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

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In addition to historical information, this discussion contains forward-looking statements based upon management's current expectations that are subject to risks and uncertainties which may cause our actual results to differ materially from plans and results discussed herein. We encourage you to review the risks and uncertainties discussed in the sections entitled Item 1A. "Risk Factors" included in Part II of this Quarterly Report on Form 10-Q and Item 1A. "Risk Factors" included in Part I of the 2026 Form 10-K. You should read the following discussion in conjunction with our audited historical consolidated financial statements, which are included in our 2026 Form 10-K and our unaudited condensed consolidated financial statements for the three months ended September 30, 2026, included elsewhere in this Quarterly Report on Form 10-Q.

Non-GAAP Financial Measures

To supplement our unaudited condensed consolidated financial statements, which are prepared and presented in accordance with US GAAP, we present "contribution margin" and "contribution margin %", which are non-GAAP financial measures. Contribution margin and contribution margin % are presented in the section titled "Contribution Margin (non-GAAP)". We have also included reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures.

These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with US GAAP. These measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. Moreover, presentation of contribution margin and contribution margin % is provided for year-over-year comparison purposes. We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business.

Forward-Looking Information

All statements other than statements of historical fact or relating to present facts or current conditions included in this Quarterly Report on Form 10-Q are forward-looking statements. Forward-looking statements include, but are not limited to, statements regarding expectations, hopes, beliefs, intentions, or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements may include words such as "anticipate," "estimate," "expect," "project," "plan," "intend," "believe," "may," "should," "can have," "likely" and the negative of such words and other words and terms of similar meaning, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on us. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in Part II, Item 1A. "Risk Factors" of this Quarterly Report on Form 10-Q and in Part I, Item 1A. "Risk Factors" of our 2026 Form 10-K. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

We caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date they are made. In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, we cannot guarantee future results, levels of activity, performance, or achievements. We disclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

Overview

Intelligent Bio Solutions Inc. and its wholly owned Delaware subsidiary, GBS Operations Inc., were each formed on December 5, 2016, under the laws of the state of Delaware. The Company's Australian subsidiary, Intelligent Bio Solutions (APAC) Pty Ltd, was formed on August 4, 2016, under the laws of New South Wales, Australia. On October 4, 2022, INBS acquired Intelligent Fingerprinting Limited ("IFP"), a company registered in England and Wales. Our headquarters are in New York City.

Intelligent Bio Solutions Inc. is a medical technology company focused on developing and delivering intelligent, rapid, non-invasive testing and screening solutions. The Company operates globally with the objective of providing innovative and accessible solutions that improve the quality of life.

Intelligent Bio Solutions Inc. is an authorized distributor of the SMARTOX SmarTest Patch. The SmarTest Patch is a discreet, water-resistant, and tamper-evident device worn on the skin for 7 to 10 days at a time, continuously collecting sweat to detect a broad range of substances, including cocaine, opiates, methamphetamine, marijuana, and fentanyl. The differing detection windows of the SmarTest Patch and the IFP System allow the Company to address both short- and long-term detection needs while maintaining a consistent, non-invasive, sweat-based approach.

The Company's current product portfolio includes:

Intelligent Fingerprinting Platform: The Company's current active product is the Intelligent Fingerprinting Platform, a proprietary portable system that analyzes fingerprint sweat using a single-use cartridge and a portable handheld reader. The flagship product from this platform, which is commercially available in certain countries outside of the United States, is the Intelligent Fingerprinting Drug Screening System (the "IFP System" or "IFP Products"). The IFP System is a non-invasive, fingerprint sweat-based diagnostic screening product designed to detect drugs of abuse, including opiates, cocaine, methamphetamine, benzodiazepines, cannabis, methadone, and buprenorphine. The IFP System comprises a small, tamper-evident drug screening cartridge onto which ten fingerprint sweat samples are collected in under one minute, and a portable Intelligent Fingerprinting DSR-Plus analysis unit (the "IFP Reader") that provides on-screen results in under ten minutes. Samples collected with a confirmatory kit may also be sent to a third-party laboratory service provider for confirmation testing. Customers include organizations in safety-critical industries such as construction and engineering, manufacturing, transport and logistics, mining, energy and utilities, government and public services, law enforcement and forensics, and the drug treatment and rehabilitation sector, as well as judicial organizations.

