Nasus Pharma Ltd. (the “Company”) was incorporated in May 2019 under the laws of the State of Israel. The Company is a clinical stage specialty pharmaceutical company focused primarily on the development of innovative intranasal products . The Company is developing a powder-based intranasal technology with a specialized product portfolio to address acute medical conditions and public health threats. The Company’s lead product candidate is NS002, an intranasal powder Epinephrine nasal spray for the treatment of type 1 severe allergies and anaphylaxis. The Company has also been developing NS001, an intranasal naloxone powder nasal spray for the treatment of opioid overdose. In addition, the Company is developing NS003, an intranasal powder formulation of ondansetron for the treatment of chemotherapy-induced and postoperative nausea and vomiting. Following the successful completion of its Phase 3 clinical trial, the Company has paused development activities for NS001 and is evaluating potential partnering opportunities and strategic alternatives for the program.

The Company has a wholly-owned subsidiary in Delaware, Nasus Pharma, Inc., which has had no operations since its incorporation in June 2026. The Company incorporated the subsidiary for future anticipated activity in the United States.

The financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

Since inception, the Company has devoted substantially all of its efforts to business planning, research and development, conducting clinical trials and securing capital resources. The Company remains in the development and clinical stage and has not generated revenue from its product candidates to date. As a result, the magnitude of future operating losses and the timing of achieving profitability remain uncertain.

During the six months ended June 30, 2026, the Company incurred a net loss of $5,942 (and a loss of $5,948 from continuing operations) and used net cash flows from operations of $6,036 (and cash used in continuing operations was $5,995). Additionally, as of June 30, 2026, the Company had an accumulated deficit of $24,462.

The Company has funded its operations to date primarily through equity financing and the issuance of convertible securities in the form of simple agreements of future equity (“SAFE”) (see Note 3). Additionally, on August 14, 2025, the Company successfully completed its initial public offering (“IPO”), and, on September 30, 2025, closed on a partial exercise of the over-allotment option by the underwriters of its IPO, raising an aggregate of $10.0 million in gross proceeds. On February 13, 2026, the Company closed a private placement transaction with certain institutional and accredited investors for the issuance of Ordinary Shares and warrants to purchase Ordinary Shares (the “Ordinary Warrants”), for aggregate gross proceeds of $15.0 million.

Additional funding will be required to complete the Company’s research and development and clinical trials, to attain regulatory approvals, to begin the commercialization efforts of the Company’s products and to achieve a level of sales adequate to support the Company’s cost structure. While the Company has been able to raise outside capital in the past, there is no assurance that it will be able to successfully obtain additional financing on a timely basis in terms acceptable to the Company.

Management expects that the Company will continue to generate losses from the clinical development and regulatory activities of its product candidates, which would result in negative cash flow from operating activity. This has led management to conclude that there is substantial doubt about the Company’s ability to continue as a going concern. The Company’s consolidated financial statements do not reflect any adjustments that might result from the outcome of this uncertainty

On August 6, 2025, the Company effected a forward share split at a ratio of 1-for-4.77008. All share and per share amounts for Ordinary Shares, share options and loss per share amounts have been adjusted to give retroactive effect to the forward share split for all periods presented in these consolidated financial statements.

On August 14, 2025, the Company closed its IPO of 1,250,800 Ordinary Shares, at a price of $8.00 per share and on September 30, 2025, the Company closed on a partial exercise of the underwriters’ over-allotment option to purchase additional 3,824 Ordinary Shares, at a price of $8.00 per share, resulting in total gross proceeds from the IPO of $10.0 million (net proceeds of $8.2 million after deducting underwriting discounts and commissions and other offering expenses). The Company’s Ordinary Shares are listed on the NYSE American and commenced trading under the symbol “NSRX” on August 13, 2025.

In addition, pursuant to the terms of the underwriting agreement for the IPO, the underwriter was granted 37,614 Underwriter Warrants. The Underwriter Warrants have an exercise price equal to $10.00 per Ordinary Share, became exercisable on February 10, 2026 and will expire on August 10, 2030. The Company estimated the fair value of the Underwriter Warrants using a Black-Scholes options pricing model to be approximately $257, which were recognized as issuance expenses. The Underwriter Warrants were classified as equity in accordance with ASC 815-40, as they are indexed to the Company’s own stock and meet all equity classification criteria. Accordingly, the Underwriter Warrants were recorded within shareholders’ equity and are not subsequently remeasured.

