Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

This Quarterly Report on Form 10-Q (this "Quarterly Report") covers (a) a period prior to the closing of the Business Combination (as defined below) and (b) a period subsequent to the closing of the Business Combination. References in this report to "we," "us," "our" or the "Company" refer to Liminatus Pharma, Inc. (successor to Iris Parent Holding Corp.) and its subsidiaries. The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Special Note Regarding Forward-Looking Statements

Some of the statements contained in this document may constitute "forward-looking statements" for purposes of the federal securities laws. All statements, other than statements of historical fact included in this report including, without limitation, statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding the Company's financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as "expect," "believe," "anticipate," "intend," "estimate," "seek" and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management's current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the "Risk Factors" section of the Company's final prospectus for its initial public offering filed with the U.S. Securities and Exchange Commission (the "SEC"). The Company's filings with the SEC can be accessed on the EDGAR section of the SEC's website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Overview

The Company is a pre-clinical stage biopharmaceutical company developing novel, immune-modulating cancer therapies. The Company's candidate IBA101, is a humanized anti CD47 monoclonal antibody. The next generation CD47 checkpoint inhibitor's initial indication is expected to be patients with advanced solid cancers including non-small cell lung cancer.

The Company is subject to the uncertainty of whether the Company's intellectual property will develop into successful commercial products.

Business Combination

On November 30, 2022, Iris Acquisition Corp, a Delaware corporation ("Iris"), the Company, Liminatus Pharma, LLC, a Delaware limited liability company ("Liminatus"), Liminatus Merger Sub and SPAC Merger Sub entered into a business combination agreement (as it may be amended, supplemented or otherwise modified from time to time, the "Business Combination Agreement").

On March 4, 2025, Iris held a special meeting of stockholders. At the special meeting, Iris's stockholders voted to approve the Business Combination and adopt the Business Combination Agreement, among other items. In connection with the special meeting, stockholders holding 59,844 Iris Class A Shares properly exercised their right to redeem their shares for cash at a redemption price of approximately $11.74 per share, subject to adjustment for taxes payable from the trust account, for an aggregate redemption amount of $702,359. The redemptions were settled on April 30, 2025, upon the consummation of the Business Combination.

On April 30, 2025 (the "Closing Date"), the Company consummated the business combination contemplated by the Business Combination Agreement, pursuant to which (a) Liminatus Merger Sub merged with and into Liminatus (the "Liminatus Merger"), with Liminatus surviving the Liminatus Merger as a direct wholly-owned subsidiary of the Company, and (b) simultaneously with the Liminatus Merger, SPAC Merger Sub merged with and into Iris (the "SPAC Merger" and, together with the Liminatus Merger, the "Mergers"), with Iris surviving the SPAC Merger as a direct wholly-owned subsidiary of the Company (the transactions contemplated by the foregoing clauses (a) and (b) the "Business Combination"), and in connection therewith the Company changed its name from "Iris Parent Holding Corp." to "Liminatus Pharma, Inc."

Pursuant to the Business Combination Agreement, among other matters, at the effective time of the Business Combination (the "Effective Time"), (i) every issued and outstanding security issued by Iris during its initial public offering (each, an "Iris Unit") was automatically separated and broken out into its constituent parts and the holder thereof was deemed to hold one share of Iris Class A common stock, par value $0.0001 per share (the "Iris Class A Shares") and one-fourth of one redeemable warrant that was included as part of each Iris Unit (the "Public Warrants"), and such underlying constituent securities of Iris were converted in accordance with the applicable terms of the Business Combination Agreement, (ii) at the Effective Time, each issued and outstanding Iris Class A Share was converted automatically into and thereafter represent the right to receive one share of common stock, par value $0.0001 per share, of the Company, following which all Iris Class A Shares ceased to be outstanding and were automatically canceled and ceased to exist, (iii) at the Effective Time, each issued and outstanding Public Warrant immediately and automatically represented the right to purchase shares of common stock on the same terms and conditions as are set forth in the applicable warrant agreement, (iv) at the Effective Time, each issued and outstanding non-redeemable warrant of Iris that was issued by Iris in a private placement at the time of the consummation of its initial public offering, entitling the holder thereof to purchase one Iris Class A Share at $11.50 per share, except those issued to Cantor Fitzgerald & Co. ("Cantor"), were forfeited, and (v) the private placement warrants issued to Cantor immediately and automatically represented the right to purchase shares of common stock.