We plan to bring the IFP System to new markets and grow within existing markets concentrating on:

	●	increasing market share across the United Kingdom and mainland Europe;
	●	expanding sales and distribution throughout Australia, New Zealand and other countries in the Asia Pacific Region ("APAC Region"), and establishing the infrastructure and satisfying the regulatory requirements needed to do so;
	●	pursuing FDA 510(k) clearance following our September 9, 2026, submission to the United States Food and Drug Administration ("FDA");
	●	initiating research aimed at broadening the capabilities of the IFP System to test for additional drugs and indications, facilitating the expansion of the platform into point-of-care medical testing;
	●	expanding the IFP System into new customer segments, including major sporting organizations, law enforcement, and commercial airlines; and
	●	developing a strategic network of distributors with established customer bases throughout the APAC Region, Europe and North America to distribute the IFP Products.

Highlights of Achievements

Major highlights and achievements for the three months ended September 30, 2026:

●	As of September 30, 2026, the Company had a cash balance of approximately $5.93 million after raising approximately $5.0 million in fiscal Q1 (before deducting fees, discounts, closing costs, and other expenses payable by the Company) through a private placement offering.
●	On September 9, 2026, the Company announced the submission of its 510(k) premarket notification to the U.S. Food and Drug Administration (FDA), seeking regulatory clearance of its Intelligent Fingerprinting Drug Screening System for detection of the opiate codeine. The Company believes the package represents the most comprehensive body of clinical evidence it has assembled to date.
●	On September 1, 2026, the Company announced the results of its latest Method Comparison Study for its Intelligent Fingerprinting Drug Screening System to detect the opiate codeine. Conducted across three independent U.S. clinical sites, the study represented the most comprehensive evaluation of the System in the Company's FDA 510(k) clinical study program. The study results showed substantially improved performance compared to the Company's prior Method Comparison Study, announced in November of 2024. The System demonstrated accuracy above 98%, sensitivity above 94%, and specificity of 100% for the opiate codeine.
●	On September 1, 2026, the Company announced that it had entered into a securities purchase agreement with a single existing institutional investor for expected gross proceeds to the Company of approximately $5.0 million, before deducting placement agent fees and other offering expenses payable by the Company.
●	On August 17, 2026, the Company announced that its Intelligent Fingerprinting Drug Screening business had been recertified to the ISO 13485:2016 quality management system standard, the internationally recognized benchmark for medical device manufacturers. The recertification, issued by the British Standards Institution (BSI), is effective October 14, 2026, and will be valid for three years.
●	On August 11, 2026, the Company announced the completion of its multi-site Method Comparison Study for the Intelligent Fingerprinting Drug Screening System. The Method Comparison Study was designed to show that typical users in occupational health, HR, and workplace safety can operate the Intelligent Fingerprinting Drug Screening System accurately and effectively in the field. The study evaluated this by measuring sensitivity, specificity, and accuracy in pre-employment and workplace screening environments, making it one of the most operationally relevant components of the Company's FDA 510(k) submission.
●	On August 5, 2026, the Company announced the completion of its Usability Study for the Intelligent Fingerprinting Drug Screening System, supporting its FDA 510(k) submission for U.S. market clearance for detection of the opiate codeine. The study was designed to evaluate how effectively operators could be trained to administer the Intelligent Fingerprinting Drug Screening System and how intuitively it could be used in a workplace setting.
●	On August 3, 2026, the Company announced the completion of its Interference Study for the Intelligent Fingerprinting Drug Screening System. The study was designed to evaluate whether a range of external contaminants and substances commonly encountered in daily life and workplace environments affect the accuracy and reliability of the Intelligent Fingerprinting Drug Screening System.
●	On July 23, 2026, the Company announced that it has addressed all the cybersecurity and software-related review items for its upcoming FDA 510(k) submission. This followed the Company's recent completion of independent third-party penetration testing and confirmed that all review items had now been resolved.
●	On July 21, 2026, the Company announced the completion of precision testing, a key component of its FDA 510(k) submission for U.S. market clearance of its Intelligent Fingerprinting Drug Screening System for detection of the opiate codeine. The precision testing confirmed that the Intelligent Fingerprinting Drug Screening System produced consistent, reliable results across varied manufacturing conditions and operating environments.
●	The Company added 27 new customer accounts throughout fiscal Q1 2027.