On February 10, 2026, the Company entered into a definitive securities purchase agreement (the “Securities Purchase Agreement”), for a private placement of Ordinary Shares and Ordinary Warrants (the “February 2026 Private Placement”). Pursuant to the Securities Purchase Agreement, certain investors purchased 2,695,425 of the Company’s Ordinary Shares and Ordinary Warrants to purchase up to 2,695,425 Ordinary Shares at a combined purchase price of $5.565 per share and accompanying Warrant. The February 2026 Private Placement resulted in gross proceeds to the Company of $15.0 million (net proceeds of $13.7 million after deducting placement agent fees and other expenses).

The Ordinary Warrants have an exercise price of $6.53 per Ordinary Share, and expire upon the earlier of two years from the date of issuance and 30 trading days following the Company’s announcement of the top-line results of the Company’s NS002 pivotal study. None of the Ordinary Warrants have been expired nor  exercised as of the date of these consolidated financial statements. The Ordinary Warrants were classified as equity in accordance with ASC 815-40, as they are indexed to the Company’s own stock and meet all equity classification criteria. Accordingly, the Ordinary Warrants were recorded within shareholders’ equity.

NASUS PHARMA LTD. AND ITS SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in U.S. dollars in thousands, except share and per share amounts)

A SAFE requires conversion into shares of the Company upon the occurrence of certain events, or at the maturity date of the SAFE. The number of shares to be issued upon conversion of the SAFE are not fixed and will be dependent upon the nature of the event that occurred that resulted in its conversion, the fair value of shares as of the event’s date, and other factors as defined in the related agreement.

SAFEs are classified as a liability and the Company elected the fair value option in accordance with ASC 825, Financial Instruments (“ASC 825”). Accordingly, the liability is adjusted to fair value at each balance sheet date, with the change in fair value being recorded as change in fair value of convertible securities within the statements of operations. The Company reclassifies the SAFE amount from liability to equity once it converts into Ordinary Shares.

NASUS PHARMA LTD. AND ITS SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in U.S. dollars in thousands, except share and per share amounts)

The Company’s IPO triggered the conversion of the 2024 SAFEs into Ordinary Shares and the 2024 SAFE were converted into 398,653 Ordinary Shares.

The SAFEs were valued at the end of the period using a probability-weighted expected return model, which incorporated significant unobservable inputs.

There were no SAFE liabilities outstanding as of June 30, 2026 (see Note 3).

There were no transfers between fair value measurement levels during the six-months ended June 30, 2026 and year ended December 31, 2025.

The estimated fair value of the Company’s cash and cash equivalents, short term deposits, restricted cash, other current assets, accounts payable, accrued expense and other current liabilities approximates their carrying values as these financial instruments are highly liquid or short-term in nature.

NASUS PHARMA LTD. AND ITS SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in U.S. dollars in thousands, except share and per share amounts)

Litigation

Commitments

In June 2019, the Company entered into a service agreement with Formulex, as subsequently amended in March 2020 (the “2019 Formulex Service Agreement”), to facilitate the flow of information and know how, as well as help develop the Company products. The Company agreed to pay a monthly fee of $5 under this agreement. The 2019 Formulex Service Agreement renewed every year for a period of one year, unless terminated by either party upon 30 days’ written notice, in accordance with the terms and conditions set forth therein. In December 2025, the Company and Formulex agreed on the termination of the 2019 Formulex Service Agreement and to forfeiture of prior obligations under that agreement.

On September 8, 2025, the Company entered into a services agreement with Formulex where the Company would pay a monthly fee of $10 for research and development services. The term of the service agreement is 36 months and the Company has the right to terminate it with 30 days notice.

In connection with the same, Formulex provided the Company with non-recurring development services in the six months ended June 30, 2026 and 2025 for additional fees of $114 and $76, respectively.

In December 2024, the Company signed an additional agreement with Formulex to provide services which support the Company in providing services to the governmental body. An amount of $171 is recorded in the consolidated statements of operations in research and development expenses during the six month period ended June 30, 2025.

