UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
or
For the transition period from __________ to __________
Commission File Number:
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Indicate by check mark whether the registrant
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for the past 90 days.
Indicate by check mark whether the registrant
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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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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On May 4, 2026, there were
InMed Pharmaceuticals Inc.
INDEX
i
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and “forward-looking information” within the meaning of applicable Canadian securities law, which include but are not limited to statements with respect to the Company’s anticipated results and progress of the Company’s operations, research and development in future periods, plans related to its business strategy, and other matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. We may, in some cases, use words such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “project”, “will”, “would”, and similar expressions that convey uncertainty of future events or outcomes to identify these forward-looking statements. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. Some of the important risks and uncertainties that could materially affect forward-looking statements are described further under IA. “Risk Factors” in our Annual Report on Form 10-K for the year ended June 30, 2025, which was originally filed with the SEC on September 23, 2025 (the “2025 Annual Report”), Item 1A. “Risk Factors” in this Quarterly Report and Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report, and include, but are not limited to, the following:
| ● | Our ability to stem operating losses; |
| ● | Our ability to successfully identify and consummate strategic and/or transformative corporate opportunities and transactions and to obtain the additional financing that we need to fund our operations; |
| ● | The material adverse impact of the winding down of the BayMedica commercial business segment due to recent legislation in the United States impacting its inventory of rare, non-intoxicating cannabinoids; |
| ● | Our ability to effectively research, develop, manufacture and commercialize pharmaceutical drug candidates that will treat diseases with high unmet medical needs; |
| ● | The continued optimization of key, proprietary manufacturing approaches and technologies; |
| ● | Our ability to commercialize and, where required, register products in the pharmaceutical R&D programs (“Product Candidates”) in the United States and other jurisdictions; |
| ● | Our success in initiating discussions with potential partners for licensing various aspects of our Product Candidates; |
| ● | Our ability to successfully access existing manufacturing capacity via leases with third-parties or to transfer our manufacturing processes to contract manufacturing organizations; |
| ● | Our belief that manufacturing approaches that we are developing are robust and effective and will result in commercially viable yields of cannabinoids and will be a significant improvement upon existing manufacturing platforms; |
| ● | Our ability to successfully scale up our IntegraSyn approach to cannabinoid manufacturing. We have created genetically engineered microbes that produce proprietary enzymes, which are then used to optimize subsequent biotransformation reactions or other cost-effective manufacturing approaches so that it may be a potential manufacturing method in the future which could reduce the need to source active pharmaceutical ingredients (“APIs”) from third-party API manufacturers; |
| ● | The success of the key next steps in our manufacturing approaches, including continuing efforts to diversify the number of products produced, scaling-up the processes to larger vessels and identifying external vendors to assist in the commercial scale-up of the process; |
ii
| ● | Our ability to successfully make determinations as to which research and development programs to continue based on several strategic factors; |
| ● | Our ability to continue to outsource the majority of our research and development activities through scientific collaboration agreements and arrangements with various scientific collaborators, academic institutions and their personnel; |
| ● | Our ability to continue to outsource the majority of our research and development activities through scientific collaboration agreements and arrangements with various scientific collaborators, academic institutions and their personnel; |
| ● | The success of work to be conducted under the research and development collaboration between us and various contract development and manufacturing organizations (“CDMOs”); |
| ● | Our ability to develop our therapies through early human testing; |
| ● | Our ability to evaluate the financial returns on various commercialization approaches for our Product Candidates, such as a ‘go-it-alone’ commercialization effort, out-licensing to third parties, or co-promotion agreements with strategic collaborators; |
| ● | Our ability to find a partnership early in the development process for our various programs; |
| ● | Our ability to explore our manufacturing technologies as processes which may confer certain benefits, including cost, yield, speed, or all the above, when pursuing specific types of molecules, and filing a provisional patent application for same; |
| ● | Plans regarding our next steps, options, and targeted benefits of our manufacturing technologies; |
| ● | Our Products being bio-identical to the naturally occurring molecules, and offering superior ease, control and quality of manufacturing when compared to alternative methods; |
| ● | U.S. Food and Drug Administration (“FDA”) regulatory acceptance of Product Candidates for potential use in the pharmaceutical industry; |
| ● | Our ability to successfully file, prosecute and defend patent applications; |
| ● | The potential for any of our patent applications to provide intellectual property protection for us; |
| ● | The termination or renegotiation of our supplier, technology and other material contracts, including the invoking of force majeure or termination clauses, and actual or threatened claims of our failure to comply with any obligations set forth under such contracts; |
| ● | The adequacy of, or gaps in, insurance coverage upon the occurrence of a catastrophic or other material adverse event, as well as our ability to (i) expand our insurance coverage to include the commercial sale of Products and Product Candidates and (ii) secure insurance coverage for shipping and storage of Product Candidates, and clinical trial insurance; |
| ● | Developing patentable New Chemical Entities (“NCE”) which, if issued, will confer market exclusivity to us for the potential development into pharmaceutical Product Candidates, license, partner or sell to interested external parties; |
| ● | Our ability to initiate discussions and conclude strategic partnerships to assist with development of certain programs; |
| ● | Our ability to position ourselves to achieve value-driving, near term milestones for our Product Candidates with limited investment; |
| ● | Our ability to effectively execute our business strategy; |
iii
| ● | The sufficiency of our internal controls, including any exposure arising from the failure to (i) establish and maintain effective internal control over financial reporting in accordance with applicable regulatory requirements, and (ii) fully remediate any material weakness identified with respect to such internal controls; |
| ● | Epidemics, pandemics, global health crises, or other public health events and concerns, and the effectiveness of associated vaccinations and treatments; |
| ● | Consolidation of our competitors and suppliers; |
| ● | Effects of new products and new technology on the market, including with respect to automation and the use of artificial intelligence; |
| ● | The impact of geopolitical, global, regional or local economic and financial market risks and challenges, applicability of foreign laws, including foreign labor and employment laws, foreign tax and customs regimes, and foreign currency exchange rate risk; |
| ● | Political disturbances, geopolitical instability and tensions, or terrorist attacks, and associated changes in global trade policies and economic sanctions, including, but not limited to, in connection with (i) global trade tensions; (ii) the Russo-Ukrainian war and (iii) any impact, effect, damage, destruction and/or bodily harm directly or indirectly relating to the ongoing hostilities in the Middle East; |
| ● | The outcome of any legal proceedings, disputes, claims and administrative proceedings that arise in the ordinary course of our business activities, including our ongoing matter with a third party licensor; and |
| ● | Our failure to satisfy any applicable listing standards, including compliance with the minimum bid price rule, and the actual or threatened delisting of our securities by Nasdaq. |
This list is not exhaustive of the factors, events, conditions and circumstances that may affect the forward-looking statements contained in this Quarterly Report. Although we have attempted to identify important factors that could cause actual results to differ materially from those described in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated, or expected. Moreover, new risks regularly emerge, and it is not possible for our management to predict or articulate all risks we face, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements, which differences could be material. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made and are based only on the information available to us at that time. Except as required by law, we disclaim any obligation to subsequently revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. We qualify all of our forward-looking statements by these cautionary statements.
iv
PART I
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
Unaudited Condensed Consolidated Financial Statements of
InMed Pharmaceuticals Inc.
For the Three and Nine Months Ended March 31, 2026 and 2025
1
InMed Pharmaceuticals Inc.
(Expressed in U.S. Dollars)
March 31, 2026
2
InMed Pharmaceuticals Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
Expressed in U.S. Dollars
| March 31, | June 30, | |||||||
| 2026 | 2025 | |||||||
Unaudited $ | (As restated) $ | |||||||
| ASSETS | ||||||||
| Current | ||||||||
| Cash and cash equivalents | ||||||||
| Short-term investments | ||||||||
| Prepaids and other current assets | ||||||||
| Current assets of discontinued operations | ||||||||
| Total current assets | ||||||||
| Non-Current | ||||||||
| Property, equipment and ROU assets, net | ||||||||
| Intangible assets, net | ||||||||
| Other assets | ||||||||
| Total Assets | ||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current | ||||||||
| Accounts payable and accrued liabilities | ||||||||
| Current portion of lease obligations | ||||||||
| Current liabilities of discontinued operations | ||||||||
| Total current liabilities | ||||||||
| Non-current | ||||||||
| Lease obligations, net of current portion | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (Note 10) | ||||||||
| Shareholders’ Equity | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| Total Shareholders’ Equity | ||||||||
| Total Liabilities and Shareholders’ Equity | ||||||||
The accompanying notes form an integral part of these condensed consolidated financial statements.
3
InMed Pharmaceuticals Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Expressed in U.S. Dollars
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| March 31, | March 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Operating Expenses | ||||||||||||||||
| Research and development | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Amortization and depreciation | ||||||||||||||||
| Foreign exchange loss | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Other Income (Expense) | ||||||||||||||||
| Interest and other income | ||||||||||||||||
| Finance expense | - | - | ( | ) | ||||||||||||
| Net loss from continuing operations before taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax expense | - | - | ||||||||||||||
| Net loss from continuing operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Discontinued operations: | ||||||||||||||||
| Income (Loss) from discontinued operations | ( | ) | ( | ) | ( | ) | ||||||||||
| Income tax benefit | - | - | ||||||||||||||
| Loss from discontinued operations | ( | ) | ( | ) | ( | ) | ||||||||||
| Net Loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss per share for the period | ||||||||||||||||
| Basic and diluted: | ||||||||||||||||
| Continuing operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Discontinued Operations | ( | ) | ( | ) | ( | ) | ||||||||||
| Net loss per share attributable to Common Stockholders – basic and diluted | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Weighted average outstanding common shares | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
The accompanying notes form an integral part of these condensed consolidated financial statements.