Upon the consummation of the Business Combination, the Company's certificate of incorporation was amended and restated to, among other things, set the total number of authorized shares of capital to 501,000,000 shares, of which 500,000,000 were designated as common stock, $0.0001 par value per share, and 1,000,000 shares were designated as preferred stock, $0.0001 par value per share.

At the Closing Date, 7,014,633 shares of Iris Class A Shares automatically converted into shares of the Company's common stock, on a one-for-one basis. Of the total 7,014,633 newly converted shares, 6,900,000 were issued to Iris Acquisition Holdings, LLC, the sponsor of Iris and 114,633 were issued to Iris' public stockholders in a noncash transaction.

At the Closing Date, the Company issued an aggregate of 1,500,000 shares of the Company's common stock in a private placement (the "PIPE Shares") for the total consideration of $15,000,000 (the "PIPE Financing"). The PIPE Financing consisted of a cash and -non-cash component. Under the cash component, the Company received gross proceeds of $10,556,500, of which $7,129,500 came directly from the PIPE investor and $3,427,000 were funded indirectly by the PIPE investor, through promissory notes between Prophase Sciences, LLC, a related party of the Company, and Liminatus. At the Closing Date, the $3,427,000 in related party debts between Prophase Sciences, LLC and Liminatus was ultimately converted into shares as part of the PIPE Financing. As part of the PIPE Financing, the gross proceeds satisfied principal and accrued interest totaling $3,316,756, which was ultimately converted into shares as part of the PIPE Financing. The - non - cash component of the PIPE Financing included the conversion of $4,443,500 in amounts borrowed from a consortium of related parties. The $4,443,500 borrowed from the related parties were used to fund an unsecured promissory note between Liminatus and Iris. At the Closing Date, the unsecured promissory note was settled and the $4,443,500 in related party debts were ultimately converted into shares of the Company in a noncash transaction.

At the Closing Date, 112,222,220 Liminatus' member units converted into 17,500,000 shares of the Company's common stock. Of the 17,500,000 shares of common stock, 4,000,000 were issued to Feelux Co, Ltd. as part of an agreement between the Company, Feelux Co, Ltd. and Car - Tcellkor, Inc. As part of the agreement, the outstanding principal and accrued interest on the Feelux and Car - Tcellkor bonds, totaling $11,481,146, and 9,999,999 member units of Liminatus were converted into 4,000,000 shares of the Company's common stock. The remaining Liminatus member units were converted based on a conversion ratio of 0.1559 shares per member unit.

Upon consummation of the Business Combination, the Company assumed a total of $10,694,604 in liabilities from Iris. The Company incurred $1,518,381 in transaction costs associated with the closing of the Business Combination. The Company converted a total of $14,797,902 of related party debt and accrued interest, $3,316,756 from the PIPE investor and $11,481,146 from Feelux and Car - Tcellkor (as described above) into common stock. Additionally, a total of $169,201 in accrued interest on related party debts that were converted, as discussed above, was eliminated upon consummation of the Business Combination.

In addition, at the Closing Date, the Company settled Iris' liabilities for $7,000,000 of the deferred underwriting fees incurred prior to the Closing Date for 700,000 shares of common stock to the underwriters in Iris's initial public offering. At the Closing Date, the shares were not issued to the underwriter and the Company recorded as a liability with a fair value of $7,049,000. On July 1, 2025, the Company issued the shares to the underwriters, which on July 1, 2025, had a fair value of $7,245,000.

