What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-12-23 compared with 2024-12-27 · 972 added, 717 removed, 685 unchanged (71% of the section changed)

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designed to provide reasonable assurance that information required to be disclosed in reports filed under the Securities Exchange

Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported within the specified time periods

and accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate

to allow timely decisions regarding disclosure.

Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported within the specified time

periods and accumulated and communicated to our management, including our principal executive officer and principal financial officer,

as appropriate to allow timely decisions regarding disclosure.

Our Chief Executive Officer (who is our principal

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of our financial statements would be prevented or detected.

Under the supervision of our Chief Executive Officer and Chief Financial Officer,

the Company conducted an evaluation of the effectiveness of our internal control over financial reporting as of September 30, 2024 using

the criteria established in Internal Control- Integrated Framework issued by the Committee of Sponsoring Organizations of the

Treadway Commission (“COSO”) (2013 Framework).

Under the supervision of our Chief Executive Officer and Chief Financial

Officer, the Company conducted an evaluation of the effectiveness of our internal control over financial reporting as of September 30,

2025 using the criteria established in Internal Control- Integrated Framework issued by the Committee of Sponsoring Organizations

of the Treadway Commission (“COSO”) (2013 Framework).

Based on this evaluation, management has concluded

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Attestation Report of Registered Public Accounting

Our independent registered public accounting firm

has not assessed the effectiveness of our internal control over financial reporting and, under SEC rules, will not be required to provide

an attestation report on the effectiveness of our internal control over financial reporting so long as we qualify as a “non-accelerated

Our independent registered public accounting

firm has not assessed the effectiveness of our internal control over financial reporting and, under SEC rules, will not be required to

provide an attestation report on the effectiveness of our internal control over financial reporting so long as we qualify as a “non-accelerated

Other Information .

On December 2, 2025, we approved and entered into an amendment (the

“Pagoda Note Amendment”) to our existing unsecured promissory note with Pagoda.

The original note provided for aggregate principal

of $1,000,000, bore interest at a per annum rate of 15.00% compounded monthly (or such lesser rate as the maximum permitted by applicable

law), and was scheduled to mature on December 2, 2025.

Pursuant to the Pagoda Note Amendment, we extended the maturity date to January

In consideration for the extension, we issued to Pagoda a warrant to purchase 75,000 shares of our common stock.

has a five-year term commencing on the date of issuance and an exercise price equal to the closing price of our common stock on Nasdaq

on the date of issuance, which was $1.26 per share.

On December 10, 2025, in connection with a common stock transaction

effected by Citius Oncology, we amended the promissory note, dated August 16, 2024, as previously amended on September 10, 2025 (the “Note”),

issued by Citius Oncology to us to provide that the maturity of the Note would be the date at which Citius Oncology has closed a series

of capital raises that in the aggregate provide gross proceeds of at least $50 million through the issuance of debt or equity securities

or the royalty-backed monetization of LYMPHIR.

All other terms of the Note remain the same.

On December 23, 2025, we extended the term of the Amended and Restated

Employment Agreement between us and Myron Holubiak for an additional 12 months until October 31, 2026, effective as of October 31, 2025.

Disclosure Regarding Foreign Jurisdictions

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with the SEC.

This code of ethics and business conduct can be found in the “Investors - Corporate Governance” section of our

website, www.citiuspharma.com .

Additionally, we have adopted an insider trading policy to establish guidelines for our employees, officers, directors,

and consultants regarding transactions in our securities and the disclosure of material nonpublic information related to our Company,

which are reasonably designed to promote compliance with insider trading laws, rules and regulations, and any listing standards applicable

to the registrant.

Each of these policies can be found in the “Investors - Governance – Governance Documents” section

of our website, www.citiuspharma.com .

The other information required by this Item concerning

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and “Corporate Governance” to be contained in our proxy statement related to the 2026 Annual Meeting of Stockholders (the

“Proxy Statement”), which information is expected to be filed with the SEC within 120 days of the end of our fiscal year pursuant

to General Instruction G(3) of Form 10-K.

The information required by this Item concerning compliance with Section 16(a) of the Exchange

Act by our directors, executive officers and persons who own more than 10% of our outstanding common stock is incorporated by reference

from the section captioned “Section 16(a) Beneficial Ownership Reporting Compliance” to be contained in the Proxy Statement.

“Proxy Statement”), which information is expected to be filed with the SEC within 120 days of the end of our fiscal year

pursuant to General Instruction G(3) of Form 10-K.

The information required by this Item concerning compliance with Section 16(a) of

the Exchange Act by our directors, executive officers and persons who own more than 10% of our outstanding common stock is incorporated

by reference from the section captioned “Section 16(a) Beneficial Ownership Reporting Compliance” to be contained in the

Proxy Statement.

Executive Compensation

The information required by this Item concerning

directors and executive compensation is incorporated by reference from the sections captioned “Director Compensation” and

“Executive Compensation”, respectively, to be contained in the Proxy Statement.

directors and executive compensation is incorporated by reference from the sections captioned “Corporate Governance”, “Director

Compensation” and “Executive Compensation”, respectively, to be contained in the Proxy Statement.

Security Ownership of Certain Beneficial

Owners and Management and Related Stockholder Matters

The following table sets forth the indicated information

as of September 30, 2024 with respect to our equity compensation plans:

The following table sets forth the indicated

information as of September 30, 2025 with respect to our equity compensation plans:

Plan Category

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2023 Omnibus Stock Incentive Plan

Our equity compensation plans consist of the Citius

Pharmaceuticals, Inc.

2023 Omnibus Stock Incentive Plan, 2021 Omnibus Stock Incentive Plan, 2020 Omnibus Stock Incentive Plan, 2018 Omnibus

Stock Incentive Plan and 2014 Stock Incentive Plan, which were all approved by our stockholders.

We do not have any equity compensation

plans or arrangements that have not been approved by our stockholders.

We no longer may grant awards under the 2014 Stock

Incentive Plan, the 2018 Omnibus Stock Incentive Plan, the 2020 Omnibus Stock Incentive Plan or the 2021 Omnibus Stock Incentive Plan.

Our equity compensation plans consist of the

Citius Pharmaceuticals, Inc.

2023 Omnibus Stock Incentive Plan, 2021 Omnibus Stock Incentive Plan, 2020 Omnibus Stock Incentive Plan,

2018 Omnibus Stock Incentive Plan and 2014 Stock Incentive Plan, which were all approved by our stockholders.

We do not have any equity

compensation plans or arrangements that have not been approved by our stockholders.

We no longer may grant awards under the 2014

Stock Incentive Plan, the 2018 Omnibus Stock Incentive Plan, the 2020 Omnibus Stock Incentive Plan or the 2021 Omnibus Stock Incentive

The other information required by this Item is

incorporated by reference to the information under the section captioned “Security Ownership of Certain Beneficial Owners and

Management” to be contained in the Proxy Statement.

incorporated by reference to the information under the section captioned “Security Ownership of Certain Beneficial Owners

and Management” to be contained in the Proxy Statement.

Certain Relationships and Related

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The information required by this Item is incorporated

by reference to the information under the section captioned “Certain Relationships and Related Transactions” and “Proposal

by reference to the information under the sections captioned “Corporate Governance”, “Certain Relationships and Related

Transactions” and “Proposal No.

1—Election of Directors” to be contained in the Proxy Statement.

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The information required by this Item is incorporated

by reference to the information under the section captioned “Auditor and Audit Committee Matters” to be contained in the Proxy

by reference to the information under the section captioned “Auditor and Audit Committee Matters” to be contained in the

Proxy Statement.

Exhibits and Financial Statement Schedules

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Certificate of Amendment to the Articles of Incorporation of Citius Pharmaceuticals Inc., dated June 21, 2021.

Amended and Restated Bylaws of Citius Pharmaceuticals, Inc.

Certificate of Designation of Series A Preferred Stock.

Certificate of Amendment to the Articles of Incorporation of Citius Pharmaceuticals, Inc., dated June 9, 2025.

Certificate of Change filed with the Secretary of State of Nevada on November 22, 2024.

Amended and Restated Bylaws of Citius Pharmaceuticals, Inc.

Amendment to the Amended and Restated Bylaws of Citius Pharmaceuticals, Inc.

Form of Common Stock Purchase Warrant, dated August 13, 2018, as amended August 8, 2023.

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Form of Investor Warrant issued November 18, 2024.

Form of Investor Warrant issued on January 8, 2025

Form of Pre-funded Warrant issued on April 2, 2025

Form of Placement Agent Warrant issued on April 2, 2025

Form of Investor Warrant issued on June 11, 2025.

Form of Pre-Funded Warrant issued on June 11, 2025.

Form of Placement Agent Warrant issued on June 11, 2025.

Form of Investor Warrant issued on October 21, 2025.

Form of Pre-Funded Warrant issued on October 21, 2025.

Form of Placement Agent Warrant issued on October 21, 2025.

Form of Warrant issued on December 2, 2025.

Description of Common Stock.

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Patent and Technology License Agreement, dated May 14, 2014, between Novel Anti-Infective Technologies, LLC and Leonard-Meron Biosciences, Inc.

Description of Document

Form of Securities Purchase Agreement, dated April 1, 2019, by and between Citius Pharmaceuticals, Inc.

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and Citius Oncology, Inc.

Description of Document

Form of Amended and Restated Registration Rights Agreement.

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by Citius Oncology, Inc.

Amendment to Promissory Note, dated September 10, 2025, by and between Citius Oncology, Inc.

and Citius Pharmaceuticals, Inc.

Second Amendment to Promissory Note, dated December 10, 2025, by and between Citius Oncology, Inc.

and Citius Pharmaceuticals, Inc.

Form of Securities Purchase Agreement, dated as of November 15, 2024, by and among Citius Pharmaceuticals, Inc.

and the investors signatory thereto.

Form of Securities Purchase Agreement, dated as of January 7, 2025, by and among Citius Pharmaceuticals, Inc.

and the investors signatory thereto.

Form of Securities Purchase Agreement, dated as of April 1, 2025, by and among Citius Pharmaceuticals, Inc.

and the investor signatory thereto.

Subscription and Investment Representation Agreement, dated April 17, 2025, by and between Citius Pharmaceuticals, Inc.

and Leonard Mazur.

Unsecured Promissory Note issued to Pagoda Resources, Inc., dated June 2, 2025.

Amendment No.

1 to Unsecured Promissory Note issued to Pagoda Resources, Inc., dated December 2, 2025.

Form of Securities Purchase Agreement, dated as of June 9, 2025, by and among Citius Pharmaceuticals, Inc.

and the investor signatory thereto.

Form of Securities Purchase Agreement, dated as of October 20, 2025, by and among Citius Pharmaceuticals, Inc.

and the investor signatory thereto.

First Amendment to Amended and Restated Employment Agreement by and between Myron Holubiak and Citius Pharmaceuticals, Inc., executed September 25, 2024, effective May 31, 2024.

Second Amendment to Amended and Restated Employment Agreement by and between Myron Holubiak and Citius Pharmaceuticals, Inc., executed December 23, 2025, effective October 31, 2025.

Insider Trading Policy.

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1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

Compensation Recovery Policy.

INLINE XBRL INSTANCE DOCUMENT

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Cover Page Interactive Data File, formatted in Inline Extensible Business Reporting Language (iXBRL).

Portions of this exhibit have been omitted pursuant to Item 601(b)10 of Regulation S-K or certain of the exhibits and schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2) or 601(a)(5), as applicable.

Citius Pharma agrees to furnish supplementally an unredacted copy such exhibit, including any omitted exhibits and schedules, to the SEC upon its request.

Management contract or compensatory plan.

Portions of this exhibit

have been omitted pursuant to Item 601(b)10 of Regulation S-K or certain of the exhibits and schedules to this exhibit have been

omitted in accordance with Regulation S-K Item 601(b)(2) or 601(a)(5), as applicable.

Citius Pharma agrees to

furnish supplementally an unredacted copy such exhibit, including any omitted exhibits and schedules, to the SEC upon its request.

Management contract or

compensatory plan.

Form 10-K Summary.

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December 23, 2025

/s/ Leonard Mazur

Leonard Mazur

Chief Executive Officer

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on the dates indicated.

/s/ Leonard Mazur

Chief Executive Officer and Director

December 27, 2024

Leonard Mazur

Chief Executive Officer

Leonard Mazur

(Principal Executive Officer)

/s/ Myron Holubiak

Executive Vice Chairman and Director

December 27, 2024

Myron Holubiak

/s/ Jaimie Bartushak

Executive Vice Chairman

Myron Holubiak

Chief Financial Officer

December 27, 2024

Jaime Bartushak

(Principal Financial Officer and Principal Accounting Officer)

/s/ Suren Dutia

December 27, 2024

/s/ Carol Webb

December 27, 2024

/s/ Eugene Holuka

December 27, 2024

(Principal Financial Officer and Principal Accounting

Eugene Holuka

/s/ Dennis McGrath

December 27, 2024

Eugene Holuka

Dennis McGrath

/s/ Robert J.

December 27, 2024

Dennis McGrath

CITIUS PHARMACEUTICALS, INC.

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prepared assuming that the Company will continue as a going concern.

As discussed in Note 2 to the financial statements, the Company has

suffered recurring losses and has a working capital deficit as of September 30, 2024.