4
InMed Pharmaceuticals Inc.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)
Expressed in U.S. Dollars
| Common Shares | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total | ||||||||||||||||||||
| # | $ | $ | $ | $ | $ | |||||||||||||||||||
| Balance July 1, 2025 | ( | ) | ||||||||||||||||||||||
| Share issuance costs | - | ( | ) | ( | ) | |||||||||||||||||||
| Exercise of pre-funded warrants | ( | ) | ||||||||||||||||||||||
| Loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||
| Share-based compensation | - | |||||||||||||||||||||||
| Balance September 30, 2025 | ( | ) | ||||||||||||||||||||||
| Exercise of pre-funded warrants | ( | ) | ||||||||||||||||||||||
| Loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||
| Share-based compensation | - | |||||||||||||||||||||||
| Balance December 31, 2025 | ( | ) | ||||||||||||||||||||||
| Proceeds from SEPA | ||||||||||||||||||||||||
| Exercise of pre-funded warrants | ( | ) | ||||||||||||||||||||||
| Loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||
| Share-based compensation | - | |||||||||||||||||||||||
| Balance March 31, 2026 | ( | ) | ||||||||||||||||||||||
| Common Shares | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total | ||||||||||||||||||||
| # | $ | $ | $ | $ | $ | |||||||||||||||||||
| Balance July 1, 2024 | ( | ) | ||||||||||||||||||||||
| Private placement | ||||||||||||||||||||||||
| Share issuance costs | - | ( | ) | ( | ) | |||||||||||||||||||
| Exercise of pre-funded warrants | ( | ) | ||||||||||||||||||||||
| Loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||
| Share-based compensation | - | |||||||||||||||||||||||
| Balance September 30, 2024 | ( | ) | ||||||||||||||||||||||
| Private Placement | ||||||||||||||||||||||||
| Share issuance costs | - | ( | ) | ( | ) | |||||||||||||||||||
| Loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||
| Share-based compensation | - | |||||||||||||||||||||||
| Balance December 31, 2024 | ( | ) | ||||||||||||||||||||||
| Private Placement | ||||||||||||||||||||||||
| Share issuance costs | - | ( | ) | ( | ) | |||||||||||||||||||
| Loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||
| Share-based compensation | - | |||||||||||||||||||||||
| Balance March 31, 2025 | ( | ) | ||||||||||||||||||||||
The accompanying notes form an integral part of these condensed consolidated financial statements.
5
InMed Pharmaceuticals Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Expressed in U.S. Dollars
| For the Nine Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| $ | $ | |||||||
| Cash provided by (used in): | ||||||||
| Operating Activities | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| Items not requiring cash: | ||||||||
| Amortization and depreciation | ||||||||
| Share-based compensation | ||||||||
| Amortization of right-of-use assets | ||||||||
| Unrealized foreign exchange loss | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaids and other currents assets | ( | ) | ( | ) | ||||
| Other non-current assets | ( | ) | ||||||
| Accounts payable and accrued liabilities | ( | ) | ( | ) | ||||
| Lease obligations | ( | ) | ( | ) | ||||
| Operating cash flow used by discontinued operations | ||||||||
| Total cash used in operating activities | ( | ) | ( | ) | ||||
| Investing Activities | ||||||||
| Sale of short-term investments | ||||||||
| Purchase of short-term investments | ( | ) | ( | ) | ||||
| Total cash used in investing activities | ||||||||
| Financing Activities | ||||||||
| Proceeds from the private placement | ||||||||
| Share issuance costs | ( | ) | ( | ) | ||||
| Total cash provided by financing activities | ||||||||
| Decrease in cash and cash equivalents during the period | ( | ) | ( | ) | ||||
| Cash and cash equivalents beginning of the period | ||||||||
| Cash and cash equivalents end of the period | ||||||||
| SUPPLEMENTARY CASH FLOW INFORMATION: | ||||||||
| Cash paid during the period for: | - | - | ||||||
| Income taxes | $ | $ | ||||||
| Interest | $ | $ | ||||||
| SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Recognition of Right-of-use asset and corresponding operating lease | $ | $ | ||||||
The accompanying notes form an integral part of these condensed consolidated financial statements.
6
InMed Pharmaceuticals Inc.
Notes to the Condensed Consolidated Financial Statements
| 1. | CORPORATE INFORMATION AND CONTINUING OPERATIONS |
Business
InMed Pharmaceuticals Inc. (“InMed”
or the “Company”) was incorporated in the Province of British Columbia on
The Company’s shares are listed on the Nasdaq Capital Market (“Nasdaq”) under the trading symbol “INM”. InMed’s office and principal place of business is located at Suite 1445, 885 West Georgia Street, Vancouver, B.C., Canada, V6C 3E8.
Going Concern
In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued.
Through March 31, 2026, the Company
has funded its operations primarily with proceeds from the sale of the Company’s common shares. The Company has incurred recurring
losses and negative cash flows from operations since its inception, including net losses of approximately $
As of the issuance date of these condensed
consolidated quarterly financial statements, the Company expects its cash, cash equivalents and short-term investments of approximately
$
The Company expects to continue to seek additional funding through potential strategic and/or transformative corporate opportunities and transactions, which may include collaborating or partnering with other companies, an acquisition or sale of the company, asset sales or acquisitions, licensing of intellectual property, among others, while continuing to seek additional funding through equity or debt financings and/or from other capital sources. The Company may not be successful in identifying or consummating any such transaction or obtaining the financing that it needs to fund its operations on acceptable terms, or at all, and the terms of any transaction and/or financing the Company is able to consummate may adversely affect the holdings or the rights of its existing shareholders and/or the value and trading price of its shares.
In connection with the Company’s assessment of going concern considerations in accordance with Subtopic 205-40, management has determined that the Company’s liquidity condition raises substantial doubt about the Company’s ability to continue as a going concern, which is considered to be for a period of one year from the issuance of these financial statements. These condensed consolidated financial statements do not include any adjustments relating to recoverability and classification of recorded asset amounts or the amounts of classification of liabilities that might result from the outcome of this uncertainty. Such adjustments could be material.
7
| 2. | SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation
These condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles as applied in the United States (“US GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for financial information.
These unaudited condensed consolidated financial statements reflect all adjustments, consisting solely of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of results for the interim periods presented. The results of operations for the three and nine months ended March 31, 2026 and 2025 are not necessarily indicative of results that can be expected for a full fiscal year. These unaudited condensed consolidated financial statements follow the same significant accounting policies as those described in the notes to the audited consolidated financial statements of the Company for the fiscal year ended June 30, 2025.
Discontinued Operations
On March 4, 2026, the Company’s board of directors ratified, confirmed and approved the decision of the board members of BayMedica to wind down and exit BayMedica’s commercial operations business segment (“commercial operations”), which is the only revenue-generating commercial operations of the Company. BayMedica intends to substantially complete the wind down and exit prior to the end of its fiscal year ending June 30, 2026. During the interim period leading to the completion of operational wind down, BayMedica will continue its commercial operations including sales, marketing, limited manufacturing, and logistics. Following the wind down of commercial operations, the Company will focus exclusively on the development of its pharmaceutical drug candidates, including INM-901 for Alzheimer's disease and INM-089 for dry Age-related Macular Degeneration as they advance towards IND filings and initial human clinical trials.
In connection with the wind down
of commercial operations, BayMedica is expected to incur severance and other employee-related costs of approximately $
The estimates of the charges and costs that BayMedica expects to incur, and the timing thereof, as well as its revenue expectations, are subject to a number of assumptions and actual results may differ materially from those described above. In addition, BayMedica may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur as a result of or in connection with the wind down of its commercial operations.
Refer to Note 3 for additional information on discontinued operations. All other notes to these consolidated financial statements present the results of continuing operations and exclude amounts related to discontinued operations for all periods presented.
Reclassifications
Certain prior year amounts in the condensed consolidated financial statements and the notes thereto have been reclassified where necessary to conform to the current year’s presentation. These reclassifications did not affect the prior period’s total assets, total liabilities, shareholders’ equity, net loss or net cash used in operating activities. During the three and nine months ended March 31, 2025, the Company reclassed certain prior year costs from research and development to general and administrative.
Use of Estimates
The preparation of financial statements in compliance with US GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities as of the balance sheet date, and the corresponding revenues and expenses for the periods reported. It also requires management to exercise judgment in applying the Company’s accounting policies. In the future, actual experience may differ from these estimates and assumptions. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to these consolidated financial statements are the application of the going concern assumptions, determining the fair value of share-based payments, income tax provisions, warrant valuations, and the assumptions used in the determination of research & development accruals.
Actual results could differ significantly from those estimates.
