AZTR 10-K & 10-Q changes, risk factors and insider trading

As of December 31, 2024,2025, we had total assets of $7.4$5.0 million and working capital of $3.9$2.0 million. In January, 2025, we completed a public offering of 4,857,780729,381 shares of our common stock, at an offering price of $0.30$2.00 per share, in which we received net proceeds of approximately $1.3$1.2 million, after deducting underwriter discounts and offering expenses, andin February 2025 we completed a registered direct offering of 2,495,518374,696 shares of our common stock, at an offering price of $0.2785$1.85 per share, in which we received net proceeds of approximately $695 thousand, after deducting placement agent commissions and offering expenses; in April 2025 we entered into an equity line of credit with Alumni Capital LP pursuant to which we have sold 9,255,823 shares and received gross proceeds of approximately $6 million; and in November 2025 we completed an offering of 535,759 shares at an offering price of $0.32, pre-funded warrants to purchase up to an aggregate of 4,151,741 shares and warrants to purchase up to an aggregate 4,687,500 shares, in which we received net proceeds of approximately, $1.3 million, after deducting underwriter discounts and offering expenses. After giving effect to boththese offerings, we believe that our cash on hand as of the date of this report will not be sufficient to cover our proposed plan of operations beyond sixthree months from the date of this report. We intend to seek additional funds through various financing sources, including the sale of our equity, licensing fees for our technology and joint ventures with industry partners. In addition, we will consider alternatives to our current business plan that may enable us to achieve revenue producing operations and meaningful commercial success with a smaller amount of capital. However, there can be no guarantees that such funds will be available on commercially reasonable terms, if at all. If such financing is not available on satisfactory terms, we may be unable required to scale back our proposed plan of operations and we may be unable to continue operations, in which case you may lose your entire investment.

We have built a proprietary platform that includes a microbial library comprised of approximately 1,500 unique bacterial strains that can be screened for unique therapeutic characteristics. The platform is augmented by artificial intelligence, machine learning and genetic engineering technologies. To date, our focus is on the development of genetically engineered strains of S. epidermidis, which we consider to be an optimal therapeutic candidate species for engineering of dermatologic therapies. However, we believe that the genetic engineering of S. epidermidis is a novel and unproven mode of therapy. We recently initiated our Phase 1b clinical trial for ATR-12 and dosed our first patient in August 2024 and expect to dosedosed the first patient in the Phase 1/2 trial of ATR-04 in the firstthird halfquarter of 2025. However, success in early clinical trials does not ensure that large-scale clinical trials will be successful, nor does it predict final results. Even after the completion of our proposed Phase 1b clinical trials, our initial product candidates will have only been tested in a small number of patients. Results from these clinical trials may not necessarily be indicative of the safety and tolerability or efficacy of our product candidates or our as we expand into larger clinical trials. Until such time, if ever, as we are able to provide the FDA with substantial clinical evidence to support a claim of safety, efficacy, purity and potency sufficient to enable the FDA to approve our proprietary product candidates for any indication, our proprietary microbial library and genetic engineering platform will remain unproven.

Because our product candidates are in early stages clinical trials or of preclinical development, they will require extensive preclinical and clinical testing. We dosed the first patient in our Phase 1b clinical trial for ATR-12 in August 2024,and we expect to dosedosed the first patient in our Phase 1/2 clinical trial for ATR-04 in the firstthird halfquarter of 2025. However, we have not conducted meaningful preclinical studies for any of our other product candidates. Success in preclinical testing and early-stage clinical trials does not ensure that later clinical trials will generate the same results or otherwise provide adequate data to demonstrate the efficacy and safety of a product candidate. Preclinical studies and Phase 1b clinical trials are primarily designed to test safety, to study pharmacokinetics and pharmacodynamics and to understand the side effects of product candidates at various doses and schedules. Phase 1b clinical trials also test how well a certain disease responds to a new treatment. Success in preclinical studies and earlier clinical trials does not ensure that later efficacy trials will be successful, nor does it predict final results. Our product candidates may fail to show the desired safety and efficacy in clinical development despite positive results in preclinical studies or even if they successfully advance through earlier clinical trials.

The ability of the FDA and other government agencies to review and approve new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory, and policy changes, a government agency’s ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the government agency’s ability to perform routine functions. Average review times at the FDA and other government agencies have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable. Disruptions at the FDA and other agencies may also slow the time necessary for new drugs or modifications to approved drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, over the last several years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical employees and stop critical activities. With the change in presidential administrations in 2025, there isremains substantial uncertainty as to how, if at all, the new administration will seek to modify or revise the requirements and policies of the FDA and other regulatory agencies with jurisdiction over our product candidates. The impending uncertainty could present new challenges or potential opportunities as we navigate the clinical development and approval process for our product candidates.

