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Item 7. Management’s Discussion and Analysis

2024-12-27 compared with 2024-04-16 · 240 added, 192 removed, 0 unchanged (100% of the section changed)

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

to the “Company,” “us,” “our” or “we” refer to TenX Keane Acquisition.

The following

discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements

and related notes included herein.

Certain information contained in the discussion and analysis set forth below includes forward-looking

statements that involve risks and uncertainties.

were incorporated in the Cayman Islands on March 1, 2021 for the purpose of effecting a merger, capital stock exchange, asset acquisition,

stock purchase, reorganization or similar business combination with one or more businesses.

of Operations and Known Trends or Future Events

have not generated any revenues to date, and we will not be generating any operating revenues until the closing and completion of our

initial business combination.

Our entire activity up to December 31, 2023 has been related to our formation, the Initial Public Offering

and, since the closing of the Initial Public Offering, and a search for a business combination target.

We have, and expect to continue

to generate, non-operating income in the form of interest income and unrealized gains on investments held in the trust account.

to continue to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing

compliance), as well as for due diligence expenses in connection with the search for a business combination target.

have neither engaged in any operations nor generated any revenues to date.

Our only activities since inception have been organizational

activities and those necessary to prepare for the IPO.

Following the IPO, we will not generate any operating revenues until after completion

of our initial business combination.

We will generate non-operating income in the form of interest income on cash and cash equivalents

after the IPO.

After the IPO, we expect to incur increased expenses as a result of being a public company (for legal, financial reporting,

accounting and auditing compliance), as well as expenses as we conduct due diligence on prospective business combination candidates.

We expect our expenses to increase substantially after the closing of the IPO.

the year ended December 31, 2023, we had net income of $2,419,304, which primarily consisted of investment income on the trust assets

of $3,432,374, partially offset by operating expenses of $1,013,070.

Capital Resources and Going Concern

registration statement for the IPO (the “Registration Statement”) was declared effective on October 13, 2022.

18, 2022, we consummated the IPO of 6,600,000 Units, including 600,000 additional Units issued pursuant to the partial exercise by

the underwriter of its over-allotment option (with respect to the ordinary share included in the Units being offered,

the “Public Shares”), generating gross proceeds of $66,000,000.

Simultaneously

with the consummation of the IPO and the sale of the Units, we consummated the Private Placement of 394,000 Placement Units to the Sponsor

at a price of $10.00 per Placement Unit, generating total proceeds of $3,940,000.

the closing of the IPO on October 18, 2022, an amount of $67,320,000 ($10.20 per Unit) from the net proceeds of the sale of the Units

in the Initial Public Offering and the Private Placement was placed in the trust account.

The funds held in the trust account may be

invested in U.S.

government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended

(the “Investment Company Act”), with a maturity of 185 days or less or in any open-ended investment company that holds itself

out as a money market fund selected by us meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the us,

until the earlier of:

(i) the completion of a business combination or (ii) the distribution of the trust account.

intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust

account, to complete our initial business combination.

To the extent that our capital stock or debt is used, in whole or in part, as

consideration to complete our initial business combination, the remaining proceeds held in the trust account will be used as working

capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.

of December 31, 2023, we had available to us approximately $32,746 of cash held outside the trust account.

We will use these funds

to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices,

plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material

agreements of prospective target businesses, and structure, negotiate and complete an initial business combination.

order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination,

our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds on a

non-interest bearing basis as may be required.

If we complete our initial business combination, we would repay such loaned amounts.

the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust account

to repay such loaned amounts but no proceeds from our trust account would be used for such repayment.

Other than as described above,

the terms of such loans by our officers and directors, if any, have not been determined and no written agreements exist with respect

to such loans.

We do not expect to seek loans from parties other than our Sponsor or an affiliate of our Sponsor as we do not believe

third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust

expect our primary liquidity requirements from December 31, 2023 through the consummation of the business combination include

$92,000 for legal, accounting, due diligence, travel and other expenses associated with structuring, negotiating and documenting

successful business combinations as well as legal and accounting fees related to regulatory reporting requirements, and $216,800 for

working capital that will be used for miscellaneous expenses and reserves.