Results of Operations

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

		Three Months Ended September 30,
		2026				2025
Revenue		$	1,391,835			$	1,111,797
Cost of revenue (exclusive of amortization shown separately below)			(633,831	)			(593,506	)
Gross profit			758,004				518,291
Other income
Government support income			205,501				193,267
Operating expenses
Selling, general and administrative expenses			(2,579,641	)			(2,706,889	)
Development and regulatory approval expenses			(829,544	)			(486,169	)
Depreciation and amortization			(237,067	)			(257,907	)
Impairment of long-lived assets			-				(261,780	)
Total operating expenses			(3,646,252	)			(3,712,745	)
Loss from operations			(2,682,747	)			(3,001,187	)
Other income (expense), net
Interest expense			(1,435	)			(2,309	)
Realized foreign exchange loss			(5,344	)			-
Interest income			21,091				8,504
Total other income, net			14,312				6,195
Net loss			(2,668,435	)			(2,994,992	)
Net loss attributable to non-controlling interest			(10,133	)			(11,986	)
Net loss attributable to Intelligent Bio Solutions Inc.		$	(2,658,302	)		$	(2,983,006	)
Other comprehensive (loss) income
Foreign currency translation (loss) gain			(52,267	)			48,716
Total other comprehensive (loss) income			(52,267	)			48,716
Comprehensive loss			(2,720,702	)			(2,946,276	)
Comprehensive loss attributable to non-controlling interest			(10,133	)			(11,986	)
Comprehensive loss attributable to Intelligent Bio Solutions Inc.		$	(2,710,569	)		$	(2,934,290	)

Revenue

Sales of goods

Revenue from sales continued its growth marking this our third consecutive quarter above $1 million and sixth consecutive quarter of year-over-year growth hitting a record quarter of sales of goods increasing by $280,038 to $1,391,835 for the three months ended September 30, 2026, from $1,111,797 for the three months ended September 30, 2025. This increase was primarily attributable to the addition of 27 new customers and an increase in the ongoing re-order rate for the consumables. The major driver of the growth was sales of cartridge consumables, which increased by $205,283 compared to the same period the prior year. This underscores the strength of our "razor-and-blades" business model of increasing the reader base to generate ongoing consumables revenue, and we will endeavor to grow this trajectory as we continue to expand our installed reader base into new markets in the future.

Cost of Revenue

Cost of revenue increased by $40,325 to $633,831 for the three months ended September 30, 2026, from $593,506 for the three months ended September 30, 2025. Cost of revenue relates to the direct labor, direct material costs and direct overhead costs incurred in the production of the goods. This increase is primarily attributable to higher direct manufacturing labor costs associated with additional hiring of factory workers in the U.K. and an increase in direct overhead costs.

Gross profit

Gross profit increased by $239,713 to $758,004 for the three months ended September 30, 2026, from $518,291 for the three months ended September 30, 2025. This represents a year-on-year growth in gross profit from 46.62% to 54.46%, being largely because of a more profitable product mix including growth of cartridge sales.

Gross profit margin improvement during the period was primarily driven by strategic outsourcing of IFP Reader manufacturing, improved operational efficiencies, and increased sales volumes. Gross profit margin also benefited from our value-based pricing structure, which remained consistent during the period. We believe this pricing reflects customers' recognition of the efficiency and return on investment offered by our fingerprint sweat screening technology compared with traditional testing methods. The improvement in gross profit margin also reflects continued operational discipline and a more favorable sales mix.

Contribution margin (non-GAAP)

		Three Months Ended September 30,
		2026				2025
Revenue		$	1,391,835			$	1,111,797
Direct material cost			(278,959	)			(310,063	)
Contribution margin (non-GAAP)		$	1,112,876			$	801,734
Contribution margin % (non-GAAP)			79.96	%			72.11	%

Contribution margin is a non-GAAP measure of efficiency relating to direct variable costs such as materials and consumables. This increased by 7.85 percentage points (being an additional $311,142) to 79.96% for the three months ended September 30, 2026, from 72.11% for the three months ended September 30, 2025. This is a result of improved strategic manufacturing partnership for IFP Readers, production efficiency, better pricing of input costs due to better volumes and sales mix, as the sales of high margin cartridges continue to increase as a proportion of the total revenue.

