Quarterly Report for Quarter Ending March 31, 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 2025 Form 10-K. You should read the following discussion in conjunction with our audited historical consolidated financial statements, which are included in our Annual Report on Form 10-K for fiscal 2025 and our unaudited condensed consolidated financial statements for the fiscal quarter ended March 31, 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 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 "Item 1A - Risk Factors" of this Quarterly Report on Form 10-Q and in our 2025 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 and was renamed to Intelligent Bio Solutions (APAC) Pty Ltd on January 6, 2023. On October 4, 2022, INBS acquired Intelligent Fingerprinting Limited ("IFP"), a company registered in England and Wales. The Company's 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.

The Company's current product portfolio includes:

Intelligent Fingerprinting Platform: The Company's current active product is the Intelligent Fingerprinting Platform, which consists of the proprietary portable platform that analyzes fingerprint sweat using a one-time cartridge and portable handheld reader. The flagship product from this platform, which is commercially available in certain countries outside of the U.S., is the Intelligent Fingerprinting Drug Screening System (the "IFP System" or "IFP Products"), a two-part system that consists of non-invasive, fingerprint sweat-based diagnostic testing products designed to detect drugs of abuse including opiates, cocaine, methamphetamines, 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 a minute before the portable analysis unit provides an on-screen result in under ten minutes. Samples collected with a confirmatory kit can also be sent to a third-party laboratory service provider for confirmation testing. Customers include safety-critical industries such as construction, transportation and logistics, mining, manufacturing, engineering, drug treatment organizations in the rehabilitation sector, and 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;

● continuing to work to gather additional supporting data to strengthen its new 510(k) submission to the 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 March 31, 2026:

	●	On March 26, 2026, the Company announced it had received European Patent EP3752831, related to contextualizing fingerprint chemical analysis with fingerprint deposition volume. The grant marked the Company's eighth European patent, further enhancing intellectual property rights around its fingerprint sweat drug testing technology.
	●	On February 25, 2026, the Company announced the successful receipt and deployment of the first shipment of Intelligent Fingerprinting Drug Screening Readers manufactured under its new strategic manufacturing partnership with Syrma Johari MedTech Ltd. ("Syrma Johari"). The shipment marked a significant step in scaling the Company's production capacity and validates the operational and financial benefits of the collaboration announced in December 2025.
	●	On February 24, 2026, the Company announced a partnership with Bouygues UK, a subsidiary of Bouygues Construction, a multi-billion-dollar global construction firm with 35,600 employees, for the deployment of its fingerprint drug screening technology across its UK operations. The initial deployment covers 13 project sites.
	●	On January 28, 2026, the Company announced the commencement of its clinical study program to support its new FDA 510(k) submission for U.S. market clearance of its Intelligent Fingerprinting Drug Screening System for detection of the opiate codeine.

