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 001-38174

Citius Pharmaceuticals, Inc.

(Exact name of registrant as specified in its charter)

Nevada		27-3425913
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

11 Commerce Drive, First Floor, Cranford, NJ		07016
(Address of principal executive offices)		(Zip Code)

(908) 967-6677

(Registrant’s telephone number, including area code)

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

Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered
Common stock, $0.001 par value		CTXR		Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has 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 the 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 ☒

As of August 13, 2026, there were 27,452,570 shares of common stock, $0.001 par value, of the registrant issued and outstanding.

Citius Pharmaceuticals, Inc.

FORM 10-Q

TABLE OF CONTENTS

June 30, 2026

		Page
PART I. FINANCIAL INFORMATION:		1

Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets at June 30, 2026 and September 30, 2025	1
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended June 30, 2026 and 2025	2
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended June 30, 2026 and 2025	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2026 and 2025	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34
Item 4.	Controls and Procedures	34

PART II. OTHER INFORMATION		35

Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Mine Safety Disclosures	36
Item 5.	Other Information	36
Item 6.	Exhibits	37

	SIGNATURES	38

EXPLANATORY NOTE

In this Quarterly Report on Form 10-Q, and unless the context otherwise requires, the “Company,” “Citius Pharma,” “we,” “us,” and “our” refer to Citius Pharmaceuticals, Inc. and its wholly-owned subsidiary Leonard-Meron Biosciences, Inc., and its majority-owned subsidiaries, Citius Oncology, Inc. (Nasdaq: CTOR) (“Citius Oncology”) and NoveCite, Inc., taken as a whole.

Mino-Lok® is our registered trademark and LYMPHIR^® (denileukin diftitox) is a registered trademark of Citius Oncology. All other trade names, trademarks and service marks appearing in this quarterly report are the property of their respective owners. We have assumed that the reader understands that all such terms are source-indicating. Accordingly, such terms, when first mentioned in this report, appear with the trade name, trademark or service mark notice and then throughout the remainder of this report without trade name, trademark or service mark notices for convenience only and should not be construed as being used in a descriptive or generic sense.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements.” Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on current expectations, estimates and projections about our business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors discussed from time to time in this Report and in other documents which we file with the Securities and Exchange Commission (the “SEC”). In addition, such statements could be affected by risks and uncertainties related to:

	●	our independent registered public accounting firm’s report includes an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern;

	●	our need for substantial additional funds and our ability to raise those funds;

	●	our ongoing evaluation of strategic alternatives;

	●	the ability of Citius Oncology to commercialize LYMPHIR, including covering the costs of licensing payments, product manufacturing and other third-party goods and services;

	●	our ability to regain compliance with the continued listing requirements of the Nasdaq Stock Market LLC (“Nasdaq”);

	●	our ability to recognize the anticipated benefits of the August 2024 reverse merger whereby Citius Oncology became a standalone publicly-traded company and our majority-owned subsidiary (the “Merger”), which may not be realized fully, if at all, or may take longer to realize than expected;

	●	our ability to obtain regulatory approval for and successfully commercialize Mino-Lok;

	●	the cost, timing, and results of our pre-clinical and clinical trials for our other product candidates;

	●	our ability to apply for, obtain and maintain required regulatory approvals for our other product candidates;

	●	the estimated markets for LYMPHIR, Mino-Lok or any of our future product candidates and the acceptance thereof by any market;

	●	our ability to obtain, perform under and maintain financing and strategic agreements and relationships;

	●	the commercial feasibility and success of our technology and our product candidates;

	●	our ability to recruit and retain qualified management and technical personnel to carry out our operations; and

	●	the other factors discussed in the “Risk Factors” section of our most recent Annual Report on Form 10-K for the fiscal year ended September 30, 2025, filed with the SEC on December 23, 2025, as amended on January 28, 2026.

Any forward-looking statements speak only as of the date on which they are made, and except as may be required under applicable securities laws, we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the filing date of this Report.

iii

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

CITIUS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	June 30,			September 30,
	2026			2025
ASSETS
Current Assets:
Cash and cash equivalents	$	17,007,523		$	4,252,290
Accounts receivable, net of allowances		686,235			-
Inventory		22,625,945			22,286,693
Prepaid expenses		3,011,660			1,395,490
Total Current Assets		43,331,363			27,934,473

Operating lease right-of-use asset, net		753,039			818,694

Deposits		38,062			38,062
In-process research and development, net of accumulated amortization		88,785,938			92,800,000
Goodwill		9,346,796			9,346,796
Total Other Assets		98,170,796			102,184,858

Total Assets	$	142,255,198		$	130,938,025

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	8,037,899		$	13,693,692
License payable		15,650,000			22,650,000
Accrued expenses		25,913,962			4,190,253
Accrued compensation		1,871,320			3,292,447
Note payable		-			1,000,000
Operating lease liability		176,170			88,348
Total Current Liabilities		51,649,351			44,914,740

Deferred tax liability		7,696,443			7,770,760
Notes payable, net of deferred financing fees		6,410,161			-
Operating lease liability – noncurrent		590,787			724,925
Total Liabilities		66,346,742			53,410,425

Commitments and Contingencies

Stockholders’ Equity:
Preferred stock - $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding		-			-
Common stock - $0.001 par value; 250,000,000 shares authorized; 27,452,570 and 18,067,744 shares issued and outstanding at June 30, 2026 and September 30, 2025, respectively		27,452			18,068
Additional paid-in capital		343,704,577			306,336,239
Accumulated deficit		(277,118,897	)		(238,804,129	)
Total Citius Pharmaceuticals, Inc. Stockholders’ Equity		66,613,132			67,550,178
Non-controlling interest		9,295,324			9,977,422
Total Equity		75,908,456			77,527,600

Total Liabilities and Equity	$	142,255,198		$	130,938,025

See notes to unaudited condensed consolidated financial statements.

Reflects a 1-for-25 reverse stock split effective November 25, 2024.

CITIUS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2026 AND 2025

(Unaudited)

	Three Months Ended						Nine Months Ended
	June 30,			June 30,			June 30,			June 30,
	2026			2025			2026			2025
Revenues	$	1,493,788		$	—		$	7,105,197		$	—
Cost of revenues		(491,843	)		—			(1,609,929	)		—
Gross Profit		1,001,945			—			5,495,268			—

Operating Expenses
Research and development		1,053,869			1,621,325			4,287,106			7,514,888
Amortization of in-process research and development		1,720,312			—			4,014,062			—
General and administrative		6,149,173			4,447,008			38,261,001			14,626,882
Stock-based compensation – general and administrative		3,810,665			2,719,674			11,879,167			7,946,529
Total Operating Expenses		12,734,019			8,788,007			58,441,336			30,088,299

Operating Loss		(11,732,074	)		(8,788,007	)		(52,946,068	)		(30,088,299	)

Other Income (Expense)
Interest income		116,691			20,637			215,372			56,658
Gain on sale of New Jersey net operating losses		—			—			3,833,277			—
Amortization of deferred financing costs		(179,492	)		—			(179,492	)		—
Interest expense		(231,732	)		(172,262	)		(420,301	)		(172,262	)
Total Other Income (Expense), Net		(294,533	)		(151,625	)		3,448,856			(115,604	)

Loss before Income Taxes		(12,026,607	)		(8,939,632	)		(49,497,212	)		(30,203,903	)
Income tax expense (benefit)		(107,347	)		264,240			(74,317	)		792,720

Net Loss		(11,919,260	)		(9,203,872	)		(49,422,895	)		(30,996,623	)
Net loss attributable to non-controlling interest		3,056,417			414,000			11,108,127			1,522,000

Net loss applicable to common stockholders	$	(8,862,843	)	$	(8,789,872	)	$	(38,314,768	)	$	(29,474,623	)

Net Loss Per Share - Basic and Diluted	$	(0.34	)	$	(0.80	)	$	(1.64	)	$	(3.27	)

Weighted Average Common Shares Outstanding
Basic and diluted (includes pre-funded warrants)		26,169,589			11,006,896			23,343,869			9,020,356

See notes to unaudited condensed consolidated financial statements.

Reflects a 1-for-25 reverse stock split effective November 25, 2024.

CITIUS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2026 AND 2025

(Unaudited)

	Preferred			Common Stock				Additional Paid-In			Accumulated			Total Citius Pharmaceuticals, Inc. Stockholders’			Non- Controlling			Total
	Stock			Shares		Amount		Capital			Deficit			Equity			Interest			Equity
Balance, September 30, 2025		-			18,067,744	$	18,068	$	306,336,239		$	(238,804,129	)	$	67,550,178		$	9,977,422		$	77,527,600
Issuance of common stock, net of costs of $13,042		-			252,137		252		349,002			-			349,254			-			349,254
October 2025 sale of common stock and pre-funded warrants, net of costs of $75,868		-			1,460,000		1,460		5,401,471			-			5,402,931			-			5,402,931
December 2025 sale of common stock and pre-funded warrants by Citius Oncology, net of costs of $2,872,989		-			-		-		11,258,682			-			11,258,682			3,866,807			15,125,489
Issuance of common stock upon exercise of pre-funded warrants		-			2,513,510		2,513		(2,262	)		-			251			-			251
Issuance of common stock for services					83,036		83		107,427			-			107,510			--			107,510
Issuance of common stock warrant for note payable extension					-		-		68,597			-			68,597			-			68,597
Stock-based compensation expense		-			-		-		3,441,544			-			3,441,544			838,683			4,280,227
Net loss		-			-		-		-			(9,393,889	)		(9,393,889	)		-			(9,393,889	)
Net loss attributable to non-controlling interest		-			-		-		-			1,173,104			1,173,104			(1,173,104	)		-
Balance, December 31, 2025		-			22,376,427		22,376		326,960,700			(247,024,914	)		79,958,162			13,509,808			93,467,970
Proceeds from exercise of Citius Oncology pre-funded warrants		-			-		-		818			-			818			-			818
December 2025 offering costs		-			-		-		(62,764	)		-			(62,764	)		-			(62,764	)
Stock-based compensation expense		-			-		-		2,876,460			-			2,876,460			911,815			3,788,275
Net loss		-			-		-		-			(28,109,746	)		(28,109,746	)		-			(28,109,746	)
Net loss attributable to non-controlling interest		-			-		-		-			6,878,606			6,878,606			(6,878,606	)		-
Balance March 31, 2026		-			22,376,427		22,376		329,775,214			(268,256,054	)		61,541,536			7,543,017			69,084,553
Issuance of common stock and pre-funded warrants in April 2026 registered direct offering, net of costs of $546,782		-			4,730,457		4,730		4,448,454			-			4,453,184			-			4,453,184
Proceeds from exercise of pre-funded warrants		-			345,686		346		(312	)		-			34			-			34
Citius Oncology net proceeds from exercise of warrants, net of costs of $1,770,000		-			-		-		6,397,475			-			6,397,475			3,332,525			9,730,000
Citius Oncology warrants issued for loan agreement		-			-		-		492,652			-			492,652			256,628			749,280
Stock-based compensation expense		-			-		-		2,591,094			-			2,591,094			1,219,571			3,810,665
Net loss		-			-		-		-			(11,919,260	)		(11,919,260	)		-			(11,919,260	)
Net loss attributable to non-controlling interest		-			-		-		-			3,056,417			3,056,417			(3,056,417	)		-
Balance June 30, 2026		-			27,452,570	$	27,452	$	343,704,577		$	(277,118,897	)	$	66,613,132		$	9,295,324		$	75,908,456

Balance, September 30, 2024		-			7,247,243	$	7,247	$	271,440,421		$	(201,370,218	)	$	70,077,450		$	4,024,380		$	74,101,830
Sale of common stock, net of costs of $425,949		-			480,000		480		2,573,571			-			2,574,051			-			2,574,051
Stock-based compensation expense		-			-		-		2,524,824			-			2,524,824			-			2,524,824
Net loss		-			-		-		-			(10,281,246	)		(10,281,246	)		-			(10,281,246	)
Net loss attributable to non-controlling interest		-			-		-		-			513,000			513,000			(513,000	)		-
Balance, December 31, 2024		-			7,727,243		7,727		276,538,816			(211,138,464	)		65,408,079			3,511,380			68,919,459
Issuance of common stock, net of costs		-			1,033,406		1,034		3,464,773			-			3,465,807			-			3,465,807
Stock-based compensation expense		-			-		-		2,702,031			-			2,702,031			-			2,702,031
Net loss		-			-		-		-			(11,511,505	)		(11,511,505	)					(11,511,505	)
Net loss attributable to non-controlling interest		-			-		-		-			595,000			595,000			(595,000	)		-
Balance, March 31, 2025		-			8,760,649		8,761		282,705,620			(222,054,969	)		60,659,412			2,916,380			63,575,792
Issuance of common stock, net of costs of $177,420		-			2,185,249		2,185		3,292,261			-			3,294,446			-			3,294,446
Issuance of common stock and pre-funded warrants in April 2025 registered direct offering, net of costs of $256,116		-			465,000		465		1,743,292			-			1,743,757			-			1,743,757
Issuance of common stock and pre-funded warrants in June 2025 registered direct offering, net of costs of $571,126		-			540,000		540		5,430,296			-			5,430,836			-			5,430,836
Issuance of common stock upon exercise of pre-funded warrants		-			2,524,131		2,524		(2,227	)		-			297			-			297
Sale of Series A preferred stock		100			-		-		100			-			100			-			100
Redemption of Series A preferred stock		(100	)		-		-		(100	)		-			(100	)		-			(100	)
Stock-based compensation expense		-			-		-		2,719,674			-			2,719,674			-			2,719,674
Net loss		-			-		-		-			(9,203,872	)		(9,203,872	)		-			(9,203,872	)
Net loss attributable to non-controlling interest												414,000			414,000			(414,000	)		-
Balance, June 30, 2025		-			14,475,029	$	14,475	$	295,888,916		$	(230,844,841	)	$	65,058,550		$	2,502,380		$	67,560,930

See notes to unaudited condensed consolidated financial statements.

Reflects a 1-for-25 reverse stock split effective November 25, 2024.

CITIUS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED JUNE 30, 2026 AND 2025

(Unaudited)

	2026			2025
Cash Flows From Operating Activities:
Net loss	$	(49,422,895	)	$	(30,996,623	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		11,879,167			7,946,529
Issuance of common stock for services		107,510			—
Issuance of common stock warrant		68,597			—
Amortization of in-process research and development		4,014,062			—
Amortization of operating lease right-of-use asset		65,655			152,212
Amortization of deferred financing costs		179,492			—
Deferred income tax expense (benefit)		(74,317	)		792,720
Changes in operating assets and liabilities:
Accounts receivable, net of allowances		(686,235	)		—
Inventory		(339,252	)		(8,940,201	)
Prepaid expenses		(1,616,170	)		1,386,824
Accounts payable		(5,655,793	)		5,166,831
Accrued expenses		19,961,209			8,506,648
Accrued compensation		(1,421,127	)		1,481,023
Operating lease liability		(46,316	)		(167,911	)
Net Cash Used In Operating Activities		(22,986,413	)		(14,671,948	)

Cash Flows From Investing Activities:
License fee payments		(7,000,000	)		—
Net Cash Used in Investing Activities		(7,000,000	)		—

Cash Flows From Financing Activities:
Proceeds from (repayment of) note payable and advance from employee		(1,000,000	)		1,300,000
Repayment of advance from employee					(300,000	)
Net proceeds from loan agreement		9,635,000			—
Proceeds from exercise of warrants		9,731,103			—
Deferred Financing Costs		(892,551	)		—
Proceeds from sale of Series A preferred stock		—			100
Redemption of Series A preferred stock		—			(100	)
Net proceeds from common stock offerings		25,268,094			16,509,194
Net Cash Provided By Financing Activities		42,741,646			17,509,194

Net Change in Cash and Cash Equivalents		12,755,233			2,837,246
Cash and Cash Equivalents - Beginning of Period		4,252,290			3,251,880
Cash and Cash Equivalents - End of Period	$	17,007,523		$	6,089,126
Supplemental Disclosures of Cash Flow Information and Non-cash Transactions:
Interest paid	$	303,644		$	—
Operating lease right-of-use asset and liability recorded	$	—		$	786,697
Warrants issued for loan agreement included in deferred financing costs	$	749,280		$	—
Deferred financing costs included in accrued expenses	$	1,762,500		$	—

See notes to unaudited condensed consolidated financial statements.

CITIUS PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED JUNE 30, 2026 AND 2025

(Unaudited)

1. NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

Citius Pharmaceuticals, Inc. (“Citius Pharma,” and together with its subsidiaries, the “Company”, “we” or “us”) is a late-stage biopharmaceutical company dedicated to the development and commercialization of first-in-class critical care products with a focus on oncology, anti-infectives in adjunct cancer care, unique prescription products and stem cell therapies.

On March 30, 2016, Citius Pharma acquired Leonard-Meron Biosciences, Inc. (“LMB”) as a wholly-owned subsidiary. We acquired all the outstanding stock of LMB by issuing shares of our common stock. The net assets acquired included identifiable intangible assets of $19,400,000 related to in-process research and development. We recorded goodwill of $9,346,796 for the excess of the purchase price over the net assets acquired.

On September 11, 2020, we formed NoveCite, Inc. (“NoveCite”), a Delaware corporation, of which we own 75% of the issued and outstanding capital stock (see Note 7).

On August 23, 2021, we formed Citius Oncology, Inc. (“Citius Oncology”), as a wholly-owned subsidiary in conjunction with the acquisition of LYMPHIR, which began operations in April 2022. On August 12, 2024, Citius Pharma and Citius Oncology entered into a merger agreement with TenX Keane Acquisition, and its wholly owned subsidiary, TenX Merger Sub Inc (“Merger Sub”), whereby Merger Sub merged with and into Citius Oncology. After the merger and recapitalization (the “Merger”), the newly combined publicly traded company was owned 92.3% by Citius Pharma, and is named “Citius Oncology, Inc.” (Nasdaq: CTOR). As of June 30, 2026, Citius Pharma owned approximately 62% of Citius Oncology.

Since our inception, we have devoted substantially all our efforts to business planning, research and development, recruiting management and technical staff, and raising capital. We are subject to a number of risks common to companies in the pharmaceutical industry including, but not limited to, the Company’s ability to obtain additional financing, risks related to the development by the Company or its competitors of research and development stage products, regulatory approval and market acceptance of its products, competition from larger companies, dependence on key personnel, dependence on key suppliers and strategic partners and the Company’s compliance with governmental and other regulations.

Basis of Presentation and Summary of Significant Accounting Policies

Basis of Preparation - The accompanying unaudited condensed consolidated financial statements include the operations of Citius Pharmaceuticals, Inc., its wholly-owned subsidiary LMB and its majority-owned subsidiaries NoveCite and Citius Oncology. On August 12, 2024, Citius Oncology, previously a wholly-owned subsidiary, became a majority-owned subsidiary. As of June 30, 2026, Citius Oncology was approximately a 62% majority-owned subsidiary.

The operations of NoveCite and Citius Oncology are included in the consolidated results. The portion of equity that is not attributable to the Company is presented as a non-controlling interest within stockholders’ equity. Unless excluded by shareholder agreements, the portion of net loss attributable to non-controlling interests is included in the statement of operations. All significant inter-company balances and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to fairly state the condensed consolidated financial position of the Company as of June 30, 2026, and the results of its operations and cash flows for the three and nine months ended June 30, 2026 and 2025. The operating results for the three and nine months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending September 30, 2026. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2025 filed with the Securities and Exchange Commission (“SEC”) on December 23, 2025, as amended on January 28, 2026.

Use of Estimates - The process of preparing financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates having relatively higher significance include the accounting for revenue recognition, in-process research and development, stock-based compensation, net realizable value of inventory and income taxes. Actual results could differ from those estimates and changes in estimates may occur.

Basic and Diluted Net Loss per Common Share - Basic and diluted net loss per common share applicable to common stockholders is computed by dividing net loss applicable to common stockholders in each period by the weighted average number of shares of common stock outstanding during such period. For the periods presented, common stock equivalents, consisting of stock options and warrants, were not included in the calculation of the diluted loss per share because they were anti-dilutive, with pre-funded warrants being included in the loss per share.

Recently Issued Accounting Standards

Other than as disclosed in our Form 10-K, we are not aware of any other recently issued accounting standards not yet adopted that may have a material impact on our financial statements.

2. GOING CONCERN UNCERTAINTY AND MANAGEMENT’S PLAN

The accompanying unaudited consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We incurred a net loss of $49.4 million for the nine months ended June 30, 2026. The Company experienced negative cash flows from operations of $23.0 million for the nine months ended June 30, 2026. At June 30, 2026, the Company had approximately $17 million in cash and a negative working capital of approximately $8.3 million.

On April 24, 2026, Citius Pharma closed a registered direct equity offering for net proceeds of approximately $4.5 million (See Note 9).

On May 5, 2026, Citius Oncology received net proceeds of approximately $9.7 million from the exercise of warrants (See Note 9).

Citius Oncology entered into a term loan agreement with two lenders for up to $25.0 million, with $10.0 million funded on May 6, 2026, up to $7.0 million available between October 1 and December 31, 2026, if certain net revenue and liquidity milestones are achieved, and up to $8.0 million available between January 1 and March 31, 2027, if certain additional net revenue milestones are achieved and a loan was drawn between October 1 and December 31, 2026. The loans bear interest at the greater of the prime rate plus 6% or 12.75% and are secured by all of Citius Oncology’s assets, subject to agreed exceptions. The loans mature on November 1, 2029 (See Note 8).

The Company estimates that its and Citius Oncology’s collective available cash resources will be sufficient to fund our operations through November 2026. We will need to raise additional capital in the future to support our operations beyond November 2026, which raises substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the accompanying consolidated financial statements are issued.

The Company is currently engaged in capital raising initiatives, as well as separate capital raising initiatives through its subsidiary Citius Oncology, in an effort to extend its cash runway. Citius Oncology has retained Jefferies LLC as its exclusive financial advisor in evaluating strategic alternatives aimed at maximizing shareholder value.

The Company has generated limited operating revenue, which commenced in December 2025, and has principally raised capital through the issuance of debt and equity instruments to finance its operations. However, the Company’s continued operations beyond November 2026, including its development plans for Mino-Lok, Halo-Lido and NoveCite, will depend on its ability to obtain regulatory approval for Mino-Lok and generate substantial revenue from the sale of LYMPHIR and on its ability to raise additional capital through various potential sources, such as equity and/or debt financings, strategic relationships, or out-licensing of its product candidates. However, the Company can provide no assurances on regulatory approval, commercialization, or future sales of LYMPHIR or that financing or strategic relationships will be available on acceptable terms, or at all. If the Company is unable to raise sufficient capital, find strategic partners or generate substantial revenue from the sale of LYMPHIR, there would be a material adverse effect on its business. Further, the Company expects in the future to incur additional expenses as it continues to develop its product candidates, including seeking regulatory approval, and protecting its intellectual property. The accompanying financial statements do not include any adjustments that might result from the outcome of the above uncertainty.

3. REVENUE RECOGNITION AND ACCOUNTS RECEIVABLE

Revenue Recognition

We recognize revenue in accordance with the provisions of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers. In determining the appropriate amount and timing of revenue to be recognized under this guidance, we perform the following five steps: (i) identify the contract(s) with our customer; (ii) identify the promised goods or services in the agreement and determine whether they are performance obligations, including whether they are distinct in the context of the agreement; (iii) measure the transaction price, including the constraint on variable consideration; (iv) allocate the transaction price to the performance obligations based on stand-alone selling prices; and (v) recognize revenue when (or as) we satisfy each performance obligation. Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

We distribute LYMPHIR in the U.S. through third party specialty distributors who are our customers. The third-party specialty distributors subsequently resell our product to health care providers, hospitals and infusion centers. Separately, we have or may enter into payment arrangements with various third-parties including government healthcare programs who provide coverage and reimbursement for our product that have been prescribed to a patient. Through a regional distribution partner, we distribute LYMPHIR internationally as part of our Named Patient Program.

Net Revenues

We recognize net revenue from LYMPHIR sales, net of variable consideration and consideration payable to parties other than our customers consisting of estimates related to allowances for sales returns, government chargebacks, patient coupon programs, and specialty distributor fees. Revenue is generally recognized when the customer obtains control of the Company’s product, which occurs at a point in time, upon delivery based on the contractual shipping terms of a contract.

We estimate variable consideration using the expected value method, constrained to amounts for which it is probable that a significant reversal of cumulative revenue will not occur when uncertainties are resolved. Calculating certain of these items involves estimates and judgments based on sales or invoice data, contractual terms, historical or expected utilization rates, new information regarding changes in applicable regulations and guidelines that would impact the amount of the actual allowance and our expectations regarding future utilization rates and channel inventory data. We will review the adequacy of our provisions for all gross-to-net adjustments on a quarterly basis. Amounts reserved for these adjustments are made when trends or significant events indicate that adjustment is appropriate reflecting actual experience.

The Company elected the practical expedient in ASC 606-10-32-18 and does not assess whether a significant financing component exists for contracts in which payment is expected within one year. No other practical expedients were applied.

Gross-to-Net Adjustments

Specialty Distributor Fees

We pay fees for distribution services, such as fees for certain data that customers provide us. We expect our customers will earn these fees and accordingly deduct these fees from gross product sales and accounts receivable at the time we recognize the related revenues.

Product Returns

Customers have the right to return products if they are damaged, defective, or expired, or as it is defined in their customer agreement. We have estimated product returns based on the experience of similar products in the market, and will continue to estimate returns based on our actual returns, sales data, and inventory levels in the distribution channel. These estimates are recorded as a reduction against gross product sales at the time of the sales.

Chargebacks

Chargebacks will occur when federal agencies who we contract with, or may contract with, can purchase off the Federal Supply Schedule or when Public Health Service 340B covered entities purchase directly from our customers at discounted prices. Our customers then charge us the difference between their purchase price and the discounted price. We estimate chargebacks considering the terms of the applicable arrangement and our visibility regarding utilization. These chargebacks are recorded in the same period as the related revenue, as a reduction against gross product sales and accounts receivable.

Co-payment Assistance

We offer co-payment assistance to patients with commercial insurance that have coverage and are allowed such co-payment assistance. We estimate the average co-payment assistance amounts for our products based on expected customer utilization and record any such amounts as a reduction from gross product revenue at the time of sale. The Company has deposited the estimated co-pay assistance amounts, which are reflected and included in the gross-to-net adjustments.

	Three Months Ended		Nine Months Ended
	June 30, 2026		June 30, 2026

Gross Product Revenue	$	1,708,560	$	8,591,040
Gross-to-net adjustments:		214,772		1,485,843
Net Revenue	$	1,493,788	$	7,105,197

Accounts receivable, net

Accounts receivable, net is stated at amounts invoiced less allowances for distributor fees, chargebacks, and estimated returns. At June 30, 2026, these sales allowances totaled $690,090. On a periodic basis, the Company evaluates its accounts receivable to establish an allowance for doubtful accounts. The allowance reflects our current estimate of credit losses expected to occur over the life of the receivable. In developing our allowance for expected credit losses, we use assumptions to capture the risk of loss, even if remote, based on a number of factors including existing contractual payment terms, individual customer circumstances, historical payment patterns of our customers, a review of the local economic environment and its potential impact on expected future customer payment patterns. Our collection risk is mitigated to a certain extent by the fact that sales are collected in a reasonable period of time, allowing for the ability to reduce exposure on defaults if collection issues are identified. We update our allowance as necessary to reflect expected credit losses over the remaining accounts receivable that are past due. We do not currently expect our current or future exposures to credit losses to have a significant impact on us. The estimated allowance for expected credit losses was $0 as of June 30, 2026.

4. INVENTORY

Inventory is stated at the lower of actual accumulated costs or net realizable value related to the manufacturing of LYMPHIR commercial products, which became available for sale in December 2025. Cost is determined using the first-in, first-out (FIFO) method. No reserves against inventory were deemed necessary based on an evaluation of the product expiration dating. A summary of inventory is as follows:

	June 30, 2026		September 30, 2025
Finished goods	$	15,673,980	$	10,577,876
Work in process		6,951,965		11,708,817
Total	$	22,625,945	$	22,286,693

Cost of Revenue

Cost of goods sold consists of direct and indirect costs associated with manufacturing and distributing LYMPHIR. These costs include amounts paid to third-party contract manufacturing organizations for production-related services, including raw materials, drug substance, drug product manufacturing, fill-finish activities, certain testing, and packaging. Cost of goods sold also includes distribution, storage shipping, and handling fees, as well as royalties owed under the Company’s licensing arrangements.

5. PREPAID EXPENSES

Prepaid expenses include advance payments made for the preparation of long-lead time drug substance and product costs, which will be utilized in research and development activities or in the manufacturing of LYMPHIR for sales. Other prepaid expenses include insurance, service fees and marketing costs. A summary of prepaid expenses is as follows:

	June 30, 2026		September 30, 2025
Prepaid manufacturing	$	2,531,280	$	1,331,280
Prepaid insurance		180,380		-
Prepaid annual service fees		-		64,210
Prepaid marketing costs		300,000		-
Total	$	3,011,660	$	1,395,490

6. IN-PROCESS RESEARCH AND DEVELOPMENT, NET

In process research and development consists of a beginning carrying value for LYMPHIR of $73,400,000 and a net balance of $69,385,938 at June 30, 2026. Amortization of in-process research and development commenced upon revenue generation in December 2025. For the three months ended June 30, 2026 and 2025, amortization was $1,720,312 and $0, respectively. For the nine months ended June 30, 2026 and 2025, amortization was $4,014,062 and $0, respectively. In-process research and development for LYMPHIR is being amortized as follows on a straight-line basis over the remaining FDA product exclusivity period which ends in August 2036. The amortization of in-process research and development excludes $19,400,000 associated with the acquisition of LMB and the Mino-Lok product candidate which will begin amortization upon approval. A summary of the expected future amortization expense for LYMPHIR in-process research and development is as follows:

Year Ending September 30,	Amount
2026 (excluding the nine months ended June 30, 2026)	$	1,720,313
2027		6,881,250
2028		6,881,250
2029		6,881,250
2030		6,881,250
2031		6,881,250
Thereafter		33,259,375
Total	$	69,385,938

7. PATENT AND TECHNOLOGY LICENSE AGREEMENTS

Patent and Technology License Agreement – Mino-Lok

LMB has a patent and technology license agreement with Novel Anti-Infective Therapeutics, Inc. (“NAT”) to develop and commercialize Mino-Lok^® on an exclusive, worldwide sub-licensable basis, as amended. LMB pays an annual maintenance fee each June until commercial sales of a product subject to the license commence. The Company recorded an annual maintenance fee expense of $90,000 in both 2026 and 2025.

LMB will also pay annual royalties on net sales of licensed products, with a low double-digit royalty rate (within a range of 10% to 15%). In limited circumstances in which the licensed product is not subject to a valid patent claim and a competitor is selling a competing product, the royalty rate is in the low- to mid-single digits (within a range of 2% to 7%). After a commercial sale is obtained, LMB must pay minimum aggregate annual royalties of $100,000 in the first commercial year which is prorated for a less than 12-month period, increasing $25,000 per year to a maximum of $150,000 annually. LMB must also pay NAT up to $1,100,000 upon achieving specified regulatory and sales milestones. Finally, LMB must pay NAT a specified percentage of payments received from any sub-licensees.

Unless earlier terminated by NAT, based on the failure to achieve certain development and commercial milestones, the license agreement remains in effect until the date that all patents licensed under the agreement have expired and all patent applications within the licensed patent rights have been cancelled, withdrawn, or expressly abandoned.

License Agreement with Eterna

On October 6, 2020, our subsidiary, NoveCite, entered into a license agreement with Novellus Therapeutics Limited (“Novellus”), whereby NoveCite acquired an exclusive, worldwide license, with the right to sublicense, develop and commercialize a stem cell therapy based on the Novellus’s patented technology for the treatment of acute pneumonitis of any etiology in which inflammation is a major agent in humans. Upon execution of the license agreement, we paid $5,000,000 to Novellus, which was charged to research and development expense during the year ended September 30, 2021, and issued to Novellus shares of NoveCite’s common stock representing 25% of the outstanding equity. We own the other 75% of NoveCite’s outstanding equity. Pursuant to the terms of the original stock subscription agreement, if NoveCite issued additional equity, subject to certain exceptions, NoveCite had to maintain Novellus’s ownership at 25% by issuing additional shares to Novellus.

In July 2021, Novellus was acquired by Brooklyn ImmunoTherapeutics, Inc. (“Brooklyn”). Pursuant to this transaction, the NoveCite license was assumed by Brooklyn with all original terms and conditions. In connection with that transaction, the stock subscription agreement was amended to assign to Brooklyn all of Novellus’s right, title, and interest in the stock subscription agreement and delete the anti-dilution protection and replace it with a right of first refusal whereby Brooklyn will have the right to purchase all or a portion of the securities that NoveCite intends to sell or in the alternative, at the option of NoveCite, Brooklyn may purchase that amount of the securities proposed to be sold by NoveCite to allow Brooklyn to maintain its then percentage ownership. In October 2022, Brooklyn changed its name to Eterna Therapeutics Inc. (“Eterna”).

We are responsible for the operational activities of NoveCite and bear all costs necessary to operate NoveCite. Our officers are also the officers of NoveCite and oversee the business strategy and operations of NoveCite. As such, NoveCite is accounted for as a consolidated subsidiary with a noncontrolling interest.

Eterna has no contractual rights in the profits or obligations to share in the losses of NoveCite, and the Company has not allocated any losses to the noncontrolling interest.

Under the license agreement, NoveCite is obligated to pay Eterna up to an aggregate of $51,000,000 in regulatory and developmental milestone payments. NoveCite also must pay a royalty equal to a mid-teens percentage of net sales, commencing upon the first commercial sale of a licensed product. This royalty is subject to downward adjustment on a product-by-product and country-by-country basis to a mid-single digit percentage (within a range of 4% to 8%) of net sales in any country in the event of the expiration of the last valid patent claim or if no valid patent claim exists in that country. The royalty will end on the earlier of (i) date on which a biosimilar product is first marketed, sold, or distributed by Eterna or any third party in the applicable country or (ii) the 10-year anniversary of the date of expiration of the last-to-expire valid patent claim in that country. In the case of a country where no licensed patent ever exists, the royalty will end on the later of (i) the date of expiry of such licensed product’s regulatory exclusivity and (ii) the 10-year anniversary of the date of the first commercial sale of the licensed product in the applicable country. In addition, NoveCite will pay to Eterna an amount equal to a mid-twenties percentage of any sublicensee fees it receives.

Under the terms of the license agreement, in the event that Eterna receives any revenue involving the original cell line included in the licensed technology, then Eterna shall remit to NoveCite 50% of such revenue.

The term of the license agreement continues on a country-by-country and licensed product-by-licensed product basis until the expiration of the last-to-expire royalty term. Either party may terminate the license agreement upon written notice if the other party is in material default. NoveCite may terminate the license agreement at any time without cause upon 90 days prior written notice.

Eterna will be responsible for preparing, filing, prosecuting, and maintaining all patent applications and patents included in the licensed patents in the territory, provided however, that if Eterna decides that it is not interested in maintaining a particular licensed patent or in preparing, filing, or prosecuting a licensed patent, NoveCite will have the right, but not the obligation, to assume such responsibilities in the territory at NoveCite’s sole cost and expense.

License Agreement with Eisai

In September 2021, we entered into an asset purchase agreement with Dr. Reddy’s Laboratories SA, a subsidiary of Dr. Reddy’s Laboratories, Ltd. (collectively, “Dr. Reddy’s”) and a license agreement with Eisai Co., Ltd. (“Eisai”) to acquire an exclusive license of E7777 (denileukin diftitox), an oncology immunotherapy for the treatment of CTCL, a rare form of non-Hodgkin lymphoma. We renamed E7777 as I/ONTAK and also obtained the trade name of LYMPHIR^TM for the product. We assigned these agreements to Citius Oncology effective April 1, 2022 and we received a Biologics License Application (“BLA”) approval from the FDA for LYMPHIR in August 2024.

Under the terms of these agreements, we acquired Dr. Reddy’s exclusive license of E7777 from Eisai and other related assets owned by Dr. Reddy’s (which are now owned by Citius Oncology). The exclusive license include rights to develop and commercialize E7777 in all markets except for Japan and certain parts of Asia. Eisai retains exclusive development and marketing rights for the agent in Japan, China, Korea, Taiwan, Hong Kong, Macau, Indonesia, Thailand, Malaysia, Brunei, Singapore, India, Pakistan, Sri Lanka, Philippines, Vietnam, Myanmar, Cambodia, Laos, Afghanistan, Bangladesh, Bhutan, Nepal, Mongolia, and Papua New Guinea. We paid Dr. Reddy’s a $40 million upfront payment, which represents the acquisition date fair value of the in-process research and development acquired from Dr. Reddy’s. Dr. Reddy’s is entitled to up to $40 million in development milestone payments related to CTCL approvals in the U.S. and other markets, up to $70 million in development milestones for additional indications, as well as commercial milestone payments and low double-digit tiered royalties on net product sales (within a range of 10% to 15%), and up to $300 million for commercial sales milestones. Citius Oncology also must pay on a fiscal quarter basis tiered royalties equal to low double-digit percentages of net product sales (within a range of 10% to 15%). The royalties will end on the earlier of (i) the 15-year anniversary of the first commercial sale of the latest indication that received regulatory approval in the applicable country and (ii) the date on which a biosimilar product results in the reduction of net sales in the applicable product by 50% in two consecutive quarters, as compared to the four quarters prior to the first commercial sale of the biosimilar product. Citius Oncology will also pay to Dr. Reddy’s an amount equal to a low-thirties percentage of any sublicense upfront consideration or milestone payments (or the like) received by us and the greater of (i) a low-thirties percentage of any sublicensee sales-based royalties or (ii) a mid-single digit percentage of such licensee’s net sales. Citius Pharma is a guarantor of Citius Oncology’s payment obligations under these agreements.

At the time of the FDA approval for LYMPHIR, a $27.5 million milestone payment became payable to Dr. Reddy’s under the terms of the asset purchase agreement for which a balance of $15,650,000 remains due as of June 30, 2026. Dr. Reddy’s agreed to a partial deferral without penalty of this milestone payment.

Under the license agreement, Eisai was due a $5.9 million milestone payment upon FDA approval, and additional commercial milestone payments related to the achievement of net product sales thresholds and an aggregate of up to $22 million related to the achievement of net product sales thresholds. Citius Oncology was also required to reimburse Eisai for up to $2.65 million of its costs to complete the Phase 3 pivotal clinical trial for LYMPHIR for the CTCL indication and reimburse Eisai for all reasonable costs associated with the preparation of a BLA for LYMPHIR. Eisai was responsible for completing the CTCL clinical trial, and chemistry, manufacturing, and controls (“CMC”) activities through the filing of the BLA for LYMPHIR with the FDA. We are responsible for development costs associated with potential additional indications.

On March 28, 2025, Citius Oncology and Eisai entered into a letter agreement that amended the license agreement to provide for a payment schedule to Eisai for the milestone payment and certain unpaid invoices. We agreed to pay Eisai $2,535,318 on July 15, 2025, $2,350,000 on the 15^th of each of the subsequent four months, and make a final payment of $2,197,892 on or before December 15, 2025, in each case with interest on each obligation from its original due date through the date of payment at the rate of 2% per annum. During the nine months ended June 30, 2026, we recorded $112,270 in interest expense under the agreement. The parties released each other from any and all claims, losses, damages, costs and expenses that arise from or related to our failure to pay the milestone payment or the other incurred costs under the license agreement except for any claims arising out of a breach of the letter agreement. All other terms of the license agreement remain in full force and effect. On December 15, 2025, we paid Eisai the balance of the outstanding milestone approval fee and accumulated interest on the license fee. At June 30, 2026, we owe Eisai for other unpaid invoices, consisting of $2,200,000 of accounts payable and $4,062,481 of accrued expenses.

The term of the license agreement will continue until the 10-year anniversary of the first commercial sale on a country-by-country basis. The first commercial sale in the United States occurred in December 2025. The term of the license may be extended for additional 10-year periods for all countries in the territory by notifying Eisai and paying an extension fee equal to $10 million. Either party may terminate the license agreement upon written notice if the other party is in material breach of the agreement, subject to cure within the designated time periods. Either party also may terminate the license agreement immediately upon written notice if the other party files for bankruptcy or takes related actions or is unable to pay its debts as they become due. Additionally, either party will have the right to terminate the agreement if the other party directly or indirectly challenges the patentability, enforceability or validity of any licensed patent.

Under the purchase agreement with Dr. Reddy’s, we are required to (i) use commercially reasonable efforts to make commercially available products in the CTCL indication, peripheral T-cell lymphoma indication and immuno-oncology indication, (ii) initiate two investigator initiated immuno-oncology trials (both of which have been initiated), (iii) use commercially reasonable efforts to achieve each of the approval milestones, and (iv) complete each specified immuno-oncology investigator trial on or before the four-year anniversary of the effective date of the definitive agreement. Additionally, we are required to commercially launch a product in a territory within six months of receiving regulatory approval for such product in each such jurisdiction; though approved in August 2024, Dr. Reddy’s waived the six-month requirement and the launch of LYMPHIR in December 2025 satisfied this requirement in the U.S.

As part of the definitive agreement with Dr. Reddy’s, Citius Pharma acquired method of use patents in which LYMPHIR is administered in combination with the programmed cell death protein 1 (“PD-1”) pathway inhibitor drug class. PD-1 plays a vital role in inhibiting immune responses and promoting self-tolerance through modulating the activity of T-cells, activating apoptosis of antigen-specific T cells and inhibiting apoptosis of regulatory T cells.

The following patents were acquired and subsequently transferred to us:

●

US Provisional Application No. 63/070,645, which was filed on August 26, 2020, and subsequently published as US 2022/0062390 A1 on March 3, 2022, entitled Methods of Treating Cancer.

●

International Patent Application Number: PCT/IB2021/0576733, which was filed with the World Intellectual Property Organization on August 23, 2021, and subsequently published as WO 2022/043863 A1 on March 3, 2022, entitled, Combination for Use in Methods of Treating Cancer.

8. DEBT AGREEMENTS

Note Payable

On June 2, 2025, the Company borrowed $1,000,000 from an unrelated lender. The note payable was due in full on December 2, 2025 with interest at 15% compounded monthly. Leonard Mazur (Chairman and Chief Executive Officer of the Company) personally guaranteed repayment of the note.

On December 2, 2025, we extended the due date to January 2, 2026 and the note was paid in full on January 5, 2026. As consideration for the extension, we issued a five-year warrant to purchase 75,000 shares of our common stock at $1.26 per share. The $68,597 fair value of the warrant was charged to interest expense during the nine months ended June 30, 2026.

Interest expense on the note payable was $0 and $11,507 for the three months ended June 30, 2026 and 2025, respectively. Interest expense, including the fair value of the warrant was $109,697 and $11,507 for the nine months ended June 30, 2026 and 2025, respectively.

Term Loan Agreement

	June 30, 2026
Notes payable principal balance	$	10,000,000
Deferred financing costs, net of accumulated amortization		(3,589,839	)
Notes payable, net of deferred financing costs	$	6,410,161

On May 5, 2026, Citius Oncology entered into a term loan agreement with two lenders for up to $25.0 million, with $10.0 million funded on May 6, 2026, up to $7.0 million available between October 1 and December 31, 2026, if certain net revenue and liquidity milestones are achieved, and up to $8.0 million available between January 1 and March 31, 2027, if certain additional net revenue milestones are achieved and a loan was drawn between October 1 and December 31, 2026.

The loans bear interest at the greater of the prime rate plus 6% or 12.75% and are secured by all of Citius Oncology’s assets, subject to agreed exceptions. The Company will pay interest only through November 2027 with subsequent monthly principal payments until maturity on November 1, 2029. A final payment of $1,062,500 is due at maturity. Interest expense for the loan for the three months ended June 30, 2026 was $198,333.

Citius Oncology issued five-year warrants to the lenders to purchase 1,111,111 shares of common stock at an exercise price of $0.90 per share. The warrant shares were calculated based on 10% of the initial funding divided by $0.90 per share. The Company will issue additional warrant shares under the same formula, if additional funds are drawn under the agreement. The estimated fair value of the warrants issued to the lenders on May 5, 2026 was approximately $749,280 and was charged to deferred financing costs.

The lenders have the right, while any loan is outstanding, to convert up to $4.0 million of the outstanding loans into shares of common stock at $1.08 per share, subject to certain terms and conditions.

In addition, Citius Oncology granted the lenders the right to invest up to $1.0 million in any issuance of equity securities on the same terms offered to other investors in such financing transaction. The right terminates 30 days after the repayment in full of all of the obligations under the loan agreement.

In connection with the loan agreement, Citius Oncology incurred deferred financing costs totaling $3,769,331. Deferred financing costs consist of commitment fees of $250,000, legal fees of $207,551, a final payment of $1,062,500, placement fees of $1,500,000, and the $749,280 fair value of the lenders’ warrants. Deferred financing costs are being amortized on a straight-line basis over the 42-month life of the loan agreement. Amortization expense for the three months ended June 30, 2026 was $179,492.

9. STOCKHOLDERS’ EQUITY

Authorized Common Stock and Reverse Stock Split

The Company filed a Certificate of Change with the Secretary of State of the State of Nevada to (i) effect a 1-for-25 reverse stock split of the Company’s issued and outstanding shares of common stock, and (ii) decrease the number of total authorized shares of common stock from 400,000,000 shares to 16,000,000 shares. The reverse stock split was intended for the Company to regain compliance with the minimum bid price requirement of $1.00 per share of common stock for continued listing on the Nasdaq Capital Market. The reverse stock split became effective on November 25, 2024, and the Company’s Common Stock began trading on a reverse stock split-adjusted basis on the Nasdaq Capital Market on November 26, 2024. All share amounts have been retroactively adjusted to reflect the split.

Series A Preferred Stock and Authorized Common Stock

On April 17, 2025, the Company entered into an agreement with Leonard Mazur (Chairman and Chief Executive Officer of the Company), pursuant to which the Company sold one share of Series A Preferred Stock, par value $0.001 per share for $100 to Mr. Mazur. The Series A Preferred Stock was sold in connection with the June 9, 2025 special meeting of the stockholders for the purpose of approving an amendment to the Company’s Articles of Incorporation, as amended, to increase the number of shares of the Company’s authorized common stock from 16,000,000 to 250,000,000. The Company’s stockholders approved the authorized share increase on June 9, 2025.

On April 17, 2025, the Company filed a certificate of designation with the Nevada Secretary of State, designating the powers, rights, privileges and restrictions of the Series A Preferred Stock. The certificate provides that each share of Series A Preferred Stock had 1,000,000,000 votes and voted together with the outstanding shares of Common Stock as a single class, exclusively with respect to the authorized share increase proposal and was not entitled to vote on any other matter. The Series A Preferred Stock was voted on the authorized share increase in the same proportion as the aggregate votes cast by holders of common stock “for” and “against” the proposal. The Series A Preferred Stock otherwise had no other voting rights, including in respect of any other proposal. The voting power attributable to the Series A Preferred Stock was disregarded for purposes of determining whether a quorum was present at the special meeting, and the establishment of a quorum at the special meeting was determined only with reference to the common stock.

Pursuant to its terms, on June 9, 2025, the outstanding share of Series A Preferred Stock was redeemed automatically for $100 after the Company published the final results of the stockholder vote on the authorized stock increase.

Common Stock Issued for Services

On July 1, 2025, we issued 20,000 shares of common stock for media, and public and investor relations services and expensed the $26,600 fair value of the common stock issued.

On October 2, 2025, we issued 83,036 shares of common stock for media, and public and investor relations services and expensed the $107,510 fair value of the common stock issued.

Common Stock Offerings

November 2024 Offering

On November 15, 2024, Citius Pharma sold 480,000 shares of common stock and warrants to purchase 480,000 shares of common stock. Gross proceeds were $3,000,000 and net proceeds were $2,574,051, after deducting fees and expenses. The shares and warrants were sold at a combined offering price of $6.25 per share and accompanying warrant. The immediately exercisable warrants have an exercise price of $6.25 per share and expire on November 19, 2029. The estimated fair value of the warrants issued to the investors was approximately $1,575,000.

We paid the placement agent a fee of 7.0% of the gross proceeds and granted the placement agent immediately exercisable warrants to purchase 33,600 shares of common stock at an exercise price of $7.8125 per share, which expire on November 15, 2029. The estimated fair value of the warrants issued to the placement agent was approximately $104,000.

January 2025 Offering

On January 7, 2025, Citius Pharma sold 743,496 shares of common stock and warrants to purchase 743,496 shares of common stock. Gross proceeds were approximately $3,000,000 and net proceeds were $2,657,167, after deducting fees and expenses. The shares and warrants were sold at a combined offering price of $4.035 per share and accompanying warrant. The immediately exercisable warrants have an exercise price of $3.91 per share and expire on January 8, 2030. The estimated fair value of the warrants issued to the investors was approximately $2,091,000.

We paid the placement agent a fee of 7.0% of the gross proceeds and granted the placement agent immediately exercisable warrants, to purchase 52,045 shares of common stock at $5.0438 per share, which expire on January 7, 2030. The estimated fair value of the warrants issued to the placement agent was approximately $138,000.

April 2025 Offering

On April 1, 2025, Citius Pharma sold 465,000 shares of common stock at $1.15 per share and pre-funded warrants to purchase 1,274,131 shares of common stock at $1.1499 per share. Gross proceeds were $1,999,873 and net proceeds were $1,743,757, after deducting fees and expenses. The immediately exercisable pre-funded warrants have an exercise price of $0.0001 per share and do not expire. All 1,274,131 of the pre-funded warrants were exercised during the three months ended June 30, 2025.

We paid the placement agent a fee of 7.0% of the gross proceeds and granted the placement agent warrants to purchase 121,739 shares of common stock at an exercise price of $1.4375 per share, which are exercisable commencing on October 2, 2025 and expire on April 1, 2030. The estimated fair value of the warrants issued to the placement agent was approximately $100,000.

June 2025 Offering

On June 11, 2025, Citius Pharma sold 540,000 shares of common stock and pre-funded warrants to purchase 4,380,000 shares of common stock, and accompanying warrants to purchase 9,840,000 shares of common stock, at $1.22 per share and accompanying warrant (or $1.2199 per pre-funded warrant and accompanying warrant). The immediately exercisable two-year warrants have an exercise price of $1.00 per share. On the expiration date, any warrants outstanding will be exercised via cashless exercise. The pre-funded warrants are exercisable immediately at $0.0001 per share and do not expire. Gross proceeds were $6,001,962 and net proceeds of the offering were $5,430,836, after deducting fees and expenses. During the year ended September 30, 2025, all 4,380,000 pre-funded warrants were exercised. The estimated fair value of the 9,840,000 warrants issued to the investors was approximately $4,867,000.

We paid the placement agent a fee of 7.0% of the gross proceeds and expenses of $150,958 and granted placement agent warrants to purchase 344,400 shares of common stock at an exercise price of $1.525 per share, which expire on June 11, 2027. On the expiration date, any warrants outstanding will be exercised via cashless exercise. The estimated fair value of the warrants issued to the placement agent was approximately $222,000.

July 2025 Citius Oncology Offering

On July 17, 2025, Citius Oncology sold 6,818,182 shares of common stock and warrants to purchase 6,818,182 shares of common stock at $1.32 per share and accompanying warrant. The immediately exercisable five-year warrants had an initial exercise price of $1.32 per share. In connection with the December 10, 2025 offering (discussed below), Citius Oncology agreed to reduce the exercise price of the 6,818,182 warrants to $1.09 per share and extended the expiration date of the warrants to January 20, 2031. Gross proceeds from the offering were approximately $9.0 million and net proceeds were $7,546,988, after deducting placement agent fees and other offering expenses. The estimated fair value of the warrants issued to the investors on July 17, 2025 was approximately $8,197,000. The estimated fair value of the repriced warrants issued to the investors as of December 8, 2025 was approximately $5,301,000. On May 6, 2026, all of the warrants were repriced to $0.90 per share and exercised in connection with the warrant inducement transaction. The estimated fair value of the repriced warrants issued to the investors as of May 6, 2026 was approximately $4,598,000.

Citius Oncology paid the placement agent a fee of 7.0% of the gross proceeds and expenses of $125,000 and granted the placement agent warrants to purchase 272,727 shares of common stock at an exercise price of $1.65 per share. The warrants are exercisable commencing on January 17, 2026 and expire on July 17, 2030. Citius Oncology also paid an additional 7.0% cash fee to a prior placement agent and issued warrants to purchase up to 477,273 shares of common stock at an exercise price of $1.65 per share. The placement agent warrants are exercisable commencing on August 17, 2025 and expire on July 17, 2030. The estimated fair value of the placement agent warrants was approximately $905,000.

September 2025 Citius Oncology Offering

On September 10, 2025, Citius Oncology sold 5,142,858 shares of common stock and warrants to purchase 5,142,858 shares of common stock, at $1.75 per share and accompanying warrant. The warrants are exercisable beginning on March 10, 2026 and expire on March 10, 2031 and had an initial exercise price of $1.84 per share. In connection with the December 10, 2025 offering (discussed below), Citius Oncology agreed to reduce the exercise price of the 5,142,858 warrants to $1.09 per share and extended the expiration date of the warrants to January 20, 2031. Gross proceeds from the offering were approximately $9.0 million and net proceeds were $7,619,854, after deducting placement agent fees and other offering expenses. The estimated fair value of the warrants issued to the investors on September 10, 2025 was approximately $6,995,000. The estimated fair value of the repriced warrants issued to the investors as of December 8, 2025 was approximately $4,179,000. On May 6, 2026, all of the warrants were repriced to $0.90 per share and exercised in connection with the warrant inducement transaction. The estimated fair value of the repriced warrants issued to the investors as of May 6, 2026 was approximately $3,468,000.

Citius Oncology paid the placement agent a fee of 7.0% of the gross proceeds and expenses of $125,000. Additionally, Citius Oncology issued the placement agent warrants to purchase 205,714 shares of common stock at an exercise price of $1.92 per share. The warrants are exercisable commencing on March 10, 2026 and expire on March 10, 2031. We also paid an additional 7.0% cash fee to a prior placement agent and issued warrants to purchase up to 360,000 shares of common stock at an exercise price of $2.1875 per share. The placement agent warrants are exercisable commencing on March 10, 2026 and expire on March 10, 2031. The estimated fair value of the placement agent warrants was approximately $717,000.

October 2025 Offering

On October 21, 2025, Citius Pharma sold 1,460,000 shares of common stock and 2,513,510 pre-funded warrants, and accompanying warrants to purchase 3,973,510 shares of common stock at $1.51 per share and accompanying warrant (or $1.5099 per pre-funded warrant and accompanying warrant). The immediately exercisable five-year warrants have an exercise price of $