INTELLIGENT BIO SOLUTIONS INC.

Notes to the Consolidated Financial Statements

**NOTE 1. ORGANIZATION AND DESCRIPTION OF THE BUSINESS **

Intelligent Bio Solutions Inc. and its wholly owned Delaware subsidiary, GBS Operations Inc., were each formed on December 5, 2016, under the laws of the state of Delaware. The Company’s Australian subsidiary, Intelligent Bio Solutions (APAC) Pty Ltd, was formed on August 4, 2016, under the laws of New South Wales, Australia and was renamed to Intelligent Bio Solutions (APAC) Pty Ltd on January 6, 2023. On October 4, 2022, INBS acquired Intelligent Fingerprinting Limited (“IFP”), a company registered in England and Wales. The Company’s headquarters are in New York, New York.

Unless context requires or indicates otherwise, the terms “we,” “us,” “our,” “Company,” or “INBS” refer to Intelligent Bio Solutions Inc. together with its consolidated subsidiaries.

Intelligent Bio Solutions Inc. is a medical technology company focused on developing and delivering intelligent, rapid, non-invasive testing and screening solutions. The Company operates globally with the objective of providing innovative and accessible solutions that improve the quality of life.

NOTE 2. LIQUIDITY AND GOING CONCERN

Through June 30, 2025, Company has financed its operations primarily though proceeds from public offerings and private placements of equity securities, existing trade and shareholder financing arrangements, and the incurrence of debt. The Company incurred net losses of $10,568,733 and $10,156,759 (after losses attributable to non-controlling interest) for the years ended June 30, 2025 and 2024, respectively. As of June 30, 2025, the Company has shareholders’ equity of $2,813,824, working capital deficit of $1,212,419, and an accumulated deficit of $62,533,065.

The Company anticipates operating losses for the foreseeable future. The Company does not expect to generate positive cash flows from operating activities and may continue to incur operating losses until it sufficiently delivers on its objectives which include completion of the regulatory approval process in the United States of America (USA) and other markets where such approval may be required, expansion of its revenue base into target markets, and the continued development of its products. The ability to achieve these objectives is subject to inherent risks and no assurance can be provided that these objectives will be fully achieved within the next 12 months.

The Company has evaluated whether there are conditions and events, considered in the aggregate, that raise a substantial doubt about its ability to continue as going concern within one year after the date of release of these consolidated financial statements. Management believes there is a material risk that the Company’s cash and cash equivalents as of June 30, 2025, of approximately $1.02 million, will be insufficient to fund its current operating plan through at least the next twelve months from the issuance of these consolidated financial statements. Accordingly, the Company will be required to raise additional funds during the next 12 months. However, there can be no assurance that when the Company requires additional financing, such financing will be available on terms which are favorable to the Company, or at all. If the Company is unable to raise additional funding to meet its working capital needs in the future, it will be forced to delay or reduce the scope of its research programs and/or limit or cease its operations. In addition, the Company may be unable to realize its assets and discharge its liabilities in the normal course of business.

Accordingly, these factors raise substantial doubt about the Company’s ability to continue as a going concern unless it can successfully meet the stated objectives and/or raise additional capital.

The Company’s consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. The 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 should the Company be unable to continue as a going concern.

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and the rules and regulations of the “SEC”.

The consolidated financial statements and notes thereto give retrospective effect to the stock splits for all periods presented.

Principles of consolidation

These consolidated financial statements include the accounts of the Company, all wholly owned and majority-owned subsidiaries in which the Company has a controlling voting interest and, when applicable, variable interest entities in which the Company has a controlling financial interest and is the primary beneficiary. Investments in entities where the Company does not exert a controlling financial interest are not consolidated.

All significant intercompany transactions and balances have been eliminated upon consolidation.

Use of estimates

The preparation of consolidated financial statements in conformity with US 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 consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Management continually evaluates the estimates and judgments it uses. These estimates and judgments have been applied in a manner consistent with prior periods and there are no known trends, commitments, events or uncertainties that management believes will materially affect the methodology or assumptions utilized in making these estimates and judgments in these consolidated financial statements. Significant estimates inherent in the preparation of the accompanying consolidated financial statements including the useful lives and impairments of long-lived assets, realizability of inventory, the allocation of transaction price among various performance obligations, fair value of warrants, realization of deferred tax assets and related uncertain tax positions, valuation of stock-based compensation awards and the allowance for credit losses. Actual results could materially differ from these judgments and estimates under different assumptions or conditions.

Segment Reporting

ASC 280, Segment Reporting (“ASC 280”), defines operating segments as components of an enterprise where discrete financial information is available that is evaluated regularly by the chief operating decision-maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company’s Chief Executive Officer performs the function that allocates resources and assesses performance, and thus serves as the Company’s CODM. The CODM reviews the assets, operating results, and financial metrics for four geographic segments:

The CODM decides how to allocate resources based on a review of financial information presented on a consolidated basis accompanied by disaggregated information about revenue by product types, other income and long-lived assets for the purpose of allocating resources and evaluating financial performance for each geographic region. Accordingly, management has determined that there are four reportable segments.

