Item 2. Management’s Discussion and Analysis
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following management's discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the unaudited condensed interim financial statements and the related notes contained therein which have been prepared in accordance with US GAAP. This discussion contains forward-looking statements reflecting our current expectations, estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the sections titled "Risk Factors" and "Statements Regarding Forward-Looking Information" appearing elsewhere in this discussion and analysis. All figures are in US dollars unless otherwise noted. Unless the context otherwise requires, for the purposes of this section, "Conexeu", "we", "us", "our", or the "Company" refers to Conexeu Sciences Inc.
Company Overview
We are an early-stage regenerative medicine company focused on the development of biomaterial-based technologies for tissue restoration in wound care and aesthetics applications.
Since inception, our activities have primarily consisted of research and development, advancing our device candidate, capital raising, organizational development, and activities required to prepare for operation as a publicly traded company. We have not generated any revenues to date and expect to continue to incur operating losses for the foreseeable future.
Subsequent to April 30, 2026, on May 21, 2026, our common stock commenced trading on the Nasdaq Capital Market under the symbol "CNXU" (see "Subsequent Events" and Note 12 to the unaudited condensed interim financial statements).
Our current operations are focused on advancing product development activities, including preparation for a planned 510(k) submission to the U.S. Food and Drug Administration.
Results of Operations
Three Months Ended April 30, 2026, Compared to Three Months Ended April 30, 2025
Three months ended April 30,
2026
2025
Change
Advertising and promotion
$
9,256
$
19,323
$
(10,067
)
Depreciation and amortization
11,422
3,401
8,021
Bank charges
3,644
926
2,718
Business development
85,712
56,337
29,375
Consulting
1,228,909
149,586
1,079,323
Filing fees
17,618
150
17,468
Insurance
4,148
-
4,148
Investor relations
1,085
-
1,085
Management and directors' salaries and fees
609,613
83,116
526,497
Office general and administrative
16,867
5,720
11,147
Professional fees
325,489
95,957
229,532
Research and development
66,605
42,465
24,140
Loss from operations
$
(2,380,368
)
$
(456,981
)
Other income (expenses), net
76,085
(1,069
)
77,154
Loss before taxes
$
(2,304,283
)
$
(458,050
)
Income tax benefit (expense)
-
-
Net loss
$
(2,304,283
)
$
(458, 050
)
1,846,233
Revenues
We did not generate any revenue during the three months ended April 30, 2026 or 2025.
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Net Loss
We incurred a net loss of $2,304,283 for the three months ended April 30, 2026, compared to a net loss of $458,050 for the same period in 2025. The increase in net loss was primarily attributable to higher operating expenses associated with the expansion of our operations and activities required to support our transition to a publicly traded company.
Operating Expenses
Operating expenses increased during the three months ended April 30, 2026, as compared to the three months ended April 30, 2025, primarily due to:
Consulting : $1,228,909 (2025: $149,586) The increase of $1,079,323 was due to increased engagement of third-party advisors supporting regulatory activities, corporate readiness, and capital markets initiatives.
Management and Personnel Costs : $609,613 (2025: $83,116) The increase of $526,497 was due to expansion of the executive and scientific team and full-time employment arrangements, including stock-based compensation (see Notes 3 and 12 to the unaudited condensed interim financial statements).
Professional Fees : $325,489 (2025: $95,957) The increase of $229,532 was related to the company's ongoing efforts to become a publicly listed company on a North American exchange.
Research and Development Expenses : $66,605 (2025: $42,465) The increase of $24,140 in research and development expenses increased reflected ongoing laboratory activities, engagement of scientific consultants, and procurement of materials used in development and testing (see Note 3 to the unaudited condensed interim financial statements).
Our current activities are primarily focused on the development and validation of our existing proprietary platform and the evaluation of potential applications across multiple verticals. We expect research and development activities to expand over time as we advance our product pipeline and explore additional applications of our technology.
Six Months Ended April 30, 2026, Compared to Six Months Ended April 30, 2025
Six months ended April 30,
2026
2025
Change
Advertising and promotion
$
20,710
$
27,215
(6,505
)
Depreciation and amortization
17,860
3,964
13,896
Bank charges
5,676
1,658
4,018
Business development
182,757
94,220
88,537
Consulting
1,759,107
196,596
1,562,511
Filing fees
25,258
150
25,108
Insurance
8,400
-
8,400
Investor relations
2,125
-
2,125
Management and directors' salaries and fees
1,335,705
292,802
1,042,903
Office general and administrative
23,843
6,349
17,494
Professional fees
592,719
101,347
491,372
Research and development
129,167
66,133
63,034
Loss from operations
$
(4,103,327
)
$
(790,434
)
Other income (expenses), net
80,221
42,320
37,901
Loss before taxes
$
(4,023,106
)
$
(748,114
)
Income tax benefit (expense)
-
-
Net loss
$
(4,023,106
)
$
(748,114
)
3,274,992
Revenues
We did not generate any revenue during the six months ended April 30, 2026, or 2025.
