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Item 7. Management’s Discussion and Analysis

2024-09-18 compared with 2023-08-23 · 377 added, 396 removed, 34 unchanged (96% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

In addition to historical information, this discussion

contains forward-looking statements based upon management’s current expectations that are subject to risks and uncertainties which

may cause our actual results to differ materially from plans and results discussed herein.

We encourage you to review the risks and uncertainties

discussed in the sections entitled Item 1A.

“Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements”

included at the beginning of this Annual Report on Form 10-K.

We caution readers not to place undue reliance

on any forward-looking statements made by us, which speak only as of the date they are made.

In addition, statements that “we believe”

and similar statements reflect our beliefs and opinions on the relevant subject.

These statements are based upon information available

to us as of the date of this report, and while we believe such information forms a reasonable basis for such.

We disclaim any obligation,

except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements to reflect any change

in our expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood

that actual results will differ from those set forth in the forward-looking statements.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

addition to historical information, this discussion contains forward-looking statements based upon management’s current expectations

that are subject to risks and uncertainties which may cause our actual results to differ materially from plans and results discussed

We encourage you to review the risks and uncertainties discussed in the sections entitled Item 1A.

“Risk Factors”

and “Cautionary Note Regarding Forward-Looking Statements” included at the beginning of this Annual Report on Form 10-K.

caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date they are made.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject.

These statements are based upon information available to us as of the date of this report, and while we believe such information forms

a reasonable basis for such.

We disclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly

update or revise any such statements to reflect any change in our expectations or in events, conditions or circumstances on which any

such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking

supplement our consolidated financial statements, which are prepared and presented in accordance with US GAAP, we present contribution

margin and contribution margin %, which are non-GAAP financial measures.

Contribution margin and contribution margin % are presented

in the section titled “Contribution Margin (non-GAAP)”.

non-GAAP financial measures are not intended to be considered in isolation or as a substitute for, or superior to, financial information

prepared and presented in accordance with US GAAP.

These measures may be different from non—GAAP financial measures used by other

companies, limiting their usefulness for comparison purposes.

Moreover, presentation of contribution and contribution margin is provided

for year-over-year comparison purposes.

We believe these non-GAAP financial measures provide investors with useful supplemental information

about the financial performance of our business, enable comparison of financial results between periods where certain items may vary

independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our

otherwise indicated, all share and per share information in this report gives effect to the reverse stock split of our outstanding common

stock, which was effected at a ratio of 1-for-12 as of 5:00 p.m.

Eastern Time on January 26, 2024.

Intelligent Bio Solutions Inc.

(formerly known as GBS Inc.), and its wholly owned Delaware subsidiary, GBS Operations Inc.

were each formed on December 5, 2016, under

the laws of the state of Delaware.

Our Australian subsidiary Intelligent Bio Solutions (APAC) Pty Ltd (formerly known as Glucose Biosensor

Systems (Greater China) Pty Ltd) was formed on August 4, 2016, under the laws of New South Wales, Australia and was renamed to Intelligent

Bio Solutions (APAC) Pty Ltd on January 6, 2023.

On October 4, 2022, INBS acquired Intelligent Fingerprinting Limited (IFP),

a company registered in England and Wales (the IFP Acquisition).

Our headquarters are in New York, New York.

We are a medical technology company

focused on developing and delivering non-invasive, rapid and pain free innovative testing and screening solutions.

We operate globally

with the objective of providing intelligent, pain-free, and accessible solutions that improve the quality of life.

Our current product portfolio includes:

Intelligent Fingerprinting Platform - Our proprietary portable platform analyzes fingerprint sweat using a one-time (recyclable) cartridge and portable handheld reader.

Our flagship product from this platform, which is commercially available in certain countries outside of the United States, is the Intelligent Fingerprinting Drug Screening System (the “IFP System” or “IFP Products”), a two-part system that consists of non-invasive, sweat-based fingerprint diagnostic testing products designed to detect drugs of abuse including opioids, cocaine, methamphetamines, benzodiazepines, cannabis, methadone, and buprenorphine.

The system comprises a small, tamper-evident drug screening cartridge onto which ten fingerprint sweat samples are collected in under a minute, before the portable analysis unit provides an on-screen result in under ten minutes.

Samples collected with our confirmatory kits can also be sent to a third-party laboratory service provider to perform confirmation testing.

Customers include safety-critical industries such as construction, transportation and logistics firms, manufacturing, engineering, drug treatment organizations in the rehabilitation sector, and judicial organizations.

The Biosensor Platform – Our “Biosensor Platform” consists of a small, printable modified organic thin-film transistor strip that we license across the Asia Pacific Region from Life Science Biosensor Diagnostics Pty Ltd (“LSBD” or “Licensor”).

The Biosensor Platform, which is designed to detect multiple biological analytes by substituting the Glucose Oxidase (“GOX”) enzyme with a suitable alternative for each analyte, is currently in the development stage.

Our flagship product candidate based on the Biosensor Platform technology is the Saliva Glucose Biosensor (“SGB” and, together with a software app that interfaces the SGB with the Company’s digital information system, the Saliva Glucose Test or “SGT”), a Point of Care Test (POCT) expected to complement the finger pricking invasive blood glucose monitoring test for diabetic patients.

Our products based on the SGT are referred to herein as the “SGT products.”

These platform technologies have the potential

to develop a range of POCT including the modalities of clinical chemistry, immunology, tumor markers, allergens, and endocrinology.

Highlights of Achievements

Our major highlights of achievements for

the fiscal year 2023:

On June 28, 2023, the Company announced it had received guidance from the United States Food and Drug Administration

(the “FDA”) regarding the regulatory classification of its Intelligent Fingerprinting Drug Screening Cartridge.

The FDA provisionally

determined that the cartridge falls within 21 CFR 862.3650, Opiate Test System, a Class II type device that requires the submission of

a pre-market notification 510(k) and the FDA’s clearance prior to marketing.