The FDA has the authority to require a REMS as part of ana BLA or after approval, which may impose further requirements or restrictions on the distribution or use of an approved drug, such as limiting prescribing to certain physicians or medical centers that have undergone specialized training, limiting treatment to patients who meet certain safe-use criteria or requiring patient testing, monitoring and/or enrollment in a registry.

With respect to sales and marketing activities related to our product candidates, advertising and promotional materials must comply with FDA rules in addition to other applicable federal, state and local laws in the United States and similar legal requirements in other countries. In the United States, the distribution of product samples to physicians must comply with the requirements of the U.S. Prescription Drug Marketing Act. Application holders must obtain FDA approval for product and manufacturing changes, depending on the nature of the change. We may also be subject, directly or indirectly through our customers and partners, to various fraud and abuse laws, including, without limitation, the U.S. Anti-Kickback Statute, U.S. False Claims Act, and similar state laws, which impact, among other things, our proposed sales, marketing, and scientific/educational grant programs. If we participate in the U.S. Medicaid Drug Rebate Program, the Federal Supply Schedule of the U.S. Department of Veterans Affairs, or other government drug programs, we will be subject to complex laws and regulations regarding reporting and payment obligations. All of these activities are also potentially subject to U.S. federal and state consumer protection and unfair competition laws. Similar requirements exist in many of these areas in other countries.

Under the Orphan Drug Act, the FDA may grant orphan drug designation to a drug intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States and for which there is no reasonable expectation that the cost of developing and making a drug available in the United States for this type of disease or condition will be recovered from sales of the product. Orphan drug designation must be requested before submitting ana BLA. After the FDA grants orphan drug designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan product designation does not convey any advantage in or shorten the duration of regulatory review and approval process. In addition to the potential period of exclusivity, orphan designation makes a company eligible for grant funding of up to $650,000 per year for four years to defray costs of clinical trial expenses, tax credits for clinical research expenses and potential exemption from the FDA application user fee.

For the purposes of the rare pediatric disease program, a “rare pediatric disease” is a serious or life‑threatening disease in which the serious or life‑threatening manifestations primarily affect individuals aged from birth to 18 years or a rare disease or conditions within the meaning of the Orphan Drug Act. Under the FDA’s rare pediatric disease priority review voucher, or RPD‑PRV, program, upon the approval of an NDA or BLA for the treatment of a rare pediatric disease, the sponsor of such application would be eligible for an RPD‑PRV that can be used to obtain priority review for a subsequent NDA or BLA. The sponsor of the application may transfer (including by sale) the RPD‑PRV to another sponsor. The voucher may be further transferred any number of times before the voucher is used, as long as the sponsor making the transfer has not yet submitted the application. Congress has extended the RPD‑PRV program until December 20, 2024, withand potentialrecently forreauthorized vouchersthe toprogram beunder grantedthe Consolidated Appropriations Act of 2026, or CAA, which was signed into law on February 3, 2026. The CAA included the Naylon Give Kids a Chance Act that reauthorizes the Rare Pediatric Disease PRV program until 2026.September 30, 2029. This program has been subject to criticism, including by the FDA. As such it is possible that even if we have obtained qualification for an RPD‑PRV, the program may no longer be in effect at the time of approval. Also, although priority review vouchers may be sold or transferred to third parties, there is no guaranty that we will be able to realize any value if we obtained, and subsequently were able to sell a priority review voucher. The RPD-PRV program is currently scheduled to sunset as of September 30, 2026.2026, and the future of this program remains unknown at this time.

On October 1, 2025, we received written notification from the NYSE American that we are not in compliance with Section 1003(a)(ii) (the “Deficiency Letter”) of the NYSE American Company Guide (the “Company Guide”). The Company has submitted a plan (the “Plan”) to regain compliance to the NYSE American and on December 16, 2025, received notice that the NYSE American had accepted the Company’s Plan to regain compliance and granted a plan period through April 1, 2027 (the “Plan Period Deadline”). If the Company does not regain compliance with the NYSE American continued listing standards by the Plan Period Deadline, or if the Company does not make progress consistent with its Plan during the plan period, then the NYSE American may initiate delisting proceedings. Additionally, if we fail to satisfy the continued listing requirements of the NYSE American, such asincluding the corporate governance requirements or the minimum closing bid price requirement, the NYSE American may take steps to delist our common stock. Such a delisting would likely have a negative effect on the price of our common stock and would impair your ability to sell or purchase our common stock when you wish to do so. In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the NYSE American’s minimum bid price requirement or prevent future non-compliance with the NYSE American’s listing requirements.

During the preparation of our financial statements included in this report, we and our independent registered public accounting firm identified a material weakness as it relates to a lack of adequate segregation of accounting functions. We are in the process of implementing measures designed to improve our internal control over financial reporting and remediate this material weakness. We intend to increase staffing within our accounting infrastructureinfrastructure, and implement additional review controls sufficient to facilitate proper segregation of accounting functions.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes thereto contained elsewhere in this report. The information contained in this annualAnnual reportReport on Form 10-K is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this report and in our other filings with the Securities and Exchange Commission, or SEC, including the "“Risk Factors"” section in this report.