Accounts Receivable and Allowances for Credit Losses

Accounts receivable primarily arise out of sales to customers. The allowance for credit losses is an amount equal to the estimated probable losses net of recoveries in accounts receivable using the incurred loss methodology. After considering current economic conditions and financial stability of its customers, an allowance for credit losses is maintained at a level which management believes is sufficient to cover all probable future credit losses as of the balance sheet date based on specific reserves and an expectation of future economic conditions that might impact collectability. Accounts receivable are carried net of allowances for credit losses as of June 30, 2025 and 2024. Account balances are charged off against the allowance when all reasonable attempts to collect have failed. Actual write-offs may be in excess of the Company’s estimated allowance. The allowance for credit losses was $546 and $6,772 as of June 30, 2025 and 2024, respectively.

Cash and cash equivalents

The Company considers all highly liquid investments with a maturity of 90 days or less to be cash equivalents. The carrying values of cash and cash equivalents approximate their fair values due to the short-term nature of these instruments. As of June 30, 2025 and 2024, there wereno cash equivalents.

Concentration of credit risk

The Company places its cash and cash equivalents, which may at times be in excess of the Australia Financial Claims Scheme, Financial Services Compensation Scheme or the United States’ Federal Deposit Insurance Corporation insurance limits, with high credit quality financial institutions and attempts to limit the amount of credit exposure with any one institution. The amounts over these insured limits as of June 30, 2025 and 2024 were $541,074 and $5,781,130, respectively. No losses have been incurred to date on any deposits.

Major Customer - One customer accounted for 8.9% and 11.5% of revenues for the years ended June 30, 2025 and 2024, respectively.

Major Supplier - The Company’s largest suppliers accounted for 19.4% and 30.7% of purchases for the years ended June 30, 2025 and 2024, respectively. The Company relies on various suppliers for its operations. For the purpose of supplier concentration analysis, “purchases” include only invoiced costs directly attributable to direct material costs.

Fair value measurements

The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or non-recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1-Quoted prices in active markets for identical assets or liabilities.

Level 2-Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3-Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets and liabilities fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

Assets and liabilities measured at fair value are based on one or more of the following techniques:

Market approach: Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

Cost approach: Amount that would be required to replace the service capacity of an asset (replacement cost).

Income approach: Techniques to convert future amounts to a single present value amount based upon market expectations (including present value techniques, option pricing, and excess earnings models).

The Company believes its valuation methods are appropriate and consistent with other market participants, however the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The carrying amounts of cash equivalents, prepaid and other assets, accounts payable and accrued liabilities are representative of their respective fair values because of the short-term nature of those instruments.

Inventories, net

Inventory cost is determined using the weighted-average method and valued at the lower of cost or net realizable value. Cost comprises direct materials and, where applicable, other costs that have been incurred in bringing the inventories to their present location and condition. The Company periodically reviews its inventories and makes a provision as necessary to appropriately value goods that are obsolete, have quality issues, or are damaged. The amount of the provision is equal to the difference between the cost of the inventory and its net realizable value.

Equity offering costs

The Company complies with the requirements of Accounting Standards Codification (“ASC”) 340,Other Assets and Deferred Costs, with regards to offering costs. Prior to the completion of an offering of its equity securities, offering costs are capitalized as deferred offering costs on the consolidated balance sheets. The deferred offering costs will be charged to shareholders’ equity upon the completion of the related offering.

Property and Equipment, net

In accordance with the ASC 360,Property, Plant, and Equipment, the Company’s property, plant and equipment (“PPE”), is stated at cost net of accumulated depreciation and impairment losses, if any. Additions and significant improvements are capitalized while maintenance and repairs are expensed as incurred. Expenditures that extend the useful life of an asset are capitalized.

Costs incurred to acquire, construct, or install PPE, before the assets are ready for use, are capitalized as construction in progress (“CIP”). The carrying amount of assets purchased or constructed using the grant funds are presented net of grant proceeds. CIP is not depreciated until such a time when the asset is substantially completed and ready for its intended use. Expenditure on maintenance and repairs are charged to operations in the period in which the expense is incurred. Construction in progress represents costs attributed to the construction of a manufacturing facility in Australia.

The Company capitalizes direct costs of materials and services consumed in developing or obtaining internal-use software. The Company also capitalizes payroll and related costs for employees who are directly associated with the development of software products for internal use, to the extent of the time spent directly on the development of software. Capitalization of costs begins during the application development stage and ends when the software is available for general use. Costs incurred during the preliminary project and post-implementation stages are expensed as incurred.

Property and equipment carrying values are reviewed for impairment when events or circumstances indicate that the asset group to which the property and equipment belong might be impaired.

Depreciation is calculated on a straight-line basis over the estimated useful life of the asset using the following terms:

When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the consolidated statements of operations in the period realized.

Leases

The Company determines if an arrangement is a lease at its inception. Lease arrangements are comprised primarily of real estate for which the right-of-use (“ROU”) assets and the corresponding lease liabilities are presented separately on the consolidated balance sheet.

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The lease term includes options to extend the lease when it is reasonably certain that the option will be exercised. Leases with a term of 12 months or less are not recorded on the consolidated balance sheet.