8
Basis of Consolidation
These condensed consolidated financial statements include the accounts of the Company and its subsidiaries, InMed Pharmaceutical Ltd.; BayMedica, LLC; Biogen Sciences Inc.; and Sweetnam Consulting Inc. Biogen Sciences Inc. and Sweetnam Consulting Inc. are inactive subsidiaries. A subsidiary is an entity that the Company controls, either directly or indirectly, where control is defined as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. All inter-company transactions and balances including unrealized income and expenses arising from intercompany transactions are eliminated in preparing these condensed consolidated financial statements.
Foreign Currency
The functional currency of the Company and its subsidiaries is the U.S. Dollar. These condensed consolidated financial statements are presented in U.S. Dollars. References to “$” and “US$” are to United States (“U.S.”) dollars and references to “C$” are to Canadian dollars.
Cash and Cash Equivalents
Cash and cash equivalents include
cash-on-hand, demand deposits with financial institutions and other short-term, highly liquid investments with original maturities of
three months or less when acquired that are readily convertible to known amounts of cash and subject to an insignificant risk of change
in value. As of March 31, 2026 and June 30, 2025, the Company held $
Short-term Investments
Short-term investments include fixed and variable rate guaranteed investment certificates, with terms greater than three months and less than twelve months. Due to the short-term nature of these investments the fair value of the investments approximates the current value. Guaranteed investment certificates are convertible to known amounts of cash and are subject to an insignificant risk of change in value.
Concentration of Credit Risk and Other Risks and Uncertainties
At times, cash balances may exceed
the Federal Deposit Insurance Corporation or Canadian Deposit Insurance Corporation limits. The Company has not experienced any losses
related to these balances. The uninsured cash balance as of March 31, 2026, was $
9
Impairment of Long-Lived Assets
The Company assesses the recoverability of its long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the long-lived asset is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset or assets. If the carrying value exceeds the sum of undiscounted cash flows, the Company then determines the fair value of the underlying asset. Any impairment to be recognized is measured as the amount by which the carrying amount of the asset group exceeds the estimated fair value of the asset group. Assets classified as held for sale are reported at the lower of the carrying amount or fair value, less costs to sell.
Fair Value Measurements
Financial Assets
Financial assets are initially recognized at fair value, plus transaction costs that are directly attributable to their acquisition or issue and subsequently carried at amortized cost, using the effective interest rate method, less any impairment losses. No financial assets are or elected to be carried at fair value through profit or loss or where changes in fair value are recognized in the condensed consolidated statements of operations and comprehensive loss in other comprehensive loss.
Short-term investments are subsequently recorded at cost plus accrued interest, which approximates fair value due to short-term nature.
Financial Liabilities
To determine the fair value of financial instruments, the Company uses the fair value hierarchy for inputs used to measure fair value of financial assets and liabilities. This hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels: Level 1 (highest priority), Level 2, and Level 3 (lowest priority).
| Level 1 – | Unadjusted quoted prices in active markets for identical instruments. |
| Level 2 – | Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). |
| Level 3 – | Inputs are unobservable and reflect the Company’s assumptions as to what market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available. Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. |
The carrying value of cash and cash equivalents, short-term investments, accounts payable, and accrued liabilities approximate their carrying values as at March 31, 2026.
10
Earnings (Loss) Per Share
Basic earnings (loss) per common share
(“EPS”) is computed by dividing the net income or loss applicable to common shares of the Company by the weighted average
number of common shares outstanding for the relevant period. As of March 31, 2026 and 2025, the Company has
The following table sets forth the number of potential Common Shares that have been excluded from diluted net income (loss) per share because their effect was anti-dilutive:
| As of March 31, | ||||||||
| 2026 | 2025 | |||||||
| Options | ||||||||
| Warrants | ||||||||
Share-based Payments
The Company follows the requirements of FASB ASC 718-10-10, Share-Based Payments with regards to stock-based compensation issued to employees and non-employees. The Company has agreements and arrangements that call for stock to be awarded to the employees and consultants at various times as compensation and periodic bonuses. The expense for this stock-based compensation is equal to the fair value of the stock price on the day the stock was awarded multiplied by the number of shares awarded. The Company has a relatively low forfeiture rate of stock-based compensation and forfeitures are recognized as they occur.
The valuation methodology used to determine the fair value of the options issued during the period is the Black-Scholes option-pricing model. The Black-Scholes model requires the use of a number of assumptions including the volatility of the stock price, the average risk-free interest rate, and the weighted average expected life of the options. Risk-free interest rates are calculated based on continuously compounded risk-free rates for the appropriate term. The dividend yield is assumed to be zero as the Company has never paid or declared any cash dividends on its Common Shares and does not intend to pay dividends on its Common Shares in the foreseeable future. The expected forfeiture rate is estimated based on management’s best assessment.
Estimated volatility is a measure of the amount by which the Company’s stock price is expected to fluctuate each year during the expected life of the award. The Company’s calculation of estimated volatility is based on historical stock prices over a period equal to the expected life of the awards.
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Segment reporting
Following the classification of the Commercial segment as discontinued
operations, the Company has
Operating segments are defined as
components of an enterprise about which separate discrete information is available for evaluation by the Chief Executive Officer and
the senior management team (CODM), in deciding how to allocate resources and in assessing performance. The Company views its operations
and manages its business as
Statement of Cash Flows
The Company has elected to present cash flows from discontinued operations on a net basis within each category of the consolidated statements of cash flows. Accordingly, the consolidated statements of cash flows do not separately present cash flows from discontinued operations within operating, investing and financing activities. Additional information regarding discontinued operations is included in Note 3.
Recent Accounting Pronouncements
The Company has reviewed recent accounting pronouncements and concluded that they are either not applicable to the Company or that there was no material impact or no material impact is expected in these condensed consolidated financial statements as a result of future adoption.
In December 2025, the FASB issued ASU 2025-12, Codification Improvements, which clarifies various topics in the Accounting Standards Codification to improve consistency and address technical corrections. Key improvements include clarifying the calculation of diluted earnings per share (EPS) when a loss from continuing operations exists. The amendments in this update are effective for the Company beginning January 1, 2027, with early adoption permitted. The Company is assessing the impact of adopting this standard.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow Scope Improvements. This update clarifies the applicability of interim reporting guidance and the form and content of interim financial statements. It also establishes a disclosure principle requiring an entity to disclose material events and changes occurring since the end of the last annual reporting period. ASU 2025-11 is effective for the Company for interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is assessing the impact of adopting this standard.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments — Credit Losses, which provides a practical expedient for estimating expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under Topic 606, Revenue from Contracts with Customers. ASU 2025-05 is effective for annual periods beginning after December 15, 2025 and interim periods within those annual reporting periods and should be applied prospectively, with early adoption permitted. The Company is assessing the impact of adopting this standard.
In November 2024, the FASB issued ASU 2024-03, Income Statement Reporting Comprehensive Income - Expense Disaggregation Disclosures, which requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses. The amendments in this update improve financial reporting by requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. This ASU should be applied on a prospective basis, with retrospective application permitted. The amendments in this update are effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the future effect the adoption of this ASU will have on our consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure of specific categories meeting a quantitative threshold within the income tax rate reconciliation, as well as disaggregation of income taxes paid by jurisdiction. This ASU, which can be applied either prospectively or retrospectively, is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company has adopted this accounting pronouncement.
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| 3. | DISCONTINUED OPERATIONS |
As previously described, assets and liabilities and income (loss) from discontinued operations are presented separately in the Consolidated Balance Sheets and Income (Loss) for all periods presented.
The following tables reconcile the carrying amounts of the major classes of assets and liabilities of discontinued operations to the current assets and liabilities of discontinued operations as presented on the Company’s Consolidated Balance Sheets:
| Assets and Liabilities of Discontinued Operations | March 31, 2026 | June 30, 2025 | ||||||
| Current Assets of Discontinued Operations | ||||||||
| Cash and cash equivalents | ||||||||
| Accounts receivable, net | ||||||||
| Prepaids and other current assets | ||||||||
| Inventories | ||||||||
| Total Current Assets of Discontinued Operations | ||||||||
| Current Liabilities of Discontinued Operations | ||||||||
| Accounts payable and accrued liabilities | ||||||||
| Severance | ||||||||
| Total Current Liabilities of Discontinued Operations | ||||||||
The following table provides details about the major classes of line items constituting “Income (loss) from discontinued operations” as presented in the Company’s Consolidated Statements of Income (Loss):
Income (Loss) from Discontinued Operations
| Three Months Ended | ||||||||
| 3/31/2026 | 3/31/2025 | |||||||
| Sales | ||||||||
| Cost of Sales | ( | ) | ( | ) | ||||
| Gross Margin | ||||||||
| Operating Expenses | ||||||||
| General and administrative | ||||||||
| Research and development | ||||||||
| Amortization and depreciation | ||||||||
| Total Operating Expenses | ||||||||
| Loss of Discontinued Operations before Provision for Income Taxes | ( | ) | ( | ) | ||||
| Provision for Income Taxes | ||||||||
| Net loss of Discontinued Operations | ( | ) | ( | ) | ||||
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| Nine Months ended | ||||||||
| March 31, 2026 | March 31, 2025 | |||||||
| Sales | ||||||||
| Cost of sales | ( | ) | ( | ) | ||||
| Gross profit | ||||||||
| Operating Expenses | ||||||||
| General and administrative | ||||||||
| Research and development | ||||||||
| Amortization and depreciation | ||||||||
| Total Operating Expenses | ||||||||
| Loss of Discontinued Operations before Provision for Income Taxes | ( | ) | ||||||
| Provision for Income Taxes | ||||||||
| Net income (loss) of Discontinued Operations | ( | ) | ||||||
| 4. | INTANGIBLE ASSETS |
The following table summarizes the Company’s intangible assets:
| March 31, 2026 | June 30, 2025 | |||||||
| $ | $ | |||||||
| Intellectual property | ||||||||
| Patents | ||||||||
| Intangible assets | ||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Intangible assets, net | ||||||||
Acquired intellectual property is
recorded at cost and is amortized on a straight-line basis over
Amortization expense on intangible
assets for the three months ended March 31, 2026 and 2025 was approximately $
| Year ending June 30, | $ | |||
| 2026 (remaining) | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total | ||||
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| 5. | ACCOUNTS PAYABLE AND ACCRUED LIABILITIES |
Accounts payable and accrued liabilities consist of the following:
| March 31, 2026 | June 30, 2025 | |||||||
| $ | $ | |||||||
| Trade payables | ||||||||
| Accrued research and development expenses | ||||||||
| Employee compensation, benefits and related accruals | ||||||||
| Accrued general and administrative expenses | ||||||||
| Accounts payable and accrued liabilities | ||||||||
| 6. | SHARE CAPITAL AND RESERVES |
Authorized
As of March 31, 2026, the Company’s authorized share structure consisted of an unlimited number of: (i) Common Shares; and (ii) preferred shares without par value (the “Preferred Shares”). Preferred Shares were issued and outstanding as of March 31, 2026 and June 30, 2025.
