UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-36856

HEPION PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

Delaware		46-2783806
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

34 Shrewsbury Ave., Suite 1D

Red Bank, NJ 07701

(Address of Principal Executive Offices)

(732) 902-4000

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.0001 per share		HEPA		OTC QB

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. Yes ☒ No ☐

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). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting 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 ☐

Non-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 ☒

The number of shares of the registrant’s Common Stock outstanding as of August 10, 2026 was 90,219,317.

HEPION PHARMACEUTICALS, INC.

FORM 10-Q

TABLE OF CONTENTS

		Page
PART I—FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (unaudited):	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive Loss	4
	Condensed Consolidated Statements of Changes in Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	22

PART II—OTHER INFORMATION

Item 1A.	Risk Factors	23
Item 6.	Exhibits	23
SIGNATURES		24

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q for Hepion Pharmaceuticals, Inc. may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are characterized by future or conditional verbs such as “may,” “will,” “expect,” “intend,” “anticipate,” believe,” “estimate” and “continue” or similar words. You should read statements that contain these words carefully because they discuss future expectations and plans, which contain projections of future results of operations or financial condition or state other forward-looking information. Such statements are only predictions and our actual results may differ materially from those anticipated in these forward-looking statements. We believe that it is important to communicate future expectations to investors. However, there may be events in the future that we are not able to accurately predict or control. Factors that may cause such differences include, but are not limited to, those discussed under Item 1A. Risk Factors and elsewhere in the audited consolidated financial statements as of and for the year ended December 31, 2025 contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 12, 2026, as well as under Item 1A . Risk Factors within this Form 10-Q. These factors include the uncertainties associated with:

●	our ability to raise substantial additional capital to continue as a going concern and fund our planned operations in the near term;

●	estimates regarding our expenses, use of cash, timing of future cash needs and anticipated capital requirements;

●	success in retaining, or changes required in, our officers, key employees or directors;

●	our public securities’ potential liquidity and trading;

●	our ability to obtain and maintain regulatory approval of our product candidates, and any related restrictions, limitations or warnings in the label of any of our product candidates, if approved;

●	our plans to pursue research and development of other future product candidates;

●	the potential advantages of our product candidates and those being developed;

●	the rate and degree of market acceptance and clinical utility of our product candidates;

●	the success of our collaborations and partnerships with third parties;

●	our estimates regarding the potential market opportunity for our product candidates;

●	our sales, marketing and distribution capabilities and strategy;

●	our ability to establish and maintain arrangements for manufacture of our product candidates;

●	our ability to compete with companies currently marketing or engaged in the development of treatments for indications that our product candidates are designed to target; and

●	our intellectual property position, including the strength and enforceability of our intellectual property rights.

We do not assume any obligation to update forward-looking statements as circumstances change and thus you should not unduly rely on these statements.

	June 30, 2026			December 31, 2025
Assets
Current assets:
Cash	$	1,628,625		$	1,828,062
Prepaid expenses		298,817			1,241,890
Total current assets		1,927,442			3,069,952
Total assets	$	1,927,442		$	3,069,952

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	169,875		$	167,810
Accrued expenses		322,884			77,507
Notes payable, current		—			54,066
Total current liabilities		492,759			299,383

Derivative financial instruments—warrants		156,164			103,022
Total liabilities		648,923			402,405
Commitments and contingencies (see Note 10)		-
Stockholders’ equity:
Series A convertible preferred stock, stated value $10 per share, 85,581 shares issued and outstanding at June 30, 2026 and December 31, 2025.		855,808			855,808
Series C convertible preferred stock, stated value $1,000 per share, 1,688 shares issued and outstanding at June 30, 2026 and December 31, 2025.		839,320			839,320
Convertible preferred stock		839,320			839,320

Common stock—$0.0001 par value per share; 120,000,000 shares authorized, 29,120,317 and 11,620,317 issued and outstanding at June 30, 2026 and December 31, 2025, respectively.		2,912			1,162
Additional paid-in capital		247,728,818			247,060,568
Accumulated other comprehensive income.		8,345			8,345
Accumulated deficit		(248,156,684	)		(246,097,656	)
Total stockholders’ equity		1,278,519			2,667,547
Total liabilities and stockholders’ equity	$	1,927,442		$	3,069,952