On March 23, 2026, the Company entered into a services agreement with Formulex for the formulation, development, analytical method qualification, GMP manufacturing, batch release, and stability testing services for the Company’s Ondansetron Nasal Powder. Under the agreement, Formulex will manufacture up to 200 investigational drug product devices and perform related analytical and stability services in accordance with the agreed scope of work. The Company will compensate Formulex based on the agreed project milestones and payment schedule set forth in the agreement. An amount of $7 is recorded in the consolidated statements of operations in research and development expenses during the six month period ended June 30, 2026.

NASUS PHARMA LTD. AND ITS SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in U.S. dollars in thousands, except share and per share amounts)

The 2019 Aptar Agreement had an early termination fee in case the Company terminate NS001 or NS002 programs for whatever reason, other than a breach of the agreement by Aptar, of $450 for each product.

In April 2021, the Company entered into an agreement with Aptar’s subdivision, NextBreath, which was subject to terms and conditions of the 2019 Aptar Agreements, to perform laboratory and development services in connection with NS001. For the services received under the 2019 Aptar Agreement by April 2022, there was an amount of $529 outstanding payable to Aptar.

On June 15, 2022, Aptar sent Nasus a Notice of Default Letter, which followed by Notice of Termination Letter sent on October 5, 2022, in which Aptar claimed for alleged breach of the contractual obligations of the Aptar Agreement made by Nasus and stated the outstanding amounts of $529 and in addition a termination fee of $450 related to NS001. The Company did not agree with the alleged breach made by Aptar and the existence of any grounds for termination of the Aptar’s Agreement. As of June 30, 2025 and December 31, 2024, a liability of $529 was recorded as accounts payable within the consolidated balance sheets. The Company has not recorded a liability for the termination fees of $900 ($450 for NS001 and $450 for NS002). The Company settled all outstanding disputes relating to the 2019 Aptar Agreement as further noted below.

In October 2025, the Company and Aptar entered into a Termination and Settlement Agreement (the “Termination Agreement”) pursuant to which the Company and Aptar agreed to (i) terminate the 2019 Aptar Agreements, and (ii) fully and finally resolve and settle all outstanding disputes relating to the 2019 Aptar Agreements. Pursuant to the Termination Agreement, the Company paid Aptar $75 in 2025 and $225 in May 2026, for a total settlement of $300 (the “Settlement Amount”), in full and final settlement of all outstanding disputes relating to the 2019 Aptar Agreements, including the $529 claimed by Aptar and any future claims for termination fees. As of June 30, 2026 and December 31, 2025, a liability of $0 and $225, respectively, is recorded as accounts payable within the consolidated balance sheets.

In October 2025, the Company and Aptar concurrently entered into a new master service agreement and schedules of work (the “New Aptar Agreement”) in which Aptar granted the Company technology access to co-development and support for the development and submissions to regulatory bodies of intranasal to deliver NS002 using Aptar’s technology. In connection with the New Aptar Agreement, the Company is required to pay Aptar up to $1,000 in the aggregate comprising of $600 to be paid in three annual instalments, milestone payments of $200 upon submission of New Drug Application (“NDA”) with the U.S. Food and Drug Administration (or equivalent body outside the U.S) (“FDA”) and additional $200 upon approval of the NDA with the FDA, and royalty payments based on sales of the intranasal Epinephrine product for a period of seven years commencing on the date of first commercial sale. The Company paid $200 to Aptar to date under the New Aptar Agreement. The New Aptar Agreement has an early termination fee in case the Company terminates NS002 program for whatever reason, other than a breach of the agreement by Aptar, of up to $160 based on termination date.

In addition, in October 2025, the Company entered into a short-form supply agreement (the “Supply Agreement”) with Aptar relating to NS002. Pursuant to the Supply Agreement, and subject to approval of the underlying product by the FDA, Aptar will serve as the Company’s exclusive supplier of unit dose powder nasal delivery system devices, and the Company has agreed to purchase 100% of its requirements for such devices from Aptar for use in the Company’s Epinephrine products. The Supply Agreement has an initial term of five years and is renewable for an additional two-year period. The Supply Agreement also sets forth pricing on a per-component basis. Initial payment of $95 was made on May 20, 2026 and was booked as prepaid expense, as the related materials had not yet been received as of June 30, 2026.

Segment information is prepared on the same basis that the Company’s chief operating decision maker (“CODM”), the Chief Executive Officer, manages the business, makes business decisions and assesses performance. The Company has one operating and reportable segment specializing in the development of intranasal drugs to treat emergency medical conditions, as described in Note 1(a). All of the Company’s assets are located in Israel.

The CODM assesses performance for this segment and decides how to allocate resources based on net loss. The measure of segment assets is reported on the balance sheet as cash and cash equivalents. The Chief Executive Officer performs the assessment of segment performance by using the reported measure of segment profit or loss to monitor actual results.

NASUS PHARMA LTD. AND ITS SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in U.S. dollars in thousands, except share and per share amounts)

Basic net loss per share is computed using the weighted average number of shares of Ordinary Shares outstanding for the period. Diluted net loss per share reflects the effect of the assumed exercise of any share options, and the conversion of any convertible securities, in each case only in the periods in which such effect would have been dilutive.

For the six months and year ended June 30, 2026 and June 30, 2025, net loss per share amounts were the same for Ordinary Shares, Class A Ordinary Shares, Class A-1 Ordinary Shares, Class A-2 Ordinary Shares, Class A-3 Ordinary Shares, Class A-3A Ordinary Shares and Class A-3B Ordinary Shares because the holders of each class are entitled to equal per share dividends.

NASUS PHARMA LTD. AND ITS SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in U.S. dollars in thousands, except share and per share amounts)

NOTE 8:- RELATED PARTIES

In March 2025, the shareholders and the Board of Directors approved compensation adjustments upon completion of the IPO to Mr. Udi Gilboa, as follows: (i) NIS 86 ($24) monthly consultation fee in the first year following the IPO, (ii) NIS 90 ($25) monthly consultation fee in the second year following the IPO, and (iii) NIS 95 ($26) monthly consultation fee from the third year following the IPO; (iv) monthly car allowance and maintenance expenses of NIS 4 ($1); (v) annual bonus of up to 25% of the annual consulting fees, the specific amount of which is subject to further approval of our Board of Directors; and (vi) one-time bonus of NIS 1,068 plus VAT ($293) upon completion of the IPO. Further, the compensation committee and Board of Directors, may grant Mr. Gilboa: (i) a special bonus of up to 1.5% of the proceeds of a qualified merger, sale, or assignment as provided therein; (ii) an equity financing bonus equal to up to 2% of the cash proceeds in a private placement or other equity financing transaction, and (iii) a one-time bonus for special efforts performed by Mr. Gilboa and/or in respect of the significant contribution of Mr. Gilboa to the Company’s operations, special projects or extra ordinary achievements which are not in the Company’s ordinary course of business.

In March 2025, the Board of Directors and the shareholders approved compensation adjustments upon completion of the IPO to Dr. Dalia Megiddo, as follows: (i) NIS 86 ($24) monthly consultation fee in the first year following the IPO, (ii) NIS 97 ($27) monthly consultation fee in the second year following the IPO, and (iii) NIS 106 ($29) monthly consultation fee from the third year following the IPO; (iv) monthly car allowance and maintenance expenses of NIS 4 ($1); (v) annual bonus of up to 25% of annual consulting fees, subject to approval of our Board of Directors; one-time bonus of NIS 855 plus VAT ($235) upon completion of the IPO. Further, the compensation committee and the Board of Directors, may grant Dr. Megiddo (i) a special bonus of up to 1.5% of the proceeds of a qualified merger, sale, or assignment as provided therein; (ii) a one-time bonus for special efforts performed by Dr. Megiddo and/or in respect of the significant contribution of Dr. Megiddo to the Company’s operations, special projects or extra ordinary achievements which are not in the Company’s general course of business; (iii) a bonus of NIS 905 plus VAT ($249) upon NDA submission for NS002 to the FDA; and (iv) a bonus of NIS 1,811 plus VAT ($497) upon FDA approval of an NDA for NS002.

For the six months ended June 30, 2026 and 2025, management fees for Mr. Gilboa in the total amount of $456 and $137  respectively, recorded as operating expense within the consolidated statements of operations. Mr. Gilboa’s fees for the six-months ended June 30, 2026 include a one-time bonus of $277 representing 2% of the private placement’s aggregate net proceeds in connection with the February 2026 Private Placement.

For the six months ended June 30, 2026 and 2025, management fees for Dr. Dalia Megido in the amount of $182  and $94  respectively, recorded as operating expense within the consolidated statements of operations.