The Company may, from time to time, issue Preferred Shares and may, at the time of issuance, determine the rights, preferences and limitations pertaining to these shares. Holders of preferred shares may be entitled to receive a preference payment in the event of any liquidation, dissolution or winding up of the Company before any payment is made to the holders of Common Shares.
Private Placement
On June 25, 2025, the Company entered
into a securities purchase agreement (the “Purchase Agreement”) with the selling shareholder, for the sale and issuance of
an aggregate of
The pre-funded warrants have an exercise
price of $
The preferred investment options issued
to the selling shareholder in the Private Placement have an exercise price of $
Concurrently with the Purchase Agreement,
the Company and the selling shareholder entered into an Amendment Letter, dated June 24, 2025, or the Existing Investment Option Amendment,
to amend
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Standby Equity Purchase Agreement (the “SEPA”)
On December 13, 2024, the Company
entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, LTD (the “Investor”) to sell up
to $
Under the terms of the SEPA, the Company
paid the Investor a one-time structuring fee in the amount of $
Common Share Warrants
A summary of the Company’s warrant activity and related information for the periods covered were as follows:
| Number of Shares Under Warrants | Weighted Average Exercise Price | |||||||
| Balance as at July 1, 2025 | $ | |||||||
| Warrants Granted | ||||||||
| Exercised | ( | ) | ||||||
| Expired/Cancelled | ||||||||
| Warrants Outstanding at March 31, 2026 | ||||||||
| Warrants Exercisable at March 31, 2026 | ||||||||
As of March 31, 2026 and June 30,
2025, the warrants exercisable and outstanding have an intrinsic value of $
| 7. | SHARE-BASED PAYMENTS |
Option Plan Details
On March 24, 2017, and as amended on November 20, 2020, the Company’s
shareholders approved: (i) the adoption of a new stock option plan (the “Plan”) pursuant to which the Company’s Board
of Directors may, from time to time, in its discretion and in accordance with applicable regulatory requirements, grant to directors,
officers, employees and consultants of the Company, non-transferable options to purchase Common Shares, provided that the number of Common
Shares reserved for issuance will not exceed twenty percent (
As of March 31, 2026 and June 30,
2025, there were
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The following is a summary of changes in outstanding options from July 1, 2025 to March 31, 2026:
| Number | Weighted Average Exercise Price | |||||||
| Balance at July 1, 2025 | $ | | ||||||
| Granted | ||||||||
| Expired/Forfeited | ( | ) | ||||||
| Balance at March 31, 2026 | $ | |||||||
| March 31, 2026: | ||||||||
| Vested and exercisable | $ | |||||||
| Unvested | $ | |||||||
Total expenses arising from share-based payment transactions recognized
during the three months ended March 31, 2026 and 2025 were $
Total expenses arising from share-based payment transactions recognized
during the nine months ended March 31, 2026 and 2025 were $
Unrecognized compensation cost at March 31, 2026 related to unvested
options was $
| 8. | LEASE OBLIGATIONS |
The Company is committed to minimum lease payments as follows:
| Maturity Analysis | March 31, 2026 | |||
| $ | ||||
| Year 1 | ||||
| Year 2 | ||||
| Year 3 | ||||
| Year 4 | ||||
| Year 5 | ||||
| More than five years | ||||
| Total undiscounted lease liabilities | ||||
| Less: imputed interest | ( | ) | ||
| Present value of lease liabilities | ||||
| Less: Current portion of lease liabilities | ( | ) | ||
| Non-current portion of lease liabilities | ||||
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On July 29, 2024, the Company entered
into a lease agreement for office space in Vancouver, British Columbia. This office occupies approximately
On October 5, 2023, BayMedica amended
its lease located in South San Francisco, California, in order to extend its lease to
| 9. | SEGMENT INFORMATION |
The following table presents information about the Company’s reportable segment for the three and nine months ended March 31, 2026 and 2025:
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| March 31, | March 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Operating Expenses | ||||||||||||||||
| Research and development | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Amortization and depreciation | ||||||||||||||||
| Foreign exchange loss (gain) | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Other Income (Expense) | ||||||||||||||||
| Interest and other income | ||||||||||||||||
| Finance expense | ( | ) | ||||||||||||||
| Net loss from continuing operations before taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax expense | ||||||||||||||||
| Net loss from continuing operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 10. | COMMITMENTS AND CONTINGENCIES |
Pursuant to the terms of agreements
with various contract research organizations, as of March 31, 2026, the Company is committed for contract research services and materials
at a cost of approximately $
Pursuant to the terms of agreements
with various vendors, as of June 30, 2025, the Company is committed for contract materials and equipment at a cost of approximately $
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Pursuant to the terms of a certain Technology Assignment Agreement, dated as of May 31, 2017 (the “Technology Agreement”), between the Company and the University of British Columbia (“UBC”), the Company is committed to pay royalties to UBC on certain licensing and royalty revenues received by the Company for biosynthesis of certain drug products that are covered by the Technology Agreement. To date, no payments have been required to be made.
Short-term investments include guaranteed
investment certificates, with one year terms, of $
In addition to the foregoing, the Company has entered into certain agreements in the ordinary course of operations that may include indemnification provisions, which are common in such agreements. In some cases, the maximum amount of potential future indemnification is unlimited; however, the Company currently holds commercial general liability insurance. This insurance may limit the Company’s overall liability and may enable the Company to recover a portion of any future amounts paid. Historically, the Company has not made any indemnification payments under such agreements, and it believes that the fair value of these indemnification obligations is minimal. Accordingly, the Company has not recognized any liabilities relating to these obligations for any period presented.
BayMedica entered into a technology license agreement (“Agreement”) with a third party (the “Licensor”) on February 15, 2021. Under the Agreement, BayMedica agreed to license a proprietary process in the United States where the Licensor has a pending U.S. patent application in exchange for certain annual royalty payments contingent on the net sales of products made using the licensed process. The royalty payments were to be made for the period beginning on the first commercial sale of the licensed product and ending on the later of the expiration of the Licensor’s patent rights or ten years after the first commercial sale of such licensed product.
On April 29, 2025, BayMedica received a letter from the Licensor of its intention to commence arbitration proceedings pursuant to the Agreement together with a Notice of Arbitration (the “Patent License Matter”). The Patent License Matter will be subject to final, binding and non-appealable arbitration under the Arbitration Act, 1991 (Ontario) and determined pursuant to Ontario law.
19
In its Notice of Arbitration, the
Licensor takes the position that the annual royalty payments are not simply required to maintain an exclusive license with respect to
the proprietary process, but rather function as guaranteed annual minimum payments that BayMedica must make for the duration of the Agreement
regardless of net sales. On the basis of this theory, and this theory alone, the Licensor seeks relief against BayMedica including (a)
approximately US $
On January 16, 2026, the Licensor delivered an Amended Notice of Arbitration alleging that BayMedica breached several obligations under the Agreement, including, among other things, failing to ensure sublicensee compliance with reporting obligations under the Agreement, and failing to remit required royalties. On this basis, the Licensor seeks an unspecified quantum of damages for BayMedica’s alleged breach of the Agreement, seeks a declaration that BayMedica has failed to comply with its obligations under the Agreement, including its reporting requirements and requirements in respect of its alleged sublicensees, and an Order for specific performance requiring it to comply with those obligations. BayMedica disputes the amended allegations and denies breaching the Agreement as alleged.