These conditions raise substantial doubt about the

Company’s ability to continue as a going concern.

As discussed in Note 2 to the financial statements, the Company

has suffered recurring losses and has a working capital deficit as of September 30, 2025.

These conditions raise substantial doubt about

the Company’s ability to continue as a going concern.

Management’s plans in regard to these matters are described in Note

financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

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Accordingly, we express no such opinion.

Our audits included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

Our audits included performing procedures to

assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that

respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well

as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

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Critical audit matters are matters arising from

the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit

committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially

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Total Current Assets

Property and equipment, net

Operating lease right-of-use asset, net

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Common stock - $ 0.001 par value;

16,000,000 shares authorized;

250,000,000 and 16,000,000 shares authorized at September 30, 2025 and 2024, respectively;

18,067,744 and 7,247,243 shares issued and outstanding at September 30, 2025 and 2024, respectively

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( 41,995,681 )

Other Income:

Interest income, net

Other Income (Expense):

Interest income

Interest expense

Gain on sale of New Jersey net operating losses

Total Other Income Net

Total Other Income (Expense), Net

Loss before Income Taxes

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( 1,047,312 )

( 1,151,208 )

Net Loss Applicable to Common Stockholders

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$ ( 162,231,379 )

$ 102,825,865

$ 103,426,245

Issuance of common stock for services

Issuance of common stock upon exercise of stock options

Issuance of common stock in registered direct offering, net of costs of $ 1,201,818

Sale of common stock, net of costs

Stock-based compensation expense

Merger, net of transaction costs of $ 2,358,780

( 3,831,357 )

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( 3,831,357 )

Balance, September 30, 2023

Minority interest from Merger

( 3,711,000 )

Issuance of common stock for services

Issuance of common stock upon exercise of stock options

Issuance of common stock offerings, net of costs

Stock-based compensation expense

Merger, net of transaction costs of $ 2,358,780

( 3,711,000 )

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( 39,425,839 )

Minority interest from Merger

( 39,425,839 )

Net loss attributable to noncontrolling interest

Balance, September 30, 2024

( 201,370,218 )

November 2024 sale of common stock, net of costs of $ 425,949

January 2025 sale of common stock, net of costs of $ 342,833

April 2025 sale of common stock and pre-funded warrants, net of costs of $ 256,116

June 2025 sale of common stock and pre-funded warrants, net of costs of $ 571,126

July 2025 sale of common stock by Citius Oncology, net of costs of $ 1,453,012

( 3,776,710 )

September 2025 sale of common stock by Citius Oncology, net of costs of $ 1,380,146

( 3,529,361 )

Issuance of common stock for services

Issuance of common stock upon exercise of pre-funded warrants

Sales of common stock under at the market offering agreement, net of costs

Sale of Series A preferred stock

Redemption of Series A preferred stock

Stock-based compensation expense

( 39,740,269 )

Net loss attributable to noncontrolling interest

( 2,306,358 )

Balance, September 30, 2025

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( 12,649,207 )

Prepaid expenses

( 2,133,871 )

Prepaid expenses

Accounts payable

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( 5,750,000 )

( 5,000,000 )

Net Cash Used In Investing Activities

( 5,750,000 )

( 5,000,000 )

Cash Flows From Financing Activities:

Proceeds from common stock option exercises

Proceeds from note payable and advance from employee

Repayment of advance from employee

( 3,831,357 )

Net proceeds from registered direct offerings

Net proceeds from common stock offerings

Net Cash Provided By Financing Activities

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( 23,229,048 )

( 15,230,762 )

Cash and Cash Equivalents – Beginning of Year

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IPR&D Milestones included in License Payable

Prepaid Manufacturing transferred to Inventory

See accompanying report of independent registered

public accounting firm and notes to the financial statements.

Net Prepaid Manufacturing transferred to Inventory

Operating lease right-of-use asset and liability recorded

Interest paid

See accompanying report

of independent registered public accounting firm and notes to the financial statements.

CITIUS PHARMACEUTICALS, INC.

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(“Citius Pharma,”

the “Company” or “we”) is a late-stage biopharmaceutical company dedicated to the development and commercialization

of critical care products with a focus on oncology, anti-infectives in adjunct cancer care, unique prescription products and stem cell

On March 30, 2016, we acquired Leonard-Meron Biosciences,

the “Company,” “we,” or “us”) is a late-stage biopharmaceutical company dedicated to the development

and commercialization of critical care products with a focus on oncology, anti-infectives in adjunct cancer care, unique prescription

products and stem cell therapies.

On March 30, 2016, we acquired Leonard-Meron

Biosciences, Inc.

(“LMB”) as a wholly-owned subsidiary.

We acquired all the outstanding stock of LMB by issuing shares of our common stock.

We acquired all the outstanding stock of LMB by issuing shares of

our common stock.

The net assets acquired included identifiable intangible assets of $ 19,400,000 related to in-process research and development.

goodwill of $ 9,346,796 for the excess of the purchase price over the net assets acquired.

We recorded goodwill of $ 9,346,796 for the excess of the purchase price over the net assets acquired.

On September 11, 2020, we formed NoveCite, Inc.

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On August 23, 2021, we formed Citius Oncology,

(formerly named Citius Acquisition Corp.) (“Citius Oncology”), as a wholly-owned subsidiary in conjunction with the acquisition

of LYMPHIR, which began operations in April 2022.

On August 12, 2024, Citius Pharma and Citius Oncology entered into a merger agreement

with TenX Keane Acquisition, and its wholly owned subsidiary, TenX Merger Sub Inc (“Merger Sub”), whereby Merger Sub merged

with and into Citius Oncology.

After the merger and recapitalization (the “Merger”), the newly combined publicly traded company

is owned 92.3 % by Citius Pharma, and is named Citius Oncology, Inc.

(“Citius Oncology”), as a wholly-owned subsidiary in conjunction with the acquisition of LYMPHIR, which began operations

in April 2022.

On August 12, 2024, Citius Pharma and Citius Oncology entered into a merger agreement with TenX Keane Acquisition, and

its wholly owned subsidiary, TenX Merger Sub Inc (“Merger Sub”), whereby Merger Sub merged with and into Citius Oncology.

After the merger and recapitalization (the “Merger”), the newly combined publicly traded company was owned 92.3 % by Citius

Pharma, and is named Citius Oncology, Inc.

(see Note 10).

Since its inception, we have devoted substantially

Since our inception, we have devoted substantially

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

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 its competitors of research and development stage products, regulatory approval and market acceptance of its 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.

by us or our competitors of research and development stage products, regulatory approval and market acceptance of its products, competition

from larger companies, dependence on key personnel, dependence on key suppliers and strategic partners, our ability to obtain additional

financing and our compliance with governmental and other regulations.

Basis of Presentation

The accompanying consolidated financial statements

include the operations of Citius Pharmaceuticals, Inc., and its wholly-owned subsidiaries, Citius Pharmaceuticals, LLC and LMB and its

majority-owned subsidiaries NoveCite and Citius Oncology.

NoveCite, was inactive until October 2020.

On August 12, 2024, Citius Oncology,

previously a wholly-owned subsidiary, became a 92.3 % majority-owned subsidiary.

include the operations of Citius Pharmaceuticals, Inc., and its wholly-owned subsidiary LMB and its majority-owned subsidiaries NoveCite

and Citius Oncology.

On August 12, 2024, Citius Oncology, previously a wholly-owned subsidiary, became a majority-owned subsidiary.

of September 30, 2025, Citius Oncology was a 79.1% majority-owned subsidiary.

The operations of NoveCite and Citius Oncology

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The portion of equity that is not attributable to the Company, is presented as a non-controlling

interest within stockholder’s equity.

interest within stockholders’ equity.

Unless excluded by shareholder agreements, the portion of net loss attributable to non-controlling

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have been eliminated in consolidation.

All share amounts and per share data reflect a

1-for-25 reverse stock split which went effective on November 25, 2024, subsequent to year-end which is more fully descripted in Note

All share amounts and per share data reflect

a 1-for-25 reverse stock split which became effective on November 25, 2024.

GOING CONCERN UNCERTAINTY AND MANAGEMENT’S

The accompanying consolidated financial statements

have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal

course of business.

The Company experienced negative cash flows from operations of $ 28,201,375 and $ 29,060,212 , for the years ended September

have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the

normal course of business.

We experienced negative cash flows from operations of $ 26,552,738 and $ 28,201,375 , for the years ended September

30, 2025 and 2024, respectively.

The Company had a negative working capital of approximately $ 21.6 million at September 30, 2024.

Company estimates that its available cash resources will be sufficient to fund its operations through February 2025 which raises substantial

doubt about the Company’s ability to continue as a going concern within one year after the date that the accompanying consolidated

financial statements are issued.

The Company has generated no operating revenue

to date and has principally raised capital through the issuance of debt and equity instruments to finance its operations.

Company’s continued operations beyond February 2025, including its development plans for Mino-Lok, Mino-Wrap, Halo-Lido and NoveCite,

will depend on its ability to obtain regulatory approval for Mino-Lok and generate substantial revenue from the sale of LYMPHIR and on

its ability to raise additional capital through various potential sources, such as equity and/or debt financings, strategic relationships,

or out-licensing of its product candidates.

However, the Company can provide no assurances on regulatory approval, commercialization,

or future sales of LYMPHIR or that financing or strategic relationships will be available on acceptable terms, or at all.

If the Company

is unable to raise sufficient capital, find strategic partners or generate substantial revenue from the sale of LYMPHIR, there would be

a material adverse effect on its business.

Further, the Company expects in the future to incur additional expenses as it continues to

develop its product candidates, including seeking regulatory approval, and protecting its intellectual property.

The accompanying financial

statements do not include any adjustments that might result from the outcome of the above uncertainty.

We had a negative working capital of approximately $ 17 million at September 30, 2025.

We estimate that

our available cash resources will be sufficient to fund its operations through March 2026 which raises substantial doubt about our ability

to continue as a going concern within one year after the date that the accompanying consolidated financial statements are issued.

We have generated no operating revenue to date

and have principally raised capital through the issuance of debt and equity instruments to finance our operations.

However, our continued

operations beyond March 2026, including our development plans for Mino-Lok, Halo-Lido and NoveCite, will depend on our ability to obtain

regulatory approval for Mino-Lok and generate substantial revenue from the sale of LYMPHIR and on our ability to raise additional capital

through various potential sources, such as equity and/or debt financings, strategic relationships, or out-licensing of our product candidates.

We can provide no assurances on regulatory approval, commercialization, or future sales of LYMPHIR or that financing or strategic relationships

will be available on acceptable terms, or at all.

If we are unable to raise sufficient capital, find strategic partners or generate substantial

revenue from the sale of LYMPHIR, there would be a material adverse effect on our business.

Further, we expect in the future to incur

additional expenses as we continue to develop our product candidates, including seeking regulatory approval, and protecting our intellectual

The accompanying financial statements do not include any adjustments that might result from the outcome of the above uncertainty.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies

followed by the Company in the preparation of the consolidated financial statements is as follows:

followed by us in the preparation of the consolidated financial statements is as follows:

Use of Estimates

The process of preparing financial statements

in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to

make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities

at the date of financial statements and the reported amounts of revenues and expenses during the reporting period.

Estimates having relatively

higher significance include the accounting for in-process research and development, goodwill, stock-based compensation and income taxes.

in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management

to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and

liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period.

having relatively higher significance include the accounting for in-process research and development, goodwill, stock-based compensation

and income taxes.

Actual results could differ from those estimates and changes in estimates may occur.

Cash and Cash Equivalents

The Company considers all highly liquid instruments

with maturities of less than three months at the time of purchase to be cash equivalents.

From time to time, the Company may have cash

balances in financial institutions in excess of insurance limits.

The Company has never experienced any losses related to these balances.

We consider all highly liquid instruments with

maturities of less than three months at the time of purchase to be cash equivalents.

From time to time, we may have cash balances in

financial institutions in excess of insurance limits.

We have never experienced any losses related to these balances.

Prepaid Expenses

Prepaid expenses at September 30, 2025 and 2024

consist of $ 0 and $ 154,611 of prepaid insurance, respectively, and $ 2,700,000 and $ 7,734,895 of advance payments made for the preparation

of long-lead time drug substance and product costs, respectively, which will be utilized in research and development activities or in

the manufacturing of LYMPHIR for sales.

consist of $ 64,210 and $ 0 in prepaid annual service fees, respectively, and $ 1,331,280 and $ 2,700,000 of advance payments made for the

preparation of long-lead time drug substance and product costs, respectively, which will be utilized in research and development activities

or in the manufacturing of LYMPHIR for sales.

Inventory is stated at the lower of actual accumulated

costs or net realizable value as of September 30, 2024 consisting of finished goods of $ 6,134,895 , and work in process of $ 2,133,862 related

to the manufacturing of LYMPHIR commercial products to be sold in 2025.

No reserves against inventory were deemed necessary based on an

evaluation of the product expiration dating.

During 2024, $ 6,134,895 of prepaid manufacturing

costs were transferred to inventory upon product approval and production commencement at our third-party manufacturers.

The Company has not yet selected a specific inventory

costing methodology (e.g., FIFO or weighted average).

