Item 1A. Risk Factors. Below we are providing, in supplemental form, changes to our risk factors from those previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended June 30, 2025, and in our Quarterly Report for the three and six months ended September 30, December 31, 2025. Our business is subject to substantial risks and uncertainties. Investing in our securities involves a high degree of risk. You should carefully consider the risk factors in Part I, Item 1A of our Annual Report on Form 10-K for the year ended June 30, 2025, filed with the SEC on September 29, 2025, together with the information contained elsewhere in this report, including Part I, Item 1 Financial Statements and Part I, Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations, and in our other SEC filings in evaluating our business. These risks and uncertainties could materially and adversely affect our business, financial condition, results of operations, prospects for growth, and the value of an investment in our securities. Except as set forth below, there were no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended June 30, 2025. If our clinical trials fail to replicate results from earlier preclinical studies or clinical trials conducted by us or third parties, we may be unable to successfully develop, obtain regulatory approval for or commercialize our product candidates. The results observed from earlier preclinical studies or early-stage clinical trials of our product candidates, including positive results, may not necessarily be predictive of the results of ongoing or future clinical trials. Furthermore, our product candidates may not be able to demonstrate similar activity or adverse event profiles as other product candidates that we believe may have similar profiles. In addition, in our planned future clinical trials, we may utilize clinical trial designs or dosing regimens that have not been tested in prior clinical trials. Moreover, there is a high failure rate for drugs candidate proceeding through clinical trials and there can be no assurance that any of our clinical trials will ultimately be successful. We, and many other companies in the pharmaceutical and biotechnology industries, have suffered significant setbacks in late-stage clinical trials after achieving positive results in earlier-stage development, such as the failure of our BNC210 Phase 3 clinical trial in SAD to meet its primary endpoint, and we cannot be certain that we will not face similar setbacks in the future with respect to BNC210 in PTSD. Should we or any successor entity determine to continue the clinical trial advancement of BNC210 in PTSD, then in addition to the risk of any ongoing or planned clinical trials failing to meet primary endpoints, setbacks may also be caused by, among other things, preclinical findings made while clinical trials were underway or safety or efficacy observations made in preclinical studies and clinical trials. Such failures or setbacks may have a material adverse effect on our ability to develop, obtain regulatory approval for or ultimately commercialize any of our product candidates. If we fail to meet the continued listing requirements of Nasdaq, it could result in a de-listing of our Common Stock. If we fail to satisfy the continued listing requirements of Nasdaq, such as the corporate governance requirements, continued listing requirements such as the minimum $1.00 closing bid price requirement, Nasdaq could take steps to delist our common stock. Any failure by us to comply with Nasdaqs continued listing standards could result in a deficiency notice and, if not cured within the applicable period, could result in delisting. Our shares of common stock are currently listed on the Nasdaq Global Market. For example, on July 18, 2025, the Company received a deficiency notification letter (the Notice) from the Listing Qualifications Staff of The Nasdaq Stock Market LLC (Nasdaq). The Notice indicated that the Company was not in compliance with Nasdaq Listing Rule 5620(a) (the Listing Rule) as a result of the Companys failure to hold an annual general meeting of stockholders within twelve months of the end of the Companys fiscal year ended June 30, 2024. The Listing Rule requires that a Nasdaq-listed company hold an annual meeting of shareholders no later than one year after the end of the Companys fiscal year end. Pursuant to and in response to that Notice, the Company timely submitted its plan to Nasdaq to regain compliance with the Listing Rule (the Plan). In response to the Companys Plan, on September 10, 2025, Nasdaq provided the Company further notice that it has accepted our Plan and granted the Company an extension of 180 calendar days from the end of the Companys fiscal year, or until December 29, 2025, to regain compliance with the Listing Rule. To this end, the Company timely filed a Proxy Statement with the SEC together with a notice of shareholder meeting related to the Companys 2025 annual general shareholder meeting, which is currently scheduled for meeting. The Company successfully held its 2025 annual general shareholder meeting on December 12, 2025. While we believe this will bring 2025 in satisfaction of the Company into full compliance upon successful completion of item provided in the Notice. As a result, on December 18, 2025 shareholder meeting, the Company received a further written Notice from Nasdaqs Staff stating that it should be noted, however, has determined that any the Company has regained compliance with the Listing Rule and this matter is now closed. 