Lantern Pharma Inc.

NOTES TO FINANCIAL STATEMENTS

Note 1. Organization, Principal Activities, and Basis of Presentation

Lantern Pharma Inc., and Subsidiaries (the “Company”) is an artificial intelligence (A.I.) focused company dedicated to developing cancer therapies and transforming the cost, pace, and timeline of oncology drug discovery and development. The Company’s development portfolio includes three clinical stage oncology focused product candidates and consists of small molecule drug candidates that others have tried, but failed, to develop into an approved commercialized drug, as well as new compounds that it is developing with the assistance of its A.I. platform and its biomarker driven approach. The Company’s A.I. platform, known as RADR®, uses big data analytics (combining molecular data, drug efficacy data, data from historical studies, data from scientific literature, phenotypic data from trials and publications, and mechanistic pathway data) and machine learning. The Company’s data-driven, genomically-targeted and biomarker-driven approach allows it to pursue a transformational drug development strategy that identifies, rescues or develops, and advances potential small molecule drug candidates.

Lantern Pharma Inc. was incorporated under the laws of the state of Texas on November 7, 2013, and thereafter reincorporated in the state of Delaware on January 15, 2020. The Company’s principal operations are located in Texas. The Company formed a wholly owned subsidiary, Lantern Pharma Limited, in the United Kingdom in July 2017, and dissolved this subsidiary in November 2025. In September 2021, the Company formed a wholly owned subsidiary, Lantern Pharma Australia Pty Ltd, in Australia. In January 2023, the Company formed a wholly owned U.S. subsidiary, Starlight Therapeutics Inc. (“Starlight”), to continue with advancing the development of drug candidate LP-184’s central nervous system (CNS) and brain cancer indications.

Since inception, the Company has devoted substantially all its activity to advancing research and development, including efforts in connection with preclinical studies, clinical trials and development of its RADR® platform. This now includes three lead drug candidates and an Antibody Drug Conjugate (ADC) program directed towards 11 disclosed therapeutic targets:

The Company’s fiscal year ends on December 31 of each calendar year. The accompanying interim condensed consolidated financial statements are unaudited and have been prepared on substantially the same basis as the Company’s annual consolidated financial statements for the fiscal year ended December 31, 2025. In the opinion of the Company’s management, these interim condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of the Company’s financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of expenses during the reporting periods. Actual results could differ from these estimates.

The December 31, 2025 year-end condensed consolidated balance sheet data in the accompanying interim condensed consolidated financial statements was derived from audited consolidated financial statements. These condensed consolidated financial statements and notes do not include all disclosures required by GAAP and should be read in conjunction with the Company’s audited consolidated financial statements as of and for the year ended December 31, 2025 and the notes thereto included in the Company’s Annual Report on Form 10-K, dated March 30, 2026, on file with the Securities and Exchange Commission.

The results of operations and cash flows for the interim periods included in these condensed consolidated financial statements are not necessarily indicative of the results to be expected for any future period or the entire fiscal year.

Any reference in these notes to applicable guidance refers to Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). To date, the Company has operated its business as one segment. The Company’s condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Lantern Pharma Limited (for the quarter ended March 31, 2025), Lantern Pharma Australia Pty Ltd. and Starlight Therapeutics Inc. All intercompany balances and transactions have been eliminated in consolidation.

Note 2. Liquidity and Going Concern

The Company incurred a net loss of approximately $3,329,000 and $4,537,000 during the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, the Company had working capital of approximately $3,280,000.

The Company plans to pursue periodic capital raises and also plans to apply for grant funding in the future to assist in supporting its capital needs. In July 2025, the Company entered into an ATM Sales Agreement (“ATM”), with ThinkEquity LLC (“ThinkEquity”), as sales agent, pursuant to which the Company may offer and sell shares of its common stock from time to time, in “at-the-market” offerings to or through its sales agent.

As described in Note 10, on May 12, 2026, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with institutional investors, pursuant to which the Company agreed to issue and sell to such investors in a registered direct offering (i)1,454,175 shares common stock of the Company, at an offering price of $2.06 per share, and (ii) pre-funded warrants to purchase up to 681,748 shares of common stock (the “Pre-Funded Warrants”) in lieu of the Common Shares, at an offering price of $2.0599 (such registered direct offering, the “Offering”). The Offering closed on May 14, 2026, and the Company received gross proceeds of approximately $4.4 million from the Offering, before deducting Offering expenses payable by the Company, including the fees of the placement agent for the Offering. In addition, in a concurrent private placement, the Company agreed to issue to such investors warrants to purchase up to 2,135,923 shares of common stock, at an exercise price of $2.27 per share. We may also explore the possibility of additional manners of offering our equity securities and entering into commercial credit facilities as an additional source of liquidity.