The Company accounts for the lease and non-lease components as a single lease component. Therefore, minimum lease payments used to measure the lease liability include all of the fixed consideration in the contract.

The Company uses its estimated incremental borrowing rate in determining the present value of lease payments considering the term of the lease, which is derived from information available at the lease commencement date, considering publicly available data for instruments with similar characteristics.

Leases with an initial term of 12 months or less are considered short-term leases and are not recorded on the consolidated balance sheets. The Company recognizes lease expense for short-term leases on a straight-line basis over the lease term in the same line item as expense arising from fixed lease payments, which is generally within selling, general and administrative expenses in the accompanying consolidated statements of operations and other comprehensive income (loss).

Intangible assets

Intangible assets are considered long-lived assets and are recorded at cost, less accumulated amortization and impairment losses, if any. The definite-lived intangible assets are amortized over their estimated useful lives, which do not exceed any contractual periods.

Certain of our intangible assets have been assigned an indefinite life as we currently anticipate that these trade names and trademarks will contribute cash flows to the Company indefinitely. Indefinite-lived intangible assets are not amortized but are evaluated at least annually to determine whether the indefinite useful life is appropriate. Amortization is recorded on a straight-line basis over their estimated useful lives. Intangible assets acquired from a foreign operation are translated from the foreign entity’s functional currency to the presentational currency based on the exchange rate at the reporting date.

***Long-lived assets ***

Long-lived assets consist of property and equipment, right-of-use assets and intangible assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. When such events occur, the Company compares the carrying amounts of the assets to their undiscounted expected future cash flows. If this comparison indicates that there is impairment, the amount of impairment is calculated as the difference between the carrying value and the estimated fair value of the asset.

Assets held for sale

Long-lived assets (including disposal groups) are classified as “Assets held for sale” when all of the applicable criteria are met in accordance with ASC 360-10-45-9:

Assets and liabilities held for sale are presented separately within the consolidated balance sheets with any adjustments necessary to measure the disposal group at the lower of its carrying value or fair value less costs to sell. Depreciation of property and equipment is not recorded while these assets are classified as assets held for sale. The fair value of a disposal group, less any costs to sell, is assessed each reporting period it remains classified as held for sale and any remeasurement to the lower of carrying value or fair value less costs to sell is reported as an adjustment to the carrying value of the disposal group recorded in other expense, net in consolidated statements of operations. We measured assets held for sale at fair value based on level 1 inputs. See note 7—Assets held for sale for further information.

In June 2025, the Company determined that assets purchased for a manufacturing facility that was under development would not be used in the facility and there was no alternative use thus management commenced the sale of the equipment, which met the criteria to be held for sale. The assets were reclassified as assets held for sale in our consolidated balance sheets as of June 30, 2025. As a result, we evaluated the assets to ensure they were recorded at the lower of their carrying value or fair value less costs to sell. The quantitative impairment test included a comparison of estimated sales proceeds less cost to sell to the carrying value of the assets. As a result of this analysis, we recorded a loss of $220,062, which is reflected as an impairment loss on our consolidated statements of operations for the year ended June 30, 2025.

Revenue recognition

In accordance with ASC 606,Revenue from Contracts with Customers, the Company recognizes revenue when it satisfies its performance obligations as evidenced by transfer of control of promised goods to customers. Control transfers once a customer has the ability to direct the use of, and obtain substantially all of the benefits from the product. This includes the transfer of legal title, physical possession, the risks and rewards of ownership, and customer acceptance. Control generally transfers to the customer upon shipment to, or upon receipt by, the customer depending on the terms of sale with the customer. In certain arrangements the Company receives payment before the customer receives the promised good. These payments are initially recorded as deferred revenue, a contract liability, and will be recognized as revenue in the period when control is transferred to the customer.

As of June 30, 2025 and 2024, the Company did not have any contracts assets or contract liabilities.

Disaggregated revenue

The following table disaggregates the Company’s revenue by product type:

Government support income

Government support income on the accompanying consolidated statements of operations and other comprehensive income (loss) consists of grant income and a research and development (“R&D”) tax refund and is summarized as follows:

a) Grant income

On June 30, 2021, the Company executed a definitive grant agreement with the Australian Government to assist with building a manufacturing facility. The grant had a total value of up to $4.7 million upon the achievement of certain milestones until March 28, 2024 (extended to March 28, 2025 on April 16, 2024). Proceeds from the grant were used primarily to reimburse the Company for costs incurred in the construction of the manufacturing facility.

Accounting for the grant does not fall under ASC 606,Revenue from Contracts with Customers, as the Australian Government will not benefit directly from our manufacturing facility. As there is no authoritative guidance under US GAAP on accounting for grants to for-profit business entities, we applied International Accounting Standards (“IAS”) 20,Accounting for Government Grants and Disclosure of Government Assistance, by analogy when accounting for the Australian Government grant to the Company. Furthermore, disclosures made below are in accordance with the disclosure requirements of Accounting Standards Update (“ASU”) 2021-10,Government Assistance (Topic 832), Disclosures by Business Entities about Government Assistance.