26 Any future Nasdaq action relating to a delisting could have a negative effect on the price of our common stock, impair the ability to sell or purchase our common stock or other securities when persons wish to do so, and any such delisting action may materially adversely affect our ability to raise capital or pursue strategic restructuring, refinancing or other transactions on acceptable terms, or at all. Delisting from the Nasdaq Global Market could also have other negative results, including the potential loss of institutional investor interest, reduced research coverage, and fewer business development opportunities. Our financial statements for the quarter ended September 30, December 31, 2025 were prepared assuming that we will continue as a going concern. Our financial statements for the quarter three and six months ended September 30, December 31, 2025 were prepared assuming that we will continue as a going concern. The going concern basis of presentation assumes that we will continue in operation for a period of at least twelve months from the foreseeable future issuance of the financial statements in this Quarterly Report on Form 10-Q, and will be able to realize value for our assets, discharge our liabilities and commitments in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from our inability to continue as a going concern. Our management, together with management and our board of directors, is directors are currently in the process of assessing the Companys future prospects prospects, strategic transaction alternatives, and pathway in light of screening candidate bidders following the negative clinical phase 3 trial results related to our Affirm 1 study in SAD. As a result, we may be forced to further reduce our operating expenses and raise additional funds to meet our working capital needs, principally through the additional sales of our securities or debt financings including, but not limited to, for the possibility of continuing our PTSD clinical trial program. However, we cannot guarantee that we will be able to obtain sufficient additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to us. If we are unable to raise sufficient additional capital or complete a strategic transaction in a timely manner, we may be unable to continue to fund our operations, develop our product candidates, or realize value from our assets and discharge our liabilities in the normal course of business. If we cannot raise sufficient funds, or find a suitable strategic partner or alternative strategic pathway, we may have to liquidate our assets and might realize significantly less than the values at which they are carried on our financial statements, and stockholders may lose all or part of their investment in our common stock. 21 We may not be successful in identifying and implementing any strategic transaction and any strategic transactions that we may consummate in the future could have negative consequences. In October 2025, we announced that our AFFIRM-1 Phase 3 trial of BNC210 for the acute treatment of social anxiety disorder ("SAD") did not meet its primary or secondary endpoint of change from baseline to the average of the performance phase of the public speaking challenge in Subjective Units of Distress Scale (SUDS) scores. Therefore, our management and board of directors have determined that we are discontinuing all clinical development of BNC210 in SAD, and are assessing plans relating to work on BNC210 in PTSD. Simultaneously, our board of directors has determined to commence and continue a robust review of strategic alternatives to advance its promising pipeline programs and maximize stockholder value. Strategic alternatives under consideration may include, but are not limited to, mergers, acquisitions, partnerships, joint ventures, licensing arrangements or other strategic transactions. In addition, on November 10, December 2, 2025, the Company received an unsolicited non-binding indication of interest from Lynx1 Master Fund LP expressing (Lynx1) revised its interest in acquiring previous non-binding proposal to acquire all of the outstanding shares of Neuphoria that it does not already own the Company for $5.20 $4.75 per share in cash and cash. This revised offer, followed a previous higher non-binding proposal of $5.20 per share made on November 10, 2025, which Lynx1 withdrew on November 18, 2025. The November 10, 2025 indication of interest from Lynx1 included its intent to nominate certain individuals to stand for election to Neuphorias board of directors at the Companys 2025 Annual Meeting of Stockholders. Stockholders (Annual Meeting), which was held on December 12, 2025. In relevant part, at the Annual Meeting a quorum to properly hold the meeting was met, and the stockholders voted in favor of the election of the Companys existing Class 1 directors, Peter Miles Davies and David Wilson, by roughly a vote of 84% to 16%. The complete results of that annual stockholder meeting can be found in the Company current report on Form 8-K filed by the Company with the SEC on December 17, 2025. As previously disclosed, Neuphoria's board of directors determined that the revised bid by Lynx1 was undervalued, provided no meaningful premium to stockholders, and further determined to continue with its ongoing strategic alternatives review process. We expect to continue to devote substantial time and resources to exploring strategic alternatives that our board of directors believes will maximize shareholder value. Despite devoting significant efforts to identify and evaluate potential strategic alternatives, there can be no assurance that this strategic review process will result in us pursuing any transaction or that any transaction, if pursued, will be completed on attractive terms