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Net Loss
We incurred a net loss of $4,023,106 for the six months ended April 30, 2026, compared to a net loss of $748,114 for the same period in 2025.
Operating Expenses
Operating expenses increased during the six months ended April 30, 2026, as compared to the six months ended April 30, 2025, primarily due to:
Consulting: $1,759,107 (2025: $196,596) The increase of $1,562,511 was due to the increased engagement of third-party advisors supporting regulatory activities, corporate readiness, and capital markets initiatives, including stock-based compensation arrangements with certain consultants (see Notes 3 and 12 to the unaudited condensed interim financial statements).
Management and Personnel Costs: $1,335,705 (2025: $292,802) The increase of $1,042,903 was due to the expansion of our executive and scientific team and the establishment of full-time employment arrangements, including stock-based compensation granted to key personnel during the period (see Notes 3 and 12 to the unaudited condensed interim financial statements).
Professional Fees: $592,719 (2025: $101,347) The increase of $491,372 was primarily related to legal, accounting, and regulatory costs associated with the Company's ongoing efforts to become, and subsequently operate as, a publicly listed company on a North American exchange.
Business Development: $182,757 (2025: $94,220) The increase of $88,537 reflected expanded business development activities, including increased engagement with potential partners and stakeholders as the Company advanced its commercial and strategic initiatives.
Research and Development: $129,167 (2025: $66,133) The increase of $63,034 reflected ongoing laboratory activities, engagement of scientific consultants, and procurement of materials used in development and testing (see Note 3 to the unaudited condensed interim financial statements).
Liquidity and Capital Resources
Cash Position and Going Concern
As of April 30, 2026, we had cash and cash equivalents of approximately $6.8 million, together with restricted cash balances related to warrant exercises held in trust (see Note 3 to the unaudited condensed interim financial statements) and working capital of $6.9 million
We have incurred recurring losses since inception and had an accumulated deficit of approximately $8.5 million as of April 30, 2026.
These factors raise substantial doubt about our ability to continue as a going concern within one year after the issuance of the financial statements (see Note 1 to the unaudited condensed interim financial statements).
Six months ended April 30, 2026
2026
2025
Change
Net cash used in operating activities
($3,340,281)
($664,605)
($2,675,676)
Net cash used in investing activities
($34,831)
($18,268)
($16,563)
Net cash provided by financing activities
$5,843,000
$447,693
$5,395,307
Cash Used in Operating Activities
Net cash used in operating activities for the six months ended April 30, 2026, totalled $3,340,281 as compared to $644,605 for the same period in 2025. The net loss from operations increased by $3,274,992 when compared to comparable period in 2025. This overall change in operational costs is reflective of the advancement of the business in building out an infrastructure that will support a publicly listed company and adding additional help to advance the company's research and development, regulatory, and pre-commercialization activities. Noteworthy is the use of non-cash stock-based compensation during the six months ending April 30, 2026, of $494,453 (2025 - $90,997).
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Cash Used in Investing Activities
Cash used in investing activities during the six months ended April 30, 2026, was a negative change of $16,563, representing an increase investment in capital assets for the lab and general office during the period.
Cash Provided by Financing Activities
Cash from financing activities during the six months ended April 30, 2026, was $5,843,000 (2025 - $447,693). The increase in cash was a result of financing activities driven by non-brokered private placements, that were closed during the six months ending April 30, 2026, resulting in proceeds received, net of issuance costs, of $2,943,351 (2025 - $550,000). Cash of $2,000,000, previously held in trust, was received for a private placement that closed on October 28, 2025, and $857,002 of cash was received under the Warrant Inducement Program, for shares and warrants. Finally, the Company received $500 for milestone incentive warrants that were exercised resulting in the issuance of 500,000 common shares of the Company.
Our historical average monthly cash burn was approximately $550,000 for the six months ended April 30, 2026.
We expect our average monthly cash burn to increase to approximately $700,000 in the near term, reflecting higher operating expenditures associated with operating as a publicly traded company, including higher general and administrative expenses, investment in investor relations and market awareness initiatives, and the expansion of laboratory and development activities.
Based on our current cash position and anticipated expenditures, we estimate that our existing cash resources will fund operations for approximately 9 to 11 months from April 30, 2026.