Management plans to implement an appropriate inventory costing method prior to the

commencement of sales activities.

The selection of this method may impact future financial statements once sales begin.

costs or net realizable value as of September 30, 2025 and 2024, related to the manufacturing of LYMPHIR commercial products to be sold

commencing in 2025.

No reserves against inventory were deemed necessary based on an evaluation of the product expiration dating.

September 30,

Finished goods

Work in process

During 2024 and 2025, $ 6,134,895 and $ 1,368,720

respectively, of prepaid manufacturing costs were transferred to inventory upon product approval and production commencement at our third-party

manufacturers.

Research and Development

Research and development costs, including upfront

fees and milestones paid to collaborators who are performing research and development activities under contractual agreements with the

Company, are expensed as incurred.

The Company defers and capitalizes its nonrefundable advance payments that are for research and development

activities until the related goods are delivered or the related services are performed.

When the Company is reimbursed by a collaboration

partner for work the Company performs, it records the costs incurred as research and development expenses and the related reimbursement

as a reduction to research and development expenses in its consolidated statement of operations.

Research and development expenses primarily

consist of clinical and non-clinical studies, materials and supplies, third-party costs for contracted services, and payments related

to external collaborations and other research and development related costs.

fees and milestones paid to collaborators who are performing research and development activities under contractual agreements with us,

are expensed as incurred.

We defer and capitalize our nonrefundable advance payments that are for research and development activities

until the related goods are delivered or the related services are performed.

When we are reimbursed by a collaboration partner for work

we perform, we record the costs incurred as research and development expenses and the related reimbursement as a reduction to research

and development expenses in our consolidated statement of operations.

Research and development expenses primarily consist of clinical

and non-clinical studies, materials and supplies, third-party costs for contracted services, and payments related to external collaborations

and other research and development related costs.

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 includes $ 19,400,000 representing

the value of LMB’s drug candidate, Mino-Lok, an antibiotic lock solution in Phase 3 clinical development, which if approved, would

be used to treat catheter-related bloodstream infections, and is expected to be amortized on a straight-line basis over a period of eight

years commencing upon revenue generation.

In-process research and development also includes $ 73,400,000 representing the value of Citius

Oncology’s 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 twelve years commencing upon

We capitalize 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, we anticipate 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 generation.

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

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

Reddy’s and $ 5,900,000 to Eisai.

Included in the

IPR&D is the historical know-how, formula protocols, designs, and procedures that were needed to complete Phase 3.

In addition, the

contracts acquired in connection with Dr.

Reddy’s transaction with the clinical research and manufacturing organization are at market

rates and could be provided by multiple vendors in the marketplace.

Therefore, there is no fair value associated with the contracts acquired.

In-process research and development includes

$ 19,400,000 representing the value of LMB’s drug candidate, Mino-Lok, an antibiotic lock solution in Phase 3 clinical development,

which if approved, would be used to treat catheter-related bloodstream infections, and is expected to be amortized on a straight-line

basis over a period of eight years commencing upon revenue generation.

In-process research and development also includes $ 73,400,000

representing the value of Citius Oncology’s 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 twelve years commencing upon revenue generation.

Citius Oncology’s In-process research and development consists of $ 40,000,000

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

Reddy’s and $ 5,900,000

Included in the IPR&D is the historical know-how, formula protocols, designs, and procedures that were needed to complete

In addition, the contracts acquired in connection with Dr.

Reddy’s transaction with the clinical research and manufacturing

organization are at market rates and could be provided by multiple vendors in the marketplace.

Therefore, there is no fair value associated

with the contracts acquired.

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 in the period identified.

No impairment has occurred since the acquisitions

through September 30, 2024.

Goodwill represents the value of LMB’s industry

relationships and its assembled workforce.

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 in the period identified.

No impairment has occurred since the

acquisitions through September 30, 2025.

Goodwill represents the value of LMB’s

industry relationships and its assembled workforce.

Goodwill is not amortized but it is tested at least annually for impairment.

The Company evaluates the recoverability of goodwill

annually or more frequently if events or changes in circumstances indicate that the carrying value of an asset might be impaired, in accordance

with Accounting Standard Update (“ASU”) 2017-04, Intangibles – Goodwill and Other (Topic 350):

Simplifying the Accounting

for Goodwill Impairment issued by the Financial Accounting Standards Bureau (“FASB”).

Goodwill is first qualitatively

assessed to determine whether further impairment testing is necessary.

Factors that management considers in this assessment include macroeconomic

conditions, industry and market considerations, overall financial performance (both current and projected), changes in management and

strategy and changes in the composition or carrying amount of net assets.

If this qualitative assessment indicates that it is more likely

than not that the fair value of a reporting unit is less than its carrying amount, a one-step test is then performed in accordance with

Under the simplified model, a goodwill impairment is calculated as the difference between the carrying amount of the reporting

unit and its fair value.

The Company performed a qualitative assessment

for its 2024 analysis of goodwill.

Based on this assessment, management does not believe that it is more likely than not that the carrying

value of the reporting unit exceeds its fair value.

Accordingly, no further testing was performed as management believes that there are

no impairment issues with respect to goodwill as of September 30, 2024.

annually or more frequently if events or changes in circumstances indicate that the carrying value of an asset might be impaired, in

accordance with Accounting Standard Update (“ASU”) 2017-04, Intangibles – Goodwill and Other (Topic 350):

the Accounting for Goodwill Impairment issued by the Financial Accounting Standards Bureau (“FASB”).

Goodwill is first

qualitatively assessed to determine whether further impairment testing is necessary.

Factors that management considers in this assessment

include macroeconomic conditions, industry and market considerations, overall financial performance (both current and projected), changes

in management and strategy and changes in the composition or carrying amount of net assets.

If this qualitative assessment indicates

that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a one-step test is then performed

in accordance with ASU 2017-04.

Under the simplified model, a goodwill impairment is calculated as the difference between the carrying

amount of the reporting unit and its fair value.

For its 2025 goodwill analysis, the Company performed a quantitative

assessment as of September 30, 2025.

Based on this analysis, management concluded that the estimated fair value of the reporting unit

exceeded its carrying amount.

Accordingly, no impairment charge was recorded, and goodwill continues to be carried at its current value.

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.

The Company follows accounting guidance regarding

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

Tax positions

taken or expected to be taken in the course of preparing the Company’s 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 consolidated financial statements.

There are no uncertain tax positions

that require accrual or disclosure as of September 30, 2024.

We recognize 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.

We estimate volatility using the trading activity of our common stock.

Because our 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 our stock options.

We recognize 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 record forfeitures as they occur.

We follow accounting guidance regarding the recognition,

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

There are no uncertain tax positions that require accrual or disclosure

as of September 30, 2025.

Any interest or penalties are charged to expense.

During the years ended

September 30, 2024 and 2023, the Company did not recognize any interest and penalties.

Tax years subsequent to September 30, 2020 are

subject to examination by federal and state authorities.

During the years ended September 30, 2025 and 2024, the Company

did not recognize any interest and penalties.

Tax years subsequent to September 30, 2021 are subject to examination by federal and state

The Company recognizes deferred tax assets and

liabilities based on differences between the financial reporting and tax basis of assets and liabilities, and operating loss and tax credit

carry forwards.

Deferred tax assets and liabilities are measured using the enacted tax rates and laws that are expected to be in effect

when the differences are expected to reverse.

The Company provides a valuation allowance, if necessary, for deferred tax assets for which

it does not consider realization of such assets to be “more-likely-than-not.” The deferred tax benefit or expense for the

period represents the change in the deferred tax asset or liability from the beginning to the end of the period.

liabilities based on differences between the financial reporting and tax basis of assets and liabilities, and operating loss and tax

credit carry forwards.

Deferred tax assets and liabilities are measured using the enacted tax rates and laws that are expected to be

in effect when the differences are expected to reverse.

The Company provides a valuation allowance, if necessary, for deferred tax assets

for which it does not consider realization of such assets to be “more-likely-than-not.” The deferred tax benefit or expense

for the period represents the change in the deferred tax asset or liability from the beginning to the end of the period.

Basic and Diluted Net Loss per Common Share

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of shares of common stock outstanding during such period.

For the periods presented, common stock equivalents, consisting of options and

warrants were not included in the calculation of the diluted loss per share because they were anti-dilutive.

For the periods presented, common stock equivalents, consisting of options

and warrants were not included in the calculation of the diluted loss per share because they were anti-dilutive.

Segment Reporting

The Company currently operates as a single segment.

The Company operates through a single operating

and reportable segment which is focused on developing and commercializing innovative targeted oncology therapies.

The Company’s

lead product candidate is LYMPHIR, an engineered IL-2 diphtheria toxin fusion protein, for the treatment of patients with persistent

or recurrent CTCL, a rare form of non-Hodgkin lymphoma.

LYMPHIR was approved by the FDA in August 2024.

The Company manages all business

activities on a consolidated basis.

The Company's Chief Operating Decision Maker ("CODM") is the Chief Executive Officer .

The accounting policies of the operating segment

are as described in Note 3.

The CODM evaluates the performance of the operating segment and allocates resources based on amounts as reported

on the consolidated statements of operations and cash flows.

Segment expenses are presented on the Company’s consolidated statements

of operations.

The operating segment assets are reported on the consolidated balance sheet as total assets.

Concentrations of Credit Risk

The Company has no significant off-balance-sheet

concentration of credit risk such as foreign exchange contracts, option contracts or other hedging arrangements.

Recently Issued Accounting Standards

We have no significant off-balance-sheet concentration

of credit risk such as foreign exchange contracts, option contracts or other hedging arrangements.

Recently Adopted Accounting Standards

Reportable Segment Disclosures

In November 2023, the

FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures.

The change in the standard improves

reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The changes improve

financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities

to enable investors to develop more decision-useful financial analyses.

The guidance will be effective for annual reporting periods beginning

after December 15, 2023, and for interim periods beginning after December 15, 2024.

In November 2023, the FASB issued ASU 2023-07,

Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures.

The change in the standard improves reportable segment

disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The changes improve financial reporting

by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors

to develop more decision-useful financial analyses.

The guidance will be effective for annual reporting periods beginning after December

15, 2023, and for interim periods beginning after December 15, 2024.

Early adoption is permitted.

The standard will be

applied retrospectively.

The Company is currently evaluating the impact of adoption of the standard on its financial statement disclosures.

The standard will be applied retrospectively.

Since the Company has one reportable segment, adoption of this new standard did not have a material impact on the Company's consolidated

financial statements.

Recently Issued Accounting Standards

Income Tax Disclosures

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application permitted.

The Company is currently evaluating the impact of adoption of the standard on its financial statement disclosures.

Disaggregation of Income Statement Expenses

We are currently evaluating the impact of adoption of the standard on our financial statement disclosures.

Disaggregation of

Income Statement Expenses

In November 2024, the

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are to be applied prospectively with the option for retrospective application.

The Company is currently evaluating the impact of adoption

of the standard update on its financial statement disclosures.

We are currently evaluating the impact of adoption of

the standard on ours financial statement disclosures.

PATENT AND TECHNOLOGY LICENSE AGREEMENTS

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LMB pays an annual maintenance fee each June until commercial sales of a product subject to the license

The Company recorded an annual maintenance fee expense of $ 90,000 in 2024 and 2023.

We recorded an annual maintenance fee expense of $ 90,000 in both 2025 and 2024.

LMB will also pay annual royalties on net sales

5 unchanged sentences

year which is prorated for a less than 12-month period, increasing $ 25,000 per year to a maximum of $ 150,000 annually.

LMB must also pay

NAT up to $ 1,100,000 upon achieving specified regulatory and sales milestones.

Finally, LMB must pay NAT a specified percentage of payments

received from any sub-licensees.

LMB must also

pay NAT up to $ 1,100,000 upon achieving specified regulatory and sales milestones.

Finally, LMB must pay NAT a specified percentage of

payments received from any sub-licensees.

Unless earlier terminated by NAT, based on the

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or expressly abandoned.

Patent and Technology License Agreement

On January 2, 2019, we entered into a patent and

technology license agreement with the Board of Regents of the University of Texas System on behalf of the University of Texas M.

Cancer Center (“Licensor”), whereby we in-licensed exclusive worldwide rights to the patented technology for any and all uses

relating to breast implants.

We intend to develop a liquefying gel-based wrap containing minocycline and rifampin for the reduction

of infections associated with breast implants following breast reconstructive surgeries (“Mino-Wrap”).

We are required to

use commercially reasonable efforts to commercialize Mino-Wrap under several regulatory scenarios and achieve milestones associated with

these regulatory options leading to an approval from the U.S.

Food and Drug Administration (the “FDA”).

Under the license agreement, we paid an annual

maintenance fee of $ 75,000 and $ 60,000 in January 2023 and 2022, respectively.

The annual maintenance fee increases by $ 15,000 per year

up to a maximum of $ 90,000 and ceases on the first sale of product.

We also must pay up to an aggregate of $ 2.1 million in milestone payments,

contingent on the achievement of various regulatory and commercial milestones.

Under the terms of the license agreement, we also must

pay a royalty of mid- to upper-single digit percentages of net sales, depending on the amount of annual sales, and subject to downward

adjustment to lower- to mid-single digit percentages in the event there is no valid patent for the product in the United States at the

time of sale.