We believe that our cash, cash equivalents, and marketable securities on hand as of the date of this report, including the net proceeds from the Offering of shares of common stock and Pre-Funded Warrants, will enable us to fund our operating expenses and capital expenditure requirements until approximately the middle of the first quarter of 2027. We will need substantial additional capital to fund our operations beyond that time period, and if we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our drug development programs or commercialization efforts.

The Company’s ability to continue as a going concern is highly contingent on the ability to raise additional capital for ongoing research and development and clinical trials as the Company expects to continue incurring losses for the foreseeable future. The financial statements in this report have been prepared assuming that the Company will continue as a going concern, and do not include any adjustments that may be necessary should the Company be unable to continue as a going concern. The Company has incurred, and it anticipates it will continue to incur, losses and generate negative operating cash flows and as such will require substantial additional funding in the near future to continue its research and development activities. These factors raise substantial doubt about the Company’s ability to continue as a going concern in the absence of obtaining substantial additional funding. While the Company plans to pursue periodic capital raises, including additional potential sales under the ATM, no assurance can be given that sufficient funding will be available when needed to allow the Company to continue as a going concern.

Note 3. Summary of Significant Accounting Policies

Use of Estimates and Assumptions

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The significant areas of estimation include determining research and development accruals, the inputs in determining the fair value of equity-based awards and warrants issued, the inputs in determining present value of lease payments, and determining the fair value of marketable securities. Actual results could differ from those estimates.

Foreign Currency

We translate the financial statements of our Australian subsidiary, which has a functional currency of the Australian dollar, to U.S. dollars using month-end exchange rates for assets and liabilities and average exchange rates for income and expenses. Translation gains and losses are recorded in accumulated other comprehensive income (loss) as a component of stockholders’ equity. Gains and losses resulting from foreign currency transactions that are denominated in currencies other than our functional currency (U.S. dollar) are included within other income, net on the consolidated statements of operations.

Risks and Uncertainties

The Company operates in an industry that is subject to intense competition, government regulation and rapid technological change. Operations are subject to significant risk and uncertainties including financial, operational, technological, regulatory, and other risks, including the potential risk of business failure.

Our marketable securities may be impacted by various risks related to interest rates, market conditions, stock market fluctuations and credit risk. Our marketable securities that are debt securities have had and may in the future have their market value fluctuate due to rises or falls in interest rates. While we believe our cash, cash equivalents and marketable securities do not contain excessive risk, we cannot provide absolute assurance that in the future our investments will not be subject to adverse changes in market value. In addition, we maintain significant amounts of cash and cash equivalents at one or more financial institutions that are federally insured. Interest bearing and non-interest bearing accounts we hold at these banking institutions are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per depositor, per FDIC-insured bank, per ownership category. From time to time, some of our cash balances held at banking institutions may be in excess of FDIC coverage.

We currently rely on foreign third-party manufacturers and service providers in connection with certain aspects of our clinical operations. The U.S. government and persons involved in the Trump administration have made statements and taken certain actions that have led to, and may continue to lead to, changes to U.S. and international trade policies. Although some previously imposed tariffs have recently been struck down, potential new tariffs and the potential escalation of trade disputes with foreign countries could pose a significant risk to our business and could result in higher operating expenses. U.S. policies on tariffs and international trade could also result in fluctuations in interest rates, which could have a negative impact on general economic conditions, on the industry sector in which we operate, and on our business.

Research and Development

Research and development costs are expensed as incurred. These expenses primarily consist of payroll, contractor expenses, research study expenses, costs for manufacturing and supplies, clinical site costs and other costs for the conduct of clinical trials, costs for technical infrastructure on the cloud for the purposes of developing the Company’s RADR® platform, and other costs for identifying, developing, and testing drug candidates. Development costs incurred by third parties are expensed as the work is performed. Costs to acquire technologies, including licenses, that are utilized in research and development and that have no alternative future use are expensed when incurred.

When accruing clinical expenses, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If possible, we obtain information regarding unbilled services directly from our service providers. However, we may be required to estimate the cost of these services based only on information available to us. If we underestimate or overestimate the cost associated with a trial or service at a given point in time, adjustments to research and development expenses may be necessary in future periods. Historically, our estimated accrued clinical expenses have generally approximated actual expense incurred.

Cash and Cash Equivalents

The Company considers money market funds and other highly liquid instruments with an original maturity of 3 months or less to be cash equivalents. Cash equivalents at March 31, 2026 and December 31, 2025 were approximately $2,533,000 and $1,540,000, respectively, and are included along with cash under the caption cash and cash equivalents on the Company’s condensed consolidated balance sheets.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets as of March 31, 2026 totaled approximately $734,000 and included approximately $546,000 of upfront payments for contractor fees, academic research studies and services, and subscriptions, approximately $156,000 of prepaid annual insurance fees, and approximately $32,000 of receivables from dividends and tax incentives.

Prepaid expenses and other current assets as of December 31, 2025 totaled approximately $684,000 and included approximately $360,000 of upfront payments for contractor fees, academic research studies and services, and subscriptions, approximately $294,000 of prepaid annual insurance fees, and approximately $30,000 of receivables from dividends and tax incentives.

Leases

The Company determines whether an arrangement contains a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current portion of operating lease liabilities, and net of current portion of operating lease liabilities on our consolidated balance sheets. Lease ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. Lease ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. As the Company’s leases do not provide an implicit rate, an incremental borrowing rate is used based on the information available at the commencement date in determining the present value of lease payments. The Company does not include options to extend or terminate the lease term unless it is reasonably certain that the Company will exercise any such options. Rent expense is recognized under the operating leases on a straight-line basis. The Company does not recognize right-of-use assets or lease liabilities for short-term leases, which have a lease term of twelve months or less, and instead will recognize lease payments as expense on a straight-line basis over the lease term.

Marketable Securities

The Company’s marketable securities at March 31, 2026 consist of mutual funds and common stock. The Company’s marketable securities at December 31, 2025 consist of government and agency securities, mutual funds and common stock. We classify our marketable securities as available-for-sale at the time of purchase and reevaluate such classification as of each balance sheet date. We may sell these securities at any time for use in current operations even if they have not yet reached maturity. As a result, we classify our investments, including securities with maturities beyond twelve months, as current assets in the accompanying condensed consolidated balance sheets.

Available-for-sale debt securities are recorded at fair value each reporting period. Unrealized gains and losses on available-for-sale debt securities are excluded from earnings and recorded as a separate component within accumulated other comprehensive income (loss) on the condensed consolidated balance sheets until realized. Interest is reported within interest income on the condensed consolidated statements of operations. We evaluate our available-for-sale debt securities to assess whether the amortized cost basis is in excess of estimated fair value and determine what amount of that difference, if any, is caused by expected credit losses. Allowance for credit losses are recognized as a charge in other income, net on the condensed consolidated statements of operations, and any remaining unrealized losses are included in accumulated other comprehensive income (loss) on the condensed consolidated balance sheets. The allowance for credit losses iszero at March 31, 2026 and December 31, 2025, and there were no credit losses recorded during the three months ended March 31, 2026 and 2025.

Equity securities, which are composed of mutual funds and common stock, are recorded at fair value each reporting period, with changes in fair value of these investments, as well as dividends earned, recorded within other income, net on the condensed consolidated statements of operations.

We determine realized gains and losses on the sale of marketable securities based on the specific identification method and record such gains and losses within other income, net on the condensed consolidated statements of operations.

Deferred Offering Costs

Deferred offering costs consist of legal, accounting, underwriting, and other direct costs incurred in connection with the Company’s ATM financing activities. These costs are capitalized as incurred and recognized as a reduction of additional paid-in capital in the consolidated statements of stockholders’ equity when shares are issued. At March 31, 2026 and December 31, 2025, the Company had approximately $55,000 and $88,000, respectively, of deferred offering costs related to the ATM. At March 31, 2026, stock issuances of up to $13,905,453 remained available under the ATM, subject to certain limits that may vary from time to time. If the Company terminates the ATM or deems it probable that the full amount available will not be utilized, the related deferred offering costs will be expensed and recognized in general and administrative expenses in the condensed consolidated statements of operations. During the three months ended March 31, 2026, the Company expensed approximately $33,000 of deferred offering costs.

Stock-based Compensation

Stock-based awards have been accounted for as required by ASC 718Compensation - Stock Compensation. Under ASC 718, awards are valued at fair value on the date of grant, and that fair value is recognized over the requisite service period. Forfeitures are accounted for as they occur.

New Accounting Pronouncements Not Yet Adopted

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, requiring public business entities to provide disaggregated disclosures of relevant income statement expenses. The amendments aim to improve financial reporting by enhancing transparency in the notes to financial statements, specifically regarding expense categories. The amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company is assessing the effect of this update on its consolidated financial statements and related disclosures.

Note 4. Commitments and Contingencies

General

The Company has entered into, and expects to enter into from time to time in the future, license agreements, strategic alliance agreements, assignment agreements, research service agreements, and similar agreements related to the advancement of its product candidates and research and development efforts. Significant agreements (collectively, the “License, Strategic Alliance, and Research Agreements”) are described in detail in the Company’s 2025 Form 10-K. While specific amounts will fluctuate from quarter to quarter based on clinical trials progress, advancement and completion of research studies and manufacturing projects, and other factors, the Company believes its overall activities regarding License, Strategic Alliance, and Research Agreements are materially consistent with those described in the 2025 Form 10-K, as supplemented by the discussion in the following paragraph.

In addition to the specific agreements described in the 2025 Form 10-K, the Company has entered into, and will in the future enter into, other research and service provider agreements for the advancement of its product candidates and research and development efforts. The Company expects to pay additional amounts in future periods in connection with existing and future research and service provider agreements.

Set forth below are the approximate amounts expensed for License, Strategic Alliance, and Research Agreements during the three months ended March 31, 2026 and 2025, respectively. These expensed amounts are included under research and development expenses in the accompanying condensed consolidated statements of operations.

Set forth below at March 31, 2026 and December 31, 2025, respectively, are (1) the approximate amounts accrued and payable under License, Strategic Alliance, and Research Agreements, and (2) the approximate amount of prepaid expenses and other current assets under License, Strategic Alliance, and Research Agreements. These amounts are included in the accompanying condensed consolidated balance sheets.

Actuate Therapeutics

In May 2021, the Company entered into a Collaboration Agreement with Actuate Therapeutics, Inc. (“Actuate”), a clinical stage private biopharmaceutical company focused on the development of compounds for use in the treatment of cancer, and inflammatory diseases leading to fibrosis. Pursuant to the agreement, the Company and Actuate have collaborated on utilization of the Company’s RADR®platform to develop novel biomarker derived signatures for use with one of Actuate’s product candidates. As part of the collaboration, the Company received 25,000 restricted shares of Actuate stock, subject to meeting certain conditions of the collaboration, as well as the potential to receive additional Actuate stock if results from the collaboration are utilized in future development efforts. In 2023, the term of the Collaboration Agreement was extended until March 31, 2024. Certain affiliates of Bios Partners beneficially own greater than 5% of the Company’s common stock and also hold substantial beneficial ownership interests in Actuate. Through March 31, 2026, no revenues have been recognized under the Collaboration Agreement.

In August 2024, Actuate announced the closing of its initial public offering (“IPO”), which also included a reverse stock split. Following the reverse stock split and the IPO, the Company holds 13,889 shares of common stock, which can be sold by the Company without restriction in accordance with Rule 144 of the Securities Act of 1933. At March 31, 2026 and December 31, 2025, the Actuate common stock held by the Company had a fair value of approximately $38,000 and $85,000, respectively, which were included in marketable securities on the Company’s condensed consolidated balance sheets.

Note 5. Leases

The following provides balance sheet information related to leases as of March 31, 2026 and December 31, 2025:

At March 31, 2026, the future estimated minimum lease payments under non-cancelable operating leases are as follows:

At March 31, 2026 and December 31, 2025, the Company has a non-cancelable operating lease for office space in Atlanta, Georgia that requires monthly payments of $6,750 through December 31, 2026. The lease is subject to automatic renewal on a month-to-month basis unless the Company provides three-months written notice to the landlord. The exercise of lease renewal options is at the Company’s sole discretion and is assessed as to whether to include any renewals in the lease term at inception.

The following table provides a reconciliation for the Company’s right of use assets and lease liabilities:

Other supplemental information related to operating leases is as follows:

The Company also leases office space in Dallas, Texas under two leases. One lease is month-to-month, while the other has a contractual term of one year and ends November 30, 2026. The Company also leases space for material storage and handling under a one-year lease that continues through September 2026. The storage lease is cancelable with 45-days’ written notice. Leases with contractual periods of twelve months or less are accounted for under the short-term lease measurement and recognition exemption allowed for by ASC 842. Rent expense is recorded as incurred for these leases.