Subsequent to April 30, 2026, the Company has undertaken additional financing and capital activities and continues to evaluate expected cash inflows and expenditures. Actual cash runway may differ based on the timing of these activities and changes in operating expenditures.
We will require additional financing to continue operations beyond this period and to advance our development activities. We expect to seek additional capital through equity financings, debt financings, or other capital sources; however, there can be no assurance that such financing will be available on acceptable terms, or at all.
Plan of Operations
Our near-term operational objectives include:
Continued product development and validation activities;
Advancement toward a planned 510(k) submission;
Expansion of laboratory capabilities, including the commencement of a laboratory lease on May 1, 2026; (see Note 9 to the unaudited condensed interim financial statements);
Increase the number of board members to nine (9);
Evaluate compensation structure for executives, employees, and directors;
Increased Directors and Officers insurance policy bound effective May 13, 2026, in anticipation of public listing on May 21, 2026; and
Continued engagement of consultants and advisors.
In May 2026, the Company initiated an investor relations and market awareness campaign, which is expected to represent a significant component of general and administrative expenses in the coming quarter. Due to our direct listing strategy, rather than an initial public offering, these broader investor relations and market awareness activities will support visibility in the public markets.
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We do not expect to generate revenue in the near term.
Subsequent Events
On May 12, 2026, the Company issued a total of 4,342,648 shares of common stock and equivalent number of new warrants under the warrant Incentive Program for total proceeds of $1,968,360.
On May 14, 2026, the Company issued 11,175 shares of common stock at a fair value of $4.00 per share to settle liabilities with a director of the Company. This liability of $44,700 had been reported as a liability to settle with shares on the unaudited condensed balance sheet as of April 30, 2026
On May 21, 2026, the Company began trading on the Nasdaq under symbol "CNXU".
On May 21, 2026, the achievement of the Nasdaq listing, constituted the fulfilment of Milestone 2 under the terms of the Milestone Performance Warrants.
On May 27, 2026, the Company mutually agreed to terminate, without penalty, a consulting agreement with a vendor for whom both shares and warrants had been issued as part of the service agreement. The Company had recorded as prepaid expenses the fair value of these equity issuances. The early termination of this agreement will accelerate the prepaid expense of $137,377 in non-cash stock-based compensation to be fully expensed as on the date of the termination.
On May 22, 2026, a Director of the Company, exercised 500,000 milestone warrants for a total amount of proceeds of $500. The Company issued 500,000 shares of common stock in connection with the warrant exercise.
On May 22, 2026, the Company issued 70,000 shares of common stock to a vendor as part of their service agreement. The fair value of these shares was determined based on the Nasdaq closing price on May 21, 2026, of $13.50 per share.
On May 28, 2026, a former director of the Company, exercised 400,000 milestone warrants for a total amount of proceeds of $400. The Company issued 400,000 shares of common stock in connection with the warrant exercise.
On May 28, 2026, the Company issued 1,667 shares of common stock to a vendor as part of their service agreement. The fair value of these shares was determined based on the Nasdaq closing price on May 27, 2026, of $13.74 per share.
On June 4, 2026, the Company issued 416,667 shares of common stock and an equivalent number of new warrants under the warrant Incentive Program for total proceeds of $167,083.
On June 8, 2026, a shareholder to whom milestone warrants had been transferred, exercised 100,000 milestone warrants for a total amount of proceeds of $100. The Company issued the 100,000 shares of common stock in connection with the warrant exercise on June 8, 2026.
On June 11, 2026, the board of directors, upon the recommendation of the nominating and corporate governance committee, approved an increase in the size of the board of directors from six (6) to nine (9) members.
On June 11, 2026, the board of directors, upon the recommendation of the nominating and corporate governance committee, approved the appointment of three new board members effective June 15, 2026.
On June 11, 2026, the board of directors, upon the recommendation of the compensation committee, agreed that effective June 15, 2026, the following changes to the compensation for board members will take effect. All board members will be eligible for an annual cash compensation of $50,000, the chair of the board will receive an annual compensation of $100,000. Additionally, on an annual basis, each board member will be granted the equivalent of $100,000 worth of Restricted Stock Units, the number of shares will be determined based on the closing price on the grant date. Twenty five percent (25%) of the shares will vest every 3 months for the following twelve months. The chairman of the board will receive the equivalent of $150,000 under the same terms as the other board members. Eligibility will be determined on the “continuous service” conditions as defined in the board member’s agreement.