In addition, the Sponsor issued an unsecured promissory

note to the Company (the “Promissory Note”), pursuant to which the Company may borrow up to an aggregate principal

amount of $300,000 if we need additional capital.

amounts are estimates and may differ materially from our actual expenses.

In addition, we could use a portion of the funds not being

placed in trust to pay commitment fees for financing, fees to consultants to assist us with our search for a target business or as a

down payment or to fund a “no-shop” provision (a provision designed to keep target businesses from “shopping”

around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular

proposed initial business combination, although we do not have any current intention to do so.

If we entered into an agreement where

we paid for the right to receive exclusivity from a target business, the amount that would be used as a down payment or to fund a “no-shop”

provision would be determined based on the terms of the specific business combination and the amount of our available funds at the time.

Our forfeiture of such funds (whether as a result of our breach or otherwise) could result in our not having sufficient funds to continue

searching for, or conducting due diligence with respect to, prospective target businesses.

may have insufficient funds available to operate our business prior to our initial business combination.

Moreover, we may need to obtain additional financing either to complete our initial business

combination or because we become obligated to redeem a significant number of our Public Shares upon completion of our initial

business combination, in which case we may issue additional securities or incur debt in connection with such business combination.

In addition, we are targeting businesses larger than we could acquire with the net proceeds of the IPO and the sale of the Private

Units, and may as a result be required to seek additional financing to complete such proposed initial business combination.

to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our

initial business combination.

If we are unable to complete our initial business combination because we do not have sufficient funds

available to us, we will be forced to cease operations and liquidate the trust account.

In addition, following our initial business

combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our

is no assurance that our plans to consummate a business combination will be successful within the combination period.

As a result, there

is substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial

statements are issued or are available to be issued.

Company has incurred and expects to continue to incur significant costs in pursuit of its acquisition plans.

In addition, the Company

currently has less than 12 months from the date these financial statements were issued to complete a business combination transaction.

If the Company is unsuccessful in consummating an initial business combination by April 18, 2024, per the mandatory liquidation requirement,

the Company must cease all operations, redeem the Public Shares and thereafter liquidate and dissolve.

In connection with the Company’s

assessment of going concern considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures

of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the Company does not have adequate liquidity

to sustain operations.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern for

a period of time within one year after the date that the financial statements are issued.

There is no assurance that the Company’s

plans to raise capital or to consummate a business combination will be successful or successful within the Combination Period.

The financial statements do not include any adjustments that

might result from the outcome of the uncertainty.

change in cash for the year ended December 31, 2023 was a decrease of $256,429 and was comprised of cash used in operating activities

of $601,304, cash used in investing activities of $1,320,000 and cash provided by financing activities of $1,664,875.

The cash used in investing activities was the deposit into the trust account for the Company’s extension of

deadline to consummate the business combination.

The cash provided by financing activities was interest or dividend derived from the investment

held in the Company’s trust account.

do not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term

Sponsor, officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in

connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business

combinations.

Our audit committee will review on a quarterly basis all payments that were made to our Sponsor, officers or directors

or our or their affiliates and will determine which expenses and the amount of expenses that will be reimbursed.

There is no cap or ceiling

on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf.

addition, in order to finance transaction costs in connection with an intended initial business combination, our Sponsor or an affiliate

of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required.

If we complete

our initial business combination, we would repay such loaned amounts.

In the event that our initial business combination does not close,

we may use a portion of the working capital held outside the trust account to repay such loaned amounts, but no proceeds from our trust

account would be used for such repayment.

The terms of such loans by our officers and directors, if any, have not been determined and

no written agreements exist with respect to such loans.

We do not expect to seek loans from parties other than our Sponsor or an affiliate

of our Sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights

to seek access to funds in our trust account.

