern - HYPE is a highly volatile asset, and fluctuations in its price may significantly influence the company's financial results and the market price of its listed securities[161][162] - HYPE and other digital assets are subject to significant legal and regulatory uncertainty, with potential for new laws or interpretations that could adversely affect HYPE's price or the company's ability to own/transfer it[163][164][167] - The HYPE treasury strategy subjects the company to enhanced regulatory oversight, including potential scrutiny under anti-money laundering, sanctions, and money services regulations[168][169] - There is a risk that HYPE could be classified as a 'security,' which would subject the company to additional regulation (e.g., Investment Company Act) and could materially impact business operations[177][179][181][184] - Risks related to the custody of HYPE include loss or destruction of private keys, cyberattacks, smart contract vulnerabilities, and potential treatment as a general unsecured creditor in custodian insolvency[186][188][189][190] - The adoption of ASU 2023-08 requires measuring HYPE at fair value, recognizing gains/losses in net income, which will increase volatility in reported earnings and could subject the company to the corporate alternative minimum tax (CAMT)[191][192][194][195] - Delisting from Nasdaq could adversely affect the price and liquidity of common stock, deter broker-dealers, and increase volatility[202][204] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities and no purchases of equity securities by the issuer or affiliated purchasers during the period - No unregistered sales of equity securities or purchases of equity securities by the issuer and affiliated purchasers were reported[207][208] Item 3. Defaults Upon Senior Securities This item is not applicable to the company for the reporting period - This item is not applicable[209] Item 4. Mine Safety Disclosures This item is not applicable to the company for the reporting period - This item is not applicable[210] Item 5. Other Information No directors, officers, or the company adopted or terminated any Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during the six months ended June 30, 2025 - No directors, officers, or the Company adopted or terminated any Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during the six months ended June 30, 2025[211] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, warrant forms, loan agreements, employment agreements, and certifications, indicating whether they are incorporated by reference or filed herewith - The exhibits include various corporate documents such as Certificates of Incorporation, Bylaws, Warrant Forms, Loan and Security Agreements, Securities Purchase Agreement, Registration Rights Agreement, and Executive Employment Agreements[212] - Certifications of the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are filed herewith[213] Signatures This section contains the official signatures, confirming the accuracy and completeness of the report as filed by the company's executive officers - The report is signed by Michael Rowe, Chief Executive Officer (Principal Executive Officer) of HYPERION DEFI, INC. on August 13, 2025[218][219]