BIONOMICS LIMITEDFI

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1. The Company and Basis of Presentation

Bionomics Limited (“the Company”) is a public company incorporated in Australia. The principal activities of the Company and its controlled entities during the period include the development of novel drug candidates focused on the treatment of serious central nervous system disorders.

Details of the Company’s entity structure at the end of the reporting period are as follows:

Liquidity and Going Concern

As of September 30, 2024, the Company had working capital of $5.9 million, an accumulated deficit of $178.8 million, and cash and cash equivalents of $8.1 million. The Company has not generated any product revenues and has not achieved profitable operations. There is no assurance that profitable operations will ever be achieved, and, if achieved, could be sustained on a continuing basis. In addition, development activities, clinical and non-clinical testing, and commercialization of the Company’s products will require significant additional financing.

The Company is subject to a number of risks similar to other life science companies, including, but not limited to, risks related to the successful discovery, development, and commercialization of product candidates, raising additional capital, development of competing drugs and therapies, protection of proprietary technology, and market acceptance of the Company’s products. As a result of these and other factors and the related uncertainties, there can be no assurance of the Company’s future success.

In accordance with ASC 205-40, Going Concern, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date these condensed consolidated financial statements are issued. The Company incurred net losses of $0.8 million for the three months ended September 30, 2024 and $15.5 million for the year ended June 30, 2024. The Company also used $4.4 million of cash for operating activities during the three months ended September 30, 2024. Based upon the Company’s current operating plans, the Company believes that its existing cash and cash equivalents, combined with its existing ATM facility, will be sufficient to continue funding its development activities into late in the first quarter of fiscal year 2026, which is less than twelve months from the date these condensed consolidated financial statements are issued. Accordingly, based on its recurring losses from operations incurred since inception, the expectation of continued operating losses, and the need to raise additional capital to finance its future operations, the Company determined that there is substantial doubt about the Company’s ability to continue as a going concern within twelve months of the issuance date of these financial statements.

The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty and assumes the Company will continue as a going concern through the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business. The Company plans to address this condition through the sale of ordinary shares in public offerings and/or private placements, debt financings, or through other capital sources, including collaborations with other companies or other strategic transactions.

Although the Company has been successful in raising capital in the past, there is no assurance that it will be successful in obtaining such additional financing on terms acceptable to the Company, if at all, nor is it considered probable under the accounting standards. If the Company is unable to obtain sufficient funding on acceptable terms, it could be forced to delay, reduce or eliminate some or all its research and development programs or commercialization activities, which could materially adversely affect its business prospects or its ability to continue operations.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP” or “GAAP”) and include the accounts of our wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

The condensed consolidated balance sheet as of June 30, 2024 was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. The accompanying condensed consolidated financial statements, as of September 30, 2024 and for the three months ended September 30, 2024, are unaudited and have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended June 30, 2024 included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024 filed with the SEC on September 30, 2024. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, as necessary for the fair statement of the Company’s financial position as of September 30, 2024, results of its operations for the three months ended September 30, 2024, stockholders’ equity for the three months ended September 30, 2024, and cash flows for the three months ended September 30, 2024, have been made. The results of operations for the three months ended September 30, 2024 are not necessarily indicative of the results of operations to be expected for the year ending June 30, 2025.

The Company has historically been classified as a foreign private issuer (“FPI”). However, as of December 31, 2023, the Company determined that it no longer satisfied the criteria to be considered an FPI. As such, beginning on July 1, 2024, the Company was required to begin utilizing the SEC’s domestic reporting forms and apply U.S. GAAP as its accounting framework. There were no material adjustments required as a result of this adjustment to retrospectively apply U.S. GAAP to the accompanying condensed consolidated financial statements. Another requirement of utilizing the SEC’s domestic reporting forms is a requirement to use the U.S. dollar as the reporting currency. These consolidated financial statements reflect the change in reporting currency to the U.S. dollar applied retrospectively. References to “$” are U.S dollars and references to “A$” are to Australian dollars.

The presentation of shareholders' equity in the consolidated balance sheets at June 30, 2023, as previously reported under International Financial Reporting Standards ("IFRS") was reclassified to comply with the presentation under U.S. GAAP. The ordinary shares have no par under Australian law. The Company has elected a policy to present all proceeds from ordinary shares within additional paid-in capital.

Note 2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosure of revenue, expenses, and certain assets and liabilities at the balance sheet date. Such estimates include the performance obligations under the Company’s collaboration agreements, the collectability of receivables, impairment evaluation for goodwill and intangible assets, and the fair values of contingent consideration and warrants. Actual results may differ from such estimates.