Sponsor has agreed (a) to waive its redemption rights with respect to any Founder Shares and Public Shares held by it in connection with

the completion of a business combination and (b) not to propose an amendment to the Amended and Restated Memorandum and Articles of Association

(i) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the our initial business

combination or to redeem 100% of the Public Shares if we do not complete a business combination within the Combination Period or (ii)

with respect to any other provision relating to shareholders’ rights or pre-initial business combination activity, unless we provide

the Public Shareholders with the opportunity to redeem their Public Shares upon approval of any such amendment at a per-share price,

payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the trust account and

not previously released to pay taxes, divided by the number of then issued and outstanding Public Shares.

Sponsor has agreed to waive its rights to liquidating distributions from the trust account with respect to the Founder Shares it will

receive if we fail to complete a business combination within the Combination Period.

However, if the Sponsor or any of its respective

affiliates acquire Public Shares, such Public Shares will be entitled to liquidating distributions from the trust account if we fail

to complete a business combination within the Combination Period.

In the event of such distribution, it is possible that the per share

value of the assets remaining available for distribution will be less than the Public Offering price per Unit ($10.00).

holders of the Founder Shares, Placement Units and Units that may be issued upon conversion of Working Capital Loans (and any shares

of Ordinary Shares issuable upon the exercise of the Private Placement Right) will be entitled to registration rights pursuant to a registration

rights agreement signed prior to or on the effective date of the IPO requiring us to register such securities for resale.

of these securities will be entitled to make up to three demands, excluding short form registration demands, that we register such securities.

In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent

to completion of a business combination and rights to require us to register for resale such securities pursuant to Rule 415 under the

Securities Act.

However, the registration rights agreement provides that we will not be required to effect or permit any registration

or cause any registration statement to become effective until the securities covered thereby are released from their lock-up restrictions.

We will bear the expenses incurred in connection with the filing of any such registration statements.

Accounting Estimates

preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United

States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure

of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported.

results could materially differ from those estimates.

consider an accounting estimate to be critical if:

(i) the accounting estimate requires us to make assumptions about matters that were

highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from

period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact

on our financial condition.

We have not identified any

critical accounting estimates other than below .

Financial Instruments

evaluate our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded

derivatives in accordance with ASC Topic 815, “ Derivatives and Hedging .” For derivative financial instruments

that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is

then re-valued at each reporting date, with changes in the fair value reported in the statements of operations.

The classification

of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the

end of each reporting period.

Derivative liabilities are classified in the balance sheet as current or non-current based on whether

or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.

over-allotment option is deemed to be a freestanding financial instrument indexed on the contingently redeemable shares and was

accounted for as a liability pursuant to ASC 480.

Management’s Discussion and Analysis

of Financial Condition and Results of Operations

The following discussion and analysis of our

financial condition and results of operations should be read together with our audited financial statements for the years ended September

30, 2024 and 2023 and related notes included elsewhere in this annual report.

The following discussion contains “forward-looking

statements” that reflect our future plans, estimates, beliefs and expected performance.

Our actual results may differ materially

from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors.

We caution that

assumptions, expectations, projections, intentions, or beliefs about future events may, and often do, vary from actual results and the

differences can be material.

Please see “Cautionary Note Regarding Forward-Looking Statements” as well as “Risk Factors-

Risks Related to the Company’s Business and Our Industry.”

Citius Oncology is a specialty biopharmaceutical

company focused on developing and commercializing innovative targeted oncology therapies.

We are commercializing LYMPHIR (denileukin diftitox),

an oncology immunotherapy for the treatment of CTCL, a rare form of non-Hodgkin lymphoma.

LYMPHIR was approved by the FDA in August 2024.

We were incorporated in the Cayman Islands on

March 1, 2021, for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar

business combination with one or more businesses.

In August 2024, we reincorporated in Delaware and completed the Merger whereby we acquired

SpinCo as a wholly owned subsidiary and changed our name to Citius Oncology, Inc.

SpinCo began operations in April 2022.

Since inception, the Company has devoted substantially

all of our efforts to business planning, research and development, and recruiting management and technical staff.