The preliminary assessment, in response to the

Company’s March 2023 513(g) request for product classification, provides a clear regulatory pathway for INBS as part of the Company’s

expansion strategy into the United States.

The Company intends to submit a 510(k) pre-market notification for its proprietary Intelligent

Fingerprinting Drug Screening Cartridge.

In June 2023, the Company concluded its study on the Correlation of Glucose and Cortisol between Oral Fluid and Blood Compartments.

The study aimed to determine the degree of correlation between saliva and blood glucose and cortisol levels in subjects with and without diabetes.

The results of the study indicate that saliva sampling and analysis has potential use in various applications, including as an aid in screening for diabetes in unhygienic environments where blood sampling is risky, and in point-of-care or at-home cortisol tests where characterizing early morning levels and daily variation is important.

The Company intends to compile a white paper summarizing the findings as it determines the next phase of development.

On May 2, 2023, the Company announced the recruitment of its Australian sales force and the addition of a new distribution

hub and office facility to manage sales and operations, significantly expanding its ability to service customers throughout the Asia Pacific

On March 15, 2023, the Company announced that it has selected Human and Supplement Testing Australia (“HASTA”), Australia’s largest independent sports drug testing laboratory, as its preferred drug testing specialist in Australia to complete lab-based confirmation testing.

On February 16, 2023, the Company announced that it has filed a 513(g) submission with the United States Food and Drug Administration (FDA) for its Intelligent Fingerprinting Drug Screening Cartridge.

The submission will allow Intelligent Bio Solutions to determine the most suitable FDA regulatory pathway as part of the Company’s strategy for expansion into the U.S.

On January 23, 2023, the Company published the results of Milestone 7, a phase of its biosensor platform development at the University of Newcastle, Australia, that included testing time-to-result (TTR), sensitivity, and reproducibility.

The results showed a record 4x improvement in TTR, enabling the biosensor to return test results in under one minute.

During the year, the Company continued to expand its customer base by entering into sales contracts

with Haulier, Eastern Airways, Hozelock, Boughey Distribution, A&F Sprinklers and Dodman Limited.

The Company completed the acquisition of Intelligent Fingerprinting Limited (IFP), a company registered in England and Wales and on October 4, 2022 (the IFP Acquisition).

IFP owns a portfolio of intellectual property for diagnostic tests and associated technologies including drug testing through the analysis of fingerprint sweat.

The acquisition of IFP has expanded the Company’s platform of rapid, non-invasive diagnostic testing technologies.

On July 13, 2022, INBS completed Institutional Review Board (IRB) approved clinical studies at the Diabetes Research Institute of Sutter Health’s Mills-Peninsula Medical Center (MPMC) in San Mateo, California.

The study design was intended to support the clinical development of its next-generation Saliva Glucose Biosensor.

A total of 40 adult subjects with type 2 diabetes were recruited for the study.

Nearly 1,400 samples of blood and oral fluids were collected and analyzed.

The subsequent statistical analysis of the correlation of glucose levels among these sample types will act as foundation for building a robust portfolio of prospective clinical evidence, forming the backbone for future regulatory submissions.

Results of Operations:

Comparison of the Years Ended June 30, 2023

and its wholly owned

Delaware subsidiary, GBS Operations Inc., were each formed on December 5, 2016, under the laws of the state of Delaware.

The Company’s

Australian subsidiary, Intelligent Bio Solutions (APAC) Pty Ltd, was formed on August 4, 2016, under the laws of New South Wales, Australia

and was renamed to Intelligent Bio Solutions (APAC) Pty Ltd on January 6, 2023.

On October 4, 2022, INBS acquired Intelligent Fingerprinting

Limited (“IFP”), a company registered in England and Wales (the “IFP Acquisition”).

The Company’s headquarters

are in New York, New York.

Intelligent Bio Solutions Inc.

is a medical technology

company focused on developing and delivering intelligent, rapid, non-invasive testing and screening solutions.

The Company operates globally

with the objective of providing innovative and accessible solutions that improve the quality of life.

Company’s current product portfolio includes:

Fingerprinting Platform:

A proprietary portable platform that analyzes fingerprint sweat using a one-time cartridge and portable

handheld reader.

The flagship product from this platform, which is commercially available in certain countries outside of the United

States, is the Intelligent Fingerprinting Drug Screening System (the “IFP System” or “IFP Products”), a two-part

system that consists of non-invasive, fingerprint sweat-based diagnostic testing products designed to detect drugs of abuse including

opiates, cocaine, methamphetamines, benzodiazepines, cannabis, methadone, and buprenorphine.

The system comprises a small, tamper-evident

drug screening cartridge onto which ten fingerprint sweat samples are collected in under a minute before the portable analysis unit

provides an on-screen result in under ten minutes.

Samples collected with a confirmatory kit can also be sent to a third-party laboratory

service provider for confirmation testing.

Customers include safety-critical industries such as construction, transportation and

logistics, manufacturing, engineering, drug treatment organizations in the rehabilitation sector, and judicial organizations.

Biosensor Platform – A biosensor platform we refer to as the Biosensor Platform Technology (“BPT”), or simply

the “Biosensor Platform,” consists of a small, printable modified organic thin-film transistor strip that we license

across the Asia Pacific Region (“APAC Region”) from Life Science Biosensor Diagnostics Pty Ltd (“LSBD” or

The Biosensor Platform is designed to detect multiple biological analytes by substituting the top enzyme

layer of the biosensor to suit each analyte.

This platform technology has the potential to develop a range of Point of Care Tests

(“POCT”), including the modalities of clinical chemistry, immunology, tumor markers, allergens, and endocrinology.

understand that following the appointment of a liquidator to LSBD, the intellectual property rights licensed by us from the Licensor

(LSBD) have reverted to the University of Newcastle.

