acog-20260630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-42403

Alpha Cognition Inc.

(Exact Name of Registrant as Specified in its Charter)

British Columbia		N/A
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1452 Hughes Rd. Ste. 200
Grapevine, Texas		76051
(Address of Principal Executive Offices)		(Zip Code)

(858) 344-4375

(Registrant’s Telephone Number, including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:		Trading Symbol		Name of each exchange on which registered:
Common Stock, no par value		ACOG		The Nasdaq Stock Market LLC

Indicate by checkmark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

	Large Accelerated Filer ☐	Accelerated Filer ☐	Non-Accelerated Filer ☒
	Smaller Reporting Company ☒	Emerging Growth Company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date: 21,777,868 common shares, without par value, outstanding as of August 13, 2026.

ALPHA COGNITION INC.

FORM 10-Q

For the Quarter Ended June 30, 2026

INDEX

		Page
PART I – FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS		1
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		19
ITEM 3. – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		31
ITEM 4. CONTROLS AND PROCEDURES		31
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS		32
ITEM 1A. RISK FACTORS		32
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		32
ITEM 3. DEFAULTS UPON SENIOR SECURITIES		33
ITEM 4. MINE SAFETY DISCLOSURE		33
ITEM 5. OTHER INFORMATION		33
ITEM 6. EXHIBITS		33
SIGNATURES		34

PART I

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

ALPHA COGNITION INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2026			2025
	(unaudited)
ASSETS

Current assets
Cash and cash equivalents	$	41,384,287		$	66,046,789
Restricted cash		58,400			58,400
Accounts receivable, net		5,474,956			4,236,136
Inventory		6,394,817			5,123,496
Prepaid expenses and other current assets		4,614,222			3,545,451
Total current assets		57,926,682			79,010,272
Equipment, net		374,692			328,540
Intangible assets, net		6,218,509			391,423
Total assets	$	64,519,883		$	79,730,235

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities
Accounts payable and accrued liabilities	$	6,237,986		$	8,976,904
Current deferred income		103,192			153,171
Other current liabilities		71,540			-
Total current liabilities		6,412,718			9,130,075
Deferred income		30,170			35,944
Option liability		-			3,174,662
Warrant liabilities		5,080,530			4,812,198
Other long-term liabilities		34,716			47,181
Total liabilities		11,558,134			17,200,060

Stockholders’ equity
Common stock, no par value, unlimited shares authorized, 21,774,104 and 21,742,104 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively		133,952,684			133,891,673
Class B preferred stock, no par value, unlimited shares authorized, 316,655 shares issued and outstanding as of June 30, 2026, and December 31, 2025, respectively		62			62
Additional paid-in capital		31,487,837			25,849,516
Accumulated other comprehensive loss		(104,301	)		(104,301	)
Accumulated deficit		(112,374,533	)		(97,106,775	)
Total stockholders’ equity		52,961,749			62,530,175
Total liabilities and stockholders’ equity	$	64,519,883		$	79,730,235

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

ALPHA COGNITION INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2026			2025			2026			2025

Revenue
Product, net	$	6,041,506		$	1,576,411		$	9,545,327		$	1,923,340
Licensing		51,468			81,276			81,445			2,663,001
Total revenue		6,092,974			1,657,687			9,626,772			4,586,341

Cost of Revenues
Cost of product sales, excluding amortization of intangible assets		277,466			105,354			526,319			131,895
Cost of licensing revenue		39,362			93,118			62,285			903,118
Amortization of intangible assets		74,229			5,386			79,616			10,773
Total cost of revenues		391,057			203,858			668,220			1,045,786

Gross Profit		5,701,917			1,453,829			8,958,552			3,540,555

Operating Expenses
Research and development		2,008,870			406,140			3,105,175			806,556
Selling, general and administrative expenses		11,449,054			9,494,966			21,705,611			14,586,238
Total operating expenses		13,457,924			9,901,106			24,810,786			15,392,794

Loss from operations		(7,756,007	)		(8,447,277	)		(15,852,234	)		(11,852,239	)

