Annual Report for Fiscal Year Ending JUNE 30, 2026 (Form 10-K)

Management's Discussion and Analysis of Financial Conditions and Results of Operations.

Forward-Looking Statements

Certain statements in this Annual Report are not historical facts and are forward-looking statements. Forward-looking statements present our expectations or forecasts of future events, and can often be identified by words such as "may," "will," "should," "could," "expects," "plans," "intends," "anticipates," "believes," "estimates," "predicts," "potential," or "continue," or the negative of those terms. These statements involve known and unknown risks and uncertainties that may cause our actual results to differ materially from those expressed or implied. Although we believe the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements, or the timing of any of them.

Forward-looking statements in this report should be read together with the risks described under Item 1A, Risk Factors, and with the other information in this report. Subsequent written and oral forward-looking statements attributable to us, or to persons acting on our behalf, are expressly qualified in their entirety by those risks and by the cautionary statements in this report and in our other filings with the Securities and Exchange Commission. We disclaim any obligation to update any forward-looking statement, or to disclose any difference between our actual results and those reflected in any forward-looking statement, except as required by law.

Overview

We are a development stage company and have not generated significant revenue since our inception in February 2009. Our operating expenses consist primarily of research and development expenses and general and administrative expenses. We have funded our operations principally through sales of our equity securities and expect to continue to do so. For a description of our business, our technology, our development programs, and the risks we face, see Item 1, Business, and Item 1A, Risk Factors.

You should read the following discussion of our financial condition and results of operations together with our financial statements and the accompanying notes included in this Annual Report beginning on page F-1.

Results of Operations for the Year Ended June 30, 2026 compared to the Year Ended June 30, 2025

Revenues

Revenues for the year ended June 30, 2026 were $1,250, compared to $0 for the year ended June 30, 2025. The net change of $1,250 in revenue was due to the Company providing consulting services to a related party during the year ended June 30, 2026 with no similar consulting services provided in the prior year.

Operating Expenses

For the year ended June 30, 2026, operating expenses were $7,521,904 compared to $5,816,192, for the year ended June 30, 2025. Operating expenses consist primarily of research and development expenses and general and administrative expenses incurred in connection with the operation of our business. The increase of $1,704,462 in operating expenses was primarily due to an increase in salary expenses, an increase in research and development costs and an increase in selling and marketing costs.

Other Income/(Expenses)

Other income and (expenses) for the year ended June 30, 2026, were $898,130 compared to $(2,410,115) for the year ended June 30, 2025. The net increase of $3,399,245 in other income and (expenses) was mainly the result of a decrease in unrealized loss on the change in fair value of investments, related party of $4,101,402, offset by a decrease in investment income of $496,390, and a decrease in unrealized gain on change in fair value of short-term investments of $331,965.

Net Income (Loss)

For the year ended June 30, 2026, our net loss was $6,531,524, compared to a net loss of $8,226,307 for the year ended June 30, 2025. The majority of the decrease in net loss of $1,694,783, was primarily due to the unrealized loss on the Company's investment in TECO (Equity securities, related party on the Consolidated Balance Sheets) in the prior period compared to no unrealized loss on the Company's investment in TECO the current year. In addition, the Company generated minimal revenues in the current year and none in the prior year period and had a large increase in operating expenses in the current year compared to the prior year period due to increased efforts in operations as explained above.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.

As of June 30, 2026, we had a working capital surplus of $31,819,205, compared to a working capital surplus of $37,048,679 as of June 30, 2025. This decrease in working capital surplus of $5,229,474 was primarily due to a decrease in cash offset by increases in prepaids, note receivable, interest receivable, short-term investments, and total current liabilities.

Cash used in operating activities was $5,065,357 for the year ended June 30 2026, compared to $3,647,278 for the year ended June 30, 2025. The increase of $1,418,079 in cash used by operating activities was due to a $1,671,183 decrease in net loss, a change of $15,438 in prepaid expenses, a change of $7,709 in interest receivable, a change of $24,364 in accounts payable and a change of $132,525 in accrued expenses offset by a change of $3,290,605 in non-cash expenses. In addition, the Company had minimal revenues during the year ended June 30, 2026 compared to none for the year ended June, 30, 2025.

Cash used in investing activities for the year ended June 30, 2026 was $(17,200,794), compared to $(2,924,988) for the year ended June 30, 2025. The increase of $14,275,806 in cash used in investing activities was due to the change in net purchase of short-term investments of $18,159,385 offset by the change of $3,869,089 in the redemption of short-term investments and the change of $14,490 for the purchase of fixed assets.

Cash provided by (used in) financing activities during the year ended June 30, 2026 was $(231,047), compared to $2,156,096 for the year ended June 30, 2025. The net decrease in cash provided by (used in) financing activities was due to decreased proceeds from purchase agreements with investors for the sale of common stock, and an increase in cash used for the purchase of Series C preferred shares and cash used to fund a note receivable with a third-party with no similar transactions in the prior year.

We have historically obtained funding from investors, through private placements and registered offerings of equity and debt securities. Management believes that the Company will be able to continue to raise funds through the sale of its securities to its existing shareholders and prospective new investors which will provide the additional cash needed to meet the Company's obligations as they become due and will allow the Company to continue to develop its core business. There can be no assurance that we will be able to continue raising the required capital for our operations on terms and conditions that are acceptable to us, or at all. If we are unable to obtain sufficient funds, we may be forced to curtail and/or cease our operation.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, result of operations, liquidity or capital expenditures.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to impairment of property, plant and equipment, intangible assets, deferred tax assets and fair value computation using the Binomial valuation option pricing model. We base our estimates on historical experience and on various other assumptions, such as the trading value of our common stock and estimated future undiscounted cash flows, that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions; however, we believe that our estimates, including those for the above-described items, are reasonable.

Use of Estimates

In accordance with accounting principles generally accepted in the United States, management utilizes estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These estimates and assumptions relate to useful lives and impairment of tangible and intangible assets, accruals, income taxes, stock-based compensation expense, Binomial lattice valuation model inputs, derivative liabilities and other factors. Management believes it has exercised reasonable judgment in deriving these estimates. Consequently, a change in conditions could affect these estimates.

Fair Value of Financial Instruments

Fair value of financial instruments requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of June 30, 2026 and June 30, 2025, the amounts reported for cash, investment in affiliate, accrued interest and other expenses, notes payables, and derivative liability approximate the fair value because of their short maturities.

We adopted ASC Topic 820 for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.

Recently Issued Accounting Pronouncements

Management reviewed currently issued pronouncements during the year ended June 30, 2026, and does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements. Pronouncements are disclosed in notes to the financial statements.