or at all. We have not set a timetable for completion of this strategic review process, and our board of directors has not approved a definitive course of action. Additionally, there can be no assurances that any particular course of action, business arrangement or transaction, or series of transactions, will be pursued, successfully consummated or lead to increased shareholder value or that we will make any cash distributions to our shareholders. The process of evaluating these strategic options may be very costly, including if this process results in any contested nominations or bids, time-consuming and complex and we expect to incur significant costs related to this evaluation, such as legal and accounting fees and expenses and other related charges. We may also incur additional unanticipated expenses in connection with this process, including but not limited to contract terminations, buyouts, damages resulting therefrom, costs and/or damages arising from change of control triggers, and other similar items that may cost more than anticipated or which may be reasonably unanticipated at this time. A 27 considerable portion of these costs will be incurred regardless of whether any such course of action is implemented or a transaction is completed. Any such expenses will decrease the remaining cash available for use in our business. In addition, potential Potential counterparties in a strategic transaction involving our company may place minimal or no value on our assets and our public listing. Further, should we determine to fully resume the development of BNC21 in PTSD, the development and any potential commercialization of BNC210 for this indication will require substantial additional cash to fund the costs associated with conducting the necessary clinical testing and obtaining regulatory approval. Consequently, any potential counterparty in a strategic transaction involving our Company may choose not to spend additional resources and continue development of BNC210 or any of our other product candidates and may attribute little or no value, in such a transaction, to those product candidates. In addition, any strategic business combination or other transactions that we may consummate in the future could have a variety of negative consequences and we may implement a course of action or consummate a transaction that yields unexpected results that adversely affects our business and decreases the remaining cash available for use in our business. Any potential transaction would be dependent on a number of factors, including certain change of control provisions and restrictions on assignment of certain assets, that could prove detrimental to the consummation of a transaction. A counterparty may, for example, also directly or indirectly cause potential significant harm to the value of our assets, including but not limited to triggering or causing the termination of certain of our material agreements, or cause the loss of certain valuable assets currently held by the Company, including but not limited to as a result of a change of control or deemed change of control transaction. Additionally, a number of the foregoing and other significant factors may be beyond our control, including, among other things, market conditions, industry trends, the interest of third parties in a potential transaction with us, obtaining shareholder approval and the availability of financing to third parties in a potential transaction with us on reasonable terms. Any failure of such potential transaction to achieve the anticipated results could significantly impair our ability to enter into any future strategic transactions and may significantly diminish or delay any future distributions to our shareholders. If we are not successful in identifying a strategic alternative or if our plans are not executed in a timely fashion, this may cause reputational harm with our shareholders and the value of our common stock shares may be adversely impacted. In addition, speculation regarding any developments related to the review of strategic alternatives and perceived uncertainties related to the future of our business could cause our share price to fluctuate significantly. Even if we successfully consummate a transaction from our strategic evaluation, we may fail to realize all of the anticipated benefits of the transaction, those benefits may take longer to realize than expected, or we may encounter integration difficulties. Our ability to realize the anticipated benefits of any potential business combination or any other result from our pursuit of strategic alternatives, are highly uncertain. Any anticipated benefits will depend on a number of factors, including our ability to realize what is believed to be higher value of certain assets due to contractual restrictions and limitations, the ability to integrate with any future business partner and our ability to generate future shareholder value. The process may be disruptive to our business and the expected 22 benefits may not be achieved within the anticipated time frame, or at all. The failure to meet the challenges involved and to realize the anticipated benefits of any potential transaction could adversely affect our business and financial condition. Any executed strategic transaction may not maximize or even enhance stockholder value, could result in total costs and expenses that are greater than expected, and could make it more difficult to attract and retain qualified personnel, each of which could have a material adverse effect on our business. In addition, a potential strategic alternative may require stockholder approval and stockholder approval may not be