Other income (expenses)
Interest income, net		380,735			425,670			886,791			887,539
Grant income		-			-			-			71,095
Loss on change in fair value of warrant liabilities		(1,414,267	)		(5,172,091	)		(290,195	)		(4,024,209	)
Loss on foreign currency contracts		(42,251	)		-			(42,251	)		-
Other income (expenses)		42,050			(5,530	)		30,131			(6,487	)
Total other income (expenses)		(1,033,733	)		(4,751,951	)		584,476			(3,072,062	)

Net loss and comprehensive loss		(8,789,740	)		(13,199,228	)		(15,267,758	)		(14,924,301	)

Weighted average shares outstanding, basic		21,774,104			16,020,702			21,768,115			16,020,015

Net loss per share, basic	$	(0.40	)	$	(0.82	)	$	(0.70	)	$	(0.93	)

Adjusted net loss, diluted	$	(8,789,740	)	$	(13,199,228	)	$	(15,629,682	)	$	(14,924,301	)

Weighted average outstanding stock, diluted		21,774,104			16,020,702			21,879,362			16,020,015

Net loss per share, diluted	$	(0.40	)	$	(0.82	)	$	(0.71	)	$	(0.93	)

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

ALPHA COGNITION INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

For the three months ended June 30, 2026:

											Accumulated
									Additional		Other
	Common Stock				Preferred Stock				Paid-In		Comprehensive			Accumulated
	Shares		Amount		Shares		Amount		Capital		Loss			Deficit			Total

Balance, March 31, 2026		21,774,104	$	133,952,684		316,655	$	62	$	27,192,853	$	(104,301	)	$	(103,584,793	)	$	57,456,505
Reclassification of CAD options		-		-		-		-		2,843,204		-			-			2,843,204
Stock-based compensation		-		-		-		-		1,451,780		-			-			1,451,780
Net loss		-		-		-		-		-		-			(8,789,740	)		(8,789,740	)
Balance, June 30, 2026		21,774,104	$	133,952,684		316,655	$	62	$	31,487,837	$	(104,301	)	$	(112,374,533	)	$	52,961,749

For the three months ended June 30, 2025:

											Accumulated
									Additional		Other
	Common Stock				Preferred Stock				Paid-In		Comprehensive			Accumulated
	Shares		Amount		Shares		Amount		Capital		Loss			Deficit			Total

Balance, March 31, 2025		16,019,787	$	99,128,230		316,655	$	62	$	17,638,811	$	(104,301	)	$	(78,161,973	)	$	38,500,829
Warrants exercised		3,332		25,823		-		-		-		-			-			25,823
Stock-based compensation		-		-		-		-		1,388,384		-			-			1,388,384
Net loss		-		-		-		-		-		-			(13,199,228	)		(13,199,228	)
Balance, June 30, 2025		16,023,119	$	99,154,053		316,655	$	62	$	19,027,195	$	(104,301	)	$	(91,361,201	)	$	26,715,808

ALPHA COGNITION INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

For the six months ended June 30, 2026

												Accumulated
									Additional			Other
	Common Shares				Preferred Shares				Paid-In			Comprehensive			Accumulated
	Shares		Amount		Shares		Amount		Capital			Loss			Deficit			Total

Balance, December 31, 2025		21,742,104	$	133,891,673		316,655	$	62	$	25,849,516		$	(104,301	)	$	(97,106,775	)	$	62,530,175
Options exercised		32,000		61,011		-		-		(60,211	)		-			-			800
Reclassification of CAD options		-		-		-		-		2,843,204			-			-			2,843,204
Share-based compensation		-		-		-		-		2,855,328			-			-			2,855,328
Net loss		-		-		-		-		-			-			(15,267,758	)		(15,267,758	)
Balance, June 30, 2026		21,774,104	$	133,952,684		316,655	$	62	$	31,487,837		$	(104,301	)	$	(112,374,533	)	$	52,961,749

For the six months ended June 30, 2025

											Accumulated
									Additional		Other
	Common Shares				Preferred Shares				Paid-In		Comprehensive			Accumulated
	Shares		Amount		Shares		Amount		Capital		Loss			Deficit			Total