The Company is in early-stage discussions regarding the potential restructuring

of future licensing of BPT and products with the University of Newcastle.

A timeline for these discussions has not yet been established.

of Operations:

Financial Performance

June 30, 2024

June 30, 2023

Gross Profit %

The Company continues to meet its objectives of strong market penetration and improved margins achieved through economies

of scale with enough volume to achieve growth of 147.58% in sales revenue and 336.41% growth in gross profit for the fiscal year ended

June 30, 2024, compared to the same period in fiscal 2023.

Furthermore, the Company is set to compound this growth with the numbers of

readers reaching 1,037 on customer sites, as of June 2024.

of the Years Ended June 30, 2024 and 2023

Year ended June 30,

9 unchanged sentences

(12,133,576 )

(13,659,529 )

Loss from operations

(10,283,174 )

Other income (expense):

(12,595,233 )

Other income (expense), net:

Interest expense

Realized foreign exchange loss

Fair value gain on revaluation of financial instruments

Fair value gain on revaluation of financial instrument

Interest income

Total other income

Total other income, net

(10,190,932 )

(10,664,555 )

Net loss attributable to non-controlling interest

3 unchanged sentences

Other comprehensive income (loss), net of tax:

Foreign currency translation income (loss)

Foreign currency translation gain/ (loss)

Total other comprehensive income (loss)

1 unchanged sentence

(10,328,050 )

(10,451,916 )

Comprehensive loss attributable to non-controlling interest

3 unchanged sentences

Net loss per share, basic and diluted*

Weighted average shares outstanding, basic and diluted*

* Common Shares and per share amount have been retroactively adjusted

to reflect the decreased number of shares resulting from a 1 for 20 reverse stock split, throughout this Annual Report on Form 10-K,

unless otherwise stated.

Results of Operations:

Comparison of the Years Ended June 30, 2023, and 2022

Sales of goods

Revenue from sales of goods increased by $1,256,872

to $1,256,872 from $0 for the year ended June 30, 2023, compared to same period in 2022.

This is due to the acquisition of IFP in October

2022, whose results of operations are consolidated and launch of fingerprint drug testing in APAC region via Intelligent Bio Solutions (APAC) Pty Ltd.

The acquisition provided the Company with access to commercially available Fingerprinting drug testing system which

is currently being marketed in Europe and Asia Pacific Region.

Revenue from the IFPG segment relates to the sale

of readers, cartridges and accessories and is summarized as follows:

Weighted average units outstanding, basic and diluted *

The accompanying notes are an integral part of these consolidated financial statements.

Common Stock and per share amounts have been retroactively adjusted to reflect the decreased number of shares resulting

from the 1-for-12 reverse stock split effected on January 26, 2024, throughout the consolidated

financial statement unless otherwise stated.

of Operations:

of the Years Ended June 30, 2024, and 2023

from sales of goods increased by $1,854,909 to $3,111,781 from $1,256,872 for the year ended June 30, 2024, compared to same period in

This is due to the expansion of the customer base, both in the pre-existing markets and expansion into new regions.

We expect this

trend to continue as we expand into new markets in the future.

from the IFPG segment relates to the sale of readers, cartridges and accessories and is summarized as follows:

Ended June 30,

of goods - cartridges

of goods - readers

of revenue increased by $755,951 to $1,686,155 from $930,204 for the year ended June 30, 2024, compared to same period in 2023.

of revenue relates to the direct labor, direct material costs and direct overhead costs incurred in the production of the goods.

is in line with expectations, as the business expands into new markets.

The following table shows the composition of cost of revenue.

Cost of revenue

Year Ended June 30,

Sales of goods - cartridges

Sales of goods - readers

Total revenue

Direct material cost

Direct labor cost

Direct overhead cost

Total cost of revenue

Year Ended June 30,

Direct material cost

Direct labor cost

Direct overhead cost

Cost of revenue

Cost of revenue increased by $930,204 to $930,204

from $0 for the year ended June 30, 2023, compared to same period in 2022.

Cost of revenue relates to the direct labor, direct material

costs and direct overhead costs incurred in the production of the goods.

Gross profit increased by $326,668 to $326,668 from

$0 for the year ended June 30, 2023, compared to same period in 2022.

This is due to the acquisition of IFP in October 2022.

The gross profit is primarily attributable to the

IFPG segment.

Government support income

Government support income increased by $300,482

to $737,628 from $437,146 for the year ended June 30, 2023, compared to same period in 2022.

This increase was primarily attributable

to qualifying research and development expenditures incurred during the current period including the completion of Milestone 7, a phase

of its biosensor platform development at the University of Newcastle, Australia.

The grant support income is primarily

attributable to INBS’s subsidiary companies recognizing an R&D tax refund as the Company believes that it is probable that

the certain amount will be recovered in full through a future claim (see Note 3 to our consolidated financial statements appearing

elsewhere in our Annual Report on Form 10-K for further information and disclosures relating R&D tax refund).

Operating expenses

Selling, general and administrative expenses

increased by $3,106,600 to $8,026,703 from $4,920,103 for the year ended June 30, 2023, compared to the same period in 2022.

is largely due to the acquisition of IFP which added approximately 32 staff to our FTE headcount, and the results of operations of

IFP which are consolidated in the current period from the date of acquisition.

As the Company’s operating activities increase,

we expect its selling, general and administrative costs will include additional costs in overhead contribution, consultancy, as well as

an increase in employee related costs associated with a higher headcount.

Development and regulatory expenses

Development and regulatory expenses decreased by $3,346,495

to $507,424 from $3,853,919 for the year ended June 30, 2023, compared to the same period in 2022.

This decrease is primarily driven by

expensing of the prepaid R&D contribution of $2,600,000 during the same period in 2022 and decrease in the R&D activities related to COVID-19, as the demand for Covid testing products decreased significantly

and we redirected our resources and efforts away from developing products related to Covid testing.

As the Company’s operating activities increase, we expect its development

and regulatory expenses to increase in future periods.

Depreciation and amortization

Depreciation and amortization increased by $966,732

to $966,732 from $0 for the year ended June 30, 2023, compared to same period in 2022.

This is due to the acquisition of IFP and primarily

related to the amortization of acquired Intangibles during the current period.

Goodwill Impairment

The goodwill impairment expenses increased by

$4,158,670 to $4,158,670 from $0 for the year ended June 30, 2023, compared to the same period in 2022.

Refer to note 3 of

our consolidated financial statements appearing elsewhere in our Annual Report on Form 10-K.

Other income and expenses

Interest expense

Interest expense increased by $215,995 to $223,534

from $7,539 for the year ended June 30, 2023, as compared to the same period in 2022.

This increase was attributable to the interest expense

recorded for convertible notes after the acquisition of IFP.

Realized foreign exchange loss

Realized foreign exchange loss increased by $5,842 to $9,829 from $3,987

for the year ended June 30, 2023, compared to the same period in 2022.

The increase in loss was largely attributable to the Company’s

settled translations in currencies other than its functional currencies.

Fair value gain on revaluation of financial instruments

The fair value gain increased by $2,154,365 to $2,154,365

from $0 for the year ended June 30, 2023, as compared to the same period in 2022.

This increase is due to the revaluation gains on the

convertible notes and contingent consideration for holdback shares resulting from the acquisition of IFP.

Interest income

Interest income decreased by $4,750 to $9,676 from $14,426 for the year

ended June 30, 2023, as compared to the same period in 2022.

This decrease was attributable to the lower bank balance during the current

period due to the amount spent on operating and development activities.

For additional information regarding

the conversion of the convertible notes, see “ Item 1.

Business – Conversion of Convertible Debt and Preferred Stock .”

Income tax (expense) benefit

There was no income tax expense for the year

ended June 30, 2023, and 2022, respectively, as the Company has established a full valuation allowance for all its deferred tax assets.

Other comprehensive income

Foreign currency translation gain/(loss)

Unrealized foreign currency translation gain increased

by $339,514 to a gain of $212,639 from a loss of $126,875 for the year ended June 30, 2023, compared to the same period in 2022.

calculated based on the Company’s unsettled transactions in currencies other than its functional currency and translation of assets

and liabilities of foreign subsidiaries in reporting currency.

Net loss attributable to INBS increased by $2,325,669

to $10,631,720 from $8,306,051 for the year ended June 30, 2023, compared to the same period in 2022.

This increase is primarily driven

by impairment of goodwill $4,158,670 offset by a recognition of fair value gain on revaluation of convertible notes and holdback Series

C Preferred Stock during the current period of $2,154,365.

Liquidity and Capital Resources

We use working capital and cash measures to evaluate

the performance of our operations and our ability to meet our financial obligations.

We define Working Capital as current assets less

current liabilities.

This measure should not be considered in isolation or as a substitute for any standardized measure under GAAP.

information is intended to provide investors with information about our liquidity.

Other companies in our industry may calculate this

measure differently than we do, limiting its usefulness as a comparative measure.

Since our inception, our operations have primarily

been financed through the issuance of our common stock, redeemable convertible preferred stock, and the incurrence of debt.

30, 2023, we had $1,537,244 in cash and cash equivalents and a working capital deficit of $2,021,124.

The Company expects that its cash and cash equivalents

as of June 30, 2023, will be insufficient to allow the Company to fund its current operating plan through at least the next twelve months

from the issuance of these financial statements.

These conditions raise substantial doubt about the Company’s ability to continue

as a going concern for a period of at least one year from the date these financial statements are issued.

The Company is currently evaluating

raising additional funds through private placements and or public equity financing.

However, there can be no assurance that, in the event

that the Company requires additional financing, such financing will be available on terms which are favorable to us, or at all.

these factors raise substantial doubt about the Company’s ability to continue as a going concern.

In the event we require additional capital, there

can be no assurances that we will be able to raise such capital on acceptable terms, or at all.

Failure to generate sufficient revenues

or raise additional capital through debt or equity financings, or through collaboration agreements, strategic alliances or marketing and

distribution arrangements, could have a material adverse effect on our ability to meet our long-term liquidity needs and achieve our intended

long-term business plan.

Our failure to obtain such funding when needed could create a negative impact on our stock price or could potentially

lead to a reduction in our operations or the failure of our company.

Accordingly, these factors raise substantial doubt about the Company’s

ability to continue as a going concern.

Extended Transition Period for “Emerging

Growth Companies”

We have elected to use the extended transition period

for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act.

This election allows us to delay the adoption

of new or revised accounting standards that have different effective dates for public and private companies until those standards apply

to private companies.

As a result of this election, our financial statements may not be comparable to companies that comply with public

company effective dates.

Because our financial statements may not be comparable to companies that comply with public company effective

dates, investors may have difficulty evaluating or comparing our business, performance or prospects in comparison to other public companies,

which may have a negative impact on the value and liquidity of our common stock.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements

or relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special

purpose entities.

Critical Accounting Estimates

The preparation of our consolidated financial statements

in conformity with GAAP requires management to make judgments, estimates and assumptions that impact the amounts reported in our consolidated

financial statements and accompanying notes that are not readily apparent from other sources.

The estimates and associated assumptions

are based on historical experience and other factors that are considered relevant.

Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed

on an ongoing basis.

Revisions to accounting estimates are recognized in the period in which the estimate is revised, if the revision

affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods.

Note 3 to the consolidated financial statements included

in Part II, Item 8 of this Annual Report on Form 10-K, and incorporated herein by reference, describes the Company’s accounting

The following discussion should be read in conjunction with Note 3, as it presents uncertainties involved in applying the accounting

policies and provides insight into the quality of management’s estimates and variability in the amounts recorded for these critical

Gross profit margin

profit increased by $1,098,958 to $1,425,626 from $326,668 for the year ended June 30, 2024, compared to same period in 2023.

been driven by increased revenue from acquiring new customers.

gross profit is primarily attributable to the IFPG segment.

margin (non-GAAP)

Year Ended June 30,

Direct material cost

Contribution margin (non-GAAP)

Contribution margin % (non-GAAP)

margin, which is a non-GAAP measure of our financial performance, increased by $1,206,908 to $2,094,563 from $887,655 for the year ended

June 30, 2024, compared to same period in 2023.

This has been driven by increased revenue from acquiring new customers.

support income

support income in the IFPG and BPT segments decreased by $312,852 to $424,776 from $737,628 for the year ended June 30, 2024,

compared to same period in 2023.

This decrease was primarily attributable to an adjustment for a potential refund of the Australian

Government grant if we are unable to complete the project on time.

grant support income is primarily attributable to INBS’s subsidiary companies recognizing an R&D tax refund as the Company

believes that it is probable that the certain amount will be recovered in full through a future claim (see Note 3 to our consolidated

financial statements appearing elsewhere in our Annual Report on Form 10-K for further information and disclosures relating R&D tax

general and administrative expenses

general and administrative expenses increased by $1,231,793 to $9,258,496 from $8,026,703 for the year ended June 30, 2024, compared

to the same period in 2023.

This increase is primarily due to engagement of consultants for marketing, media and investor relationship

management, capital raising, professional fees for legal and compliance as the Company continues to expand its business and conduct clinical

study as it progresses along its 510(k) pathway for FDA clearance.

the Company’s operating activities increase, we expect its general and administrative costs will include additional costs in overhead

contribution, consultancy, as well as an increase in employee-related costs associated with a higher headcount.

We aim to ensure that

our cost efficiency is increased over the same period whilst we streamline the business, delivering increased value for investors.

and regulatory approval expenses

and regulatory approval expenses increased by $1,166,382 to $1,673,806 from $507,424 for the year ended June 30, 2024, compared to the

same period in 2023.

This increase is primarily driven by amounts spent on in-house R&D staff and timing of R&D

work performed by the research partners engaged by the Company.

the Company continues its FDA 501(k) clinical study plan, we expect development and regulatory expenses to increase in future periods,

as demonstrated by the results above.

and amortization

and amortization increased by $234,542 to $1,201,274 from $966,732 for the year ended June 30, 2024, compared to same period in 2023.

This is mainly due to inclusion of amortization of intangible assets for twelve months to June 30, 2024 results as compared to approximately

nine months to June 30, 2023 upon the acquisition of IFP in October 2022 offset by the revaluation of the useful life of technology assets

from 5 years to 7 years on April 1, 2023.

goodwill impairment expenses decreased by $4,158,670 to $0 from $4,158,670 for the year ended June 30, 2024, compared to the same period

Refer to note 3 of our consolidated financial statements appearing elsewhere in our Annual Report on Form 10-K.

income and expenses

expense decreased by $56,394 to $167,140 from $223,534 for the year ended June 30, 2024, as compared to the same period in 2023.

decrease was attributable to the conversion of the convertible notes into common stock of the Company in May 2023.

foreign exchange loss

foreign exchange loss decreased by $8,651 to $1,178 from $9,829 for the year ended June 30, 2024, compared to the same period in

This decrease was largely attributable to favorable exchange rates while settling transactions in currencies other than its

functional currencies.

value gain on revaluation of financial instruments

fair value gain decreased by $1,978,627 to $175,738 from $2,154,365 for the year ended June 30, 2024, as compared to the same period

This decrease is due to the revaluation gains on the convertible notes and contingent consideration for holdback Series C Preferred Stock resulting

from the acquisition of IFP.

The convertible notes and holdback Series C Preferred Stock shares were converted

into common stock in May 2023 and October 2023, respectively.

income increased by $75,146 to $84,822 from $9,676 for the year ended June 30, 2024, as compared to the same period in 2023.

This increase

was attributable to the higher bank balance during the current period due to capital raising of approximately $14.56 million, net of costs

during fiscal year ended June 30, 2024.

tax (expense) benefit

was no income tax expense for the years ended June 30, 2024, and 2023, respectively, as the Company has established a full valuation

allowance for all its deferred tax assets.

comprehensive income

currency translation gain/(loss)

foreign currency translation gain decreased by $349,757 to a loss of $137,118 from a gain of $212,639 for the year ended June 30, 2024,

compared to the same period in 2023.

It is calculated based on the Company’s unsettled transactions in currencies other than its

functional currency and translation of assets and liabilities of foreign subsidiaries in reporting currency.

loss attributable to INBS

loss attributable to INBS decreased by $474,961 to $10,156,759 from $10,631,720 for the year ended June 30, 2024, compared to the same

period in 2023.

decrease is primarily driven by goodwill impairment charges of $4,158,670 and combined results of operations after the acquisition of

IFP offset by a recognition of fair value gain on revaluation of convertible notes and holdback Series C Preferred Stock of $2,062,878

during the same period in 2023.

and Capital Resources

use working capital and cash measures to evaluate the performance of our operations and our ability to meet our financial

We define Working Capital as current assets less current liabilities.

This measure should not be considered in

isolation or as a substitute for any standardized measure under US GAAP.

This information is intended to provide investors with

information about our liquidity.

Other companies in our industry may calculate this measure differently than we do, limiting its

usefulness as a comparative measure.

our inception, our operations have primarily been financed through the issuance of our common stock, redeemable convertible preferred

stock, and the incurrence of debt.

As of June 30, 2024, we had $6,304,098 in cash and cash equivalents and working capital of $3,083,510.

Company expects that its cash and cash equivalents as of June 30, 2024, may be insufficient to allow the Company to fund its current

operating plan through at least the next twelve months from the issuance of these financial statements.

These conditions raise substantial

doubt about the Company’s ability to continue as a going concern for a period of at least one year from the date these financial

statements are issued.

There can be no assurance that, in the event that the Company requires additional financing, such financing may

be available on terms which are favorable to us, or at all.

the event we require additional capital, there can be no assurances that we will be able to raise such capital on acceptable terms, or

Failure to generate sufficient revenues or raise additional capital through debt or equity financings, or through collaboration

agreements, strategic alliances or marketing and distribution arrangements, could have a material adverse effect on our ability to meet

our long-term liquidity needs and achieve our intended long-term business plan.

Our failure to obtain such funding when needed could

create a negative impact on our stock price or could potentially lead to a reduction in our operations or the failure of our Company.

Accordingly, these factors raise substantial doubt about the Company’s ability to continue as a going concern unless it can successfully

raise additional capital.

Provided by Financing Activities

October 4, 2023, the Company raised approximately $4.38 million, prior to deducting underwriting discounts and commissions and offering

expenses, via a registered underwritten public offering of the Company’s securities.

Net proceeds to the Company, after deducting

the underwriting discounts and commissions and estimated offering expenses payable by the Company, were approximately $3.79 million.

See Note 13, Shareholders’ Equity, for further details.

February 7, 2024, the Company raised approximately $1.77 million, prior to deducting closing costs and placement agent fees, via a warrant

inducement transaction with holders of the Company’s Series E Warrants issued on October 4, 2023.

Net proceeds to the Company,

after deducting closing costs, placement agent fees, and other estimated expenses payable by the Company, was approximately $1.58 million.

See Note 13, Shareholders’ Equity, for further details.

March 12, 2024, the Company raised approximately $10.10 million, prior to deducting placement agent’s fees and other offering expenses

via a private placement of common stock and warrants priced at-the-market under Nasdaq rules.

Net proceeds to the Company, after deducting

placement agent’s fees and other estimated offering expenses payable by the Company, were approximately $9.12 million.

13, Shareholders’ Equity, for further details.

Transition Period for “Emerging Growth Companies”

have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of

the JOBS Act.

This election allows us to delay the adoption of new or revised accounting standards that have different effective dates

for public and private companies until those standards apply to private companies.

As a result of this election, our financial statements

may not be comparable to companies that comply with public company effective dates.

Because our financial statements may not be comparable

to companies that comply with public company effective dates, investors may have difficulty evaluating or comparing our business, performance

or prospects in comparison to other public companies, which may have a negative impact on the value and liquidity of our common stock.

Sheet Arrangements

As of June 30, 2024, we did not have any off-balance

sheet arrangements.

Accounting Estimates

While all accounting policies impact the consolidated financial statements, certain policies may be viewed to be

Management believes that the accounting policies which involve more significant judgments and estimates used in the preparation

of our consolidated financial statements include research and development tax refunds.

We believe our most critical accounting policies and

estimates relate to the following:

Revenue recognition

Revenue from contracts with customers

is recognized when, or as, the Company satisfies its performance obligations by delivering the promised goods or service deliverables

to the customers.

A good or service deliverable is transferred to a customer when, or as, the customer obtains control of that good or

service deliverable.

Accounting for the grant income does not fall under

ASC 606, Revenue from Contracts with Customers , as the Australian Government will not benefit directly from our manufacturing facility.

As there is no authoritative guidance under U.S.

GAAP on accounting for grants to for-profit business entities, we applied International

Accounting Standards 20 (“IAS 20”), Accounting for Government Grants and Disclosure of Government Assistance by analogy

when accounting for the Australian Government grant to the Company.

The Australian Government grant proceeds, which will

be used to reimburse construction costs incurred, meet the definition of grants related to assets as the primary purpose for the payments

is to fund the construction of a capital asset.

Under IAS 20, government grants related to assets are presented in the statement of financial

position either by setting up the grant as deferred income that is recognized in the statement of operation on a systematic basis over

the useful life of the asset or by deducting the grant in arriving at the carrying amount of the asset.

Either of these two methods of

presentation of grants related to assets in financial statements are regarded as acceptable alternatives under IAS 20.

The Company has

elected to record the grants received initially as deferred income and deducting the grant proceeds received from the gross costs of the

assets or construction in progress (“CIP”) and the deferred grant income liability.

Under IAS 20, government grants are initially recognized

when there is reasonable assurance the conditions of the grant will be met, and the grant will be received.

As of June 30, 2021, management

concluded that there was reasonable assurance the grant conditions will be met, and all milestone payment received.

The total grant value

of $4.7 million was recognized as both a grant receivable and deferred grant income on the grant effective date.

The Company received

payments of $1.4 million and $2.1 million during the years ended June 30, 2023 and 2022, respectively.

The project has been delayed due to global shortages

of semiconductors that are used in manufacturing equipment and global supply chain disruption due to Covid-19 pandemic in the preceding

As of June 30, 2023, the Company has only completed 4 of the 8 milestones in the grant agreement.

There is uncertainty regarding

the potential extension of the grant agreement past its original end of March 28, 2024.

Therefore, management concluded that there was

no reasonable assurance that the remaining grant receivable would be received.

After initial recognition, under IAS 20, government

grants are recognized in earnings on a systematic basis in a manner that mirrors the manner in which the Company recognizes the underlying

costs for which the grant is intended to compensate.

Further, IAS 20 permits recognition in earnings either separately under a general

heading such as other income, or as a reduction of the cost of the asset.

The Company has elected to recognize government grant income

separately within other income for operating expenditures.

Similarly, for capital expenditures, the carrying amount of assets purchased

or constructed out of the grant funds are presented net by deducting the grant proceeds received from the gross costs of the assets or

CIP and deferred grant income liability.

A total of $127,944 and $51,258 deferred grant income was recognized within other income during

the years ended June 30, 2023, and 2022, respectively.