In this report we make,make statements, and from time to time we otherwise make written and oral statements regarding our business and prospects, such as projections of future performance, statements of management’s plans and objectives, forecasts of market trends, and other matters that are 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. Statements containing the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimates,” “projects,” “believes,” “expects,” “anticipates,” “intends,” “target,” “goal,” “plans,” “objective,” “should” or similar expressions identify forward-looking statements, which may appear in our documents, reports, filings with the SEC, and news releases, and in written or oral presentations made by officers or other representatives to analysts, stockholders, investors, news organizations and others, and in discussions with management and other of our representatives.

As of February 24,26, 2025,2026, we had 14,979,35416,192,438 shares of our common stock issued and outstanding. Except as otherwise indicated, all share and share price amountsherein in this report givesgive effect to a forward stock split effected on May 17, 2023 at a ratio of 7.1-for-1,7.1 andfor theone, a reverse stock split effected on July 1, 2024 at a ratio of 1-for-30.one for 30 and a reverse stock split effected on August 21, 2025 at a ratio of one for 6.66. As of the date of this filing, our Board is still evaluating the need for a further reverse split and, if needed, the exact split ratio based on our financing alternatives and NYSE American compliance considerations. Our financial statements will not reflect a further reverse stock split until such time as it occurs.

We are focused on developing innovative therapies for precision dermatology using engineered proteins and topical live biotherapeutic products. We have built a proprietary platform that includes a microbial library comprised of approximately 1,500 unique bacterial strains that can be screened for unique therapeutic characteristics. The platform is augmented by an artificial intelligence and machine learning technology that analyzes, predicts and helps screen our library of strains for drug like molecules. The platform also utilizes a licensed genetic engineering technology, which can enable the transformation of previously genetically intractable strains. Our initial focus is on the development of genetically engineered strains of Staphylococcus epidermidis, or S. epidermidis, which we consider to be an optimal therapeutic candidate species for engineering of dermatologic therapies. The particular species demonstrates a number of well-described properties in the skin. As of the date of this report, we have identified among our microbial library over 60 distinct bacterial species that we believe are capable of being engineered to create living organisms or engineered proteins with significant therapeutic effect.

We are a pioneer in genetically engineered bacteria for therapeutic use in dermatology. Our goal is to leverage our platforms and internal microbial library bacterial strains to create new therapeutics that are either engineered living organisms or engineered proteins or peptides to treat skin diseases. Our initial focus is on the development of our current product candidates,programs, including:

•ATR-12, which includes a genetically modified strain of S. epidermidis for treating the orphan disease, Netherton syndrome, a chronic and sometimes fatal disease of the skin estimated to affect approximately one to nine in every 100,000, but its prevalence may be underestimated due to misdiagnosis caused by similarities to other skin diseases. We received Pediatric Rare Disease Designation for ATR-12 by the United States Food and Drug Administration, or FDA, in 2019. In December 2022, we submitted an investigational new drug application, or IND, for a Phase 1b clinical trial of ATR-12 in adult Netherton syndrome patients, and on January 27, 2023 we received notification from the FDA that the “study may proceed” with respect to the proposed Phase 1b clinical trial. After submitting post-IND manufacturing reports, we have commenced operating activities for our Phase 1b clinical trial in December 2023, and we have dosed our first patient in August 2024. We expect to reportreported initial clinical safety results in the first half of 2025.

•ATR-04, which includes a genetically modified strain of S. epidermidis for treating the papulopustular rash experienced by cancer patients undergoing epidermal growth factor receptor inhibitor, or EGFRi, targeted therapy. In August 2024, we obtained IND clearance from the FDA to commence a Phase 1/2 clinical trial in certain cancer patients undergoing EGFRi targeted therapy. In September 2024, we obtained Fast Track designation by the FDA in this indication. We expect to dosedosed the first patient in the Phase 1/2 clinical trial in the firstthird halfquarter of 2025.

•ATR-01, which includes a genetically modified strain of S. epidermidis that expresses an engineered recombinant human filaggrin protein for treating ichthyosis vulgaris, a chronic, xerotic (abnormally dry), scaly skin disease with an estimated incidence and prevalence of 1 in 250, which suggests a total patient population of 1.3 million in the United States. We are planning to perform lead optimization and IND-enabling studies in 2025 to support ana potential IND filing.filing in 2026.