Balance, December 31, 2024		16,019,787	$	99,128,230		316,655	$	62	$	16,507,736	$	(104,301	)	$	(76,436,900	)	$	39,094,827
Warrants exercised		3,332		25,823		-		-		-		-			-			25,823
Share-based compensation		-		-		-		-		2,519,459		-			-			2,519,459
Net loss		-		-		-		-		-		-			(14,924,301	)		(14,924,301	)
Balance, June 30, 2025		16,023,119	$	99,154,053		316,655	$	62	$	19,027,195	$	(104,301	)	$	(91,361,201	)	$	26,715,808

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

ALPHA COGNITION INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

	For the Six Months Ended June 30,
	2026			2025

Cash flows used in operating activities
Net loss	$	(15,267,758	)	$	(14,924,301	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		133,356			18,896
Accrued expenditures for government grant		-			63,051
Change in fair value of warrant liabilities		290,195			4,024,209
Change in fair value of bonus rights liability		(21,799	)		85,068
Change in fair value for foreign currency contracts		42,251			-
Loss on disposal of equipment		-			18,000
Stock-based compensation – equity-classified options		2,855,328			2,519,458
Stock-based compensation – liability-classified CAD options		(331,458	)		2,812,291
Changes in non-cash operating working capital items:
Accounts receivable, net		(1,238,820	)		(1,813,696	)
Inventories		(1,271,321	)		(260,719	)
Prepaid expenses and other current assets		(1,068,771	)		(1,457,016	)
Accounts payable and accrued liabilities		(2,722,158	)		368,533
Deferred income		(55,753	)		362,450
Net cash used in operating activities		(18,656,708	)		(8,183,776	)

Cash flows used in investing activities
Acquisition of equipment		(99,892	)		(71,585	)
Acquisition of intangible asset		(5,906,702	)		-
Net cash used in investing activities		(6,006,594	)		(71,585	)

Cash flows provided by financing activities
Proceeds from exercises of options		800			-
Proceeds from exercises of warrants		-			25,823
Repayment of promissory notes		-			(911,463	)
Proceeds received from restricted government grant		-			174,675
Amounts paid from restricted government grant funds		-			(134,146	)
Net cash provided by financing activities		800			(845,111	)

Change in cash, cash equivalents, and restricted cash during the period		(24,662,502	)		(9,100,472	)
Cash, cash equivalents, and restricted cash beginning of period		66,105,189			48,564,082
Cash, cash equivalents, and restricted cash end of period	$	41,442,687		$	39,463,610

	For the Six Months Ended June 30,
	2026		2025

Supplemental Disclosure
Cash paid for interest	$	-	$	4,894
Supplemental non-cash disclosures
Reallocation of fair value of share options upon exercise	$	60,211	$	-
Reclassification of CAD option liability to equity	$	2,843,204	$	-

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – NATURE OF OPERATIONS

Alpha Cognition Inc. (“ACI” or the “Company”) is a commercial stage, biopharmaceutical company dedicated to developing treatments for patients suffering from neurodegenerative diseases, such as Alzheimer’s Disease, for which there are limited or no treatment options. The Company focuses on the commercial manufacturing and commercial sales of its ZUNVEYL oral tablet formulation, which was launched on March 19, 2025. The Company’s commercial program for ZUNVEYL is primarily focused on its long-term care commercial team that can focus on providing key points of differentiation, exploiting key issues with existing AChEI treatments, and franchising potential additional indications and new products.

On November 12, 2024, the Company’s common stock commenced trading on the NASDAQ stock exchange under the symbol “ACOG”. The Company’s common stock traded on the Canadian Securities Exchange (“CSE”) under the symbol “ACOG” from May 1, 2023 to December 17, 2024 on which date they were voluntarily delisted.

NOTE 2 – REVISIONS TO PREVIOUSLY ISSUED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL INFORMATION

As previously reported in the Company’s Annual Report on Form 10-K, during the preparation of its consolidated financial statements for the year ended December 31, 2025, the Company identified an error in its previously reported consolidated financial statements for the year ended December 31, 2024 and for each of the quarters ended March 31, June 30, and September 30, 2025. Specifically, certain options denominated in Canadian dollars (the “CAD Options”) were previously classified as equity awards. Upon further evaluation of the terms of the CAD Options and the applicable accounting guidance, the Company determined that because the exercise price of the CAD Options is denominated in a currency that is different than the one in which a substantial portion of the Company’s shares are traded, the CAD Options were considered to be indexed to a factor other than a market, performance, or service condition. Accordingly, the CAD Options should have been accounted for as liability-classified awards measured at fair value beginning with the Company’s US initial public offering in November 2024, with subsequent changes in fair value recognized in earnings each reporting period.

In accordance with Staff Accounting Bulletin (“SAB”) 99, Materiality, and SAB 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in the Current Year Financial Statements, the Company evaluated the materiality of the error from qualitative and quantitative perspectives, and concluded that the error was immaterial to each of the 2025 interim financial statements.

However, the Company has corrected the error in the current year comparative condensed consolidated financial statements by adjusting the information, as applicable, as of and for the quarter and six months ended June 30, 2025. A summary of the corrections to the affected financial statement line items in these condensed consolidated financial statements is presented below.

Condensed Consolidated Statement of Operations and Comprehensive Loss

	Three Months Ended June 30, 2025
	As Reported			Adjustment			As Revised
Operating expenses
Research and development	$	317,120		$	89,020		$	406,140
General and administrative expenses		6,873,710			2,621,256			9,494,966
Total operating expenses		7,190,830			2,710,276			9,901,106
Net operating loss		(5,737,001	)		(2,710,276	)		(8,447,277	)
Total other income (expenses)		(4,751,951	)		-			(4,751,951
Net loss and comprehensive loss	$	(10,488,952	)	$	(2,710,276	)	$	(13,199,228	)
Net loss per share, basic and diluted	$	(0.65	)	$	(0.17	)	$	(0.82	)

	Six Months Ended June 30, 2025
	As Reported			Adjustment			As Revised
Operating expenses
Research and development	$	724,631		$	81,925		$	806,556
General and administrative expenses		12,239,357			2,346,881			14,586,238
Total operating expenses		12,963,988			2,428,806			15,392,794
Net operating loss		(9,423,433	)		(2,428,806	)		(11,852,239	)
Total other income (expenses)		(3,072,062	)					(3,072,062
Net loss and comprehensive loss	$	(12,495,495	)	$	(2,428,806	)	$	(14,924,301	)
Net loss per share, basic and diluted	$	(0.78	)	$	(0.15	)	$	(0.93	)

Condensed Consolidated Statement of Stockholders’ Equity

For the three months ended June 30, 2025:

	Additional Paid in Capital							Accumulated Deficit									Total
	As Reported		Adjustment			As Revised		As Reported			Adjustment			As Revised			As Reported			Adjustment			As Revised
Balance, March 31, 2025	$	20,079,465	$	(2,440,654	)	$	17,638,811	$	(78,291,581	)	$	129,608		$	(78,161,973	)	$	40,811,875		$	(2,311,046	)	$	38,500,829
Stock-based compensation	$	1,547,570	$	(159,186	)	$	1,388,384	$	-		$	-		$	-		$	1,547,570		$	(159,186	)	$	1,388,384
Net loss	$	-	$	-		$	-	$	(10,488,952	)	$	(2,710,276	)	$	(13,199,228	)	$	(10,488,952	)	$	(2,710,276	)	$	(13,199,228	)
Balance, June 30, 2025	$	21,627,035	$	(2,599,840	)	$	19,027,195	$	(88,780,533	)	$	(2,580,668	)	$	(91,361,201	)	$	31,896,316		$	(5,180,508	)	$	26,715,808

For the six months ended June 30, 2025

	Additional Paid in Capital							Accumulated Deficit									Total
	As Reported		Adjustment			As Revised		As Reported			Adjustment			As Revised			As Reported			Adjustment			As Revised
Balance, December 31, 2024	$	18,724,092	$	(2,216,356	)	$	16,507,736	$	(76,285,038	)	$	(151,862	)	$	(76,436,900	)	$	41,463,045		$	(2,368,218	)	$	39,094,827
Stock-based compensation	$	2,902,943	$	(383,484	)	$	2,519,459	$	-		$	-		$	-		$	2,902,943		$	(383,484	)	$	2,519,459
Net loss	$	-	$	-		$	-	$	(12,495,495	)	$	(2,428,806	)	$	(14,924,301	)	$	(12,495,495	)	$	(2,428,806	)	$	(14,924,301	)
Balance, June 30, 2025	$	21,627,035	$	(2,599,840	)	$	19,027,195	$	(88,780,533	)	$	(2,580,668	)	$	(91,361,201	)	$	31,896,316		$	(5,180,508	)	$	26,715,808

Condensed Consolidated Statement of Cash Flows

	Six Months Ended June 30, 2025
	As Reported			Adjustment			As Revised
Net loss	$	(12,495,495	)	$	(2,428,806	)	$	(14,924,301	)
Cash flow used in operating activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	$	2,902,943		$	2,428,806		$	5,331,749

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation – The accompanying interim condensed consolidated financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and are consistent in all material respects with those applied in our Annual Report on Form 10-K for the year ended December 31, 2025.

The interim condensed consolidated financial statements are unaudited and have been prepared on the same basis as the audited annual financial statements and, in management’s opinion, include all adjustments consisting of only normal recurring adjustments necessary for the fair statement of the Company’s financial position as of June 30, 2026 and its results of operations, changes in equity, and cash flows for the three and six months ended June 30, 2026 and 2025. The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results to be expected for the full fiscal year or any other period.

Certain information and footnote disclosures normally included in the Company’s annual financial statements have been condensed or omitted. The information included in this Form 10-Q should be read in conjunction with the financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Liquidity - The Company does not have sufficient operating revenue to finance its existing obligations and has relied on external financing, such as debt and equity raises, to generate capital to maintain its capacity to meet working capital requirements. During August 2025, the Company entered into an At the Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”) as sales agent. Under the terms of the ATM Agreement, the Company is entitled to sell, at its sole discretion and from time to time as it may choose, common stock in the capital of the Company (“Stock”) through Wainwright, with such sales having an aggregate gross sales value of up to $75.0 million. Through June 30, 2026, the Company has not issued any Common Stock under the ATM Agreement. The ATM Agreement expires on August 29, 2028.

The Company believes its current cash balances provide sufficient funding to meet the Company’s working capital requirements for the next 12 months from the date of issuance of these condensed consolidated financial statements. The Company expects to continue to rely on debt and the issuance of shares, and possibly other non-dilutive financing options to finance its ongoing operations and plans for continued commercialization of ZUNVEYL. However, there is a risk that additional financing will not be available on a timely basis or on terms acceptable to the Company.

Use of Estimates and Assumptions – The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues and disclosure of contingent liabilities as of the date of the condensed consolidated financial statements and the reported amounts of expenses during the reporting period. The Company’s most significant estimates relate to the fair value of its warrant liabilities, CAD Options liability, and stock option grants, and its estimates of the standalone selling prices of certain performance obligations. On an ongoing basis, management evaluates its estimates, to ensure that those estimates effectively reflect changes in the Company’s business and new information as it becomes available. Management bases these estimates on historical and anticipated results, trends, and various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to forecasted amounts and future events. Actual results could differ materially from these estimates under different assumptions or conditions.

Liability-Based Awards – Bonus right awards that include cash settlement features are accounted for as liability-based awards in accordance with ASC 718, Compensation – Share Based Compensation. The fair value of the bonus right awards is estimated using a Black-Scholes option-pricing model and is revalued on each reporting date based on the probability of the expected awards to vest. Changes in the estimated fair value of the bonus right awards are recognized within selling, general and administrative expense in the consolidated statements of operations and comprehensive loss. Key assumptions in the calculation of the fair value of the bonus right awards include expected volatility, the risk-free interest rate, expected life, and fair value per award.

At December 31, 2025, the Company had 758,300 outstanding stock options with exercise prices denominated in CAD. Because the exercise prices of these options were denominated in a currency that was different than the one in which a substantial portion of the Company’s shares were traded, the CAD Options were considered to be indexed to a factor other than a market, performance, or service condition. As a result, the CAD Options were classified as liabilities and remeasured at fair value each reporting period with the corresponding change in fair value recorded as an increase or decrease in stock-based compensation expense within research and development and selling, general and administrative expenses in the consolidated statements of operations and comprehensive loss.

On April 30, 2026, the Company modified all 758,300 outstanding CAD Options to change the exercise prices from CAD to USD, using the Bank of Canada’s published CAD-to-USD exchange rate as of the original grant date for each of the CAD Options. This modification was intended to eliminate the foreign currency indexation issue, restore equity classification, and preserve the original intrinsic value of the awards. All other terms and conditions of the CAD Options remained unchanged.

Fair Value Measurements – Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value.

Level 1 – Observable inputs that reflect quoted prices for identical assets or liabilities in active markets.

Level 2 – Inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and credit ratings.

Level 3 – Financial instruments whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the instrument.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. To the extent that a fair value measurement is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3.

The Company’s recurring fair value measurements include those related to warrant liabilities (see Note 7), bonus right liabilities, and, until their modification in April 2026, CAD Option liabilities (see Note 7). These liabilities are or were considered to be Level 3 measurements due to the use of significant unobservable inputs, including expected volatility and expected term. These inputs are inherently uncertain and require significant judgment; accordingly, changes in these assumptions could have a material impact on the fair value measurement. In general, increases (decreases) in the expected volatility assumptions would result in higher (lower) fair value measurements, and increases (decreases) in the expected term assumptions would generally result in higher (lower) fair values.

The carrying amounts of cash and cash equivalents, restricted cash, accounts receivable, inventory, prepaid expenses and other current assets, accounts payable and accrued liabilities, and deferred income are considered to be representative of their respective fair values because of the short-term nature of these accounts.

New Accounting Pronouncements

In November 2024, the FASB issued Accounting Standards Update No. 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”), which requires disaggregation of certain costs in a separate note to the financial statements, such as the amounts of employee compensation, depreciation and intangible asset amortization, included in each relevant expense caption in annual and interim consolidated financial statements. ASU 2024-03 is effective for annual periods beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027 on a retrospective or prospective basis, with early adoption permitted. The Company is evaluating the effect that ASU 2024-03 will have on its financial statement disclosures.

The Company considers the applicability and potential impact of all recently issued accounting pronouncements; those not specifically identified in this disclosure are either not applicable to the Company or not expected to have a material effect on our financial condition or results of operations.

NOTE 4 – INVENTORY

Inventory consisted of the following:

	June 30, 2026		December 31, 2025
Raw materials	$	3,936,662	$	3,725,336
Work in progress		1,036,784		725,460
Finished goods		1,421,371		672,700
Total	$	6,394,817	$	5,123,496

NOTE 5 – OTHER BALANCE SHEET COMPONENTS

Prepaid expenses and other current assets consisted of the following:

	June 30, 2026		December 31, 2025
Prepaid insurance and other expenses	$	2,385,781	$	2,123,379
Prepaid FDA user fees		663,320		994,979
Prepaid legal expenses		37,708		1,465
Deferred ATM offering costs		223,096		223,096
Manufacturing deposit		1,130,400		-
Others		173,917		202,532
Prepaid expenses and other current assets	$	4,614,222	$	3,545,451

The manufacturing deposit relates to production of raw materials for the end of the 2026 fiscal year.

Accounts payable and accrued expenses consisted of the following:

	June 30, 2026		December 31, 2025
Accounts payable	$	1,188,007	$	3,067,616
Accrued gross-to-net discounts		1,467,440		993,413
Accrued inventory costs		698,364		450,321
Accrued clinical research costs