While the Company is not able to predict the outcome of the Patent License Matter, an unfavorable outcome to BayMedica would have a material adverse impact on the Company’s business and financial condition and on BayMedica’s ability to continue operations.
| 11. | SUBSEQUENT EVENTS |
The Company has evaluated subsequent events through the date of the filing of these unaudited condensed consolidated financial statements and determined that there have been no events that have occurred that would require adjustments to our disclosures in the condensed consolidated financial statements except for the matters described below.
On April 21, 2026, the Company amended
the exercise price of
On April 24, 2026, the Company amended
the exercise prices of
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This discussion and analysis contains certain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, and is subject to the safe harbor created by those sections. For more information, see “Cautionary Statement Regarding Forward-Looking Statements.” When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that impact our business. In particular, we strongly encourage you to review the risks and uncertainties described in “Risk Factors” in the 2025 Annual Report, the “Risk Factors” identified in Item 1A. of this Quarterly Report, and other filings we make from time to time with the SEC. These risks and uncertainties could cause actual results to differ materially from those projected or implied by our forward-looking statements contained in this Quarterly Report. These forward-looking statements are made as of the date of this Quarterly Report, and we do not intend, and do not assume any obligation, to update these forward-looking statements, except as required by law.
The following discussion and analysis should be read in conjunction with our audited consolidated financial statements for the year ended June 30, 2025, and the related notes thereto, which have been prepared in accordance with U.S. GAAP. Additionally, the following discussion and analysis should be read in conjunction with our audited consolidated financial statements included in our Annual Report. Throughout this discussion, unless the context specifies or implies otherwise the terms “InMed,” “Company,” “we,” “us,” and “our” refer to InMed Pharmaceuticals Inc.
All dollar amounts stated herein are in U.S. dollars unless specified otherwise.
Overview
We are a pharmaceutical drug development company with a pipeline of proprietary small molecule drug candidates that are preferential signaling ligands of the endogenous CB1 and CB2 receptors as well as other receptor targets linked to human disease. CB1 and CB2 receptors are each part of the endocannabinoid system that is found throughout the human body and is responsible for many homeostatic functions. CB1 receptors are primarily located in the brain and central nervous system, while CB2 receptors are involved in modulating neuroinflammation and immune responses. Our research efforts target the treatment of diseases with high unmet medical needs. Together with our wholly owned subsidiary, BayMedica, LLC, or BayMedica, we also have significant know-how in developing proprietary manufacturing approaches to produce and sell bulk rare cannabinoids as ingredients for various market sectors, or Products
We have sought to focus on the research and development of preferential signaling ligands of CB1 and CB2, and have produced a library of novel, proprietary drug candidates, or Product Candidates. These Product Candidates are patentable new chemical entities, or NCEs, for pharmaceutical development, aimed at targeting diverse clinical indications. Our current potential pharmaceutical pipeline consists of three programs, with drug candidates targeting Alzheimer’s disease, dry Age-Related Macular Degeneration, or dry AMD, and Epidermolysis Bullosa, or EB.
Our INM-901 is a proprietary small molecule, disease modifying drug candidate being developed as a potential treatment for Alzheimer’s disease. INM-901 has multiple potential mechanisms of action as a preferential signaling agonist for both CB1 and CB2 receptors, as well as impacting the peroxisome proliferator-activated receptor, or PPAR, signaling pathway. Across multiple preclinical studies, INM-901’s primary mechanism of action is the reduction of neuroinflammation, with statistically significant effects demonstrated in both ex vivo and in vivo models. Additionally, INM-901 targets several other mechanisms of action offering a unique treatment approach targeting several biological pathways associated with Alzheimer’s disease. More recently, these findings translated into advanced human brain organoid systems, where INM-901 showed significant dose-dependent reductions in key pro-inflammatory markers. Together, these data meaningfully de-risk the program and strengthen confidence as the program advances toward a pre-IND meeting and subsequent human clinical trials.
21
Outcomes from our ocular research, based on the proprietary small molecule INM-089, indicate potentially promising neuroprotective effects in the back of the eye, which may lead to the preservation of retinal function. Neuroprotection in dry AMD remains an unmet medical need and a new treatment option may help solve this multifactorial disease.
We have completed a Phase 2 clinical trial of INM-755 (cannabinol) cream studying its safety and efficacy in treating symptoms related to EB. Results from the Phase 2 clinical trial showed a positive indication of enhanced anti-itch activity for INM-755 cream versus the control cream alone in an exploratory clinical evaluation. We are also pursuing strategic partnership opportunities for INM-755 in EB and other itch-related skin conditions.
Together with BayMedica, our manufacturing capabilities include traditional approaches such as chemical synthesis and biosynthesis, as well as a proprietary, integrated manufacturing approach called IntegraSyn. With multiple manufacturing approaches, we have sought to maintain enhanced flexibility to select the most cost-effective method to deliver high quality, high purity Products and Product Candidates fit for their intended uses. BayMedica’s commercial business specializes in the B2B commercialization of bulk rare, non-intoxicating cannabinoids as raw materials for the Health and Wellness sector that are bioidentical to those found in nature.
Recent Developments
NASDAQ Delisting Notice
As previously reported, on March 27, 2026, we received a written notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC, or Nasdaq, notifying us that the closing bid price of our common shares over a period of 30 consecutive trading days was below the minimum $1.00 per share requirement for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2), or the Minimum Bid Price Rule, during the February 11, 2026 to March 26, 2026 period.
In accordance with applicable Nasdaq procedures, we have a period of 180 calendar days following the receipt of the written notice mentioned above to cure the deficiency and regain compliance. The notice has no immediate impact on the listing of our common shares, which will continue to trade on The Nasdaq Capital Market subject to our continued compliance with the other listing requirements of The Nasdaq Capital Market. Our common shares will continue to trade under the symbol “INM”. We intend to monitor the closing share price for our common shares and explore available options to regain compliance.
In the event we do not evidence compliance with the Minimum Bid Price Rule during the 180-day grace period, we may be eligible for an additional 180 calendar day grace period. To qualify, we will be required to meet the continued listing requirement for market value of publicly held shares and all other listing standards for The Nasdaq Capital Market, with the exception of the Minimum Bid Price Rule, and will need to provide written notice of our intention to cure the deficiency during the second compliance period, by effecting a reverse stock split, if necessary, to Nasdaq. If it appears to the staff of Nasdaq that we will not be able to cure the deficiency, or if we are otherwise not eligible, we will not be entitled to an additional 180 calendar days grace period and Nasdaq will provide notice to us that our securities will be subject to delisting. If we do not regain compliance within the allotted compliance period(s), including any extensions that may be granted by Nasdaq, it is expected that Nasdaq would notify us that our common shares are subject to delisting. If we are notified by Nasdaq that our securities are subject to delisting, we may appeal such determination to a Nasdaq Hearings Panel, or the Panel, but our securities would be automatically suspended from trading on The Nasdaq Capital Market pending the completion of the appeal process. There can be no assurance that any such appeal would be successful or that we would be able to evidence compliance with the terms of any extension that may be granted by the Panel.
22
Delisting from The Nasdaq Capital Market could materially and adversely affect our ability to raise additional financing through the public or private sale of equity securities, would significantly affect the ability of investors to trade our securities and would negatively affect the value and liquidity of our securities, including our common shares. The actual or threatened delisting of our securities could also have other material and adverse consequences, including the potential loss of confidence by employees and other stakeholders, the loss of institutional investor interest and fewer business development opportunities, limited availability of market quotations for our securities, reduced liquidity with respect to our securities, a determination that our common shares is “penny stock,” which will require brokers trading in our common shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our common shares, and limited amount of news and analyst coverage of us. To the extent that our common shares became eligible to trade on the OTC Bulletin Board, another over-the-counter quotation system, or on the pink sheets, an investor may find it more difficult to dispose of their common shares or obtain accurate quotations as to the market value of our common shares.
Wind Down of BayMedica’s Commercial Operations
As previously reported, H.R. 5371, the “Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026” (the “Act”) in its current form and without further amendment, will have a material negative impact on BayMedica LLC (“BayMedica”), a wholly owned subsidiary of the Company. Specifically, certain aspects of BayMedica’s commercial business and its inventory of rare, non-intoxicating cannabinoids would be prohibited under the Act if it becomes effective as planned on November 12, 2026.
On March 4, 2026, our board of directors ratified, confirmed and approved the decision of the board members of BayMedica to wind down and exit BayMedica’s commercial operations business segment (“commercial operations”), which is the only revenue-generating commercial operations of the Company. BayMedica intends to substantially complete the wind down and exit prior to the end of its fiscal year ending June 30, 2026. During the interim period leading to the completion of operational wind down, BayMedica will continue its commercial operations including sales, marketing, limited manufacturing, and logistics. Following the wind down of commercial operations, we will focus exclusively on the development of our Product Candidates, including INM-901 for Alzheimer's disease and INM-089 for dry Age-related Macular Degeneration as they advance towards IND filings and initial human clinical trials.
In connection with the wind down of commercial operations, BayMedica is expected to incur severance and other employee-related costs of approximately $550,000 and expects to incur additional related expenditures of approximately $120,000 through the end of the fiscal year. These expenditures are expected to be reduced by the profits from the sale of BayMedica’s products prior to the completion of operational wind down.
The estimates of the charges and costs that BayMedica expects to incur, and the timing thereof, as well as its revenue expectations, are subject to a number of assumptions and actual results may differ materially from those described above. In addition, BayMedica may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur as a result of or in connection with the wind down of its commercial operations.