	2026			2025			2026			2025
	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025
Revenues	$	—		$	—		$	—		$	—
Cost and expenses:
Research and development		50,918			423,277			120,918			445,512
General and administrative		1,160,573			919,488			1,889,082			2,177,848
Asset impairment loss		—			402,746			—			402,746
Total operating expenses		1,211,491			1,745,511			2,010,000			3,026,106
Loss from operations		(1,211,491	)		(1,745,511	)		(2,010,000	)		(3,026,106	)

Other income (expense):
Interest income (expense)		6,243			4,866			4,114			(19,945	)
Change in fair value of derivative financial instruments-warrants		(42,989	)		698,073			(53,142	)		(4,102,408	)
Net loss	$	(1,248,237	)	$	(1,042,572	)	$	(2,059,028	)	$	(7,148,459	)

Weighted-average common shares outstanding:
Basic and diluted		16,193,404			11,328,122			13,906,860			7,137,017

Net loss per common share: (see Note 9)
Basic and diluted	$	(0.08	)	$	(0.09	)	$	(0.15	)	$	(1.00	)

	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Income		Deficit			Equity
	Preferred Stock				Preferred Stock								Additional		Accumulated other					Total
	Series A				Series C				Common Stock				Paid in		Comprehensive		Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Income		Deficit			Equity
Balance at December 31, 2025		85,581	$	855,808		1,688	$	839,320		11,620,317	$	1,162	$	247,060,568	$	8,345	$	(246,097,656	)	$	2,667,547

Net loss		—		—		—		—		—		—		—		—		(810,791	)		(810,791	)
Balance at March 31, 2026		85,581	$	855,808		1,688	$	839,320		11,620,317		1,162	$	247,060,568	$	8,345	$	(246,908,447	)	$	1,856,756

Net loss		—		—		—		—		—		—		—		—		(1,248,237	)		(1,248,237	)
Issuance of common stock, net		—		—		—		—		17,500,000		1,750		668,250		—		—			670,000
Balance at June 30, 2026		85,581	$	855,808		1,688	$	839,320		29,120,317		2,912	$	247,728,818	$	8,345	$	(248,156,684	)	$	1,278,519

	June 30,			December 31,
	2026			2025
Stock price	$	0.07		$	0.06
Expected warrant term (years)		2.6 years			3.1 years
Risk-free interest rate		4.15	%		3.64	%
Expected volatility		200.48	%		171.05	%
Dividend yield		—			—

	Exercise Price		Warrants Outstanding		Fair Value		Exercise Price		Warrants Outstanding		Fair Value
	June 30, 2026						December 31, 2025
	Exercise Price		Warrants Outstanding		Fair Value		Exercise Price		Warrants Outstanding		Fair Value
Series A Warrants	$	95.50		19,608		—	$	95.50		19,608		—
Series B-1 Warrants	$	95.50		14,706		—	$	95.50		14,706		—
2025 Series A Warrants	$	3.22		3,443,461	$	156,164	$	3.22		3,443,461	$	103,022
Total				3,477,775	$	156,164				3,477,775	$	103,022

Date	Number of Warrants Outstanding		Derivative Instrument Liability
Balance of derivative liability at December 31, 2025		3,477,775	$	103,022
Change in fair value of warrants		—		53,142
Balance of derivative liability at June 30, 2026		3,477,775		156,164

Description	Fair value		(Level 1)		(Level 2)		(Level 3)
	Fair Value Measurement at Reporting Date Using
Description	Fair value		(Level 1)		(Level 2)		(Level 3)
As of June 30, 2026:
Derivative liabilities related to warrants	$	156,164	$	—	$	156,164	$	—

As of December 31, 2025:
Derivative liabilities related to warrants	$	103,022	$	—	$	103,022	$	—

	June 30, 2026		December 31, 2025

Payroll related	$	138,386	$	29,172
Accrued taxes		127,263
Other		57,235		48,335
Total accrued expenses	$	322,884	$	77,507

	2026		2025		2026		2025
	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
General and administrative	$	—	$	—	$	—	$	20,783
Total stock-based compensation expense	$	—	$	—	$	—	$	20,783