The components of lease expense were approximately as follows for the three months ended March 31, 2026 and 2025:

During the three months ended March 31, 2026 and 2025, cash used in operating activities associated with operating leases was approximately $20,000 and $54,000, respectively.

Note 6. Stockholders’ Equity

Common Stock

As of March 31, 2026 and December 31, 2025, the Company had 25,000,000 authorized shares of common stock, of which 11,254,697 shares were issued and outstanding.

During the three months ended March 31, 2026,10,000 shares of restricted common stock issued to a service provider in December 2025 vested, resulting in $38,800 of expense.

Options

A summary of stock option activity under the Plan, during the three months ended March 31, 2026 is presented below:

The weighted average remaining contractual term of options outstanding and exercisable at March 31, 2026 is 5.80 years and 4.74 years, respectively. Options were exercisable for 1,166,262 shares of common stock at March 31, 2026 at a weighted average exercise price of $5.71. The intrinsic value of options outstanding and exercisable at March 31, 2026 was approximately $155,000.

Stock-based compensation relating to stock options was as follows for the three months ended March 31, 2026 and 2025:

Note 7. Fair Value Measurements

We determine the fair values of our financial instruments based on the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value assumes that the transaction to sell the asset or transfer the liability occurs in the principal or most advantageous market for the asset or liability and establishes that the fair value of an asset or liability shall be determined based on the assumptions that market participants would use in pricing the asset or liability. The classification of a financial asset or liability within the hierarchy is based upon the lowest level input that is significant to the fair value measurement. The fair value hierarchy prioritizes the inputs into three levels that may be used to measure fair value:

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.

Level 3 - Inputs are unobservable inputs based on our assumptions.

Financial Assets

When available, our marketable securities are valued using quoted prices for identical instruments in active markets. If we are unable to value our marketable securities using quoted prices for identical instruments in active markets, we value our investments using broker reports that utilize quoted market prices for comparable instruments. As of March 31, 2026 our U.S. treasury bills were valued through use of quoted prices for comparable instruments in active markets and are classified as Level 2, and our money markets, common stock and mutual funds were valued using quoted prices in active markets for identical assets and are classified as Level 1.

Based on our valuation of our marketable securities, we concluded that they are classified in either Level 1 or Level 2, and we have no financial assets measured using Level 3 inputs. The following table presents information about our assets that are measured at fair value on a recurring basis using the above input categories.

Note 8. Loss Per Share

Basic loss per share is derived by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during each period. Diluted loss per share includes the effect, if any, from the potential exercise or conversion of securities, such as warrants and stock options, which would result in the issuance of incremental shares of common stock unless such effect is anti-dilutive. In calculating the basic and diluted net loss per share applicable to common stockholders, the weighted average number of shares remained the same for both calculations due to the fact that when a net loss exists, dilutive shares are not included in the calculation. Potentially dilutive securities outstanding that have been excluded from diluted loss per share due to being anti-dilutive include the following:

Note 9. Segment Reporting

The Company operates asone operating segment. The Company’s chief operating decision maker (“CODM”) is its chief executive officer, who reviews financial information presented on a condensed consolidated basis. The CODM uses expected research and development study and material costs; cash, cash equivalents and marketable securities balances; operating losses; and budget projections to assess financial performance and allocate resources.

Cash, cash equivalents and marketable securities were as follows at March 31, 2026 and December 31, 2025:

Research and development study and material costs were as follows during the three months ended March 31, 2026 and 2025:

These financial metrics are used by the CODM to make key operating decisions, such as which research and development studies to commence, extend or discontinue. See the condensed consolidated balance sheets and statements of operations as of March 31, 2026 and December 31, 2025, as well as the condensed consolidated statements of operations for the three months ended March 31, 2026 and 2025.

Note 10. Subsequent Events

On May 12, 2026, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with institutional investors, pursuant to which the Company agreed to issue and sell to such investors in a registered direct offering (i)1,454,175 shares common stock of the Company, at an offering price of $2.06 per share, and (ii) pre-funded warrants to purchase up to 681,748 shares of common stock (the “Pre-Funded Warrants”) in lieu of the Common Shares, at an offering price of $2.0599 (such registered direct offering, the “Offering”). The Offering closed on May 14, 2026, and the Company received gross proceeds of approximately $4.4 million from the Offering, before deducting Offering expenses payable by the Company, including the fees of the placement agent for the Offering. In addition, in a concurrent private placement, the Company agreed to issue to such investors warrants to purchase up to 2,135,923 shares of common stock, at an exercise price of $2.27 per share.