Summary of Significant Accounting Policies

There were no changes to significant accounting policies during the three months ended September 30, 2024, as compared to those identified in the fiscal 2024 Annual Report.

Note 3. Fair Value Measurement

The Company measures and reports certain financial instruments as assets and liabilities at fair value on a recurring basis. The following tables set forth the fair value of the Company’s liabilities at fair value on a recurring basis based on the three-tier fair value hierarchy:

The Company has no financial assets that are measured at fair value. The liabilities measured at fair value at September 30, 2024 and June 30, 2024 are contingent consideration and the accompanying warrant liability. The value of financial assets and other financial liabilities approximate their fair value. The following table gives information about how the fair value of the financial liability is determined.

The accompanying warrants liability relates to the Company’s issuance of accompanying warrants in conjunction with a Private Placement in June 2024. The fair value of the accompanying warrants liability was based on valuations that required inputs that were both significant to the fair value measurement and unobservable. This approach resulted in a classification of the accompanying warrants liability as Level 3 of the fair value hierarchy.

The following table summarizes changes in the fair value of the contingent consideration and the accompanying warrants liability, each for which each fair value was determined by Level 3 inputs:

The Company evaluates transfers between levels at the end of each reporting period. There were no transfers between levels during the periods presented.

Note 4. Accounts Receivable, Non-trade

Accounts receivable, non-trade consist of the following:

Note 5. Leases

In June 2021, the Company entered into a 5-year lease agreement (the “Greenhill Lease”) for its Australian facility located in Dulwich, South Australia. The initial term of the lease expires in May 2026.

The Greenhill Lease requires monthly lease payments that are subject to annual increases of 3% throughout the lease term. The lease also includes two renewal options, at the election of the Company, to renew or extend the lease for additional terms ofone year each. These optional periods have not been considered in the determination of the right-of-use assets or lease liabilities associated with these leases as the Company did not consider it reasonably certain it would exercise the options. Variable lease expense for the premises primarily consists of common area maintenance and other operating costs.

The following table summarizes the Company’s recognition of the Greenhill Lease including the remaining lease payments through the end of the expected lease term:

The discount rate associated with the Company’s operating lease is 3.5% and the weighted average remaining lease term is approximately 1.8 years.

The following table summarizes the effect of lease costs in the Company’s condensed consolidated statements of operations and other comprehensive income (loss):

Note 6. Goodwill

The following table summarizes changes in the carrying value of goodwill for the three months ended September 30, 2024 and 2023:

The Company reviews goodwill for impairment at the reporting unit on an annual basis during the fourth quarter, and when events or changes in circumstances indicate that a reduction in the carrying value may not be recoverable. The reporting unit has been identified as the drug development business unit. There were no impairment indicators identified by the Company at September 30, 2024.

Note 7. Intangible Assets

Intellectual Property

The acquired intellectual property relates to cancer stem cell technology, and is carried at its cost as at its date of acquisition, less accumulated amortization.

Acquired intellectual property with a finite life is recognized as an asset at cost and amortized on a straight line basis over its estimated useful life of 20 years. There is currently no internally generated intellectual property that has been capitalized.

Note 8. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following:

Note 9. Share Based Compensation

Equity awards for executives and employees have been and are provided by a combination of equity plans that may include the:

•

Employee Share Plan (the “A$1,000 Plan”);

•

Employee Share Option Plan (“ESOP”); and

•

Employee Equity Plan (“EEP”).

Participation in these plans is at our board of directors’ discretion and no individual has an ongoing contractual right to participate in a plan or to receive any guaranteed benefits. For key appointments, an initial allocation of equity may be offered as a component of their initial employment agreement. The structure of equity awards is under the active review of the Nomination and Remuneration Committee to ensure it meets good corporate practice for a company of our size, nature and company lifecycle.

The following describes the material terms of each of the plans.

Employee Share Plan

The objective of the A$1,000 Plan is to assist Management in the attraction and retention of employees, and to provide encouragement to become shareholders. An annual allocation of up to A$1,000 of shares may be granted and taxed on a concessional basis. No shares were issued to employees under the A$1,000 Plan during the three months ended September 30 2024 and 2023, respectively.

The Bionomics Employee Equity Plan and Bionomics Employee Share Option Plan

The EEP replaced the ESOP at the Annual General Meeting held December 2, 2021.

