CNXU 10-K & 10-Q changes, risk factors and insider trading

On September 4, 2026, the Company raised gross proceeds of $1,753,998 through the exercise of warrants by four holders at an exercise price of $2.30 per share. In connection with the exercises, the Company issued an aggregate of 762,608 shares of common stock. The proceeds will be used to support ongoing operations. The shares issued upon exercise are "restricted securities" as defined in Rule 144(a)(3) under the Securities Act of 1933, as amended.

We incurred a net loss of $7,725,651 for the three months ended July 31, 2026, compared to a net loss of $1,298,570 for the same period in 2025, an increase of $6,427,081. The three months ended July 31, 2025, reflected our early-stage operations shortly after the Company completed the assignment of its extracellular matrix ("ECM") patent and began to plan a strategy for developing the underlying intellectual property, funded principally by modest private placement activity. By comparison, the three months ended July 31, 2026, reflect the operations of a substantially larger, Nasdaq-listed public company that completed its direct listing on May 21, 2026, raised significant additional capital, and incurred the compensation, governance, regulatory, and market-visibility costs that accompany that transition.

• Business Development - an increase of $1,175,087, reflecting expanded marketing, investor relations, and business development initiatives undertaken following our Nasdaq listing to build and maintain trading visibility, liquidity, and investor awareness for our newly public stock, and to support our ongoing capital-raising efforts. Business development costs also include travel-related expenses (airfare, accommodations, and ground transportation) associated with investor and business development meetings, which increased materially following our Nasdaq listing and are discussed further below.

• Insurance - an increase of $160,309, primarily driven by the directors' and officers' liability insurance obtained ahead of our listing.

• Research and Development Expenses - Research and development expenses increased by $135,750 to $270,412, reflecting a lease commitment for Company operated laboratory facilities (see Note 9 to the unaudited condensed interim financial statements), engagement of scientific consultants, and procurement of materials used in development and testing. Our current activities are primarily focused on the development and validation of our existing proprietary platform and the evaluation of potential applications across multiple verticals. We expect research and development activities to expand over time as we advance our product pipeline and explore additional applications of our technology.

Nine Months Ended July 31, 2026, compared to July 31, 2025

We did not generate any revenue during the nine months ended July 31, 2026, or 2025.

We incurred a net loss of $11,748,757 for the nine months ended July 31, 2026, compared to a net loss of $2,046,684 for the same period in 2025, an increase of $9,702,073. The nine months ended July 31, 2025, the Company was in the early stages of investigating the commercial potential of its ECM intellectual property, which had only recently been fully assigned to the Company, and had achieved modest success with private placement financings. By comparison, during the nine months ended July 31, 2026, the Company completed a direct listing on the Nasdaq Capital Market on May 21, 2026, raised approximately $7.7 million in net financing proceeds during the period (see "Liquidity Outlook" below), and made the investments in personnel, governance, regulatory compliance, and market visibility that are necessary to operate and maintain relevance as a Nasdaq-listed company.

In particular, following the direct listing, the Company allocated significant resources to marketing and business development initiatives, given the importance of building and sustaining trading visibility and investor awareness both generally and in support of the Company's ongoing need to raise additional capital.

The increase in net loss was primarily attributable to:

• Business Development - Increased business development, marketing, and investor relations activities following our Nasdaq listing, including approximately $357,000 of travel-related costs (airfare, accommodations, and ground transportation) associated with the direct listing on May 21, 2026, investor and business development meetings, representing approximately 25% of the $1,410,010 of business development expense for the nine months ended July 31, 2026.

• Consulting - Consulting costs increased to $5.4 million, however, a substantial portion of this expense is non-cash, stock-based compensation of approximately $3.7 million ($3,667,836) issued to marketing and advisory vendors.

• Management and Personnel Costs - Increased management and personnel-related expenses, including stock-based compensation of approximately $1.3 million ($1,270,543).

• Regulatory Fees - an increase of $299,015 reflecting the Company's expanding efforts and continued preparations of the Company's 510K for submission to the FDA.

• Insurance - an increase of $168,709, primarily driven by the directors' and officers' liability insurance obtained ahead of our listing.

• Professional Fees - an increase of $593,088 due to higher professional fees including legal, accounting, and advisory costs associated with the direct listing and operating as a publicly listed company.

• Research and Development Expenses - Research and development expenses increased to $399,578, reflecting a lease commitment for Company operated laboratory facilities (see Note 9 to the unaudited condensed interim financial statements), engagement of scientific consultants, and procurement of materials used in development and testing. Ongoing work in support of the 510K submission. Current activities continue to investigate the application of our existing proprietary platform across multiple verticals. We expect research and development activities to expand over time as we advance our product pipeline and explore additional applications of our technology.

As of July 31, 2026, we had cash and cash equivalents of approximately $2.0 million ($1,971,408), together with restricted cash of approximately $0.2 million ($238,208) related to funds received from exercised warrant held in trust (see Note 3 to the unaudited condensed interim financial statements), and working capital of approximately $5.5 million ($5,487,587). Our cash and cash equivalents declined by approximately $2.6 million from $4.8 million at October 31, 2025, reflecting the higher level of operating expenditures described above, including marketing, business development, and compensation costs. The collection of a $2.0 million private placement subscription receivable at October 31, 2025, and net proceeds from warrant exercises under our Warrant Exercise Incentive Program help to offset the overall increased expenses during the nine months ending July 31, 2026.

We have incurred recurring losses since inception and had an accumulated deficit of approximately $16.3 million ($16,270,277) as of July 31, 2026, compared to $4.5 million as of October 31, 2025.

Prepaid Expenses

Prepaid expenses increased from approximately $0.5 million ($549,930) as of October 31, 2025, to approximately $4.5 million ($4,544,274) as of July 31, 2026, an increase of approximately $4.0 million ($3,994,344). Approximately $3.7 million, or 81%, of the increase relates to two business development and marketing service agreements entered into following our Nasdaq listing, consisting of a $3.5 million contract for services to be rendered over a twelve-month period from June 2026 through May 2027 and a second for $0.6 million for services to delivered prior to October 31, 2026.

As of July 31, 2026, of this total $4.1 million, $0.2 million was recorded in accounts payable and paid in cash in August. Amounts paid or payable under these agreements are capitalized as a prepaid expense and will be recognized as business development expenses over the twelve-month service period; approximately $0.6 million had been recognized as expense as of July 31, 2026, leaving a prepaid balance of approximately $3.5 million, all of which is expected to be recognized as expense within the next twelve months. The cash paid under this agreement is a significant driver of the increase in cash used in operating activities for the three months ended July 31, 2026, discussed under "Liquidity, Capital Resources, and Going Concern" below. The remaining approximately $0.8 million of the July 31, 2026, balance relates to prepaid insurance, regulatory, professional, and other operating costs also paid in cash in advance in the normal course of business, including the annual premium for our directors' and officers' liability insurance policy paid in connection with our Nasdaq listing.

Liquidity Outlook

Net cash provided by financing activities during the nine months ended July 31, 2026, was $7,548,009 (2025 - $1,820,391). The increase was driven by the collection of a $2.0 million cash for a private placement subscription receivable that had been outstanding at October 31, 2025 in connection with a private placement that closed on October 28, 2025, together with net proceeds of $2,943,351 (2025 - $2,018,413) from non-brokered private placements closed during the six months ended April 30, 2026, and proceeds of approximately $2.7 million received under the Company's Warrant Exercise Incentive Program during the nine months ended July 31, 2026, as warrant holders exercised outstanding warrants and subscribed for new warrants at a $2.30 exercise price. No new private placement tranches were closed during the three months ended July 31, 2026; financing activity during the quarter was driven primarily by warrant inducement exercises. There were two reductions offsetting the incoming funds, offering costs that were paid out during the period of $30,992 and that have subsequently been written off due to the direct listing and total cash paid out of $92,187 for the financed insurance premiums, including the initial down payment.

Our average monthly cash used in operating activities was approximately $1.1 million for the nine months ended July 31, 2026, compared to approximately $0.56 million for the six months ended April 30, 2026. The increase was concentrated in the three months ended July 31, 2026, during which average monthly cash used in operating activities was approximately $2.3 million, reflecting the one-time costs related to the direct listing on the Nasdaq (approx. $0.35 million), marketing, business development, and compensation costs described above. Noteworthy is that in the current quarter ending July 31, 2026, a significant amount of the cash used in operating activities was used to prepay for expenses, approximately $3.3 million, that will have future benefits in the months to come.

Excluding these one-time items and prepaid expenses, we estimate that our recurring average monthly cash burn rate during the three months ended July 31, 2026, was approximately $0.87 million, compared to approximately $0.56 million for the six months ended April 30, 2026, reflecting a sustained increase in the costs of operating as a Nasdaq-listed company, including insurance, listing and regulatory fees, professional fees, travel, and compensation costs, as described above.