Liminatus was deemed the accounting acquirer in the Business Combination based on an analysis of the criteria outlined in Accounting Standards Codification ("ASC") 805, Business Combinations ("ASC 805"). The determination was primarily based on Liminatus' members prior to the Business Combination having a majority of the voting interests in the combined company, Liminatus' ability to exert control over the majority of the board of directors of the combined company, Liminatus' ability to maintain control of the board of directors on a go-forward basis, Liminatus' senior management comprising the senior management of the combined company, and Liminatus' operations prior to the Business Combination comprise the ongoing operations of the combined company. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Liminatus' issuing stock for the net assets of Iris, accompanied by a recapitalization. The net assets of Iris were stated at fair value, with no goodwill or other intangible assets recorded.

Upon the consummation of the Business Combination, the Iris Class A Shares, Iris Units and Public Warrants ceased trading on the OTC Pink Marketplace, and the Company's common stock and Public Warrants began trading on The Nasdaq Stock Market ("Nasdaq") under the trading symbols "LIMN" and "LIMNW," respectively.

February 2026 Public Offering

On February 18, 2026, we closed a best efforts public offering for the sale of (i) 8,270,000 shares of our common stock, (ii) 5,543,000 pre-funded warrants (the "Pre-Funded Warrants") to purchase up to 5,543,000 shares of our common stock and (iii) 20,719,500 common stock purchase warrants (the "Common Stock Warrants") to purchase up to 20,719,500 shares of common stock, at a combined public offering price of $0.29 per share (or $0.2899 per pre-funded warrant) and accompanying warrant (the "Offering"), for aggregate net proceeds of approximately $3.44 million after deducting the estimated offering expenses, including the placement agent fees. Each pre-funded warrant has an exercise price of $0.0001 per share upon issuance for one share of common stock and will not expire prior to exercise. Each warrant has a reduced exercise price of $0.18 per share, is exercisable upon issuance for one and a half shares of common stock and will expire five years following the date of issuance. The exercise price and number of shares of common stock issuable upon exercise is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting the common stock and the exercise price. Maxim Group LLC ("Maxim") acted as the placement agent in connection with the Offering.

In connection with the Offering, on February 17, 2026, we entered into a securities purchase agreement (the "Purchase Agreement") with certain purchasers party thereto. Pursuant to the Purchase Agreement, we agreed not to issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of common stock or any securities convertible into or exercisable or exchangeable for shares of common stock or file any registration statement or prospectus, or any amendment or supplement thereto for 180 days after the closing date of the Offering, subject to certain exceptions. We also agreed not to effect or enter into an agreement to effect any issuance of common stock or any securities convertible into or exercisable or exchangeable for shares of common stock involving a Variable Rate Transaction (as defined in the Purchase Agreement) until 180 days after the closing date of the Offering, subject to certain exceptions.

In connection with the Offering, on February 17, 2026, we entered into a placement agency agreement with Maxim, as placement agent in connection with the Offering. We paid Maxim a cash fee of 8.0% of the aggregate gross proceeds raised in the Offering. We also agreed to reimburse Maxim for all reasonable out-of-pocket costs and expenses incurred in connection with the Offering in an aggregate amount up to $100,000. In addition, we issued to Maxim warrants (the "Placement Agent Warrants") to purchase 690,650 shares of common stock (representing 5.0% of the number of shares of common stock sold in the Offering). The Placement Agent Warrants are immediately exercisable at an exercise price of $0.319 (or 110% of the public offering price for the shares of common stock and common warrants offered in the Offering) and will expire on the fifth anniversary of the commencement of sales of the Offering.