	Number of Options			Weighted Average Exercise Price Per Share		Intrinsic Value		Weighted Average Remaining Contractual Term
Balance outstanding, December 31, 2025		5,822		$	356.90	$	—	5.15 years
Forfeited		(3,801	)	$	311.51	$	—
Balance outstanding, June 30, 2026		2,021		$	440.88	$	—	0.12 years
Awards outstanding, vested awards and those expected to vest at June 30, 2026		2,021		$	440.88	$	—	0.12 years
Vested and exercisable at June 30, 2026		2,021		$	440.88	$	—	0.12 years


	Three Months Ended June 30,						Six Months Ended June 30,
Basic and diluted net loss per common share:	2026			2025			2026			2025
Numerator:
Net loss	$	(1,248,237	)	$	(1,042,572	)	$	(2,059,028	)	$	(7,148,459	)
Denominator:
Weighted average common shares outstanding		16,193,404			11,328,122			13,906,860			7,137,017
Net loss per share of common stock—basic and diluted	$	(0.08	)	$	(0.09	)	$	(0.15	)	$	(1.00	)

	●	the scope, progress, results and costs of researching and developing our current and future product candidate and programs, and of conducting preclinical studies and clinical trials;

	●	the number and development requirements of other product candidates that we may pursue, and other indications for our current product candidate that we may pursue;

	●	the timing of, and the costs involved in, obtaining regulatory and marketing approvals and developing our ability to establish sales and marketing capabilities, if any, for our future product candidates we develop if clinical trials are successful;

	●	our ability to establish and maintain collaborations, strategic licensing or other arrangements and the financial terms of such agreements;

	●	the cost of commercialization activities for our future product candidates that we may develop, whether alone or with a collaborator;

	●	the costs involved in preparing, filing, prosecuting, maintaining, expanding, defending and enforcing patent claims, including litigation costs and the outcome of such litigation;

	●	the timing, receipt and amount of sales of, or royalties on, our future products, if any; and

	●	Due to cost-cutting measures, the Company’s control environment was ineffective as they did not maintain a sufficient complement of personnel to execute controls as designed including the absence of proper segregation of duties. Such impacted controls include indirect controls affecting risk assessment, information & communication, and monitoring components of COSO along with certain control activities including both business process controls and information technology general controls.
	●	Lack of proper design and implementation of controls over formal review, approval, and evaluation of non-core, complex accounting transactions.
	●	Lack of proper design and implementation of certain controls over the income tax provision and management’s review of the income tax provision. The Company utilized a third-party to assist in the preparation of the tax provision. Specifically, the Company did not sufficiently design and implement controls related to the completeness and accuracy of certain aspects of the tax provision and the completeness and accuracy of income tax disclosures.

	●	We will need to increase personnel in the future in order to have proper segregation of duties.
	●	We are utilizing the services of external consultants for non-routine and\or technical accounting issues as they arise.
	●	Expanding and improving our review process for complex accounting transactions. We plan to further improve this process by enhancing access to accounting literature, identification of third-party professionals with whom to consult regarding complex accounting applications and consideration of additional staff with the requisite experience and training to supplement existing accounting professionals.
	●	Management, with the assistance of a third party, will perform an evaluation of the processes and procedures around our tax provision processes, internal control design gaps, and recommend process enhancements.
	●	Implementing enhancements and process improvements, including the design and implementation of well-defined controls and related control attributes regarding income tax provision and income tax disclosures.
	●	Developing a detailed timeline of the tax provision calculation, to ensure that sufficient time is allocated to complete the process as designed.

4.1		Form of Warrant (incorporated by reference to Exhibit 4.1 to Form 8-K filed on August 4, 2026).
10.1		Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to Form 8-K filed on August 4, 2026)
10.2		Employment Agreement with Sireesh Appajosyula dated August 1, 2026.
31.1		Certification of Interim Chief Executive Officer and Interim Chief Financial Officer required under Rule 13a-14(a)/15d-14(a) under the Exchange Act.
32.1		Certification of Interim Chief Executive Officer and Interim Chief Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document-the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB		Inline XBRL Taxonomy Label Linkbase
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase
104		Cover Page Interactive Data File (formatted as Inline XBRL in Exhibit 101)

	HEPION PHARMACEUTICALS, INC. (Registrant)

Date: August 13, 2026	By:	/s/ GARY STETZ
		Gary Stetz
		Interim Chief Executive Officer
		(Principal Executive Officer and Principal Financial and Accounting Officer)