We also have established partnerships with teams from Carnegie Mellon University and the Fred Hutchinson Cancer Center, or Fred Hutch, two of the premier academic centers in the United States. Our collaboration with the Carnegie Mellon based team also takes advantage of the power of whole genome sequencing. This partnership is mining our proprietary library of bacterial strains for novel, drug like peptides and proteins. The artificial intelligence/machine learning technology developed by this team predicts the molecules made by microbes from their genetic sequences. The system then compares the predictions to the products actually made through tandem mass spectroscopy and/or nuclear magnetic resonance imaging to refine future predictions. The predictions can be compared to publicly available 2D and 3D protein databases to select drug like structures.

We hold an exclusive, worldwide license from Fred Hutch regarding the use of its patented SyngenicDNA Minicircle Plasmid, or SyMPL, technologies for all fields of genetic engineering, including to discover, develop and commercialize engineered microbial therapies and microbial-derived peptides and proteins for skin diseases. We are utilizing our licensed patent rights to build plasmids in order to make genetic transformations that have never been previously achieved. To date, our team has successfully engineered our lead therapeutic candidates without the SyMPL technology. However, we believe that SyMPL will open up the ability to make genetic transformations of an expanded universe of microbial species, and we expect that some or all of our future product candidates will incorporate the SyMPL technology. Our collaboration with Fred Hutch is led by Dr. Christopher Johnston, an expert in microbial engineering, and the innovator behind the SyMPL technology.

Beyond our three lead product candidates and collaboration with Bayer,candidates, our goal is to develop a broad portfolio of product candidates focused on expanding the application of our platforms for precision dermatology. We believe that we have established a unique position in advancing the development of biologics for precision dermatology.

•Advance our lead product candidates,programs, ATR-12 and ATR-04, through clinical trials. In 2022, we obtained pre-IND correspondence with the FDA for purposes of discussing our proposed regulatory pathway for the ATR-12 program and obtaining guidance from the FDA on the preclinical plan leading to the filing and acceptance of an IND for ATR-12. In December 2022, we filed an IND for aan ATR-12 first-in-human trial of ATR-12 in Netherton syndrome patients. On January 27, 2023, we received notification from the FDA that the “study may proceed” with respect to the proposed Phase 1b clinical trial, and in August 2024 we initiated dosing the first patient in itsthe ATR-12 Phase 1b clinical trial evaluating ATR-12.trial. In August 2024, we received IND clearance from the FDA for a first-in-human Phase 1b/2a clinical trial in patients with EGFRi-associated rash, and in September 2024, the FDA granted Fast Track designation for ATR-04.the ATR-04 program. We commenced a Phase 1b trial offor our ATR-04 program in certain cancer patients undergoing EGFRi therapy in the fourth quarter of 2024.2024 Weand expectinitiated to dosedosing the first patient in the ATR-04 Phase 1/2 clinical trial with ATR-04 in the firstthird halfquarter of 2025. We expect to reportreported initial safety results of the first patients dosed in our Phase 1b clinical trial for our ATR-12 program in Netherton syndrome patients in early 2025 with full results anticipated in the secondfirst half of 2025.

•Leverage our academic partnerships. We currently have partnerships with investigators at the Fred Hutchinson Cancer Center, Yale University, JacksonDuke Laboratory for Genomic Medicine,University, and Carnegie Mellon University. We expect to leverage these partnerships and potentially expand them or form other academic partnerships to bolster our engineering platforms and expand our research and development pipeline.

We are an early-stage clinical biopharmaceutical company, formed in January 2014, and have limited operating history. We have not commenced revenue-producing operationsoperations, apart from limited service revenue derived throughand our JDAcore withfocus Bayer.is Underon the termsresearch and development of theinnovative JDA, we are responsibletherapies for testingprecision ourdermatology libraryusing ofengineered microbial strainsproteins and theirlive naturalbiotherapeutic products for key preclinical properties and Bayer reimburses us for our development costs.products. To date, our operations have consisted of the development of our proprietary microbial library, the identification, characterization and testing of certain bacterial species from our microbial library that we believe are capable of being engineered to provide significant therapeutic effect andeffect, the development of our initial product candidates and the commencement of phase 1/2 clinical trials related to our ATR-12, and ATR-04 product candidates.

We generated $7,500$0 of service revenue under the Bayer JDA during the year ended December 31, 20242025 compared to service revenue of $686,000$7,500 under the Bayer JDA for the year ended December 31, 2023.2024. The decrease of $(678,500)$7,500 in service revenue is attributable to a decrease in the amount of reimbursable development costs incurred in 2024,2025. andWe the Company doesdo not expect any significantfurther futureservice revenue underat thethis Bayer JDA.time.

Research and development expenses include salaries and benefits of all research personnel, payments to contract research organizations, payments to research consultants, and the purchase of lab supplies. These expenses are offset by income earned from government grant payments.