Results of Operations

Comparison of the Three and Nine Months Ended March 31, 2026 and 2025

		Three Months Ended March 31,								Nine Months Ended March 31,
		2026				2025				2026				2025
Revenue		$	1,060,802			$	728,867			$	3,069,373			$	2,208,648
Cost of revenue (exclusive of amortization shown separately below)			(525,421	)			(387,499	)			(1,555,962	)			(1,297,366	)
Gross profit			535,381				341,368				1,513,411				911,282
Other income
Government support income			165,695				173,271				431,682				433,039
Operating expenses
Selling, general and administrative expenses			(2,458,605	)			(2,414,639	)			(7,512,388	)			(6,195,490	)
Development and regulatory approval expenses			(893,979	)			(358,351	)			(1,902,261	)			(1,814,047	)
Depreciation and amortization			(290,393	)			(301,978	)			(875,667	)			(907,577	)
Impairment of long-lived assets			(5,200	)			-				(294,127	)			-
Total operating expenses			(3,648,177	)			(3,074,968	)			(10,584,443	)			(8,917,114	)
Loss from operations			(2,947,101	)			(2,560,329	)			(8,639,350	)			(7,572,793	)
Other income (expense), net
Interest expense			(4,241	)			(7,919	)			(7,435	)			(21,027	)
Realized foreign exchange gain (loss)			32,258				(113	)			32,258				(914	)
Interest income			49,444				17,687				63,282				92,464
Total other income (expense), net			77,461				9,655				88,105				70,523
Net loss			(2,869,640	)			(2,550,674	)			(8,551,245	)			(7,502,270	)
Net loss attributable to non-controlling interest			(6,928	)			(7,148	)			(27,937	)			(23,641	)
Net loss attributable to Intelligent Bio Solutions Inc.		$	(2,862,712	)		$	(2,543,526	)		$	(8,523,308	)		$	(7,478,629	)
Other comprehensive income (loss)
Foreign currency translation gain (loss)			(233,631	)			116,007				(171,766	)			189,197
Total other comprehensive income (loss)			(233,631	)			116,007				(171,766	)			189,197
Comprehensive loss			(3,103,271	)			(2,434,667	)			(8,723,011	)			(7,313,073	)
Comprehensive loss attributable to non-controlling interest			(6,928	)			(7,148	)			(27,937	)			(23,641	)
Comprehensive loss attributable to Intelligent Bio Solutions Inc.		$	(3,096,343	)		$	(2,427,519	)		$	(8,695,074	)		$	(7,289,432	)

Revenue

Sales of goods

Strong growth in revenue has continued for the quarter. Revenue from sales of goods increased by $331,935 to $1,060,802 (representing approximately a 46% increase) for the three months ended March 31, 2026, from $728,867 for the three months ended March 31, 2025. This increase is mainly due to the addition of 33 new customers and increase in the ongoing re-order rate for the consumables. We expect this trend to continue as we expand into new markets in the future.

Revenue from sales of goods increased by $860,725 to $3,069,373 (representing approximately a 39% increase) for the nine months ended March 31, 2026, from $2,208,648 for the nine months ended March 31, 2025. This increase is mainly due to the addition of 82 new customers. We expect this trend to continue as we expand into new markets in the future.

Cost of revenue

Cost of revenue increased by $137,922 to $525,421 for the three months ended March 31, 2026, from $387,499 for the three months ended March 31, 2025. The increase in cost of revenue being a direct variable cost is mainly due to an increase in revenue discussed above, increase in direct labor cost due to annual salary revision for direct manufacturing labor during the fourth quarter of fiscal 2025, write down of inventory of $37,311 related to finished goods due to obsolescence and a provision for warranty replacement of $29,355.

Cost of revenue increased by $258,596 to $1,555,962 for the nine months ended March 31, 2026, from $1,297,366 for the nine months ended March 31, 2025. The increase in cost of revenue being a direct variable cost is mainly due to an increase in revenue discussed above, increase in direct labor cost due to annual salary revision for direct manufacturing labor during the fourth quarter of fiscal 2025, write down of inventory of $37,311 related to finished goods due to obsolescence and a provision for warranty replacement of $29,355.

Gross profit

Gross profit increased by $194,013 to $535,381 for the three months ended March 31, 2026, from $341,368 for the three months ended March 31, 2025. Gross margin increased to 50.47% from 46.84% in the prior-year period.

Gross profit increased by $602,129 to $1,513,411 for the nine months ended March 31, 2026, compared to $911,282 for the nine months ended March 31, 2025. Gross margin increased to 49.31% from 41.26% in the prior-year period.

Gross profit margin improvement during the period was driven by a combination of operational efficiencies and increased sales volumes, alongside a value-driven price structure that has remained consistent as customers recognize the superior efficiency and ROI of our fingerprint sweat screening technology over traditional methods. This reflects rigorous operational discipline, a more favourable sales mix, and the market's willingness to invest in our more efficient, non-invasive testing platform.

Contribution margin (non-GAAP)

Contribution margin, which is a non-GAAP measure of our financial performance, increased by $256,921 to $790,324 for the three months ended March 31, 2026, from $533,403 for the three months ended March 31, 2025. The contribution margin improved by approximately 1.32 percentage points due to improved production efficiency and sales mix, as the sales of high margin cartridges continue to increase as a proportion of the total revenue.