On June 11, 2026, the board of directors, upon the recommendation of the compensation committee, agreed that effective June 15, 2026, the following changes to the compensation for committee members will take effect. This compensation is in addition to the board member’s fees as previously disclosed. Nominating and Corporate Governance committee members will receive $5,000 per year, with the chair of the committee receiving $7,500. Compensation committee members will receive $6,000 per year, with the chair of the committee receiving $12,000. Audit committee members will receive $7,500 per year, with the chair of the committee receiving $15,000.
On June 11, 2026, the board of directors, upon the recommendation of both the nominating and corporate governance and compensation committees, approved the appointment of a new Chief Commercial Officer (“CCO”) effective June 15, 2026, along with his associated compensation package. This individual was previously an independent non-executive board member. He will continue to serve on the board as a non-independent executive board member. As part of his role as CCO, he will become a full-time employee, his annual salary is $270,000, additional incentives include, an annual discretionary bonus, a milestone equity award up to a maximum of 0.75% of the Company’s shares of common stock on an issued and outstanding basis at the time of the equity grant, plus $37,500 upon the date of the completion of a financing of $20 million at a minimum of $150 million pre-money market capitalization. If the financing completed is a minimum of $15 million at a minimum of $150 million pre-money market capitalization, then then two-thirds of the $37,500 or $24,750 will be earned and paid out.
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Critical Accounting Policies
Our unaudited condensed interim financial statements are prepared in accordance with generally accepted accounting principles in the U.S. The preparation of our unaudited condensed interim financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our unaudited condensed interim financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
There have been no material changes to our critical accounting policies from those disclosed in our audited financial statements for the year ended October 31, 2025.
Our summary of significant accounting policies is described in more detail in the notes to our unaudited condensed interim financial statements. Please refer to Note 3.
Off-Balance Sheet Arrangements
We have not entered into any material off-balance sheet arrangements such as guarantee contracts, contingent interests in assets transferred to unconsolidated entities, derivative financial obligations, or with respect to any obligations under a variable interest equity arrangement.
Proposed Transactions
We have not entered into any proposed transactions that have not been disclosed herein.
Implications of Being an Emerging Growth Company
The Company, as an issuer with less than $1.235 billion in total annual gross revenues during its last fiscal year, it will qualify as an "emerging growth company" under the Jumpstart Our Business Startups Act of 2012 (the " JOBS Act ") and this status will be significant. An emerging growth company may take advantage of certain reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. In particular, as an emerging growth company, the Company:
will not be required to obtain an auditor attestation on its internal controls over financial reporting pursuant to the Sarbanes-Oxley Act of 2002;
will not be required to provide a detailed narrative disclosure discussing its compensation principles, objectives and elements and analyzing how those elements fit with its principles and objectives (commonly referred to as "compensation discussion and analysis");
will not be required to obtain a non-binding advisory vote from its shareholders on executive compensation or golden parachute arrangements (commonly referred to as the "say-on-pay," "say-on-frequency" and "say-on-golden-parachute" votes);
will be exempt from certain executive compensation disclosure provisions requiring a pay-for-performance graph and CEO pay ratio disclosure;
may present only two years of audited financial statements and only two years of related Management's Discussion and Analysis of Financial Condition and Results of Operations (" MD&A "); and
will be eligible to claim longer phase-in periods for the adoption of new or revised financial accounting standards.
The Company intends to take advantage of all of these reduced reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised financial accounting standards under Section 107 of the JOBS Act. The Company's election to use the phase-in periods may make it difficult to compare its financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the phase-in periods under Section 107 of the JOBS Act.
Under the JOBS Act, the Company may take advantage of the above-described reduced reporting requirements and exemptions for up to five years after the Company's initial sale of common equity pursuant to a registration statement declared effective under the Securities Act of 1933, as amended, or such earlier time should it no longer meet the definition of an emerging growth company. In this regard, the JOBS Act provides that the Company would cease to be an "emerging growth company" if the Company has more than $1.235 billion in annual revenues, has more than $700 million in market value of its common stock held by non-affiliates, or issues more than $1 billion in principal amount of non-convertible debt over a three-year period.
Certain of these reduced reporting requirements and exemptions are also available to the Company due to the fact that it may also qualify, once subject to the reporting obligations under section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, as a "smaller reporting company" under the rules of the U.S. Securities and Exchange Commission (the " SEC "). For instance, smaller reporting companies are not required to obtain an auditor attestation on their assessment of internal control over financial reporting; are not required to provide a compensation discussion and analysis; are not required to provide a pay-for-performance graph or CEO pay ratio disclosure; and may present only two years of audited financial statements and related MD&A disclosure.
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Item 3. Quantitative And Qualitative Disclosures About Market Risk
As a smaller reporting company as defined in Rule 12b-2 under the Exchange Act, the Company is not required to provide the information required by this item.