The Company is subject

to a number of risks common to companies in the pharmaceutical industry including, but not limited to, risks related to the development

by the Company or our competitors of research and development stage products, market acceptance of our approved products, competition

from larger companies, dependence on key personnel, dependence on key suppliers and strategic partners, the Company’s ability to

obtain additional financing and the Company’s compliance with governmental and other regulations.

License Agreement with Eisai

In September 2021, Citius Pharma entered into

an asset purchase agreement with Dr.

Reddy’s and a license agreement with Eisai to acquire an exclusive license for E7777 (denileukin

diftitox), a late-stage oncology immunotherapy for the treatment of CTCL, a rare form of non-Hodgkin lymphoma.

Citius Pharma assigned

these agreements to us effective April 1, 2022.

Citius Pharma renamed E7777 as I/ONTAK and also obtained the trade name LYMPHIR TM

for the product.

Denileukin diftitox is referred to in this annual report as E7777, I/ONTAK or LYMPHIR, depending on the period of time

and context that is being discussed.

Under the terms of the

agreements, Citius Pharma acquired Dr.

Reddy’s exclusive license for E7777 from Eisai and other related assets owned by Dr.

The exclusive license includes rights to develop and commercialize E7777 in all markets except for Japan and certain parts of Asia.

Additionally,

we retain an option on the right to develop and market the product in India.

Eisai retains exclusive development and marketing rights

for the agent in Japan, China, Korea, Taiwan, Hong Kong, Macau, Indonesia, Thailand, Malaysia, Brunei, Singapore, India (subject to the

India option), Pakistan, Sri Lanka, Philippines, Vietnam, Myanmar, Cambodia, Laos, Afghanistan, Bangladesh, Bhutan, Nepal, Mongolia, and

Papua New Guinea.

Citius Pharma paid $40 million upfront payment which represents the acquisition date fair value of the in-process research

and development acquired from Dr.

Reddy’s is entitled to up to $40 million in development milestone payments

related to CTCL approvals in the U.S.

and other markets, up to $70 million in development milestones for additional indications, as well

as commercial milestone payments and low double-digit tiered royalties on net product sales (within a range of 10% to 15%), and up to

$300 million for commercial sales milestones.

We also must pay on a fiscal quarter basis tiered royalties equal to low double-digit percentages

of net product sales (within a range of 10% to 15%).

The royalties will end on the earlier of (i) the 15-year anniversary of the first

commercial sale of the latest indication that received regulatory approval in the applicable country and (ii) the date on which a biosimilar

product results in the reduction of net sales in the applicable product by 50% in two consecutive quarters, as compared to the four quarters

prior to the first commercial sale of the biosimilar product.

We will also pay to Dr.

Reddy’s an amount equal to a low-thirties

percentage of any sublicense upfront consideration or milestone payments (or the like) received by us and the greater of (i) a low-thirties

percentage of any sublicensee sales-based royalties or (ii) a mid-single digit percentage of such licensee’s net sales.

At the time of the FDA approval for LYMPHIR, a

$27.5 million milestone payment became payable under the terms of the asset purchase agreement for which a balance of $22.5 million remains

due as of September 30, 2024.

Pending further discussions with Dr.

Reddy’s agreed to a partial deferral without

penalty of this milestone payment.

Under the license agreement, Eisai is to

receive a $5.9 million milestone payment, upon FDA approval which is included in license payable at September 30, 2024, and

additional commercial milestone payments related to the achievement of net product sales thresholds and an aggregate of up to $22

million related to the achievement of net product sales thresholds.

Citius Pharma was also required to reimburse Eisai for up to

$2.65 million of its costs to complete the Phase 3 pivotal clinical trial for LYMPHIR for the CTCL indication and reimburse Eisai

for all reasonable costs associated with the preparation of a BLA for LYMPHIR.

Eisai was responsible for completing the CTCL

clinical trial, and CMC activities through the filing of the BLA for LYMPHIR with the FDA.

The Company will be responsible for

development costs associated with potential additional indications.