June 2026 Warrant Inducement

On June 3, 2026, we entered into a warrant exercise inducement offer letter (the "Inducement Letter Agreement") with a holder of our existing common stock warrants exercisable for an aggregate of 10,344,000 shares of our common stock (collectively, the "Existing Warrants"), to exercise its Existing Warrants at a reduced exercise price of $0.18 per share, in exchange for our agreement to issue new common stock warrants to purchase an aggregate of up to 20,688,000 shares of common stock, consisting of (i) warrants to purchase up to 10,344,000 shares of common stock at an exercise price per share of $0.18 (the "New Black-Scholes Warrants") and (ii) warrants to purchase up to 10,344,000 shares of common stock at an exercise price per share of $0.18 (the "New Change of Control Warrants" and, together with the New Black-Scholes Warrants, the "Inducement Warrants") (the "Warrant Inducement"). The aggregate gross proceeds

from the exercise of the Existing Warrants is approximately $1,861,921, before deducting financial advisory fees. The fair value of the Inducement Warrants was $2,211,295 at inducement, or $0.18 per instrument.

In connection with the transaction described above, we entered into a financial advisory services agreement, dated June 3, 2026, with Maxim, pursuant to which we agreed to pay Maxim for its services a cash fee of up to 8% of the gross proceeds received by us in connection with the exercise of the Existing Warrants.

The Warrant Inducement, which resulted in the issuance of the Company's common stock in exchange for the cash exercise of the Existing Warrants, is considered a modification of the Existing Warrants under the guidance of ASC 815-40. The modification is consistent with the "Equity Issuance" classification under that guidance as the reason for the modification was to induce the holders of the Existing Warrants to cash exercise their warrants, resulting in the imminent exercise of the Existing Warrants, which raised equity capital and generated net proceeds for the Company. As the Existing Warrants were classified as equity instruments before and after the exchange, and as the exchange is directly attributable to an equity offering, the Company recognized the effect of the modification of $117,806 as an equity issuance cost. The amount of the equity issuance cost recognized for the warrant modification was determined at the incremental fair value of the modified Existing Warrants immediately before and after the warrant modification.

InnocsAI Acquisition

On May 17, 2026, we entered into a Merger Agreement (the "Original Merger Agreement") with InnocsAI LLC, a Delaware limited liability company ("InnocsAI"), and NamChul Jung, in his capacity as the representative of the members of InnocsAI. Under the Original Merger Agreement, the aggregate consideration payable to the members of InnocsAI consisted of (i) 1,600,000,000 shares of our common stock, valued at an issuance price of $0.20 per share (the "Closing Payment Shares"), and (ii) contingent value rights, on terms to be agreed upon by the parties, representing in the aggregate the right to receive 20% of the net proceeds from any future strategic sale, out-license, transfer or other disposition of, or exit transaction involving, the assets acquired from InnocsAI. Upon completion of the transactions contemplated by the Original Merger Agreement, all issued and outstanding membership interests of InnocsAI were to be canceled and automatically converted into the right to receive the Closing Payment Shares.

The assets to be acquired included a portfolio of oncology-focused biologic and cellular therapy programs centered on CAR-T and antibody-related technologies. These technologies are designed to address certain limitations observed in current approaches to hematologic malignancies and solid tumors, including antigen escape, tumor heterogeneity, limited T-cell persistence, tumor microenvironment-mediated suppression and lineage-restricted target coverage. Chris Kim, our Chief Executive Officer and a member of our board of directors, is also a director of InnocsAI and the Chief Executive Officer and controlling member of Valetudo Therapeutics LLC, a member of InnocsAI.

On June 29, 2026, we, InnocsAI and Mr. Jung amended and restated the Original Merger Agreement (as so amended and restated, the "Amended and Restated Merger Agreement"). The Amended and Restated Merger Agreement revised the structure of the transaction to allow closing prior to obtaining stockholder approval and provided that the 1,600,000,000 shares of our common stock comprising the merger consideration would instead be paid in a combination of shares of common stock and shares of newly designated non-voting convertible preferred stock. As contemplated by the Original Merger Agreement, and subject to the terms and conditions of the Amended and Restated Merger Agreement, InnocsAI would merge with and into a new wholly-owned Delaware subsidiary ("Merger Sub"), with InnocsAI ceasing to exist as a separate legal entity and Merger Sub continuing as the surviving entity (the "InnocsAI Merger").