The EEP was last amended on October 31, 2021 to provide the Company with increased flexibility to settle EEP awards offered or granted to non-Australian employees and directors by enabling it to offer and grant EEP awards that may be settled in American Depository Shares (“ADS”) (at a number of ADS’ that represents the appropriate number of Ordinary Shares offered or granted under the award). In addition, the amendment permits the Company to (i) determine any monetary amounts and accept payments related to the EEP or awards issued thereunder in United States dollars (or any other currency the Board deems acceptable), (ii) impose terms and conditions on the EEP or awards issued thereunder to comply with the securities and tax laws of the United States (or any other jurisdiction the Board deems appropriate), and (iii) take any other steps the Board deems necessary or desirable to settle EEP awards in ADSs.

Share-based compensation benefits have been provided to employees via the Employee Equity Plan, with the exception of share options issued to the Executive Chairman and the Chief Executive Officer which were each approved by shareholders at the General Meeting held in February 2023.

Staff eligible to participate in the plan are those who have been a full-time or part-time employee of the Company for a period of not less than six months or are members of the Board of Directors. Options are granted under the plan for no consideration and vest equally over five years, or when vesting conditions are achieved, unless they are bonus options which vest immediately. The amounts disclosed as remuneration relating to options are the assessed fair values at grant date of those options allocated equally over the period from grant date to vesting date.

The following table summarizes employee and non-employee share option activity for the three months ended September 30, 2024:

As of September 30, 2024, there was less than $0.1 million of unrecognized compensation cost related to unvested employee share option awards outstanding, which is expected to be recognized as expense over a weighted average period of 1.2 years.

In determining the fair value of the share-based awards, the Company uses the Black-Scholes option-pricing model and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment to determine.

During the three months ended September 30, 2024 and 2023, the Company recognized total share-based compensation expense of less than $0.1 million and $0.1 million, respectively, substantially all of which was recorded as general and administrative expense in each period. There wereno equity awards issued during the three months ended September 30, 2024 or 2023, respectively.

Note 10. Warrants

The following table summarizes warrant activity for the three months ended September 30, 2024:

(1)

Each ADS warrant converts into ordinary shares at a conversion ratio of 1:180.

The classification, expiration date, and exercise price of individual warrants at September 30, 2024 are as follows:

14,859,572 ADS warrants were vested and exercisable at September 30, 2024.

The pre-funded ADS warrants have no expiry associated with them. The weighted average remaining contractual life of the accompanying ADS warrants outstanding at September 30, 2024 is 4.68 years.

Note 11. Ordinary shares

During the three months ending September 30, 2023, the Company issued 2,100,866 ADS', representing 378,155,880 ordinary shares, for gross proceeds of $6,7 million net of issuance costs of $0.5 million.1,508,727 of the ADS's were issued subject to a subscription agreement which settled on October 3, 2023 when the Company received the remaining $5.6 million.

Note 12. Income Taxes

For interim financial reporting, the Company estimates its annual effective tax rate ("ETR") based on the projected income for its entire fiscal year and records a provision or benefit for income taxes quarterly, based on the estimated annual effective income tax rate. Our ETR from continuing operations was 14.1% for the three months ended September 30, 2024 and 0.6% for the three months ended September 30, 2023. The Company recognized a tax benefit of $132,187 for the period ending September 30, 2024 and a tax benefit of $34,793 for the period ending September 30, 2023.

Note 13. Loss per Share

The following potential ordinary shares are anti-dilutive and are therefore excluded from the weighted average number of ordinary shares for the purposes of diluted loss per share.

Note 14. Related Party Transactions

Danforth Advisors

In July 2021, we entered into a consulting agreement with Danforth Advisors LLC (“Danforth”) to provide consulting services to the Company. The Danforth agreement was amended in May 2023, and further amended in August 2023. Pursuant to the agreement, Danforth provides us with the Chief Financial Officer services of Mr. Cunningham in exchange for fees payable to Danforth. The Danforth agreement will continue until such time as either party to it has given notice of termination pursuant thereto with cause upon 30 days prior written notice to the other party; or without cause upon 60 days prior written notice.

WG Partners LLP

In December 2023, we entered into an engagement letter with WG Partners LLP to provide financial advisory services to Bionomics. David Wilson, a director of Bionomics, is the Chairman and Chief Executive Officer of WG Partners. Under the agreement, Bionomics must pay to WG Partners a monthly fee of $15,000 and commission of up to 5% of any fundraising proceeds attributable to this relationship. The agreement will continue until such time as a party gives 30 days prior written notice of termination to the other party. During the three-month period ended September 30, 2024, Bionomics paid WG Partners $59,841 for its services under terms and conditions that are on an arms-length basis.

Note 15. Contingent Consideration

As a result of the acquisition of Eclipse Therapeutic, Inc (“Eclipse”) during the year ended June 30, 2013, the Company determines and recognizes at each reporting date the fair value of the additional consideration that may be payable to Eclipse security holders due to potential royalty payments based on achieving late-stage development success or partnering outcomes based on Eclipse assets. Such potential earn-out payments are recorded at fair value and include several significant estimates including adjusted revenue projections and expenses, probability of such projections, and a suitable discount rate to calculate fair value.

Due to changes in the projected inputs associated with the timing and quantum of expected cash outflows, which are in USD dollars, the liability increased by approximately $0.1 million during the three months ended September 30, 2024. Inputs used are based on the anticipated amounts and timing of potential milestone and royalty payments from licensing agreement with Carina Biotech Pty Ltd (“Carina”).

The guidance in ASC 805, Business Combinations, requires an acquirer to recognize contingent consideration obligations as of the acquisition date at fair value as part of the consideration transferred in exchange for the acquired business. Subsequent changes in the fair value are recognized in the Condensed Consolidated Statement of Operations and Comprehensive Loss (see Note 3).

Note 16. Commitments and Contingencies

Ironwood Pharmaceuticals, Inc.

In January 2012, the Company entered into a research and license agreement with Ironwood Pharmaceuticals, Inc. (“Ironwood”) pursuant to which Ironwood was granted worldwide development and commercialization rights for BNC210. In November 2014, the parties mutually agreed to terminate this license agreement, reverting all rights to BNC210 back to the Company. The sole obligation to Ironwood is to pay Ironwood low to mid-single digit royalties on the net sales of BNC210, if commercialized. It is not practicable to estimate the future payments of any such royalties that may arise due to the stage of development of BNC210.

Severance Obligation

The Company has a contingent liability in relation to the employment agreement with Dr. Spyros Papapetropoulos for severance pay of $787,500.

Depositary Agreement with Citibank

As a result of the Company planning to affect a redomiciliation by a scheme of arrangement under Part 5.1 of the Australian Corporations Act which would change the jurisdiction of the holding company of the Bionomics Group from Australia to the United States, we will terminate the ADR Depositary Agreement with Citibank. We may be required to pay significant additional fees for the withdrawal or termination of this program and are not able to estimate what those fees will be.

Note 17. Subsequent Events

The Company has evaluated subsequent events through November 14, 2024 and has concluded that no events or transactions have occurred that require disclosure in the accompanying consolidated financial statements, except as follows:

On October 24, 2024, in connection with the Company’s June 4, 2024 private placement offering of ADS’, pre-funded warrants and an accompanying warrants (the “June 2024 Offering”), Armistice Capital LLC (the investor, “Armistice”) provided a notice to the Company in connection with its exercise of its pre-funded warrants to purchase 1,450,000 ADSs (represented by 261,000,000 Ordinary Shares underlying the pre-funded warrants). Following this exercise, there remained 757,000 exercisable pre-funded ADS warrants. The underlying pre-funded ADS warrants were previously registered for resale on Form F-1 with the SEC. On October 25, 2024. Armistice provided notice to the Company in connection with its exercise of its pre-funded warrants to purchase 757,000 ADSs (represented by 136,260,000 Ordinary Shares underlying the warrant). Following this exercise, there remains no exercisable pre-funded ADS warrants related to the Offering. The underlying pre-funded ADS warrants were previously registered for resale on Form F-1 with the SEC. The Company plans to file a resale registration statement on Form S-3 for purposes of covering the resale, if any, of the cash exercise warrants issued in the private placement. No cash warrants have been exercised to date.

During October 2024, Carina Biotech (“Carina”) made a milestone payment to the Company in the gross amount of A$1,000,000 under the terms of the November 2020 agreement we had entered into with them whereby we had exclusively licensed BNC101 to Carina for the development of CAR-T therapeutics, in return for milestones and royalties or a percentage of the out-licensed revenues. As a result of the acquisition of Eclipse Therapeutic, Inc (“Eclipse”) during the year ended June 30, 2013, the Company is obligated to remit to Eclipse 20% of the proceeds received from Carina, or A$200,000, in compliance with the merger agreement.

There are no other matters or circumstances that have arisen since the end of the financial year which significantly affect or may significantly affect the results of the operations of the Group.