obtained (including if any significant or activist shareholder may not vote for such transaction or it/they may attempt to actively work against the approval of such strategic or other transaction) and, therefore, we may not successfully consummate the strategic alternative. In addition, the market price of our common stock may reflect a market assumption that a strategic alternative will occur, and a failure to complete a strategic alternative could result in negative investor perceptions and could cause a decline in the market price of our common stock, which could adversely affect our ability to access the equity and financial markets, as well as our ability to explore and enter into different strategic alternatives. If we are successful in completing a strategic transaction, we may be exposed to other operational and financial risks. Although there can be no assurance that a strategic transaction will result from the process we have undertaken to identify and evaluate strategic alternatives, the negotiation and consummation of any such transaction will require significant time on the part of our management, and the diversion of managements attention may disrupt our business. The negotiation and consummation of any such transaction may also require more time or greater cash resources than we anticipate and expose us to other operational and financial risks, including, but not limited to: increased near-term and long-term expenditures; exposure to unknown liabilities; higher than expected acquisition, disposition or integration costs; 28 incurrence of substantial debt or dilutive issuances of equity securities to fund future operations; write-downs of assets or goodwill or incurrence of non-recurring, impairment or other charges; increased amortization expenses; difficulty and cost in combining the operations and personnel of any acquired business with our operations and personnel; impairment of relationships with key suppliers or customers of any acquired business due to changes in management and ownership; inability to retain key employees of our company or any acquired business; termination of existing agreements that may lead to the loss of certain valuable assets, for little or no value; potential exchange or buyout costs related to certain existing agreements being much higher than reasonably anticipated; additional activist investor actions that may involve additional time and capital resources to resolve; and possibility of future litigation. Any of the foregoing risks could have a material adverse effect on our business, financial condition and prospects. If a strategic transaction is not consummated, our board of directors may decide to pursue a dissolution and liquidation. In such an event, the amount of cash available for distribution to our shareholders will depend heavily on the timing of such liquidation as well as the amount of cash that will need to be reserved for commitments and contingent liabilities. There can be no assurance that a strategic transaction will be completed. If a strategic transaction is not completed, our board of directors may decide to pursue a dissolution and liquidation. In such an event, the amount of cash available for distribution to our shareholders will depend heavily on the timing of such decision and, with the passage of time the amount of cash available for distribution will be reduced as we continue to fund our operations. In addition, if our board of directors were to approve and recommend, and our shareholders were to approve, a dissolution and liquidation, we would be required under Delaware law to pay our outstanding obligations, as well as to make reasonable provision for contingent and unknown obligations, prior to making any distributions in liquidation to our shareholders. As a result of this requirement, a portion of our assets may need to be reserved pending the resolution of such obligations and the timing of any such resolution is uncertain. The amount of cash available for distribution to our stockholders will depend heavily on the timing of such dissolution and liquidation, and the amount of cash that will need to be reserved for commitments and contingent liabilities. In addition, we may be subject to litigation or other claims related to a dissolution and liquidation. If a dissolution and liquidation were pursued, our board of directors, in consultation with our advisors, would need to evaluate these matters and make a determination about a reasonable amount to reserve. Accordingly, holders of our common stock shares could lose all or a significant portion of their investment in the event of a liquidation, dissolution or winding up. Our ability to consummate a strategic transaction depends on our ability to retain our employees key executives required to consummate such transaction. transaction, as well as resolving the continuation, amendment or termination of certain contracts involving key assets of the Company. Our ability to consummate a strategic transaction depends upon our ability to retain key executives required to consummate such a transaction, the loss of whose services may adversely impact the ability to consummate such transaction. In connection with the evaluation of strategic alternatives and in order to extend our resources, we implemented a reduction in our workforce by approximately 75%, which is expected was completed, whereby the Company terminated all but one employee, and also terminated its facility leases, and cancelled and/or suspended all research and development activities while it seeks to be completed by identify a partner with which to execute a strategic merger for the end benefit of