Pursuant to the Amended and Restated Merger Agreement, upon completion of the InnocsAI Merger, the members of InnocsAI would receive shares of our common stock up to the maximum number that could be issued without prior stockholder approval under applicable Nasdaq listing rules (or an estimated 19.99% of the outstanding common stock immediately prior to the closing of the InnocsAI Merger). The balance of the merger consideration would be paid in shares of our newly designated Series A Non-Voting Convertible Preferred Stock (the "Series A Preferred Stock"), having the rights, preferences, powers and privileges set forth in the applicable Certificate of Designation (as defined below). Each share of Series A Preferred Stock would be convertible into 10,000 shares of common stock. The Series A Preferred Stock would not become convertible unless and until we obtained stockholder approval for the issuance of the underlying shares of common stock to the extent required under applicable Nasdaq listing rules.

On July 2, 2026, the InnocsAI Merger was completed, pursuant to which we acquired InnocsAI. In connection with the closing of the InnocsAI Merger, we issued to the former members of InnocsAI an aggregate of 11,188,729 shares of common stock and an aggregate of 158,881.1271 shares of Series A Preferred Stock.

Pursuant to the Amended and Restated Merger Agreement, we acquired InnocsAI which is primarily composed of intangible assets (i.e. its portfolio of oncology-focused biologic and cellular therapy program). The InnocsAI Merger is further considered an asset acquisition under ASC 805 as it does not meet the definition of a business since substantially all of the fair value of the assets acquired are concentrated in a group of similarly identifiable assets. Furthermore, the InnocsAI Merger was deemed to be an asset acquisition as InnocsAI did not meet the definition of a business under SEC Rule 11-01 (d) of Regulation S-X ("Rule 11-01 (d)"), where a business, for purposes of Rule 11-01 (d), is identified by the continuity of operations before and after the transaction. InnocsAI has no substantive revenue producing activities, employee base, sales force, customer base, operating rights or production techniques, thus, not meeting the definition of a business under Rule 3-05.

On June 29, 2026, in connection with the Amended and Restated Merger Agreement, we entered into a registration rights agreement (the "Registration Rights Agreement") with the existing members of InnocsAI, pursuant to which we have agreed to provide such holders with "piggy-back" and Form S-3 registration rights, covering shares of common stock (including shares issuable upon conversion of preferred stock) received in the InnocsAI Merger. We have agreed to bear the registration expenses.

On June 29, 2026, in connection with the Amended and Restated Merger Agreement, InnocsAI, for the benefit of the Company and its affiliates, successors and subsidiaries, entered into a non-competition and non-solicitation agreement (the "Non-Compete Agreement") with certain key employees of InnocsAI, pursuant to which each subject party has agreed not to compete with or solicit the employees, customers, or suppliers of InnocsAI and its affiliates for two years after the merger closing, and to maintain confidentiality regarding company information.

Results of Operations

Comparison of the Three Months Ended June 30, 2026 and 2025

The following is a comparative of our results of operations for the three months ended June 30, 2026 and 2025:

​

Operating Expenses

General and Administrative Expenses

General and administrative expenses consists primarily of professional service fees, including accounting and legal services and other general operating expenses. General and administrative expenses decreased by $339,303 during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, primarily due to accounting and legal expenses incurred in connection with the Business Combination during the three months ended June 30, 2025, as compared to no such costs during the three months ended June 30, 2026.

Research and Development Expenses

Research and development expenses consist of costs incurred by InnoBation Bio Co, Ltd. ("Innobation") who is performing the research and development activities for the Company in accordance with the license agreements with Innobation. Research and development expenses increased by $600,000 as a result of costs incurred under the CD47 license agreement during the three months ended June 30, 2026 as compared no such costs incurring during the three months ended June 30, 2025.

Other (Expenses) Income, net

The other (expense) income, net decreased by $1,259,849 from $1,231,498 of other income for the three months ended June 30, 2025 to $28,351 of other expense for the three months ended June 30, 2026. The decrease in other (expenses) income, net is primarily

due to a decrease in amounts of unrelated vendor payables forgiven of $2,130,782. Furthermore, the Company recognized an unrealized loss on the change in the fair value of deferred underwriting fee common stock payable of $756,000 during the three months ended June 30, 2025 as compared to no such loss during the three months ended June 30, 2026.

Comparison of the Six Months Ended June 30, 2026 and 2025

The following is a comparative of our results of operations for the six months ended June 30, 2026 and 2025:

​

Operating Expenses

General and Administrative Expenses

General and administrative expenses consists primarily of professional service fees, including accounting and legal services and other general operating expenses. General and administrative expenses increased by $97,375 during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 primarily due to higher accounting and legal expenses incurred as a result of the Company operating as a publicly traded company following the closing of the Business Combination, whereas the Company was not publicly traded prior to the Business Combination.

Research and Development Expenses

Research and development expenses consist of costs incurred by Innobation who is performing the research and development activities for the Company in accordance with the license agreements with Innobation. Research and development expenses increased by $1,000,000 as a result of costs incurred under the CD47 license agreement during the six months ended June 30, 2026 as compared to no such costs incurring during the six months ended June 30, 2025.

Other (Expenses) Income, net

The other (expense) income, net decreased by $1,219,359 from $1,168,192 of other income for the six months ended June 30, 2025 to $51,167 of other expense for the six months ended June 30, 2026. The decrease in other (expenses) income, net is primarily due to a decrease in amounts of unrelated vendor payables forgiven of $2,130,782 during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. Furthermore, the Company recognized an unrealized loss on the change in the fair value of deferred underwriting fee common stock payable of $756,000 during the six months ended June 30, 2025 as compared to no such loss during the six months ended June 30, 2026.

Liquidity and Capital Resources

The Company is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern for one year after the date that the condensed consolidated financial statements are issued. Through June 30, 2026, the Company has funded its operations mainly through equity and debt financings, including the proceeds from the Mergers, the PIPE Financing, the Offering and the Warrant Inducement.

As of June 30, 2026, the Company had $3,017,096 of cash in its bank accounts. As of June 30, 2026, there was $1,442,500 of related party debts, which are included in short-term debt, related parties in the accompanying unaudited condensed consolidated balance sheets (see Note 4).

The Company has an accumulated deficit of $41,402,706 as of June 30, 2026. The Company had a loss from operations and net loss of $2,479,806 and $2,530,973, respectively, for the six months ended June 30, 2026. The Company had a loss from operations and net loss of $1,378,908 and $1,407,259, respectively, for the three months ended June 30, 2026.

On February 18, 2026, the Company completed a "best efforts" public offering of (i) 8,270,000 shares of its common stock, (ii) 5,543,000 Pre-Funded Warrants to purchase up to 5,543,000 shares of common stock and (ii) 20,719,500 Common Stock Warrants to purchase up to 20,719,500 shares of common stock, at a combined public offering price of $0.29 per share (or $0.2899 per Pre-Funded Warrant) and accompanying warrant. In connection with the Offering, the Company received net proceeds of $3,444,427, after deducting the estimated offering expenses payable by the Company, including the placement agent fees.

On June 3, 2026, the Company entered into the Inducement Letter Agreement with a holder of its Existing Warrants to exercise 10,344,000 of its Existing Warrants at a reduced exercise price of $0.18 per share for an aggregate of 10,344,000 shares of its common stock. In connection with the Warrant Inducement, the Company received net proceeds of $1,622,967, after deducting the estimated offering expenses payable by the Company including the placement agent fees.

In connection with the Company's assessment of going concern considerations in accordance with Financial Accounting Standards Board ("FASB") ASC 205-40, Presentation of Financial Statements-Going Concern, management has concluded that there is substantial doubt about its ability to continue as a going concern for one year after the date that the accompanying unaudited condensed consolidated financial statements are issued. The Company's unaudited condensed consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

Management's plans relating to the above include raising additional cash through further equity and debt financings or other arrangements to fund operations. There can be no assurance that the Company will be able to raise adequate capital under acceptable terms, if at all. The sale of additional equity may dilute existing members and newly issued equity securities may contain senior rights and preferences compared to currently outstanding common stock. Issued debt securities may contain covenants and limit the Company's ability to pay dividends or make other distributions to stockholders. If the Company is unable to obtain such additional financing, future operations would need to be reevaluated.

Cash Flows

The following table summarizes our cash flows for the six months ended June 30, 2026 and 2025:

​

Net cash used in operating activities for the six months ended June 30, 2026 decreased by $5,990,571 as compared to the six months ended June 30, 2025. The decrease in cash used in operating activities is primarily due to decreases in due from related parties of $3,427,000, a decrease in amounts of unrelated vendor payables forgiven of $2,142,297, payment of accounts payable and accrued expenses of $1,812,806 and amounts due to research and development partner of $1,782,297 offset by an increase in net loss of $2,391,734 and increase in the fair value of deferred underwriting fees of common stock payable of $756,000, for the six months ended June 30, 2026 as compared to the same period in the prior year.

The decrease is further a result of operating activities, adjusted for non-cash transactions including forgiveness of unrelated vendor payables of $2,142,297 offset by the change in the fair value of deferred underwriting fees of common stock payable of $756,000 for the six months ended June 30, 2026 as compared to no such activity during the six months ended June 30, 2025

Net cash used in investing activities for the six months ended June 30, 2026 decreased by $775,000 as compared to the six months ended June 30, 2025. The decrease in cash used in investing activities is primarily due to less issuances of loans to Iris due to the completion of the Business Combination.

Net cash provided by financing activities for the six months ended June 30, 2026 decreased by $5,368,033 as compared to the six months ended June 30, 2025. The decrease in cash provided by financing activities is primarily due to gross proceeds received of $10,556,500, offset by $2,563,738 in payments for transaction costs in connection with the Business Combination during the six months ended June 30, 2025 as compared to the aggregate gross proceeds of $5,664,729 received from the Offering, the Warrant Inducement and the exercise of warrants during the six months ended June 30, 2026. Further, the Company had proceeds from related party debt of $4,340,000, which is offset by payments of related party debt of $1,300,000 during the six months ended June 30, 2025. No such payments occurred during the six months ended June 30, 2026.

Critical Accounting Policies and Estimates

The preparation of unaudited condensed consolidated financial statements and related disclosures 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, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Making estimates requires management to exercise significant judgement. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. The actual results could materially differ from those estimates.

Warrants

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant's specific terms and applicable authoritative guidance in ASC 480, Distinguishing liabilities from equity ("ASC 480"), and ASC 815, Derivatives and Hedging ("ASC 815"). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company's own common shares and whether the warrant holders could potentially require "net cash settlement" in a circumstance outside of the Company's control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance, modification, and as of each subsequent quarterly period end date while the warrants are outstanding. As of June 30, 2026, 20,688,000 Inducement Warrants, 9,625,500 Common Stock Warrants, 690,650 Placement Agent Warrants and 5,094,623 Public Warrants were accounted for as equity-classified instruments and 835,555 private placement warrants were accounted for as liability-classified instruments.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the liability-classified warrants are recognized as a non-cash gain or loss on the accompanying consolidated statements of operations and comprehensive loss. The Company assesses the classification of its warrants at each reporting date to determine whether a change in classification between equity and liability is required. During the three and six months ended June 30, 2026, the Company had an unrealized gain on the change in fair value of the warrant liabilities of $29,245 and $33,423, respectively. During the three and six months ended June 30, 2025, the Company had an unrealized gain on the change in fair value of the warrant liabilities of $116,894.

Recently Issued Accounting Pronouncements - Not Yet Adopted

On November 4, 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, to improve financial reporting by requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The amendments in this ASU do not change or remove current expense disclosure requirements; however, the amendments affect where such information appears in the notes to financial statements because entities are required to include certain current disclosures in the same tabular format disclosure as the other disaggregation requirements in the amendments. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the potential impact that the adoption of this standard will have on its unaudited condensed consolidated financial statements.