Cibus Inc

Shareholders and Board of Directors

Cibus, Inc.

San Diego, California

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Cibus, Inc. (the “Company”) as of December 31, 2023, the related consolidated statements of operations, comprehensive loss, redeemable noncontrolling interest and stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America ("GAAP").

Going Concern Uncertainty

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred recurring losses from operations and negative cash flows from operations. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Determination of Accounting Acquirer

As described in Notes 1 and 2 to the consolidated financial statements, the Company (or “Legacy Calyxt”) completed the acquisition of Cibus Global, LLC (“Cibus Global”) on May 31, 2023. As a result of the business combination, the Company is organized in an “Up-C” structure, and the Company’s only material asset consists of membership units of Cibus Global. In accordance with ASC 810, Consolidation, Cibus Global is considered a variable interest entity (“VIE”) with the Company as its sole managing member and primary beneficiary. As such, the Company consolidates Cibus Global, and the remaining common unit holders that hold economic interests directly in Cibus Global are presented as redeemable noncontrolling interest in the Company’s consolidated financial statements.

We identified the accounting acquirer determination as a critical audit matter, specifically whether Cibus Global is a VIE at the closing of the transaction and whether Legacy Calyxt is the primary beneficiary of Cibus Global and therefore, the accounting acquirer. The application of GAAP is complex due to the existence of multiple classes of equity holders within the Company’s Up-C structure, including voting and other rights and powers held by Class A and Class B stockholders and the composition of the combined Company’s board of directors. Given this complexity, performing audit procedures to evaluate the identification of the primary beneficiary and accounting acquirer and determination of whether Cibus Global is a VIE required a high degree of auditor judgment due to the nature and extent of audit evidence required to address these matters, including the extent of specialized skill and knowledge needed.

•Obtaining and reading the merger and governance agreements to identify factors relevant to the determination of whether Cibus Global is a VIE and whether Legacy Calyxt was the primary beneficiary and accounting acquirer.

•Utilizing personnel with specialized knowledge and skills in the relevant technical accounting guidance to assist in evaluating voting and other rights and powers held by the Class A and Class B stockholders and the composition of the combined Company’s board of directors, in the determination of whether Cibus Global meets the definition of a VIE, and whether Legacy Calyxt was the primary beneficiary and accounting acquirer.

Valuation of Acquired Intangible Assets and Royalty Liability

As described in Notes 1 and 2 to the consolidated financial statements, the Company acquired intangible assets and assumed a royalty liability valued at $135.4 million and $146.4 million, respectively, from its business combination with Cibus Global. The Company accounted for the acquisition as a business combination, which required the Company to exercise judgment and make estimates and assumptions based on available information regarding the fair values of identifiable tangible and intangible assets and liabilities as of the date of the acquisition. Estimates and assumptions that the Company used in estimating the fair value of acquired intangible assets and liabilities assumed for the royalty liability include future cash flows that it expects to generate from the acquired assets.

We identified the forecasted revenue assumptions and discount rates used in determining the fair value of the intangible assets and royalty liability as a critical audit matter. The principal consideration for our determination was the subjectivity and judgment required to determine inputs and assumptions utilized by the Company in the valuation, specifically the trait fees and adoption rate assumptions utilized in the forecasted revenues and discount rates. Auditing these elements involved especially challenging and subjective auditor judgment due to the nature and extent of audit effort required to address these matters, including the extent of specialized skill or knowledge needed.

•Assessing the forecasted revenue by evaluating assumptions used by management in developing the forecasts, specifically the trait fees and adoption rate, by comparing financial projections to external market and industry data.

•Utilizing personnel with specialized knowledge and skill to evaluate the discount rates used to determine the fair value of intangible assets and royalty liability.

Impairment Assessments of Goodwill and In-process Research and Development

As described in Note 1 to the consolidated financial statements, goodwill is not amortized and is tested for impairment at least annually or when events and circumstances indicate that fair value of a reporting unit may be below its carrying value. If the carrying value of the reporting unit exceeds the fair value, an impairment loss is recognized for the difference. In-process research and development indefinite-lived intangible assets (or “IPR&D”) are not amortized until they are determined to be ready for their intended use. The acquired IPR&D is tested for impairment annually, or more frequently, if an impairment indicator is identified. Due to the Company’s strategic realignment with its primary commercial objective of advancing its late-stage activities, as well as the sustained decline in the quoted market price of its common stock, the Company performed an impairment analysis of its IPR&D and goodwill. The Company recognized an impairment to goodwill and IPR&D of approximately $150.4 million and $99.0 million, respectively.

We identified the goodwill and IPR&D impairment assessments as a critical audit matter. The principal consideration for our determination was the subjectivity and judgment required to determine inputs and assumptions utilized by the Company in the impairment assessments, specifically the trait fees and adoption rate assumptions utilized in the forecasted revenues and discount rates. Auditing these elements involved especially challenging and subjective auditor judgment due to the nature and extent of audit effort required to address these matters, including the extent of specialized skill or knowledge needed.

•Assessing the forecasted revenue by evaluating assumptions used by management in developing the forecast, specifically the trait fees and adoption rate, by comparing financial projections to external market and industry data.

•Utilizing personnel with specialized knowledge and skill to evaluate the discount rates used to determine the fair value of IPR&D intangible assets and goodwill.

/s/BDO USA, P.C.

We have served as the Company’s auditor since 2023.

San Diego, California

March 21, 2024

To the Shareholders and the Board of Directors of Cibus, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Cibus, Inc. (the Company) as of December 31, 2022, the related consolidated statement of operations, comprehensive loss, redeemable noncontrolling interest and stockholders’ equity, and cash flows for the year ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.

The Company's Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred recurring losses from operations, utilized cash from operations, and has stated that substantial doubt exists about the Company’s ability to continue as a going concern. Management's evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Adoption of ASU No. 2016-02

As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for leases in 2022 due to the adoption of ASU No. 2016-02, Leases.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/Ernst & Young LLP

We have served as the Company’s auditor from 2015 to 2023.

Minneapolis, Minnesota

March 2, 2023, except for the effects of the reverse stock splits described in Note 1 as to which the date is March 21, 2024