the fourth calendar quarter existing shareholders of 2025. Neuphoria. The strategic review process is supported by our experience at the board of directors, executive management, and supporting staff levels, remaining support staff, as well as by the retention of outside advisors and consultants. To this end, the Companys board of directors terminated the employment agreement of our CEO, Dr. Spyridon Papapetropoulos, M.D, effective December 31, 2025, at which time Dr. Papapetropoulos ceased to serve as the full-time President and CEO of the Company. Pursuant to the terms of this employment agreement, Dr. Papapetropoulos was entitled to severance payment in an aggregate amount equal to his annual base salary, target bonus amount, and medical insurance premiums, 50% of which was paid in calendar year 2025, and the balance of such severance to be paid in partial installments in 2026 until paid in full. Simultaneously and in connection with the termination of the foregoing employment agreement, Dr. Papapetropoulos entered into a consulting agreement with the Company (the Consulting Agreement) effective January 1, 2026, under which Dr. Papapetropoulos will serve as the interim CEO to the Company for up to twelve months to support the execution of the Companys contemplated strategic transaction and ensure a seamless transition. Under the terms of the Consulting Agreement, Dr. Papapetropoulos will receive consulting fees equal to $800 per hour for services up to approximately 40 hours per month for his continued services, which aggregate hours shall not exceed more than twenty percent of the total hours performed while acting as the full-time CEO of the Company. 29 Our cash conservation activities may yield unintended consequences, such as attrition beyond our reduction in workforce and reduced employee morale, which may cause remaining employees to seek alternative employment. Our 23 ability to successfully complete a strategic transaction depends in large part on our ability to retain certain of our remaining key personnel successfully retain our remaining personnel, we are at risk of a disruption to our exploration and consummation of a strategic alternative as well as business operations. In addition, strategic mergers and similar transaction structures often require restructuring material contracts to realize synergies or comply with the new corporate structure. If, for example, certain collaborative or development partners of the Company do not agree to an assignment, consent or such other seamless continuation of such contract in connection with a successor entity, or in the alternative, a reasonable amendment, if necessary, to such contracts, the merger or other strategic transaction's economic rationale may fail, and a transaction may not be consummated. Our corporate restructuring and the associated headcount reduction may not result in anticipated savings, could result in total costs and expenses that are greater than expected and could disrupt our business. In November 2025, our board of directors determined to discontinue all clinical development of BNC210 in SAD and, in connection with such decision, approved and then consummated a reduction in our workforce of approximately 75%. workforce. We expect to incur incurred personnel-related restructuring charges of approximately $1.6 $1.4 million related to such reduction in our workforce. We may not realize, in full or in part, the anticipated benefits, savings and improvements in our cost structure from our restructuring efforts due to unforeseen difficulties, delays or unexpected costs. If we are unable to realize the expected operational efficiencies and cost savings from the restructuring, our operating results and financial condition would be adversely affected. Furthermore, our restructuring plan may be disruptive to our operations. For example, our headcount reductions could yield unanticipated consequences, such as increased difficulties in implementing our business strategy, including retention of our remaining employees. Any future growth would impose significant added responsibilities on members of management, including the need to identify, recruit, maintain and integrate additional employees. Due to our limited resources, we may not be able to effectively manage our operations or recruit and retain qualified personnel, which may result in weaknesses in our infrastructure and operations, risks that we may not be able to comply with legal and regulatory requirements, and loss of employees and reduced productivity among remaining employees. Our future financial performance and, should we resume development, our ability to develop our product candidates or additional assets will depend, in part, on our ability to effectively manage any future growth or restructuring, as the case may be. We may become involved in litigation that could divert managements attention and harm our business, and insurance coverage may not be sufficient to cover all costs and damages. In the past, litigation has often followed certain significant business transactions, such as the sale of a company or company, announcement of any other strategic transaction, or the announcement of negative events, such as negative results from additional clinical trials. These events may also result in investigations by the Securities and Exchange Commission (the SEC). We may be exposed to such litigation or investigation even if no wrongdoing occurred. Litigation and investigations are usually expensive and divert managements attention and resources, which could adversely affect our cash resources and our ability to consummate a potential strategic transaction.