The term of the license

agreement will continue until (i) if there has not been a commercial sale of a licensed product in the territory, the 10-year anniversary

of the original license effective date, March 30, 2016, or (ii) if there has been a first commercial sale of a licensed product in the

territory within the 10-year anniversary of the original license effective date, the 10-year anniversary of the first commercial sale

on a country-by-country basis.

The term of the license may be extended for additional 10-year periods for all countries in the territory

by notifying Eisai and paying an extension fee equal to $10 million.

Either party may terminate the license agreement upon written notice

if the other party is in material breach of the agreement, subject to cure within the designated time periods.

Either party also may terminate

the license agreement immediately upon written notice if the other party files for bankruptcy or takes related actions or is unable to

pay its debts as they become due.

Additionally, either party will have the right to terminate the agreement if the other party directly

or indirectly challenges the patentability, enforceability or validity of any licensed patent.

Also under the purchase

agreement with Dr.

Reddy’s, we are required to (i) use commercially reasonable efforts to make commercially available products in

the CTCL indication, peripheral T-cell lymphoma indication and immuno-oncology indication, (ii) initiate two investigator initiated immuno-oncology

trials (both of which have been initiated), (iii) use commercially reasonable efforts to achieve each of the approval milestones, and

(iv) to complete each specified immuno-oncology investigator trial on or before the four-year anniversary of the effective date of the

definitive agreement.

Additionally, we are required to commercially launch a product in a territory within six months of receiving regulatory

approval for such product in each such jurisdiction.

RESULTS OF OPERATIONS

Results of Operations for Year Ended September

30, 2024 compared to Year Ended September 30, 2023

Year Ended September 30,

September 30,

Operating expenses:

Research and development

General and administrative

Stock-based compensation – general and administrative

Total operating expenses

Loss before income taxes

(20,572,747 )

(12,121,241 )

Income tax expense

$ (21,148,747 )

$ (12,697,241 )

We did not generate any revenues for the years

ended September 30, 2024 and 2023.

Research and Development Expenses

For the year ended September 30, 2024, research

and development expenses were $4,925,001 as compared to $4,240,451 for the year ended September 30, 2023, an increase of $684,550 due

to development activities completed for the resubmission of the BLA of LYMPHIR in January 2024 which were associated with CRL remediation.

General and Administrative Expenses

For the year ended September 30, 2024, general

and administrative expenses were $8,148,929 as compared to $5,915,290 for the year ended September 30, 2023, an increase of $2,233,639.

The primary reason for the increase was the efforts associated with the pre-commercial and commercial launch activities of LYMPHIR associated

with market research, marketing, distribution and drug product reimbursement from health plans and payers.

Stock-based Compensation Expense

For the year ended September 30, 2024, stock-based

compensation expense was $7,498,817 as compared to $1,965,500 for the year ended September 30, 2023.

The primary reason for the $5,533,317

increase in stock-based compensation expense was the amounts were realized over 12 months in the year ended September 30, 2024 as compared

to three months post-plan adoption in the year ended September 30, 2023.

The Company recorded deferred income tax expense

of $576,000 in each of the years ended September 30, 2024 and 2023 related to the amortization for taxable purposes of its in-process

research and development asset.

For the year ended September 30, 2024, we incurred

a net loss of $21,148,747 compared to a net loss of $12,697,241 for the year ended September 30, 2023.

The $8,451,506 increase in the

net loss was primarily due to the increase in our operating expenses.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity and Working Capital

Citius Oncology has incurred operating losses

since inception and incurred net losses of $21,148,747 and $12,697,241 for the years ended September 30, 2024 and 2023, respectively.

At September 30, 2024, Citius Oncology had an accumulated deficit of $39,278,587.

Citius Oncology’s net cash provided by operations

during the years ended September 30, 2024 and 2023 was $126,353 and $-0-, respectively.

Investing Activities

During 2024, the Company paid $5,000,000 in connection

with a partial milestone payments due under its asset purchase agreement with Dr.

Financing Activities

In connection with closing of the Merger, Citius

Pharma, made a contribution to the Company’s capital in the amount of $33,180,961 representing the balance of the due to/due from

related party account on the date of the Merger.

