Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and notes required by GAAP for annual financial statements. A complete discussion of the Company’s significant accounting policies is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all of the adjustments necessary to present the financial position of the Company as of June 30, 2026 and the results of operations and cash flows for the periods presented. The accompanying unaudited condensed consolidated financial statements of the Company have not been audited by the Company’s independent registered public accounting firm, except that the year-end consolidated balance sheet was derived from audited financial statements. The results of operations for the six months ended June 30, 2026 are not necessarily indicative of the operating results for the full fiscal year or any future period.

Reverse Stock Splits

On June 16, 2025, in order to maintain a minimum closing bid price of $1.00 per share, as required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2), the Company effectuated a 1-for-25 reverse stock split of its issued and outstanding common stock. On June 11, 2026, the Company effectuated a 1-for-10 reverse stock split of its issued and outstanding common stock (collectively, the “Reverse Stock Splits”).

No fractional shares were issued as a result of the Reverse Stock Splits. Stockholders who otherwise would be entitled to receive a fractional share in connection with the Reverse Stock Splits received one full share of the post-Reverse Stock Splits Common Stock in lieu of such fractional share. The Reverse Stock Splits had no effect on the Company’s authorized shares of common stock or preferred stock and the par value remained unchanged at $0.00001.

The Reverse Stock Splits reduced the number of shares of Common Stock issuable upon the exercise or vesting of the Company’s outstanding warrants, restricted stock units and convertible preferred stock in proportion to the ratio of the Reverse Stock Splits and caused a proportionate increase in the exercise or conversion prices of such convertible securities, as applicable. All common stock share, option, warrant and per share amounts (except our authorized but unissued shares and previously reserved shares) have been retroactively adjusted in these unaudited condensed consolidated financial statements and related disclosures.

Basis of Consolidation

The unaudited condensed consolidated financial statements have been prepared on a consolidated basis with Shuttle Pharmaceuticals, Inc., Shuttle Diagnostics, Inc., and Molecule.ai., wholly-owned subsidiaries of the Company. All intercompany transactions and balances have been eliminated.

In May 2026, as a result of the merger transaction described in Note 7, United Dogecoin became wholly-owned by the Company. However, the Company does not have a controlling interest in United Dogecoin and, as such, does not consolidate United Dogecoin. See Note 7 for discussion on the accounting for the Company’s non-control investment in United Dogecoin.

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Significant estimates are contained in the accompanying unaudited condensed consolidated financial statements for the valuation of debt, warrants, pre-funded warrants, contingent consideration liabilities, bifurcated derivative liabilities, stock-based compensation awards, and other financial instruments.

Cash and Cash Equivalents

Cash and cash equivalents include cash in bank accounts and money market funds with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. As of June 30, 2026 and December 31, 2025, cash and cash equivalents consisted of the following:

 Schedule of Cash and Cash Equivalents 

Periodically, the Company may carry cash balances at financial institutions in excess of the federally insured limit of $250,000 per institution. As of June 30, 2026, no cash balances were held in excess of federally insured limits. The Company has not experienced losses on these accounts and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant.

Investment in Equity Securities

The Company accounts for investments in equity securities in accordance with ASC 321, Investments – Equity Securities. For investments that do not have a readily determinable fair value and for which the Company does not exercise significant influence, the investments are carried at cost, less any impairment, adjusted for observable price changes from orderly transactions involving identical or similar investments of the same issuer. The Company evaluates such investments for impairment at each reporting date by performing a qualitative assessment of impairment indicators. If this assessment indicates the investment is impaired, the Company estimates the investment’s fair value and recognizes an impairment loss in earnings equal to the excess of the carrying value over fair value, establishing a new cost basis for the investment.