The Australian Government grant proceeds, which will be used to reimburse construction costs incurred, meet the definition of grants related to assets as the primary purpose for the payments is to fund the construction of a capital asset. Pursuant to IAS 20, the Company elected to record the grants received initially as deferred income and deduct the grant proceeds received from the gross costs of the assets or construction in progress (“CIP”) and the deferred grant income liability.

In the fourth quarter of fiscal 2025, upon the end of the project deadline for the construction of a manufacturing facility in Australia, a grant acquittal audit was completed by an independent auditor in relation to the grant received from the Australian Government. As a result of the grant acquittal audit, the Company determined the amount owed to the Australian Government was $2,172,108 as of June 30,2025, which is recorded on the consolidated balance sheets in “Accounts payable and accrued expenses”. The Company decided to dispose of the corresponding CIP assets as they had no alternative use to the Company (also refer to Note 7, Assets held for sale). The CIP assets were reclassified to “Assets held for sale” on the consolidated balance sheet as of June 30, 2025. A total of $0 and $543,410 was recognized as CIP asset on the consolidated balance sheets as of June 30, 2025 and 2024, respectively.

Under IAS 20, government grants are initially recognized when there is reasonable assurance the conditions of the grant will be met and the grant will be received. As of June 30, 2021, management concluded that there was reasonable assurance the grant conditions will be met and all milestone payments received. The total grant value of $4.7 million was recognized as both a grant receivable and deferred grant income on the grant effective date. The project was delayed due to global shortages of semiconductors that are used in manufacturing equipment and global supply chain disruption due to the coronavirus pandemic in the preceding year. The Company had only completed 4 of the 8 milestones in the grant agreement as of June 30, 2024. On April 16, 2024, the Company had entered into a Deed of Variation with Australian Government, Department of Industry, Science and Resources, extending the project completion date to March 28, 2025. The deed of variation also made certain modifications to the project costs. The overall budget of the project was reduced by $1.65 million to account for the changes in scope of the project.

After initial recognition, under IAS 20, government grants are recognized in earnings on a systematic basis in a manner that mirrors the manner in which the Company recognizes the underlying costs for which the grant is intended to compensate. Pursuant to IAS 20, the Company has elected to recognize government grant income separately within other income for operating expenditures. Similarly, for capital expenditures, the carrying amount of assets purchased or constructed out of the grant funds are presented net by deducting the grant proceeds received from the gross costs of the assets or CIP and deferred grant income liability. There was $271,780 and $0 was recognized as deferred grant income during the years ended June 30, 2025 and 2024, respectively.

b) R&D tax refund

The Company incurs R&D expenditures in Australia and the United Kingdom that offers tax credits of 43.5% and 14.5% respectively, which are fully refundable. The Company measures the R&D tax refund by considering the time spent by employees on eligible R&D activities and R&D costs incurred to external service providers. A total of $545,121 and $424,776 of R&D tax refund income was recognized in other income during the years ended June 30, 2025 and 2024, respectively.

The R&D tax refund receivable is recognized when there is a reasonable assurance that the amount will be recovered in full through future claims. At June 30, 2025 and 2024, the R&D tax incentive receivable was $734,408 and $525,332, respectively.

Selling, general and administrative expenses (SG&A)

Selling, general and administrative expenses represent indirect operating costs incurred in connection with product sales and corporate administration. SG&A costs include:

SG&A does not include costs related to manufacturing or R&D. Costs that are directly attributable to production are classified as cost of revenue, while expenses related to product development are recorded as development and regulatory approval expenses.

Development and regulatory approval costs

Development and regulatory approval costs include external expenses incurred under arrangements with third parties; salaries and personnel-related costs; license fees to acquire in-process technology; R&D related costs; intellectual property acquired for a particular research and development project and that have no alternative future uses (in other research and development projects or otherwise) and other expenses. The Company recognizes the benefit of refundable R&D tax refunds as a R&D tax refund income when there is reasonable assurance that the amount claimed will be recovered though the future claims.

Warrants

The Company evaluates the appropriate balance sheet classification of warrants that are issued as either equity or as a derivative liability. The Company classifies a warrant as equity if it is “indexed to the Company’s equity” and meets several specific conditions for equity classification. A warrant is not considered “indexed to the Company’s equity,” in general, when it contains certain types of exercise contingencies or potential adjustments to its exercise price. If a warrant is not indexed to the Company’s equity or it has net cash settlement provisions that result in the warrants being accounted for under ASC 480,Distinguishing Liabilities from Equity(“ASC 480”) or ASC 815,Derivatives and Hedging (“ASC 815”), it is classified as a derivative liability and carried on the consolidated balance sheets at fair value with any changes in its fair value recognized in the statements of operations and comprehensive income (loss). At June 30, 2025 and 2024, all of the Company’s outstanding warrants were classified as equity.

Equity-Based Compensation

Equity-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, if any, based on the terms of the awards. The fair value of the stock-based payments to employees and non-employees that are fully vested and non-forfeitable at the grant date is measured at their grant date fair value, unless there is a contractual term for services in which case such compensation would be amortized over the contractual term.

Employee benefits

The costs of short-term employee benefits are recognized as a liability and an expense unless those costs are required to be recognized as part of the cost of inventories or non-current assets. The cost of any unused holiday entitlement is recognized in the period in which the employee’s services are received. Termination benefits are recognized immediately as an expense when the Company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

The Company has recognized the obligation for unpaid salaries, director fees, holiday leaves, retirement benefits and long service leave entitlements as employee benefits. Employee benefit obligations are classified as either current or non-current liabilities in the accompanying consolidated balance sheets based on the timing of expected settlement.

Advertising expenses

Advertising expenses are expensed as they are incurred. For the years ended June 30, 2025, and 2024, $1,554,773 and $725,422 of advertising expenses, respectively, were incurred and classified within selling, general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income (loss).

Foreign currency

The Company’s reporting currency is the U.S. Dollar (“USD”). The functional currency for each foreign subsidiary included in these consolidated financial statements is the applicable local currency of each entity.

For each entity whose functional currency is not the USD, assets and liabilities are translated into USD using the exchange rate in effect on the balance sheet date and revenue and expenses are translated into USD using the average rate in effect for year. Translation gains and losses are recorded as a foreign currency translation adjustment as a component of other comprehensive income (loss), which is a component of accumulated other comprehensive income (loss) on the accompanying consolidated balance sheets.

Cash flows are also translated at average translation rates for the periods; therefore, amounts reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

Comprehensive income (loss)

Comprehensive income (loss) includes net loss as well as other changes in shareholders’ equity that result from transactions and economic events other than those with shareholders. For the years ended June 30, 2025 and 2024, these changes related to foreign currency translation gains and losses. There were no reclassifications out of comprehensive income (loss) for the years ended June 30, 2025 and 2024.

Income taxes

The Company is required to estimate its income taxes in each of the jurisdictions in which it operates as part of preparing the consolidated financial statements. This involves estimating the actual current tax in addition to assessing temporary differences resulting from differing treatments for tax and financial accounting purposes. These differences, together with net operating loss carryforwards and tax credits, are recorded as deferred tax assets or liabilities on the Company’s consolidated balance sheet. Deferred income tax assets and liabilities are measured using enacted tax rates, for the appropriate tax jurisdiction, which are expected to be in effect when these differences are anticipated to reverse.

A judgment must then be made of the likelihood that any deferred tax assets will be recovered from future taxable income. A valuation allowance may be required to reduce deferred tax assets to the amount that is more likely than not to be realized. In the event the Company determines that it may not be able to realize all or part of its deferred tax asset in the future or that new estimates indicate that a previously recorded valuation allowance is no longer required, an adjustment to the deferred tax asset is charged or credited to income in the period of such determination.

The Company recognizes tax positions that meet a “more likely than not” (greater than 50 percent likelihood) minimum recognition threshold. If necessary, the Company recognizes interest and penalties associated with tax matters as part of the income tax provision when incurred and would include accrued interest and penalties with the related tax liability in the consolidated balance sheets. The Company has no uncertain tax positions or related interest or penalties requiring accrual at June 30, 2025 and 2024.

Net loss per share

The Company calculates earnings per share attributable to common shareholders in accordance with ASC 260,Earning Per Share. Basic net loss per share attributable to common shareholders is calculated by dividing net loss attributable to common shareholders by the weighted average number of common stock outstanding during the period. Diluted net loss per common share is calculated by dividing net loss attributable to common shareholders by weighted average common stock outstanding during the period plus potentially dilutive common stock, such as share warrants.

Potentially dilutive common stock are calculated in accordance with the treasury share method, which assumes that proceeds from the exercise of all warrants are used to repurchase common stock at market value. The number of shares remaining after the proceeds are exhausted represents the potentially dilutive effect of the securities.

As the Company has incurred net losses in all periods, certain potentially dilutive securities, including convertible preferred stock, warrants to acquire common stock, and convertible notes payable have been excluded in the computation of diluted loss per share as the effects are antidilutive.

The following outstanding warrants were excluded from the computation of diluted net loss per share for the periods presented because their effect would have been anti-dilutive:

Reclassification

Certain comparative amounts for prior periods have been reclassified to conform to current period presentations. These reclassifications had no effect on net income, loss per share, cash flows, assets, liabilities, or stockholders’ equity as previously reported.

Recent accounting pronouncements

As the Company is an emerging growth company, we have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act.

Adopted:

In October 2021, the FASB issued ASU No. 2021-08,Business Combinations (Topic 805) – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers(“ASU 2021-08”). ASU -08 requires that an acquirer recognizes, and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, as if it had originated the contracts. Prior to this ASU, an acquirer generally recognized contract assets acquired, and contract liabilities assumed that arose from contracts with customers at fair value on the acquisition date. The ASU was effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The ASU is to be applied prospectively to business combinations occurring on or after the effective date of the amendment. The Company has adopted ASU 2021-08. Adoption of ASU 2021-08 did not impact our financial position, results of operations or cash flows.

In November 2023, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2023-07,Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker, or CODM, and included within each reported measure of segment profit or loss. All disclosure requirements under ASU 2023-07 are required for public entities with a single reportable segment. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, on a retrospective basis, with early adoption permitted. The Company adopted ASU 2023-07 effective June 30, 2025, for the annual period beginning July 1, 2024. While the adoption has no impact on our consolidated financial statements, it has resulted in incremental disclosures within the footnotes to our consolidated financial statements. Refer to Note 4, Segment Reporting for the inclusion of the new required disclosures.

Pending adoption:

In December 2023, the FASB issued ASU 2023-09,Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU requires greater disaggregation of information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The ASU applies to all entities subject to income taxes and is intended to help investors better understand an entity’s exposure to potential changes in jurisdictional tax legislation and assess income tax information that affects cash flow forecasts and capital allocation decisions. The ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The ASU should be applied on a prospective basis although retrospective application is permitted. We are currently evaluating the impact of this standard on our disclosures.

On November 4, 2024, the FASB issued ASU 2024-03,Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which is intended to enhance transparency of the nature and function of expenses, primarily through additional disclosures of certain cost and expenses. ASU 2024-03 will be effective for our annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted, and is required to be applied prospectively with the option of retrospective application. We expect the adoption of this ASU will have no impact on our financial position or our results of operations but will result in additional disclosures.

NOTE 4. SEGMENT REPORTING

ASC 280,Segment Reporting, establishes standards for the manner in which companies report financial information about operating segments, products, services, geographic areas and major customers.

Our Segments

During the year ended June 30, 2025, the revised our reportable segments to a region-focused structure, aligning with changes in our business and organizational structure. This transition was driven by several key developments, including the end of project for the construction of a manufacturing facility in Australia during the fourth fiscal quarter of fiscal 2025 and the reversion of intellectual property rights to the University of Newcastle following the liquidation of LSBD, the former licensor. These events prompted a reassessment of the Company’s operating model and strategic priorities, resulting in the adoption of a region-based segment reporting structure that better aligns with the geographic focus of the business and how management evaluates performance and allocates resources.

The following tables set forth the Company’s revenue, government support income, net loss and long-lived assets and inventories by operating and reportable segments.

The Company’s segment revenue, segment expenses, segment net income (loss), and a reconciliation of the total reportable segment’s net income (loss) to the consolidated net income(loss) are as follows:

NOTE 5. ACCOUNTS RECEIVABLE, NET

Accounts receivable, net consist of the following:

NOTE 6. INVENTORIES, NET

Inventories consist of the following:

NOTE 7. ASSETS HELD FOR SALE

Assets held for sale consist of the following:

In June 2025, the Company determined that assets purchased for a manufacturing facility that was under development would not be used in the facility and the Company had no alternative use. Therefore, management committed to a plan to sell the assets (the “Disposal Group”). The Disposal Group was reclassified to Assets Held for Sale in the accompanying consolidated balance sheet as of June 30, 2025. Depreciation of the Disposal Group will not be recorded while these assets are classified as held for sale. The Company performance an assessment of the Disposal Group and determined the carrying value of the disposal group exceeded the fair value less costs to sell. As a result, the Company recorded an impairment loss of $220,062, which is included as impairment of long-lived assets in the accompanying consolidated statements of operations and comprehensive income (loss) for the year ended June 30, 2025.

The Company has not disposed of any assets held for sale during the fiscal year ended June 30, 2025.

NOTE 8. OTHER CURRENT ASSETS

Other current assets consist of the following:

NOTE 9. PROPERTY AND EQUIPMENT, NET

Property and equipment consist of the following:

The Company recorded depreciation expense of $14,955 and $15,108 in relation to the depreciation of property and equipment for the years ended June 30, 2025, and 2024 respectively.

The following table summarizes the amount of CIP recorded in property and equipment, net on the consolidated balance sheets:

NOTE 10. INTANGIBLE ASSETS, NET

Intangible assets, net consist of the following as June 30, 2025:

Intangible assets, net consist of the following as of June 30, 2024:

Intangible assets recognized from the acquisition of IFP were allocated to the United Kingdom operating and reportable segment.

The cumulative balance of the accumulated amortization as of June 30, 2025 and 2024 was $2,835,057 and $1,723,852 respectively.

Expense related to the amortization of intangible assets charged to the consolidated statements of operations and other comprehensive income (loss) for the years ended June 30, 2025 and 2024 was $949,288 and $947,436, respectively.

Amortization expense for the intangible assets is expected to be as follows over the next five years, and thereafter:

NOTE 11. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following:

NOTE 12. NOTE PAYABLE

The Company assumed a note payable due to a distributor as part of an acquisition. The unpaid principal balance of the loan accrues interest at a rate of 0.97% per annum. The balance is reduced by (i) payments of 10% of the Company’s monthly worldwide gross revenue received in the preceding month and (ii) 50% of sales by the Company to the distributor

The classification of the notes payables is based on sales forecast prepared by the management.

NOTE 13. LEASES

The Company has two non-cancellable operating leases with original lease periods expiring in August 2025 and April 2026.

The components of operating lease expense are as follows:

As of June 30, 2025 and 2024, the weighted average remaining lease-term was 0.5 years and 1.3 years, respectively, and the weighted-average discount rate was 13.2%.

The reconciliation of the maturities of the operating leases to the operating lease liabilities recorded in the consolidated balance sheet as of June 30, 2025, is as follows:

NOTE 14. SHAREHOLDERS’ EQUITY

Common Stock

The Company is authorized to issue 100,000,000 shares of common stock with a par value of $0.01 per share, of which 7,323,261 and 3,456,000 were issued and outstanding as of June 30, 2025 and 2024, respectively.

Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.01 per share, of which 4,012,276 shares have been designated Series C Convertible Preferred Stock 5,728,723 shares have been designated Series E Convertible Preferred Stock. There wereno shares of preferred stock issued or outstanding as of June 30, 2025 and 2024.

Warrants

As of June 30, 2025, there were warrants outstanding to purchase shares amounting to 5,508,496 of common stock, held by certain shareholders, with exercise prices ranging from $0.01 to $4,488 per share and a weighted-average exercise price of $16.07 per share. Each warrant initially represented the right to purchase one share of the Company’s common stock and was subject to adjustment upon the occurrence of specified events including reverse stock splits.

The Company raised approximately $7,939 and issued 799,447 shares of common stock in connection with the exercise of outstanding warrants for the years ended June 30, 2025, respectively and the Company raised approximately $6,551,000 through the issuance of 655,086 shares of common stock upon the exercise of outstanding warrants the years ended June 30, 2024, respectively.

At The Market (ATM) Offering

As a result of the sale of shares of common stock by the Company pursuant to the previously disclosed ATM Agreement between the Company and Ladenburg, the Company has raised approximately $2,449,962 (net of commissions of approximately $75,774 paid to Ladenburg) as of August 12, 2025. Of this amount, the Company raised approximately $2,251,540 (net of commissions of approximately $69,637 paid to Ladenburg) through the sale and issuance of 1,434,659 shares of Company common stock pursuant to the ATM Agreement during the period between September 18, 2024, through to June 30, 2025. During the three months ended June 30, 2025, the Company raised approximately $765,201 (net of commissions of approximately $23,666 paid to Ladenburg) through the sale and issuance of 514,296 shares of Company common stock pursuant to the ATM Agreement.

February Offering

On February 20, 2025, the Company entered into an underwriting agreement with Ladenburg, as representative (the February Representative) for the underwriters named in Schedule 1 thereto, relating to an underwritten public offering of 1,304,348 shares of the Company’s common stock. The public offering price for each share was $2.00 per share and the February Underwriters agreed to purchase 1,304,348 shares. The Company granted the February Underwriters a 45-day option to purchase an additional 195,652 shares of common stock at the public offering price of $2.00 per share, less the underwriting discounts and commissions. On February 20, 2025, the February Representative fully exercised the over-allotment option to purchase an additional 195,652 shares of common stock. All of the shares were sold by the Company. The February Offering closed on February 21, 2025. As a result of the overallotment option being exercised in full, the Company raised approximately $2,645,000 (net of underwriting discounts and commissions of approximately $355,000).

Advisory Agreement

On February 29, 2024, the Company entered into an Investor Relations and Corporate Development Advisory Agreement (the “ClearThink Agreement”) with ClearThink Capital LLC (“ClearThink”) pursuant to which ClearThink provides certain advisory and investor relations services to the Company. As consideration for such services, the Company agreed pay a fee consisting of: (a) an initial grant of 5,260 restricted shares of common stock (the “Initial Grant”) and (b) a monthly fee consisting of (i) a cash fee of a $5,000 per month, and (ii) a grant of restricted common stock with a value of $4,000 per month ($12,000 per three-month period (a “Quarter”)), with the number of shares of common stock in each such Quarterly issuance (each a “Quarterly Grant”) calculated on the first business day of each Quarter based on the closing price of the Company’s common stock on the last trading day of the immediately preceding Quarter. The ClearThink Agreement remains in effect until terminated by either party after three months from the effective date. For the year ended June 30, 2025, the Company recognized $48,000 of expense related to the ClearThink Agreement in the accompanying consolidated statements of operations and comprehensive income (loss). The Company issued 33,655 restricted stocks to ClearThink during the year ended June 30, 2025.

Stock-based payments under 2019 Stock Incentive Plan

On September 25, 2024, the Company granted its employees 99,500 shares of common stock as compensation. The Company recorded stock compensation expense of $190,045, based on a grant date fair value of $1.91 per share in the accompanying consolidated statement of operations and comprehensive income (loss). All shares of common stock granted vested immediately and there isno unrecognized share-based compensation expense as of June 30, 2025.

NOTE 15. FAIR VALUE MEASUREMENTS

Convertible notes

The Company held back 500,000 Series C Preferred Stock (“Closing Holdback Shares”), from former owners of an acquired entity for one year after the closing of the acquisition to secure potential indemnification claims by the Company against the former owners of the acquired entity. Each share of Series C Preferred Stock was convertible into 0.0125 shares of common stock. Effective one year after the closing of the acquisition, all Closing Holdback Shares were issued and immediately converted into an aggregate of 6,248 shares of common stock.

The following table provides a reconciliation of the beginning and ending balance of the Closing Holdback Shares (in the form of Series C Preferred Stock):

NOTE 16. COMMITMENTS AND CONTINGENCIES **

Agreement with CenExel

On August 1, 2024, the Company signed an agreement with CenExel to perform a method comparison clinical study as part of the Company’s FDA 510(k) clinical study plan. As a part of the agreement, the Company is committed to pay $381,204 on completion of certain milestones. As of June 30, 2025, $89,007 remains payable under the agreement, which is accrued within current liabilities in the accompanying consolidated balance sheets within accounts payable and accrued expenses.

From time to time, the Company may become a party to various legal proceedings arising in the ordinary course of business. Based on information currently available, the Company is not involved in any pending or threatened legal proceedings that it believes could reasonably be expected to have a material adverse effect on its financial condition, results of operations or liquidity. However, legal matters are inherently uncertain, and the Company cannot guarantee that the outcome of any potential legal matter will be favorable to the Company.

NOTE 17. INCOME TAX

The Company computes income taxes using the asset and liability method in accordance with FASB ASC Topic 740,Income Taxes. Under the asset and liability method, we determine deferred income tax assets and liabilities based on the differences between the financial reporting and tax bases of assets and liabilities and measure them using currently enacted tax rates and laws. The Company provides a valuation allowance for deferred tax assets that, based on available evidence, are more likely than not to be realized. Realization of our net operating loss carryforward was not reasonably assured as of June 30, 2025 and 2024, and the Company has recorded a valuation allowance of $12,698,469 and $10,421,568, respectively against deferred tax assets in excess of deferred tax liabilities.

The components of net deferred taxes are as follows:

Our statutory income tax rate is expected to be approximately 21%. The provision for income taxes consisted of the following:

A reconciliation of statutory tax rates to effective tax rates were as follows in each of the periods presented:

Deferred tax assets and liabilities reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and (b) operating loss and tax credit carryforwards. Significant components of our deferred tax assets and liabilities were as follows for each of the dates presented:

As of June 30, 2025 and 2024, the company had federal and foreign income tax net operating loss carry forwards of $59,006,727 and $49,097,053, respectively, which expire at various dates ranging from 2038 through unlimited expiration.

NOTE 18. LOSS PER SHARE

Basic loss per common share is computed by dividing net loss allocable to common shareholders by the weighted average number of shares of common stock or common stock equivalents outstanding. Diluted loss per common share is computed similar to basic loss per common share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock.

The following outstanding warrants, options and preferred shares were excluded from the computation of diluted net loss per share for the periods presented because their effect would have been anti-dilutive:

NOTE 19. SUBSEQUENT EVENTS

At The Market (ATM) Offering

The Company raised approximately $198,421 (net of commissions of approximately $6,137 paid to Ladenburg) through the sale and issuance of 110,397 shares of common stock between June 30, 2025, through August 12, 2025.

Inducement Agreements

On July 25, 2025, the Company entered into warrant exercise inducement offer letters (each an “Inducement Agreement”) with certain existing holders of certain Company warrants (collectively, the “Holders”) to receive new warrants (the “Inducement Warrants” or “Series J Warrants”) to purchase up to a number of shares of the Company’s common stock equal to 200% of the number of warrant shares to be issued pursuant to the exercise (or prepayment) of Series G Warrants and Series H-1 Warrants (“Existing Warrants”).

Pursuant to the Inducement Agreements, the Company reduced the exercise price for such Existing Warrants to $1.90 per share (the “Reduced Exercise Price”), and the Holders: (i) exercised the Existing Warrants (Series G and Series H-1 Warrants) to purchase 1,545,494 shares of the Company’s common stock; and (ii) prepaid $1.89 per share of the Reduced Exercise Price for Series H-1 Warrants to purchase 477,734 shares of the Company’s common stock in consideration of the Company further reducing the exercise price of Series H-1 Warrants to purchase 477,734 shares of the Company’s common stock to $0.01 per share.

The gross proceeds to the Company from the exercise (or prepayment of the exercise price) of the Existing Warrants were approximately $3.8 million, prior to deducting placement fees and estimated offering expenses.

The Inducement Warrants (Series J Warrants) have an initial exercise price equal to $1.90 per share and will expire five and one-half (5.5) years from the date of issuance. The Inducement Warrants will be exercisable upon the Company’s receipt of stockholder approval of the exercise of the Inducement Warrants into an aggregate of up to 4,046,456 shares of common stock.

Leases

Cambridge, England

On August 12, the Company entered into a lease renewal agreement for its multifunctional facility located at Cambridge, England, which will replace the existing lease that is set to expire on August 31, 2025.

The new lease term begins on September 1, 2025 and extends through August 31, 2035. Under the amended agreement, the Company has agreed to pay monthly base rent of approximately $24,800, compared to $22,600 under the existing lease. The renewal also provides for an increase on September 1, 2029 of the monthly rental amount to current market rates and includes an option to break the lease on September 1, 2030, subject to providing 9 months written notice.

Sydney, Australia

On August 11, 2025, the Company signed a Heads of Agreement (HOA) for its office/warehouse space located at Sydney, Australia. HOA sets out the key terms of a lease renewal agreement which will replace the existing lease that is set to expire on April 25, 2026.

The new lease term will begin on April 26, 2026 and extends through April 25, 2029. Under the HOA, the Company has agreed to pay monthly base rent of approximately $4,189, compared to $3,592 under the existing lease.

Other than the event noted, no material subsequent events have taken place that require disclosure in these consolidated financial statements noted between June 30, 2025, and the date of this report.