Citius Pharma also made cash contributions to the Company’s capital, pursuant to

the terms of the Merger Agreement, in the amount of $3,827,944.

Also, in connection with the Merger, Citius Pharma

advanced cash to the Company for an unsecured promissory note issued by the Company in the principal amount of $3,800,111.

Our management believes that inflation

has not had a material effect on our results of operations.

Off Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition

and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally

accepted in the United States.

The preparation of these financial statements requires us to make estimates and judgments that affect the

reported amounts of assets, liabilities and expenses and related disclosure of contingent assets and liabilities.

We review our estimates

on an ongoing basis.

We base our estimates on historical experience and on various other factors that we believe to be reasonable under

the circumstances.

Actual results may differ from these estimates.

We believe the judgments and estimates required by the following accounting

policies to be critical in the preparation of our financial statements.

In-process Research and Development

The Company capitalizes intangible assets purchased from others for

use in research and development activities as In Process Research & Development (IPR&D) when the assets acquired have an alternative

future use, the Company anticipates future economic benefit from that use and the assets acquired are not dependent on future development.

Milestone payments upon regulatory approval that meet the same criteria are capitalized when the payments are considered recoverable based

on expected future cash flows.

Amortization of IPR&D over the exclusive regulatory period of the acquired asset commences upon revenue

In-process research and development of $73,400,000

represents the value of our September 2021 acquisition of an exclusive license for LYMPHIR (denileukin diftitox), a late-stage oncology

immunotherapy for the treatment of CTCL, a rare form of non-Hodgkin lymphoma and is expected to be amortized on a straight-line basis

over a period of 12 years commencing upon revenue generation.

In-process research and development consists of $40,000,000 paid to Dr.

Reddy’s from the asset purchase agreement and approval milestone fees of $27,500,000 to Dr.

Reddy’s and $5,900,000 to Eisai.

Incremental costs incurred on IPR&D after

the acquisition date are expensed as incurred, unless there is an alternative future use.

The Company reviews intangible assets annually

to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the

remaining useful life of any intangible asset.

If the carrying value of an asset exceeds its undiscounted cash flows, the Company writes

down the carrying value of the intangible asset to its fair value for the period identified.

No impairments have occurred since the acquisitions

of our intangible assets through September 30, 2024.

Stock-Based Compensation

The Company recognizes compensation costs resulting from the issuance

of stock-based awards to employees and directors as an expense in the consolidated statement of operations over the requisite service

period based on the fair value for each stock award on the grant date.

The fair value of each option grant is estimated as of the date

of grant using the Black-Scholes option pricing model.

The Company estimates volatility using the trading activity of its common stock.

Because the Company’s stock options have characteristics significantly different from those of traded options, and because changes

in the input assumptions can materially affect the fair value estimate, the existing model may not necessarily provide a reliable single

measure of fair value of the Company’s stock options.

The Company recognizes compensation costs resulting from the issuance

of stock-based awards to non-employees as an expense in the consolidated statement of operations over the service period based on the

measurement of fair value for each stock award and records forfeitures as they occur.

We follow accounting guidance regarding the recognition, measurement,

presentation, and disclosure of uncertain tax positions in the financial statements.

Tax positions taken or expected to be taken in the

course of preparing our tax returns are required to be evaluated to determine whether the tax positions are “more-likely-than-not”

of being sustained by the applicable tax authorities.

Tax positions not deemed to meet a more-likely-than-not threshold would be recorded

in the financial statements.

We recognize deferred tax assets and liabilities based on differences

between the financial reporting and tax basis of assets and liabilities using the enacted tax rates and laws that are expected to be in

effect when the differences are expected to reverse.

We provide a valuation allowance for deferred tax assets for which we do not consider

realization of such assets to be more likely than not.

Quantitative and Qualitative Disclosures

About Market Risk

Not required.

Financial Statements and Supplementary Data

See the financial statements included in this report beginning on page

Changes in and Disagreements with Accountants

on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis