What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-05-07 compared with 2025-10-30 · 149 added, 623 removed, 138 unchanged (85% of the section changed)

3 unchanged sentences

(In thousands, except share and per share amounts)

September 30,

CURRENT ASSETS

6 unchanged sentences

Operating lease – right of use asset 1,410 914

Acquired in-process research and development intangible assets

Other assets 683 595

TOTAL ASSETS $ 25,818 $ 32,351

LIABILITIES AND STOCKHOLDERS’ EQUITY

2 unchanged sentences

Accounts payable and accrued liabilities – related parties 25 25

Deferred liabilities

Operating lease, current liabilities 704 623

TOTAL CURRENT LIABILITIES 5,388 8,416

Long-term operating lease liabilities

Long-term operating lease liability 806 411

TOTAL LIABILITIES 6,194 8,827

2 unchanged sentences

Preferred stock, $ 0.001 par value, 10,000,000 shares authorized, 0 shares issued and outstanding - -

Common stock, $ 0.001 par value, 200,000,000 shares authorized, 26,585,258 and 22,280,451 shares issued and outstanding, respectively

Common stock, $ 0.001 par value, 200,000,000 shares authorized, 26,585,258 shares issued and outstanding 27 27

Additional paid-in capital 234,768 233,271

10 unchanged sentences

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

REVENUE $ - $ 50

OPERATING EXPENSES

1 unchanged sentence

Research and development 3,641 7,639

Impairment of acquired in-process research and development intangible assets

Total operating expenses 5,812 9,955

1 unchanged sentence

OTHER INCOME, NET 405 166

NET LOSS $ ( 5,407 ) $ ( 9,739 )

Net loss per common share – basic and diluted $ ( 0.20 ) $ ( 0.43 )

1 unchanged sentence

COMPREHENSIVE LOSS

Other comprehensive loss – foreign currency translation

Net loss $ ( 5,407 ) $ ( 9,739 )

Other comprehensive income (loss) – foreign currency translation 10 ( 35 )

Total comprehensive loss $ ( 5,397 ) $ ( 9,774 )

4 unchanged sentences

IN STOCKHOLDERS’ EQUITY

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER

FOR THE THREE MONTHS ENDED MARCH 31, 2026

(In thousands, except share amounts)

2 unchanged sentences

Balance as of December 31, 2025 26,585,258 $ 27 $ 233,271 $ ( 737 ) $ ( 209,037 ) $ 23,524

$ ( 163,104 )

Stock-based compensation - - 1,497 - - 1,497

Sale of common stock for cash

Exercise of warrants for cash

Loss on foreign currency translation

Gain on foreign currency translation - - - 10 - 10

Net loss - - - - ( 5,407 ) ( 5,407 )

Balance as of March 31, 2026 26,585,258 $ 27 $ 234,768 $ ( 727 ) $ ( 214,444 ) $ 19,624

Stock-based compensation

Sale of common stock for cash

Loss on foreign currency translation

Balance as of June 30, 2025

Stock-based compensation

Loss on foreign currency translation

Balance as of September 30, 2025

$ ( 203,773 )

The accompanying notes are an integral

part of these unaudited condensed consolidated financial statements.

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

INMUNE BIO INC.

1 unchanged sentence

IN STOCKHOLDERS’ EQUITY

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER

FOR THE THREE MONTHS ENDED MARCH 31, 2025

(In thousands, except share amounts)

1 unchanged sentence

Stockholders’

Income (Loss)

Balance as of December 31, 2024 22,280,451 $ 22 $ 195,754 $ ( 575 ) $ ( 163,104 ) $ 32,097

$ ( 121,022 )

Stock-based compensation - - 2,076 - - 2,076

Gain on foreign currency translation

Balance as of March 31, 2024

Stock-based compensation

Common stock issued for cash

Common stock and warrants issued for cash

Loss on foreign currency translation

Balance as of June 30, 2024

$ ( 141,793 )

Stock-based compensation

Common stock and warrants issued for cash

Reclassification from redeemable common stock

Sale of common stock for cash 649,860 1 5,272 - - 5,273

Exercise of warrants for cash 100 - 1 - - 1

Loss on foreign currency translation - - - ( 35 ) - ( 35 )

Balance as of September 30, 2024

Net loss - - - - ( 9,739 ) ( 9,739 )

Balance as of March 31, 2025 22,930,411 $ 23 $ 203,103 $ ( 610 ) $ ( 172,843 ) $ 29,673

The accompanying

3 unchanged sentences

(In thousands)

For the Nine Months Ended

September 30,

For the Three Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ ( 5,407 ) $ ( 9,739 )

Adjustments to reconcile net loss to net cash used in operating activities:

Stock-based compensation 1,497 2,076

Accretion of debt discount

Gain on settlement of accounts payable ( 91 ) -

Depreciation expense 52 -

Impairment of acquired in-process research and development intangible assets

Changes in operating assets and liabilities:

2 unchanged sentences

Prepaid expenses ( 99 ) 124

Prepaid expenses – related party

Other assets ( 88 ) 30

Accounts payable and accrued liabilities ( 3,018 ) 659

3 unchanged sentences

Net cash used in operating activities ( 3,403 ) ( 6,824 )

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of equipment

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Net proceeds from sale of common stock and warrants

Sale of common stock for cash - 5,273

Exercise of warrants for cash - 1

Repayments of debt

Net cash provided by financing activities - 5,274

Impact on cash from foreign currency translation 10 ( 35 )

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

NET DECREASE IN CASH AND CASH EQUIVALENTS ( 3,393 ) ( 1,585 )

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 24,751 20,922

3 unchanged sentences

Cash paid for interest expense $ - $ -

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

SUPPLEMENTAL NONCASH INVESTING AND FINANCING ACTIVITIES

Right of use assets obtained in exchange for lease obligations $ 587 $ -

4 unchanged sentences

FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND DESCRIPTION

NOTE 1 – ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Description of Business

INmune Bio Inc.

(the “Company” or “INmune Bio”)

was organized in the State of Nevada on September 25, 2015 and is a clinical stage biotechnology pharmaceutical company focused on developing

and commercializing its product candidates to treat diseases where inflammation and immunology cause a dysfunctional immune system contributing

(the “Company” or “INmune Bio”) is a clinical stage biotechnology pharmaceutical company focused on developing and commercializing its product candidates to treat diseases where inflammation and immunology cause a dysfunctional immune system contributing to disease.

INmune Bio has three product platforms.

The DN-TNF product platform utilizes dominant-negative technology to selectively

neutralize soluble TNF, a key driver of innate immune dysfunction and mechanistic target of many diseases and was used for its Alzheimer’s

clinical trial (“XPro”).

The CORDStrom product platform is a pooled, human umbilical cord mesenchymal stem cell product currently

being developed to treat recessive dystrophic epidermolysis bullosa (“RDEB”).

The Natural Killer Cell Priming Platform includes

INKmune aimed at priming the patient’s NK cells to eliminate minimal residual disease in patients with cancer.

product platforms utilize a precision medicine approach for the treatment of a wide variety of hematologic malignancies, solid tumors

and chronic inflammation.

NOTE 2 – GOING CONCERN

These unaudited condensed consolidated financial

statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates

the realization of assets and the satisfaction of liabilities in the normal course of business.

The Company has incurred significant losses and

negative cash flows from operations since inception and expects to incur additional losses until such time that it can generate significant

revenue from the commercialization of its product candidates.

During the nine months ended September 30, 2025, the Company incurred a

net loss of $ 40.7 million and had net cash flows used in operating activities of $ 19.6 million.

Given the Company’s projected

operating requirements and its existing cash and cash equivalents, the Company is projecting insufficient liquidity to sustain its operations

through one year following the date that the financial statements are issued.

These conditions and events raise substantial doubt about

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

In response to these conditions, management is

currently evaluating different strategies to obtain the required funding of future operations.

Financing strategies may include, but are

not limited to, the public or private sale of equity, debt financings or funds from other capital sources, such as government funding,

collaborations, strategic alliances, divestment of non-core assets, or licensing arrangements with third parties.

There can be no assurances

that the Company will be able to secure additional financing, or if available, that it will be sufficient to meet its needs or on favorable

Because management’s plans have not yet been finalized and are not within the Company’s control, the implementation

of such plans cannot be considered probable.

As a result, the Company has concluded that management’s plans do not alleviate substantial

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

The unaudited condensed consolidated financial

statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and

classification of liabilities that might result from the outcome of this uncertainty.

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES

of Presentation

The accompanying financial statements are presented

dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America (“US

GAAP”), and pursuant to the accounting and disclosure rules and regulations of the U.S.

The CORDStrom product platform is a pooled, human umbilical cord mesenchymal stem cell product currently being developed to treat recessive dystrophic epidermolysis bullosa (“RDEB”).

The DN-TNF product platform utilizes dominant-negative technology to selectively neutralize soluble TNF, a key driver of innate immune dysfunction and mechanistic target of many diseases and was used for its Alzheimer’s clinical trial (“XPro”).

The Natural Killer Cell Priming Platform includes INKmune aimed at priming the patient’s NK cells to eliminate minimal residual disease in patients with cancer.

Basis of Presentation

The accompanying financial statements are presented in U.S.

dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), and pursuant to the accounting and disclosure rules and regulations of the U.S.

Securities and Exchange Commission (“SEC”).

1 unchanged sentence

and its subsidiaries.

Intercompany transactions

and balances have been eliminated.

In the opinion

of management, the interim financial information includes all normal recurring adjustments necessary for a fair statement of the results

for the interim periods.

These unaudited condensed consolidated interim financial statements should be read in conjunction with

the audited financial statements and notes thereto for the year ended December 31, 2024, included in the Company’s Annual Report

on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 27, 2025.

Risks and Uncertainties

The Company is subject to risks and uncertainties

common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological

innovations, protection of proprietary technology, dependence on key personnel, compliance with government regulations and the need to

obtain additional financing to fund operations.

Product candidates currently under development will require significant additional research

and development efforts, including extensive preclinical studies, clinical trials and regulatory approval prior to commercialization.

These efforts require significant amounts of additional resources, adequate personnel, infrastructure and extensive compliance and reporting.

The Company’s product candidates are still

in development and, to date, none of the Company’s product candidates have been approved for sale.

There can be no assurance that the Company’s

research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be

obtained or maintained, that any products developed will obtain necessary government regulatory approval or that any approved products

will be commercially viable.

Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the

Company will generate any revenue from any of its products.

The Company operates in an environment of rapid change in technology and substantial

competition from other pharmaceutical and biotechnology companies.

The Company relies and expects to continue to

rely on a small number of vendors to manufacture supplies and materials for its use in the clinical trial programs.

These programs could

be adversely affected by a significant interruption in these manufacturing services.

Intercompany transactions and balances have been eliminated.

In the opinion of management, the interim financial information includes all normal recurring adjustments necessary for a fair statement of the results for the interim periods.

These unaudited condensed consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2025, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 30, 2026.

Use of Estimates

Preparing financial statements in conformity with

US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses.

Preparing financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses.

Actual results and outcomes may differ from management’s estimates and assumptions.

Fair Value of Financial Instruments

The Company measures certain assets and liabilities

in accordance with authoritative guidance which requires fair value measurements to be classified and disclosed in one of the following

three categories:

Quoted prices (unadjusted)

in active markets that are accessible at the measurement date for assets or liabilities.

Observable prices that

are based on inputs not quoted on active markets but corroborated by market data.

Unobservable inputs are

used when little or no market data is available.

Assets and liabilities are classified based on

the lowest level of input that is significant to the fair value measurements.

The Company reviews the fair value hierarchy classification

on a quarterly basis.

Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain assets

or liabilities within the fair value hierarchy.

The Company did not have any transfers of assets and liabilities between the levels of

the fair value measurement hierarchy during the years presented.

The carrying amounts of financial instruments

such as cash and cash equivalents, research and development tax credit receivable, other tax receivable, prepaid expenses, and accounts

payable and accrued liabilities approximate the related fair values due to the short-term maturities of these instruments.

Cash and Cash Equivalents

considers all short-term, highly liquid investments with an original maturity at the date of purchase of three months or less to be cash

The Company maintains cash balances that may be uninsured or in deposit accounts that exceed Federal Deposit Insurance Corporation

The Company maintains its cash deposits with major financial institutions.

and Development Tax Incentive Receivable

The Company, through its wholly owned subsidiary

in Australia (“AUS”), participates in the Australian research and development tax incentive program, such that a percentage

of our qualifying research and development expenditures are reimbursed by the Australian government, and such incentives are reflected

as a reduction of research and development expense.

The Australian research and development tax incentive is recognized when there is

reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the consideration

can be reliably measured.

At each period end, management estimates the reimbursement available to the Company based on available information

The Company, through its wholly owned subsidiary

in the United Kingdom (“UK”), participates in the research and development program provided by the United Kingdom tax relief

program, such that a percentage of our qualifying research and development expenditures are reimbursed by the United Kingdom government,

and such incentives are reflected as a reduction of research and development expense.

The United Kingdom research and development tax

incentive is recognized when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred

and the amount of the consideration can be reliably measured.

At each period end, management estimates the reimbursement available to

the Company based on available information at the time.

Equipment is recorded at cost and depreciated

using the straight-line method over the estimated useful lives of the assets and consist of scientific equipment with a 5 year life.

and maintenance costs are charged to expense as incurred.

Intangible Assets

The Company capitalizes costs incurred in connection

with in-process research and development purchased from others if the asset has alternative uses and such uses are not restricted under

applicable license agreements;

patent applications (principally legal fees), patent purchases, and trademarks related to its cell line

as intangible assets.

Acquired in-process research and development costs that do not have alternative uses are expensed as incurred.

the assets are determined to have a finite life (upon completion of the development of the in-process research and development for its

DN-TNF platform), the useful life will be determined and the in-process research and development intangible assets will be amortized.

During the fourth quarter and if business factors

indicate more frequently, the Company performs an assessment of the qualitative factors affecting the fair value of our in-process research

and development.

If the qualitative assessment suggests that impairment is more likely than not, a quantitative analysis is performed.

The quantitative analysis involves a comparison of the fair value of the in-process research and development with the carrying amount.

If the carrying amount of the in-process research and development exceeds its fair value, an impairment loss is recognized in an amount

equal to that excess.

During the second quarter of 2025, the Company

released the Phase 2 clinical trial results for our Alzheimer’s drug candidate, XPro, which failed to meet the primary endpoint,

though a subgroup showed potential benefits.

Due to insufficient resources to fund further trials, the Company has halted immediate plans

to develop XPro for Alzheimer’s or other indications and are instead seeking a partner to continue these studies.

As part of preparing

its interim unaudited condensed consolidated financial statements, the Company determined that the intangible asset’s fair value

was likely below its carrying value.

Following a quantitative impairment assessment, the Company estimated the asset’s fair value

at $ 0 , resulting in a recorded impairment of $ 16,514,000 which was recorded during the second quarter of 2025.

Significant Accounting Policies

Our significant accounting policies have not changed during the three months ended March 31, 2026 from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

Going concern

These unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

The Company has incurred significant losses and negative cash flows from operations since inception and expects to incur additional losses until such time that it can generate significant revenue from the commercialization of its product candidates.

During the three months ended March 31, 2026, the Company incurred a net loss of $ 5.4 million and had net cash flows used in operating activities of $ 3.4 million.

Given the Company’s projected operating requirements and its existing cash and cash equivalents, the Company is projecting insufficient liquidity to sustain its operations through one year following the date that the financial statements are issued.

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

In response to these conditions, management is currently evaluating different strategies to obtain the required funding of future operations.

Financing strategies may include, but are not limited to, the public or private sale of equity, debt financings or funds from other capital sources, such as government funding, collaborations, strategic alliances, divestment of non-core assets, or licensing arrangements with third parties.

There can be no assurances that the Company will be able to secure additional financing, or if available, that it will be sufficient to meet its needs or on favorable terms.

Because management’s plans have not yet been finalized and are not within the Company’s control, the implementation of such plans cannot be considered probable.

As a result, the Company has concluded that management’s plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern.

The unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

Basic and Diluted Loss per Share

Basic loss per share is computed by dividing net

loss available to common shareholders by the weighted average number of outstanding common shares during the period.

Diluted loss per

share gives effect to all dilutive potential common shares outstanding during the period.

Dilutive loss per share excludes all potential

common shares if their effect is anti-dilutive.

For all periods presented, there is no difference in the number of shares used to calculate

basic and diluted shares outstanding due to the Company’s net loss position.

At September 30, 2025 and 2024, the Company had

potentially issuable shares as follows:

September 30,

Stock options

Revenue Recognition

The Company recognizes revenue when the customer

obtains control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange

for those goods or services.

The Company recognizes revenue following the five-step model prescribed under ASC Topic 606:

contract(s) with a customer;

(2) identify the performance obligations in the contract;

(3) determine the transaction price;

the transaction price to the performance obligations in the contract;

and (5) recognize revenues when (or as) the Company satisfies the

performance obligations.

The Company records the expenses related to revenue in research and development expense, in the periods such

expenses were incurred.

The Company records deferred revenues when cash

payments are received or due in advance of performance, including amounts which are refundable.

Stock-Based Compensation

utilizes the Black-Scholes option pricing model to estimate the fair value of stock option awards at the date of grant, which requires

the input of highly subjective assumptions, including expected volatility and expected life.

Changes in these inputs and assumptions can

materially affect the measure of estimated fair value of our share-based compensation.

These assumptions are subjective and generally

require significant analysis and judgment to develop.

When estimating fair value, some of the assumptions will be based on, or determined

from, external data and other assumptions may be derived from our historical experience with stock-based payment arrangements.

The appropriate

weight to place on historical experience is a matter of judgment, based on relevant facts and circumstances.

The Company accounts for

forfeitures of stock options as they occur.

Research and Development

Research and development (“R&D”)

costs are expensed as incurred.

Research and development credits are recorded by the Company as a reduction of research and development

Major components of research and development costs include cash compensation, stock-based compensation, costs of preclinical studies,

clinical trials and related clinical manufacturing, costs of drug development, costs of materials and supplies, facilities cost, overhead

costs, regulatory and compliance costs, and fees paid to consultants and other entities that conduct certain research and development

activities on the Company’s behalf.

recognizes grants as contra research and development expense in the consolidated statement of operations on a systematic basis over the

periods in which the entity recognizes as expenses the related costs for which the grants are intended to compensate.

The Company follows the liability method of accounting

for income taxes.

Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable

to differences between the financial statement carrying values and their respective income tax basis (temporary differences).

on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment

Foreign Currency Translation

The Company’s financial statements are presented

dollar (“$”), which is the Company’s reporting currency, while its functional currencies are the U.S.

based operations, British Pound (“GBP”) for its United Kingdom-based operations and Australian Dollars (“AUD”)

for its Australian-based operations.

All assets and liabilities are translated at the exchange rate on the balance sheet date, stockholders’

equity is translated at historical rates and statement of operations items are translated at the weighted average exchange rate for the

The resulting translation adjustments are reported under other comprehensive income.

Gains and losses resulting from the translations

of foreign currency transactions and balances are reflected in the statement of operations and comprehensive income (loss).

Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period.

Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period.

Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.

For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.

At March 31, 2026, the Company had 9,733,841 potentially issuable shares of common stock upon the exercise of stock options and 3,944,138 potentially issuable shares of common stock upon the exercise of warrants

At December 31, 2025, the Company had 9,759,882 potentially issuable shares of common stock upon the exercise of stock options and 3,944,138 potentially issuable shares of common stock upon the exercise of warrants.

Segment Information

The Company has one primary business activity

and operates in one reportable segment.

The Company’s chief operating decision maker

(“CODM”) is its Chief Executive Officer who evaluates performance and makes operating decisions about allocating resources

based on financial data presented on a consolidated basis.

The measures of profitability and the significant segment expenses reviewed

by the CODM are consistent with these financial statements and footnotes.

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income

Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”).

The guidance in ASU 2023-09 improves the

transparency of income tax disclosures by greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated

by jurisdiction.

The standard is effective for public companies for fiscal years beginning after December 15, 2024 and for interim periods

for fiscal years beginning after December 15, 2025, with early adoption permitted.

The Company is currently evaluating the impact that

the adoption of ASU 2023-09 may have on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income

Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income

Statement Expenses (“ASU 2024-03”).

ASU 2024-03 requires additional disclosure of specific types of expenses included

in the expense captions presented on the face of the income statement as well as disclosures about selling expenses.

ASU 2024-03 is effective

for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted.

ASU 2024-03 may be applied prospectively with the option for retrospective application for all prior periods presented.

The Company is

currently evaluating the impact of adopting this guidance on the Company’s current financial position, results of operations or

financial statement disclosures.

On July 4, 2025, the One Big Beautiful Bill Act

(“OBBBA”) was enacted in the U.S.

The OBBBA includes significant provisions, such as expensing of U.S.

research expenditures

and eligible capital expenditures, the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications

to the international tax framework and the restoration of favorable tax treatment for certain business provisions.

The impacts of the

OBBBA are reflected in our results for the quarter ended September 30, 2025, and there was no impact to our income tax expense or effective

income tax rate.

NOTE 4 – RESEARCH AND DEVELOPMENT

According to AUS tax law, the Company is allowed

an R&D tax credit that reduces a company’s tax bill in AUS for expenses incurred in R&D subject to certain requirements.

The Company has one primary business activity and operates in one reportable segment.

The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer who evaluates performance and makes operating decisions about allocating resources based on financial data presented on a consolidated basis.

The measures of profitability and the significant segment expenses reviewed by the CODM are consistent with these financial statements and footnotes.

Recently issued accounting pronouncements not yet adopted

In November 2024, the FASB issued ASU 2024-03 related to the disaggregation of certain income statement expenses.

The amendments in this update require public entities to disclose incremental information related to purchases of inventory, team member compensation and depreciation, which will provide investors the ability to better understand entity expenses and make their own judgements about entity performance.

The amendments in this update are effective for fiscal years beginning after December 15, 2026.

The standard permits adoption on either a prospective or retrospective basis.

The Company currently plans to adopt this guidance on a prospective basis for the year ending December 31, 2027.

Aside from these disclosure changes, we do not expect the amendments to have a material effect on our financial statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements, which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting.

The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity.

ASU 2025-11 is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted.

The standard permits either prospective or retrospective application.

The Company currently plans to adopt ASU 2025-11 on a prospective basis for the year ending December 31, 2028.

The Company is currently evaluating the impact of adopting ASU 2025-11 on our financial statements.

NOTE 2 – RESEARCH AND DEVELOPMENT ACTIVITY

According to AUS tax law, the Company is allowed an R&D tax credit that reduces a company’s tax bill in AUS for expenses incurred in R&D subject to certain requirements.

The Company’s Australian subsidiary submits R&D tax credit requests annually for research and development expenses incurred.

At September 30, 2025 and December 31, 2024, the Company recorded a research and development tax credit receivable of $ 1,704,000 and $ 1,181,000 ,

respectively, for R&D expenses incurred in Australia.

License Agreement

3, 2017, the Company entered into a license agreement (“Xencor License Agreement”) with Xencor, Inc.

which discovered and developed a proprietary biological molecule that inhibits soluble tumor necrosis factor.

On June 10, 2021, the Company

and Xencor entered into a First Amendment to License Agreement pursuant to which, among other things, Section 3.2 of the Xencor License

Agreement was amended to change the due diligence milestones.

Pursuant to the Xencor License Agreement, Xencor granted the Company an

exclusive worldwide, royalty-bearing license in licensed patent rights, licensed know-how and licensed materials (as defined in the license

agreement) to make, develop, use, sell and import any pharmaceutical product that comprises, contains, or incorporates Xencor’s

proprietary protein known as “XPro” that inhibits soluble tumor necrosis factor (or all modifications, formulations and variants

of the licensed protein that specifically bind soluble tumor necrosis factor) alone or in combination with one or more active ingredients,

in any dosage or formulation (“Licensed Products”).

The Company believes the protein has numerous medical applications.

additional alternative applications of the technology are available under the Xencor License Agreement.

also agreed to pay Xencor a 5 % royalty on Net Sales of all Licensed Products in a given calendar year, which are payable on a country-by-

country and licensed product by licensed product basis until the date that is the later of (a) the expiration of the last to expire valid

claim covering such Licensed Product in such country or (b) ten years following the first sale to a third party of the licensed product

in such country.

During the second quarter of 2025, the Company

released the Phase 2 clinical trial results for our Alzheimer’s drug candidate, XPro, which failed to meet the primary endpoint,

though a subgroup showed potential benefits.

Due to insufficient resources to fund further trials, the Company has halted immediate plans

to develop XPro for Alzheimer’s or other indications and are instead seeking a partner to continue these studies.

As part of preparing

its interim unaudited condensed consolidated financial statements, the Company determined that the intangible asset’s fair value

was likely below its carrying value.

Following a quantitative impairment assessment, the Company estimated the asset’s fair value

at $ 0 , resulting in a recorded impairment of $ 16,514,000 during the second quarter of 2025.

At March 31, 2026 and December 31, 2025, the Company recorded a research and development tax credit receivable of $ 479,000 and $ 3,897,000 , respectively, for R&D expenses incurred in Australia.

During the three months ended March 31, 2026, the Company received approximately $ 3.6 million in tax credit reimbursements from Australia.

According to UK tax law, the Company is allowed an R&D tax credit that reduces a company’s tax bill in the UK for expenses incurred in R&D subject to certain requirements.

At March 31, 2026 and December 31, 2025, the Company had a research and development tax credit receivable of $ 0 and $ 387,000 , respectively, for R&D expenses incurred in the UK.

During the three months ended March 31, 2026, the Company received approximately $ 382,000 in tax credit reimbursements from the UK.

Cordstrom License Agreement

On February 6, 2025, the Company and Great Ormond

Street Hospital for Children NHS Foundation Trust (“GOSH”) entered into a license agreement for the exclusive commercial use

to clinical trial data associated with a GOSH study investigating the potential of CORDStrom to treat RDEB in pediatric patients (the

“MissionEB study”).

The Company owns the intellectual property covering CORDStrom, the investigational medicinal product used

in the Mission EB study.

In addition, the Company owns intellectual property and maintains trade secret protections covering the manufacturing

of CORDStrom.

With this license to the clinical trial data, the Company intends to prepare applications seeking marketing authorization

of CORDStrom for treatment of pediatric RDEB in each of the FDA, EMA, and MHRA.

Terms of the license agreement include a milestone payment

of up to £ 6,000,000 (approximately $ 8.1 million as of September 30, 2025) due on the first to occur marketing authorization to be

granted by the FDA, EMA or MHRA, which had not occurred as of September 30, 2025.

The Company was also required to make an upfront payment

to GOSH of approximately $ 0.3 million, which the Company paid during July 2025 and recorded in research and development expense.

Pursuant to the GOSH license agreement, the Company

has an obligation to provide CORDStrom to the MissionEB study at no cost.

While Part 1 of the study is completed, Part 2 of the MissionEB

study is currently uninitiated due to a lack of funding by the National Health Services England (“NHSE”).

It is unknown whether

funding for the study will be allocated by NHSE or its successor agency in the United Kingdom.

The Company has not recorded an estimated

obligation for the supply of the MissionEB trial with CORDStrom as it is unknown if the MissionEB trial will resume.

During February 2025, the Company and Great Ormond Street Hospital for Children NHS Foundation Trust (“GOSH”) entered into a license agreement for the exclusive commercial use to clinical trial data associated with a GOSH study investigating the potential of CORDStrom to treat RDEB in pediatric patients (the “MissionEB study”).

The Company owns the intellectual property covering CORDStrom, the investigational medicinal product used in the Mission EB study.

In addition, the Company owns intellectual property and maintains trade secret protections covering the manufacturing of CORDStrom.

With this license to the clinical trial data, the Company intends to prepare applications seeking marketing authorization of CORDStrom for treatment of pediatric RDEB in each of the FDA, EMA, and MHRA.

Terms of the license agreement include a milestone payment of up to £ 6,000,000 (approximately $ 7.9 million as of March 31, 2026) due on the first to occur marketing authorization to be granted by the FDA, EMA or MHRA, which had not occurred as of March 31, 2026.

Under the license agreement, the Company was previously obligated to provide CORDStrom for use in the MissionEB clinical study at no cost.

During February 2026, the MissionEB study was formally closed, and the Company’s obligation to supply CORDStrom in connection with that study has terminated in accordance with the terms of the license agreement.

As a result, the Company has no remaining contractual product supply obligations related to the MissionEB study under the license agreement.

The Company intends to provide CORDStrom at no cost for use in a contemplated follow-on clinical study referred to as “MissionEB II” however, no definitive agreement governing such study has been executed, and the Company has no present contractual obligation to supply product for MissionEB II.

License Agreement

During October 2017, the Company entered into a license agreement with Xencor, Inc., as amended.

Under the agreement, the Company obtained an exclusive, worldwide, royalty-bearing license to develop and commercialize products incorporating Xencor’s XPro protein technology targeting soluble tumor necrosis factor.

The Company is obligated to pay a 5 % royalty on net sales of licensed products on a country-by-country and product-by-product basis for the later of the patent term or ten years following first commercial sale.

INKmune License Agreement

On October 29, 2015, the Company entered into

an exclusive license agreement (the “INKmune License Agreement”) with Immune Ventures, LLC (“Immune Ventures”).

Pursuant to the INKmune License Agreement, the Company was granted exclusive worldwide rights to the patents, including rights to incorporate

any improvements or additions to the patents that may be developed in the future.

In consideration for the patent rights, the Company

agreed to the following milestone payments:

(in thousands)

Each Phase I initiation

Each Phase II initiation

Each Phase III initiation

Each NDA/EMA filing

Each NDA/EMA awarded

In addition, the Company agreed to pay the licensor

a royalty of 1 % of net sales during the life of each patent granted to the Company.

The License is owned by Immune Ventures.

Moss, the Company’s Chief Executive Officer, Mark Lowdell, its Chief Scientific Officer, and RJ Tesi, former Chief Executive Officer

of the Company, are the owners of Immune Ventures.

No sales have occurred under this license.

During December 2023, the Company initiated

a Phase I trial with INKmune in patients with metastatic castration-resistant prostate cancer.

At December 31, 2024 and September 30,

2025, the Company recorded $ 25,000 payable to Immune Ventures within accounts payable and accrued liabilities – related parties

in the consolidated balance sheet.

The term of the agreement began on October 29,

2015 and ends on a country-by-country basis on the date of the expiration of the last to expire patent rights where patent rights exists,

unless terminated earlier in accordance with the agreement.

Upon the termination of the agreement, we shall have a fully paid up, perpetual,

royalty-free license without further obligation to Immune Ventures.

The agreement can be terminated by Immune Ventures if, after 60 days

from the Company’s receipt of notice that the Company has not made a payment under the agreement, and the Company still does not

make this payment.

On July 20, 2018 and October 30, 2020, the parties amended the agreement under which the Company was required

achieve milestones pursuant to the agreement.

On April 17, 2023, the parties executed an additional

amendment to the agreement under which the Company removed the due diligence requirements to achieve reasonable commercial efforts to

bring INKmune to market.

This removed all requirements of clinical trial timelines and the filing timelines of an NDA or equivalent.

other provisions in the INKmune License Agreement shall continue in full force and effect.

University of Pittsburg License Agreement

On October 3, 2017, the Company entered into an

Assignment and Assumption Agreement with Immune Ventures related to intellectual property licensed from the University of Pittsburgh.