After the first sale of product, we will owe an annual minimum royalty payment of $ 100,000 that will increase annually by

$ 25,000 for the duration of the term.

We will be responsible for all patent expenses incurred by Licensor for the term of the agreement

although Licensor is responsible for filing, prosecution, and maintenance of all patents.

The agreement expires on the later of the expiration

of the patents or January 2, 2034.

The Company terminated the Mino-Wrap License Agreement

in December 2024.

License Agreement with Eterna

On October 6, 2020, our subsidiary, NoveCite,

signed an exclusive license agreement for a novel cellular therapy for acute respiratory distress syndrome (ARDS) with a subsidiary of

Novellus, Inc.

(“Novellus”).

Upon execution of the agreement, we paid $ 5,000,000 to Novellus, which was charged to research

and development expense during the year ended September 30, 2021, and issued Novellus shares of NoveCite’s common stock representing

25 % of the outstanding equity.

We own the other 75 % of NoveCite’s outstanding equity.

Pursuant to the terms of the original stock

subscription agreement, if NoveCite issued additional equity, subject to certain exceptions, NoveCite had to maintain Novellus’s

ownership at 25 % by issuing additional shares to Novellus.

On October 6, 2020, NoveCite, entered into a

license agreement with Novellus Therapeutics Limited (“Novellus”), whereby NoveCite acquired an exclusive, worldwide license,

with the right to sublicense, develop and commercialize a stem cell therapy based on the Novellus’s patented technology for the

treatment of acute pneumonitis of any etiology in which inflammation is a major agent in humans.

Upon execution of the license agreement,

NoveCite, paid an upfront payment of $ 5,000,000 to Novellus, which was charged to research and development expense during the year ended

September 30, 2021, and issued to Novellus shares of NoveCite’s common stock representing 25 % of the outstanding equity.

the other 75 % of NoveCite’s outstanding equity.

Pursuant to the terms of the original stock subscription agreement, if NoveCite

issued additional equity, subject to certain exceptions, NoveCite had to maintain Novellus’s ownership at 25 % by issuing additional

shares to Novellus.

In July 2021, Novellus was acquired by Brooklyn

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(“Brooklyn”).

In connection with that transaction, the stock subscription agreement was amended to

assign to Brooklyn all of Novellus’s right, title, and interest in the stock subscription agreement and delete the anti-dilution

protection and replace it with a right of first refusal whereby Brooklyn will have the right to purchase all or a portion of the securities

that NoveCite intends to sell or in the alternative, at the option of NoveCite, Brooklyn may purchase that amount of the securities proposed

to be sold by NoveCite to allow Brooklyn to maintain its then percentage ownership.

In October 2022, Brooklyn changed its name to Eterna

Therapeutics Inc.

Citius is responsible for the operational activities

of NoveCite and bears all costs necessary to operate NoveCite.

Citius’s officers are also the officers of NoveCite and oversee the

business strategy and operations of NoveCite.

In this transaction, the NoveCite license was assumed by Brooklyn with all original

terms and conditions.

The stock subscription agreement was amended to assign to Brooklyn all of Novellus’s rights and delete the

anti-dilution protection and replace it with a right of first refusal whereby Brooklyn will have the right to purchase all or a portion

of the securities that NoveCite intends to sell or in the alternative, at the option of NoveCite, Brooklyn may purchase that amount of

the securities proposed to be sold by NoveCite to allow Brooklyn to maintain its then percentage ownership.

In October 2022, Brooklyn

changed its name to Eterna Therapeutics Inc.

We are responsible for the operational activities

of NoveCite and bear all costs necessary to operate NoveCite.

Our officers are also the officers of NoveCite and oversee the business

strategy and operations of NoveCite.

As such, NoveCite is accounted for as a consolidated subsidiary with a noncontrolling interest.

Eterna has no contractual rights in the profits

or obligations to share in the losses of NoveCite, and the Company has not allocated any losses to the noncontrolling interest.

NoveCite is obligated to pay Eterna up to $ 51,000,000

upon the achievement of various regulatory and developmental milestones.

NoveCite also must pay a royalty equal to low double-digit percentages

of net sales, commencing upon the sale of a licensed product.

This royalty is subject to downward adjustment to an upper-single digit

percentage of net sales in any country in the event of the expiration of the last valid patent claim or if no valid patent claim exists

in that country.

The royalty will end on the earlier of (i) date on which a biosimilar product is first marketed, sold, or distributed

in the applicable country or (ii) the 10-year anniversary of the date of expiration of the last-to-expire valid patent claim in that country.

In the case of a country where no licensed patent ever exists, the royalty will end on the later of (i) the date of expiry of such licensed

product’s regulatory exclusivity and (ii) the 10-year anniversary of the date of the first commercial sale of the licensed product

in the applicable country.

In addition, NoveCite will pay to Eterna an amount equal to a mid-twenties percentage of any sublicensee fees

Under the terms of the license agreement, if Eterna

receives any revenue involving the original cell line included in the licensed technology, then Eterna shall remit to NoveCite 50 % of

such revenue.

or obligations to share in the losses of NoveCite, and we have not allocated any losses to the noncontrolling interest.

Under the license agreement, NoveCite is obligated

to pay Eterna up to an aggregate of $ 51,000,000 in regulatory and developmental milestone payments.

NoveCite also must pay a royalty

equal to a mid-teens percentage of net sales, commencing upon the first commercial sale of a licensed product.

This royalty is subject

to downward adjustment on a product-by-product and country-by-country basis to a mid-single digit percentage (within a range of 4 % to

8 %) of net sales in any country in the event of the expiration of the last valid patent claim or if no valid patent claim exists in that

The royalty will end on the earlier of (i) date on which a biosimilar product is first marketed, sold, or distributed by Eterna

or any third party in the applicable country or (ii) the 10-year anniversary of the date of expiration of the last-to-expire valid patent

claim in that country.

In the case of a country where no licensed patent ever exists, the royalty will end on the later of (i) the date

of expiry of such licensed product’s regulatory exclusivity and (ii) the 10-year anniversary of the date of the first commercial

sale of the licensed product in the applicable country.

In addition, NoveCite will pay to Eterna an amount equal to a mid-twenties percentage

of any sublicensee fees it receives.

Under the terms of the license agreement, in

the event that Eterna receives any revenue involving the original cell line included in the licensed technology, then Eterna shall remit

to NoveCite 50 % of such revenue.

The term of the license agreement continue on

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prosecuting, and maintaining all patent applications and patents included in the licensed patents in the territory, provided however,

that if Eterna decides that it is not interested in maintaining a particular licensed patent or in preparing, filing, or prosecuting a

licensed patent, NoveCite will have the right, but not the obligation, to assume such responsibilities in the territory at NoveCite’s

that if Eterna decides that it is not interested in maintaining a particular licensed patent or in preparing, filing, or prosecuting

a licensed patent, NoveCite will have the right, but not the obligation, to assume such responsibilities in the territory at NoveCite’s

sole cost and expense.

License Agreement with Eisai

In September 2021, the Company entered into an

asset purchase agreement with Dr.

In September 2021, we

entered into an asset purchase agreement with Dr.

Reddy’s Laboratories SA, a subsidiary of Dr.

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Reddy’s”) and a license agreement with Eisai Co., Ltd.

(“Eisai”) to acquire an exclusive license of E7777 (denileukin

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

We have obtained the trade

name of LYMPHIR for E7777.

Citius Pharma assigned these agreements to Citius Oncology effective April 1, 2022.

(“Eisai”) to acquire an exclusive

license of E7777 (denileukin diftitox), an oncology immunotherapy for the treatment of CTCL, a rare form of non-Hodgkin lymphoma.

renamed E7777 as I/ONTAK and also obtained the trade name of LYMPHIR for the product.

We assigned these agreements to Citius Oncology

effective April 1, 2022 and received a BLA approval from the FDA for LYMPHIR in August 2024.

Under the terms of these

agreements, we 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 retained 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 and Asia.

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, 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.

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.

Under the license agreement, Eisai is to receive

a $5.9 million development milestone payment upon initial approval and additional commercial milestone payments related to the achievement

of net product sales thresholds (which increases to $6.9 million in the event we have exercised our option to add India to the licensed

territory prior to FDA approval) and an aggregate of up to $22 million related to the achievement of net product sales thresholds.

also were required to reimburse Eisai for up to $2.65 million of its costs to complete the ongoing Phase 3 pivotal clinical trial for

LYMPHIR for the CTCL indication and reimburse Eisai for all reasonable costs associated with the preparation of a Biologics License Application

(“BLA”) for LYMPHIR.

Eisai was responsible for completing the CTCL clinical trial, and chemistry, manufacturing, and controls

(CMC) activities through the filing of a BLA for LYMPHIR with the FDA.

The BLA was filed with the FDA on September 27, 2022.

be responsible for development costs associated with potential additional indications.

Reddy’s exclusive license for E7777 from Eisai and other related assets (which are now owned by Citius

The exclusive license rights, through Citius Oncology, include rights to develop and commercialize E7777 in all markets except

for Japan and certain parts of Asia.

Eisai retains exclusive development and marketing rights for the agent in Japan, China, Korea, Taiwan,

Hong Kong, Macau, Indonesia, Thailand, Malaysia, Brunei, Singapore, India, Pakistan, Sri Lanka, Philippines, Vietnam, Myanmar, Cambodia,

Laos, Afghanistan, Bangladesh, Bhutan, Nepal, Mongolia, and Papua New Guinea.

Reddy’s a $ 40 million upfront payment,

which represents the acquisition date fair value of the in-process research and development acquired.

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.

Citius Oncology 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.

Citius Oncology 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.

Citius Pharma is a guarantor of Citius Oncology’s payment

obligations under these agreements.

At the time of the FDA

approval for LYMPHIR, a $ 27.5 million milestone became payable to Dr.

Reddy’s, of which a balance of $ 19.75 million included in

license fee payable, remained due as of September 30, 2025.

After discussions, Dr.

Reddy’s agreed to a partial deferral without

penalty of this milestone payment.

During the years ended September 30, 2025 and 2024, we paid $ 2,750,000 and $ 5,000,000 , respectively,

against the outstanding milestone fee.

At the time of the FDA

approval for LYMPHIR, a $ 5.9 million milestone became payable to Eisai, of which a balance of $ 2.9 million included in license fee payable,

remained due as of September 30, 2025.

During the year ended September 30, 2025, we paid $ 3,000,000 against the outstanding milestone

Eisai is to receive 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 Oncology was o required to reimburse Eisai for

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

costs associated with the preparation of a Biologics License Application (“BLA”) for LYMPHIR.

Eisai was responsible for completing

the CTCL clinical trial, and chemistry, manufacturing, and controls (“CMC”) activities through the filing of the BLA with

The BLA was approved by the FDA on August 8, 2024.

We are responsible for development costs associated with potential additional

On March 28, 2025, Citius

Oncology and Eisai entered into a letter agreement that amended the license agreement to provide for a payment schedule to Eisai for

the milestone payment and certain unpaid invoices.

We agreed to pay Eisai on or before July 15, 2025, an aggregate amount of $ 2,535,318

and thereafter on the 15th of each of the next four months to pay Eisai $ 2,350,000 and make a final payment of $ 2,197,892 to Eisai on

or before December 15, 2025, in each case with interest on each obligation from its original due date through the date of actual payment

under the letter agreement at the rate of 2 % per annum.

During the year ended September 30, 2025, we recorded $ 218,032 in interest expense

under the agreement.

The parties released each other from any and all claims, losses, damages, costs and expenses that arise from or

related to our failure to pay the milestone payment or the other incurred costs under the license agreement except for any claims arising

out of a breach of the letter agreement.

All other terms of the license agreement remain in full force and effect.

During the year ended

September 30, 2025 we paid $ 3,000,000 of the development milestone and the balance of $ 2,900,000 is included in license fee payable at

September 30, 2025.

On July 21, 2025, we made a payment to Eisai of $1,616,522 for other invoices and accumulated interest associated

with the letter agreement.

The term of the license

agreement will continue until (i) March 30, 2026, if there has not been a commercial sale of a licensed product in the territory, or (ii)

if there has been a first commercial sale of a licensed product in the territory by March 30.

2026, the 10-year anniversary of the first

if there has been a first commercial sale of a licensed product in the territory by March 30, 2026, 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.

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 asset

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, (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.

On July 29, 2023, we received a Complete Response

Letter, (“CRL”) from the FDA regarding the BLA seeking approval for LYMPHIR.

The FDA has required that we incorporate enhanced

product testing, and additional controls agreed to with the FDA during the market application review.

The FDA raised no concerns relating

to the safety and efficacy clinical data package.

On September 8, 2023,

we announced that the FDA agreed with our plans to address the requirements outlined in the CRL.

The guidance from the FDA provides a

path for completing the necessary activities to support the resubmission of the BLA.

No additional clinical efficacy or safety trials

have been requested by FDA for the resubmission.

The Company remediated

the issues raised in the CRL by the FDA and received a BLA approval in August 2024.

We expect the first commercial sale to occur in the first quarter of 2026.

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.

Under the purchase agreement

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;

the launch of LYMPHIR in December 2025 satisfied this requirement in the U.S.