NASUS PHARMA LTD. AND ITS SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in U.S. dollars in thousands, except share and per share amounts)

In March 2025, the shareholders and the Board of Directors approved, subject to the consummation of the IPO, the following amendments to the agreement with the CEO (1) an increase in the CEO Annual Bonus from 10%-20% of his annual gross salary to 20%-30%; (2) one-time bonus of $75 if the Phase 3 clinical trial of NS002 successfully meets its primary end-point; and (3) an increase in the CEO IPO Bonus to NIS 240 ($66). In August 2025, following the consummation of the IPO, the Company paid the CEO IPO Bonus.  

On July 22, 2026, Mr. Dan Teleman and the Company entered into mutual separation agreement   (see Note 11). 

In addition, Mr. Udi Gilboa received a bonus of 2% of the private placement’s aggregate net proceeds, in an amount of $277. In addition, management received a bonus of $270 in aggregate of which $70 is subject to the shareholder approval.

During 2020, the Company’s research and development team in Israel developed a nasal powder that creates a hostile microenvironment in the nose where many airborne viruses can’t survive, which was marketed as Taffix (“Taffix”). At the end of 2021, the Company started the wind-down of Taffix by selling off all the manufacturing equipment, ceasing marketing efforts, seeking alternatives, fulling final orders but not accepting new orders, disposal of inventory and terminating of engagements with employee contractors and manufacturers. As of December 2022, the Company was no longer engaged in the development, production, marketing or sales of Taffix.

NASUS PHARMA LTD. AND ITS SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in U.S. dollars in thousands, except share and per share amounts)

In accordance with applicable accounting guidance, the results of Taffix are presented as net income (loss) from discontinued operations in the statements of operations. Further, the Company reclassified the liabilities of Taffix current liabilities related to discontinued operations on the balance sheets as of June 30, 2026 and December 31, 2025. The statements of cash flows are presented on a basis for both continuing operations and discontinued operations.

In January 2025, the Company granted the CEO and Oren Elmaliach, its Director of Finance, 318,856 share options and 27,681 share options, respectively, to purchase 346,537 Class Ordinary Shares at an exercise price of $6.05. The share options are to vest over a period of 36 months, commencing January 7, 2025, with the share options granted to the CEO vesting fully upon change of control, other than IPO, as defined in the option letter award agreement. In addition, the Company increased the maximum number of Ordinary Shares reserved for issuance under its 2019 Incentive Option Plan (the “2019 Plan”) by 477,008, from 246,170 Ordinary Shares to 723,178 Ordinary Shares.

In March 2025, the shareholders and the Board of Directors approved, subject to the consummation of the IPO, the following amendments to the agreement with the CEO (1) an increase in the CEO Annual Bonus from 10%-20% of his annual gross salary to 20%-30%; (2) one-time bonus of $75 if the Phase 3 clinical trial of NS002 successfully meets its primary end-point; and (3) an increase in the CEO IPO Bonus to NIS 240 ($66). In August 2025, following the consummation of the IPO, the Company paid the CEO the CEO IPO Bonus.

In July 24, 2026, the Company’s entered into a mutual separation agreement with Mr. Dan Teleman, pursuant to which he agreed to resign from his position of Chief Executive Officer of the Company and from the Company’s Board of Directors, effective July 22, 2026.(see Note 11).

NASUS PHARMA LTD. AND ITS SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in U.S. dollars in thousands, except share and per share amounts)

Under the agreement, if, during the term, the Company completes a sale of all its assets or undergoes a change in control, Mr. O’Grady will be entitled to a bonus of $750, less applicable taxes and withholdings.

Mr. O’Grady is also entitled to 210,000 stock options subject to a three-year time-based vesting schedule of which one-third (1/3) vesting on the anniversary date while the remaining two-thirds (2/3) vesting in the three (3) month intervals of 17,500 options each, beginning with the fifteen (15) month anniversary of the effectivity date until fully vested upon the eight (8^th) and final interval. The stock options have exercise prices of $3.50, $4.25, and $5.00 per share for each respective one-third tranche of the award.

Finally, Mr. O’Grady is also entitled to additional stock options with milestone-based vesting:

Mr. O’Grady’s compensation package was approved by the Board of Directors, and remains subject to the approval of the Company’s shareholders.