Our non-operatingother income (expense) consists of refundableinterest researchincome, andloss developmenton credits,issuance of stock, loss on foreign currency translation, change in the valuation of warrants carried at fair market value, loss on the issuance of common stock, loss on disposal of property and equipment, loss on foreign currency translation, change in fair value of the convertible note, interest income, and interest expense. During the year ended December 31, 2024,2025, non-operatingother income (expense) increaseddecreased by $5.8 million,$2,007,065, or (153)%,99%, compared tofrom the comparableprior period in fiscal 2023.year. The increasedecrease was primarily attributablerelated to a $3.6 million decrease in fair value of the convertible note and an increase of $4.0 million$4,000,000 attributable to the decreasechange in the valuation of the warrants.warrants, Thisa wasnet decrease of $54,000 in other (expense) income, a decrease of $52,000 of interest income, offset by adecrease one-timeof $2.1$2,200,000 millionin loss attributable to theon issuance of stock, and a a net increase of $0.3 million attributable to other income (expense).stock.

As of December 31, 2024,2025, we had total assets of approximately $7.4$5.0 million and working capital of approximately $3.9$2.0 million. As of December 31, 2024,2025, our liquidity included approximately $4.6$2.1 million of cash and cash equivalents. In January 2025, we completed a public offering of shares of our common stock for the net proceeds of approximately $1.3 million, and in February 2025 we completed a registered direct offering of shares of our common stock for the net proceeds of approximately $695 thousand. After giving effect to both offerings, weWe believe that our cash on-hand as of the date of this report will not be not sufficient to cover our proposed plan of operations beyondover sixthe next twelve months fromand the date of this report.thereafter. We intend to seek additional funds through various financing sources, including the sale of our equity and debt securities, federal grants, licensing fees for our technology and joint ventures with industry partners. In addition, we will consider alternatives to our current business plan that may enable us to achieve revenue producing operations and meaningful commercial success with a smaller amount of capital. However, there can be no guarantees that such funds will be available on commercially reasonable terms, if at all. If such financing is not available on satisfactory terms, we may be requiredunable to scalefurther backpursue our proposedbusiness plan of operations and we may be unable to continue operations.

During the year ended December 31, 2025, operating activities used $11.2 million of cash primarily driven by our net loss of $10.9 million. During fiscal 2024, operating activities used $10.2 million of cash primarily driven by our net loss of $9.0 million and by non-cash items of $1.2 million. During fiscal 2023, operating activities used $7.4 million of cash primarily driven by our net loss of $11.3 million offset by non-cash items of $3.9 million.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations are based on our consolidatedcondensed financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these consolidatedcondensed financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our consolidatedcondensed financial statements. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts and experience. The effects of material revisions in estimates, if any, will be reflected in the consolidatedcondensed financial statements prospectively from the date of change in estimates.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Those forward-looking statements include our expectations, beliefs, intentions and strategies regarding the future. You should carefully consider the risk factors discussed in the “Risk Factors” section in our Form 10-K for the year ended December 31, 2025 (the "2025 Form 10-K") as, in light of those risks, the forward-looking events and circumstances discussed in this report may not occur and actual results could differ materially and adversely from those anticipated or implied in our forward-looking statements. Other than as set forth below, there have been no material changes in the risk factors included in our 2025 Form 10-K. The risk factors described in our 2025 Form 10-K are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

We currently rely on foreign third-party manufacturers and service providers in connection with certain aspects of our clinical operations. The U.S. government and persons involved in the Trump administration have made statements and taken certain actions that have led to, and may continue to lead to, changes to U.S. and international trade policies. In April 2025, the U.S. government commenced collecting a 10% tariff on imports from many countries, with higher levies on goods from larger trading partners. Since that time, the scope, rates and application of announced tariffs have been modified on multiple occasions, and further changes may occur. If maintained, tariffs and the potential escalation of trade disputes with foreign countries could pose a risk to our business and could result in higher operating expenses. The extent and duration of any tariffs and the resulting impact on general economic conditions and on our business are uncertain and depend on various factors, such as negotiations between the United States and other countries, the response of such countries, exemptions or exclusions that may be granted, availability and cost of alternative sources of supply of materials we purchase from companies targeted with tariffs. The foreign country hardest hit by the U.S. tariffs to date has been China; however, we do not currently import any goods or services from China. The tariffs have not been applied to the provision of services by foreign service providers as of the date of this filing, however there can be no assurance that the U.S. administration will not attempt to apply tariffs to the provision of overseas services going forward. There can be no assurance that U.S. policies on tariffs and international trade will not increase the cost of manufacturing our product candidates and supporting materials and import or export of raw materials and finished product candidates used in our and our collaborators’ preclinical studies and clinical trials.

We were formed in January 2014 as a biopharmaceutical company focused on developing innovative therapies for precision dermatology using engineered proteins and live biotherapeutic products. Azitra also leverages its technologies to develop cosmetic ingredients for consumer-oriented products.products as well as recombinant proteins and peptides for research. We are an early-stage clinical biopharmaceutical company and have not commenced commercial operations.