Pharmaceutical Program Updates
In March 2026, we provided a pharmaceutical development outlook for 2026.
2026 Development Priorities for INM-901 included:
| ● | Conduct a pre-IND meeting with the U.S. Food and Drug Administration in the third quarter of 2026. |
| ● | Continue to execute on IND-enabling pharmacology and toxicology studies. |
| ● | Continued development and scale up of drug substance and product manufacturing activities to support IND enabling studies and submission. |
| ● | Engage regulatory / clinical experts to map out topline clinical design for first in human clinical trials for the INM-901. |
| ● | Subject to regulatory feedback and completion of IND-enabling activities, the Company targets submission of an IND and initiation of a Phase 1 clinical trial in 2027. |
23
Development priorities for INM-089 included:
| ● | Generation of data supporting continued evaluation of therapeutic potential. |
| ● | Completion of preclinical studies, including dose-ranging assessment, demonstrating dose proportionality and pharmacologically relevant concentration following dosing. |
| ● | Drug substance and drug product process in place to support IND enabling studies, with further optimization expected in advance of IND submission. |
| ● | Planning for a pre-IND meeting with the FDA in Q4 2026. |
In March 2026, we announced new preclinical data demonstrating the effects of INM-901 in reducing neuroinflammation in 3D human brain organoid models of Alzheimer’s disease.
These studies, conducted in collaboration with Stem Pharm, Inc. (“Stem Pharm”) using their proprietary platform of human neuro-immune organoids, represent a key step in translating prior animal model results for INM-901 into a human-relevant system, helping to de-risk the INM-901 program ahead of a first-in-human clinical trial.
The in vitro human organoid models represent some of the closest approximations to human brain tissue currently available, incorporating a complex cellular environment relevant to neurodegenerative disease. The organoids are composed of neurons, astrocytes, vascular cells and feature microglia, the brain’s resident immune cells, and can be used to bridge the gap between traditional animal models and human clinical trials.
INM-901 was evaluated in two distinct human 3D organoid models: a general model of neuroinflammation induced with lipopolysaccharide (“LPS”) and interferon-gamma (“IFN-γ”); and, Stem Pharm’s proprietary neuroinflammation Alzheimer’s disease model with specific features observed in Alzheimer’s disease patients.
Key Observations:
| ● | INM-901 demonstrated significant reduction in neuroinflammation in Stem Pharm’s LPS-induced model and in their Alzheimer’s disease model. A dose-dependent reduction of key pro-inflammatory markers such as IL-6 and IL-8 was seen in both neuroinflammation models. |
| ● | Effects align with prior findings from an in vivo Alzheimer’s model and an ex vivo LPS-induced neuroinflammation model. |
| ● | Provides supportive evidence of mechanistic translation from animal models to human tissue systems. |
The consistency of INM-901’s anti-inflammatory effects across in vivo animal models, ex vivo systems and now human 3D brain organoids provide increasing confidence in the compound’s potential to translate into clinical benefit in humans with neuroinflammatory conditions.
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Components of Results of Operations
Operating Expenses
Research and Development Expenses
Research and development expenses represent costs incurred by us for the discovery and development of our Product Candidates and include:
| ● | external research and development expenses incurred under agreements with contract research organizations, CDMOs and consultants; |
| ● | salaries, payroll taxes, employee benefits expenses for individuals involved in research and development efforts; |
| ● | research supplies; and |
| ● | legal and patent office fees related to patent and intellectual property matters. |
We expense research and development costs as incurred. We recognize expenses for certain development activities, such as preclinical studies, based on an evaluation of the progress to completion of specific tasks using data or other information provided to us by our vendors. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of expenses incurred. Non-refundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. These amounts are recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered, or the services rendered.
External costs represent a significant portion of our research and development expenses, which we track on a program-by-program basis following the nomination of a development candidate. Our internal research and development expenses consist primarily of personnel-related expenses, including salaries, benefits and stock-based compensation expense. We do not track our internal research and development expenses on a program-by-program basis as the resources are deployed across multiple projects.
The successful development of our Product Candidates is highly uncertain. At this time, we cannot reasonably estimate or know the nature, timing, and estimated costs of the efforts that will be necessary to complete the remainder of the development of our Product Candidates or to develop and commercialize additional Products. We are also unable to predict when, if ever, material net cash inflows will commence from our Product Candidates, if approved. This is due to the numerous risks and uncertainties associated with development, including the uncertainty related to:
| ● | the timing and progress of preclinical and clinical development activities; |
| ● | the number and scope of preclinical and clinical programs we decide to pursue; |
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| ● | our ability to raise additional funds necessary to complete preclinical and clinical development and commercialization of our Product Candidates, to further advance the development of our manufacturing technologies, and to develop and commercialize additional Products, if any; |
| ● | our ability to maintain our current research and development programs and to establish new ones; |
| ● | our ability to establish sales, licensing or collaboration arrangements; |
| ● | the progress of the development efforts of parties with whom we may enter into collaboration arrangements; |
| ● | the successful initiation and completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the FDA or any comparable foreign regulatory authority; |
| ● | the receipt and related terms of regulatory approvals from applicable regulatory authorities; |
| ● | the availability of materials for use in production of our Product Candidates; |
| ● | our ability to secure manufacturing supply through relationships with third parties or establish and operate a manufacturing facility; |
| ● | our ability to consistently manufacture our Product Candidates in quantities sufficient for use in clinical trials; |
| ● | our ability to obtain and maintain intellectual property protection and regulatory exclusivity, both in the United States and internationally; |
| ● | our ability to maintain, enforce, defend and protect our rights in our intellectual property portfolio; |
| ● | the commercialization of our Product Candidates, if and when approved, and of new Products; |
| ● | our ability to obtain and maintain third-party payor coverage and adequate reimbursement for our Product Candidates, if approved; |
| ● | the acceptance of our Product Candidates, if approved, by patients, the medical community and third-party payors; |
| ● | a continued acceptable safety profile of our Product Candidates following receipt of any regulatory approvals. |
A change in the outcome of any of these variables with respect to the development of any of Product Candidates would significantly change the costs and timing associated with the development of those Product Candidates.
General and Administrative Expenses
General and administrative expenses consist of personnel-related costs, including salaries, benefits and stock-based compensation expense, for our personnel in executive, finance and accounting, human resources, business operations and other administrative functions, investor relations activities, legal fees related to corporate matters, fees paid for accounting and tax services, consulting fees, patent costs and facility-related costs.
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Amortization and Depreciation
Intangible assets are comprised of intellectual property that we acquired in 2014 and 2015 and trade secrets, product formulation knowledge, and patents that we acquired in October 2021. The acquired intellectual property and patents are amortized on a straight-line basis based on their estimated useful lives. Equipment and leasehold improvements are depreciated using the straight-line method based on their estimated useful lives.
Share-based Payments
Share-based payments is the stock-based compensation expense related to our granting of stock options to employees and others. The fair value, at the grant date, of equity-settled share awards is charged to our loss over the period for which the benefits of employees and others providing similar services are expected to be received. The vesting components of graded vesting employee awards are measured separately and expensed over the related tranche’s vesting period. The amount recognized as an expense is adjusted to reflect the number of share options expected to vest. The fair value of awards is calculated using the Black-Scholes option pricing model, which considers the exercise price, current market price of the underlying shares, expected life of the award, risk-free interest rate, expected volatility and the dividend yield.
Other Income
Other income consists primarily of interest income earned on our cash, cash equivalents and short-term investments.
Loss from discontinued operations
Discontinued operations for the three months ended March 31, 2026 and 2025, reflect the results of our former segment BayMedica Commercial.
Results of Operations
Comparison of the Three Months Ended March 31, 2026 and 2025
| Three Months Ended March 31, | % | |||||||||||||||
| 2026 | 2025 | Change | Change | |||||||||||||
| (in thousands) | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | $ | 1,023 | $ | 425 | $ | 598 | 141 | % | ||||||||
| General and administrative | 1,741 | 1,585 | 156 | 10 | % | |||||||||||
| Amortization and depreciation | 52 | 52 | - | - | % | |||||||||||
| Foreign exchange gain (loss) | 23 | 22 | 1 | 5 | % | |||||||||||
| Total operating expenses | 2,839 | 2,084 | 755 | 36 | % | |||||||||||
| Interest and other income | 48 | 17 | 31 | 182 | % | |||||||||||
| Net loss from continued operations | (2,791 | ) | (2,067 | ) | (724 | ) | 35 | % | ||||||||
| Loss from discontinued operations | (175 | ) | (54 | ) | (121 | ) | 224 | % | ||||||||
| Net Loss | $ | (2,966 | ) | $ | (2,121 | ) | $ | (845 | ) | 40 | % | |||||
Research and Development Expenses
Research and development expenses increased by $0.6 million, or 141%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase in research and development expenses was primarily due to higher external contractor and research supply costs.
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General and Administrative Expenses
General and administrative expenses increased by $0.2 million, or 10%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase is primarily due to an increase in Salaries and Benefits.
Loss from discontinued operations
Loss from discontinued operations was $0.2 million for the three months ended March 31, 2026, compared to a loss of less than $0.1 million for the three months ended March 31, 2025. The decrease is primarily due to lower gross profit and higher general and administrative expenses.