Inventories are stated at the

lower of cost or net realizable value.

Cost comprises direct materials and, where applicable, other costs that have been incurred in bringing

the inventories to their present location and condition.

Net realizable value is the estimated selling price less all estimated costs

of completion and costs to be incurred in marketing, selling and distribution.

Impairment of Long-lived

Assets and Goodwill

Long-lived assets consist of property

and equipment, right-of-use assets and other intangible assets.

We assess impairment of assets groups, including intangible assets at

least annually or more frequently if there are any indicators for impairment.

Goodwill represents the excess

of the purchase price over the estimated fair value of the net assets acquired in a business combination.

We perform an annual impairment

test on goodwill in the fourth quarter of each fiscal year or when events occur or circumstances change that would, more likely than not,

reduce the fair value of a reporting unit below its carrying value.

We may first assess qualitative factors, such as general economic

conditions, market capitalization, the Company’s outlook, market performance and forecasted financial performance to determine whether

it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

If we determine it is more likely

than not that the fair value of the reporting unit is greater than its carrying amount, an impairment test is not necessary.

If an impairment

test is necessary, we estimate the fair value of a related reporting unit.

If the carrying value of a reporting unit exceeds its fair

value, the goodwill of that reporting unit is determined to be impaired, and we will record an impairment charge equal to the excess of

the carrying value over the related fair value of the reporting unit.

If we determine it is more likely than not that goodwill is not

impaired, a quantitative test is not necessary.

During the year ended June 30, 2023, the Company’s market capitalization significantly declined and recurring

cash burn of the reporting unit and continuous cash support from the parent entity led management to reassess whether an impairment

had occurred considering these qualitative factors.

Management’s evaluation indicated that the goodwill related to its IFPG reporting

unit was potentially impaired.

The Company then performed a quantitative impairment test by calculating the fair value of the reporting

unit and comparing that amount to it’s carrying value.

Significant assumptions inherent in the valuation methodologies include,

but were not limited to prospective financial information, growth rates, terminal value and discount rate.

The Company determined the

fair value of the reporting unit utilizing the discounted cash flow model.

The fair value of the reporting unit was determined to be less

than its carrying value.

The Company recognized an impairment charge of $ 4.2 million in the IFPG segment, which is related to the goodwill

associated with the IFP Acquisition.

Business Combinations

The results of businesses acquired

in a business combination are included in the Company’s consolidated financial statements from the date of the acquisition.

Company uses the acquisition method of accounting and allocates the purchase price to the identifiable assets and liabilities of the relevant

acquired business at their acquisition date fair values.

Any excess consideration over the fair value of assets acquired and liabilities

assumed is recognized as goodwill.

The allocation of the purchase price in a business combination requires the Company to perform valuations

with significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenue, costs and cash

flows, discount rates and selection of comparable companies.

The Company engages the assistance of valuation specialists in concluding

on fair value measurements in connection with determining fair values of assets acquired and liabilities assumed in a business combination.

As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to

the assets acquired and liabilities assumed with the corresponding offset to goodwill.

Upon the conclusion of the measurement period or

final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded

to the consolidated statements of operations.

Transaction costs associated with business combinations are expensed as incurred and are

included in selling, general and administrative expense in the consolidated statements of operations.

R&D tax Refund

The Company measures the research

and development grant income and receivable by taking into account the time spent by employees on eligible research and development activities

and research and development costs incurred to external service providers.

The research and development tax refund receivable is recognized

as the Company believes that it probable that the amount will be recovered in full through a future claim.

Intellectual property acquired

for a particular research and development project and that have no alternative future uses (in other research and development projects

or otherwise) are expensed in research and development costs at the time the costs are incurred.

In certain circumstances, the Company may be required

to make advance payments to vendors for goods or services that will be received in the future for use in R&D activities.

In such circumstances,

the non-refundable advance payments are deferred and capitalized, even when there is no alternative future use for the R&D, until

the related goods or services are provided.

In circumstances where amounts have been paid in excess of costs incurred, the Company records

a prepaid expense.

Recently issued Accounting Pronouncements

For the impact of recently

issued accounting pronouncements on the Company’s consolidated financial statements, see Note 3 to the consolidated financial statements

included in Part II, Item 8 of this Annual Report on Form 10-K and incorporated herein by reference.

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK.

We are a smaller reporting company as defined by Rule

12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.

FINANCIAL STATEMENTS AND SUPPLEMENTARY

The consolidated financial statements required pursuant

to this item are included in Part IV, Item 15 of this Annual Report on Form 10-K, beginning on page F-1, and incorporated herein by reference.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

ON ACCOUNTING AND FINANCIAL DISCLOSURES.

preparation of our consolidated financial statements in conformity with US GAAP requires management to make judgments, estimates and

assumptions that impact the amounts reported in our consolidated financial statements and accompanying notes that are not readily

apparent from other sources.

The estimates and associated assumptions are based on historical experience and other factors that are

considered relevant.

Actual results may differ from these estimates.

estimates and underlying assumptions are reviewed on an ongoing basis.

Revisions to accounting estimates are recognized in the period

in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods, if the

revision affects both current and future periods.

3 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K, and incorporated herein by

reference, describes the Company’s accounting policies.

The following discussion should be read in conjunction with Note 3, as

it presents uncertainties involved in applying the accounting policies and provides insight into the quality of management’s estimates

and variability in the amounts recorded for these critical accounting estimates.

While all accounting policies impact the consolidated

financial statements, certain policies may be viewed to be critical.

Management believes that the accounting policies which involve more

significant judgments and estimates used in the preparation of our consolidated financial statements include research and development

believe our most critical accounting policies and estimates relate to the following:

from contracts with customers is recognized when, or as, the Company satisfies its performance obligations by delivering the promised

goods or service deliverables to the customers.