On November 24, 2025, the Company entered into a securities purchase agreement (the “SeriesNovember A Purchase Agreement”) with Alumni Capital pursuant to which the Company agreed to issue and sell to Alumni Capital in a private placement offering (the "November PIPE Offering") priced at a premium to market in accordance with NYSE rules (the “November Offering”) an aggregate of 535,759 shares of common stock of the Company, (ii) pre-funded warrants (the “November Pre-Funded Warrants”) to purchase up to an aggregate of 4,151,741 shares of Common Stock (the “November Pre-Funded Warrants Shares”) at an exercise price of $0.0001 per November Pre-Funded Warrant, and (iii) common stock purchase warrants (the “November Common Warrants” together with the November Pre-Funded Warrants, the “November Warrants”) to purchase up to an aggregate of 4,687,500 shares of Common Stock (the “November Common Warrant Shares” together with the November Pre-Funded Warrant Shares, the “November Warrant Shares”) at an exercise price of $0.32 per November Common Warrant. The offering price was $0.32 per share of Common Stock or November Pre-Funded Warrant and accompanying November Common Warrant (the “November Offering Price”). The November Pre-Funded Warrants are immediately exercisable and do not expire until exercised in full. The November Common Warrants are exercisable upon shareholder approval and will expire on the five-year anniversary of shareholder approval.

On March 18, 2026, Azitra, Inc. the Company entered into a Securities Purchase Agreement (the “March Purchase Agreement”) with the March Purchasers, pursuant to which the Company sold an aggregate of (i) 10,485 shares of its Series A convertible non-redeemable preferred stock, par value $0.0001 per share, (ii) Series B warrants to purchase up to 85,233,12685,223,126 shares of the Company’s common stock, par value $0.0001 per share (or, in certain circumstances, pre-funded warrants to purchase shares of Common Stock), (iii) Series C warrants to purchase up to 85,233,12685,223,126 shares of Common Stock (or, in certain circumstances, Pre-Funded Warrants) to the March Purchasers in a private placement (the “March PIPE Financing”). Each share of Series A Preferred Stock is being sold together with a Series B Warrant to purchase 8,128.1 shares of Common Stock and a Series C Warrant to purchase 8,128.1 shares of Common Stock. The securities were sold at a purchase price of $1,000.00 per Security to the March Purchasers, which included the Company’s Chief Executive Officer, a consultant of the Company, and a holder of more than 5% of the Company’s outstanding Common Stock as of the date of the March Purchase Agreement. The Warrants will each have an exercise price of $0.123 per share.

As of MayAugust 13,12, 2026, the Company has sold 9,255,823 shares and issued 925,579 warrants to Alumni Capital LP under the ELOC with an estimated gross proceeds of approximately $6.2 million. During the three and six months ended MarchJune 31,30, 2026, the Company issued 1,300,000 shares of our common stock and 130,000 warrants under the ELOC resulting in net proceeds of approximately $215,000.

As of MayAugust 13,12, 2026, we had 16,192,43860,603,742 shares of our common stock issued and outstanding. Except as otherwise indicated, all share and share price this report gives effect to a reverse stock split effected on July 1, 2024 at a ratio of 30-for-1 and August 21, 2025 at a ratio of 6.66-for-1. At the 2026 Annual Meeting of Stockholders, our stockholders approved an amendment to our certificate of incorporation authorizing our Board of Directors to effect one or more reverse stock splits of our outstanding common stock. As of the date of this filing, our Board is still evaluating the need for a further reverse split and, if needed, the exact split ratio based on our financing alternatives and NYSE American compliance considerations.

We are focused on developing innovative therapies for precision dermatology using engineered proteins and topical live biotherapeutic products. We have built a proprietary platform that includes a microbial library comprised of approximately 1,500 unique bacterial strains that can be screened for unique therapeutic characteristics. The platform is augmented by an artificial intelligence and machine learning technology, which can enable the transformation of previously genetically intractable strains. Our initial focus is on the development of genetically engineered strains of Staphylococcus epidermidis, or S. epidermidis, which we consider to be an optimal therapeutic candidate species for engineering of dermatologic therapies. The particular species demonstrates a number of well-described properties in the skin. As of the date of this report, we have identified among our microbial library over 60 distinct bacterial species that we believe are capable of being engineered to create living organisms or engineered proteins with significant therapeutic effect. We also leverage our technology to develop cosmetic ingredients for consumer-oriented products.products as well as recombinant proteins and peptides for research.