Comparison of the Nine Months Ended March 31, 2026 and 2025
| Nine Months Ended March 31, | $ | % | ||||||||||||||
| 2026 | 2025 | Change | Change | |||||||||||||
| (in thousands) | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | $ | 2,223 | $ | 2,244 | $ | (21 | ) | (1 | )% | |||||||
| General and administrative | 4,304 | 4,155 | 149 | 4 | % | |||||||||||
| Amortization and depreciation | 157 | 158 | (1 | ) | (1 | )% | ||||||||||
| Foreign exchange loss | 62 | 51 | 11 | 22 | % | |||||||||||
| Total operating expenses | 6,746 | 6,608 | 138 | 2 | )% | |||||||||||
| Interest and other income | 216 | 104 | 112 | 108 | % | |||||||||||
| Finance expense | - | (352 | ) | 352 | (100 | )% | ||||||||||
| Net loss from discontinued operations | (6,530 | ) | (6,856 | ) | 326 | (5 | )% | |||||||||
| Income (Loss) from discontinued operations | (191 | ) | 482 | (673 | ) | (140 | )% | |||||||||
| Net Loss | $ | (6,721 | ) | $ | (6,374 | ) | $ | (347 | ) | 5 | % | |||||
General and Administrative Expenses
General and administrative expenses increased by $0.1 million in our Pharma segment, or 4%, for the nine months ended March 31, 2026, as compared to the nine months ended March 31, 2025. The increase is primarily due to higher legal expenses and severance expenses, offset by a decrease primarily in patent fees, and investor relations fees.
Interest and Other Income
Interest and other income increased by $0.1 million in our Pharma segment, or 108% for the nine months ended March 31, 2026, as compared to the nine months ended March 31, 2025. The increase primarily results from the increase in our average cash on hand during the current year.
Finance Expense
Finance expenses decreased by $0.4 million in our Pharma segment, or 100% for the nine months ended March 31, 2026, as compared to the nine months ended March 31, 2025. The decrease relates to the fees incurred pursuant to the SEPA in December 2024.
Loss from discontinued operations
Loss from discontinued operations was $0.2 million for the three months ended March 31, 2026, compared to income of $0.5 million for the nine months ended March 31, 2025. The decrease is primarily due to lower gross profit and higher general and administrative expenses.
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Liquidity and Capital Resources
Since our inception, we have generated revenue from BayMedica product sales and no sales from any other sources and have incurred significant operating losses and negative cash flows from our operation. We have not yet commercialized any of our Product Candidates and we do not expect to generate revenue from sales of any Product Candidates for several years, if at. We have funded our operations to date primarily with proceeds from the sale of Common Shares.
As of March 31, 2026, we had cash, cash equivalents and short-term investments of $5.2 million.
The following table summarizes our cash flows for each of the periods presented:
| (in thousands) | Nine Months Ended March 31, 2026 | Nine Months Ended March 31, 2025 | ||||||
| Net cash used in operating activities | $ | (5,679 | ) | $ | (5,988 | ) | ||
| Net cash provided by financing activities | 94 | 4,097 | ||||||
| Net increase (decrease) in cash and cash equivalents | $ | (5,585 | ) | $ | (1,891 | ) | ||
Operating Activities
During the nine months ended March 31, 2026, we used cash in operating activities of $5.7 million, primarily resulting from our net loss of $6.7 million combined with $0.6 million used in changes in our non-cash working capital, partially offset by non-cash amortization expense and share-based compensation expenses.
During the nine months ended March 31, 2025, we used cash in operating activities of $6.0 million, primarily resulting from our net loss of $6.4 million combined with a $0.1 million decrease in changes in our non-cash working capital, partially offset by non-cash expenses contributing to net cash used in operating activities.
Investing Activities
During the nine months ended March 31, 2026 and 2025, cash used in investing activities was $nil, respectively.
Financing Activities
During the nine months ended March 31, 2026, cash used in financing activities of $0.1 million consisted of $0.2 million in gross proceeds from the SEPA, offset by total transaction costs of $0.1 million.
During the nine months ended March 31, 2025, cash provided by financing activities of $4.1 million consisted of $4.4 million in gross proceeds derived from the Amended ATM Agreement and SEPA, offset by total transaction costs of $0.3 million.
Funding Requirements
We expect our expenses to increase substantially in connection with our ongoing research and development activities, particularly as we continue the research and development of and the clinical trials for our Product Candidates. In addition, we expect to incur additional costs associated with operating as a US-listed public company and associated with any required investment into our R&D efforts targeting cannabinoid analogs. As a result, we expect to incur substantial operating losses and negative operating cash flows for the foreseeable future.
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In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), we have evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued.
Through March 31, 2026, we have funded our operations primarily with proceeds from the sale of our Common Shares. We have incurred recurring losses and negative cash flows from operations since its inception, including net losses of $6.7 million. In addition, we have an accumulated deficit of $124.0 million as of March 31, 2026.
As of the issuance date of these condensed consolidated financial statements, we expect our cash, cash equivalents and short-term investments of approximately $5.2 million as of March 31, 2026 will be sufficient to fund our operating expenses and capital expenditure requirements into the fourth quarter of calendar 2026, depending on the level and timing of our operating expenses. Our future viability is dependent on our ability to raise additional capital to finance its operations. We have concluded that there is substantial doubt about our ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued.
We are exploring a number of potential strategic and/or transformative corporate opportunities and transactions, which may include collaborating or partnering with other companies, an acquisition or sale of the company, asset sales or acquisitions, licensing of intellectual property, among others, while continuing to seek additional funding through equity or debt financings and/or from other capital sources. We may not be successful in identifying or consummating any such transaction or obtaining the financing that we need to fund our operations on acceptable terms, or at all, and the terms of any transaction and/or financing we are able to consummate may adversely affect the holdings or the rights of our existing shareholders and/or the value and trading price of our shares.
Our funding requirements and the timing and amount of our operating expenditures will depend largely on:
| ● | the scope, progress, results and costs of discovery research, preclinical development, laboratory testing and clinical trials for our Product Candidates; |
| ● | the scope, progress, results and costs of development of our manufacturing technologies; |
| ● | the number of and development requirements for Product Candidates that we pursue; |
| ● | the costs, timing and outcome of regulatory review of our Product Candidates; |
| ● | our ability to enter into contract manufacturing arrangements for supply of materials and manufacture of our Product Candidates and the terms of such arrangements; |
| ● | the impact of any acquired, or in-licensed, externally developed product(s) and/or technologies; |
| ● | our ability to establish and maintain strategic collaborations, licensing or other arrangements, and the financial terms of such arrangements; |
| ● | the sales, costs and timing of future commercialization activities, including product manufacturing, sales, marketing and distribution, for any of our Product Candidates for which we may receive marketing approval; |
| ● | the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights and defending any intellectual property-related claims; |
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| ● | expansion costs of our operational, financial and management systems and increases to our personnel, including personnel to support our clinical development, manufacturing and commercialization efforts and our operations as a dual listed company; |
| ● | the costs to obtain, maintain, expand and protect our intellectual property portfolio; and |
| ● | the level and timing of realizing revenues from the BayMedica commercial operations. |
A change in the outcome of any of these, or other variables with respect to the development of any of our Product Candidates, could significantly change the costs and timing associated with their development. We will need to continue to rely on additional financing to achieve our business objectives.
In addition to the variables described above, if and when any of our Product Candidates successfully complete development, we will incur substantial additional costs associated with regulatory filings, marketing approval, post-marketing requirements, maintaining our intellectual property rights, and regulatory protection, in addition to other commercial costs. We cannot reasonably estimate these costs at this time.
Until such time, if ever, as we can generate substantial revenues from either our Product Candidates, we expect to finance our cash needs through a combination of equity or debt financings and collaboration arrangements. We currently have no credit facility or committed sources of capital. To the extent that we raise additional capital through the future sale of equity securities, the ownership interests of our shareholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing common shareholders. If we raise additional funds through the issuance of debt securities, these securities could contain covenants that would restrict our operations. We may require additional capital beyond our currently anticipated amounts, and additional capital may not be available on reasonable terms, or at all. If we raise additional funds through collaboration arrangements or other strategic transactions in the future, we may have to relinquish valuable rights to our technologies, or Product Candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate development or future commercialization efforts or grant rights to develop and market Product Candidates that we would otherwise prefer to develop and market ourselves.
Off-Balance Sheet Arrangements
During the periods presented, we did not have, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations promulgated by the SEC.
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Critical Accounting Estimates and Accounting Policies
Our significant accounting policies are described in Note 2 of the Unaudited condensed consolidated Financial Statements. The estimates will require us to rely upon assumptions that were highly uncertain at the time the accounting estimates are made, and changes in them are reasonably likely to occur from period to period. Changes in estimates used in these and other items could have a material impact on our financial statements in the future. Our estimates will be based on our experience and our interpretation of economic, political, regulatory, and other factors that affect our business prospects. Actual results may differ significantly from our estimates. For detailed information regarding our critical accounting policies and estimates, see our financial statements and notes thereto included in this Report and in our 2025 Annual Report. There have been no material changes to our critical accounting policies and estimates from those disclosed in our 2025 Annual Report.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and, as such, are not required to provide the information under this Item.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2026. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to its management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31, 2026, our principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three-month period ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II
ITEM 1. LEGAL PROCEEDINGS.