Reconciliation of contribution margin (non-GAAP)

		Three Months Ended September 30,
		2026				2025
Revenue (GAAP)		$	1,391,835			$	1,111,797
Less: Cost of revenue (exclusive of amortization) (GAAP)			(633,831	)			(593,506	)
Gross Profit (GAAP)		$	758,004			$	518,291
Add: Direct labor cost			313,838				269,198
Add: Direct overhead cost			41,034				14,245
Contribution margin (non-GAAP)		$	1,112,876			$	801,734
Contribution margin % (non-GAAP)			79.96	%			72.11	%

Government support income

Government support income increased by $12,234 to $205,501 for the three months ended September 30, 2026, from $193,267 for the three months ended September 30, 2025. This increase was primarily attributable to our intentional spending on research and development expenditures that qualify for reimbursement under certain government subsidies.

Operating expenses

Selling, general and administrative expenses

Selling, general and administrative expenses decreased by $127,248 to $2,579,641 for the three months ended September 30, 2026, from $2,706,889 for the three months ended September 30, 2025. The decrease in expenses is largely driven by lower marketing and investor relations expenses, partially offset by higher wages and salaries and higher legal expenses.

The major components of selling, general and administrative expenses are:

Marketing expenses

Marketing expenses were $319,086 for the three months ended September 30, 2026, compared to $624,579 for the same period the prior year. The decrease was primarily attributable to the Company's transition to the next phase of its marketing strategy, resulting in reduced marketing expenditures while maintaining its focus on increasing brand awareness, strengthening its presence in existing markets, and expanding into new markets to support future revenue growth.

Wages and salaries

Wages and salaries were $1,108,759 for the three months ended September 30, 2026, compared to $1,013,829 for the same period the prior year. The components of this increase were related to additional costs incurred for sales staff remuneration and additional head count for marketing staff.

Legal expenses

Legal expenses were $200,376 for the three months ended September 30, 2026, compared to $194,269 for the same period the prior year. The components of this increase were related to higher general corporate legal and administrative costs, including legal services associated with capital-raising activities.

Development and regulatory approval expenses

Development and regulatory approval expenses increased by $343,375 to $829,544 for the three months ended September 30, 2026, from $486,169 for the three months ended September 30, 2025. This increase is primarily attributable to the amounts spent on in-house R&D staff and timing of R&D work performed by the research partners. During the three months ended September 30, 2026, the Company completed precision testing, the Method Comparison Study, Interference Study and the Usability Study for the Intelligent Fingerprinting Drug Screening System, supporting its FDA 510(k) submission for U.S. market clearance for detection of the opiate codeine.

Depreciation and amortization

Depreciation and amortization decreased by $20,840 to $237,067 for the three months ended September 30, 2026 from $257,907 for the three months ended September 30, 2025. The decrease was primarily attributable to the completion of the amortization of customer relationships (intangible assets) in September 2025 resulting in no remaining carrying value for amortization during the three months ended September 30, 2026.

Impairment of long-lived assets

The impairment of long-lived assets decreased by $261,780 to $0 for the three months ended September 30, 2026, from $261,780 for the three months ended September 30, 2025. The decrease was primarily attributable to the settlement of the outstanding balance associated with the assets held for sale, resulting in no impairment charges being recognized during the current period.

Other income and expenses

Interest expense

Interest expense decreased by $874 to $1,435 for the three months ended September 30, 2026, from $2,309 for the three months ended September 30, 2025. The decrease was primarily attributable to the repayment in full of the notes payable during the third quarter of fiscal year 2025.

Realized foreign exchange (loss) gain

Realized foreign exchange (loss) gain decreased by $5,344 to a loss of $5,344 for the three months ended September 30, 2026, from nil for the three months ended September 30, 2025. The decrease was primarily attributable to unfavorable foreign currency exchange rates and fluctuations associated with transactions denominated in currencies other than the functional currencies of the Company and its subsidiaries.

Interest income

Interest income increased by $12,587 to $21,091 for the three months ended September 30, 2026, from $8,504 for the three months ended September 30, 2025. This increase was attributable to funds received from capital raising activities, which contributed to the balance on which interest was earned.

Liquidity and Capital Resources

We use working capital and cash measures to evaluate the performance of our operations and our ability to meet our financial obligations. We define working capital as current assets less current liabilities. This measure should not be considered in isolation or as a substitute for any standardized measure under US GAAP. This information is intended to provide investors with information about our liquidity. Other companies in our industry may calculate this measure differently than we do, limiting its usefulness as a comparative measure.

Since our inception, we have financed our operations primarily through proceeds from public offerings and private placements of equity securities, warrant inducement transactions, existing trade and shareholder financing arrangements, and the incurrence of debt. As of September 30, 2026, we had $5,929,871 in cash and cash equivalents and working capital of $4,466,995.

On September 18, 2024, the Company entered into an At The Market Offering Agreement (the "ATM Agreement") with Ladenburg Thalmann & Co. Inc. ("Ladenburg"). Pursuant to the terms of the ATM Agreement and under the 2024 ATM Prospectus Supplement (as defined below), the Company was originally permitted to sell, from time to time, through Ladenburg, as sales agent or principal, shares of the Company's common stock with an initial aggregate sales price of up to $3.0 million. On March 11, 2025, the Company filed a second prospectus supplement (the "2025 March ATM Supplement") in connection with the offer, sale, and issuance of up to $1,376,530 of shares of common stock pursuant to the ATM Agreement. Prior to the expiration of our "shelf" registration statement on Form S-3 (File No. 333-264218), which became effective on April 20, 2022 ("2022 Shelf"), any sale of shares pursuant to the ATM Agreement was made under the 2022 Shelf and the included base prospectus, and under the related prospectus supplement dated September 18, 2024 (the "2024 ATM Prospectus Supplement"), and the 2025 March ATM Supplement. On April 11, 2025, the Company filed a new "shelf" registration statement on Form S-3 (File No. 333-286489), which became effective on September 10, 2025 ("2025 Shelf"), and subsequently filed a prospectus supplement on September 18, 2025 (the "2025 September ATM Supplement") in connection with the offer, sale, and issuance of up to $1,211,174 of shares of Company common stock pursuant to the ATM Agreement. On March 23, 2026, the Company filed a second prospectus supplement (the "2026 March ATM Supplement") to the 2025 Shelf in connection with the offer, sale, and issuance of up to $3,966,316 of shares of common stock pursuant to the ATM Agreement. Following the expiration of the 2022 Shelf, any sale of shares pursuant to the ATM Agreement was made under the Company's 2025 Shelf and the included base prospectus, and under the related 2025 September ATM Supplement and the 2026 March ATM Supplement.

During the period between September 18, 2024, through September 30, 2026, the Company raised approximately $4,288,649 (net of commissions of approximately $132,641 paid to Ladenburg) through the sale and issuance of 623,167 shares of Company common stock pursuant to the ATM Agreement. During the three months ended September 30, 2026, the Company raised approximately $265,373 (net of commissions of approximately $8,208 paid to Ladenburg) through the sale and issuance of 121,867 shares of Company common stock pursuant to the ATM Agreement.

Cash Flows

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

		Three Months Ended September 30,
		2026				2025
Net cash used in operating activities		$	(2,752,991	)		$	(2,846,825	)
Net cash used in investing activities			-				(70,401	)
Net cash provided by financing activities			4,684,036				3,558,165
Effect of foreign exchange rates on cash and cash equivalents			6,514				(743	)
Net increase in cash and cash equivalents		$	1,937,559			$	640,196

Cash used in operating activities

Our primary sources of operating cash are customer receipts from the sale of IFP Products and government support income. Our major operating cash expenditure includes employee-related costs, product development and regulatory approval expenses, sales and marketing, and general and administrative expenses. Operating cash flows are also affected by the timing and amount of collections from accounts receivable and payments to accounts payable.

Net cash used in operating activities decreased by $93,834 to $2,752,991 for the three months ended September 30, 2026, from $2,846,825 for the three months ended September 30, 2025. The decrease was primarily attributable to a decrease in net loss, non-cash adjustments and operating assets and liabilities.

Cash used in investing activities

Net cash used in investing activities decreased by $70,401 to $0 for the three months ended September 30, 2026, from $70,401 for the three months ended September 30, 2025. The decrease is primarily related to the investment in development of internal-use software (property and equipment) during the three months ended September 30, 2025.

Cash provided by financing activities

Cash provided by financing activities increased by $1,125,871 to $4,684,036 for the three months ended September 30, 2026, from $3,558,165 for the three months ended September 30, 2025. The increase was primarily attributable to proceeds from issuance and exercise of warrants from a private placement and issuance of common stock under the ATM Agreement.

September 2026 Private Placement - On August 31, 2026, the Company entered into a Securities Purchase Agreement with a single institutional investor for the sale of Series M Pre-Funded Warrants to purchase up to 2,036,659 shares of common stock, Series N-1 Warrants to purchase up to 2,036,659 shares of common stock and Series N-2 Warrants to purchase up to 2,036,659 shares of common stock in a private placement (the "September 2026 Private Placement") that closed on September 2, 2026. Gross proceeds from the September 2026 Private Placement were approximately $5.0 million, before deducting placement agent fees and other offering expenses. If exercised in full for cash, the Series N-1 Warrants and Series N-2 Warrants, which have an exercise price of $2.33 per share, would provide additional gross proceeds of approximately $9.5 million, and the placement agent warrants, which have an exercise price of $3.06875 per share, would provide additional gross proceeds of approximately $0.3 million. However, there can be no assurance that any of these warrants will be exercised for cash, the Series N-1 Warrants may be called by the Company following FDA 510(k) clearance, and the Series N-2 Warrants are not exercisable unless and until shareholder approval of the issuance of the underlying shares is obtained. For more information, see Note 7 to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

As of September 30, 2026, our principal contractual obligations include future minimum lease payments under operating leases for our facilities (total remaining lease payments of $2,887,153, as described in Note 6 to the unaudited condensed consolidated financial statements), a repayment obligation to the Australian Government related to a manufacturing facility grant (with total remaining repayments of $1,131,147, as described in Note 8 to the unaudited condensed consolidated financial statements), and remaining amounts due under our agreements for clinical study services (with total remaining payment of $1,357,742, as described in Note 8 to the unaudited condensed consolidated financial statements). In addition, we have ongoing payment obligations under advisory agreements which require monthly cash fees plus periodic issuances of restricted common stock.

The Company expects that its cash and cash equivalents as of September 30, 2026, will be insufficient to allow the Company to fund its current operating plan through at least the next 12 months from the issuance of these unaudited condensed consolidated financial statements. These conditions raise substantial doubt about the Company's ability to continue as a going concern for a period of at least one year from the date these unaudited condensed consolidated financial statements are issued. Accordingly, the Company will be required to raise additional funds during the next 12 months.

However, there can be no assurances that we will be able to raise such capital on acceptable terms, or at all. Failure to generate sufficient revenues or raise additional capital through debt or equity financing, or through collaboration agreements, strategic alliances or marketing and distribution arrangements, could have a material adverse effect on our ability to meet our long-term liquidity needs and achieve our intended long-term business plan. Our failure to obtain such funding when needed could create a negative impact on our stock price or could potentially lead to a reduction in our operations or the failure of our Company.

Smaller Reporting Company Status

We ceased to qualify as an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), at the end of fiscal year 2026, but we continue to be a "smaller reporting company" as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

We will continue to qualify as a smaller reporting company if, as determined annually, either (i) the market value of our voting and non-voting common equity held by non-affiliates is less than $250 million as of the last business day of our most recently completed second fiscal quarter, or (ii) our annual revenues are less than $100 million for our most recently completed fiscal year for which audited financial statements are available and the market value of our voting and non-voting common equity held by non-affiliates is less than $700 million as of the last business day of our most recently completed second fiscal quarter. If we determine that we no longer qualify as a smaller reporting company, we will no longer be able to use the scaled disclosure accommodations beginning with our Quarterly Report on Form 10-Q for the first fiscal quarter of the following fiscal year. Once we lose smaller reporting company status, we will not regain it unless, in a later annual determination, we meet the requalification thresholds in Rule 12b-2, which are lower than the initial thresholds for the criteria we exceeded.

Off-Balance Sheet Arrangements

As of September 30, 2026, we did not have any off-balance sheet arrangements.

Critical Accounting Estimates

The preparation of financial statements in conformity with US GAAP requires management to make judgments, estimates and assumptions. Predicting future events is inherently an imprecise activity and, as such, requires the use of significant judgment. Actual results may differ from our estimates in amounts that may be material to the financial statements. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact our unaudited condensed consolidated financial statements.

For information on our critical accounting policies, estimates, and judgments, see Note 3, Summary of Significant Accounting Policies, included in Item 8 of Part II of our 2026 Form 10-K.

Recently Issued Accounting Pronouncements

For the impact of recently issued accounting pronouncements on the Company's unaudited condensed consolidated financial statements, see Note 3 to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and incorporated herein by reference.