We also have established partnerships with teams from Carnegie Mellon University and the Fred Hutchinson Cancer Center, or "Fred Hutch,Hutch", two of the premier academic centers in the United States. Our collaboration with the Carnegie Mellon based team also takes advantage of the power of whole genome sequencing. This partnership is mining our proprietary library of bacterial strains for novel, drug like peptides and proteins. The artificial intelligence/machine learning technology developed by this team predicts the molecules made by microbes from their genetic sequences. The system then compares the predictions to the products actually made through tandem mass spectroscopy and/or nuclear magnetic resonance imaging to refine future predictions. The predictions can be compared to publicly available 2D and 3D protein databases to select drug-like structures.

Beyond our fourthree lead product candidates, our goal is to develop a broad portfolio of product candidates focused on expanding the application of our platforms for precision dermatology.dermatology and recombinant protein and peptide manufacturing. We believe that we have established a unique position in advancing the development of biologics for precision dermatology and high-value ingredients for the cosmetic industry.

•Advance our lead programs, ATR-12ATR-04 and ATR-04,ATR-01, through clinical trials. In 2022, we obtained pre-IND correspondence with the FDA for purposes of discussing our proposed regulatory pathway for the ATR-12 program and obtaining guidance from the FDA on the preclinical plan leading to the filing and acceptance of an IND for ATR-12. In December 2022, we filed an IND for an ATR-12 first-in-human trial in Netherton syndrome patients. On January 27, 2023, we received notification from the FDA that the “study may proceed” with respect to the proposed Phase 1b clinical trial, and in August 2024 we initiated dosing the first patient in the ATR-12 Phase 1b clinical trial. In August 2024, we received IND clearance from the FDA for a first-in-human Phase 1b/2a clinical trial in patients with EGFRi-associated rash, and in September 2024, the FDA granted Fast Track designation for the ATR-04 program. We commenced a Phase 1b trial for our ATR-04 program in certain cancer patients undergoing EGFRi therapy in the fourth quarter of 2024 and initiated dosing the first patient in the ATR-04 Phase 1/2 clinical trial in the third quarter of 2025. We reportedcontinue initialto safetyconduct resultsIND-enabling studies for the development of the first patients dosedATR-01 in our Phase 1b clinical trial for our ATR-12 program in Netherton syndrome patients in the first half of 2025.2026.

•Broaden our platform by selectively exploring strategic partnerships that maximize the potential of our precision dermatology programs. We intend to maintain significant rights to all of our core technologies and product candidates. However, we will continue to evaluate partnering opportunities in which a strategic partner could help us to accelerate development of our technologies and product candidates, provide access to synergistic combinations, or provide expertise that could allow us to expand into the treatment of different types of skin diseases.diseases and into other markets such as consumer health or biomanufacturing. We may also broaden the reach of our platform by selectively in-licensing technologies or product candidates. In addition, we will consider potentially out-licensing certain of our proprietary technologies for indications and industries that we are not ourselves pursuing. We believe our genetic engineering techniques and technologies have applicability outside of the field of medicine, including cosmetics and in the generation of clean fuels and bioremediation.

On October 1, 2025, the Company received a deficiency letter (the “Deficiency Letter”) from the NYSE American indicating that the Company is not in compliance with the NYSE American continued listing standards set forth in Sections 1003(a)(ii) of the NYSE American Company Guide. Section 1003(a)(ii) of the NYSE American Company Guide requires a listed company’s stockholders’ equity be at least $4.0 million if it has reported losses from continuing operations and/or net losses in three of its four most recent fiscal years. The Deficiency Letter noted that the Company reported stockholders’ deficitequity of $2.2 million as of June 30, 2025, and losses from continuing operations and/or net losses in three of its four most recent fiscal years ended December 31, 2024.

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

The following table summarizes our results of operations with respect to the items set forth below for the three months ended MarchJune 31,30, 2026 and 2025, together with the percentage change for those items.

General and administrative costs during the firstsecond quarter of fiscal 2026 increased by approximately $523,000,$598,000, or 28%,41%, to $2,373,359$2,067,639 from the comparable prior period. The increase was primarily related to thean write-offincrease in payroll and benefits of approximately $624,000$284,000 certainrelated deferredto patentretention costs,bonuses paid in the second quarter, an increase in approximately $47,000$165,000 in legal fees, an increase of approximately $72,000 in accounting costs associated with year end activities including the annual meeting, an increase of approximately $63,000 in the use of business consultants which was primarily attributed to increased hours due to incremental public company compliance initiatives and business development efforts, an increase of approximately $22,000 in financing costs and an increase of approximately $4,000$39,000 in other overhead expenses,expenses offset by a decrease of approximately $97,000$20,000 in payrolloverall andinsurance benefits primarily related to bonus accruals;costs, a decrease of approximately $71,000 accounting and auditing costs primarily related to the NYSE annual fee; a decrease of approximately $31,000$14,000 in financingpublic costs,relation expenses, and a decrease of approximately $16,000$13,000 in overallsoftware insuranceand equipment costs.