A good or service deliverable is transferred to a customer when, or as, the customer

obtains control of that good or service deliverable.

for the grant income does not fall under ASC 606, Revenue from Contracts with Customers , as the Australian Government will not

benefit directly from our manufacturing facility.

As there is no authoritative guidance under US GAAP on accounting for grants to for-profit

business entities, we applied International Accounting Standards 20 (“IAS 20”), Accounting for Government Grants and Disclosure

of Government Assistance by analogy when accounting for the Australian Government grant to the Company.

Australian Government grant proceeds, which will be used to reimburse construction costs incurred, meet the definition of grants related

to assets as the primary purpose for the payments is to fund the construction of a capital asset.

Under IAS 20, government grants related

to assets are presented in the statement of financial position either by setting up the grant as deferred income that is recognized in

the statement of operation on a systematic basis over the useful life of the asset or by deducting the grant in arriving at the carrying

amount of the asset.

Either of these two methods of presentation of grants related to assets in financial statements are regarded as

acceptable alternatives under IAS 20.

The Company has elected to record the grants received initially as deferred income and deducting

the grant proceeds received from the gross costs of the assets or construction in progress (“CIP”) and the deferred grant

income liability.

project has been delayed due to global shortages of semiconductors that are used in manufacturing equipment and global supply chain disruption

due to Covid-19 pandemic in the preceding year.

As of June 30, 2024, the Company has only completed 4 of the 8 milestones in the grant

On April 16, 2024, the Company entered into a Deed of Variation with Australian Government, Department of Industry, Science

and Resources, extending the project completion date to March 28, 2025.

The deed of variation also made certain modifications to the

project costs.

The overall budget of the project has been reduced by $1.65 million to account for the changes in scope of the project.

was no deferred grant income recognized within other income during the year ended June 30, 2024.

A total of $127,944 deferred grant income

was recognized within other income during the year ended June 30, 2023.

are stated at the lower of cost or net realizable value.

Cost comprises direct materials and, where applicable, other costs that have

been incurred in bringing the inventories to their present location and condition.

Net realizable value is the estimated selling price

less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

General market conditions, as

well as the Company’s research activities, can cause certain of its products to become obsolete.

The Company writes down excess

and obsolete inventories based upon a regular analysis of inventory on hand compared to historical and projected demand.

The determination

of projected demand requires the use of estimates and assumptions related to projected sales for each product.

These write downs can

influence results from operations.

of Long-lived Assets and Goodwill

assets consist of property and equipment, right-of-use assets and other intangible assets.

We assess impairment of assets groups, including

intangible assets at least annually or more frequently if there are any indicators for impairment.

The Company did not recognize any

impairments of long-lived assets during the fiscal year ended June 30, 2024 and 2023.

We perform an annual

impairment test on goodwill in the fourth quarter of each fiscal year or when events occur or circumstances change that would, more likely

than not, reduce the fair value of a reporting unit below its carrying value.

We may first assess qualitative factors, such as general

economic conditions, market capitalization, the Company’s outlook, market performance and forecasted financial performance to determine

whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

If we determine it is more

likely than not that the fair value of the reporting unit is greater than its carrying amount, an impairment test is not necessary.

an impairment test is necessary, we estimate the fair value of a related reporting unit.

If the carrying value of a reporting unit exceeds

its fair value, the goodwill of that reporting unit is determined to be impaired, and we will record an impairment charge equal to the

excess of the carrying value over the related fair value of the reporting unit.

If we determine it is more likely than not that goodwill

is not impaired, a quantitative test is not necessary.

the fiscal year ended June 30, 2023, the Company recognized an impairment charge of $4.2 million in the IFPG segment, which was related

to the goodwill associated with the IFP Acquisition.

Following the impairment charge the goodwill balance was zero.

results of businesses acquired in a business combination are included in the Company’s consolidated financial statements from the

date of the acquisition.

The Company uses the acquisition method of accounting and allocates the purchase price to the identifiable assets

and liabilities of the relevant acquired business at their acquisition date fair values.

Any excess consideration over the fair value

of assets acquired and liabilities assumed is recognized as goodwill.

The allocation of the purchase price in a business combination

requires the Company to perform valuations with significant judgment and estimates, including the selection of valuation methodologies,

estimates of future revenue, costs and cash flows, discount rates and selection of comparable companies.

The Company engages the assistance

of valuation specialists in concluding on fair value measurements in connection with determining fair values of assets acquired and liabilities

assumed in a business combination.

As a result, during the measurement period, which may be up to one year from the acquisition date,

the Company records adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill.

Upon the conclusion

of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any

subsequent adjustments are recorded to the consolidated statements of operations.

Transaction costs associated with business combinations

are expensed as incurred and are included in selling, general and administrative expenses in the consolidated statements of operations.

Company measures the research and development grant income and receivable by calculating the time spent by employees and costs

incurred to external service providers on eligible research and development activities.

The research and development tax refund receivable is recognized as the Company believes that it is

probable that the amount will be recovered in full through a future claim.

property acquired for a particular research and development project and that have no alternative future uses (in other research and development

projects or otherwise) are expensed in research and development costs at the time the costs are incurred.

certain circumstances, the Company may be required to make advance payments to vendors for goods or services that will be received in

the future for use in R&D activities.

In such circumstances, the non-refundable advance payments are deferred and capitalized, even

when there is no alternative future use for the R&D, until the related goods or services are provided.

In circumstances where amounts

have been paid in excess of costs incurred, the Company records a prepaid expense.

issued Accounting Pronouncements

the impact of recently issued accounting pronouncements on the Company’s consolidated financial statements, see Note 3 to the consolidated

financial statements included in Part II, Item 8 of this Annual Report on Form 10-K and incorporated herein by reference.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise

required under this item.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

consolidated financial statements required pursuant to this item are included in Part IV, Item 15 of this Annual Report on Form 10-K,

beginning on page F-1, and incorporated herein by reference.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis