CNXU 10-Q
Conexeu Sciences Inc. (CNXU)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from __________ to _________
Commission File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of organization) | (I.R.S. employer identification no.) | |
| (Address of principal executive offices) | (Zip code) |
(
(Registrant's telephone number, including area code)
Nevada Agency and Transfer Company
50 West Liberty Street, Suite 880
Reno, NV 89501
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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, as amended, during the preceding 12 months (or for such shorter period than the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 | ☐ |
| ☒ | 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 practicable date:
CONEXEU SCIENCES INC.
Quarterly Report on Form 10-Q
TABLE OF CONTENTS
STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
We make statements in this Quarterly Report on Form 10-Q that are forward-looking statements within the meaning of the federal securities laws. The words "believe," "estimate," "expect," "anticipate," "intend," "plan," "seek," "may," and similar expressions or statements regarding future periods are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from any predictions of future results, performance or achievements that we express or imply in this Quarterly Report or in the information incorporated by reference into this Quarterly Report.
The forward-looking statements included in this Quarterly Report on Form 10-Q are based upon our current expectations, plans, estimates, assumptions and beliefs that involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, taking into account the information currently available to us, we cannot guarantee future transactions, results, performance, achievements or outcomes, and our actual results and performance could differ materially from those set forth in any forward-looking statements. The cautionary statements set forth in this Quarterly Report on Form 10-Q identify important factors which you should consider in evaluating our forward-looking statements. These factors include, without limitation:
• The Company has a limited operating history and has incurred significant losses since its inception and anticipates that it will continue to incur losses for the foreseeable future, making it difficult to assess the Company's future viability;
• The Company has only one device candidate and no commercial sales, and the Company's business presently depends entirely on its ability to obtain the necessary regulatory authorizations and to successfully commercialize CXU™ on a timely basis, if at all;
• The Company may require additional financing to fund its future operations, and a failure to obtain additional capital when needed on acceptable terms, or at all, could force the Company to delay, limit, reduce or terminate its operations and execute its business plan;
• Even if CXU™ or future device candidates receive regulatory approval, they may fail to achieve the broad degree of healthcare practitioner adoption and use necessary for commercial success;
• The Company may have significant product liability exposure and its insurance may not cover all potential claims;
• If The Company is unable to protect the confidentiality of its trade secrets, the Company's innovative capacity and competitive position could be harmed;
• The Company may become involved in lawsuits to protect or enforce its patents, which could be expensive, time-consuming and, whether successful or unsuccessful, limit the commercial value of the Company's product or have a material adverse effect on the Company's business;
• The Company is highly dependent upon the services of its key management personnel, including Miles Harrison, the Company's Chief Executive Officer, and if the Company is unable to retain key personnel, the Company's ability to compete could be harmed;
• Adverse worldwide economic and market conditions, including inflation, economic instability, and declines in consumer demand or spending levels, could negatively affect the Company's business, results of operations, and liquidity; and
• The Company's device candidate faces significant competition, and any future device candidates may face similar competitive pressures.
You are cautioned not to place undue reliance on any forward-looking statements included in this Quarterly Report. All forward-looking statements are made as of the date of this Quarterly Report on Form 10-Q, and the risk that actual results will differ materially from the expectations expressed in this Quarterly Report will increase with the passage of time. Except as otherwise required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements after the date of this Quarterly Report, whether as a result of new information, future events, changed circumstances or any other reason. In light of the significant uncertainties inherent in the forward-looking statements included in this Quarterly Report, the inclusion of such forward-looking statements should not be regarded as a representation by us or any other person that the objectives and plans set forth in this Quarterly Report will be achieved
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONEXEU SCIENCES INC.
CONDENSED INTERIM FINANCIAL STATEMENTS
Unaudited
(Expressed in United States Dollars)
For the Three and Nine months ended July 31, 2026 and 2025
1
CONEXEU SCIENCES INC.
Condensed Balance Sheets
(Expressed in United States Dollars)
| Unaudited | ||||||
| ASSETS | July 31, 2026 | October 31, 2025 | ||||
| CURRENT ASSETS | ||||||
| Cash and cash equivalents | $ | $ | ||||
| Restricted cash | ||||||
| Share subscription receivable | ||||||
| Tax receivable | ||||||
| Interest receivable | ||||||
| Convertible note receivable | ||||||
| Prepaid expenses | ||||||
| TOTAL CURRENT ASSETS | ||||||
| NON-CURRENT ASSETS | ||||||
| Deferred offering costs | ||||||
| Investment, at cost | ||||||
| Security deposit | ||||||
| Operating lease - Right of Use, net of accumulated amortization of $ |
||||||
| Fixed assets, net of accumulated depreciation of $ |
||||||
| Patent, net of accumulated amortization of $ |
||||||
| TOTAL ASSETS | $ | $ | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
| CURRENT LIABILITIES | ||||||
| Accounts payable and accrued liabilities | $ | $ | ||||
| Accounts payable and accrued liabilities - related parties | ||||||
| Wages payable | ||||||
| Lease liability | ||||||
| Insurance funding agreement | ||||||
| Liabilities to be settled with shares | ||||||
| Due to shareholders | ||||||
| TOTAL CURRENT LIABILITIES | ||||||
| LONG-TERM LIABILITIES | ||||||
| Non-current lease liability | ||||||
| TOTAL LIABILITIES | ||||||
| COMMITMENTS AND CONTINGENCIES (See Notes 8 and 9) | ||||||
| SHAREHOLDERS' EQUITY | ||||||
| Preferred Stock, par value $ |
||||||
| Common Stock, par value $ |
||||||
| Additional paid-in capital | ||||||
| Accumulated deficit | ( |
) | ( |
) | ||
| TOTAL SHAREHOLDERS' EQUITY | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | $ |
The accompanying notes are an integral part of these unaudited condensed interim financial statements
2
CONEXEU SCIENCES INC.
Condensed Interim Statements of Operations
(Unaudited)
(Expressed in United States Dollars)
| Three months ended | Nine months ended | |||||||||||
| July 31, 2026 | July 31, 2025 | July 31, 2026 | July 31, 2025 | |||||||||
| OPERATING EXPENSES | ||||||||||||
| Advertising and promotion | $ | $ | $ | $ | ||||||||
| Depreciation and amortization | ||||||||||||
| Bank charges | ||||||||||||
| Business development | ||||||||||||
| Consulting | ||||||||||||
| Filing and listing fees | ||||||||||||
| Insurance | ||||||||||||
| Investor relations | ||||||||||||
| Management and directors' salaries and fees - related parties | ||||||||||||
| Office and general administrative | ||||||||||||
| Professional fees | ||||||||||||
| Regulatory fees | ||||||||||||
| Research and development | ||||||||||||
| Total operating expenses | ||||||||||||
| LOSS FROM OPERATIONS | ( |
) | ( |
) | ( |
) | ( |
) | ||||
| OTHER INCOME (EXPENSES) | ||||||||||||
| Gain on conversion of payables | ||||||||||||
| Write-off of deferred offering costs | ( |
) | ( |
) | ||||||||
| Interest income | ||||||||||||
| Interest expense | ( |
) | ||||||||||
| Foreign exchange gain (loss) | ( |
) | ( |
) | ||||||||
| Total other income (expenses) | ( |
) | ( |
) | ||||||||
| LOSS BEFORE TAXES | ( |
) | ( |
) | ( |
) | ( |
) | ||||
| Income tax benefit (expense) | ||||||||||||
| NET LOSS | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) |
| Net loss per common share, basic and diluted | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) |
| Weighted average of common shares outstanding, basic and diluted | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed interim financial statements
3
CONEXEU SCIENCES INC.
Condensed Interim Statements of Shareholders' Equity
For the Three and Nine Months ended July 31, 2026 and 2025
(Unaudited)
(Expressed in United States Dollars)
| Preferred Stock | Common Stock | ||||||||||||||||||||
| Additional Paid-in | Accumulated | Shareholders' | |||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | |||||||||||||||
| Balance , November 1, 2025 | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||
| Private placements, net of issuance costs | - | - | - | ||||||||||||||||||
| Shares issued under warrant incentive program | - | - | - | ||||||||||||||||||
| Shares issued for services | - | - | - | ||||||||||||||||||
| Shares issued for exercise of warrants | - | - | - | - | |||||||||||||||||
| Stock-based compensation expense | - | - | - | - | - | ||||||||||||||||
| Proceeds for warrants issued under warrant incentive program | - | - | - | - | - | ||||||||||||||||
| Net loss | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||
| Balance, July 31, 2026 | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||
| Balance, May 1, 2026 | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||
| Shares issued under warrant incentive program | - | - | - | ||||||||||||||||||
| Shares issued for services | - | - | - | ||||||||||||||||||
| Shares issued for exercise of warrants | - | - | - | - | |||||||||||||||||
| Stock-based compensation expense | - | - | - | - | - | ||||||||||||||||
| Proceeds for warrants issued under warrant incentive program | - | - | - | - | - | ||||||||||||||||
| Net loss | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||
| Balance, July 31, 2026 | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||
| Additional Paid-in | Accumulated | Shareholders' | |||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | |||||||||||||||
| Balance, November 1, 2024 | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||
| Private placement | - | - | - | ||||||||||||||||||
| Shares issued for services | - | - | - | ||||||||||||||||||
| Warrants issued for services | - | - | - | - | - | ||||||||||||||||
| Stock-based compensation expense | - | - | - | - | |||||||||||||||||
| Shares issued for conversion of payables | - | - | - | ||||||||||||||||||
| Net loss | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||
| Balance, July 31, 2025 | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||
| Balance, May 1, 2025 | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||
| Private placements, net of issuance costs | - | - | - | ||||||||||||||||||
| Shares issued for services | - | - | - | ||||||||||||||||||
| Warrants issued for services | - | - | - | - | |||||||||||||||||
| Stock-based compensation expense | - | - | - | - | |||||||||||||||||
| Net loss | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||
| Balance, July 31, 2025 | $ | $ | $ | $ | ( |
) | $ |
The accompanying notes are an integral part of these unaudited condensed interim financial statements
4
CONEXEU SCIENCES INC.
Condensed Interim Statements of Cash Flows
(Unaudited)
(Expressed in United States Dollars)
| Nine months ended | ||||||
| July 31, 2026 | July 31, 2025 | |||||
| Cash flows from operating activities | ||||||
| Net loss | $ | ( |
) | $ | ( |
) |
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||
| Amortization expense | ||||||
| Depreciation expense | ||||||
| Fixed asset, disposed | ||||||
| Gain on conversion of payables | ( |
) | ||||
| Warrants issued for services | ||||||
| Warrants issued to related parties | ||||||
| Options issued for services | ||||||
| Shares issued for services | ||||||
| Loss on write-off of offering costs | ||||||
| Operating lease - right of use | ||||||
| Changes in operating assets and liabilities: | ||||||
| Accounts payable and accrued liabilities | ||||||
| Accounts payable and accrued liabilities - related parties | ||||||
| Interest receivable | ( |
) | ||||
| Taxes receivable | ( |
) | ||||
| Wages payable | ( |
) | ||||
| Prepaid expenses | ( |
) | ( |
) | ||
| Security deposit | ( |
) | ||||
| Lease liability | ( |
) | ||||
| Liability to be settle by shares | ||||||
| Net cash used in operating activities | ( |
) | ( |
) | ||
| Cash flow from investing activities | ||||||
| Purchase of fixed assets | ( |
) | ( |
) | ||
| Change in convertible note receivables | ( |
) | ||||
| Loan receivable | ( |
) | ||||
| Net cash used in investing activities | ( |
) | ( |
) | ||
| Cash flow from financing activities | ||||||
| Receivable form issuance of private placement shares | ||||||
| Repayments on due to shareholders | ( |
) | ||||
| Proceeds for shares issued under the warrant inducement program | ||||||
| Proceeds for warrants issued under the warrant inducement program | ||||||
| Proceeds received for performance warrants exercised | ||||||
| Proceeds from private placement, net of issuance costs | ||||||
| Repayments on insurance funding agreement | ( |
) | ||||
| Repayment of loan payable | ( |
) | ||||
| Offering costs paid for future offering | ( |
) | ( |
) | ||
| Net cash provided by financing activities | ||||||
| Effect of exchange rate changes on cash | ( |
) | ||||
| Increase in cash, cash equivalents and restricted cash | ( |
) | ||||
| Cash, cash equivalents and restricted cash at beginning of period | ||||||
| Cash, cash equivalents and restricted cash at end of period | $ | $ | ||||
| Supplemental cash flow information | ||||||
| Cash paid for interest | $ | $ | ||||
| Cash paid for taxes | $ | $ | ||||
| Non-cash investing and financing activities | ||||||
| Shares issued for prepaid expenses | $ | $ | ||||
| Warrants issued for services to be expensed | $ | $ | ||||
| Investment | $ | $ | ||||
| Prepaid insurance from funding agreement | $ | |||||
| New right of use addition | $ | |||||
| Shares issued for conversion of payables | $ | $ | ||||
The accompanying notes are an integral part of these unaudited condensed interim financial statements
5
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
1. Nature of Operations
Conexeu Sciences Inc. ("CONEXEU" or the "Company") was incorporated on November 2, 2022, pursuant to the Business Corporations Act of British Columbia, Canada. CONEXEU is a regenerative medicine company committed to developing and commercializing novel cellular therapies for skin restoration in wound care and aesthetics with the use of patent protected advanced tissue engineering and biomaterial innovations. The Company has a fiscal year-end of October 31. On April 10, 2025, the Company was continued from the jurisdiction of British Columbia, Canada to a newly incorporated Nevada corporation. The registered offices of the Company, effective April 10, 2025, is located at 50 W Liberty St., Suite 880, Reno, Nevada, 89501.
On May 21, 2026, the Company began trading on the Nasdaq Trading Exchange ("Nasdaq") under symbol "CNXU".
Risks and Uncertainties
Disruption of global financial markets and a recession or market correction, including the ongoing military conflicts between Russia and Ukraine and the related sanctions imposed against Russia as well as the conflicts between Israel and Hamas, the significant tariffs imposed by the United States on imports from other countries, the military action taken against Iran and other global macroeconomic factors such as inflation and rising interest rates, could reduce the Company's ability to access capital, which could in the future negatively affect the Company's liquidity and could materially affect the Company's business and the value of its common stock.
Segment Reporting
ASC Topic No. 280, Segment Reporting ("ASC 280"), establishes standards for the way that public business enterprises report information about operating segments in their financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. ASC 280 also establishes standards for related disclosures about products and services, geographic areas, and major customers. The Company's business segments are based on the organization structure used by the chief operating decision maker for making operating and investment decisions and for assessing performance. Our chief executive officer, who is our chief operating decision maker, views the Company's operations and manages its business in one operating segment, which is developing and commercializing novel cellular therapies for skin restoration in wound care and aesthetics through use of patent protected advanced tissue engineering and biomaterial innovations.
2. Basis of Presentation
Basis of Presentation
These unaudited condensed interim financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed interim financial statements should be read in conjunction with the audited financial statements included in the Company's Annual Report for the fiscal year ended October 31, 2025. The accompanying unaudited condensed interim financial statements include all adjustments that are of a normal recurring nature and necessary for the fair presentation of the results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for the full year.
The functional and presentation currency of the Company is the United States Dollars.
Prior to its incorporation as a Nevada corporation, the Company's articles of incorporation had three classes of stock, Preferred Series A, Common Class A and Common Class B. The articles of incorporation allowed for unlimited shares of each type to be issued, and the shares had no par value.
On April 10, 2025, the Company became incorporated in Nevada. The Nevada articles of incorporation authorized two types of shares, preferred stock and common stock. Each class of stock has a par value of $
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
2. Basis of Presentation (cont'd)
These converted into common stock at a ratio of
On April 21, 2025, the Board of Directors approved a
These unaudited condensed interim financial statements have been adjusted retrospectively for the change of incorporation and the reverse stock split.
Use of Estimates
The preparation of these unaudited condensed interim financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of these unaudited condensed interim financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.
Going Concern
These unaudited condensed interim financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. During the three months ending July 31, 2026, and 2025, the Company recorded a net loss of $
These factors raise substantial doubt about the Company's ability to continue as a going concern within one year after the date of these unaudited condensed interim financial statements being issued. The ability of the Company to continue as a going concern is dependent upon the Company's ability to raise additional funds and implement its business plan. These unaudited condensed interim financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Such adjustments could be material.
As of July 31, 2026, the Company had cash and cash equivalents in the amount of $
3. Summary of Significant Accounting Policies
The significant accounting policies applied in the preparation of these unaudited condensed interim financial statements are consistent with the accounting policies disclosed in the Company's audited financial statements for the year ended October 31, 2025.
Reclassifications
Certain prior period amounts in the unaudited condensed consolidated financial statements have been reclassified to conform to the current period presentation. Specifically, regulatory expenses previously included in professional fees has been reclassified into Regulatory fees to better reflect the nature of the expenses. This reclassification had no effect on previously recorded operating expenses or net loss.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held with banks, funds in transit and when applicable, short-term, highly liquid deposits which are either cashable or with original maturities of no more than three months. As of July 31, 2026, the Company had cash of $
Investment
The Company has an investment of
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
3. Summary of Significant Accounting Policies (cont'd)
Restricted Cash
Restricted Cash equaling $
Fair Value of Financial Instruments
Our financial assets and liabilities measured at fair value on a recurring basis consist primarily of prepaid expenses, accounts payable and accrued liabilities, due to shareholders, and loan payable. The carrying amount of prepaid expenses, accounts payable and accrued liabilities, due to shareholders approximate fair value because of the short-term maturity of such instruments.
We have categorized our assets and liabilities that are valued at fair value on a recurring basis into a three-level fair value hierarchy in accordance with U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and lowest priority to unobservable inputs (Level 3).
Assets and liabilities recorded in the unaudited condensed balance sheets at fair value are categorized based on a hierarchy of inputs, as follows:
Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2 - Quoted prices for similar assets or liabilities in active markets that are observable for the asset or liability either directly or indirectly through market corroboration, for substantially the full term of the financial instrument
Level 3 - Unobservable inputs for the asset or liability
The Company had no assets or liabilities required to be accounted for under the fair value hierarchy.
Advertising Expenses
Advertising expenses are expensed as incurred. Advertising expenses for the three months ended July 31, 2026, and 2025 were $
Research and Development Expenses
Research and development expenses are expensed as incurred and consist principally of internal and external costs, which include the cost of contract research services, laboratory supplies and development and manufacture of preclinical compounds and consumables for preclinical testing. Research and development expenses for the three months ended July 31, 2026, and 2025 were $
Stock-Based Compensation
The Company applies the provisions of ASC 718, Compensation-Stock Compensation ("ASC 718"), which requires the measurement and recognition of compensation expense for all stock-based awards made to employees, including employee stock options and warrants, in the unaudited condensed interim statements of operations.
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
3. Summary of Significant Accounting Policies (cont'd)
Stock-Based Compensation (cont'd)
For stock options and warrants issued to employees and members of the Company's Board of Directors (the "Board") for their services, the Company estimates each option's grant-date fair value using the Black-Scholes option pricing model. The use of the Black-Scholes option pricing model requires management to make assumptions with respect to the expected term of the option and warrant, the expected volatility of the Common Stock consistent with the expected life of the option and warrant, risk-free interest rates, and expected dividend yields of the Common Stock. For awards subject to service-based vesting conditions, including those with a graded vesting schedule, the Company recognizes stock-based compensation expense equal to the grant date fair value of stock options and warrants on a straight-line basis over the requisite service period, generally the vesting term. Forfeitures are recorded as incurred instead of estimated at the time of grant and revised.
Under Accounting Standards Update ("ASU") 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Non-Employee Share-Based Payment Accounting, the Company accounts for stock options and warrants issued to non-employees for their services in accordance with ASC 718. The Company uses valuation methods and assumptions to value the stock options and warrants that are in line with the process for valuing employee stock options and warrants noted above.
The fair value of the Company's stock was determined by management and, in doing so, considered in part upon third-party 409A valuations through July 31, 2025. A 409A valuation is an independent appraisal of a private company's common stock fair market value. The valuations were performed on the following dates: inception through December 30, 2024, December 31, 2024, June 5, 2025, and July 31, 2025.
The Company determined the fair value of the Company's stock from inception through December 30, 2024, by using the asset approach, as this was believed to be the most appropriate method due to very limited equity issuances, limited operations, and there being significant doubt about the Company's ability to continue as a going concern. The fair value of the shares from this valuation was determined to be $
The fair value of the Company's stock as of December 31, 2024, June 5, 2025, and July 31, 2025, was determined by using the market approach which was believed to be the most appropriate valuation methodology, whereby the fair value was equal to the price of the shares purchased in the most recent equity raises. The Company determined these dates for the valuations due to achievement of significant business milestones, including but not limited to, the continuation and restructuring of the Company from British Columbia, Canada to Nevada, USA, assignment of the IP patent, successes in the research and development programs and an increasing scope of potential markets for the Company's IP. The December 31, 2024, June 5, 2025, and July 31, 2025, valuations concluded that the fair value was equal to the most recent sale of equity securities, which was $
Subsequent to July 31, 2025, management determined the fair value of the shares was equal to the last raised price, as on July 31, 2025, the date the Company started its Regulation Crowdfunding offering at $
Based on management's use of the market approach valuation, on October 28, 2025, the Company completed a private placement issuing
On March 23, 2026, the Company completed a private placement issuing
On May 21, 2026, the Company's shares were listed on the Nasdaq and began trading publicly. Therefore, any fair market valuation will now be determined by the closing price of the shares on any given date.
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
3. Summary of Significant Accounting Policies (cont'd)
Net Loss Per Share
The Company computes net loss per share in accordance with ASC 260, Earnings per Share ("EPS"). The Company computes basic loss per share by dividing the loss attributable to holders of Common Stock for the period by the weighted average number of shares of Common Stock outstanding during the period. The Company's warrants could potentially be exercised or converted into Common Stock and then share in the earnings of the Company. However, these convertible instruments were excluded when calculating diluted loss per share because such inclusion would be anti-dilutive for the periods presented. As a result, diluted loss per share is the same as basic loss per share for the periods presented.
Potentially dilutive securities, which are not included in diluted weighted average shares outstanding for the nine months ending July 31, 2026, and 2025, consist of the following (in common stock equivalents):
| July 31, 2026 | July 31, 2025 | |||||
| Warrants | ||||||
| Options | ||||||
| Restricted Share Units |
Basic EPS as calculated in these accompanying unaudited condensed interim financial statements have included the potential dilutive effect of the weighted average of vested penny warrants outstanding. Therefore,
Fixed Assets
Fixed assets are stated at cost less accumulated depreciation. Maintenance and repair charges are expensed as incurred. Fixed assets are depreciated under the straight-line method using the following estimated useful lives:
- Equipment -
- Lab Equipment -
- Furniture and fixtures -
- Computer equipment -
Leases
The Company accounts for leases in accordance with Accounting Standards Codification ("ASC") Topic 842, Leases. The Company determines if an arrangement is a lease at inception. Right-of-use ("ROU") assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.
Lease liabilities are measured using the present value of future lease payments, discounted using the interest rate implicit in the lease, if readily determinable, or the Company's incremental borrowing rate. ROU assets are measured based on the corresponding lease liability, adjusted for lease incentives, initial direct costs, and prepaid lease payments.
The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that such options will be exercised. Lease expense for operating leases is recognized on a straight-line basis over the lease term.
The Company does not recognize ROU assets or lease liabilities for leases until the lease commencement date. Payments made prior to lease commencement are recorded as prepaid rent or other assets, depending on their nature.
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
3. Summary of Significant Accounting Policies (cont'd)
Subsequent Events
The Company evaluated subsequent events through September 14, 2026, the date in which these unaudited condensed interim financial statements were issued.
4. Fixed Assets
Fixed Assets consist of the following:
| July 31, 2026 | October 31, 2025 | |||||
| Furniture and fixtures | ||||||
| Lab equipment | ||||||
| Computer equipment | ||||||
| Less: accumulated depreciation | ||||||
| Fixed Assets, net |
Depreciation expense was $
5. Taxes Receivable
The Company has filed with the Canada Revenue Agency ("CRA") a Goods and Services Tax ("GST") return to claim the GST paid on Canadian expenses paid between September 21, 2024 (date of registration) and up to April 10, 2025, when the Company continued from the jurisdiction of British Columbia, Canada to a newly incorporated Nevada corporation and no longer qualified for claiming any GST paid. The outstanding amount due July 31, 2026, and October 31, 2025, were $
6. Convertible Note Receivable
On May 14, 2025, the Company entered into a Memorandum of Understanding (the "MOU") with a private company (the "Target Company"), related to the potential acquisition of
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
7. Patent
Patent Assignment Agreement with University of British Columbia ("UBC")
On November 20, 2023, the Company entered into a Patent Assignment Agreement ("PAA") with UBC. Under the terms of the agreement, UBC agrees to transfer, sell and assign to the Company all of UBC's right, title and interest in and to the Patents. However, the PAA will not be released to the Company until the Company has paid UBC $
The Company fully paid the loan and all interest due on March 4, 2025. The Patent Assignment was completed on April 7, 2025.
The total capitalized costs as of July 31, 2026, and October 31, 2025, were $
The patent has an expiration date of February 3, 2036. Amortization expense for the nine months ended July 31, 2026, and 2025 was $
8. Debt
Loan Agreement with University of British Columbia ("UBC")
In connection with the purchase of the patent, on November 20, 2023, the Company entered into a loan agreement with UBC. The loan was for $
As of October 31, 2024, the outstanding principal was $
On March 4, 2025, the Company paid UBC a total of $
Interest expense was $
Insurance Funding Agreement
On May 5, 2026, the Company obtained an insurance policy with total premiums equaling $
9. Right of Use Asset
On March 23, 2026, the Company entered into a 24-month licence agreement commencing May 1, 2026, with monthly base lease fees of approximately $
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
9. Right of Use Asset (cont'd)
Effective May 1, 2026, the Company began to recognize the lease in accordance with ASC 842. As of May 1, 2026, the Company recognized an Operating Lease - Right of Use non-current asset of $
When measuring lease liabilities for leases that classified as operating leases, the Company discounted lease payments using the estimated incremental borrowing rate at the later of the lease inception or May 1, 2026, the date of adoption of the ASC 842. The weighted average incremental borrowing rate applied was
The following table presents the net lease cost and other supplemental lease information:
| Nine months ending July 31, | ||||||
| 2026 | 2025 | |||||
| Lease cost: | - | |||||
| Operating lease cost | $ | $ | ||||
| Short-term lease cost | ||||||
| Net lease cost | $ | $ | ||||
| Cash paid for operating lease liabilities | $ | $ | ||||
As of July 31, 2026, the estimated future minimum lease payments, excluding non-lease components, are as follows:
| Fiscal Year | |||
| 2026 (remaining) | $ | ||
| 2027 | |||
| 2028 | |||
| Total future minimum annual lease payments | $ | ||
| Less: Imputed interest | |||
| Present value of lease liability | $ |
In connection with the execution of the lease agreement, the Company paid a security deposit of $
As of July 31, 2026, the Company has recognized the security deposit of $
10. Related Party Transactions
Founder and Former CEO
The Founder and then Chief Executive Officer ("CEO") made non-interest-bearing advances to the Company with no specific terms of repayment that are due on demand. The outstanding amounts as of July 31, 2026, and October 31, 2025, were $
Director 1 (Former)
The Company entered into a consulting agreement with a company of which Director 1 controls in October 2023. In accordance with the agreement, it was agreed to provide consulting services, including but not limited to, provide the Company with corporate management services, (ii) provide the Company with introductions to certain entities which could form strategic alliances or partnerships with the Company, including assisting with negotiations with respect to any such alliance or partnership, and (iii) assist the Company with strategic planning and, Director 1 received a monthly fee of $
Director 1 earned certain discretionary bonuses in the form of shares and warrants during the nine months ended July 31, 2025.
On January 15, 2025, Director 1 was granted
The total expense, exclusive of the share-based compensation, was $
On June 5, 2025, the Company and Director 1 entered into a consulting service agreement for
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
10. Related Party Transactions (cont'd)
Director 1 (Former) (cont'd)
Milestone 1 -
Milestone 2 -
Milestone 3 -
Milestone 4 -
On October 23, 2025, Director 1 resigned from the board and the consulting agreement with the company of which Director 1 is a director was mutually terminated.
On November 4, 2025, the Company and former Director 1 reached a separation agreement wherein a one-time lump sum payment of $
On May 28, 2026, this former director exercised
On June 18, 2026, this former director exercised
Director 2 & CCO
The Company entered into a consulting agreement with Director 2 in October 2023. In accordance with the agreement, it was agreed to provide consulting services, including but not limited to, provide the Company with corporate management services, provide the Company with introductions to certain entities which could form strategic alliances or partnerships with the Company, including assisting with negotiations with respect to any such alliance or partnership, and assist the Company with strategic planning and, Director 2 received a monthly fee of $
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
10. Related Party Transactions (cont'd)
Director 2 & CCO (cont'd)
Effective March 2025, the Company entered into a new consulting agreement with Director 2, which had an indefinite term, and increased the monthly fee of $
The total expense incurred in connection with these agreements was $
On December 15, 2025, the board agreement between Director 2 and the Company was revised. Effective January 1, 2026, the Director was entitled to quarterly compensation of $
As of July 31, 2026, and 2025, there were no outstanding payables.
On June 5, 2025, the Company and Director 2 entered into a consulting service agreement for
Milestone 1 -
Milestone 2 -
Milestone 3 -
Milestone 4 -
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
10. Related Party Transactions (cont'd)
Director 2 & CCO (cont'd)
On June 11, 2026, the board of directors, upon the recommendation of both the nominating and governance and compensation committees, approved the appointment of Director 2 as the Chief Commercial Officer ("CCO") effective June 15, 2026, along with their associated compensation package. Director 2 will continue to serve on the board as a non-independent executive board member. As part of their role as CCO, they will become a full-time employee, their annual salary is $
Director 3 and former CEO (May to October 2025)
The Company entered into a consulting agreement with Director 3 in May 2025 to serve as the CEO. In accordance with the agreement, through a company that Director 3 controls, he would provide services related to his role as CEO, including but not limited to, the overall business strategy, identify and develop relationships with strategic business partners and provide oversight of the overall day-to-day business activities and received a monthly fee of $
For the three months ended July 31, 2026, and 2025, the Company incurred, $
During the nine months ended July 31, 2026, Director 3 earned a one-time incentive payment of $
As of July 31, 2026, and 2025, $
On June 5, 2025, the Company and Director 3 entered into a consulting service agreement for
Milestone 1 -
Milestone 2 -
Milestone 3 -
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
10. Related Party Transactions (cont'd)
Director 3 and former CEO (May to October 2025) (cont'd)
Milestone 4 -
The CEO resigned October 22, 2025, and continued as a non-executive Director.
Effective November 1, 2025, Director 3 entered into a board agreement to serve on the Company's board of directors for an indefinite term. In connection with this agreement, Director 3 is entitled to a $
Furthermore, all board members serving on any of the committees will receive the following; Nominating and Governance committee members will receive $
During the three-and nine-months ending July 31, 2026, the total expense incurred in connection with the original agreement and the new compensation notice was $
In December 2025, Director 3 exercised
On May 22, 2026, Director 3 exercised
CMO, former Director 4 and former President
The Company entered into a consulting agreement with a company that Director 4 controls in April 2025 to serve as the Chief Medical Officer ("CMO"). In accordance with the agreement, Director 4 would provide services, including but not limited to, strategic direction, scientific support, business development support, research programs, budgeting, and medical affairs and received a monthly fee of $
For the three and nine months ended July 31, 2025, an expense of $
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
10. Related Party Transactions (cont'd)
CMO, former Director 4 and former President (cont'd)
On April 1, 2025, the Company granted the CMO
On October 15, 2025, the CMO became a full-time employee and agreed to a remuneration package of an annual salary of $
On October 22, 2025, he resigned from his role as President and Director, while maintaining his position as CMO.
As at October 31, 2025, the Company recognized wages payable of $
Director 5
On May 14, 2025, a new Director 5 was appointed to the Company's board of directors.
On October 23, 2025, Director 5 entered into a new board agreement with the Company. The agreement has an effective date of October 23, 2025, an indefinite term, and beginning November 2025, entitles the Director to quarterly compensation of $
Furthermore, all board members serving on any of the committees will receive the following; Nominating and Governance committee members will receive $
For the three and nine months ended July 31, 2026, a total expense of $
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
10. Related Party Transactions (cont'd)
Director 5 (cont'd)
On November 1, 2025, Director 5 entered into a new medical advisory agreement. In accordance with the agreement, the director will be compensated monthly $
On March 17, 2026, the Company issued
On May 14, 2026, the Company issued
As of July 31, 2026, a total of $
CEO, President and Director 6
On October 15, 2025, the new CEO became a full-time employee and agreed to a remuneration package of an annual salary of $
For the three and nine months ended July 31, 2026, the Company expensed $
As of October 31, 2025, the Company recognized wages payable of $
CFO
The Company entered into a consulting agreement with a company that is controlled by the Chief Financial Officer ("CFO") in November 2023. In accordance with the agreement, it was agreed that in addition to fulfilling the responsibilities of the Company's CFO, additional services would include, but are not limited to, oversight of all accounting matters, bookkeeping services and general day-to-day operations and the CFO received minimum monthly compensation of $
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
10. Related Party Transactions (cont'd)
CFO (cont'd)
The total expense incurred in connection with these agreements was $
As of July 31, 2026, and October 31, 2025, $
During the nine months ended July 31, 2025, the Company converted outstanding payables of $
On October 15, 2025, the CFO became a part-time employee and agreed to a remuneration of a maximum annual salary of $
As of October 31, 2025, the Company recognized wages payable of $
CSO
The Company entered into a consulting agreement with this consultant in May 2025 to serve as the Chief Science Officer ("CSO"). In accordance with the agreement, the CSO agreed to provide services, including but not limited to, advancing the Company's core biomaterial technology, building the Company's future product pipeline, develop, test, and expand the applications of the Company's proprietary collagen-based platform across multiple medical and surgical markets. The CSO received a monthly fee of $
On June 9, 2025, the Company granted to the CSO,
On October 15, 2025, the CSO became a full-time employee and agreed to a remuneration package of an annual salary of $
As at October 31, 2025, the Company recognized wages payable of $
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
10. Related Party Transactions (cont'd)
Director 7
On October 23, 2025, the Company appointed a new director to the board of directors, Director 7. The agreement has an effective date of October 23, 2025, an indefinite term, and beginning November 2025, entitles the Director to quarterly compensation of $
Furthermore, all board members serving on any of the committees will receive the following; Nominating and Governance committee members will receive $
During the three-and nine-months ending July 31, 2026, the total expense incurred in connection with the board agreement was $
On October 28, 2025, a company to which Director 7 is related, subscribed to purchase
On December 1, 2025, the Company entered into a consulting agreement with a company to which Director 7 is related. The agreement had a total contract amount of $
In January 2026, a company to which Director 7 is related subscribed to purchase
In March 2026, a company to which Director 7 is related subscribed to purchase
On May 12, 2026, a company to which Director 7 is related exercised
On June 18, 2026, a company to which Director 7 is related exercised
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
10. Related party transactions (cont'd)
Director 8
Effective November 1, 2025, the Company appointed a new director to the board of directors, Director 8. The agreement has an effective date of October 31, 2025, an indefinite term, and beginning November 2025, entitles the Director to quarterly compensation of $
Furthermore, all board members serving on any of the committees will receive the following; Nominating and Governance committee members will receive $
During the three-and nine-months ending July 31, 2026, the total expense incurred in connection with this agreement was $
In November 2025, a company controlled by Director 8 subscribed to purchase
Director 9
On June 15, 2026, Director 9 was appointed to the Company's board of directors.
All board members will be eligible for an annual cash compensation of $
During the three-and nine-months ending July 31, 2026, the total expense incurred in connection with this agreement was $
Director 10
On June 15, 2026, Director 10 was appointed to the Company's board of directors.
All board members will be eligible for an annual cash compensation of $
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
10. Related party transactions (cont'd)
Director 10 (cont'd)
During the three-and nine-months ending July 31, 2026, the total expense incurred in connection with this agreement was $
Director 11
On June 15, 2026, Director 11 was appointed to the Company's board of directors.
All board members will be eligible for an annual cash compensation of $
During the three- and nine-months ending July 31, 2026, the total expense incurred in connection with this agreement was $
Head of Strategy and Transformation
On November 17, 2025, the Company entered into a consulting agreement with a company controlled by an individual who was appointed Head of Strategy and Transformation on February 9, 2026. During the three and nine months ended July 31, 2026, the Company incurred consulting fees of $
Head of Business Development and Licensing
On February 5, 2026, the Company entered into a consulting agreement with a company controlled by an individual who was appointed Head of Business Development and Licensing on March 2, 2026. During the three and nine months ended July 31, 2026, the Company incurred consulting fees of $
11. Share capital
Write-off of Deferred Offering Costs
The Company was pursuing an Initial Public Offering "IPO", in which they were capitalizing costs incurred in connection with the potential offering as deferred offering costs. During the nine months ended July 31, 2026, the Company decided to pursue a direct listing rather than go forward with the IPO. Due to this, the Company wrote off $
Private Placements - Non-brokered
The Company closed several non-brokered private placements in December 2024 and January 2025. The private placements consisted of units which were comprised of 1 share of common stock and 1 warrant. The warrants vested immediately, have a two-year life, and an exercise price equal to the price of the unit in the private placement. The price of the units of the private placements was $
The Company closed a non-brokered private placement in May 2025. The private placement consisted of units which were comprised of 1 share of common stock and 1 warrant. The warrants vested immediately, have a two-year life, and an exercise price equal to the price of the unit in the private placement. The price of the units of the private placements was $
On October 23, 2025, the Company received board approval, to open a non-brokered private placement of up to $
On November 12, 2025, the Company closed the second tranche of the non-brokered private placement and issued
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
11. Share capital (cont'd)
Private Placements - Non-brokered (cont'd)
On January 26, 2026, the Company closed the third and final tranche of the non-brokered private placement and issued
On January 20, 2026, the Company received board approval, to open a non-brokered private placement of up to $
Private Placements - Brokered
On July 31, 2025, the Company filed with the Securities and Exchange Commission ("SEC") a Regulation Crowdfunding ("Reg CF") to raise up to $
On September 2, 2025, the first tranche of the raise was closed with total gross proceeds of $
On September 18, 2025, a second tranche of the raise was closed with total gross proceeds of $
On October 7, 2025, the third and final tranche of the raise was closed with total gross proceeds of $
In connection with these raises the Company also issued
The fair value of the warrants issued in the private placements during the nine months ended July 31, 2026, and the year ended October 31, 2025, was determined using the following Black-Scholes Pricing model assumptions:
|
July 31, 2026 |
October 31, 2025 |
|
| Share price | $ |
|
| Exercise price | $ |
|
| Expected life | ||
| Volatility | ||
| Risk-free interest Rate |
Shares Issued for Services
On May 8, 2025, the Company entered into a service agreement in which it was agreed that the consultant would provide advisory and consultancy services related to the Company's Form C disclosure documents required for a planned Regulation Crowdfunding ("Reg CF") offering, advising the Company on marketing, organizational and financial issues and business development. The agreement was for a twelve (12) month period from its effective date of May 8, 2025, and includes a one-time cash payment of $
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
11. Share capital (cont'd)
Shares Issued for Services (cont'd)
On June 27, 2025, the Company granted
On January 15, 2025, Director 1 received
In May 2025, the Company also issued
On October 15, 2025, the Company also issued
On March 17, 2026, the Company issued
On April 28, 2026. the Company entered into a marketing agreement with a vendor. Under the terms of the agreement, the vendor will assist in video hosting, and distribution services for marketing and communications activities. In connection with the agreement, the Company is to issue the vendor a total of
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
11. Share capital (cont'd)
Shares Issued for Services (cont'd)
On May 14, 2026, the Company issued
On May 21, 2026. the Company entered into a marketing agreement with a vendor. Under the terms of the agreement, the vendor will advise the Company regarding media creation, online awareness strategies, and introductions to relevant business contacts and appropriate strategic partners. In connection with the agreement, the Company is to issue the vendor a total of
On May 21, 2026. the Company entered into a marketing agreement with a vendor. Under the terms of the agreement, the vendor will provide strategic marketing and communications services designed to increase awareness, visibility, and engagement with respect to the Company's business, initiatives, and overall market presence. In connection with the agreement, the Company is to issue the vendor a total of
On May 21, 2026. the Company entered into a marketing agreement with a vendor. Under the terms of the agreement, the vendor will provide corporate advisory and investor relations services. In connection with the agreement, the Company is to issue the vendor a total of
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
11. Share capital (cont'd)
Shares Issued for Services (cont'd)
On May 21, 2026. the Company entered into a marketing agreement with a vendor. Under the terms of the agreement, the vendor will provide digital media and brand awareness, social media management, content creation, and distribution services. In connection with the agreement, the Company is to issue the vendor a total of
Shares Issued for Conversion of Payables
Between November 30, 2024 and January 31, 2025, the Company issued
Warrants
Warrants Issued for Services
On January 21, 2025, the Company issued
On June 5, 2025, the Company granted milestone warrants to three Directors. The milestones were defined as follows:
Milestone 1 - One quarter of the warrants granted Warrants shall vest upon the Company completing and receiving the results of the three-month Collagen Study in Boston, MA. Milestone achieved July 8, 2025.
Milestone 2 - Second quarter of the warrants granted shall vest upon the Company listing its shares of common stock in The Nasdaq Stock Market, LLC, or any such other recognized stock exchange in North America. Milestone achieved May 21, 2026.
Milestone 3 - Third quarter of the warrants granted shall vest upon the Company's listed shares of common stock trading for at least 20 consecutive trading days at a market capitalization of $
Milestone 4 - Fourth and final quarter if the warrants granted shall vest upon the Company submitting a 510(k) application to the FDA.
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
11. Share capital (cont'd)
Warrants (cont'd)
Warrants Issued for Services (cont'd)
On July 8, 2025, the first milestone was achieved, and the Company recorded a total expense of $
On May 21, 2026, the second milestone was achieved, and the Company recorded a total expense of $
On June 17, 2026, the third milestone was achieved, and the Company recorded a total expense of $
For the fourth milestone, the Company assessed a greater than 70% probability that this would occur. As of October 31, 2025, the Company anticipated that this would occur on June 30, 2026. As of July 31, 2026, the Company anticipates that this will now occur on March 31, 2027. The expense for the three and nine months ended July 31, 2026, was $
In May 2025, the Company issued
On December 23, 2025, a Director of the Company, exercised
On May 22, 2026, a Director of the Company, exercised
On May 22, 2026, a former Director of the Company, exercised
On June 8, 2026, a shareholder of the Company, to whom milestone warrants had been transferred, exercised
On June 18, 2026, a former Director of the Company, exercised
The fair value of the warrants issued as compensation during the nine months ended July 31, 2026, and the year ended October 31, 2025, was determined using the following Black-Scholes Pricing model assumptions:
| July 31, 2026 | October 31, 2025 | |
| Share price | $ |
|
| Exercise price | $ |
|
| Expected life | ||
| Volatility | ||
| Risk-free interest Rate |
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
11. Share capital (cont'd)
Warrants (cont'd)
Warrants Issued for Services (cont'd)
The stock price in the model was based on the methodology disclosed in Note 3, the volatility was based on the historical volatility of comparable public companies, and the expected term is determined using the Simplified Method.
Warrant Incentive Program
On October 1, 2025, the Board of Directors approved a Warrant Exercise Incentive Program (the "Incentive Program"), inviting current warrant holders to exercise their warrants early at the existing exercise price and if they choose to do so, they are then entitled to subscribe for a new full warrant for each warrant exercised, with a purchase price of $
On February 11, 2026, under the Company Incentive Program, an initial group of warrant holders exercised
On May 12, 2026, under the Company Incentive Program, a group of warrant holders exercised
On June 5, 2026, under the Company Incentive Program, a warrant holder exercised
On June 18, 2026, under the Company Incentive Program, a warrant holder exercised
The fair value of the warrants issued under the incentive program during the nine months ended July 31, 2026, was determined using the following Black-Scholes Pricing model assumptions:
| July 31, 2026 | |
| Share price | $ |
| Exercise price | $ |
| Expected life | |
| Volatility | |
| Risk-free interest Rate |
The share price in the model was based on pre-May 21, 2026, the most recent private placement price and post-May 21, 2026, the quoted price in the market, the volatility was based on the historical volatility of comparable public companies, and the expected term is determined using the Simplified Method.
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
11. Share capital (cont'd)
Warrants (cont'd)
A summary of common stock warrant activity during the nine months ending July 31, 2026, and the year ending October 31, 2025, is as follows:
| Number of Warrants |
Weighted Average exercise price |
Weighted Average remaining contractual life |
Aggregate intrinsic value |
|||||||||
| Outstanding at November 1, 2024 | ||||||||||||
| Granted | - | - | ||||||||||
| Exercised | - | - | ||||||||||
| Cancelled/Forfeited | - | - | ||||||||||
| Outstanding at October 31, 2025 | ||||||||||||
| Granted | - | - | ||||||||||
| Exercised | - | - | ||||||||||
| Cancelled/Forfeited | - | - | ||||||||||
| Outstanding at July 31, 2026 | ||||||||||||
| Exercisable at July 31, 2026 |
As of July 31, 2026, there remained an unrecognized stock-based compensation expense for the unvested warrants of $
Options
On June 7, 2025, the Company approved a Stock Incentive Plan (the "Plan") and Stock-Based Compensation Agreement. The Plan allows for a maximum of
Options Issued for Services
On November 1, 2025, a total of
On February 9, 2026, a total of
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
11. Share capital (cont'd)
Options (cont'd)
The fair value of the stock options during the nine months ended July 31, 2026, and the year ended October 31, 2025, was determined using the following weighted average Black-Scholes Option Pricing model assumptions:
|
July 31, 2026 |
October 31, 2025 |
|
| Share price | $ |
$ |
| Exercise price | $ |
$ |
| Expected life | ||
| Volatility | ||
| Risk-free interest Rate |
The stock price in the model was based on the methodology disclosed in Note 3, the volatility was based on the historical volatility of comparable public companies, and the expected term is determined using the Simplified Method.
A summary of common stock options activity during the nine months ended July 31, 2026, and the year ended October 31, 2025, is as follows.
| Number of options |
Weighted Average exercise price |
Weighted Average remaining contractual life |
Aggregate intrinsic value |
|||||
| Outstanding, November 1, 2024 | ||||||||
| Granted | $ |
- | ||||||
| Exercised | - | - | ||||||
| Cancelled or forfeited | - | - | ||||||
| Outstanding, October 31, 2025 | $ |
|||||||
| Granted | $ |
- | ||||||
| Exercised | - | - | ||||||
| Cancelled or forfeited | $ |
- | - | |||||
| Outstanding, July 31, 2026 | $ |
|||||||
| Exercisable, July 31, 2026 | $ |
As of July 31, 2026, there remained an unrecognized stock-based compensation expense for the unvested options of $
12. Subsequent Events
On August 21, 2026,
On August 24, 2026, the Company issued
On August 24, 2026, the Company issued a total of
Conexeu Sciences Inc.
Notes to the Unaudited Condensed Interim Financial Statements
For the three and nine months ended July 31, 2026 and 2025
(Expressed in United States Dollars)
12. Subsequent Events (cont'd)
On August 27, 2026, the Board of Directors agreed to amend and restate a service agreement previously approved on July 12, 2026, wherein a vendor will be issued common shares in the Company as part of a compensation package including cash and equity, the originally agreed aggregate amount of
On September 1, 2026, the Company issued
On September 4, 2026, the Company raised gross proceeds of $
32
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following management's discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the unaudited condensed interim financial statements and the related notes contained therein which have been prepared in accordance with US GAAP. This discussion contains forward-looking statements reflecting our current expectations, estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the sections titled "Risk Factors" and "Statements Regarding Forward-Looking Information" appearing elsewhere in this Quarterly Report. All figures are in US dollars unless otherwise noted. Unless the context otherwise requires, for the purposes of this section, "Conexeu", "we", "us", "our", or the "Company" refers to Conexeu Sciences Inc.
Overview
Conexeu Sciences Inc. (the "Company," "we," "us," or "our") is an early-stage regenerative medicine company focused on the development of biomaterial-based technologies for tissue restoration in wound care and aesthetics applications.
Since inception, our activities have primarily consisted of research and development, advancing our device candidate, capital raises, organizational development, and activities required to prepare for operation as a publicly traded company. We have not generated any revenues to date and expect to continue to incur operating losses for the foreseeable future.
On May 21, 2026, during the third quarter of fiscal 2026, our common stock commenced trading on the Nasdaq Capital Market ("Nasdaq") under the symbol "CNXU," completing our transition from a private, development-stage company to a publicly traded issuer via a direct listing.
Our current operations are focused on advancing product development activities, including preparation for a planned 510(k) submission to the U.S. Food and Drug Administration.
On September 4, 2026, the Company raised gross proceeds of $1,753,998 through the exercise of warrants by four holders at an exercise price of $2.30 per share. In connection with the exercises, the Company issued an aggregate of 762,608 shares of common stock. The proceeds will be used to support ongoing operations. The shares issued upon exercise are "restricted securities" as defined in Rule 144(a)(3) under the Securities Act of 1933, as amended.
Results of Operations
Three Months Ended July 31, 2026, compared to July 31, 2025
| Three months ended July 31 | |||||||||
| 2026 | 2025 | Change | |||||||
| Advertising and promotion | $ | 105,956 | $ | 21,288 | $ | 84,668 | |||
| Depreciation and amortization | 5,435 | 6,640 | (1,205 | ) | |||||
| Bank charges | 3,714 | 1,474 | 2,240 | ||||||
| Business development | 1,227,253 | 52,166 | 1,175,087 | ||||||
| Consulting | 3,784,642 | 465,361 | 3,319,281 | ||||||
| Filing and listing fees | 100,430 | 9,363 | 91,067 | ||||||
| Insurance | 164,457 | 4,148 | 160,309 | ||||||
| Investor relations | 26,360 | - | 26,360 | ||||||
| Management and directors' salaries and fees | 1,512,974 | 457,231 | 1,055,743 | ||||||
| Office general and administrative | 34,647 | 1,282 | 33,365 | ||||||
| Professional fees | 216,588 | 114,872 | 101,716 | ||||||
| Regulatory fees | 235,505 | 29,134 | 206,371 | ||||||
| Research and development | 270,412 | 134,662 | 135,750 | ||||||
| Loss from operations | $ | (7,688,373 | ) | $ | (1,297,621 | ) | (6,390,752 | ) | |
| Other income (expenses), net | (37,278 | ) | (949 | ) | (36,329 | ) | |||
| Loss before taxes | $ | (7,725,651 | ) | $ | (1,298,570 | ) | |||
| Income tax benefit (expense) | - | - | |||||||
| Net loss | $ | (7,725,651 | ) | $ | (1,298,570 | ) | 6,427,081 | ||
33
We did not generate any revenue during the three months ended July 31, 2026 or 2025.
We incurred a net loss of $7,725,651 for the three months ended July 31, 2026, compared to a net loss of $1,298,570 for the same period in 2025, an increase of $6,427,081. The three months ended July 31, 2025, reflected our early-stage operations shortly after the Company completed the assignment of its extracellular matrix ("ECM") patent and began to plan a strategy for developing the underlying intellectual property, funded principally by modest private placement activity. By comparison, the three months ended July 31, 2026, reflect the operations of a substantially larger, Nasdaq-listed public company that completed its direct listing on May 21, 2026, raised significant additional capital, and incurred the compensation, governance, regulatory, and market-visibility costs that accompany that transition.
The increase in net loss was primarily attributable to higher operating expenses associated with the expansion of our operations and activities required to support our transition to a publicly traded company.
Operating expenses increased primarily due to:
• Business Development - an increase of $1,175,087, reflecting expanded marketing, investor relations, and business development initiatives undertaken following our Nasdaq listing to build and maintain trading visibility, liquidity, and investor awareness for our newly public stock, and to support our ongoing capital-raising efforts. Business development costs also include travel-related expenses (airfare, accommodations, and ground transportation) associated with investor and business development meetings, which increased materially following our Nasdaq listing and are discussed further below.
• Consulting - an increase of $3,319,281, driven substantially by non-cash, stock-based compensation issued to marketing, investor relations, and corporate advisory vendors, valued at then-current Nasdaq trading prices, together with increased engagement of third-party advisors supporting regulatory activities and capital markets initiatives.
• Management and Personnel Costs - expansion of the executive and scientific team and full-time employment arrangements, including the appointment of a Chief Commercial Officer effective June 15, 2026, and stock-based compensation associated with milestone warrants that vested upon our Nasdaq listing and subsequent stock-price milestones (see Notes 10 and 11 to the unaudited condensed interim financial statements).
• Regulatory Fees- an increase of $206,371 reflecting the Company's expanding efforts and continued preparations of Company's 510K for submission to the FDA.
• Insurance - an increase of $160,309, primarily driven by the directors' and officers' liability insurance obtained ahead of our listing.
• Professional Fees - an increase of $101,716 in legal, accounting, and advisory costs associated with the direct listing and operating as a publicly listed company.
• Research and Development Expenses - Research and development expenses increased by $135,750 to $270,412, reflecting a lease commitment for Company operated laboratory facilities (see Note 9 to the unaudited condensed interim financial statements), engagement of scientific consultants, and procurement of materials used in development and testing. Our current activities are primarily focused on the development and validation of our existing proprietary platform and the evaluation of potential applications across multiple verticals. We expect research and development activities to expand over time as we advance our product pipeline and explore additional applications of our technology.
34
Nine Months Ended July 31, 2026, compared to July 31, 2025
| Nine months ended July 31 | |||||||||
| 2026 | 2025 | Change | |||||||
| Advertising and promotion | $ | 126,665 | $ | 48,503 | 78,162 | ||||
| Depreciation and amortization | 23,296 | 10,604 | 12,692 | ||||||
| Bank charges | 9,390 | 3,132 | 6,258 | ||||||
| Business development | 1,410,010 | 146,386 | 1,263,624 | ||||||
| Consulting | 5,446,548 | 661,957 | 4,784,591 | ||||||
| Filing and listing fees | 125,689 | 9,513 | 116,176 | ||||||
| Insurance | 172,857 | 4,148 | 168,709 | ||||||
| Investor relations | 33,042 | - | 33,042 | ||||||
| Management and directors' salaries and fees | 2,848,679 | 750,033 | 2,098,646 | ||||||
| Office general and administrative | 58,490 | 7,632 | 50,858 | ||||||
| Professional fees | 809,307 | 216,219 | 593,088 | ||||||
| Regulatory fees | 328,149 | 29,134 | 299,015 | ||||||
| Research and development | 399,578 | 200,795 | 198,783 | ||||||
| Loss from operations | $ | (11,791,700 | ) | $ | (2,088,056 | ) | (9,703,644 | ) | |
| Other income (expenses), net | 42,943 | 41,372 | 1,571 | ||||||
| Loss before taxes | $ | (11,748,757 | ) | $ | (2,046,684 | ) | |||
| Income tax benefit (expense) | - | - | |||||||
| Net loss | $ | (11,748,757 | ) | $ | (2,046,684 | ) | 9,702,073 | ||
We did not generate any revenue during the nine months ended July 31, 2026, or 2025.
We incurred a net loss of $11,748,757 for the nine months ended July 31, 2026, compared to a net loss of $2,046,684 for the same period in 2025, an increase of $9,702,073. The nine months ended July 31, 2025, the Company was in the early stages of investigating the commercial potential of its ECM intellectual property, which had only recently been fully assigned to the Company, and had achieved modest success with private placement financings. By comparison, during the nine months ended July 31, 2026, the Company completed a direct listing on the Nasdaq Capital Market on May 21, 2026, raised approximately $7.7 million in net financing proceeds during the period (see "Liquidity Outlook" below), and made the investments in personnel, governance, regulatory compliance, and market visibility that are necessary to operate and maintain relevance as a Nasdaq-listed company.
In particular, following the direct listing, the Company allocated significant resources to marketing and business development initiatives, given the importance of building and sustaining trading visibility and investor awareness both generally and in support of the Company's ongoing need to raise additional capital.
The increase in net loss was primarily attributable to:
• Business Development - Increased business development, marketing, and investor relations activities following our Nasdaq listing, including approximately $357,000 of travel-related costs (airfare, accommodations, and ground transportation) associated with the direct listing on May 21, 2026, investor and business development meetings, representing approximately 25% of the $1,410,010 of business development expense for the nine months ended July 31, 2026.
• Consulting - Consulting costs increased to $5.4 million, however, a substantial portion of this expense is non-cash, stock-based compensation of approximately $3.7 million ($3,667,836) issued to marketing and advisory vendors.
• Management and Personnel Costs - Increased management and personnel-related expenses, including stock-based compensation of approximately $1.3 million ($1,270,543).
35
• Regulatory Fees - an increase of $299,015 reflecting the Company's expanding efforts and continued preparations of the Company's 510K for submission to the FDA.
• Insurance - an increase of $168,709, primarily driven by the directors' and officers' liability insurance obtained ahead of our listing.
• Professional Fees - an increase of $593,088 due to higher professional fees including legal, accounting, and advisory costs associated with the direct listing and operating as a publicly listed company.
• Research and Development Expenses - Research and development expenses increased to $399,578, reflecting a lease commitment for Company operated laboratory facilities (see Note 9 to the unaudited condensed interim financial statements), engagement of scientific consultants, and procurement of materials used in development and testing. Ongoing work in support of the 510K submission. Current activities continue to investigate the application of our existing proprietary platform across multiple verticals. We expect research and development activities to expand over time as we advance our product pipeline and explore additional applications of our technology.
Liquidity, Capital Resources and Going Concern
Cash Position and Going Concern
As of July 31, 2026, we had cash and cash equivalents of approximately $2.0 million ($1,971,408), together with restricted cash of approximately $0.2 million ($238,208) related to funds received from exercised warrant held in trust (see Note 3 to the unaudited condensed interim financial statements), and working capital of approximately $5.5 million ($5,487,587). Our cash and cash equivalents declined by approximately $2.6 million from $4.8 million at October 31, 2025, reflecting the higher level of operating expenditures described above, including marketing, business development, and compensation costs. The collection of a $2.0 million private placement subscription receivable at October 31, 2025, and net proceeds from warrant exercises under our Warrant Exercise Incentive Program help to offset the overall increased expenses during the nine months ending July 31, 2026.
We have incurred recurring losses since inception and had an accumulated deficit of approximately $16.3 million ($16,270,277) as of July 31, 2026, compared to $4.5 million as of October 31, 2025.
36
These factors raise substantial doubt about our ability to continue as a going concern within one year after the issuance of the financial statements (see Note 1 to the unaudited condensed interim financial statements).
Prepaid Expenses
Prepaid expenses increased from approximately $0.5 million ($549,930) as of October 31, 2025, to approximately $4.5 million ($4,544,274) as of July 31, 2026, an increase of approximately $4.0 million ($3,994,344). Approximately $3.7 million, or 81%, of the increase relates to two business development and marketing service agreements entered into following our Nasdaq listing, consisting of a $3.5 million contract for services to be rendered over a twelve-month period from June 2026 through May 2027 and a second for $0.6 million for services to delivered prior to October 31, 2026.
As of July 31, 2026, of this total $4.1 million, $0.2 million was recorded in accounts payable and paid in cash in August. Amounts paid or payable under these agreements are capitalized as a prepaid expense and will be recognized as business development expenses over the twelve-month service period; approximately $0.6 million had been recognized as expense as of July 31, 2026, leaving a prepaid balance of approximately $3.5 million, all of which is expected to be recognized as expense within the next twelve months. The cash paid under this agreement is a significant driver of the increase in cash used in operating activities for the three months ended July 31, 2026, discussed under "Liquidity, Capital Resources, and Going Concern" below. The remaining approximately $0.8 million of the July 31, 2026, balance relates to prepaid insurance, regulatory, professional, and other operating costs also paid in cash in advance in the normal course of business, including the annual premium for our directors' and officers' liability insurance policy paid in connection with our Nasdaq listing.
Liquidity Outlook
| Nine months ended July 31, 2026 | |||||||||
| 2026 | 2025 | Change | |||||||
| Net cash used in operating activities | ($10,099,279 | ) | ($1,238,410 | ) | ($8,860,869 | ) | |||
| Net cash used in investing activities | ($76,231 | ) | ($59,054 | ) | ($17,177 | ) | |||
| Net cash provided by financing activities | $7,548,009 | $1,820,391 | $5,727,618 | ||||||
Cash Used in Operating Activities
Net cash used in operating activities for the nine months ended July 31, 2026, totaled $10,099,279 as compared to $1,238,410 for the same period in 2025. The net loss increased by $9,702,073 when compared to the comparable period in 2025. This overall change in operational costs is reflective of the advancement of the business in building out an infrastructure to support a publicly listed company, the significant marketing and business development spending undertaken to establish and maintain visibility in the public markets following our Nasdaq listing, and additional headcount to advance the Company's research and development, regulatory, and pre-commercialization activities. Prepaid expenses represent $3.5 million of cash used during the period, and as noted previously, this includes, but is not limited to, cash advances for marketing and business development expenses, insurance premiums and regulatory services. Within the net loss is the use of non-cash stock-based compensation during the nine months ended July 31, 2026, of approximately $4.6 million (options issued for services of $1,493,977 and shares issued for services of $3,081,289), substantially all of which relates to executive, director, and marketing/advisory arrangements. (2025 - approximately $0.48 million).
Cash Used in Investing Activities
Net cash used in investing activities during the nine months ended July 31, 2026, was $76,231, compared to $59,054 for the same period in 2025, representing principally purchases of fixed assets for the Company's lab and general office space.
Cash Provided by Financing Activities
Net cash provided by financing activities during the nine months ended July 31, 2026, was $7,548,009 (2025 - $1,820,391). The increase was driven by the collection of a $2.0 million cash for a private placement subscription receivable that had been outstanding at October 31, 2025 in connection with a private placement that closed on October 28, 2025, together with net proceeds of $2,943,351 (2025 - $2,018,413) from non-brokered private placements closed during the six months ended April 30, 2026, and proceeds of approximately $2.7 million received under the Company's Warrant Exercise Incentive Program during the nine months ended July 31, 2026, as warrant holders exercised outstanding warrants and subscribed for new warrants at a $2.30 exercise price. No new private placement tranches were closed during the three months ended July 31, 2026; financing activity during the quarter was driven primarily by warrant inducement exercises. There were two reductions offsetting the incoming funds, offering costs that were paid out during the period of $30,992 and that have subsequently been written off due to the direct listing and total cash paid out of $92,187 for the financed insurance premiums, including the initial down payment.
Our average monthly cash used in operating activities was approximately $1.1 million for the nine months ended July 31, 2026, compared to approximately $0.56 million for the six months ended April 30, 2026. The increase was concentrated in the three months ended July 31, 2026, during which average monthly cash used in operating activities was approximately $2.3 million, reflecting the one-time costs related to the direct listing on the Nasdaq (approx. $0.35 million), marketing, business development, and compensation costs described above. Noteworthy is that in the current quarter ending July 31, 2026, a significant amount of the cash used in operating activities was used to prepay for expenses, approximately $3.3 million, that will have future benefits in the months to come.
Excluding these one-time items and prepaid expenses, we estimate that our recurring average monthly cash burn rate during the three months ended July 31, 2026, was approximately $0.87 million, compared to approximately $0.56 million for the six months ended April 30, 2026, reflecting a sustained increase in the costs of operating as a Nasdaq-listed company, including insurance, listing and regulatory fees, professional fees, travel, and compensation costs, as described above.
37
We expect our monthly cash burn to remain elevated in the near term as we continue to incur costs associated with operating as a publicly traded company, including general and administrative expenses, investor relations and market awareness initiatives, and the expansion of laboratory and development activities, although we intend to evaluate opportunities to moderate discretionary marketing spend as circumstances warrant.
Based on our cash and cash equivalents of $1,971,408 as of July 31, 2026, and our average monthly cash burn rate during the three months then ended of approximately $0.87 million as noted above, our existing cash resources are not sufficient to fund operations for the next twelve months and, absent additional financing, are expected to fund operations for a substantially shorter period than the 9 to 11 months estimated as of April 30, 2026. This estimate excludes the one-time business development and direct listing costs described above, which have already been paid or accrued as of July 31, 2026, and are reflected in our cash balance, and does not reflect any future one-time or discretionary expenditures we may elect to undertake, including further business development or marketing initiatives. Management is actively pursuing additional debt and/or equity financing; however, there can be no assurance that such financing will be obtained on acceptable terms, or at all. These factors raise substantial doubt about our ability to continue as a going concern within one year after the date these financial statements are issued (see Note 2 to the unaudited condensed interim financial statements).
Subsequent to July 31, 2026, between August 31, 2026, and September 3, 2026, four warrant holders exercised 762,608 warrants at an exercise price of $2.30 per share for gross proceeds of $1,753,998, which the Company intends to use for operations.
While these funds will provide additional near-term liquidity, it is not sufficient, on its own, to resolve the substantial doubt about our ability to continue as a going concern discussed above. Management continues to evaluate expected cash inflows and expenditures and to pursue additional financing alternatives. Actual cash runway may differ based on the timing of any financing activities and changes in operating expenditures.
We will require additional financing to continue operations beyond this period and to advance our development activities. We expect to seek additional capital through equity financings, debt financings, or other capital sources; however, there can be no assurance that such financing will be available on acceptable terms, or at all.
Plan of Operations
Our near-term operational objectives include:
• Continued product development and validation activities
• Advancement toward a planned 510(k) submission to the FDA, currently anticipated in the first quarter of calendar 2027
• Continued operation of our leased laboratory and office space under the 24-month lease that commenced May 1, 2026 (see Note 9 to the unaudited condensed interim financial statements)
• Continued development of Board and committee governance structures following the expansion of our Board to nine (9) members and the appointment of a Chief Commercial Officer, each effective June 15, 2026
• Continue to evaluate compensation structure for executives, employees, and directors
• Prudent management of discretionary marketing, investor relations, and business development spending to balance market visibility with capital preservation, in light of the liquidity position discussed above
• Continued engagement of consultants and advisors
Beginning in May 2026, the Company undertook a significant investor relations and marketing campaign intended to build trading visibility and market awareness for our newly listed common stock. This campaign was a substantial driver of consulting and business development expenses during the three and nine months ended July 31, 2026, as described above. Because we completed our Nasdaq listing through a direct listing rather than a traditional underwritten initial public offering, without the marketing support and book-building process typically associated with an underwritten offering, management believed this level of investment was important to establishing market awareness and liquidity in our shares and in supporting our ongoing capital-raising efforts. In light of our current cash position and the going concern considerations discussed above, we are evaluating the appropriate ongoing level of such discretionary spending.
We do not expect to generate revenue in the near term.
38
Subsequent Events
On August 21, 2026, 160,338 warrants expired unexercised.
On August 24, 2026, the Company issued 6,500 common shares to two vendors as part of their service agreements. The fair value of these shares was determined based on the Nasdaq closing price on August 21, 2026, of $8.89 per share.
On August 24, 2026, the Company issued a total of 5,259 common shares to a director in settlement of liabilities owed for advisory and director fees. The fair value of these shares was determined based on the either a historical value of $2.30 per share for 3,658 shares and a volume weighted average price between May 21, 2026, and June 15, 2026, of $13.96 per share for 1,601 shares.
On August 27, 2026, the Board of Directors agreed to amend and restate a service agreement previously approved on July 12, 2026, wherein a vendor will be issued common shares in the Company as part of a compensation package including cash and equity, the originally agreed aggregate amount of 50,000 shares shall be increased to an aggregate amount of 67,000 shares. The value of the original 50,000 common shares will be based on the closing trading price of the Company's shares on the previously agreed schedule of August 31st and September 30th. The additional new shares that will be issued along with the issuances on August 31st and September 30th, in equal amounts of 8,500 shares per issuance with a reserved price based on the market closing price on August 26, 2026, of $6.98 per share.
On September 1, 2026, the Company issued 35,167 common shares to two vendors as part of their service agreements. The fair value of these shares was determined based on the Nasdaq closing price on August 28, 2026, of $7.07 per share for 1,667 common shares and on August 31, 2026, of $7.18 per share for 33,500 common shares.
On September 4, 2026, the Company raised gross proceeds of $1,753,998 through the exercise of warrants by four holders at an exercise price of $2.30 per share. In connection with the exercises, the Company issued an aggregate of 762,608 shares of common stock. The proceeds will be used to support ongoing operations. The shares issued upon exercise are restricted securities and are subject to a six-month Rule 144 holding period.
Critical Accounting Policies
There have been no material changes to our critical accounting policies from those disclosed in our audited financial statements for the year ended October 31, 2025.
Our summary of significant accounting policies is described in more detail in the notes to our unaudited condensed interim financial statements. Please refer to Note 3.
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Item 3. Quantitative And Qualitative Disclosures About Market Risk
As a smaller reporting company as defined in Rule 12b-2 under the Exchange Act, the Company is not required to provide the information required by this item.
Item 4. Controls And Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
39
As required by Rules 13a-15 and 15d-15 under the Exchange Act, management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of July 31, 2026. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were ineffective as of July 31, 2026.
As previously disclosed, management identified a material weakness in the Company's internal control over financial reporting related to the accounting for and disclosure of certain prepaid expenses. During the quarter ended July 31, 2026, the Company continued to implement remediation measures designed to address this material weakness, including enhanced review procedures and a policy requiring formal documentation supporting the accounting treatment of material transactions, including references to applicable authoritative accounting guidance.
Management believes that these remediation measures have strengthened the Company's internal control over financial reporting. However, the controls implemented as part of the remediation process have not operated for a sufficient period of time to permit management to fully evaluate their operating effectiveness. Accordingly, the material weakness remains under remediation as of July 31, 2026, and management will continue to monitor and test the effectiveness of the related controls.
Changes in Internal Control over Financial Reporting
During the quarter ended July 31, 2026, the Company implemented certain changes to its internal control over financial reporting as part of its remediation efforts related to the material weakness described above, including enhanced review procedures and formal documentation requirements for material transactions. Other than these remediation activities, there were no changes in the Company's internal control over financial reporting during the quarter ended July 31, 2026, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been or would be detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently a party to any pending legal proceedings that we believe will have a material adverse effect on our business or financial conditions. We may, however, be subject to various claims and legal actions arising in the ordinary course of business from time to time.
Item 1A. Risk Factors
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item. You should carefully consider the risks discussed in the section entitled "Risk Factors" in included in the Registration Statement on Form S-1, as amended, originally filed with the SEC on November 28, 2025 (File No. 333-291845, the "Registration Statement"), which could materially affect our business, financial condition, or future results. The risks described in our Registration Statement are not the only risks we face. Additional risks and uncertainties not currently known to us or that we do not currently deem material, may also materially affect our business, results of operations, cash flows and financial position.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a) None that have not already been reported on a Current Report on Form 8-K.
(b) Not applicable.
(c) There were no repurchases of our Common Stock or purchases by affiliated parties in the fiscal quarter ended July 31, 2026.
40
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
(a) Not applicable.
(b) Not applicable.
(c)
Item 6. Exhibits
The following exhibits are included with this Quarterly Report:
Notes:
* Filed herewith.
** Furnished herewith
41
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| CONEXEU SCIENCES INC. | ||
| Date: September 14, 2026 | By: | /s/ Miles Harrison |
| Name: | Miles Harrison | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) President and Director |
||
| Date: September 14, 2026 | By: | /s/ Stephen D. Inouye |
| Name: | Stephen D. Inouye | |
| Title: | Chief Financial Officer | |
| (Principal Financial Officer and Principal Accounting Officer) Secretary and Treasurer |
||
42