Contribution margin, which is a non-GAAP measure of our financial performance, increased by $729,937 to $2,259,981 for the nine months ended March 31, 2026, from $1,530,044 for the nine months ended March 31, 2025. The contribution margin improved by approximately 4.35 percentage points due to improved production efficiency and sales mix, as the sales of high margin cartridges continue to increase as a proportion of the total revenue.

		Three Months Ended March 31,								Nine Months Ended March 31,
		2026				2025				2026				2025
Revenue		$	1,060,802			$	728,867			$	3,069,373			$	2,208,648
Direct material cost			(270,478	)			(195,464	)			(809,392	)			(678,604	)
Contribution margin (non-GAAP)		$	790,324			$	533,403			$	2,259,981			$	1,530,044
Contribution margin % (non-GAAP)			74.50	%			73.18	%			73.63	%			69.28	%

Reconciliation of contribution margin (non-GAAP)

		Three Months Ended March 31,								Nine Months Ended March 31,
		2026				2025				2026				2025
Revenue (GAAP)		$	1,060,802			$	728,867			$	3,069,373			$	2,208,648
Less: Cost of revenue (exclusive of amortization) (GAAP)			(525,421	)			(387,499	)			(1,555,962	)			(1,297,366	)
Gross Profit (GAAP)		$	535,381			$	341,368			$	1,513,411			$	911,282
Add: Direct labor cost			215,696				186,095				688,502				585,491
Add: Direct overhead cost			39,247				5,940				58,068				33,271
Contribution margin (non-GAAP)		$	790,324			$	533,403			$	2,259,981			$	1,530,044
Contribution margin % (non-GAAP)			74.50	%			73.18	%			73.63	%			69.28	%

Government support income

Government support income decreased by $7,576 to $165,695 for the three months ended March 31, 2026, from $173,271 for the three months ended March 31, 2025. This decrease was primarily attributable to changes in U.K. R&D tax credit legislation, reducing the benefit from 14.5% to 10% of eligible R&D expenditures.

Government support income decreased by $1,357 to $431,682 for the nine months ended March 31, 2026, from $433,039 for the nine months ended March 31, 2025. This decrease was primarily attributable to changes in U.K. R&D tax credit legislation, reducing the benefit from 14.5% to 10% of eligible R&D expenditures.

Operating expenses

Selling, general and administrative expenses

Selling, general and administrative expenses increased from $2,414,639 to $2,458,605 (being an increase of $43,966) for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, and from $6,195,490 to $7,512,388 (being an increase of $1,316,898) for the nine months ended March 31, 2026, compared to the nine months ended March 31, 2025.

The increase in expenses is largely driven by marketing and investors relations expenses as the company accelerates the efforts to establish the foundations of the Company as it expands its market share and market awareness. The major components of selling, general and administrative expenses are:

Marketing expenses

Marketing expenses were $635,868 for the three months ended March 31, 2026, compared to $1,094,658 for the same period last year and $1,768,127 for the nine months ended March 31, 2026, compared to $1,486,212 for the same period last year. Marketing expenditure has increased during the nine months ended March 31, 2026 as the company moves to the next phase of strategic direction in expanding market awareness into existing and potential markets. The company believes this is achieving the objectives through increased revenue and successful capital raising.

Wages and salaries

Wages and salaries were $1,050,705 for the three months ended March 31, 2026, compared to $804,085 for the same period last year and $2,989,477 for the nine months ended March 31, 2026, compared to $2,603,574 for the same period last year. Wages and salaries include increased costs for additional head counts for marketing staff as a part of the marketing awareness strategy, additional expenditure for finance staff to implement NetSuite, the new accounting system with the objective to remediate the internal control issues raised at "Item 4. Controls and Procedures" to bring this to a level of effectiveness as the Company plans to expand in future and increase in the minimum wage in the United Kingdom.

Legal expenses

Legal expenses were $93,588 for the three months ending March 31, 2026, compared to $58,443 for the same period last year and $449,876 for the nine months ending March 31, 2026, compared to $252,669 for the same period last year. Additional legal costs were incurred as part of the activities of developing further the foundations of the Company during this reporting period including implementing the 2025 Reverse Stock Split, general corporate expenses and administrative legal costs associated with raising capital.

Development and regulatory approval expenses

Development and regulatory approval expenses increased by $535,628 to $893,979 for the three months ended March 31, 2026, from $358,351 for the three months ended March 31, 2025. This increase is primarily attributable to higher amounts spent on in-house R&D staff and timing of R&D work performed by the research partners. During the three months ended March 31, 2026, the Company had partnered with Cliantha Research to perform a cutoff assessment for codeine in fingerprint sweat as part of the Company's FDA 510(k) clinical study plan which contributed to the additional costs during the period.

Development and regulatory approval expenses increased by $88,214 to $1,902,261 for the nine months ended March 31, 2026, from $1,814,047 for the nine months ended March 31, 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 nine months ended March 31, 2026, the Company had partnered with Cliantha Research to perform a cutoff assessment for codeine in fingerprint sweat as part of the Company's FDA 510(k) clinical study plan which contributed to the additional costs during the period.

We expect development and regulatory expenses to increase in future periods as the Company continues to work to gather additional supporting data to strengthen its new 510(k) submission to the FDA.

Depreciation and amortization

Depreciation and amortization decreased by $11,585 to $290,393 for the three months ended March 31, 2026, from $301,978 for the three months ended March 31, 2025. This decrease is primarily due to the completion of scheduled amortization of customer relationship (intangible assets) during the prior quarter, resulting in no remaining carrying value for amortization during the three months ended March 31, 2026, partially offset by an amortization of software costs.

Depreciation and amortization decreased by $31,910 to $875,667 for the nine months ended March 31, 2026, from $907,577 for the nine months ended March 31, 2025. This decrease is primarily due to the completion of scheduled amortization of customer relationship (intangible assets) during the prior quarter, resulting in no remaining carrying value for amortization during the three months ended March 31, 2026, partially offset by an amortization of software costs.

Impairment of long-lived assets

The impairment of long-lived assets increased by $5,200 to $5,200 for the three months ended March 31, 2026, from $0 for the three months ended March 31, 2025. The increase is primarily due to an adverse foreign exchange effects arising from the translation of account balance movements at average exchange rates for the period, which impacts the impairment of construction in progress assets classified as held for sale.

The impairment of long-lived assets increased by $294,127 to $294,127 for the nine months ended March 31, 2026, from $0 for the nine months ended March 31, 2025. The increase is mainly due to the impairment of construction in progress assets held for sale.

Other income and expenses

Interest expense

Interest expense decreased by $3,678 to $4,241 for the three months ended March 31, 2026, from $7,919 for the three months ended March 31, 2025. The decrease was primarily attributable to the settlement of notes payable.

Interest expense decreased by $13,592 to $7,435 for the nine months ended March 31, 2026, from $21,027 for the nine months ended March 31, 2025. The decrease was primarily attributable to the settlement of notes payable.

Interest income

Interest income increased by $31,757 to $49,444 for the three months ended March 31, 2026, from $17,687 for the three months ended March 31, 2025. This increase was attributable to funds received from capital raising activities, which contributed to the balance on which interest was earned.

Interest income decreased by $29,182 to $63,282 for the nine months ended March 31, 2026, from $92,464 for the nine months ended March 31, 2025. This decrease was due to the spending of funds received from capital raising activities, which decreases 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 March 31, 2026, we had $6,862,204 in cash and cash equivalents and working capital of $5,138,618.

Shelf Registration Statement - On April 11, 2025, the Company filed a shelf registration statement on Form S-3 (File No. 333-286489), which became effective on September 10, 2025 ("2025 Shelf"), under which we can sell and issue up to an aggregate of $100 million in any combination of common stock, preferred stock, debt securities, warrants, purchase contracts and units. No securities may be sold under the 2025 Shelf until a prospectus supplement describing the method and terms of any future offering is delivered. The 2025 Shelf replaced the 2022 Shelf (defined below), which expired in 2025.

At The Market (ATM) Offering - 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 were made under 2022 Shelf and 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 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 were made under the Company's 2025 Shelf and included base prospectus, and under the related 2025 September ATM Supplement and the 2026 March ATM Supplement.

The Company raised approximately $3,624,773 (net of commissions of approximately $112,169 paid to Ladenburg) through the sale and issuance of 347,863 shares (after adjustment for the 2025 Reverse Stock Split) of Company common stock pursuant to the ATM Agreement during the period between September 18, 2024, through March 31, 2026. The Company did not sell any shares of Company common stock pursuant to the ATM Agreement during the three months ended March 31, 2026.

Under the same ATM agreement, the Company raised approximately $237,350 (net of commissions of approximately $7,346 paid to Ladenburg) upon the issuance of 86,673 shares of common stock between April 1, 2026, and May 12, 2026. As a result of the sale of shares of common stock by the Company pursuant to the previously disclosed ATM Agreement between the Company and Ladenburg, the Company has raised approximately $3,862,123 (net of commissions of approximately $119,515 paid to Ladenburg) as of May 12, 2026.

Inducement Agreements - On July 25, 2025, the Company entered into warrant exercise inducement offer letters (each an "Inducement Agreement") with certain existing holders (the "Holders") of certain outstanding Company warrants to receive new warrants (the "Series J Warrants") to purchase up to a number of shares of the Company's common stock equal to 200% of the number of warrant shares issued pursuant to the exercise (or prepayment) of outstanding Series G Warrants and outstanding Series H-1 Warrants (the "2025 Warrant Inducement Transaction").

Pursuant to the Inducement Agreements, the Holders agreed to (i) exercise their outstanding Series G and Series H-1 Warrants at a reduced exercise price of $19.00 per share ($1.90 per share pre-2025 Reverse Stock Split) (the "Reduced Exercise Price") to purchase an aggregate 154,549 shares (1,545,494 shares pre-2025 Reverse Stock Split) of the Company's common stock and (ii) prepay $18.90 per share ($1.89 per share pre-2025 Reverse Stock Split) toward the Reduced Exercise Price for the exercise of Series H-1 Warrants to purchase an additional 47,773 shares (477,734 shares pre-2025 Reverse Stock Split), in exchange for the Company's agreement to further reduce the exercise price of the prepaid Series H-1 Warrants to $0.10 per share ($0.01 per share pre-2025 Reverse Stock Split), issue Series J Warrants to purchase up to 404,646 shares (4,046,456 shares pre-2025 Reverse Stock Split) of common stock, and reduce the exercise price of the Series H-2 Warrants to the Reduced Exercise Price for up to 156,868 shares (1,568,680 shares pre-2025 Reverse Stock Split). The 2025 Warrant Inducement Transaction closed on July 28, 2025.

As a result of the exercises of the Series G and Series H-1 Warrants, the Company issued an aggregate of 154,549 shares (1,545,494 shares pre-2025 Reverse Stock Split) of common stock. In addition, as a result of the prepayment of the remaining Series H-1 Warrants, the Company amended such warrants to permit the purchase of 47,773 shares (477,734 shares pre-2025 Reverse Stock Split) of common stock at an exercise price of $0.10 per share ($0.01 per share pre-2025 Reverse Stock Split). The Company received aggregate gross proceeds of approximately $3,839,356 and raised approximately $3,332,646, net of underwriting discounts and commissions of approximately $410,542 and legal and compliance costs of $96,168.

In January 2026, the Company raised approximately $1,044,392 (net of commissions of approximately $93,995 payable to Ladenburg) upon the issuance of 54,968 shares for exercise of warrants Series J and H-2 by investors on January 13, 2026, and January 15, 2026.

December 2025 Purchase Agreement - On December 31, 2025, the Company entered into a Securities Purchase Agreement with two healthcare-focused institutional investors in connection with a private placement (the "December Private Placement") for the sale by the Company of: (i) 2,298,850 shares of Common Stock or, in lieu thereof, Series L Pre-Funded Warrants (the "Series L Pre-Funded Warrants"), (ii) Series K-1 warrants to purchase up to 2,298,850 shares of Common Stock (the "Series K-1 Warrants"), and (iii) Series K-2 warrants to purchase up to 2,298,850 shares of Common Stock (the "Series K-2 Warrants" and, collectively with the Series K-1 Warrants and Series L Pre-Funded Warrants, the "December 2025 Warrants"). The combined purchase price for one share of Common Stock (or one Series L Pre-Funded Warrant) and accompanying Series K-1 and Series K-2 Warrants was $4.35. The December Private Placement closed on January 2, 2026, at which time the Company issued an aggregate of 105,000 shares of Common Stock, 2,193,850 Series L Pre-Funded Warrants, 2,298,850 Series K-1 Warrants, and 2,298,850 Series K-2 Warrants.

Subject to certain ownership limitations, the December 2025 Warrants are exercisable upon issuance. Each Series L Pre-Funded Warrant is exercisable for one share of Common Stock at an exercise price of $0.01 per share, subject to adjustment, and remains exercisable until exercised in full. Each Series K-1 Warrant and Series K-2 Warrant is exercisable for one share of Common Stock at an exercise price of $4.10 per share, subject to adjustment, and has a term of five years commencing on the date a registration statement registering the resale of the shares underlying Series K-1 Warrant and Series K-2 Warrant, as applicable, is declared effective by the U.S. Securities and Exchange Commission (the "SEC").

Gross proceeds from the December Private Placement were approximately $10.0 million, before deducting placement agent fees and other offering expenses, and excluding any proceeds from the exercise of the December 2025 Warrants. The Company intends to use the net proceeds for working capital and general corporate purposes.

In connection with the December Private Placement, the Company entered into a Registration Rights Agreement with the investors and agreed to file by January 10, 2026, a resale registration statement (the "Resale Registration Statement") with the SEC covering all shares of Common Stock sold to the investors and the shares of Common Stock issuable upon exercise of the December 2025 Warrants, and to use its best efforts to cause the Resale Registration Statement to be declared effective no later than February 14, 2026. The Company filed the Resale Registration Statement on January 9, 2026, which was declared effective on January 21, 2026.

Australian Government Grant - In the fourth fiscal quarter ended June 30, 2025, upon the end of the project deadline for the construction of a manufacturing facility in Australia, a grant acquittal audit was completed by an independent auditor in relation to the grant received from the Australian Government (the "Australian Government Grant"). Following the grant acquittal audit, an amount of $1,513,290 remains payable to the Australian Government, which is disclosed under liabilities in the balance sheet as of March 31, 2026, as "Accounts payable and accrued expenses". The remaining amount is payable in 11 equal monthly instalments. For more information regarding the repayment of the Australian Government Grant, see "Item 1A. Risk Factors - The Company may not be able to repay the grant it received from the Australian Government when due."

As of March 31, 2026, our principal contractual obligations include future minimum lease payments under operating leases for our facilities, a repayment obligation to the Australian Government related to a manufacturing facility grant, and remaining amounts due under our agreements for clinical study services. 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 March 31, 2026, will be insufficient to fund its current operating plan for at least 12 months from the issuance date of these unaudited condensed consolidated financial statements. In addition, the Company has a significant repayment obligation related to the Australian Government Grant, which further increases its near-term liquidity requirements. 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 issuance date of these unaudited condensed consolidated financial statements. As a result, the Company will be required to raise additional funds during the next 12 months.

While the Company intends to raise additional capital through equity or debt financings, strategic collaborations, or other arrangements, there can be no assurance that such funding will be available on acceptable terms, or at all. Failure to obtain additional funding when needed could adversely affect the Company's ability to execute its operating plan and meet its long-term liquidity requirements.

Extended Transition Period for "Emerging Growth Companies"

We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. Because our financial statements may not be comparable to companies that comply with public company effective dates, investors may have difficulty evaluating or comparing our business, performance or prospects in comparison to other public companies, which may have a negative impact on the value and liquidity of our common stock.

Off-Balance Sheet Arrangements

As of March 31, 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.

Our critical accounting policies, estimates, and judgments are included in Note 3. Summary of Significant Accounting Policies included in Item 8 of Part II of our 2025 Form 10-K for additional information.

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.