2. GOING CONCERN UNCERTAINTY AND MANAGEMENT’S PLAN

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

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

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

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

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

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

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