Fair Value of Financial Instruments

The Company follows accounting guidelines on fair value measurements for financial instruments measured on a recurring basis, as well as for certain assets and liabilities that are initially recorded at their estimated fair values. Fair value is defined as the exit price, or the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The Company uses the following three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs to value its financial instruments:

Financial instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires the Company to make judgments and consider factors specific to the asset or liability. The use of different assumptions and/or estimation methodologies may have a material effect on estimated fair values. Accordingly, the fair value estimates disclosed, or initial amounts recorded, may not be indicative of the amount that the Company or holders of the instruments could realize in a current market exchange.

The carrying amounts of the Company’s financial instruments including cash and cash equivalents, prepaid expenses, accounts payable and accrued liabilities approximate fair value due to the short-term maturities of these instruments.

Set out below are the Company’s financial instruments that are required to be remeasured at fair value on a recurring basis and their fair value hierarchy as of June 30, 2026 and December 31, 2025:

 Schedule of Fair Value Liabilities Measured on Recurring Basis

See Note 5 and Note 9 for additional disclosures related to the fair value of the Company’s convertible notes and derivative liabilities, respectively.

Derivative Financial Instruments

The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the unaudited condensed consolidated statements of operations.

For our derivative financial instruments classified as a liability, we use a Black-Scholes Model to value the derivative instruments at inception and on subsequent valuation dates. The model requires specification of the current stock price, exercise price, expected term, expected volatility, a risk-free interest rate aligned with the expected term, and expected dividend yield. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the unaudited condensed consolidated balance sheets as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within twelve (12) months of the balance sheet date.

Convertible Notes Payable

The Company accounts for its Convertible Bridge Notes (as defined in Note 5) under the fair value option in accordance with ASC 825, Financial Instruments (“ASC 825”). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. Additional term or other notes may be issued in subsequent periods where the Company would be able to make a fair value option election upon issuance provided eligibility criteria are met. The Company records the portion of the Convertible Bridge Notes that are issued and outstanding for accounting purposes at fair value with changes in fair value recorded in other income (expense), net in the unaudited condensed consolidated statements of operations, except for the portion of the total change in fair value that results from a change in the instrument-specific credit risk of the Convertible Bridge Notes, which is recorded in other comprehensive income (loss), if applicable. No loss was attributed to changes in credit risk for the periods presented therefore net loss was equal to comprehensive loss. The fair value option election was made to align the accounting for the Convertible Bridge Notes with the Company’s financial reporting objectives and reduce operational effort to account for embedded features that otherwise would require bifurcation as a separate unit of account.

Pursuant to the fair value option election, direct and incremental debt issuance costs and consideration paid to the lender related to the Convertible Bridge Notes were expensed as incurred and recorded in other income (expense), net in the unaudited condensed consolidated statements of operations.

For convertible notes for which the fair value option is not elected, the Company evaluates the convertible notes for embedded features and bifurcates these features (such as conversion options and redemption options) from their host instruments and accounts for them as free standing derivative financial instruments if certain criteria are met. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

Convertible Preferred Stock

The Company evaluates its preferred stock instruments pursuant to FASB ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and other applicable accounting guidance to determine whether such instruments should be classified as liabilities, temporary equity, or stockholders’ equity. Preferred stock instruments that are mandatorily redeemable or otherwise constitute an obligation requiring the Company to transfer assets are classified as liabilities. Preferred stock instruments that are redeemable for cash or other assets upon events that are not solely within the Company’s control are evaluated for temporary equity classification.

The Company’s Series B-1 and Series B-2 Convertible Preferred Stock do not contain redemption features that require liability or temporary equity classification. Accordingly, the Series B-1 Convertible Preferred Stock and Series B-2 Convertible Preferred Stock are classified within stockholders’ equity. As of June 30, 2026, the Company had 9,673 shares of Series B-1 Convertible Preferred Stock and 1,910 shares of Series B-2 Convertible Preferred Stock issued and outstanding. The Series B-1 Convertible Preferred Stock and Series B-2 Convertible Preferred Stock each have a stated value and liquidation preference of $5,000 per share.

Warrants

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. Finally, the Company determines if the warrants meet the definition of a derivative based on their contractual terms. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and at each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the unaudited condensed consolidated statements of operations. The Company also evaluates if changes in contractual terms or other considerations would result in the reclassification of outstanding warrants from liabilities to stockholders’ equity (or vice versa).

The Company may also issue or enter into arrangements to issue pre-funded warrants that contain contingent issuance, settlement or exercisability provisions. The Company evaluates these instruments under ASC 480 and ASC 815 to determine whether the instruments should be classified within stockholders’ equity or accounted for as liabilities. For contingent pre-funded warrants determined to be equity-classified, the instruments are recorded within additional paid-in capital at their estimated fair value on the applicable measurement date and are not subsequently remeasured unless modified or required to be reclassified. If contingent pre-funded warrants do not meet the criteria for equity classification, the instruments are recorded as liabilities at fair value and remeasured at each reporting date, with changes in fair value recognized in earnings.

When fair value measurement is required for contingent pre-funded warrants, the Company estimates fair value using a probability-weighted valuation approach that incorporates management’s assessment of the likelihood of satisfying the underlying contractual conditions. Significant assumptions utilized in these valuations may include the Company’s stock price, the expected timing of contingent events, the probability of satisfying specified performance, operational or other contractual conditions, and the likelihood of obtaining any required approvals.

Stock-Based Compensation

The Company accounts for stock-based compensation using the provisions of ASC 718, Stock-Based Compensation (“ASC 718”), which requires the recognition of the fair value of stock-based compensation. Stock-based compensation is estimated at the grant-date based on the fair value of the awards. The fair value of restricted stock units (“RSUs”) is based on the quoted price of our common stock on the grant-date. We estimate the grant-date fair value of stock options using the Black-Scholes option-pricing model, which requires certain assumptions that impact the estimation of fair value and related compensation expense. The assumptions used to estimate fair value include the expected volatility of a representative peer group of publicly traded companies, the risk-free interest rate, the expected term of the award, and the expected dividend yield. A description of the key assumptions used in determining the fair value of stock options is provided below:

The Company accounts for forfeitures of grants as they occur. Compensation cost for awards is recognized using the straight-line method over the requisite service period

Research and Development Expenses

Research and development expenses are charged to expense as incurred. Research and development expenses include, but are not limited to, product development, clinical and regulatory expenses, payroll and other personnel expenses, which may include portions of the Company’s executives to the extent they are actively involved in the research and development activities, materials, supplies, related subcontract expenses, and consulting costs.

Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use asset (“ROU”), operating lease liability - current, and operating lease liability - noncurrent on the consolidated balance sheets.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the related obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the estimated rate of interest for collateralized borrowing, over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the asset may not be fully recoverable. Recoverability of assets is measured by a comparison of the carrying amount of an asset to the estimated undiscounted cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge will be recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. There were no impairments of long-lived assets during the periods presented.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Expenditures for maintenance and repairs are charged to expense as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method for substantially all assets with estimated lives as follows:

Schedule of Useful Lives for Property Plant Equipment

Internal-Use Software

All costs related to the development of internal use software, other than those incurred during the application development stage, are expensed as incurred. Costs incurred during the application development stage are capitalized and amortized over the estimated useful life of the software, which is typically four years. The estimated useful lives of internally developed software are reviewed frequently and adjusted as appropriate to reflect upcoming development activities that may include significant upgrades and/or enhancements to the existing functionality. Capitalized internally developed software costs are amortized on a straight-line basis over their expected economic lives. Amortization of these costs begins once the product is ready for its intended use. The amount of costs capitalized within any period is dependent on the nature of software development activities and projects in each period.

Intangible Assets

Intangible assets can include intangible assets acquired as part of business combinations, asset acquisitions and other business transactions. The Company records intangible assets at cost, net of accumulated amortization and accumulated impairment losses, if any. Cost is measured based on the fair values of cash consideration paid and equity interests issued. The cost of an intangible asset acquired is its acquisition date fair value. Amortization of definite life intangible assets is calculated on a straight-line basis over the estimated useful lives of the assets.

Income Taxes

The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes (“ASC 740”). ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, the Company does not foresee generating taxable income in the near future and utilizing its deferred tax asset, therefore, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company has no material uncertain tax positions for any of the reporting periods presented.

Segment Information

Operating segments are defined as components of an enterprise about which separate and discrete information is available for evaluation by the chief operating decision-maker (“CODM”) in deciding how to allocate resources and assess performance. The Company’s CODM, its chief executive officer, evaluates the Company’s operations and manages its business as a single operating segment. With the exception of the Molecule.ai intangible asset, substantially all of the Company’s long-lived assets are held in the United States. The Molecule.ai intangible asset is recorded on the books of the Company’s Canadian subsidiary. Refer to Note 11 for the Company’s disclosure on its single operating segment.

Net Loss Per Common Stock

Net loss per share of common stock requires presentation of basic and diluted earnings per common share on the face of the unaudited condensed consolidated statements of operations for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic earnings per share computation to diluted earnings per share.

In the accompanying unaudited condensed consolidated financial statements, basic loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the year. Certain warrants issued and outstanding include terms and conditions resulting in the treatment as participating securities. Such warrants do not include an obligation for the warrant holders to fund the losses of the Company. Therefore, these warrants are excluded from the calculation of earnings per common share in periods of net loss.

Diluted earnings per share is computed by dividing net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding and potentially dilutive shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through convertible securities, contingent share arrangements, stock options and warrants unless the result would be antidilutive.

The dilutive effect of restricted stock units and other stock-based payment awards subject to vesting and common stock warrants is calculated using the “treasury stock method,” which assumes that the “proceeds” from the exercise of these instruments are used to purchase common shares at the average market price for the period. The dilutive effect of convertible securities is calculated using the “if-converted method.” Under the if-converted method, securities are assumed to be converted at the beginning of the period, and the resulting shares of common stock are included in the denominator of the diluted calculation for the entire period being presented.

Given the nominal exercise price of the Company’s pre-funded warrants, other than the 2026 Pre-Funded Warrants, such pre-funded warrants are included in the calculation of basic and diluted net loss per share as the exercise price per warrant is deemed non-substantive when compared to the fair value of the underlying common shares. The 2026 Pre-Funded Warrants are contingently issuable upon the achievement of specified milestone events, subject to stockholder approval (see Note 8). Contingently issuable shares are considered outstanding common shares and included in basic net loss per share as of the date that all necessary conditions have been satisfied (i.e., when issuance of the shares is no longer contingent on any conditions except the passage of time).

For the six months ended June 30, 2026 and year ended December 31, 2025, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive:

Schedule of Anti-dilutive Securities Excluded from Computation of Earnings Per Share

Recently Adopted Accounting Pronouncements

In December 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The guidance is effective for the Company’s fiscal years beginning after December 15, 2024. The Company adopted ASU 2023-09, effective December 31, 2025, in these unaudited condensed consolidated financial statements. ASU 2023-09 which only impacted the disclosures and did not otherwise impact the unaudited condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (“DISE”), which requires disaggregated disclosure of income statement expenses for public business entities. The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the notes to the financial statements. ASU 2024-03 is effective for all public business entities for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the potential impact that this standard may have on its unaudited condensed consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-use Software (Subtopic 350-40), which modernizes the accounting framework for internal-use software. The ASU removes all references to prescriptive and sequential software development stages to reflect the current software development methodologies and frameworks. Under the ASU, an entity is required to start capitalizing software development costs when both of the following occur: (i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended. ASU 2025-06 is effective for all entities for fiscal years beginning after December 15, 2027, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the potential impact that this standard may have on its unaudited condensed consolidated financial statements and related disclosures.

There have been no other recent accounting pronouncements, changes in accounting pronouncements or recently adopted accounting guidance that are of significance or potential significance to the Company.