From time to time, we may be subject to various legal proceedings, claims and administrative proceedings that arise in the ordinary course of our business activities. Although the results of the litigation and claims cannot be predicted with certainty, as of the date of this Quarterly Report, with the exception of the Patent License Matter previously reported in our Form 10-Q for the quarterly period ended December 31, 2025, we do not believe we are party to any claim, proceeding or litigation the outcome of which, if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on our business. Regardless of the outcomes, however, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
On February 15, 2021, BayMedica entered into an exclusive technology license agreement (the “Agreement”) with a third party (the “Licensor”) pursuant to which it agreed to license a proprietary process in the United States where the Licensor has a pending U.S. patent application in exchange for certain annual royalty payments contingent on the net sales of products made using the licensed process. The royalty payments were to be made for the period beginning on the first commercial sale of the licensed product and ending on the later of the expiration of the Licensor’s patent rights or ten years after the first commercial sale of such licensed product. On April 29, 2025, BayMedica received a letter from the Licensor stating its intention to commence arbitration proceedings pursuant the Agreement, together with a Notice of Arbitration (the “Patent License Matter”). Such arbitration proceedings will be subject to final, binding and non-appealable arbitration under the Arbitration Act, 1991 (Ontario) and determined pursuant to Ontario law. In its Notice of Arbitration, the Licensor takes the position that the annual royalty payments are meant to function as guaranteed annual minimum payments required to be made for the duration of the Agreement regardless of net sales. The Licensor seeks relief against BayMedica including (a) approximately $3.4 million in annual payments for the years 2022 through 2024 and (b) a declaration that BayMedica is liable to pay certain guaranteed annual minimum payments of approximately $2.3 million for the remainder of the term of the Agreement. BayMedica disputes the amount owing and to be paid over the duration of the agreement. BayMedica vehemently contests the Licensor’s interpretation of the Agreement and its position in the Patent License Matter and intends to take all necessary steps to vigorously defend the Patent License Matter.
Pursuant to Terms of Appointment dated November 12, 2025, BayMedica and the Licensor have appointed an Arbitrator of the Patent License Matter (the “Arbitrator”). On November 13, 2025, BayMedica delivered a Response to Notice of Arbitration. BayMedica disputes the Licensor’s interpretation of the Agreement and denies breaching the Agreement as alleged. BayMedica also asserts that the Licensor’s allegations are statute-barred pursuant to the Limitations Act, 2002.
On November 13, 2025, BayMedica also delivered a Notice of Motion, seeking a summary dismissal of the Patent License Matter on the basis that, among other things, the Licensor’s claim is statute-barred. Pursuant to a Procedural Order dated December 31, 2025, the Arbitrator held that, among other things, BayMedica’s motion shall be heard preliminarily, and has been scheduled for May 6, 2026.
On January 16, 2026, the Licensor delivered an Amended Notice of Arbitration alleging that BayMedica breached several obligations under the Agreement, including, among other things, failing to ensure sublicensee compliance with reporting obligations under the Agreement, and failing to remit required royalties. On this basis, the Licensor seeks an unspecified quantum of damages for BayMedica’s alleged breach of the Agreement, seeks a declaration that BayMedica has failed to comply with its obligations under the Agreement, including its reporting requirements and requirements of its alleged sublicensees, and an Order for specific performance requiring it to comply with those obligations. BayMedica disputes the amended allegations and denies breaching the Agreement as alleged.
While we are not able to predict the outcome of the Patent License Matter, an unfavorable outcome to BayMedica would have a material adverse impact on the Company’s business and financial condition and on BayMedica’s ability to continue operations.
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ITEM 1A. RISK FACTORS.
We are winding down our only revenue-generating business segment, which creates substantial uncertainty regarding our liquidity, results of operations, prospects, and ability to continue as a going concern.
On March 4, 2026, our board of directors ratified BayMedica’s decision to wind down and exit its commercial operations. We intend to substantially complete the wind down prior to June 30, 2026, while continuing limited commercial activities in the interim. The wind down may take longer or cost more than anticipated, and we may not realize expected savings, proceeds or strategic benefits. We expect to incur approximately $550,000 in severance and other employee-related costs and approximately $120,000 in additional related expenditures through the end of the fiscal year, partially offset by profits from product sales prior to completion; we may also incur other charges and may be unable to exit or assign contracts on acceptable terms. As a result, our liquidity, cash flows, results of operations, and financial condition are subject to significant uncertainty, and there can be no assurance that we will be able to fund operations or meet obligations as they come due.
Because BayMedica’s commercial operations is our only revenue-generating business segment, our ability to comply with debt covenants and other financial maintenance requirements may be adversely affected, and we may be unable to monetize assets on terms and timing that support our liquidity needs. The wind down may negatively affect our workforce and internal controls, and our reduced revenues and potential losses could affect our access to capital. Execution of the wind down and the corresponding transition depends on numerous assumptions and external factors, and delays or shortfalls could further increase costs, reduce liquidity, and adversely affect our ability to pursue strategic opportunities. There can be no assurance that we will successfully transition to a new business model or generate sustainable revenues or profitability in the future; if we cannot, our business, financial condition, results of operations, and prospects would be materially and adversely affected, and we may need to undertake additional restructuring or other actions that could be dilutive or otherwise detrimental to investors.
Any actual or threatened delisting of our securities by Nasdaq could have a material and adverse effect on our business, operations and financial condition, and could, among other things, limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
As previously reported, on March 27, 2026, we received a written notice from the Listing Qualifications Department of Nasdaq, notifying us that the closing bid price of our common shares over a period of 30 consecutive trading days was below the minimum $1.00 per share requirement for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2), during the February 11, 2026 to March 26, 2026 period.
In accordance with applicable Nasdaq procedures, we have a period of 180 calendar days following the receipt of the written notice mentioned above to cure the deficiency and regain compliance. The notice has no immediate impact on the listing of our common shares, which will continue to trade on The Nasdaq Capital Market subject to our continued compliance with the other listing requirements of The Nasdaq Capital Market. Our common shares will continue to trade under the symbol “INM”. We intend to monitor the closing share price for our common shares and explore available options to regain compliance.
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In the event we do not evidence compliance with the minimum bid price rule during the 180-day grace period, we may be eligible for an additional 180 calendar day grace period. To qualify, we will be required to meet the continued listing requirement for market value of publicly held shares and all other listing standards for The Nasdaq Capital Market, with the exception of the minimum bid price rule, and will need to provide written notice of our intention to cure the deficiency during the second compliance period, by effecting a reverse stock split, if necessary, to Nasdaq. If it appears to the staff of Nasdaq that we will not be able to cure the deficiency, or if we are otherwise not eligible, we will not be entitled to an additional 180 calendar days grace period and Nasdaq will provide notice to us that our securities will be subject to delisting. If we do not regain compliance within the allotted compliance period(s), including any extensions that may be granted by Nasdaq, it is expected that Nasdaq would notify us that our common shares are subject to delisting. If we are notified by Nasdaq that our securities are subject to delisting, we may appeal such determination to the Panel, but our securities would be automatically suspended from trading on The Nasdaq Capital Market pending the completion of the appeal process. There can be no assurance that any such appeal would be successful or that we would be able to evidence compliance with the terms of any extension that may be granted by the Panel.
Delisting from The Nasdaq Capital Market could materially and adversely affect our ability to raise additional financing through the public or private sale of equity securities, would significantly affect the ability of investors to trade our securities and would negatively affect the value and liquidity of our securities, including our common shares. The actual or threatened delisting of our securities could also have other material and adverse consequences, including the potential loss of confidence by employees and other stakeholders, the loss of institutional investor interest and fewer business development opportunities, limited availability of market quotations for our securities, reduced liquidity with respect to our securities, a determination that our common shares is “penny stock,” which will require brokers trading in our common shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our common shares, and limited amount of news and analyst coverage of us. To the extent that our common shares became eligible to trade on the OTC Bulletin Board, another over-the-counter quotation system, or on the pink sheets, an investor may find it more difficult to dispose of their common shares or obtain accurate quotations as to the market value of our common shares.
Furthermore, the National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because our common shares are currently listed on The Nasdaq Capital Market, such securities will be deemed covered securities. Although the states will be preempted from regulating the sale of our securities, the federal statute does allow states to investigate companies if there is a suspicion of fraud and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. Additionally, if we were no longer listed on The Nasdaq Capital Market, our securities would not be covered securities and we would be subject to regulations in each state in which we offer our securities. Upon a delisting of our common shares, this offering would immediately terminate.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION.
Rule 10b5-1 Plan and Non-Rule 10b5-1 Trading Arrangement Adoptions, Terminations, and Modifications
During the three months ended March 31, 2026,
none of our directors or “officers” (as defined in Rule 16a-1(f) under the Exchange Act)
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ITEM 6. EXHIBITS.
Exhibits
The following exhibits are filed as part of this report:
| * | Filed herewith. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
| INMED PHARMACEUTICALS INC. | ||
| (Registrant) | ||
| Dated: May 6, 2026 | By: | /s/ Netta Jagpal |
| Chief Financial Officer | ||
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