Pursuant to the Assignment and Assumption Agreement (“Assignment Agreement”), Immune Ventures assigned all of its rights,

obligations and liabilities under an Exclusive License Agreement between the University of Pittsburgh – Of the Commonwealth System

of Higher Education (“Licensor”) and Immune Ventures to INmune Bio (“Licensee”), (the “PITT Agreement”).

Consideration under the PITT Agreement includes:

(i) annual maintenance fees, (ii) royalty payments based on the sale of products making use of the licensed technology, and (iii) milestone

The Company owes annual maintenance fees under

the PITT Agreement in the amount of $ 25,000 payable on June 26 of each year until the first commercial sale.

At September 30, 2025, the

Company owed the University of Pittsburgh $ 25,000 for annual maintenance fees.

Upon first commercial sale of a product making

use of the licensed technology under the PITT Agreement, the Licensee is required to pay royalties equal to 2.5 % of Net Sales each calendar

Moreover, under the PITT Agreement the Licensee

is required to make milestone payments as follows:

(in thousands)

Each Phase I initiation

Each Phase III initiation

First commercial sale of product making use of licensed technology

The PITT Agreement expires upon the earlier of:

(i) expiration of the last claim of the Patent Rights (as defined in the PITT Agreement) forming the subject matter of the PITT Agreement;

or (ii) the date that is 20 years from the effective date of the agreement (June 26, 2037).

The Licensee may terminate the PITT Agreement

upon 3 months prior written notice provided all payments under the license are current.

The Licensor may terminate the PITT Agreement

upon written notice if:

(i) Licensee defaults as to performance of material obligations which have not been cured within 60 days after

receiving written notice;

or (ii) Licensee ceases to carry out its business, becomes bankrupt or insolvent, applies for or consents to

the appointment of a trustee, receiver or liquidator of its assets or seeks relief under any law for the aid of debtors.

The Company is party to a license agreement with Immune Ventures, LLC (“Immune Ventures”), a related party, under which it obtained exclusive worldwide rights to certain intellectual property.

The agreement provides for milestone payments upon the achievement of specified development and regulatory events and a 1 % royalty on future net sales.

No sales have occurred under the license.

As of March 31, 2026 and December 31, 2025, the Company recorded a $ 25,000 milestone payable to Immune Ventures, which is included in accounts payable and accrued liabilities – related parties.

NOTE 3 – FAIR VALUE MEASUREMENTS

The following table presents the hierarchy

for assets and liabilities measured at fair value on a recurring basis:

(in thousands)

September 30, 2025:

The following table presents the hierarchy for assets and liabilities measured at fair value on a recurring basis:

(in thousands) Total Quoted

(Level 1) Significant

(Level 2) Significant

March 31, 2026:

Cash equivalents

Treasury Bills

Money market fund

Money market funds $ 20,177 $ 20,177 $ - $ -

Total cash equivalents $ 20,177 $ 20,177 $ - $ -

(in thousands)

(in thousands) Total Quoted

(Level 1) Significant

Observable Inputs

(Level 2) Significant

December 31, 2025:

Cash equivalents

Treasury Bills

Money market fund

Money market funds $ 24,298 $ 24,298 $ - $ -

Total cash equivalents $ 24,298 $ 24,298 $ - $ -

NOTE 6 – COMMITMENTS

2025, the Company wholly owned subsidiary, INmune Bio International Ltd., entered into an agreement whereby the Company leases manufacturing

space from a third party in the United Kingdom for 2 years.

The lease requires payments of approximately $ 76,000 each quarter during the

first year and $ 152,000 each quarter during the second year.

The lease commencement date is August 2025.

As of September 30, 2025, the

maturities of our lease liabilities are as follows:

NOTE 4 – LEASE

In September 2021, the Company signed a lease with a third party for office space in Boca Raton, Florida.

The lease agreement has a 64 -month term and commenced during the fourth quarter of 2021.

During March 2026, the Company exercised its option to renew the term of its office space in Boca Raton, Florida.

The option renewal provides for an additional three -year term commencing April 1, 2027.

Base rent under the extension will be approximately $ 17,000 per month during the first year, increasing by approximately 3 % annually over the term.

As of March 31, 2026, the maturities of our lease liabilities are as follows:

(in thousands, except years)

4 unchanged sentences

Long-term operating lease liabilities $ 806

Weighted-average remaining lease term 1.7 years

Weighted-average discount rate 12.0 %

During the three and nine months ended September

30, 2025 the Company recognized $ 134,000 and $ 229,000 , respectively, of lease expense.

During the three and nine months ended September

30, 2024, the Company recognized $ 40,000 and $ 120,000 , respectively, of lease expense.

During April 2025, the Company’s wholly-owned

subsidiary, INmune Bio International.

Ltd., entered into a 2 -year collaboration agreement with a vendor whereby it makes fixed payments

to the vendor in exchange for services pursuant to manufacturing CORDStrom in the United Kingdom.

A summary of the commitments payable

for these services pursuant to the agreement is as follows as of September 30, 2025:

(in thousands, except years)

NOTE 7 – RELATED PARTY TRANSACTIONS

the nine months ended September 30, 2025 and 2024, the Company made payments to UCL of $ 132,000 and $ 252,000 , respectively, for medical

research performed on behalf of the Company.

UCL is a wholly owned subsidiary of the University of London.

The Company’s Chief

Scientific and Manufacturing Officer is a professor at the University of London.

30, 2025 and December 31, 2024, the Company recorded a payable to AmplifyBio of $ 26,000 and $ 0 , respectively, for medical research performed

on behalf of the Company.

During the nine months ended September 30, 2025 and 2024, the Company paid AmplifyBio $ 41,000 and $ 324,000 ,

respectively.

During 2025, AmplifyBio ceased operations.

Amplify Bio’s former CEO is on the board of directors of the Company.

NOTE 8 – DEBT

the Company entered into a Loan and Security Agreement (the “Term Loan”) with Silicon Valley Bank and SVB Innovation Credit

Fund VIII, L.P., together (the “Lenders”) in which the Company borrowed $ 15 million.

The Term Loan was secured by the Company’s

During December 2024, the Company paid off the Term Loan in full.

During February 2025, the Company entered into a letter agreement

with the Lenders whereby the Term Loan was terminated.

three and nine months ended September 30, 2024, the Company recognized interest expense of $ 145,000 and $ 752,000 , respectively, related

to the Term Loan

The weighted average lease term as of March 31, 2026 and December 31, 2025 was 2.8 years and 1.5 years, respectively.

As of March 31, 2026 and March 31, 2025, the weighted-average discount rate for operating leases was 12.0 %.

