10-Q: CTT Pharma Reports Continued Losses, Faces Going Concern Doubt

CTT Pharmaceutical Holdings, Inc. filed its quarterly report for the period ended June 30, 2026, highlighting ongoing net losses and a going concern warning from auditors, alongside progress in patent applications and potential European partnerships.

Summary

• CTT Pharmaceutical Holdings, Inc. reported financial results for the quarter ended June 30, 2026.
• The company experienced a net loss of $99,908 for the six months ended June 30, 2026, an increase from $90,273 in the same period of 2025.
• Total operating expenses increased to $99,908 from $90,273, primarily due to higher consulting fees related to a Securities Act registration.
• Cash and cash equivalents significantly decreased to $31 as of June 30, 2026, from $15,359 as of December 31, 2025.
• The company's auditors have raised substantial doubt about its ability to continue as a going concern due to ongoing losses and lack of resources.
• CTT Pharma received patent approval for a Nicotine Strip utilizing its technology and signed a Letter of Intent (LOI) for a potential partnership in Europe, though discussions are in early stages.
• Material weaknesses in internal controls were identified, including a lack of written documentation for internal control policies and insufficient segregation of duties within accounting functions.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative sentiment due to the company's continued net losses, negative cash flow from operations, and the going concern warning, despite some positive developments in patent approvals and potential partnerships.

Positives

• Received approval for a CIP Application from the United States Patent Office for a Nicotine Strip utilizing CTT's technology.
• Signed a Letter of Intent (LOI) with a European company for a potential partnership, indicating business development efforts.
• The company's intangible assets, primarily patents and trademarks, are valued at $67,403, with management believing their potential value could substantially increase upon third-party appraisal.

Negatives

• Net loss increased to $99,908 for the six months ended June 30, 2026, compared to $90,273 for the same period in 2025.
• Cash and cash equivalents plummeted from $15,359 at the end of 2025 to $31 at the end of the second quarter of 2026.
• Auditors have expressed substantial doubt about the company's ability to continue as a going concern.
• Operating expenses increased by $9,635, largely due to consulting fees associated with a Securities Act registration.
• Two material weaknesses in internal controls were identified: lack of written documentation for internal control policies and insufficient segregation of duties in accounting functions.

Risks

• The company's ongoing losses and lack of resources raise substantial doubt about its ability to continue as a going concern within one year.
• Operating losses are expected to continue in the near term as management seeks to acquire income-producing assets.
• The effectiveness of disclosure controls and procedures was deemed not to be at a reasonable assurance level due to identified material weaknesses.
• The potential European partnership is in early stages and may not materialize.
• The company has minimal operations and its financial results are highly volatile and may not provide meaningful insight into future operations.

Future Outlook

The company anticipates that operating losses will continue in the near term as management focuses on efforts to acquire income-producing assets. The plan of operations for calendar 2026 involves using approximately $500,000 to establish a manufacturing facility, but this is contingent on obtaining financing, which cannot be assured. If these efforts are unsuccessful, operations will continue in a manner similar to the current state.

Management Comments

• "As is clear from the foregoing, we have had minimal operations during the above periods and the specific components of our results have and are likely to fluctuate greatly until we establish manufacturing operations. We do not believe they provide any meaningful insight as to operations we will conduct in the future."
• "Management believes that the consistent application of these policies enables us to provide users of the financial statements with useful and reliable information about our operating results and financial condition."
• "Management has identified the following two material weaknesses which have caused management to conclude that as of December 31, 2025, our disclosure controls and procedures were not effective at the reasonable assurance level."
• "As our resources allow, we will engage additional personnel to address these deficiencies."

Industry Context

StockSavvy.ai notes that CTT Pharmaceutical Holdings operates in the drug delivery systems sector, a highly competitive and R&D-intensive industry. The company's focus on fast-dissolving oral delivery systems is a niche within this market. The current financial state, characterized by losses and a going concern warning, is not uncommon for early-stage pharmaceutical companies heavily reliant on patent development and future product commercialization. However, the lack of revenue-generating activities and the significant cash burn are critical concerns.

Comparison to Industry Standards

• The company's lack of revenue and continued net losses are a significant deviation from established pharmaceutical companies that typically have multiple revenue streams from approved products.
• Many biotechnology and pharmaceutical firms at a similar stage of development (pre-revenue) often rely on substantial venture capital or public market funding to sustain operations, which CTT Pharma appears to be struggling to secure.
• The identified material weaknesses in internal controls are concerning and contrast with the robust compliance and reporting standards expected of publicly traded companies, especially those in regulated industries like pharmaceuticals.

Corporate Governance

Legal Proceedings

• The company is not a party to any legal proceedings.

Related Party Transactions

• Related-party payables include $21,949 as of June 30, 2026, representing funds advanced by Ryan Khouri for working capital and management contract purposes.
• Related-party note payable includes $19,442 as of June 30, 2026, representing uncollateralized obligations from advances by a related party, planned for repayment through restricted shares.
• During the six months ended June 30, 2026, the company repaid funds advanced by Ryan Khouri.
• Common shares were issued for services to related parties, including Ryan Khouri ($60,000 value in Q1 2026), Katherine Cole ($10,800 cash proceeds and services in Q1 2026), Kevin Sakser ($10,800 cash proceeds and services in Q1 2026), Murray Goldenberg (services in 2025), Borders Consulting LLC (services in 2025), and Frank Hariton (services in 2025).

Stakeholder Impact

• Shareholders: Continued losses and the going concern warning significantly increase the risk of investment loss and potential dilution from future capital raises.
• Creditors: The company's precarious financial position and lack of liquidity may impact its ability to meet its obligations.
• Employees/Management: The uncertainty surrounding the company's future operations and potential need for additional financing could affect job security and operational stability.

Next Steps

• Establish a manufacturing facility using approximately $500,000 in potential financing.
• Continue efforts to acquire income-producing assets.
• Potentially form a partnership with a European company, subject to early-stage discussions.
• Address material weaknesses in internal controls by engaging additional personnel as resources allow.

Key Dates

Recommendation

The company exhibits severe financial distress, characterized by a sharp decline in cash, increasing net losses, and a critical going concern warning from auditors. Despite some positive developments in patent approvals and potential partnerships, these are overshadowed by the fundamental financial instability and lack of revenue-generating operations. The identified material weaknesses in internal controls further add to the risk profile. Until the company can demonstrate a clear path to profitability, secure substantial funding, and rectify its internal control deficiencies, a sell recommendation is warranted.

Keywords

pharmaceutical, drug delivery systems, patents, nicotine strip, going concern, financial statements, net loss, internal controls