As part of the definitive

agreement with Dr.

Reddy’s, Citius Pharmaceuticals acquired method of use patents in which LYMPHIR is administered in combination

with the programmed cell death protein 1 (“PD-1”) pathway inhibitor drug class.

PD-1 plays a vital role in inhibiting immune

responses and promoting self-tolerance through modulating the activity of T-cells, activating apoptosis of antigen-specific T cells and

inhibiting apoptosis of regulatory T cells.

Reddy’s, we acquired method of use patents in which LYMPHIR is administered in combination with the programmed

cell death protein 1 (“PD-1”) pathway inhibitor drug class.

PD-1 plays a vital role in inhibiting immune responses and promoting

self-tolerance through modulating the activity of T-cells, activating apoptosis of antigen-specific T cells and inhibiting apoptosis

of regulatory T cells.

The following patents

were acquired and subsequently transferred to Citius Oncology, Inc.:

were acquired and subsequently transferred to Citius Oncology:

US Provisional Application

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published as WO 2022/043863 A1 on March 3, 2022, entitled, Combination for Use in Methods of Treating Cancer.

Upon FDA approval of

Lymphir in August 2024, Citius Oncology was subject to approval milestone fees totaling $ 33.7 million.

Citius Oncology paid $ 5.0 million

prior to year end and the remaining balance is reflected as a License Payable on the balance sheet.

The $ 33.7 million was recorded as

in-process research and development asset and will be subject to amortization as further discussed in Note 3.

COMMON STOCK, STOCK OPTIONS AND WARRANTS

NOTE PAYABLE AND ADVANCE FROM EMPLOYEE

On June 2, 2025, The Company borrowed $ 1,000,000

from an unrelated lender.

The note payable is due in full on December 2, 2025 with interest at 15 % compounded monthly.

Leonard Mazur

(Chairman and Chief Executive Officer of the Company) personally guaranteed repayment of the note.

Interest expense for the year ended

September 30, 2025 was $ 49,750 .

On May 28, 2025, an employee provided a $ 300,000

non-interest-bearing advance to the Company.

On June 5, 2025, the Company repaid the employee in full.

COMMON STOCK, STOCK OPTIONS, RESTRICTED

STOCK AWARDS, AND WARRANTS

Authorized Common Stock and Reverse Stock

We filed a Certificate of Change with the Secretary

of State of the State of Nevada to (i) effect a 1-for-25 reverse stock split of our issued and outstanding shares of common stock, and

(ii) decrease the number of total authorized shares of common stock from 400,000,000 shares to 16,000,000 shares.

The reverse stock split

was intended to regain compliance with the minimum bid price requirement of $ 1.00 per share of common stock for continued listing on

the Nasdaq Capital Market.

The reverse stock split became effective on November 25, 2024, and our common stock began trading on a reverse

stock split-adjusted basis on the Nasdaq Capital Market on November 26, 2024.

All share amounts have been retroactively adjusted to reflect

Series A Preferred Stock and Authorized

On April 17, 2025, we entered into an agreement

with Leonard Mazur (Chairman and Chief Executive Officer of the Company), pursuant to which we sold one share of Series A Preferred Stock,

par value $ 0.001 per share for $ 100 to Mr.

The Series A Preferred Stock was sold in connection with the June 9, 2025 special meeting

of the stockholders for the purpose of approving an amendment to our Articles of Incorporation, as amended, to increase the number of

shares of our authorized common stock from 16,000,000 to 250,000,000 .

Our stockholders approved the authorized share increase on June

On April 17, 2025, we filed a certificate of

designation with the Nevada Secretary of State, designating the powers, rights, privileges and restrictions of the Series A Preferred

The certificate provides that each share of Series A Preferred Stock will have 1,000,000,000 votes and will vote together with

the outstanding shares of common stock as a single class, exclusively with respect to the authorized share increase proposal and shall

not be entitled to vote on any other matter.

The Series A Preferred Stock will be voted on the authorized share increase in the same

proportion as the aggregate votes cast by holders of common stock “for” and “against” the proposal.

A Preferred Stock otherwise has no other voting rights, including in respect of any other proposal.

The voting power attributable to

the Series A Preferred Stock will be disregarded for purposes of determining whether a quorum is present at the special meeting, and

the establishment of a quorum at the special meeting will be determined only with reference to the common stock.

Pursuant to its terms, on June 9, 2025, the outstanding

share of Series A Preferred Stock was redeemed automatically for $ 100 after we published the final results of the stockholder vote on

the authorized stock increase.

Common Stock Issued for Services

On October 10, 2023, the Company issued 4,351

shares of common stock for media, and public and investor relations services and expensed the $ 76,146 fair value of the common stock issued.

On January 17, 2024, the Company issued 5,128

shares of common stock for general and business development advisory services and expensed the $ 98,079 fair value of the common stock

On April 25, 2024, the Company issued 6,000 shares

of common stock for financial, general and business development advisory services and expensed the $ 109,950 fair value of the common stock

Common Stock Offering

On April 30, 2024, the Company closed a registered

direct offering of 857,143 common shares and warrants to purchase up to 857,143 common shares, at a purchase price of $ 17.50 per share

On October 10, 2023, we issued 4,351 shares of

common stock for media, and public and investor relations services and expensed the $ 76,146 fair value of the common stock issued.

On January 17, 2024, we issued 5,128 shares of

common stock for general and business development advisory services and expensed the $ 98,079 fair value of the common stock issued.

On April 25, 2024, we issued 6,000 shares of

common stock for financial, general and business development advisory services and expensed the $ 109,950 fair value of the common stock

On July 1, 2025, we issued 20,000 shares of common

stock for media, and public and investor relations services and expensed the $ 26,600 fair value of the common stock issued.

Common Stock Offerings

On April 30, 2024 , Citius Pharma

sold 857,143 shares of common stock and warrants to purchase 857,143 shares of common stock, at a purchase price of $ 17.50 per share

and accompanying warrant for gross proceeds of $ 15,000,002 .

The warrants have an exercise price of $ 18.75 per share, are exercisable six

months from the date of issuance, and expire on October 30, 2029 .

The estimated fair value of the warrants issued to the investors was

approximately $ 11,206,000 .

The warrants have an exercise price of $ 18.75 per share, are exercisable

six months after issuance, and expire on October 30, 2029.

The estimated fair value of the warrants issued to the investors was approximately

$ 11,206,000 .

Net proceeds were $ 13,718,951 after deducting

the placement agent fee of $ 1,050,000 , placement agent expenses of $ 135,000 , legal fees of $ 80,101 , and other offering expenses of $ 15,950 .

The Company also issued 60,000 warrants to the placement agent at an exercise price of $ 21.875 per share, that are exercisable six months

from the date of issuance and expire on April 25, 2029 .

We also issued 60,000 warrants to the placement agent at an exercise price of $ 21.875 per share, that are exercisable six months from

the date of issuance and expire on April 25, 2029.

The estimated fair value of the warrants issued to the placement agent was approximately

At the Market Offering Agreement

On August 12, 2024, the Company entered into

an agreement with HC Wainwright, (the “Manager’) to issue and sell through or to the Manager, as sales agent and/or

principal, from time to time during the term of this Agreement the Company’s common shares.

The Company completed the

following sales of its common shares through the Manager in September.

1) Net proceeds after deducting the broker fee and trading expenses but before offering expenses.

There were additional offering expenses of approximately

$ 162,000 in placement agent expenses and legal fees for net proceeds after expenses of $ 84,735 .

Stock Option Plans

Pursuant to our 2014 Stock Incentive Plan, we

reserved 34,667 shares of common stock.

As of September 30, 2024, there were options to purchase 18,484 shares outstanding, options to

purchase 2,318 shares were exercised, options to purchase 13,865 shares expired or were forfeited, and no shares were available for future

Pursuant to our 2018 Omnibus Stock Incentive Plan,

we reserved 80,000 shares of common stock.

As of September 30, 2024, there were options to purchase 67,200 shares outstanding, options

to purchase 4,667 shares were exercised, options to purchase 3,733 shares expired or were forfeited, and the remaining 4,400 shares were

transferred to the 2020 Omnibus Stock Incentive Plan (“2020 Plan”).

Pursuant to our 2020 Plan, we reserved 124,400

On November 15, 2024 , Citius Pharma

sold 480,000 shares of common stock and warrants to purchase 480,000 shares of common stock.

Gross proceeds were $ 3,000,000 and net proceeds

were $ 2,574,051 after deducting fees and expenses.

The shares and warrants were sold at a combined offering price of $ 6.25 .

immediately exercisable warrants have an exercise price of $ 6.25 per share and expire on November 19, 2029 .

The estimated fair value

of the warrants issued to the investors was approximately $ 1,575,000 .

We paid the placement agent 7 % of the gross proceeds

and granted the placement agent immediately exercisable warrants to purchase 33,600 shares of common stock at an exercise price is $ 7.8125

per share which expire on November 15, 2029 .

The estimated fair value of the warrants issued to the placement agent was approximately

On January 7, 2025 , Citius Pharma

sold 743,496 shares of common stock and warrants to purchase 743,496 shares of common stock.

Gross proceeds were approximately

$ 3,000,000 and net proceeds were $ 2,657,167 after deducting fees and expenses.

The shares and warrants were sold at a combined

offering price of $ 4.035 .

The immediately exercisable warrants have an exercise price of $ 3.91 per share and expire on January

The estimated fair value of the warrants issued to the investors was approximately $ 2,091,000 .

We paid the placement agent 7 % of the gross

proceeds and granted the placement agent immediately exercisable warrants, to purchase 52,045 shares of common stock at $ 5.0438 per

share which expire on January 7, 2030 .

The estimated fair value of the warrants issued to the placement agent was approximately $ 138,000 .

On April 1, 2025 , Citius Pharma

sold 465,000 shares of common stock, and pre-funded warrants to purchase 1,274,131 shares of common stock at an offering price of $ 1.15

and $ 1.1499 .

Gross proceeds were $ 1,999,873 and net proceeds were $ 1,743,757 after deducting fees and expenses.

The immediately exercisable

pre-funded warrants have an exercise price of $ 0.0001 per share and do not expire.

All 1,274,131 of the pre-funded warrants were

exercised during the year ended September 30, 2025.

We paid the placement agent 7 % of the gross

proceeds and granted the placement agent warrants to purchase 121,739 shares of common stock at $ 1.4375 per share which

are exercisable commencing on October 2, 2025 and expire on April 1, 2030.

The estimated fair value of the warrants issued to the placement

agent was approximately $ 100,000 .

On June 11, 2025 , Citius Pharma

sold 540,000 shares of common stock, and pre-funded warrants to purchase 4,380,000 shares of common stock at offering prices of $ 1.22

and $ 1.2199 , respectively, along with immediately exercisable two-year warrants to purchase 9,840,000 shares of common stock at $ 1.00

Gross proceeds were $ 6,001,962 and net proceeds of the offering were $ 5,430,836 after deducting fees and expenses.

pre-funded warrants are exercisable immediately at $ 0.0001 per share and do not expire.

During the year ended September 30, 2025 all

4,380,000 of the pre-funded warrants were exercised.

The estimated fair value of the 9,840,000 warrants issued to the investors was approximately

$ 4,867,000 .

We paid the placement agent a fee of $ 420,168

and other fees and expenses were $ 150,958 .

In addition, we granted placement agent warrants to purchase 344,400 shares of common stock

at an exercise price equal to $ 1.525 per share.

The warrants are exercisable six months after issuance and expire after five years.

the expiration date, any warrants outstanding will be exercised via cashless exercise.

The estimated fair value of the warrants issued

to the placement agent was approximately $ 222,000 .

On July 17, 2025 , Citius Oncology

sold 6,818,182 shares of common stock and warrants to purchase 6,818,182 shares of common stock.

The shares and warrants were sold at

a per unit price of $ 1.32 .

The immediately exercisable five-year warrants have an exercise price of $ 1.32 per share.

Gross proceeds from

the offering were approximately $ 9.0 million and net proceeds were $ 7,546,988 , after deducting placement agent fees and other offering

The estimated fair value of the warrants issued to the investors was approximately $ 8,197,000 .

Citius Oncology paid the placement agent a fee

of 7.0 % of the gross proceeds and expenses of $ 125,000 , and issued the placement agent warrants to purchase up to 272,727 shares of common

stock at an exercise price of $ 1.65 per share.

The warrants are exercisable commencing on January 17, 2026 and expire on July 17, 2030.

Citius Oncology also paid an additional 7.0 % fee to a prior placement agent and issued the prior placement agent warrants to purchase

up to 477,273 shares of common stock at an exercise price of $ 1.65 per share.

The placement agent warrants are exercisable commencing

on August 17, 2025 and expire on July 17, 2030.

The estimated fair value of the warrants issued to the placement agents was approximately

On September 10, 2025 , Citius Oncology

sold 5,142,858 shares of common stock and warrants to purchase 5,142,858 shares of common stock.

The shares and warrants were sold at

a per unit price of $ 1.75 .

The warrants are exercisable beginning on March 10, 2026 and expire on March 10, 2031 at an exercise price

of $ 1.84 per share.

Gross proceeds from the offering were approximately $ 9.0 million and net proceeds were $ 7,619,854 , after deducting

placement agent fees and other offering expenses.

The estimated fair value of the warrants issued to the investors was approximately

$ 6,995,000 .

Citius Oncology paid the placement agent a fee

of 7.0 % of the gross proceeds and expenses of $ 125,000 .

Additionally, Citius Oncology issued the placement agent warrants to purchase

up to 205,714 shares of common stock at an exercise price of $ 1.92 per share.

The warrants are exercisable commencing on March 10, 2026

and expire on March 10, 2031.

We also paid an additional 7.0 % fee to a prior placement agent and issued the prior placement agent warrants

to purchase up to 360,000 shares of common stock at an exercise price of $ 2.1875 per share.

The placement agent warrants are exercisable

commencing on March 10, 2026 and expire on March 10, 2031.

The estimated fair value of the warrants issued to the placement agents was

approximately $ 717,000 .

Citius Pharma At the Market Offering Agreement

On August 12, 2024, we entered into a sales agreement,

to sell, from time to time during the term of the agreement our shares of common stock.

During the year ended September 30, 2024, Citius

Pharma sold 18,168 shares for gross proceeds of $ 252,140 .

Net proceeds after deducting broker fees and other offering expenses were $ 84,735 .

During the three months ended March 31, 2025,

Citius Pharma sold 289,910 shares for gross proceeds of $ 839,468 .

Net proceeds after deducting broker fees and other offering expenses

were $ 808,640 .

During the three months ended June 30, 2025,

Citius Pharma sold 2,185,249 shares for gross proceeds of $ 3,471,866 .

Net proceeds after deducting broker fees and other offering expenses

were $ 3,294,446 .

During the three months ended September 30, 2025,

Citius Pharma sold 442,715 shares for gross proceeds of $ 657,284 .

Net proceeds after deducting broker fees and other offering expenses

were $ 626,843 .

Citius Pharma Stock Option Plans

Under our 2014 Stock Plan, we reserved 34,667

shares of common stock.

As of September 30, 2024, there were options to purchase 66,000 shares outstanding, options to purchase 8,800

shares expired or were forfeited, and the remaining 49,600 shares were transferred to the 2021 Omnibus Stock Incentive Plan (“2021

Stock Plan”).

Pursuant to our 2021 Stock Plan, we reserved 349,600

As of September 30, 2025, there were options to purchase 16,910 shares outstanding and no shares were available

for future grants.

Under our 2018 Stock Plan, we reserved 80,000

shares of common stock.

As of September 30, 2024, options to purchase 330,000 shares were outstanding, options to purchase 18,200 shares

expired or were forfeited, and the remaining 1,400 shares were transferred to the 2023 Omnibus Stock Incentive Plan (“2023 Stock

In November 2022, our Board approved the 2023

Stock Plan, subject to stockholder approval, which was received on February 7, 2023.

The 2023 Stock Plan has reserved for issuance 481,400

As of September 30, 2025, there were options to purchase 67,200 shares outstanding and no shares were available

for future grants.

Under our 2020 Stock Plan, we reserved 124,400

shares of common stock.

As of September 30, 2024, options to purchase 174,400 shares were outstanding, 4,000 shares were expired or forfeited

303,000 shares remain available for future grants.

The fair value of each stock option award is estimated

on the date of grant using the Black-Scholes option pricing model.

Volatility is estimated using the trading activity of our common stock.

As of September 30, 2025, there were options to purchase 66,000 shares outstanding and no shares available for

future grants.

Under our 2021 Stock Plan, we reserved 349,600

shares of common stock.

As of September 30, 2025, options to purchase 330,000 shares were outstanding and no shares reserved for future

Under our 2023 Stock Plan, we reserved for issuance

481,400 shares of common stock.

As of September 30, 2025, options to purchase 359,400 shares were outstanding, and 118,000 shares remain

available for future grants.

The fair value of each stock option award is

estimated on the date of grant using the Black-Scholes option pricing model.

Volatility is estimated using the trading activity of our

common stock.

The risk-free interest rate is based on the U.S.

Treasury yield curve in effect at the time of grant commensurate with the expected term

The expected term of stock options granted to employees and directors, all of which qualify as “plain vanilla,”

is based on the average of the contractual term (generally 10 years ) and the vesting period.

For non-employee options, the expected

term is the contractual term.

Treasury yield curve in effect at the time of grant commensurate with

the expected term assumption.

The expected term of stock options granted to employees and directors, all of which qualify as “plain

vanilla,” is based on the average of the contractual term (generally 10 years ) and the vesting period.

For non-employee options,

the expected term is the contractual term.

The following assumptions were used in determining

8 unchanged sentences

Expected volatility

A summary of option activity under the Citius

Pharma plans (excluding the NoveCite and Citius Oncology Stock Plans) is presented below:

A summary of option activity under our plans

(excluding the NoveCite and Citius Oncology Stock Plans) is presented below:

Shares Weighted-

2 unchanged sentences

Outstanding at September 30, 2024 656,084 $ 36.41 7.26 years $ 0.00

Granted 166,400 $ 17.50 9.04 years $ 0.00

Exercised ( 2,125 ) $ 0.38 $ 39,068

Granted 185,000 $ 9.50

Forfeited or expired ( 1,574 ) $ 242.80

5 unchanged sentences

to 36 months and have a term of 10 years.

The weighted average grant date fair value of

the options granted during the year ended September 30, 2024 was estimated at $ 13.38 per share.

All these options vest over terms of 12

to 36 months and have a term of 10 years.

At September 30, 2024, unrecognized total compensation

cost related to unvested awards under the Citius stock plans of $ 2,678,274 is expected to be recognized over a weighted average period

of 1.44 years.

At September 30, 2025, unrecognized total

compensation cost related to unvested awards under the Citius Pharma stock plans of $ 1,485,612 is expected to be recognized over a

weighted average period of 1.55 years.

NoveCite Stock Plan – Under

the NoveCite Stock Plan, we reserved 2,000,000 common shares of NoveCite.

As of September 30, 2024, there were options outstanding to

purchase 1,911,500 common shares of NoveCite and 88,500 common shares of NoveCite available for future grants.

the NoveCite Stock Plan, we reserved 2,000,000 shares of common stock of NoveCite.

As of September 30, 2025, there were options outstanding

to purchase 1,911,500 shares and 88,500 shares of common stock available for future grants.

During the year ended September 30, 2021, NoveCite

granted options to purchase 2,000,000 common shares to employees at a weighted average exercise price of $ 0.24 per share, of which options

to purchase 88,500 common shares were forfeited, and options to purchase 1,911,500 common shares were exercisable as of September 30,

These options vest over 36 months and have a term of 10 years.

The weighted average remaining contractual term of options outstanding

under the NoveCite Stock Plan is 6.39 years.

granted options to purchase 2,000,000 shares of common stock to employees at an exercise price of $ 0.24 per share, 88,500 shares were

forfeited, and options to purchase 1,911,500 shares were exercisable as of September 30, 2025.

These options vested over 36 months and

have a term of 10 years.

The weighted average remaining contractual term of options outstanding under the NoveCite Stock Plan is 5.39

No options were issued in fiscal years 2025 and 2024.

At September 30, 2024, there is no

remaining unrecognized total compensation cost related to unvested awards under the NoveCite Stock Plan.

At September 30, 2025, there is no remaining unrecognized total compensation

cost related to awards under the plan.

Citius Oncology Stock Plan - Under

the Citius Oncology Stock Plan, adopted on April 29, 2023, we reserved 15,000,000 common shares of Citius Oncology.

The Citius Oncology

Stock Plan provides incentives to employees, directors, and consultants through grants of options, SARs, dividend equivalent rights, restricted

stock, restricted stock units, or other rights.

the 2023 Citius Oncology Stock Plan, we reserved 15,000,000 shares of common stock of Citius Oncology.

On August 2, 2024, Citius Oncology

reserved 15,000,000 shares under the Citius Oncology 2024 Stock plan The Citius Oncology Stock Plans provide incentives to employees,

directors, and consultants through grants of options, SARs, dividend equivalent rights, restricted stock, restricted stock units, or

other rights.

As of September 30, 2025, options to purchase 18,100,000 shares were outstanding, restricted stock awards of 11,600,000

have not vested and 300,000 shares remain available for future grants.

The following assumptions were used in determining

1 unchanged sentence

Risk-free interest rate

4.08 - 4.18 %

Expected dividend yield

Expected term

5.50 - 6.50 years

Expected volatility

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Treasury yield curve in effect at the time of grant commensurate with the expected term assumption.

The expected term of stock

options granted to employees and directors, all of which qualify as “plain vanilla,” is based on the average of the contractual

term (generally 10 years ) and the vesting period.

The expected term of

stock options granted to employees and directors, all of which qualify as “plain vanilla,” is based on the average of the

contractual term (generally 10 years ) and the vesting period.

For non-employee options, the expected term is the contractual term.

A summary of option activity under the Citius Oncology plan is

presented below:

A summary of option activity under the Citius Oncology plan

is presented below:

Shares Weighted-

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Granted 5,750,000 1.07

Forfeited ( 400,000 )

Outstanding at September 30, 2025 18,100,000 $ 1.83 8.21 years $ 5,386,000

Exercisable at September 30, 2025 9,781,250 $ 2.02 7.94 years $ 1,136,500

The weighted average grant date fair value of

the Citius Oncology options granted during the year ended September 30, 2024 was estimated at $ 1.66 per share.

All these options vest

over terms of 12 to 36 months and have a term of 10 years.

At September 30, 2024, unrecognized total compensation cost related to unvested

awards under the Citius Oncology stock plan of $ 11,592,383 is expected to be recognized over a weighted average period of 1.77 years.

Stock-based compensation expense under all plans

for the years ended September 30, 2024 and 2023 was $ 11,839,678 (including $ 47,574 for the NoveCite plan and $ 7,498,817 for the Citius

Oncology plan) and $ 6,616,705 (including $ 130,382 for the NoveCite plan and $ 1,965,500 for the Citius Oncology plan), respectively.

The Company has reserved 2,945,337 shares of common

stock for the exercise of outstanding warrants.

On December 2, 2024, the Board of Directors granted

options to purchase 200,000 shares of common stock at an exercise price of $ 1.02 per share.

On December 12, 2024, the Board of Directors

granted options to purchase 5,550,000 shares of common stock at an exercise price of $ 1.07 per share.

The weighted average grant date

fair value of the options granted during the year ended September 30, 2025 was estimated at $ 0.80 per share.

All these options vest over

terms of 12 to 36 months and have a term of 10 years.

At September 30, 2025, unrecognized total compensation

cost related to unvested awards of $ 7,814,682 is expected to be recognized over a weighted average period of 1.23 years.

Citius Oncology Restricted Stock Awards

On September 19, 2025, the Board of Directors

granted restricted stock awards of 11,600,000 shares of common stock to employees and directors.

The restricted stock awards vest on

September 30, 2028.

The fair value of the common stock on the date of grant was $ 20,300,000 ($ 1.75 per share).

Stock-based compensation expense for restricted

stock awards for the year ended September 30, 2025 was $ 203,741 .

At September 30, 2025, unrecognized total compensation

cost related to unvested restricted stock awards under the stock plans of $ 20,096,259 is expected to be recognized over a weighted average

period of 2.97 years.

Stock-based compensation expense - under

all plans for the years ended September 30, 2025 and 2024 was $ 10,836,291 (including $ 8,116,678 for Citius Oncology options and $ 203,741

for Citius Oncology restricted stock awards) and $ 11,839,678 (including $ 47,574 for the NoveCite plan and $ 7,498,817 for the Citius Oncology

respectively.

Citius Pharmaceuticals Warrants

We reserved 14,479,372 shares of common stock

for the exercise of outstanding warrants.

The following table summarizes the warrants outstanding at September 30, 2025:

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August 2018 Offering Agent 39.84 7,576 August 8, 2026

April 2019 Registered Direct/Private Placement Investors 35.50 51,780 April 5, 2024

April 2019 Registered Direct/Private Placement Agent 48.28 9,605 April 5, 2024

September 2019 Offering Investors 19.25 111,732 September 27, 2026

September 2019 Offering Underwriter 27.97 7,774 September 27, 2026

February 2020 Exercise Agreement Placement Agent 31.88 5,555 August 19, 2025

May 2020 Registered Direct Offering Investors 25.00 66,824 November 18, 2025

May 2020 Registered Direct Offering Placement Agent 33.20 6,226 May 14, 2025

August 2020 Underwriter 32.81 8,079 August 10, 2025

January 2021 Registered Direct Offering Investors 30.78 123,648 July 27, 2026

January 2021 Registered Direct Offering Agent 40.44 14,065 July 27, 2026

May 2020 Offering Investors 25.00 66,824 November 18, 2025

January 2021 Offering Investors 30.78 123,648 July 27, 2026

January 2021 Offering Agent 40.44 14,065 July 27, 2026

February 2021 Offering Investors 42.50 823,211 February 19, 2026

February 2021 Offering Agent 47.03 100,256 February 19, 2026

May 2023 Registered Direct Offering Investors 37.50 500,000 May 8, 2028

May 2023 Registered Direct Offering Agent 37.50 35,000 May 3, 2028

April 2024 Registered Direct Offering Investors 18.75 857,143 October 30, 2029

April 2024 Registered Direct Offering Agent 21.875 60,000 April 25, 2029

On April 2, 2024, we extended the term by one

year to April 5, 2025, for 51,780 warrants for common stock with an exercise price of $ 35.50 per share and extended the term by one year

to April 5, 2025, for 9,605 warrants with an exercise price of $ 48.28 per share.

We recorded a deemed dividend of $ 321,559 based on the

excess of the fair value of the modified warrants over the fair value of the warrants before the modification, the effect of which was

an increase in the net loss attributable to common shareholders in the statement of operations for the year ended September 30, 2024.

On August 7, 2024, we extended the term by one

year to August 14, 2025, for 156,863 warrants for common stock with an exercise price of $ 28.75 per share and extended the term by one

year to August 8, 2025, for 7,576 warrants with an exercise price of $ 39.84 per share.

We recorded a deemed dividend of $ 375,511 based

on the excess of the fair value of the modified warrants over the fair value of the warrants before the modification, the effect of which

was an increase in the net loss attributable to common shareholders in the statement of operations

May 2023 Offering Investors 37.50 500,000 May 8, 2028

May 2023 Offering Agent 37.50 35,000 May 3, 2028

April 2024 Offering Investors 18.75 857,143 October 30, 2029

April 2024 Offering Agent 21.875 60,000 April 25, 2029

November 2024 Offering Investors 6.25 480,000 November 18, 2029

November 2024 Offering Agent 7.8125 33,600 November 15, 2029

January 2025 Offering Investors 3.91 743,496 January 8, 2030

January 2025 Offering Agent 5.0438 52,045 January 7, 2030

April 2025 Offering Agent 1.4375 121,739 April 1, 2030

June 2025 Offering Investor 1.00 9,840,000 June 11, 2027

June 2025 Offering Agent 1.525 344,400 June 11, 2027

On April 2, 2024, we extended the term to April

5, 2025, for 51,780 warrants with an exercise price of $ 35.50 per share and extended the term to April 5, 2025, for 9,605 warrants with

an exercise price of $ 48.28 per share.

We recorded a deemed dividend of $ 321,559 based on the excess of the fair value of the modified

warrants over the fair value of the warrants before the modification which increased the net loss attributable to common shareholders

for the year ended September 30, 2024.

On September 25, 2024, we extended the term by

one year to September 27, 2025, for 111,732 warrants for common stock with an exercise price of $ 19.25 per share and extended the term

by one year to September 27, 2025, for 7,774 warrants with an exercise price of $ 27.97 per share.

We recorded a deemed dividend of $ 350,241

based on the excess of the fair value of the modified warrants over the fair value of the warrants before the modification, the effect

of which was an increase in the net loss attributable to common shareholders in the statement of operations for the year ended September

On August 7, 2024, we extended the term to August

14, 2025, for 156,863 warrants with an exercise price of $ 28.75 per share and extended the term to August 8, 2025, for 7,576 warrants

with an exercise price of $ 39.84 per share.

We recorded a deemed dividend of $ 375,511 based on the excess of the fair value of the modified

warrants over the fair value of the warrants before the modification which increased the net loss attributable to common shareholders

for the year ended September 30, 2024.

On September 25, 2024, we extended the term to

September 27, 2025, for 111,732 warrants with an exercise price of $ 19.25 per share and extended the term to September 27, 2025, for

7,774 warrants with an exercise price of $ 27.97 per share.

We recorded a deemed dividend of $ 350,241 based on the excess of the fair

value of the modified warrants over the fair value of the warrants before the modification which increased the net loss attributable

to common shareholders for the year ended September 30, 2024.

On August 7, 2025, we extended the term to August

14, 2026 for 156,863 warrants with an exercise price of $ 28.75 per share and extended the term to August 8, 2026 for 7,577 warrants with

an exercise price of $ 39.84 per share.

On August 7, 2025, we also extended the term to September 27, 2026 for 111,732 warrants with an

exercise price of $ 19.25 per share and 7,774 warrants with an exercise price of $ 27.97 per share.

We did not record a deemed dividend

for the year ended September 30, 2025, as there was no increase in the fair value of the modified warrants over the fair value of the

warrants before the modification.

At September 30, 2025, the weighted average remaining

life of the outstanding warrants is 2.88 years, all warrants are exercisable, and there was no aggregate intrinsic value for the

life of the outstanding warrants is 2.02 years, all warrants are exercisable, and the aggregate intrinsic value of the warrants

outstanding was $ 2,361,600 .

Citius Oncology Warrants

We have reserved 13,276,754 shares of common

stock for the exercise of outstanding warrants.

The following table summarizes the warrants outstanding at September 30, 2025:

price Number Expiration Dates

July 2025 Offering Investors $ 1.32 6,818,182 July 17, 2030

July 2025 Offering Agent 1.65 272,727 July 17, 2030

July 2025 Prior Offering Agent 1.65 477,273 July 17, 2030

September 2025 Offering Investors 1.84 5,142,858 March 10, 2031

September 2025 Offering Agent 1.92 205,714 March 10, 2031

September 2025 Prior Offering Agent 2.1875 360,000 March 10, 2031

At September 30, 2025, the weighted average remaining

life of the outstanding warrants is 5.08 years, all warrants are exercisable except for the September 2025 Offering warrants which become

exercisable on March 10, 2026, and the aggregate intrinsic value of the warrants outstanding was $ 6,125,681 .

Citius Pharma Common Stock Reserved

A summary of common stock reserved for future

issuances by Citius Pharma excluding our subsidiaries as of September 30, 2025 is as follows:

Stock plan options outstanding

Stock plan shares available for future grants

Warrants outstanding

Common Stock Reserved

A summary of common stock reserved for future issuances by the Company

excluding all subsidiaries as of September 30, 2024 is as follows:

Citius Oncology Common Stock Reserved

A summary of common stock reserved for future

issuances by Citius Oncology as of September 30, 2025 is as follows:

Stock plan options outstanding

Restricted stock awards

Stock plan shares available for future grants

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RELATED PARTY TRANSACTIONS

On the following dates, we extended warrants held

by our Chairman and by our Executive Vice Chairman (see Note 5).

April 5, 2024

August 7, 2024

September 25, 2024

During the year ended September 30, 2024, Citius

Pharma extended warrants held by our Chairman and Executive Vice Chairman (see Note 6) for 51,780 warrants on April 5, 2024, 156,863

warrants on August 7, 2024 and 111,732 warrants on September 25, 2024.

During the year ended September 30, 2025, Citius Pharma extended

warrants held by our Chairman and Executive Vice Chairman (see Note 6) for 156,863 warrants and 111,732 warrants on August 7, 2025.

See also Note 10 for Merger transaction and transactions

consummated with our subsidiary to facilitate the Merger.

The Company is a party to a Shared Services Agreement

with Citius Oncology.

Under the terms of the agreement, the Company provides all executive, operational, financial, and administrative

support to Citius Oncology for a period of up to two (2) years.

The quarterly allocated expense to Citius Oncology by the Company is approximately

EMPLOYMENT AGREEMENTS

Citius Pharma is a party to a Shared Services

Agreement with Citius Oncology.

Under the terms of the agreement, the Citius Pharma provides all executive, operational, financial, and

administrative support to Citius Oncology for a period of up to two (2) years.

The quarterly allocated expense to Citius Oncology by

Citius Pharma is currently approximately $ 1,006,000 .

EMPLOYMENT AGREEMENTS

2 unchanged sentences

Upon expiration, the agreement automatically

renews for successive periods of one-year unless terminated pursuant to its terms.

Under the terms of the agreement, the Company is required

to pay base compensation plus incentives over the employment term plus severance benefits upon the occurrence of certain events as described

renews for successive periods of one-year unless terminated.

Under the terms of the agreement, we are required to pay base compensation

plus incentives over the employment term plus severance benefits upon the occurrence of certain events as described in the agreement.

On November 27, 2017, we entered into an employment

agreement with Jaime Bartushak to serve as our Chief Financial Officer and Principal Financial Officer..

The agreement requires us to

pay base compensation plus incentives over the employment term plus severance benefits upon the occurrence of certain events as described

in the agreement.

On November 27, 2017, the Company entered into

an employment agreement with Jaime Bartushak to serve as the Chief Financial Officer and Principal Financial Officer of the Company.

agreement requires the Company to pay base compensation plus incentives over the employment term plus severance benefits upon the occurrence

of certain events as described in the agreement.

On April 12, 2022, we entered into an 18-month

employment agreement with Myron Holubiak to serve as Executive Vice Chairman.

Upon expiration, the agreement automatically renews for

successive periods of one-year unless terminated pursuant to its terms.

The agreement requires the Company to pay base compensation plus

incentives over the employment term plus severance benefits upon the occurrence of certain events as described in the agreement.

On April 12, 2022, we entered into an employment

agreement with Myron Holubiak to serve as Executive Vice Chairman.

Upon expiration, the agreement automatically renews for successive

periods of one-year unless terminated.

The agreement requires us to pay base compensation plus incentives over the employment term plus

severance benefits upon the occurrence of certain events as described in the agreement.

On July 13, 2020, we entered into an employment

1 unchanged sentence

to serve as Executive Vice President, Chief Medical Officer.

The agreement requires the Company to

pay base compensation plus incentives over the employment term plus severance benefits upon the occurrence of certain events as described

in the agreement.

The agreement requires us to pay base

compensation plus incentives over the employment term plus severance benefits upon the occurrence of certain events as described in the

The Company has employment agreements with certain

other employees that require the Company to pay base compensation plus incentives over the employment term plus severance benefits upon

the occurrence of certain events as described in the agreement.

other employees that require us to pay base compensation plus incentives over the employment term plus severance benefits upon the occurrence

of certain events as described in the agreement.

COMMITMENTS AND CONTINGENCIES

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lease for office space in Cranford, NJ.

We pay our proportionate share of real estate taxes and operating expenses in excess of the base

year expenses.

These costs are variable lease payments and are not included in the determination of the lease’s right-of-use asset

or lease liability.

On February 28, 2025 we extended the lease to February 28, 2030.

A right-of-use asset of $ 786,697

was recognized as a non-cash asset and liability on the amendment date.

We pay our proportionate share of real estate taxes and operating

expenses in excess of the base year expenses.

These costs are variable lease payments and are not included in the determination of the

lease’s right-of-use asset or lease liability.

We identified and assessed the following significant

assumptions in recognizing its right-of-use assets and corresponding lease liabilities:

As the Cranford lease does not provide an implicit rate, the Company estimated the incremental borrowing rate in calculating the present value of the lease payments.

The Company has estimated its incremental borrowing rate based on the remaining lease term as of the adoption date.

Since the Company elected to account for each lease component and its associated non-lease components as a single combined component, all contract consideration was allocated to the combined lease component.

The expected lease terms include noncancelable lease periods.

assumptions in recognizing our right-of-use assets and corresponding lease liabilities:

As the Cranford lease does

not provide an implicit rate, we estimated the incremental borrowing rate in calculating the present value of the lease payments.

We estimated the incremental borrowing rate based on the remaining lease term as of the amendment date.

Since we elected to account

for each lease component and its associated non-lease components as a single combined component, all contract consideration was allocated

to the combined lease component.

The expected lease terms

include noncancelable lease periods.

The elements of lease expense are as follows:

Lease cost Year Ended

September 30,

2024 Year Ended

September 30,

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Other information

Weighted-average remaining lease term - operating leases 1.1 Years 2.1 Years

Weighted-average remaining lease term - operating leases

Weighted-average discount rate - operating leases

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Commercial Manufacturing Contracts

The Company has entered into an agreement with

a Contract Manufacturing Organization for the manufacture and supply of drug substance.

The agreement runs through calendar 2026, with

an automatic renewal for a subsequent 4-year term.

Under this agreement, the Company is obligated to purchase minimum annual quantities

of batches at a set price per batch, subject to annual increases.

Additionally, the Company is required to pay an annual service fee of

The agreement also includes provisions for potential price increases

based on increases in the manufacturer’s operating expenses or industry indices, as well as significant termination fees

and obligations.

As of September 30, 2024, the total minimum purchase commitment under this agreement was approximately

$ 17.3 million consisting of payments of $ 11.9 million and $ 5.4 million for 2025 and 2026 respectively.

As of September 30, 2024, the Company also has commercial supply agreements

with two other vendors for the completion and packaging of finished drug products.

Minimum purchase commitments under these two agreements

amount to approximately $ 4.5 million consisting of purchase commitment obligations of $ 2.9 million in 2025 and $ 1.6 million in 2026.

We entered into an agreement with a Contract

Manufacturing Organization for the manufacture and supply of drug substance.

The agreement runs through calendar 2026, with an automatic

renewal for a subsequent 4-year term.

Under this agreement, we are obligated to purchase minimum annual quantities of batches at a set

price per batch, subject to annual increases.

Additionally, we are required to pay an annual service fee of $ 250,000 .

The agreement also

includes provisions for potential price increases based on increases in the manufacturer’s operating expenses or industry indices,

as well as significant termination fees and obligations.

As of September 30, 2025, the total minimum purchase commitment under this agreement

was approximately $ 16.2 million consisting of payments of $ 8.5 million and $ 5.3 million for 2025 and 2026 respectively and approximately

$ 2.4 million for 2026 pass-throughs and consumable manufacturing components.

As of September 30, 2025, we also have commercial

supply agreements with two other vendors for the completion and packaging of finished drug products.

Minimum purchase commitments under

these two agreements amount to approximately $ 4.9 million consisting of purchase commitment obligations of $ 1.2 million in 2025 and $ 1.9

million in 2026 and $ 1.8 million in 2027.

Legal Proceedings

The Company is not involved in any litigation

that it believes could have a material adverse effect on its financial position or results of operations.

We are not involved in any litigation that we

believe could have a material adverse effect on our financial position or results of operations.

There is no action, suit, proceeding,

inquiry, or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to

the knowledge of the Company’s executive officers, threatened against or affecting the Company or its officers or directors in their

capacities as such.

the knowledge of our executive officers, threatened against or affecting us or our officers or directors in their capacities as such.

MERGER AGRFEEMENT

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subsidiary of TenX (the “Merger”) which was subsequently renamed Citius Oncology Sub.

Prior to closing of the Merger, TenX

migrated to and domesticated as a Delaware corporation in accordance with Section 388 of the General Corporation Law of the State of Delaware

and the Cayman Islands Companies Act (As Revised) (the “Domestication”).

As part of the Domestication, TenX changed its name

to “Citius Oncology, Inc.” (Nasdaq:

Prior to the closing of the Merger,

TenX migrated to and domesticated as a Delaware corporation in accordance with Section 388 of the General Corporation Law of the State

of Delaware and the Cayman Islands Companies Act (As Revised) (the “Domestication”).

As part of the Domestication, TenX changed

its name to “Citius Oncology, Inc.” (Nasdaq:

Immediately after the closing of the Merger, Citius Pharma owned approximately

92.3 % of the outstanding shares of common stock of Citius Oncology.

The Merger, net amount of $ 3,831,357 charged to

additional paid in capital consists of $ 395,515 of net liabilities of TenX on the date of the Merger (cash of $ 163,500 less liabilities

The Merger, net amount of $ 3,831,357 charged

to additional paid in capital consists of $ 395,515 of net liabilities of TenX on the date of the Merger (cash of $ 163,500 less liabilities

of $ 559,015 ) plus directly related transaction costs $ 2,358,780 and the cost of public rights in the amount of $ 1,077,062 .

As part of the Merger, the Company made capital

investments in Citius Oncology through cash contributions of $ 3,827,944 to fund transactions related to the Merger and by reclassifying

to additional paid in capital intercompany receivables of $ 33,180,961 that were due from Citius Oncology to the Company.

Simultaneously,

the Company advanced an additional $ 3,800,111 to Citius Oncology under the terms of a non-interest bearing note payable.

The note is repayable

upon a capital raise by Citius Oncology of at least $ 10,000,000 through the issuance of debt, equity or royalty financing.

recapitalization resulted in a 92.3 % ownership interest by the Company in Citius Oncology.

As part of the Merger, we made capital investments

in Citius Oncology through cash contributions of $ 3,827,944 to fund transactions related to the Merger and by reclassifying to additional

paid in capital intercompany receivables of $ 33,180,961 that were due from Citius Oncology to us.

Simultaneously, we advanced an additional

$ 3,800,111 to Citius Oncology under the terms of a non-interest bearing note payable.

The note is repayable upon a capital raise by Citius

Oncology of at least $ 10,000,000 through the issuance of debt, equity or royalty financing.

The Merger resulted in an initial 92.3 % ownership

interest by Citius Pharma in Citius Oncology.

GAIN ON SALE OF NEW JERSEY NET OPERATING

The Company recognized a gain of $ 2,387,842 and

$ 3,585,689 for the years ended September 30, 2024 and 2023, respectively, in connection with the sale of certain New Jersey income tax

net operating losses to a third party under the New Jersey Technology Business Tax Certificate Transfer Program.

The Company recorded deferred income tax expense

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

research and development asset.

We recognized a gain of $ 2,387,842 for the year

ended September 30, 2024, in connection with the sale of certain New Jersey income tax net operating losses to a third party under the

New Jersey Technology Business Tax Certificate Transfer Program.

We recorded deferred income tax expense of $ 1,056,960

and $ 576,000 for the years ended September 30, 2025 and 2024 related to the amortization for taxable purposes of its in-process research

and development asset.

The income tax expense (benefit) differs from

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for income tax purposes.

Significant components of the Company’s deferred tax assets and liabilities are as follows:

Significant components of our deferred tax assets and liabilities are as follows:

September 30,

18 unchanged sentences

$ ( 6,713,800 )

The Company has recorded a valuation allowance

against deferred tax assets as the utilization of the net operating loss carryforward and other deferred tax assets is uncertain.

the years ended September 30, 2024 and 2023, the valuation allowance increased by $ 8,906,000 and $ 4,984,000 , respectively.

in the valuation allowance during the years ended September 30, 2024 and 2023 was primarily due to the Company’s net operating loss.

At September 30, 2024, the Company has a federal net operating loss carryforward of approximately $ 155,000,000 .

Federal net operating

loss carryforwards of approximately $ 35,000,000 begin expiring in 2034 and carryforwards of approximately $ 120,000,000 generated in tax

years beginning after 2017 may be carried forward indefinitely.

As of September 30, 2024, the Company also has

estimated federal research and development credits of $ 4,250,000 to offset future income taxes.

The tax credit carryforwards will begin

to expire in 2036.

The Company accounts for uncertain tax positions

in accordance with the guidance provided in ASC 740, “Accounting for Income Taxes.” This guidance describes a recognition

threshold and measurement attribute for the financial statement disclosure of tax positions taken or expected to be taken in a tax return

and requires recognition of tax benefits that satisfy a more-likely-than-not threshold.

ASC 740 also provides guidance on de-recognition,

classification, interest and penalties, accounting in interim periods and disclosure.

There have been no reserves for uncertain tax positions

recorded by the Company to date.

NASDAQ LISTING

On March 12, 2024, the Company received formal

notice that the Nasdaq Stock Market LLC (“Nasdaq”) granted our request for an extension through September 9, 2024 (the “Extension

Notice”) to evidence compliance with the $ 1.00 per share requirement for continued inclusion on the Nasdaq Capital Market pursuant

to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”).

On September 9, 2024 the Company received a letter

from the Listing Qualifications Staff of Nasdaq indicating that, based upon the closing bid price of the Company’s common stock,

par value $ 0.001 per share, for the prior 30 consecutive business days, the Company was not in compliance with the Bid Price Rule.

As the Company did not regain compliance with

the Bid Price Rule by September 9, 2024, the Company received a delisting determination letter on September 10, 2024.

Accordingly, the

Company intends to timely request a hearing before a Nasdaq Hearing Panel (“Panel”).

On October 28, 2024 the Panel held its hearing

with the Company.

On November 6, 2024, the Company received a decision

letter from the Panel granting the Company’s request to continue its listing on The Nasdaq Capital Market, subject to regaining

compliance with the Bid Price Rule on or before December 3, 2024.

On December 18, 2024, the Company received notification

from Nasdaq that it had regained compliance with the Bid Price Rule.

We recorded a valuation allowance against deferred

tax assets as the utilization of the net operating loss carry-forward and other deferred tax assets is uncertain.

During the years ended

September 30, 2025 and 2024, the valuation allowance increased by $ 12,321,000 and $ 8,911,000 , respectively.

The increase in the valuation

allowance during the years ended September 30, 2025 and 2024 was primarily due to our net operating loss.

At September 30, 2025, we have

a federal net operating loss carryforward of approximately $ 181,000,000 .

Federal net operating loss carryforwards of approximately $ 29,000,000

begin expiring in 2034 and carryforwards of approximately $ 152,000,000 generated in tax years beginning after 2017 may be carried forward

indefinitely.

Use of federal net operating losses may be limited under Section 382 of the Internal Revenue Code due to changes in ownership.

As of September 30, 2025, we also have estimated

federal research and development credits of $ 5,297,000 to offset future income taxes.

The tax credit carryforwards will begin to expire

On July 4, 2025, the “One Big Beautiful Bill Act” (“OBBBA”) was signed into law in the United States.

includes a broad range of tax reform provisions for businesses, including extensions of key Tax Cuts and Jobs Act provisions, modifications

to the international tax framework, and restoration of favorable tax treatment for certain business provisions.

Certain provisions of

the legislation will become effective in 2025, while others are effective in 2026.

The OBBBA was enacted during our fourth fiscal quarter

of 2025, and we have considered its potential effects and reflected the impact of the OBBBA on our financial position, results of operations,

and cash flows.

We are in the process of evaluating the impact of these provisions on future periods, but we do not expect the OBBBA to

have a material impact on our consolidated financial statements.

We account for uncertain tax positions in accordance

with the guidance provided in ASC 740, “Accounting for Income Taxes.” This guidance describes a recognition threshold and

measurement attribute for the financial statement disclosure of tax positions taken or expected to be taken in a tax return and requires

recognition of tax benefits that satisfy a more-likely-than-not threshold.

ASC 740 also provides guidance on de-recognition, classification,

interest and penalties, accounting in interim periods and disclosure.

There have been no reserves for uncertain tax positions recorded

by us to date.

SUBSEQUENT EVENTS

On November 15, 2024, the Company entered into a securities purchase

agreement (the “Purchase Agreement”) with certain institutional investors for the issuance and sale, in a registered direct

offering by the Company (the “Offering”), of 480,000 shares of the Company’s common stock, par value $ 0.001 per share

(the “Shares”) and warrants (the “Warrants”) to purchase up to 480,000 shares of common stock.

Gross proceeds

received were $ 3,000,000 and net proceeds were approximately $ 2,650,000 after deducting for fees and expenses.

The Shares and Warrants

were sold at a combined offering price of $ 6.25 .

The Offering closed on November 18, 2024.

The Warrants have an exercise price equal to $ 6.25 per share, are exercisable

immediately upon issuance and will expire five years after the initial exercise date.

The Company also paid the placement agent 7 % of the gross proceeds

and also agreed to grant to the placement agent or its designees, placement agent warrants, to purchase up to 33,600 shares of the common

stock (the “Placement Agent Warrants”).

The terms of the Placement Agent Warrants are substantially the same as the terms

of the Warrants, except that the exercise price is $ 7.8125 per share.

The Company filed a Certificate

of Change (the “Certificate of Change”) with the Secretary of State of the State of Nevada to (i) effect a 1-for-25 reverse

stock split (the “Reverse Stock Split”) of the Company’s issued and outstanding shares of common stock, par value $ 0.001

per share, and (ii) decrease the number of total authorized shares of common stock from 400,000,000 shares to 16,000,000 shares.

Stock Split was intended for the Company to regain compliance with the minimum bid price requirement of $ 1.00 per share of common stock

for continued listing on the Nasdaq Capital Market.

The Reverse Stock Split became effective at 5:00 p.m., Eastern Time, on November 25,

2024, and the Company’s Common Stock began trading on a Reverse Stock Split-adjusted basis on the Nasdaq Capital Market at the opening

of the market on November 26, 2024.

On October 20, 2025, Citius Pharmaceuticals,

entered into a securities purchase agreement with a certain institutional investor for the issuance and sale, in a registered direct

offering by the Company , of 1,460,000 shares of the Company’s common stock, par value $ 0.001 per share , and pre-funded warrants

to purchase up to 2,513,510 shares of common stock at an offering price of $ 1.51 and $ 1.5099 , respectively.

The Company also issued to

the investor warrants to purchase up to 3,973,510 shares of common stock.

The offering closed on October 21, 2025.

Gross proceeds were

approximately $ 6.0 million, before deducting placement agent fees and other expenses.

On December 8, 2025, Citius Oncology entered into

a securities purchase agreement with a certain institutional investor in a registered direct offering for the purchase and sale of 1,284,404

shares of our common stock at an offering price of $ 1.09 per share of common stock.

In a concurrent private placement, the Company also

agreed to sell such institutional investor warrants to purchase up to 1,284,404 shares of common stock, with an exercise price of $ 1.09

per share of our common stock, which are exercisable upon the requisite stockholder approval, and have a term of five years from the date

of the stockholder approval.

The aggregate gross proceeds to the Company from the offering were approximately $ 18.0 million.

were approximately $ 15.2 million, after deducting placement agent fees and other offering expenses payable by the Company.

On December 8, 2025, Citius Oncology also entered

into a securities purchase agreement with such institutional investor to issue in a concurrent private placement pre-funded warrants to

purchase up to 15,229,358 shares of common stock and 15,229,358 warrants, at a combined price of $ 1.0899 per pre-funded warrant and accompanying

The pre-funded warrants are exercisable immediately, at an exercise price of $ 0.0001 per share, and will remain valid and exercisable

until all the pre-funded warrants are exercised in full.

In connection with the offering, Citius Oncology

agreed to pay the placement agent a cash fee of 7.0 % of the aggregate gross proceeds Citius Oncology received in the offering.

the Company granted warrants to the placement agent, or its designees, to purchase up to 1,155,963 shares of common stock.

the placement agent warrants are substantially the same as the terms of the warrants, except that the exercise price is $ 1.3625 per share

and expire five years from the commencement of sales in the offering.

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 9A. Controls and Procedures