During the three months ended March 31, 2026 and 2025, the Company recognized $ 147,000 and $ 40,000 , respectively, of lease expense.

NOTE 5 – STOCKHOLDERS’ EQUITY

Registered Direct Offerings

During June 2025, the Company entered into securities

purchase agreements with investors whereby the Company sold 3,000,000 shares of the common stock in a registered direct offering in exchange

for gross proceeds of $ 18.9 million (net proceeds of approximately $ 17.4 million).

During September 2024, the Company entered into

securities purchase agreements with investors whereby the Company sold 2,341,260 shares of the Company’s common stock

and warrants to purchase an additional 2,341,260 shares of the Company’s common stock in a registered direct offering

in exchange for gross proceeds of $ 13.0 million (net proceeds of approximately $ 12.0 million).

Directors and officers

that participated in the offering paid a combined offering price of $ 6.50 per share and warrant, and other investors paid a combined

offering price of $ 5.50 per share and warrant.

The warrants are exercisable until March 16, 2030 and the exercise price is $ 6.40 .

The Company determined the warrants were equity classified.

The fair value of the warrants was approximately $ 9.1 million and was

calculated using the Black-Scholes option-pricing model.

Variables used in the Black-Scholes option-pricing model include:

rate of 3.41 % based on the applicable US Treasury bill rate (2) expected life of 5.5 years, (3) expected volatility of

approximately 92 % based on the trading history of the Company, and (4) zero expected dividends.

During April 2024, the Company entered into a

securities purchase agreement with an investor whereby the Company sold 986,000 shares of the Company’s common stock and

warrants to purchase an additional 986,000 shares of the Company’s common stock in a registered direct offering in exchange

for gross proceeds of approximately $ 9.7 million (net proceeds of approximately $ 8.9 million).

The exercise price of the warrants

is $ 9.84 and the warrants are exercisable until April 29, 2026.

The Company determined that the warrants were equity classified.

The fair value of the warrants was approximately $ 5.8 million and was calculated using the Black-Scholes option-pricing model.

used in the Black-Scholes option-pricing model include:

(1) discount rate of 4.97 % based on the applicable US Treasury bill rate

(2) expected life of 2.0 years, (3) expected volatility of approximately 77 % based on the trading history of the Company,

and (4) zero expected dividends.

During April 2024, the Company entered into securities

purchase agreements with investors whereby the Company sold 571,592 shares of the Company’s common stock and warrants

to purchase an additional 571,592 shares of the Company’s common stock in a registered direct offering in exchange for

gross proceeds of approximately $ 4.8 million (net proceeds of approximately $ 4.5 million).

Directors and

officers that participated in the offering paid a combined offering price of $ 8.445 per share and warrant, and other investors paid

$ 8.32 per share and warrant.

The exercise price of the warrants is $ 9.152 , and the warrants are exercisable for two years from the

issuance dates.

The Company determined the warrants were equity classified.

The fair value of the warrants was approximately $ 3.0 million

and was calculated using the Black-Scholes option-pricing model.

Variables used in the Black-Scholes option-pricing model include:

discount rate of 4.89 % based on the applicable US Treasury bill rate (2) expected life of 2.0 years, (3) expected volatility

of approximately 78 % based on the trading history of the Company, and (4) zero expected dividends.

Common Stock – At the Market Offering

During March 2021, the Company entered into a

sales agreement (“Sales Agreement”) with BTIG, LLC (“BTIG”), as sales agent, to establish an At-The-Market (“ATM”)

offering program of up to $ 45 million of common stock, subject to certain limitations on the amount of common stock that may be offered

and sold by the Company set forth in the sales agreement.

During August 2023, the Company and BTIG entered into Amendment No.

Sales Agreement.

The Company is required to pay BTIG a commission of 3 % of the gross proceeds from the sale of shares.

nine months ended September 30, 2024, the Company issued and sold 198,364 shares of common stock at an average price of $ 10.56 per

share under the ATM program.

The aggregate net proceeds were approximately $ 2.0 million after commission expenses.

During August 2024, the Company entered into an

amended and restated at-the-market sales agreement with RBC Capital Markets LLC and BTIG (together, the “Sales Agents”) relating

to the offer and sale of shares of our common stock with an aggregate offering price of up to $ 75.0 million.

This amended and restated

at-the-market sales agreement replaced the Sales Agreement entered into with BTIG in March 2021, as amended in August 2023.

is required to pay the Sales Agents a commission of 3 % of the gross proceeds from the sale of shares.

During the nine months

ended September 30, 2024, the Company issued and sold 48,762 shares of common stock at an average price of $ 6.96 per share

under the ATM program.

The aggregate net proceeds were approximately $ 0.3 million after commission expenses.

During the nine months

ended September 30, 2025, the Company issued and sold 1,304,707 shares of common stock at an average price of $ 8.01 per

share under the ATM program.

During August 2024, the Company entered into an amended and restated at-the-market sales agreement with RBC Capital Markets LLC and BTIG (together, the “Sales Agents”) relating to the offer and sale of shares of our common stock.

The Company was required to pay the Sales Agents a commission of 3 % of the gross proceeds from the sale of shares.

During the three months ended March 31, 2025, the Company issued and sold 649,860 shares of common stock at an average price of $ 8.37 per share under the ATM program.

The aggregate net proceeds were approximately $ 5.3 million after commission expenses.

30, 2025, the Company had $ 64.5 million of common stock available under the amended and restated at-the-market agreement.

During July 2023, the Company sold 75,697 shares of its common

stock at an average price of $ 10.56 per share under the ATM program.

The aggregate net proceeds were approximately $ 775,000 after

offering expenses.

These shares were inadvertently sold under a registration statement filed with the SEC that had in fact expired prior

to the time the shares were sold.

The Company reclassified 75,697 shares, with an aggregate purchase price of $ 799,000 of

its common stock as temporary equity presented outside stockholders’ equity as a result of potential rescission rights.

of September 30, 2024, the rescission rights for these shares lapsed and the shares were reclassified to permanent equity.

On December 19, 2025, the Company terminated the amended and restated ATM sales agreement with the Sales Agents.

On December 19, 2025, the Company entered into a sales Agreement with A.G.P./Alliance Global Partners (“AGP”), as sales agent, pursuant to which the Company may offer and sell, from time to time, up to $ 65,000,000 of shares of its common stock through AGP in exchange for a 3 % commission on gross proceeds.

There were no sales of stock pursuant to this agreement during the three months ended March 31, 2026.

Stock options

During August 2025, the Company modified stock

option awards held by its former Chief Executive Officer to extend the post-termination exercise period and provide that unvested stock

options shall continue to vest pursuant to the severance agreement, which will result in additional stock-based compensation expense of

up to $ 2.4 million to be expensed over the remaining original vesting term, if any, of the stock option awards.

The following

table summarizes stock option activity during the nine months ended September 30, 2025:

The following table summarizes stock option activity during the three months ended March 31, 2026:

(in thousands, except share and per share amounts) Number of

6 unchanged sentences

Options cancelled ( 26,041 ) $ - - -

Outstanding at September 30, 2025 7,195,342 $ 8.29 5.80 $ -

Exercisable at September 30, 2025 5,379,014 $ 8.80 4.81 $ -

During the three and nine months ended September

30, 2025, the Company recognized stock-based compensation expense of approximately $ 3.0 million and $ 6.6 million, respectively, related

to the vesting of stock options.

During the three and nine months ended September 30, 2024, the Company recognized stock-based compensation

expense of approximately $ 1.7 million and $ 5.8 million, respectively, related to the vesting of stock options.

As of September 30, 2025,

there was approximately $ 8.0 million of total unrecognized compensation cost related to non-vested stock options which is expected to

be recognized over a weighted-average period of 2.63 years.

The Company issued warrants to the Company’s

lenders upon obtaining a loan in June 2021.

The warrants have a 10 -year term and an exercise price of $ 14.05 .

At September 30, 2025, 45,386 of

these warrants are outstanding and the intrinsic value of these warrants is $ 0 .

2024, the Company issued 1,557,592 warrants to investors in connection with the sale of common stock.

At September 30, 2025, 1,557,592 of

these warrants are outstanding and are exercisable for cash at a weighted average price of $ 9.59 per share.

The intrinsic value of

these warrants was $ 0 as of September 30, 2025.

During September

2024, the Company issued 2,341,260 warrants to investors in connection with the sale of common stock.

At September 30, 2025, 2,341,160 of

these warrants are outstanding and are exercisable for cash at a weighted average price of $ 6.40 per share.

The intrinsic value of

these warrants was $ 0 as of September 30, 2025.

Outstanding at March 31, 2026 9,733,841 $ 2.63 6.58 $ -

Exercisable at March 31, 2026 5,562,827 $ 3.19 4.57 $ -

During the three months ended March 31, 2026 and 2025, the Company recognized stock-based compensation expense of approximately $ 1.5 million and $ 2.1 million, respectively, related to the vesting of stock options.

As of March 31, 2026, there was approximately $ 8.4 million of total unrecognized compensation cost related to non-vested stock options which is expected to be recognized over a weighted-average period of 2.27 years.

The Company issued warrants to the Company’s lenders upon obtaining a loan in June 2021.

The warrants expire in June 2031 and have an exercise price of $ 14.05 .

At March 31, 2026 and December 31, 2025, 45,386 of these warrants are outstanding and the intrinsic value of these warrants is $ 0 .

April 2024 Warrants

In April 2024, the Company issued an aggregate of 1,557,592 warrants in connection with the sale of common stock.

Of these warrants, 1,348,415 have an exercise price of $ 1.95 per share and expire in June 2026, and 209,277 have an exercise price of $ 9.152 per share and were scheduled to expire in April 2026.

As of March 31, 2026 and December 31, 2025, all 1,557,592 warrants were outstanding and exercisable, with a weighted-average exercise price of $ 2.92 per share.

The aggregate intrinsic value of these warrants was $ 0 as of March 31, 2026.

Subsequent to March 31, 2026, in April 2026, 209,277 warrants expired unexercised.

September 2024 Warrants

During September 2024, the Company issued 2,341,260 warrants to investors in connection with the sale of common stock.

At March 31, 2026 and December 31, 2025, 2,341,160 of these warrants are outstanding and are exercisable for cash at a weighted average price of $ 6.40 per share and expire in March 2030.

The intrinsic value of these warrants was $ 0 as of March 31, 2026.

Stock-based Compensation by Class of Expense

The following summarizes the components of stock-based

compensation expense in the consolidated statements of operations for the nine months ended September 30, 2025 and 2024 respectively:

(in thousands)

September 30,

The following summarizes the components of stock-based compensation expense in the consolidated statements of operations for the three months ended March 31, 2026 and 2025 respectively:

(in thousands) Three Months

2026 Three Months

Research and development $ 348 $ 830

General and administrative 1,149 1,246

Shareholder Rights Agreement

On December 30, 2020, the Board of Directors (the

“Board”) of the Company approved and adopted a Rights Agreement, dated as of December 30, 2020, by and between the Company

and VStock Transfer, LLC, as rights agent, pursuant to which the Board declared a dividend of one preferred share purchase right (each,

a “Right”) for each outstanding share of the Company’s common stock held by stockholders as of the close of business

on January 11, 2021.

When exercisable, each right initially would represent the right to purchase from the Company one one-thousandth

of a share of a newly designated series of preferred stock, Series A Junior Participating Preferred Stock, par value $ 0.001 per share,

of the Company, at an exercise price of $ 300.00 per one one-thousandth of a Series A Junior Participating Preferred Share, subject

to adjustment.

Subject to various exceptions, the Rights become exercisable in the event any person (excluding certain exempted or grandfathered

persons) becomes the beneficial owner of twenty percent or more of the Company’s common stock without the approval of the Board.

The Rights Agreement was amended in 2021, 2022, 2023 and 2024 to extend the expiration date and shall expire on December 30, 2025.

NOTE 10 – LEGAL

had a dispute with a vendor in which the Company believed that the vendor did not properly provide services for which they have invoiced

The vendor invoiced the Company approximately $ 1.6 million, of which the Company recorded $ 0.2 million.

During August 2025,

the Company and the vendor settled the obligation for approximately $ 0.2 million.

is subject to claims and suits that arise from time to time in the ordinary course of our business.

Although management currently believes

that resolving claims against the Company, individually or in aggregate, will not have a material adverse impact in the Company’s

consolidated financial statements, these matters are subject to inherent uncertainties and management’s view of these matters may

change in the future.

Total $ 1,497 $ 2,076

NOTE 6 – COMMITMENTS

The Company is subject to claims and suits that arise from time to time in the ordinary course of our business.

Although management currently believes that resolving claims against the Company, individually or in aggregate, will not have a material adverse impact in the Company’s consolidated financial statements, these matters are subject to inherent uncertainties and management’s view of these matters may change in the future.

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-Q

Item 1. Financial Statements