UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
For the quarterly period ended
OR
For the transition period from to
Commission file number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
(Address of principal executive offices) (Zip code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on which Registered | ||
| The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | |
| ☒ | Smaller Reporting Company | |||
| Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of November 9, 2026,
INDEX
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PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
VYOME HOLDINGS, INC. AND SUBSIDIARIES.
Condensed Consolidated Balance Sheets
| (Amount in USD) | September 30, 2026 (Unaudited) |
December 31, 2025 |
||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Property and equipment, net | ||||||||
| Intangible asset - shell company | ||||||||
| Goods and services tax and other credits receivable | ||||||||
| Prepaid insurance – long-term portion | ||||||||
| Right-of-use asset, net | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Due to Affiliates | ||||||||
| Operating lease liability - current portion | ||||||||
| Salary and post-employment benefits payable | ||||||||
| Insurance premium financing | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity | ||||||||
| Common stock, | ||||||||
| Additional paid in capital | ||||||||
| Non-controlling interest in VTI; | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
VYOME HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30,
| (Amount in USD) | 2026 | 2025 | ||||||
| Revenue | $ | $ | ||||||
| Cost of goods sold | ( | ) | ( | ) | ||||
| Gross profit | ||||||||
| Operating expenses | ||||||||
| Depreciation and amortization | ||||||||
| Selling, general and administrative | ||||||||
| Research and development | ||||||||
| Transactional fees | ||||||||
| Total operating expenses | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Other income/(expense), net: | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Interest income and other | ||||||||
| Fair value adjustment | ||||||||
| Total other income (expense), net | ( | ) | ||||||
| Net loss | ( | ) | ( | ) | ||||
| Net loss attributable to non-controlling interest | ( | ) | ( | ) | ||||
| Net loss attributable to owners of the Company | ( | ) | ( | ) | ||||
| Net loss | ( | ) | ( | ) | ||||
| Other comprehensive loss | ||||||||
| Foreign currency translation adjustments | ( | ) | ( | ) | ||||
| Total comprehensive loss | $ | ( | ) | $ | ( | ) | ||
| Net Loss per common share: | ||||||||
| Loss per common share – basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of shares outstanding | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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VYOME HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30,
| (Amount in USD) | 2026 | 2025 | ||||||
| Revenue | $ | $ | ||||||
| Cost of goods sold | ( | ) | ( | ) | ||||
| Gross profit | ||||||||
| Operating expenses | ||||||||
| Depreciation and amortization | ||||||||
| Selling, general and administrative | ||||||||
| Research and development | ||||||||
| Transactional fees | ||||||||
| Total operating expenses | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Other income/(expense), net: | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Interest income and other | ||||||||
| Fair value adjustment | ||||||||
| Total other income (expense), net | ( | ) | ||||||
| Net loss | ( | ) | ( | ) | ||||
| Net loss attributable to non-controlling interest | ( | ) | ( | ) | ||||
| Net loss attributable to owners of the Company | ( | ) | ( | ) | ||||
| Net loss | ( | ) | ( | ) | ||||
| Other comprehensive loss | ||||||||
| Foreign currency translation adjustments | ( | ) | ( | ) | ||||
| Total comprehensive loss | $ | ( | ) | $ | ( | ) | ||
| Net Loss per common share: | ||||||||
| Loss per common share – basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of shares outstanding | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
VYOME HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2026, AND 2025
| Common stock of VHI | Preferred stock | Additional Paid-in |
Accumulated | Non- controling Interest |
Accumulated Other Comprehensive Income |
Total Stockholder’s equity |
||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | VTI Shares | Amount | (Loss) | (Deficit) | |||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
| Net loss for the period | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | ||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
| Net loss for the period | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | ||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||||||||||||||||||||||
| Issuance (and exercise) of warrants to investors | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Conversion of certain preferred shares for new classes of preferred shares | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Issuance of shares to advisors | ||||||||||||||||||||||||||||||||||||||||
| Conversion of preferred stock to common stock | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Conversion of notes payable to common stock | ||||||||||||||||||||||||||||||||||||||||
| Net shares of VTI exchanged into Vyome Holdings common stock | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Shares issued in connection with concurrent financing | ||||||||||||||||||||||||||||||||||||||||
| Shares issued in connection with ATM financing, net of costs | ||||||||||||||||||||||||||||||||||||||||
| Deferred cost offset against concurrent financing | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Net loss for the period | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||
| Common stock of VHI | Preferred stock | Additional Paid-in |
Accumulated | Non- controling Interest |
Accumulated Other Comprehensive Income |
Total Stockholder’s equity |
||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | VTI Shares | Amount | (Loss) | (Deficit) | |||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||
| Shares issued in connection with ATM financing, net of costs | ||||||||||||||||||||||||||||||||||||||||
| Adjustment of net liabilities assumed in Merger transaction | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Issuance of shares to marketing firm | ||||||||||||||||||||||||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||||||||||||||||||||||
| Net loss for the period | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||
| Costs incurred in connection with ATM financing | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Adjustment of net liabilities assumed in Merger transaction | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||||||||||||||||||||||
| Net loss for the period | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||||||||||||||||||||||
| Net loss for the period | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2026 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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VYOME HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30,
| (Amount in USD) | 2026 | 2025 | ||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| (Gain) loss on fair value adjustment of convertible debt | ( | ) | ||||||
| Non-cash accrued interest expense | ||||||||
| Stock compensation expenses - stock options | ||||||||
| Stock compensation expenses – common stock | ||||||||
| Changes in assets and liabilities: | ||||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Other assets | ||||||||
| Accounts payable & accrued expenses | ( | ) | ||||||
| Due to Affiliates | ( | ) | ||||||
| Salary and post-employment benefits payable | ( | ) | ( | ) | ||||
| Other liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Net proceeds from sale/purchase of fixed assets | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of convertible debt | ||||||||
| Proceeds from promissory note issued by Reshape | ||||||||
| Proceeds from sale of common stock pursuant to ATM | ||||||||
| Proceeds from sale of common stock under Concurrent Financing | ||||||||
| Issuance costs of Concurrent Financing | ( | ) | ||||||
| Insurance premium financing | ( | ) | ( | ) | ||||
| Proceeds from exercise of warrants | ||||||||
| Net cash generated from financing activities | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ( | ) | ||||
| Net increase in cash and cash equivalents | ||||||||
| Cash and cash equivalents at beginning of the period | ||||||||
| Cash and cash equivalents at end of the period | $ | $ | ||||||
| Supplemental non-cash and financing activities: | ||||||||
| Interest paid | ||||||||
| Adjustment of net liabilities assumed in Merger transaction | ( | ) | ||||||
| Insurance premium financed | ||||||||
| Incremental fair value of exchange of VTI preferred shares for new series | ||||||||
| Conversion of preferred shares of VTI to common stock of VTI | ||||||||
| Reclassification of debt and equity accounts to non-controlling interests | ||||||||
| Conversion of debt into common stock | ||||||||
| Fair value of issuance of warrants to preferred shareholders | ||||||||
| Reclass of deferred offering costs to additional paid in capital | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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VYOME HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2026 AND 2025
(All amounts are in US Dollars and as stated otherwise)
1. Organization and principal activities
a) Business
The Company is a Cambridge, MA/Princeton, NJ/New Delhi, India-based clinical-stage specialty pharmaceutical company working to treat immune-inflammatory and rare diseases of unmet need with next-generation therapeutic solutions. The lead program, VT-1953, is a topical gel that is being developed to treat signs and symptoms of malignant fungating wounds, and it can be a potential orphan drug-designated program. The Company had initiated a Phase II investigator-initiated trial in the first quarter of 2025 for VT-1953 and announced interim results in September 2025 and final results in December 2025. The Company filed an application for Orphan Drug Designation for the VT-1953 program with the FDA in January 2026. In March 2026, the Company submitted a pre-IND briefing package to the FDA for its VT-1953 program, including its proposed pivotal clinical study strategy for the treatment of malodor and other symptoms associated with malignant fungating wounds. During the second quarter of 2026, the Company received the FDA’s written response on the proposed clinical development program described in the pre-IND briefing package submitted in March 2026. The Company is incorporating the FDA’s feedback and plans to continue its engagement with the FDA through a Type C meeting prior to advancing the pivotal clinical development program. During the third quarter of 2026, the Company continued research and development activities, including clinical development planning, CMC development, and preparatory work with prospective GMP manufacturing partners. In the third quarter, the Company received written correspondence from the FDA requesting additional information and clarifications in connection with its Orphan Drug Designation application for VT-1953 filed in January 2026. The Company is preparing its response to the FDA and intends to continue to work with the FDA as part of the ongoing regulatory review process.
Also, the Company has a pre-investigational New Drug application stage ophthalmic drops program, a potentially orphan drug designated program, and a repurposed immune modulator to treat steroid-sparing anterior uveitis. During the third quarter of 2026, the Company continued research and development activities for its topical ophthalmic program, including formulation and CMC development, GMP manufacturing planning, and preparation for future clinical development.
Another late clinical-stage program, VB-1953, for moderate to severe inflammatory acne has completed its Phase II clinical trial with positive readouts, and this program is Phase III ready. The Company is also developing other assets for treating immune-inflammatory diseases, which are in pre-clinical or early clinical development.
The Company also has commercialized novel reformulated topical antifungal products using its patented technology after two such products successfully completed clinical testing in India.
The Company has entered into a Development and Licensing agreement for Luliconazole (an antifungal product) with the Sun Pharma group of companies in India (“Sun Pharma”) for additional development and commercialization in India. Sales of Luliconazole commenced in the third quarter of 2023 by Sun Pharma, and the Company earns royalties and milestone payments from this arrangement.
On May 8, 2026, the Company entered into an in-licensing agreement with Impetis Biosciences Limited (a TATA Enterprise) relating to certain preclinical JAK inhibitor assets, pursuant to which the Company has no upfront payment obligations, development funding commitments, or milestone payment obligations, and consideration is limited to a
6
Since its inception, the Company has devoted substantially all its efforts to drug development, business planning, research and development, conducting clinical trials, recruiting management and technical staff, acquiring operating assets, and raising capital. The Company is subject to risks common to companies in the biotechnology industry, including, but not limited to, successful development of technology, obtaining additional funding, protection of proprietary technology, compliance with government regulations, risks of delays or failure of pre-clinical studies, clinical studies and clinical trials, the need to obtain marketing approval for its drug candidates and its consumer products, fluctuations in operating results, economic pressure impacting therapeutic pricing, dependence on key personnel, risks associated with changes in technologies, development by competitors of technological innovations and the ability to transition from pilot scale manufacturing to large scale production.
b) Merger Transaction:
Vyome Holdings, Inc. (“Vyome Holdings”, “VHI” or the “Company”), formerly known as ReShape Lifesciences Inc. (“Reshape”), is the holding company for Vyome Therapeutics, Inc. (“VTI”), a Delaware corporation, and its subsidiary in India, Vyome Therapeutics Limited (“VTL”), which are collectively referred to as “Vyome”.
VTI signed a definitive merger agreement (“Merger”) with Reshape Lifesciences, Inc. (“Reshape”) in July 2024, and such transaction was completed on August 15, 2025. Immediately prior to the Merger, Reshape sold substantially all of its assets and operations to a third-party. Immediately prior to the Merger, all of the convertible notes and preferred stock of Vyome were converted into shares of common stock based upon negotiated values. As a result of the Merger, the Board of Directors and management team of Reshape resigned, the Board of Directors and management of VTI were installed, and the Company became a Nasdaq-listed company. Reshape changed its name to Vyome Holdings, Inc. (the “Combined Company”) and began trading under the ticker symbol “HIND”. The Company will focus on Vyome’s business of advancing the development of its immuno-inflammatory assets and on identifying additional opportunities in the world-class US-Indian innovation corridor for the global market.
The Company has accounted for the transaction as a reverse recapitalization with VTI as the accounting acquirer. Because VTI is the accounting acquirer, its historical financial statements became the Company’s historical financial statements, and such assets and liabilities continued to be recorded at their historical carrying values. The impact of the recapitalization has been retroactively applied to all periods presented. Immediately after the closing of the Merger and the consummation of a private placement offering, the former holders of common stock of VTI owned, in the aggregate, approximately
c) Going Concern
The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. For the nine months ended September 30, 2026 and 2025, the Company generated a net loss of $
Obtaining additional financing to support the successful development of the Company’s contemplated plan of drug development and operations and its transition, ultimately, to the attainment of profitable operations, is necessary for the Company to continue operations. The Company will continue to seek funds through debt or equity financings, marketing and distribution arrangements, and other collaborations, strategic alliances, and licensing arrangements, or other sources of financing. However, there can be no assurances that such financing or other strategic transactions will be available on acceptable terms, or at all. If the Company is unable to raise additional funds, it will need to do one or more of the following:
| ● | Delay clinical trials and processes; |
| ● | License third parties to develop and commercialize products or technologies that it would otherwise seek to develop and commercialize itself; |
7
| ● | Seek strategic alliances or business combinations; |
| ● | Attempt to sell the Company; |
| ● | Cease operations; or |
| ● | Declare bankruptcy |
As a result of the Merger transaction and ATM facility described in Note 11, and depending upon the timing of the commencement of certain clinical activities, the Company believes it has sufficient funds to finance the operating requirements for at least the next 12 months from the issuance of these condensed consolidated financial statements. The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. Management continues to implement plans to manage the timing and amount of expenses and seek additional financing. However, there can be no assurance that these plans will be successful.
2. Summary of Significant Accounting Policies
a) Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”), and reflect all adjustments consisting only of normal recurring adjustments of the Company, which are, in the opinion of management, necessary for a fair presentation of the financial position as of September 30, 2026 and December 31, 2025, and the results of operations, and cash flows for the periods presented. Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”). Certain reclassifications have been made to the prior period condensed consolidated financial statements to conform to the current period presentation. These reclassifications had no effect on previously reported net loss, total assets, total liabilities or stockholders’ equity.
b) Segments
The Company organized its operations into
As the Company’s long-lived assets, except for the intangible asset, are substantially all located in India, and all of the Company’s revenue and expenses related to the sale of products are derived from within India, no geographical segments are presented.
8
c) Basis of Consolidation
The condensed consolidated financial statements include the accounts of the Company, its majority-owned subsidiaries, VTL and VTI, and other wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in the consolidation.
d) Use of Estimates
The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results, as determined at a later date, could differ from those estimates. Significant estimates used in preparing these condensed consolidated financial statements include the realization of deferred tax assets, timing of the recognition of research and development costs, fair value of debt and equity-based instruments, and future obligations under employee benefit plans.
e) Foreign Currency Translation and Transactions
The Company also operates in India, which may give rise to significant foreign currency risks from fluctuations and the degree of volatility of foreign exchange rates between the US dollar and the Indian Rupee.
The Company’s functional currency is the United States Dollar. The functional currency of its Indian subsidiary is Indian National Rupees. Consequently, revenues and expenses of operations of the Indian subsidiary are translated into United States Dollars using average period exchange rates, while assets and liabilities of the Indian subsidiary are translated into United States Dollars using the year-end exchange rate in effect at the balance sheet dates. Adjustments resulting from the translation of functional currency financial statements to reporting currency are accumulated and reported as a part of Accumulated Other Comprehensive loss, a separate component of stockholders’ equity (deficit) in the accompanying consolidated balance sheets.
Transactions in foreign currencies are translated at the exchange rate prevailing on the date of the transaction. Resulting gains or losses from the settlement of such foreign currency transactions are included in the condensed consolidated statements of operations. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates in effect on the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are expressed in functional currency at the historical exchange rates. Net gains/(losses) resulting from foreign currency transactions amounting to $
9
f) Cash and Cash Equivalents
Cash includes all highly liquid instruments with a maturity of three months or less when purchased. VTI and VHI maintain their cash balances in financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”). At various times during the year, such balances may exceed the FDIC limit. On September 30, 2026, the Company held approximately $
g) Accounts Receivable, net
Accounts receivable are generally recorded at the invoiced amounts, net of an allowance for expected losses. The Company establishes credit terms for new customers based upon management’s review of their credit information and project terms and performs ongoing credit evaluations of its customers, adjusting credit terms when management believes appropriate based upon payment history and an assessment of the customer’s current creditworthiness. The Company follows ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which removed all current thresholds and requires entities under the current expected credit loss (“CECL”) model to recognize an allowance for credit losses for the difference between the amortized cost basis of a financial instrument and the amount of amortized cost that an entity expects to collect over the instrument’s contractual life. The CECL model is based on expected losses rather than incurred losses. Management determined that allowance for credit losses was necessary as of September 30, 2026 and December 31, 2025. Accounts receivable are included in Other current assets in the accompanying Condensed Consolidated Balance Sheets (see Note 3).
h) Property and equipment, net
Property and equipment is stated as net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, summarized as follows:
| ● | Computers and software. |
| ● | Office equipment. |
| ● | Furniture and Fixtures. |
| ● | Lab machinery. |
| ● | Leasehold improvements. Lower of estimated useful life or remaining period of lease term |
Repairs and maintenance costs are expensed as incurred; major renewals and betterments are capitalized. When assets are disposed of, the assets and related allowances for depreciation and amortization are eliminated from the accounts, and any resulting gain or loss is reflected in operations.
10
i) Goods and Services Tax and Other Credits Receivable
The Company has indirect tax credit carry-forwards arising in India, which may be utilized or refunded as VTL generates sales to third parties or invoices to VTI pursuant to intercompany transfer pricing arrangements. The Company expects to utilize these indirect tax credit carry-forwards over a 4-to-5-year period.
j) Intangible Assets
On August 21, 2021, Vyome acquired the majority of the outstanding shares, representing substantially all of the outstanding shares of preferred stock, of LiveChain, Inc. (“LICH”) for $
In February 2026, the Company, LICH, LICH AI, Inc. (“LICH Sub”), a newly formed, wholly owned subsidiary of LICH, and Remus Capital Series B II, L.P. (“Remus”) entered into a definitive Notes Purchase and Exchange Agreement, as subsequently amended. Under the agreement, LICH Sub will acquire from Remus senior secured convertible notes issued by Sociometric Solutions, Inc., d/b/a Humanyze (“Humanyze”), an AI company, with an aggregate principal amount of $
Immediately after the closing, LICH Sub is expected to acquire all or substantially all of Humanyze’s assets and operations in satisfaction of amounts due under the notes. LICH Sub then intends to hire personnel, raise capital, and advance the operations acquired from Humanyze. The transaction had not closed as of September 30, 2026, or as of the date of this filing.
Intangible assets with indefinite lives, such as the non-reporting shell, are not amortized. Instead, they are tested for impairment annually, or whenever events or circumstances indicate that it is more likely than not that an impairment exists.
k) Impairment of Long-Lived Assets
The Company evaluates all long-lived assets for impairment annually, or sooner if events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the carrying amount is not fully recoverable, an impairment loss is recognized to reduce the carrying amount to fair value and is charged to expense in the period of impairment. As of September 30, 2026 and December 31, 2025, management has determined that the value of the shares acquired in LICH is not impaired.
l) Non-Controlling interest
Noncontrolling interest reported as a component of equity on the condensed consolidated balance sheets represents the equity interests not owned by the Company and is recorded for consolidated entities the Company controls, but which the Company owns less than
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m) Revenue Recognition
The Company recognizes revenue under ASC Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). The Company determines revenue recognition through the following steps:
| ● | Step 1: Identify the contract with the customer; |
| ● | Step 2: Identify the performance obligations in the contract; |
| ● | Step 3: Determine the transaction price; |
| ● | Step 4: Allocate the transaction price to the performance obligations in the contract; and |
| ● | Step 5: Recognize revenue when the company satisfies a performance obligation. |
The Company records sales of its dermatological products to the pharmaceutical company when performance obligations with its customer are satisfied. The Company’s performance obligation is a promise to transfer a distinct good to the customer, and each distinct good represents a single performance obligation. Such performance obligations are satisfied at a point in time, and revenues are recognized when all rights and rewards of ownership are transferred. The majority of the Company’s products are shipped by common carriers resulting in recognition of revenues upon shipment, at which time control passes to the customer. Revenue is measured at the amount of consideration the Company expects to receive in exchange for the transfer of products. Customers may be entitled to cash discounts, typically denoted at the time of invoicing and shipping. Such amounts are considered to be variable consideration under ASC 606. An estimate for cash discounts is included in the transaction price as a component of sales and is estimated based on the satisfaction of outstanding receivables and historical performance. The Company does not have any material financing terms as payment is received shortly after the transfer of control of the products to the customer within a period of 30-60 days.
Net service fee payment and agent fees for sales of products made by Sun Pharma are recorded as service fee revenue in the period earned.
Pursuant to licensing and marketing contracts, the Company receives payments from its pharmaceutical company marketing partner for the right to distribute the products (“royalties”). Such royalty payments are linked to the net sales value of the products by its marketing partner to third parties and are recognized in the period to which the royalty relates. Such amounts are recorded under revenue from operations in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
The Company recognizes milestone payments under the license and marketing agreements when all performance obligations are completed, typically when there are no further steps required by the Company for that milestone.
n) Cost of products sold
The cost of products sold represents the cost of manufacturing the products supplied by third-party manufacturers.
o) Research and Development Expenses
Research and development costs are expensed as incurred. Research and development expenses consist of internal and external expenses. Internal expenses include employee compensation and overheads. External expenses include development, clinical trials, statistical analysis and report writing, and regulatory compliance costs incurred with clinical research organizations and other third-party vendors. At the end of the reporting period, the Company compares payments made to third-party service providers to the estimated progress toward completion of the research or development objectives. Such estimates are subject to change as additional information becomes available. Depending on the timing of payments to the service providers and the progress that the Company estimates has been made as a result of the service provided, the Company may record net prepaid or accrued expenses relating to these costs. Payments made to third parties that perform research and development services on the Company’s behalf are expensed as services are rendered, or as contractually agreed.
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p) Stock-based Compensation
The Company accounts for stock options granted to employees and non-employees at fair value, which is measured using the Black-Scholes option pricing model. Measurement inputs include share price on the measurement date, the exercise price of the instrument, expected volatility (based on weighted average historic volatility for a duration equal to the weighted average life of the instruments), expected life (based on the average of the vesting and contractual periods for employee awards, given the minimal history of prior option exercises from which to establish historical exercise experience), and the risk-free interest rate. The expected life of the stock options is not necessarily indicative of exercise patterns that may occur. The fair value measurement date for employee awards is the date of the grant.
The expected life of the stock options in years is estimated using the “simplified method,” as prescribed in the SEC’s Staff Accounting Bulletin (“SAB”) No. 107, as the Company has no historical information from which to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants. The simplified method is the midpoint between the vesting period and the contractual term of the option. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may also not necessarily be the actual outcome. Prior to the Merger, the Company was a private company and lacked company-specific historical and implied volatility information. Therefore, it estimated its expected stock volatility based on the historical data regarding the volatility of a publicly traded set of peer companies. The risk-free rate is based on the U.S. Treasury yield curve commensurate with the expected life of the option. The expected dividend yield is zero as the Company has no history of paying dividends and no plans to do so in the near term.
Stock-based compensation expense attributable to equity awards granted to employees is measured at the grant date based on the fair value of the award. The expense is recognized on a straight-line basis over the requisite service period for awards that vest, which is generally the period from the grant date to the end of the vesting period. Stock-based awards provided to non-employees are measured and expensed as the services are provided.
The Company’s policy is to account for forfeitures of awards when they occur in accordance with ASC 718, “Compensation-Stock Compensation”. The Company reverses compensation cost previously recognized in the period the award is forfeited, for an award that is forfeited before completion of the requisite service period.
As the Company’s common stock has not been publicly traded prior to the Merger, its board of directors periodically estimated the fair value of the Company’s common stock considering, among other things, contemporaneous valuations of its common stock prepared by an independent valuation firm in accordance with the guidance provided by the American Institute of Certified Public Accountants 2013 Practice Aid, “Valuation of Privately-Held-Company Equity Securities Issued as Compensation”.
q) Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards in the condensed consolidated financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the condensed consolidated statements of operations in the period that includes the enactment date.
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Valuation allowances are recognized to reduce deferred tax assets to the amount that will more likely than not be realized. In assessing the need for a valuation allowance, management considers all available evidence for each jurisdiction, including past operating results, estimates of future taxable income, and the feasibility of ongoing tax planning strategies. When the Company changes its determination as to the amount of deferred tax assets that can be realized, the valuation allowance is adjusted with a corresponding impact to income tax expense in the period in which such determination is made.
The Company also accounts for uncertain tax positions in accordance with ASC Topic 740, “Income Taxes”. This guidance prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken in the Company’s income tax returns. As of September 30, 2026 and December 31, 2025, the Company had uncertain tax positions that affected its financial position and its results of operations or its cash flows, and will continue to evaluate for uncertain tax positions in the future. There are interest costs or penalties provided for in the Company’s condensed consolidated financial statements for the periods ended September 30, 2026 and 2025. If at any time the Company should record interest and penalties in connection with income taxes, the interest and the penalties will be expensed within the general and administrative expenses category in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss.
r) Leases
ASC Topic 842, “Leases”, establishes a right-of-use (“ROU”) model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. Lessor accounting under the new standard is substantially unchanged. Additional qualitative and quantitative disclosures are also required.
The Company adopted the following practical expedients and accounting policies elections related to this standard:
| ● | Short-term lease accounting policy election allowing lessees to not recognize ROU assets and liabilities for leases with a term of 12 months or less; option to not separate lease and non-lease components in the Company’s lease contracts; and |
| ● | The package of practical expedients applied to all of its leases, including (i) not reassessing whether any expired or existing contracts are or contain leases, (ii) not reassessing the lease classification for any expired or existing leases, and (iii) not reassessing the capitalization of initial direct costs for any existing leases. |
Disclosures related to the amount, timing and uncertainty of cash flows arising from leases are included in Note 14.
s) Notes Payable
The Company has elected to account for notes payable issued to investors using the fair value option in accordance with the guidance contained in ASC 825-10-25. The fair value option provides an option to elect fair value as an alternative measurement for selected financial assets, financial liabilities, unrecognized firm commitments, and written loan commitments. See Note 10 for additional information. Pursuant to ASC 815-40-65-1(d), the Company made a one-time irrevocable election to apply the fair value option in ASC 825-10 for any liability classified convertible securities that are within the scope of ASC 825-10.
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t) Fair Value Measurements
The Company considers its cash and cash equivalents, accounts receivable, and accounts payable to meet the definition of financial instruments, and the carrying amounts of such instruments approximated their fair values due to the short maturities of these instruments. The Company recorded the convertible debt at fair value.
The Company measures fair value as required by ASC Topic 820, “Fair Value Measurement” (“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. ASC Topic 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.
As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, there exists a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
| Level 1 - | Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date. |
| Level 2 - | Inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. |
| Level 3 - | Unobservable inputs for the asset or liability are only used when there is little if any, market activity for the asset or liability at the measurement date. |
The Company utilized a Probability Weighted Expected Return Model (“PWERM”) to value the convertible debt and promissory notes. The quantitative information with respect to valuation methodology and significant unobservable inputs used for the Company’s convertible debt that is categorized within Level 3 of the fair value hierarchy included the discount rate and expected financing date. The other factors used in the calculation of fair value are contractual terms of the convertible note and promissory note instruments.
u) Basic and diluted net loss per common share
Net loss per share information is determined using the two-class method, which includes the weighted average number of shares of common stock outstanding during the period and other securities that participate in dividends (a “participating security”). The Company considered its Preferred Stock to be participating securities because the shares included rights to participate in dividends with the common stock.
Under the two-class method, basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. The net loss attributable to common stockholders is calculated by adjusting the net loss of the Company for the accretion on the Preferred Stock. Net losses are not allocated to preferred stockholders as they do not have an obligation to share in the Company’s net losses. In periods with net income attributable to common stockholders, the Company would allocate net income first to preferred stockholders based on dividend rights under the Company’s certificate of incorporation and then to preferred and common stockholders based on ownership interests. Diluted net loss per share attributable to common stockholders is computed using the more dilutive of (1) the two-class method or (2) the if-converted method.
During the periods ended September 30, 2026 and 2025, diluted net loss per common share is the same as basic net loss per common share because the Company incurred a net loss during each period presented, and the potentially dilutive securities from the assumed exercise of all outstanding stock options and warrants and the put/call option exercise to Entitlement Shares would have an anti-dilutive effect.
The dilutive shares as of September 30, 2026 and 2025, not included in the dilutive loss per share calculation, are as follows:
| September 30, | September 30, | |||||||
| 2026 | 2025 | |||||||
| Stock options | ||||||||
| Warrants | ||||||||
| Shares that are subject to put call option agreement for certain entitled VHI shares | ||||||||
| Total | ||||||||
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v) Post Employment benefits
The Subsidiary in India has a defined benefit gratuity scheme for its employees in India. This gratuity scheme provides for lump sum payment in accordance with the provisions of the Payment of Gratuity Act, 1972 to vested employees at retirement or death while in employment or on termination of employment of an amount equivalent to 15 days’ basic salary payable for each completed year of service or part thereof in excess of three months subject to a limit of INR
Accumulated compensated absences, which are expected to be encashed within 12 months from end of the year, are treated as short-term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement at the end of the year. Actuarial gains or losses are recognized in the Condensed Consolidated Statement of Operations and Comprehensive Loss in the year in which they arise.
w) Recent accounting pronouncements
From time to time, new accounting pronouncements are issued by the FASB and are early adopted by the Company or adopted as of the specified effective date. Except as described below, there were no recent accounting pronouncements that impacted the Company or are expected to have a significant effect on its condensed consolidated financial statements.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. ASU 2025-05 provides a practical expedient that permits an entity, in developing reasonable and supportable forecasts as part of estimating expected credit losses on current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. The guidance is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, and is applied prospectively. The Company adopted ASU 2025-05 effective January 1, 2026, and elected the practical expedient. The adoption of ASU 2025-05 did not have a material impact on the Company’s condensed consolidated financial statements or related 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, which requires companies to provide more detailed and organized disclosures of their expenses in their income statements. The standard requires breaking down expenses into specific categories, such as employee compensation and costs related to depreciation and amortization. This update is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, on a prospective basis and early adoption and retrospective application is permitted. The Company is currently evaluating this new guidance and its impact on its condensed consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The guidance is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, and may be applied on a prospective or retrospective basis. The Company adopted ASU 2024-04 effective January 1, 2026 on a prospective basis. All of the Company’s convertible notes were converted into equity in connection with the Merger in August 2025, and the Company had no convertible debt instruments outstanding during the nine months ended September 30, 2026. Accordingly, the adoption did not have an impact on the Company’s condensed consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires entities to provide additional information in the rate reconciliation and additional disaggregated disclosures about income taxes paid. This guidance requires public entities to disclose in their rate reconciliation table additional categories of information about federal, state, and foreign income taxes and to provide more details about the reconciling items in some categories if the items meet a quantitative threshold. The guidance is effective for annual periods beginning after December 15, 2024. The adoption of this guidance did not have a significant impact on the condensed consolidated financial statements.
There are no other recent accounting pronouncements that the Company expects will have a material effect on its prospective condensed consolidated financial statements.
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3. Other current assets
Other current assets consist of the following:
| September 30, 2026 | December 31, 2025 | |||||||
| Advances to suppliers | $ | $ | ||||||
| Accounts receivable | ||||||||
| Receivables from LICH | ||||||||
| Others | ||||||||
| Total other current assets | ||||||||
| Prepaid expenses | ||||||||
| Less long term prepaid insurance | ( | ) | ( | ) | ||||
| Total prepaid expenses | ||||||||
| Total | $ | $ | ||||||
Prepaid expenses consist primarily of prepaid directors’ and officers’ insurance.
4. Property and equipment, net
Property and equipment, net consist of the following:
| September 30, 2026 | December 31, 2025 | |||||||
| Buildings and Improvement | $ | $ | ||||||
| Computer and office equipment | ||||||||
| Furniture & fixtures | ||||||||
| Laboratory equipment | ||||||||
| Total | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Net fixed assets | $ | $ | ||||||
Depreciation expense was $
5. Goods and services tax and other credits receivable
The Company’s balance of goods and services tax and other credits receivable from government authorities as of September 30, 2026 and December 31, 2025, consists of the following:
| September 30, 2026 | December 31, 2025 | |||||||
| Tax deducted at source and tax collected at source receivable | $ | $ | ||||||
| Input goods and service tax credit | ||||||||
| Delaware Tax credit paid | ||||||||
| Total | $ | $ | ||||||
6. Accounts payable and accrued expenses
Accounts payable and accrued expenses as of September 30, 2026 and December 31, 2025 consist of the following:
| September 30, 2026 | December 31, 2025 | |||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Total | $ | $ | ||||||
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7. Salary and post-employment benefits payable
Salary and post-employment benefits payable as of September 30, 2026 and December 31, 2025, consist of the following:
| September 30, 2026 | December 31, 2025 | |||||||
| Salaries payable | $ | $ | ||||||
| Accrued leave encashment (note 15) | ||||||||
| Accrued gratuity plan (note 15) | ||||||||
| Total | $ | $ | ||||||
8. Other current liabilities
Other current liabilities as of September 30, 2026 and December 31, 2025 consist of the following:
| September 30, 2026 | December 31, 2025 | |||||||
| Statutory dues payable - current | $ | $ | ||||||
| Advance from customer - current | ||||||||
| Other Liability | ||||||||
| Total | $ | $ | ||||||
9. Insurance premium financing
The Company entered into a Premium Finance Agreement, dated August 28, 2026, with First Insurance Funding (“First Insurance”), to finance insurance premiums related to its directors’ and officers’ liability, employment practices liability, package, and workers’ compensation insurance policies.
Under the agreement, First Insurance financed insurance premiums and related taxes and fees totaling approximately $
The Company made a down payment of $
If any payment due under the Premium Finance Agreement is not paid when due, a late charge will be assessed on any installment at least 5 days in default, and the late charge will equal 5% of such payment or the maximum late charge permitted by law, whichever is less.
In 2025, the Company entered into a premium finance agreement with First Insurance to finance approximately $
As of September 30, 2026 and December 31, 2025, the Company had an outstanding balance of $
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10. Convertible debt and Promissory Notes - Reshape
Convertible Debt
Commencing in October 2020 through February 2024, the Company began raising money through the issuance of a compulsorily convertible promissory note (the “Promissory Note”) pursuant to a Subscription Agreement (the “Subscription Agreement”). The Promissory Note was issued as part of a private placement (the “Offering”) for the sale of up to $
a) In the event that the Company issues and sells shares of its equity securities (“Equity Securities”) to investors (the “Investors”) prior to the Maturity Date in an equity financing with total proceeds to the Company of not less than $
b) If the Company consummates a transaction that is a Deemed Liquidation Event (as defined in the Certificate of Incorporation) while the Promissory Notes remain outstanding, then the outstanding principal amount of the Promissory Notes and any unpaid accrued interest shall, immediately prior to the closing of such Deemed Liquidation Event, automatically convert in whole without any further action by the holder of the Promissory Notes into shares of a newly created series of preferred stock (“New Senior Preferred Stock”) at a conversion price equal to the Original Issue Price (as defined in the Certificate of Incorporation) for the most senior series of preferred stock of the Company outstanding at such time (the “New Senior Preferred Conversion Price”). The New Senior Preferred Stock shall have the identical rights, privileges, preferences and restrictions as the most senior series of preferred stock of the Company outstanding at the time of such conversion, other than with respect to: (i) the per share liquidation preference, which shall be equal to two (2) times (in some notes) or three (3) times (in other notes) the New Senior Preferred Conversion Price; (ii) the conversion price for purposes of price-based anti-dilution protection, which will equal the New Senior Preferred Conversion Price; and (iii) the per share dividend, which will be the same percentage of the New Senior Preferred Conversion Price as applied to determine the per share dividends of the holders of the most senior series of preferred stock of the Company outstanding at such time relative to the Original Issue Price for such shares. For the avoidance of doubt, the New Senior Preferred Stock shall be senior to the most senior series of preferred stock of the Company outstanding at such time and shall be pari passu with all other securities into which compulsory convertible notes issued by the Company convert.
c) If the Promissory Notes have not otherwise been converted pursuant to the above, then, effective as of the Maturity Date, all outstanding principal and accrued and unpaid interest under the Promissory Notes shall be automatically converted into Series D Preferred Stock, at a conversion price equal to the New Senior Preferred Conversion Price.
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During 2023 and through September 2025, certain of the Promissory Notes reached their maturity date and were extended by an additional year. In connection with such extension, the conversion rate was amended from
In July 2024, the Company began offering investors the opportunity to participate in a private placement offering, providing the investors the right to purchase shares of its common stock, bridge notes and warrants and other equity rights in VTI and VTL, some of which are dependent upon the completion of the Merger. An aggregate of
In connection with the Merger, all of the Promissory Notes and Bridge Notes were converted into
The Company has elected to record the Promissory Notes and Bridge Notes at fair value. Changes in the fair value of the Promissory Notes and Bridge Notes for the nine months ended September 30, 2025, are summarized as follows:
| Nine months ended | ||||
| September 30, 2025 | ||||
| Balance, beginning of the period | $ | |||
| Additional notes issued | ||||
| Interest accrued | ||||
| Change in fair value | ||||
| Conversion of notes and accrued interest to shares | ( | ) | ||
| Reclassification of accrued interest related to VTL notes to accrued expense | ( | ) | ||
| Total | $ | |||
The Notes were converted to common shares as part of the reverse recapitalization with Reshape in August 2025.
Promissory Notes – Reshape (“Reshape Notes”)
VTI entered into a note payable with Reshape for $
| Nine months ended | ||||
| September 30, 2025 | ||||
| Balance, beginning of the period | $ | |||
| Borrowings | ||||
| Change in fair value | ( | ) | ||
| Elimination of promissory notes due to Merger | ( | ) | ||
| Total | $ | |||
There are notes payable outstanding as of September 30, 2026.
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Overall Debt
Interest expense on the above debt instruments was and $
The fair value of the Promissory Notes, Bridge Notes, and Reshape Notes is classified within Level 3 of the fair value hierarchy, using the inputs below to calculate the fair value. The Company used a probability-weighted scenario analysis to determine the fair value of the convertible notes. There were notes payable outstanding during the period ended September 30, 2026.
| September 30, 2025 | ||
| Adjusted Interest rate | ||
| Time to Financing Date |
11. Common Stock and Preferred Stock
Authorized Capital
VTI had been authorized to issue
| a. | Series D-1 – |
| b. | Series D-2 – |
| c. | Series Seed-1 – |
On April 24, 2026, VHI amended its Certificate of Incorporation to effectuate a decrease in the number of shares of the common stock authorized for issuance from
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VTI Common Stock Transactions
In August 2025, VTI issued
In August 2025, VTI issued warrants to certain preferred shareholders, who agreed to participate in the Concurrent Financing, to purchase
In August 2025, all of the preferred stock outstanding was converted into
As discussed in Note 10, all of the outstanding VTI’s Promissory Notes and Bridge Notes and related accrued interest were converted into
VTI Preferred stock
In August 2025, several preferred shareholders were issued shares of a new series of preferred stock in exchange for their current holdings in earlier issued series of preferred stock as follows:
| a. |
| b. |
| c. |
Such shareholders received an aggregate of
As a result of the Merger transaction, all shares of preferred stock were converted into common stock.
VHI Stock transactions
At the Merger date, there were
At the Merger date, there were
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The private placement offering of VHI common stock and the share subscription in VTL that comprised the Concurrent Financing (see Note 10) closed shortly after the Merger. As a result, VTL received gross proceeds of $
The Company issued
At The Market Offering
On August 20, 2025, the Company entered into Amendment No. 1 to the Equity Distribution Agreement dated May 30, 2025 (the “Sales Agreement” or “ATM”) with Maxim Group LLC (“Maxim”) to act as the Company’s exclusive sales agent with respect to the issuance and sale of up to $
Entitlement shares
In connection with the Merger, three put/call option agreements were put in place.
| a. | The first put/call option agreement is between the Company and certain investors in VTI. Through this agreement, |
| b. | The second put/call option agreement is between the Company’s Indian subsidiary, VTL, and investors in the bridge investments that came in the form of Compulsory Convertible Debentures that were converted to |
| c. | The third put/call option agreement is between the Company’s Indian subsidiary, VTL, and investors for the concurrent (concurrent to Merger closing) financing for subscription of |
VHI may exercise its call options for the specified shares of VTI or VTL in the above three option agreements upon certain defined liquidation events. The investors may exercise their put options for the purchase of their entitled shares of the Company upon certain defined financing and/or liquidation events, in all cases subject to approval by the Board of Directors of the Company and VTI. The consideration to be paid for such put/call options is based upon pro rata “liquidation event” proceeds or certain specified amounts, and in certain investor cases, for the exchange of common stock of VHI. These put/call options are equity classified since all actions under the agreements are subject to the Company’s control. Upon exercise, the Company will recognize a “deemed dividend” for the excess of the fair value of the stock received at such date over its historical cost.
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Between the Merger date and December 31, 2025,
Since the shares discussed above are outstanding shares issued by subsidiaries of the Company, they are classified as non-controlling interests. As of September 30, 2026 and December 31, 2025, approximately
The non-controlling interest is summarized as of September 30, 2026, as follows:
| Entitled shares | Historical Cost Amount | |||||||
| VTI Shareholders | $ | |||||||
| VTL note holders | ||||||||
| Investors in VTL common stock through the Concurrent Financing | ||||||||
| Loss attributable to non-controlling interest for the year ended December 31, 2025 | - | ( | ) | |||||
| Non-controlling interest at December 31, 2025 | ||||||||
| Loss attributable to non-controlling interest for the nine months ended September 30, 2026 | ( | ) | ||||||
| Non-controlling interest at September 30, 2026 | $ | |||||||
12. Stock-Based Compensation
VTI has two stock option plans. There is also a legacy Reshape plan that was still in effect at the time of the Merger. The Company converted these plans into a comprehensive VHI plan in the first quarter of 2026. All share amounts have been adjusted to reflect the reverse stock split discussed above.
2025 VHI PLAN
On October 27, 2025, the stockholders of the Company approved the adoption of the 2025 Equity Incentive Plan (the “VHI Plan”), which was adopted by the Board of Directors on October 2, 2025 and replaced the prior Equity Incentive Plan. Under the 2025 Equity Incentive Plan,
In February 2026, VHI issued stock options to employees, board members and consultants to purchase
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The Company has estimated the fair value of the 2026 stock option awards as of the date of grant by applying the Black-Scholes option-pricing model using the following assumptions:
| Risk- free interest rate | ||||
| Expected term | ||||
| Expected volatility | % | |||
| Expected dividends | ||||
| Grant date fair value of common stock | $ |
The summary of stock option activity of the VHI Plan for the nine months ended September 30, 2026 is as follows:
| Number of | Weighted Average Exercise | Weighted Average Time | ||||||||||
| Options | Price | to Expiry | ||||||||||
| Outstanding as of December 31, 2025 | $ | |||||||||||
| Granted during the nine months ended September 30, 2026 | $ | |||||||||||
| Expired during the nine months ended September 30, 2026 | ||||||||||||
| Exercised during the nine months ended September 30, 2026 | ||||||||||||
| Outstanding as of September 30, 2026 | $ | |||||||||||
| Exercisable as of September 30, 2026 | $ | |||||||||||
The following outlines the outstanding and vested stock options by exercise price as of September 30, 2026.
| Exercise Price | Number of Options Outstanding – September 30, 2026 | |||
| $0.66 | ||||
| $2.17 | ||||
| $4.97 | ||||
| Total | ||||
2018 ESOP PLAN
On December 14, 2018, VTI authorized an Employee Stock Option Plan 2018 (the “ESOP Plan”) under which
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The last issuance of an option under the ESOP Plan was in 2024.
| Number of | Weighted Average Exercise | Weighted Average Time | ||||||||||
| Options | Price | to Expiry | ||||||||||
| Outstanding as of December 31, 2024 | $ | |||||||||||
| Granted during year ended December 31, 2025 | ||||||||||||
| Expired during year ended December 31, 2025 | ( | ) | ||||||||||
| Exercised during year ended December 31, 2025 | ||||||||||||
| — | — | |||||||||||
| Outstanding as of December 31, 2025 | ||||||||||||
| Cancelled during the nine months ended September 30, 2026 | ( | ) | ||||||||||
| Outstanding as of September 30, 2026 | $ | |||||||||||
| Exercisable as of September 30, 2026 | $ | |||||||||||
| Exercisable as of December 31, 2025 | $ | |||||||||||
2025 Stock Option Plan
In August 2025, VTI authorized an Employee Stock Option Plan 2025 (the “2025 Plan”) under which
In August 2025, VTI issued stock options to employees, consultants, board members, and others to purchase
The Company has estimated the fair value of the 2025 stock option awards as of the date of grant by applying the Black-Scholes option-pricing model using the following assumptions:
| Risk- free interest rate | % | |||
| Expected term | ||||
| Expected volatility | % | |||
| Expected dividends | ||||
| Grant date fair value of common stock | $ |
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The summary of stock option activity of the 2025 Plan for the year ended December 31, 2025 and the nine months ended September 30, 2026 is as follows:
| Number of | Weighted Average Exercise | Weighted Average Time | ||||||||||
| Options | Price | to Expiry | ||||||||||
| Outstanding as of December 31, 2024 | $ | |||||||||||
| Granted during year ended December 31, 2025 | ||||||||||||
| Expired during year ended December 31, 2025 | ||||||||||||
| Exercised during year ended December 31, 2025 | ||||||||||||
| - | ||||||||||||
| Outstanding as of December 31, 2025 | $ | |||||||||||
| Cancelled during the nine months ended September 30, 2026 | ( | ) | ||||||||||
| Outstanding as of September 30, 2026 | ||||||||||||
| Exercisable as of September 30, 2026 | $ | - | ||||||||||
| Exercisable as of December 31, 2025 | $ | |||||||||||
The Company recognized $
Legacy Reshape Plans
At the time of the Merger, the following fully vested options and warrants were outstanding.
| ● | Stock options to purchase |
| ● | Warrants to purchase |
13. Income taxes
The Company generated a current taxable loss for the periods ended September 30, 2026 and 2025, and therefore, the only current income taxes payable were certain minimum taxes. The effective tax rate for such periods was zero and differs from the federal statutory income tax rate of
A valuation allowance is established attributable to deferred tax assets recognized on carry forward tax losses by the Company where, based on available evidence, it is more likely than not that they will not be realized. The Company recorded full valuation allowance against its net deferred tax assets on September 30, 2026 and December 31, 2025. Significant management judgment is required in determining provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against deferred tax assets. The valuation allowance is based on the Company’s estimates of taxable income by jurisdiction in which the Company operates and the period over which deferred tax assets will be recoverable.
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As of December 31, 2025, VTI has net operating loss carry-forwards of approximately $
At the date of the Merger, Reshape had approximately $
As of December 31, 2025, VTL has approximately $
The Company is subject to income taxes and tax audits in many jurisdictions. A certain degree of estimation is thus required in recording the assets and liabilities related to income taxes. Tax audits and examinations can involve complex issues, interpretations, and judgments and the resolution of matters that may span multiple years, particularly if subject to litigation or negotiation. The Company’s investments in its foreign subsidiaries are considered to be permanently invested and no provision for income taxes on the related foreign exchange translation adjustments or income/(loss) of those subsidiaries has been recorded.
The Company does not expect a significant change to the amount of unrecognized tax benefits over the next
14. Leases
The Company leases offices and laboratory space in India, which were automatically extended for two one-year periods ending December 2026, with payments ranging from $
Operating leases are presented in the Company’s Condensed Consolidated Balance Sheets as right-of-use assets, net, operating lease liability– current portion, and operating lease liability, net of current portion. The assets and liabilities from our leases are recognized at the lease commencement date based on the present value of remaining lease payments over the lease term using the Company’s incremental borrowing rates. Short-term leases, which have an initial term of 12 months or less, are not recorded on the balance sheet. As the Company’s operating leases do not provide implicit rates, the Company has utilized its incremental borrowing rate, determined based on the long-term borrowing costs of companies with similar credit profiles, to record its lease obligations. For operating leases, the Company recognizes the minimum rental expense on a straight-line basis based on the fixed components of a lease arrangement. The Company will amortize this expense over the term of the lease beginning with the lease commencement date.
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The following table presents information about the amount and timing of liabilities arising from the Company’s operating leases as of September 30, 2026:
| Lease payments – 2026 | $ | |||
| Total undiscounted operating lease payments | ||||
| Less: Imputed interest | ( | ) | ||
| Present value of operating lease liabilities (current) | $ |
| As of | As of | |||||||
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Weighted average remaining lease term in years | ||||||||
| Weighted average discount rate | % | % | ||||||
The right-of-use asset as of September 30, 2026, of $
15. Commitments and contingencies
a) Employee Benefits – Gratuity
The Company has a defined benefit gratuity scheme for its employees in India. This gratuity scheme provides for lump sum payment in accordance with the provisions of the Payment of Gratuity Act, 1972 to vested employees at retirement or death while in employment or on termination of employment of an amount equivalent to 15 days’ basic salary payable for each completed year of service or part thereof in excess of nine months subject to a limit of INR
| Nine months ending September 30, 2026 | Year ended December 31, 2025 | |||||||
| Obligation recognized in balance sheet: | ||||||||
| Beginning of period | $ | $ | ||||||
| Benefits paid | ( | ) | ( | ) | ||||
| Expenses charged to profit or loss | ||||||||
| Currency translation differences | ( | ) | ( | ) | ||||
| Interest on gratuity payable | ||||||||
| Balance for the period ended | $ | $ | ||||||
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b) Employee Benefits – Leave Encashment
Accumulated compensated absences or paid leave encashment, which are expected to be encashed within 12 months from the end of the year, are treated as short-term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement at the end of the year. Actuarial gains or losses are recognized in the Consolidated Statement of Operations and Comprehensive Loss in the year in which they arise.
Nine months ending | Year ended | |||||||
| Obligation recognized in balance sheet: | ||||||||
| Beginning of period | $ | $ | ||||||
| Benefits paid | ( | ) | ( | ) | ||||
| Expenses charged to profit or loss | ||||||||
| Currency translation differences | ( | ) | ||||||
| Balance for the period ended | $ | $ | ||||||
c) Employee Benefits – Provident Fund
In accordance with Indian law, all employees in India are entitled to receive benefits under the ‘Provident Fund’, which is a defined contribution plan. Both the employee and the employer make monthly contributions to the plan at a predetermined rate (presently at
d) GST matter
On March 27, 2026, the Company received an order from the goods and services tax (“GST”) authorities in India relating to the refund of Integrated Goods and Services Tax (“IGST”) of approximately ₹
The Company believes that its position is supported by applicable law, judicial precedents, and clarificatory guidance, including the nature of the services provided on a principal-to-principal basis and the fact that they do not constitute services in respect of goods physically made available. Accordingly, the Company contested the demand order by filing a writ petition before the Delhi High Court. Following hearings in July and August 2026, the matter was heard on August 12, 2026, including on the Company’s jurisdictional challenge that the demand order was issued beyond the applicable statutory limitation period. By its order dated August 12, 2026, the Delhi High Court disposed of the writ petition without examining the merits and relegated the Company to the statutory remedy of appeal before the Appellate Authority. The Company challenged the said order by filing a special leave petition before the Hon’ble Supreme Court of India. However, the Hon’ble Supreme Court, by its order dated October 12, 2026, was not inclined to interfere with the order passed by the Hon’ble Delhi High Court. Accordingly, the Company filed an appeal before the first appellate authority on October 14, 2026, along with an application seeking exclusion of the time spent in the writ and special leave proceedings. Based on its assessment, including advice from legal and tax counsel, management has concluded that a loss is not probable and, accordingly, no provision for the liability has been recorded as of September 30, 2026.
e) Litigation
From time to time, the Company is involved in various disputes, claims, liens, and litigation matters arising out of the normal course of business, which could result in a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties, and other sources are recorded when it is probable that a liability has been incurred, and the amount of the loss can be reasonably estimated. As of December 31, 2025, the Company had outstanding claims or litigation and had liabilities recorded for loss contingencies. In April 2026, VTL received a civil court notice with respect to deferred salary of approximately $
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16. Segments
The Company operates in
The CODM evaluates the performance of each segment and allocates resources based on segment net (loss) income, which is reported on the same basis as consolidated net loss.
Reporting by segment is summarized as follows for the nine months ended September 30, 2026 and 2025:
| Amount in USD | For the nine months ended September 30, 2026 | For the nine months ended September 30, 2025 | ||||||||||||||||||||||
| Biotechnology | Pharmaceutical | Total | Biotechnology | Pharmaceutical | Total | |||||||||||||||||||
| Revenues | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Gross margin | ||||||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||
| Selling, general and administrative | ||||||||||||||||||||||||
| Transactional fees | ||||||||||||||||||||||||
| Research and development | ||||||||||||||||||||||||
| Total Operating expenses | ||||||||||||||||||||||||
| Other income/(expenses) | ||||||||||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Fair value adjustment | ||||||||||||||||||||||||
| Interest income and other | ||||||||||||||||||||||||
| Total Other income/(expenses) | ( | ) | ( | ) | ||||||||||||||||||||
| Net (loss)/income | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||||
Reporting by segment is summarized as follows for the three months ended September 30, 2026 and 2025:
| Amount in USD | For the three months ended September 30, 2026 | For the three months ended September 30, 2025 | ||||||||||||||||||||||
| Biotechnology | Pharmaceutical | Total | Biotechnology | Pharmaceutical | Total | |||||||||||||||||||
| Revenues | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Gross margin | ||||||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||
| Selling, general and administrative | ||||||||||||||||||||||||
| Transactional fees | ||||||||||||||||||||||||
| Research and development | ||||||||||||||||||||||||
| Total Operating expenses | ||||||||||||||||||||||||
| Other income/(expenses) | ||||||||||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Fair value adjustment | ||||||||||||||||||||||||
| Interest income and other | ||||||||||||||||||||||||
| Total Other income/(expenses) | ( | ) | ( | ) | ||||||||||||||||||||
| Net (loss)/income | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
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Assets by segment as of September 30, 2026 and December 31, 2025 are summarized as follows:
| Amount in USD | September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||
| Biotechnology | Pharmaceutical | Total | Biotechnology | Pharmaceutical | Total | |||||||||||||||||||
| Assets of segment | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
The Company derives revenues from the sale of products, including royalties related to sales of such products and from the license of technology. Substantially all revenues for the nine months ended September 30, 2026 and 2025 are derived from Sun Pharma, a significant pharmaceutical company based in India (“Major Customer”).
Nine months ending | Nine months ending | |||||||
| Service fee for arrangements for sale of Dandruff products | $ | $ | ||||||
| Licensing and milestone fees – Luliconazole | ||||||||
| Sale of products | ||||||||
| Royalty income related to above product sales | ||||||||
| Total | $ | $ | ||||||
In December 2020, the Company entered into a licensing contract for a product with the Major Customer, whereby the Company would be entitled to development and sales-based milestones and royalties on future sales of the product by the Major Customer. development or sales-based milestones have been received under this license during the nine months ended September 30, 2026 and $
17. Due to affiliates
The Company incurred consultancy charges to certain members of the Board of Directors of the Company (“Directors”) recognized as selling, general and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss amounting to approximately $
The Company incurred compensation expenses to the Chief Executive Officer of the Company (“CEO”) recognized as Selling, General and Administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss amounting to approximately $
Certain Directors have provided short-term advances to the Company from time to time, amounting to approximately $
18. Subsequent events
For the condensed consolidated financial statements as at and for the nine-month period ended September 30, 2026, the Company has evaluated subsequent events through the date the condensed consolidated financial statements were issued and determined that there have been no events that have occurred that would require adjustments to our disclosures in the condensed consolidated financial statements, except as described in Note 15(d) with respect to the GST matter and Note 15(e) with respect to litigation
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. Except for the historical information contained herein, the matters discussed in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are forward-looking statements that involve risks and uncertainties. In some cases, these statements may be identified by terminology such as “may,” “will,” “should,” “expects,” “could,” “intends,” “might,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of such terms and other comparable terminology. These statements involve known and unknown risks and uncertainties that may cause our results, level of activity, performance, or achievements to be materially different from those expressed or implied by the forward-looking statements. Factors that may cause or contribute to such differences include, among others, those discussed in the “Risk Factors” section included in Item 1A of our most recent Annual Report on Form 10-K. Except as may be required by law, we undertake no obligation to update any forward-looking statement to reflect events after the date of this report.
Overview
On August 15, 2025, ReShape Lifesciences Inc. (now known as Vyome Holdings, Inc.) (the “Company”) completed the merger pursuant to the Agreement and Plan of Merger, dated as of July 8, 2024, as amended (the “Merger Agreement”), by and among the Company, Raider Lifesciences Inc., a wholly owned subsidiary of the Company (“Merger Sub”), and Vyome Therapeutics, Inc. (“Vyome”). Pursuant to the Merger Agreement, Merger Sub merged with and into Vyome, with Vyome surviving the merger as a subsidiary of the Company (the “Merger”). As a result of the Merger, the Company was renamed “Vyome Holdings, Inc.” and Vyome continued under its name as Vyome Therapeutics, Inc., in each case effective before the open of trading on August 15, 2025.
The Company is a Cambridge, MA/Princeton, NJ/New Delhi, India-based clinical-stage specialty pharmaceutical company working to treat immune-inflammatory and rare diseases of unmet need with next-generation therapeutic solutions, with a business advantage of the U.S.-India innovation corridor. The lead program, VT-1953, is a topical gel that is being developed to treat signs and symptoms of malignant fungating wounds, a potentially orphan drug designation program. The Company initiated a Phase II investigator-initiated trial in the first quarter of 2025 for VT-1953 and announced interim results in September 2025 and final results in December 2025. The Company filed an application for Orphan Drug Designation for the VT-1953 program with the FDA in January 2026. In March 2026, the Company submitted a pre-IND briefing package to the FDA for its VT-1953 program, including its proposed pivotal clinical study strategy for the treatment of malodor and other symptoms associated with malignant fungating wounds. During the second quarter of 2026, the Company received the FDA’s written response on the proposed clinical development program described in the pre-IND briefing package submitted in March 2026. The Company is incorporating the FDA’s feedback and plans to continue its engagement with the FDA through a Type C meeting prior to advancing the pivotal clinical development program. During the third quarter of 2026, the Company continued research and development activities, including clinical development planning, CMC development, and preparatory work with prospective GMP manufacturing partners. In the third quarter, the Company received written correspondence from the FDA requesting additional information and clarifications in connection with its Orphan Drug Designation application for VT-1953 filed in January 2026. The Company is preparing its response to the FDA and intends to continue to work with the FDA as part of the ongoing regulatory review process. Also, the Company has a pre-investigational New Drug application stage ophthalmic drops program, a potentially orphan drug designated program, and a repurposed immune modulator to treat steroid-sparing anterior uveitis. During the third quarter of 2026, the Company continued research and development activities for its topical ophthalmic program, including formulation and CMC development, GMP manufacturing planning, and preparation for future clinical development.
Another late clinical-stage program, VB-1953, for moderate to severe inflammatory acne, has completed its Phase II clinical trial with positive readouts, and this program is Phase III-ready. The Company is also developing other assets for treating immune-inflammatory diseases, which are in pre-clinical or early clinical development.
The Company may experience delays in the conduct of clinical trials of its candidates. Clinical trials can be delayed for a variety of reasons, including delays in obtaining regulatory approval to commence a clinical trial, in securing clinical trial agreements with prospective sites with acceptable terms, in obtaining institutional review board approval to conduct a clinical trial at a prospective site, in recruiting patients to participate in a clinical trial or in obtaining sufficient supplies of clinical trial materials. Any delays in completing the Company’s clinical trials will increase its costs, slow down its product development, timelines, and approval process, and delay its ability to generate revenue.
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The Company has commercialized a novel reformulated topical anti-fungal shampoo based on the technology platform of Molecular Replacement Therapeutics (“MRT”) in India. The Company had entered into a licensing and marketing agreement with Sun Pharma to sell such topical anti-fungal product in India, whereby the Company received a net service fee payment for sales of such products made by Sun Pharma. This agreement terminated in 2024. The Company had also entered into an agreement with Sun Pharma for the development and licensing of MRT technology-based Luliconazole topical cream for skin fungal diseases for the Indian market. This product was commercialized by Sun Pharma in 2023.
On May 8, 2026, the Company entered into an in-licensing agreement with Impetis Biosciences Limited (a TATA Enterprise) relating to certain preclinical JAK inhibitor assets, pursuant to which the Company has no upfront payment obligations, development funding commitments, or milestone payment obligations, and consideration is limited to a 1.5% royalty on future net sales, if any, upon commercialization. There were no revenues or expenses under the arrangement for the nine months ended September 30, 2026.
The Company operates in two segments, biotechnology and pharmaceutical products. Our biotechnology segment comprises our operations around our VT-1953, VT-1908, and VB-1953 programs that are in development, and our pharmaceutical segment comprises our antifungal products.
Since inception, our operations have focused on organizing and staffing our biotechnology segment, business planning, raising capital, acquiring and developing our technology, establishing our intellectual property portfolio, identifying potential product candidates, undertaking preclinical and clinical studies, and manufacturing. We do not have any products approved for sale and have not generated any revenue from product sales from the biotechnology segment. Our pharmaceutical segment represents the operations of a legacy business and various licensing agreements with Sun Pharma.
Recent Developments
Closing of the Merger
On August 15, 2025, the Company completed the Merger pursuant to the Merger Agreement, pursuant to which Merger Sub merged with and into Vyome, with Vyome surviving the merger as a subsidiary of the Company. As a result of the Merger, the Company was renamed “Vyome Holdings, Inc.” and Vyome continued under its name as Vyome Therapeutics, Inc., in each case effective before the open of trading on August 15, 2025.
At the effective time of the Merger (the “Effective Time”), each share of common stock, par value $0.001 per share, of Vyome, and each share of preferred stock, par value $0.001 per share, of Vyome issued and outstanding immediately prior to the Effective Time (other than the shares that were owned by the Company, Vyome, or Merger Sub and shares that will be subject to put-call option agreements with certain stockholders of Vyome and Vyome’s subsidiary Vyome Therapeutics Limited (“Vyome Limited”) who are located in India) were converted into the right to receive a number of fully-paid and non-assessable shares of common stock of the Company, $0.001 par value per share (the “Common Stock” or “common stock”), according to a predetermined ratio; provided that the shares to be received by certain stockholders of Vyome and Vyome Limited located in India shall be subject to the put-call option agreements with the Company, which entitle such holders to receive shares of Common Stock of the Company upon certain occurrences. In addition, each outstanding warrant, stock option, restricted stock award, stock grant or other equity award to purchase capital stock of Vyome was converted into rights, warrants or equity awards to purchase a number of the Company’s shares of common stock equal to the number of shares of Vyome common stock issuable upon exercise of such Vyome right, warrant or equity award multiplied by the predetermined ratio, with an exercise price, in the case of warrants and stock options, equal to the exercise price of such Vyome warrant or option divided by the predetermined ratio.
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Immediately prior to the consummation of the Merger, the Company filed an Amended and Restated Certificate of Designation to Series C Convertible Preferred Stock (the “Series C Amendment”).
The issuance of Common Stock in connection with the Merger was registered under the Securities Act of 1933, as amended, pursuant to the Company’s registration statement on Form S-4 (File No. 333-282459) filed with the United States Securities and Exchange Commission (the “SEC”) on October 1, 2024, as amended on December 6, 2024, January 15, 2025, April 29, 2025, May 9, 2025 and May 14, 2025 and declared effective on May 14, 2025.
As set forth in the Merger Agreement, it was a condition to the closing of the Merger that The Nasdaq Stock Market (“Nasdaq”) approve the initial listing application of the combined company so that the listing on The Nasdaq Capital Market will continue after the Merger. Nasdaq approved the initial listing application on August 6, 2025.
Prior to the Effective Time of the Merger, Vyome had the following activities as discussed in more detail in the financial statements:
| ● | Authorized a 1 for 5,000 reverse stock split of issued and outstanding shares of common and preferred stock |
| ● | Amended the Certificate of Incorporation of Vyome to authorize three new classes of preferred stock, with similar rights as the previous shares of preferred stock: |
| o | Series D-1 – 23,658 shares authorized with an “original issuance price” of $8.874 per share |
| o | Series D-2 – 315,256 shares authorized with an “original issuance price” of $5.886 per share |
| o | Series Seed-1 – 900,000 shares authorized with an “original issuance price” of $0.936 per share |
| ● | Adopted the 2025 Equity Incentive Plan (the “2025 Plan”) providing for the issuance of up to 2,800,000 shares of common stock to employees, officers, directors, and non-employees in the form of non-qualified and incentive stock options, restricted stock awards, and other stock-based awards. |
| ● | Issued, under the 2025 Plan, stock options to employees, consultants, board members and others to purchase 2,705,779 shares of common stock at an exercise price of $0.41 per share which vest immediately and 57,122 shares of common stock at an exercise price of $0.41 per share which vest over a one-year period from the date of grant to employees. |
| ● | Reclassified certain shares held by shareholders as follows: |
| o | 11 shares of Series D preferred stock into 23,658 shares of Series D-1 preferred stock |
| o | 96 shares of Series D preferred stock into 315,256 shares of Series D-2 preferred stock |
| o | 203 shares of Series D preferred stock into 900,000 shares of Series Seed-1 preferred stock |
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| ● | Terminated the Amended and Restated Investors’ Rights Agreement, the Amended and Restated Right of First Refusal and Co-Sale Agreement, and the Amended and Restated Voting Agreement, as amended September 5, 2019, between Vyome and its shareholders |
| ● | All convertible notes plus accrued interest outstanding at the Merger date were converted into 534,850 shares of common stock |
| ● | Warrants to purchase 6,008,589 shares of common stock at $0.001 per share were issued to investors. The Company received $6,009 from the exercise of such warrants at the Merger date. |
| ● | Issued 376,256 common shares to consultants, advisors and for terminating a share subscription agreement. |
Changes in Officers and Directors
On August 13, 2025, in connection with the consummation of the Merger and as required pursuant to the Merger Agreement, Paul Hickey, Dan W. Gladney, Arda M. Minocherhomjee, Lori C. McDougal and Gary D. Blackford resigned from and ceased serving on the Board of Directors of the Company (the “Board”) and any and all committees thereof, which resignations were effective upon the consummation of the Merger. In addition, effective upon the consummation of the Merger, Paul Hickey resigned as the President and Chief Executive Officer of the Company, and Tom Stankovich resigned as the Chief Financial Officer of the Company.
In connection with the consummation of the Merger and pursuant to the Merger Agreement, on August 15, 2025, the Board elected and designated Krishna Gupta, Stash Pomichter, Shiladitya Sengupta, Venkat Nelabhotla, John Tincoff, and Mohanjit Jolly to serve on the Board effective immediately after the consummation of the Merger. Pursuant to the Merger Agreement and as previously disclosed, Krishna Gupta has been serving as the Chairperson of the Board effective as of the consummation of the Merger.
Also on August 15, 2025, in connection with the consummation of the Merger, Venkat Nelabhotla was appointed as Chief Executive Officer of the Company and Robert Dickey was appointed as Interim Chief Financial Officer of the Company.
The Company entered into an agreement with Foresite Advisors, LLC (the “Foresite Agreement”) governing the terms of Mr. Dickey’s employment with the Company as its Interim Full-time Chief Financial Officer. The Foresite Agreement provides for a one-year term, which may be extended by mutual written consent. The Foresite Agreement may be terminated by either party with Cause, as defined in the agreement, upon 15 days’ notice or without Cause, upon 30 days’ prior written notice to the other party. The Foresite Agreement provides for compensation of $15,000 per calendar month. In connection with Mr. Dickey’s resignation as Interim Chief Financial Officer, effective August 31, 2026, the Foresite Agreement was deemed terminated as of August 31, 2026.
On August 27, 2026, the Board appointed Jerry Leonard as the Company’s Chief Financial Officer, effective September 1, 2026, succeeding Mr. Dickey. Mr. Leonard provides services to the Company pursuant to a consulting agreement, dated August 27, 2026, by and among the Company, ClearbridgeCFO, LLC and Mr. Leonard, which provides for a consulting fee of $15,000 per calendar month, an initial one-year term that automatically renews for successive 12-month periods, and termination by either party for Cause, as defined in the agreement, upon 15 days’ prior written notice or without Cause upon 60 days’ prior written notice.
Closing of the ReShape Asset Sale
On July 8, 2025, the Company completed the transactions contemplated under the Asset Purchase Agreement dated July 8, 2024, which was amended on April 25, 2025 (the “Asset Purchase Agreement”), with Ninjour Health International Limited, a company incorporated under the laws of the United Kingdom, which is an affiliate of Biorad Medisys Pvt. Ltd. (together, “Biorad”). Pursuant to the Asset Purchase Agreement, the Company sold its assets (excluding cash) to Biorad, and Biorad assumed substantially all of the Company’s liabilities, for an agreed-upon purchase price of $2.25 million in cash, subject to adjustment based on the Company’s actual accounts receivable and accounts payable at the closing, compared to such amounts as of March 31, 2024.
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Private Placement
Immediately after the Effective Time, the Company closed on the sale of an aggregate of 520,514 shares of the Company’s Common Stock (the “Offered Shares”) at a price of $11.02 per share for gross proceeds of approximately $5,735,000 pursuant to those certain subscription agreements entered into among the Company, Vyome, and the investors signatory thereto. Vyome, through its subsidiary Vyome Limited, also closed on the sale of 999 shares of Vyome Limited at a price per share of $937.14 for gross proceeds of approximately $940,000, which shares are subject to a put-call option agreement with the Company. Simultaneously with entry into the subscription agreements, the Company, Vyome and the investors entered into registration rights agreements, which provide for certain registration rights to the investors, including the filing of a registration statement that includes the shares of common stock purchased by the investors, within 45 days of the closing of the Merger. Simultaneously with the execution of the subscription agreements, Vyome entered into a securities purchase agreement with each investor pursuant to which Vyome issued to each investor a convertible promissory note in the principal amount equal to 5% or more of such investor’s total agreed upon investment amount, which convertible notes provided for interest at 8% per annum and conversion immediately before completion of the Merger into a number of shares of common stock of Vyome equal to 100% of the outstanding principal and interest of the convertible promissory notes divided by $11.02, the price per share of common stock sold in the private placement offering.
Reverse Stock Split
On August 15, 2025, the Company effected a 1-for-4 reverse stock split of its Common Stock (the “Reverse Stock Split”). On July 24, 2025, the stockholders of the Company approved the proposal to authorize the Board, in its discretion, to amend the Company’s Certificate of Incorporation, as amended, to effect a reverse stock split of the Company’s Common Stock, at a ratio in the range of 1-for-2 to 1-for-5, such ratio to be determined by the Board and included in a public announcement. The Board subsequently approved the Reverse Stock Split at a ratio of 1-for-4, and on August 15, 2025, the Company filed a Certificate of Eighth Amendment (the “Certificate of Eighth Amendment”) with the Secretary of State of the State of Delaware to amend the Company’s Restated Certificate of Incorporation, as amended, and effected the Reverse Stock Split on August 15, 2025.
As a result of the Reverse Stock Split, every four shares of Common Stock issued or outstanding or held by the Company as treasury stock were automatically reclassified into one new share of Common Stock without any action on the part of the holders. Any fractional shares of Common Stock resulting from the Reverse Stock Split were rounded up to the nearest whole share, and no stockholders received cash in lieu of fractional shares.
The Reverse Stock Split was primarily intended to bring the Company into compliance with the minimum bid price requirements for maintaining its listing on The Nasdaq Capital Market in connection with the Merger. Trading of the Company’s Common Stock on The Nasdaq Capital Market continued on a split-adjusted basis when the markets opened on August 15, 2025, under the name Vyome Holdings, Inc. and trading symbol “HIND.”
Amendments to Certificate of Incorporation
On August 15, 2025, the Company filed (a) the Certificate of Eighth Amendment with the Secretary of State of the State of Delaware to effect the Reverse Stock Split after the close of trading on August 14, 2025, (b) the Series C Amendment, and (c) a Certificate of Ninth Amendment with the Secretary of State of the State of Delaware to amend the Company’s Restated Certificate of Incorporation, as amended, to change its corporate name to Vyome Holdings, Inc.
On April 24, 2026, the Company filed the Certificate of Tenth Amendment with the Secretary of State of the State of Delaware to effectuate a decrease in the number of shares of the Company’s common stock authorized for issuance from 300,000,000 to 50,000,000 shares. The stockholders of the Company approved the amendment on April 24, 2026, at the 2026 Annual Meeting of Stockholders.
ATM Offering
On August 20, 2025, the Company entered into Amendment No. 1 (the “Amendment”) to that certain Equity Distribution Agreement dated May 30, 2025 (the “Equity Distribution Agreement”) with Maxim Group LLC to act as the Company’s exclusive sales agent with respect to the issuance and sale of up to $12,000,000 of the Company’s shares of common stock, par value $0.001 per share, from time to time, in an at-the-market public offering (the “ATM Offering”), less a 3% discount. The Amendment increased the amount that may be offered and sold in the ATM Offering from $3,420,926 to $12,000,000. In January 2026, the Company sold 1,089,545 shares of common stock at prices between approximately $4.00 and $6.00 per share under the Equity Distribution Agreement, resulting in net proceeds of $5,291,868, before deducting $6,000 for due diligence fees incurred with the ATM Offering.
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LICH / Humanyze Transaction
In February 2026, the Company, its majority-owned subsidiary LiveChain, Inc. (“LICH”), LICH’s wholly owned subsidiary LICH AI, Inc., and Remus Capital Series B II, L.P. (“Remus”) entered into a definitive Notes Purchase and Exchange Agreement, as subsequently amended. Under the agreement, LICH Sub will acquire from Remus senior secured convertible notes issued by Sociometric Solutions, Inc., d/b/a Humanyze (“Humanyze”), an AI company, with an aggregate principal amount of $5,765,000. In exchange, LICH will issue Remus 211,200,844 shares of LICH common stock, representing 25% of LICH’s issued and outstanding common stock on a fully diluted basis as of the closing. Remus is also an investor in the Company, and a principal of Remus, Stash Pomichter, who is also a director of the Company, serves on the board of Humanyze. Immediately after the closing, LICH Sub is expected to acquire all or substantially all of Humanyze’s assets and operations in satisfaction of amounts due under the notes. The transaction had not closed as of September 30, 2026, or as of the date of this filing. See Note 2(j) to the condensed consolidated financial statements.
In-Licensing Agreement with Impetis Biosciences
On May 8, 2026, the Company entered into an in-licensing agreement with Impetis Biosciences Limited (a TATA Enterprise) for certain preclinical JAK inhibitor assets. The Company has no upfront payment, development funding, or milestone payment obligations under the agreement, and consideration is limited to a 1.5% royalty on future net sales, if any, upon commercialization. There were no revenues or expenses under the arrangement for the nine months ended September 30, 2026.
Components of Results of Operations
Although we operate in two segments, all of our revenue relates to the pharmaceutical segment, and substantially all of our costs relate to the biotechnology segment. See Note 16, “Segments,” to our condensed consolidated financial statements.
Revenue
We have a development and licensing agreement for MRT technology-based Luliconazole topical cream product for skin fungal diseases, from which we get revenues from milestone payments, royalties and the sale of a proprietary ingredient. These payments are recorded as service fee revenue in the period earned. We have occasionally received payments for milestones specified under the license of our products to Sun Pharma, but do not expect to receive any significant further milestone payments. We expect to continue to receive a minor amount of royalties under such licenses. Such revenues are part of our pharmaceutical segment.
Operating Expenses
Our operating expenses consist of (i) research and development expenses, (ii) cost of goods sold, and (iii) general and administrative expenses.
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for our research and development activities, including our product candidate discovery efforts and preclinical and clinical studies under our research programs, which include:
| ● | employee-related expenses, including salaries, benefits, and stock-based compensation expense for our research and development personnel; |
| ● | costs of funding research performed by third parties that conduct research and development and preclinical and clinical activities on our behalf; |
| ● | costs of manufacturing drug product and drug supply related to our current or future product candidates; |
| ● | costs of conducting preclinical studies and clinical trials of our product candidates; |
| ● | consulting and professional fees related to research and development activities, including equity-based compensation to non-employees; |
| ● | costs of maintaining our laboratory, including purchasing laboratory supplies and non-capital equipment used in our preclinical studies; |
| ● | costs related to compliance with clinical regulatory requirements; and |
| ● | facility costs and other allocated expenses, which include expenses for rent and maintenance of facilities, insurance, depreciation and other supplies. |
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Research and development costs are expensed as incurred. Costs for certain activities are recognized based on an evaluation of the progress to completion of specific tasks using data such as information provided to us by our vendors and analyzing the progress of our preclinical and clinical studies or other services performed.
The successful development of our product candidates is highly uncertain. We cannot reasonably estimate or know the nature, timing, and estimated costs of the efforts that will be necessary to complete development of our current or future product candidates. We are also unable to predict when, if ever, material net cash inflows will commence from the sale of our product candidates, if they are approved. This is due to the numerous risks and uncertainties associated with developing product candidates, including the uncertainty of:
| ● | the scope, rate of progress, and expenses of our ongoing research activities as well as any preclinical studies and clinical trials and other research and development activities; |
| ● | establishing an appropriate safety profile; |
| ● | successful enrollment in and completion of clinical trials; |
| ● | whether our product candidates show safety and efficacy in our clinical trials; |
| ● | receipt of marketing approvals from applicable regulatory authorities; |
| ● | establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers; |
| ● | obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our product candidates; |
| ● | commercializing product candidates, if and when approved, whether alone or in collaboration with others; and |
| ● | continued acceptable safety profile of the products following any regulatory approval. |
A change in the outcome of any of these variables with respect to the development of our current and future product candidates would significantly change the costs and timing associated with the development of those product candidates.
Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect research and development costs to increase significantly for the foreseeable future as we commence clinical trials and continue the development of our current and future product candidates. However, we do not believe that it is possible, at this time, to accurately project expenses through commercialization. There are numerous factors associated with the successful commercialization of any of our product candidates, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development. Additionally, future commercial and regulatory factors beyond our control will impact our clinical development programs and plans.
Cost of Goods Sold
Cost of goods sold represents the costs to obtain products from the third-party manufacturer of our pharmaceutical products and proprietary ingredients sold to Sun Pharma.
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General and Administrative Expenses
General and administrative expenses include salaries and other compensation-related costs, including stock-based compensation, for personnel in executive, finance and accounting, business development, operations and administrative roles. Other significant costs include insurance costs, professional fees, travel costs, facility and office-related costs, not included in research and development expenses.
We anticipate that our general and administrative expenses will increase in the future as our business expands to support expected growth in research and development activities, including our future clinical programs. These increases will likely include increased costs related to the hiring of additional personnel and fees to outside service providers, among other expenses. In addition, if we obtain regulatory approval for any of our product candidates and do not enter into a third-party commercialization collaboration, we expect to incur significant expenses related to building a sales and marketing team to support product sales, marketing and distribution activities.
We also anticipate increased expenses associated with being a public company including costs for audit, legal, regulatory and tax-related services related to compliance with the rules and regulations of the SEC, and listing standards applicable to companies listed on a national securities exchange, directors’ and officers’ insurance premiums, and investor relations costs.
Interest Expense
Interest expense results from the stated interest rates under our convertible notes. Borrowings under the notes carried an 8% coupon interest rate. All of the notes were converted into equity instruments in connection with the Merger.
Fair value adjustment
We record our convertible notes at fair value. Changes in the fair value of the convertible notes are recognized as a component of other income. All of the notes were converted into equity instruments in connection with the Merger.
Comparison of the three months ended September 30, 2026 and 2025
For the three months ended September 30,
| 2026 | 2025 | Change | ||||||||||
| Revenues | ||||||||||||
| Revenue | $ | 57,998 | $ | 34,627 | $ | 23,371 | ||||||
| Cost of goods sold | (31,196 | ) | (16,577 | ) | (14,619 | ) | ||||||
| Gross profit | 26,802 | 18,050 | 8,752 | |||||||||
| Operating expenses: | - | |||||||||||
| Research and development | 409,831 | 39,677 | 370,154 | |||||||||
| Depreciation and amortization | 2,702 | 2,806 | (104 | ) | ||||||||
| General and administrative | 635,410 | 844,344 | (208,934 | ) | ||||||||
| Transactional fees | - | 7,705,533 | (7,705,533 | ) | ||||||||
| Total operating expenses | 1,047,943 | 8,592,360 | (7,544,417 | ) | ||||||||
| Loss from operations | (1,021,141 | ) | (8,574,310 | ) | 7,553,169 | |||||||
| Other income (expense): | - | |||||||||||
| Fair value adjustment | - | - | - | |||||||||
| Interest income and other | 93,751 | 4,614 | 89,137 | |||||||||
| Interest expense | (2,935 | ) | (25,604 | ) | 22,669 | |||||||
| Net loss | $ | (930,325 | ) | $ | (8,595,300 | ) | $ | 7,664,975 | ||||
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Revenues
The Company derives revenues from the sale of products, including royalties related to sales of such products, and from the license of our technology. Substantially all revenues for the three months ended September 30, 2026 and 2025 were derived from one customer, Sun Pharma, based in India. We have a development and licensing agreement for MRT technology-based Luliconazole topical cream product for skin fungal diseases, from which we get revenues from milestone payments, royalties, and the sale of a proprietary ingredient.
Revenues for the three months ended September 30, 2026 and 2025 are summarized as follows:
| 2026 | 2025 | |||||||
| Sale of products | $ | 49,219 | $ | 26,973 | ||||
| Royalty income related to above product sales | 8,779 | 7,654 | ||||||
| Licensing and milestone fees – Luliconazole | - | - | ||||||
| $ | 57,998 | $ | 34,627 | |||||
Research and Development Expenses
Research and development expenses were $409,831 and $39,677 for the three months ended September 30, 2026 and 2025, respectively. The increase in research and development costs was primarily due to the focusing of the Company’s resources on scaling up the regulatory consulting and CMC preparation work of the VT-1953 project.
General and Administrative Expenses
General and administrative expenses were $635,410 and $844,344 for the three months ended September 30, 2026 and 2025, respectively. The decrease was primarily due to banker and legal fees paid toward the Merger transaction, partially offset by higher stock-based compensation for stock options in the three months ended September 30, 2026.
Interest income and other
Interest income and other income were $93,751 and $4,614 for the three months ended September 30, 2026 and 2025, respectively, an increase of $89,137. The increase was primarily due to higher interest income of $53,744, reflecting interest earned on cash balances held following the Concurrent Financing completed in connection with the Merger and proceeds from sales under our ATM program, a gain of $30,283 on the write-off of liabilities no longer considered payable, with no comparable amount in the prior-year period, and a favorable change of $5,152 in foreign currency transaction gains and losses, from a loss of $4,321 in the prior-year period to a gain of $831 in the current period.
Fair value adjustment
The fair value adjustment related to the fair value of the Company’s outstanding convertible notes was favorable/(unfavorable) Nil and Nil for the three months ended September 30, 2026 and 2025, respectively, reflecting the probability and timing of the Merger completion and resultant valuation considerations. All of the notes were converted into equity instruments in connection with the Merger.
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Comparison of the nine months ended September 30, 2026 and 2025
Results of Operations
The following table summarizes our results of operations for the periods presented:
For the nine months ended September 30,
| 2026 | 2025 | Change | ||||||||||
| Revenues | ||||||||||||
| Revenue | $ | 116,544 | $ | 283,163 | $ | (166,619 | ) | |||||
| Cost of goods sold | (61,439 | ) | (86,458 | ) | 25,019 | |||||||
| Gross profit | 55,105 | 196,705 | (141,600 | ) | ||||||||
| Operating expenses: | - | |||||||||||
| Research and development | 1,582,959 | 210,006 | 1,372,953 | |||||||||
| Depreciation and amortization | 7,917 | 9,297 | (1,380 | ) | ||||||||
| General and administrative | 1,477,876 | 1,369,365 | 108,511 | |||||||||
| Transactional fees | - | 7,705,533 | (7,705,533 | ) | ||||||||
| Total operating expenses | 3,068,752 | 9,294,201 | (6,225,449 | ) | ||||||||
| Loss from operations | (3,013,647 | ) | (9,097,496 | ) | 6,083,849 | |||||||
| Other income (expense): | - | |||||||||||
| Fair value adjustment | - | 30,511 | (30,511 | ) | ||||||||
| Interest income and other | 387,223 | 5,649 | 381,574 | |||||||||
| Interest expense | (9,105 | ) | (136,697 | ) | 127,592 | |||||||
| Net loss | $ | (2,635,529 | ) | $ | (9,198,033 | ) | $ | 6,562,504 | ||||
Revenues
The Company derives revenues from the sale of products, including royalties related to sales of such products, and from the license of our technology. Substantially all revenues for the nine months ended September 30, 2026 and 2025 were derived from one customer, Sun Pharma, based in India. We have a development and licensing agreement for MRT technology-based Luliconazole topical cream product for skin fungal diseases, from which we get revenues from milestone payments, royalties, and the sale of a proprietary ingredient.
Revenues for the nine months ended September 30, 2026 and 2025 are summarized as follows:
| 2026 | 2025 | |||||||
| Sale of products | $ | 99,504 | $ | 148,397 | ||||
| Royalty income related to above product sales | 17,040 | 17,866 | ||||||
| Licensing and milestone fees – Luliconazole | - | 116,900 | ||||||
| $ | 116,544 | $ | 283,163 | |||||
Research and Development Expenses
Research and development expenses were $1,582,959 and $210,006 for the nine months ended September 30, 2026 and 2025, respectively. The increase in research and development costs was primarily due to the focusing of the Company’s resources on scaling up the regulatory consulting and CMC preparation work of the VT-1953 project.
General and Administrative Expenses
General and administrative expenses were $1,477,876 and $1,369,365 for the nine months ended September 30, 2026 and 2025, respectively. The increase of $108,511 was primarily due to an increase in legal, accounting, auditing, and related professional fees associated with being a public company and increased staff, partially offset by a decrease of $381,558 in stock-based compensation for stock options, which was $192,551 and $574,109 for the nine months ended September 30, 2026 and 2025, respectively.
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Interest income and other
Interest income and other income were $387,223 and $5,649 for the nine months ended September 30, 2026 and 2025, respectively, an increase of $381,574. The increase was primarily due to a gain of $204,424 on the write-off of liabilities no longer considered payable, with no comparable amount in the prior-year period, and higher interest income of $170,231, reflecting interest earned on cash balances held following the Concurrent Financing completed in connection with the Merger and proceeds from sales under our ATM program.
Fair value adjustment
The fair value adjustment related to the fair value of the Company’s outstanding convertible notes was favorable/(unfavorable) Nil and $30,511 for the nine months ended September 30, 2026 and 2025, respectively, reflecting the probability and timing of the Merger completion and resultant valuation considerations. All of the notes were converted into equity instruments in connection with the Merger.
Cash Flows
The following table summarizes our cash flows for the nine months ended September 30, 2026 and 2025:
For the nine months ended September 30,
| Net cash provided by (used in): | 2026 | 2025 | Change | |||||||||
| Operating activities | $ | (2,967,253 | ) | $ | (2,229,103 | ) | $ | (738,150 | ) | |||
| Investing activities | (2,778 | ) | - | (2,778 | ) | |||||||
| Financing activities | 4,996,793 | 7,849,404 | (2,852,611 | ) | ||||||||
| Other | (52,273 | ) | (15,193 | ) | (37,080 | ) | ||||||
| Net (decrease) increase in cash | $ | 1,974,489 | $ | 5,605,108 | $ | (3,630,619 | ) | |||||
During the nine months ended September 30, 2026, net cash used in operating activities was $2,967,253, consisting primarily of net losses of $2,635,529, a decrease of $427,059 in salary and post-employment benefits payable, a decrease in accounts payable and accrued expenses of $296,832, and a decrease in other liabilities of $52,877, partially offset by a decrease in prepaid expenses and other current assets of $194,839 and non-cash stock compensation expenses of $222,551. The Company continues to operate under cost-efficient operations for capital efficiency.
During the nine months ended September 30, 2025, net cash used in operating activities was $2,229,103, consisting primarily of net losses of $9,198,033, offset by non-cash stock compensation expenses of $6,473,803 ($574,109 for stock options and $5,899,694 for common stock issued to advisors), the non-cash charge for interest expense of $130,659, and an increase in accounts payable and accrued expenses of $521,522, partially offset by an increase in prepaid expenses and other current assets of $199,966 and the income on fair value adjustment of convertible debt of $30,511.
During 2025 prior to the Merger, we have primarily used the proceeds of the sale of our convertible notes to incrementally develop our biotechnology products and prepare the Company for an offering of its securities and activities related thereto. We had been operating under an austerity program for several years, delaying projects and payments until sufficient funds could be raised. As a result of the Merger, we were able to close on the funding from the Concurrent Financing (net proceeds of approximately $6.4 million) and subsequently from the ATM facility (approximately $5,970,000 through September 30, 2026). The Company had $6,956,822 of cash on September 30, 2026.
Financing Activities
During the nine months ended September 30, 2026, cash provided by financing activities was $4,996,793, principally from the net proceeds of $5,285,868 from the sale of common stock pursuant to the ATM, partially offset by payments of $289,075 on insurance premium financing. During the nine months ended September 30, 2025, cash provided by financing activities was $7,849,404, principally from the net proceeds from the Concurrent Financing (the private placement of the Company’s common stock and the share subscription in VTL) of approximately $6.4 million (gross proceeds of $6,675,061, less issuance costs paid during the period of $261,000), proceeds from promissory notes issued by Reshape of $600,000, Bridge Notes of $191,253 in VTI and VTL, and proceeds from the sale of common stock pursuant to the ATM of $679,600, slightly offset by $41,552 of insurance premium financing payments.
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Liquidity and Capital Resources
Since inception, we have incurred significant operating losses. As of September 30, 2026, we had a cash balance of approximately $6,956,822 and have operated under an austerity plan for several years. We expect to continue to incur significant and increasing expenses and operating losses for the foreseeable future, as we advance our current and future product candidates through preclinical and clinical development, manufacturing of our drug product and drug supply, regulatory approval for our current and future product candidates, maintenance and expansion of our intellectual property portfolio, hiring of additional research, development and business personnel and operations as a public company. In addition, if we obtain marketing approval for any of our current or future product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution, which costs we may seek to offset through entry into collaboration agreements with third parties.
We will not generate revenue from product sales for our biotechnology segment unless and until we successfully complete clinical development and obtain regulatory approval for our product candidates. In addition, if we obtain regulatory approval for our product candidates and do not enter into a third-party commercialization partnership, we expect to incur significant expenses related to developing our commercialization capability to support product sales, marketing, manufacturing, and distribution activities.
As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity offerings and debt financings or other sources, such as potential collaboration agreements, strategic alliances, and licensing arrangements. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on acceptable terms, or at all.
On March 27, 2026, the Company received an order from the goods and services tax (“GST”) authorities in India relating to the refund of Integrated Goods and Services Tax (“IGST”) of approximately ₹3.57 crore, or approximately $378,000, previously claimed on certain R&D services provided to its U.S. affiliate. The matter pertains to the determination of the place of supply under the IGST Act, 2017, for services rendered before October 1, 2019. The GST authorities have taken the position that such services do not qualify as “export of services” and have proposed recovery of the refund along with applicable interest and penalties under relevant provisions of the Central Goods & Services Tax Act. The total amount of the demand order by IGST with respect to this matter, including interest and penalty, was approximately $739,000 as of September 30, 2026.
The Company believes that its position is supported by applicable law, judicial precedents, and clarificatory guidance, including the nature of the services provided on a principal-to-principal basis and the fact that they do not constitute services in respect of goods physically made available. Accordingly, the Company contested the demand order by filing a writ petition before the Delhi High Court. Following hearings in July and August 2026, the matter was heard on August 12, 2026, including on the Company’s jurisdictional challenge that the demand order was issued beyond the applicable statutory limitation period. By its order dated August 12, 2026, the Delhi High Court disposed of the writ petition without examining the merits and relegated the Company to the statutory remedy of appeal before the Appellate Authority. The Company challenged the said order by filing a special leave petition before the Hon’ble Supreme Court of India. However, the Hon’ble Supreme Court, by its order dated October 12, 2026, was not inclined to interfere with the order passed by the Hon’ble Delhi High Court. Accordingly, the Company filed an appeal before the first appellate authority on October 14, 2026, along with an application seeking exclusion of the time spent in the writ and special leave proceedings. Based on its assessment, including advice from legal and tax counsel, management has concluded that a loss is not probable and, accordingly, no provision for the liability has been recorded as of September 30, 2026. In April 2026, VTL received a civil court notice with respect to deferred salary of approximately $95,000, not paid to a past employee. This has been recognized as a liability at both September 30, 2026, and December 31, 2025; therefore, there is no further impact on working capital expected related to this matter. After September 30, 2026, the matter was heard before the District Court in Delhi on October 16, 2026. VTL, as Defendant No. 1, had previously filed its written statement. The Court directed the parties to file affidavits of admission and denial of documents and proposed issues, and adjourned the matter to December 23, 2026 for arguments on VTL’s pending application, replication, if any, and framing of issues. No determination on the merits of the claim was made at the October 16, 2026 hearing.
We believe that our existing cash, which includes the proceeds from the Concurrent Financing and the ATM Offering to date, will enable us to fund our operating expenses and capital expenditure requirements for at least 15 months, including the initiation of the pivotal trial of our lead candidate, VT-1953, but will not be sufficient to complete the trial or work on the other indications or the development of any other product candidate. For the nine months ended September 30, 2026, the Company raised net proceeds of approximately $5,285,868 from the sale of common stock pursuant to the ATM Offering. We have based this estimate on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Our failure to raise capital or enter into collaboration, strategic alliance, or licensing agreements as, and when, needed could have a material adverse effect on our business, results of operations, and financial condition.
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Our future capital requirements will depend on a number of factors, including:
| ● | the costs of conducting preclinical studies and clinical trials; |
| ● | the costs of manufacturing; |
| ● | the scope, progress, results and costs of discovery, preclinical development, laboratory testing, and clinical trials for product candidates we may develop, if any; |
| ● | the costs, timing, and outcome of regulatory review of our product candidates; |
| ● | our ability to establish and maintain collaborations on favorable terms, if at all; |
| ● | the achievement of milestones or occurrence of other developments that trigger payments under any license or collaboration agreements we might have at such time; |
| ● | the costs and timing of future commercialization activities, including product sales, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing approval; |
| ● | the amount of revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval; |
| ● | the costs of preparing, filing and prosecuting patent applications, obtaining, maintaining and enforcing our intellectual property rights, and defending intellectual property-related claims; |
| ● | our headcount growth and associated costs as we expand our business operations and research and development activities; and |
| ● | the costs of operating as a public company. |
Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through equity offerings and debt financings or other sources, such as potential collaboration agreements, strategic alliances, and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the interests of our stockholders may be diluted, and the terms of these securities may include liquidation or other preferences that could adversely affect the rights of our stockholders. Additional debt financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends, that could adversely impact our ability to conduct our business.
If we raise funds through potential collaborations, strategic alliances or licensing 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. If we are unable to raise additional funds 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 product candidates that we would otherwise prefer to develop and market ourselves.
Contractual Obligations and Commitments
We enter into agreements in the normal course of business for sponsored research, preclinical studies, contract manufacturing, and other services and products for operating purposes, which are generally cancellable upon written notice.
Licenses, employment agreements, or other commitments
The Company leases offices and laboratory space in India, which were extended for two one-year periods ending December 2026, with monthly payments ranging from $2,500 to $2,900 per month. We also have offices in Princeton, NJ, and Cambridge, MA, under short-term rentals.
We may enter into contracts in the normal course of business with clinical research organizations for clinical trials and clinical supply manufacturing and with vendors for pre-clinical research studies, research supplies, and other services and products for operating purposes. These contracts generally provide for termination on notice, and therefore, we believe that our non-cancelable obligations under these agreements will not be material.
We also have employment agreements with certain employees and consulting agreements that require the funding of a specific level of payments if certain events, such as a change in control, termination without cause, or retirement, occur. We also have a Resignation and Separation Letter agreement dated January 11, 2021, with Craig Tooman, a past employee, to pay a certain amount on change of control.
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Critical Accounting Policies and Significant Judgments and Estimates
The following summarizes the most significant estimates impacting the condensed consolidated financial statements. Refer to Note 2 for further information.
Stock options
We account for the issuance of stock options in accordance with ASC 718, Compensation-Stock Compensation. We estimate the fair value of stock option awards granted using the Black-Scholes option-pricing model, which uses as inputs the fair value of our common stock and subjective assumptions we make, including expected stock price volatility, the expected term of the award, the risk-free interest rate, and expected dividends.
Inflation
Inflation generally affects us by increasing the cost of labor. We do not believe that inflation had a material effect on our business, financial condition or results of operations during the three and nine months ended September 30, 2026 or 2025.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company, we are not required to provide disclosure pursuant to this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. Our disclosure controls and procedures have been designed to provide reasonable assurance of achieving their objectives.
Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2026, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses in our internal control over financial reporting described below.
Material Weaknesses in Internal Control over Financial Reporting
As previously disclosed in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2025, management identified material weaknesses in our internal control over financial reporting related to (i) the lack of a comprehensive policies and procedures manual, (ii) inadequate segregation of duties, and (iii) insufficient technical accounting expertise. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. These material weaknesses had not been remediated as of September 30, 2026.
Notwithstanding these material weaknesses, management believes that the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, the Company’s financial position, results of operations and cash flows for the periods presented in accordance with GAAP.
Remediation Efforts
Management is committed to remediating the material weaknesses. During the quarter ended September 30, 2026, the Company appointed a Chief Financial Officer with public company reporting and technical accounting experience, effective September 1, 2026. The material weaknesses will not be considered remediated until the applicable controls have operated for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
Changes in Internal Control over Financial Reporting
On September 1, 2026, Jerry Leonard succeeded Robert Dickey as the Company’s principal financial officer and principal accounting officer. Other than the remediation efforts described above, there were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the quarter ended September 30, 2026, that materially affected, or were reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Except for the GST matter described in Note 15(d) to the condensed consolidated financial statements, the Company is not aware of any pending or threatened litigation against it that could have a material adverse effect on the Company’s business, operating results or financial condition. The industry in which the Company operates is characterized by frequent claims and litigation, including claims regarding patent and other intellectual property rights as well as improper hiring practices. As a result, the Company may be involved in various legal proceedings from time to time.
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors set forth in Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 18, 2026.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
Uses of Proceeds from Sale of Registered Securities
None.
Purchases of Equity Securities
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Rule 10b5-1 Plan and Non-Rule 10b5-1 Trading Arrangement Adoptions, Terminations, and Modifications
During the three months ended September 30, 2026, none of our directors or “officers” (as defined in Rule 16a-1(f) under the Exchange Act)
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ITEM 6. EXHIBITS
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| * | The schedules and exhibits to this exhibit have been omitted pursuant to Item 601 of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request. |
| ** | Filed herewith. |
| *** | Furnished herewith. |
| # | Indicates a management contract or compensatory plan or arrangement. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| VYOME HOLDINGS, INC. | ||
| BY: | /s/ Venkat Nelabhotla | |
| Venkat Nelabhotla | ||
| Chief Executive Officer | ||
| (principal executive officer) | ||
| BY: | /s/ Jerry Leonard | |
| Jerry Leonard | ||
| Chief Financial Officer | ||
| (principal financial and accounting officer) | ||
| Dated: November 12, 2026 | ||
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