During the three months ended MarchJune 31,30, 2026 and 2025, our research and development expenses by category were as follows:

During the firstsecond quarter of fiscal 2026, research and development expenses increaseddecreased by approximately $310,000,$50,000, or 25%,4%, to $1,560,565$1,351,529 from the comparable prior period. The increasedecrease was primarily related to a net increasedecrease of approximately $484,000$393,000 in research and development andcosts for our ATR-12 program as the program progresses through its clinical trialtrial, costsa net decrease of approximately $37,000 for our ATR-04 program as the program progresses through its clinical trial, and a decrease of approximately $38,000 in the use of clinical consultants offset by an increase of approximately $198,000 in payroll and benefits related to retention bonuses paid in the second quarter, an increase of approximately $120,000 for our ATR-01 program as the program progresses, an increase of approximately $54,000$57,000 in researchlab supplies and development costs for our ATR-04 program as the program progresses through its clinical trial, an increase of approximately $17,000$42,000 forin labthe supplies,use of CMC consultants, and a net increase of approximately $2,000$1,000 in other miscellaneous costs offset by a net decrease of approximately $207,000 in research and development and clinical trial costs for our ATR-12 program due to a decrease in the number of patents dosed during the quarter, a decrease of approximately $27,000 in the use of consultants, and a decrease of approximately $13,000 in payroll and benefits.costs.

Our other income consists of interest income, interest expense, change in the valuation of warrants carried at fair value, and loss on foreign currency. During the firstsecond quarter of fiscal 2026, other income decreasedincreased by approximately $25,000,$89,000, or 79%,505%, compared to the comparable period in fiscal 2025. The decreaseincrease was primarily related to aan decreaseincrease in interest income of $22,000$59,000 and a netdecrease decreasein loss on foreign currency of $3,000approximately in other costs.$30,000.

As of MarchJune 31,30, 2026, we had total assets of approximately $12.1$8.9 million and working capital of approximately $9.2$5.9 million. As of MarchJune 31,30, 2026, our liquidity included approximately $10.1$6.7 million of cash and cash equivalents. We believe that our cash on-hand as of the date of this report will not be sufficient to cover our proposed plan of operations over the next twelve months. We intend to seek additional funds through various financing sources, including the sale of our equity and debt securities, federal grants, licensing fees for our technology and joint ventures with industry partners. In addition, we will consider alternatives to our current business plan that may enable us to achieve revenue producing operations and meaningful commercial success with a smaller amount of capital. However, there can be no guarantees that such funds will be available on commercially reasonable terms, if at all. If such financing is not available on satisfactory terms, we may be unable to further pursue our business plan and we may be unable to continue operations.

As of the date of this filing, management has determined there is substantial doubt about our ability to continue as a going concern based on our lack of revenue from commercial operations, significant losses, and the need to raise additional capital to support ongoing operations. Our contractual commitments primarily consist of operating and financing leases with contractual undiscounted balances of $349,795,$419,815, and $5,920,$1,486, respectively as of MarchJune 31,30, 2026. Refer to Note 1110 for more detailed information regarding our lease commitments. Additionally, as we continue to progress our product candidates through clinical trials, we will continue to incur additional costs related to our CRO's. It is common in our industry for the CRO's to require significant up-front cash payments prior to the beginning of such trial phases, and additional cash payments upon the achievement of certain milestones per the contracts' terms.

During the first threesix months of fiscal 2026, operating activities used approximately $2.5$5.8 million of cash primarily driven by our net loss of approximately $3.9$7.3 million offset by approximately $624,000 of impairment expenses related to our patents, approximately $542,000$557,000 in accounts payable and accrued expenses and approximately $255,000$239,000 in prepaid expenses. During the comparable period of fiscal 2025, operating activities used approximately $3.1$5.9 million of cash primarily driven by our net loss of approximately $3.1$6.0 million.

During the first threesix months of fiscal 2026, investing activities used approximately $37,000$155,000 of cash driven by approximately $22,000$100,000 in trademark and deferred patent costs and approximately $15,000$55,000 for the purchase of equipment. During the comparable period of fiscal 2025, investing activities used approximately $22,000$58,000 of cash driven by approximately $25,000$50,000 in trademark and deferred patent costs and approximately $11,000 for the purchase of equipment offset by proceeds of approximately $3,000 for the sale of equipment.

During the first threesix months of fiscal 2026, financing activities provided approximately $10.5$10.6 million in cash primarily driven by proceeds from our private placement in March andMarch, draws on our equity line of credit.credit and exercise of warrants. During the comparable period of fiscal 2025, financing activities provided approximately $1.7$2.4 million in cash primarily driven by proceeds from our follow-on offerings in January and February 2025.

During the threesix months ended MarchJune 31,30, 2026, there were no material changes to our critical accounting policies previously disclosed in our Form 10-K for the year ended December 31, 2025 and filed with the SEC on February 27, 2026.