Pure Bioscience, Inc. (PURE)

PURE Bioscience operates in the food safety market, an industry that continues to rely on toxic chemicals as processing aids or interventions during food processing operations, for which pathogens are becoming increasingly resistant and rendering current interventions less efficacious. Most of these chemicals carry various warning labels for their toxic and/or caustic characteristics, which can negatively affect the safety of processing plant personnel, plant operating equipment and the plant environment and its surroundings. Currently used chemicals in food processing include peracetic acid, acidified sodium chlorite, ozone, and chlorine dioxide, some of which can be difficult to work with as a processing aid as they require heating to become effective or are difficult to mix and stabilize prior to use, some of which damage the food being processed, leading to reduced yields, and some of which can produce noxious fumes that over time have been linked to upper respiratory illness and typically require in-plant decontamination of their effluence. The food safety market is highly competitive, and recent trends in the industry are for large food safety companies to consolidate into a smaller number of very large entities, which further concentrates financial, technical and market strength and increases competitive pressure in the industry.

PURE Bioscience competes in the highly competitive food safety market, where its SDC-based product offerings, especially at higher silver ion concentration levels, are typically more expensive to produce than existing treatment chemicals, and as a result, customers may not purchase its products for cost reasons, even if the company is successful in demonstrating the superior efficacy of its products. Most competitors have been in business for a longer period of time than PURE Bioscience, offer a greater number of products and services, and have greater financial, technical, sales and other resources. Many competitors already have well established brands and distribution capabilities, and in some cases are able to leverage the sale of other products with more favorable terms for products competing with PURE Bioscience's own. PURE Bioscience also has significantly fewer sales personnel than virtually all of its competitors. Since SDC is a novel antimicrobial technology, the company's success hinges on gaining market share from established products, and even if SDC demonstrates technological advantages, substantial investments are needed to displace traditional technologies offered by well-known industry leaders. The company believes its SDC-based products offer superior pathogen control compared to traditional chemical solutions, which often have higher toxicity, and its competitive position rests on the ability of the company, its distributors and other partners to develop brand recognition, develop the scientific and plant trial data to demonstrate the efficacy of its products, and to displace existing, established and future products in its relevant target markets.

PURE Bioscience is dedicated to developing and commercializing proprietary antimicrobial products that address health and environmental challenges related to pathogen and hygienic control, with a technology platform based on patented stabilized ionic silver and initial products containing Silver Dihydrogen Citrate, or SDC. This broad-spectrum, non-toxic antimicrobial agent is available in liquid form and various concentrations, distinguished by its superior efficacy, reduced toxicity, non-causticity, and the inability of bacteria to develop resistance. The company's SDC-based disinfecting and sanitizing products are registered with the United States Environmental Protection Agency, the United States Food and Drug Administration, and Health Canada. In addition to manufacturing and distributing these products, the company supplies SDC-based formulations as raw material ingredients for personal care products. Products are sold directly to end-use customers, as well as third-party distributors who market and sell the products across various industries. Revenue is generated primarily through product sales, which generally consist of a single performance obligation satisfied at a point in time, with payment terms on invoiced direct customer and distributor sales ranging between 30 and 90 days after the company satisfies its performance obligation, and the majority of customers on 30-day payment terms. The company also recognizes royalty revenue from a non-exclusive third-party distributor, and during the fiscal years ended July 31, 2026 and 2025, recognized $3,000 ¹ and $4,000 ² in royalties, respectively. The company currently offers no right of return on invoiced sales and maintains no allowance for sales returns.

PURE Bioscience's registered offerings include PURE Hard Surface, a food contact surface sanitizer and disinfectant designed for restaurant chains, food processors, and transportation companies, and PURE Control, a direct food contact processing aid. PURE Hard Surface is an SDC-based, patented, and EPA-registered ready-to-use hard surface disinfectant and food contact surface sanitizer that combines high efficacy with low toxicity and achieves bacterial and viral kill times in as few as 30 seconds ³. The product effectively kills resistant pathogens such as MRSA and NDM-1, as well as dangerous fungi and viruses including SARS Co-V-2, HIV, Hepatitis B, Hepatitis C, Norovirus, Influenza A, Avian Influenza, and H1N1, and eradicates hazardous food pathogens like E. coli, Salmonella, Campylobacter, and Listeria, all while being classified as least-toxic by the EPA. PURE Hard Surface contains no bleach, ammonia, phosphates, phenols, or Volatile Organic Compound-emitting compounds, and for facilities utilizing PURE's application systems, one gallon of PURE Hard Surface can cover up to 40,000 cubic feet ⁴, effectively reducing the risk of cross-contamination from treated surfaces. The product ensures a rapid disinfectant kill time of 30 to 120 seconds ⁵ for bacteria and viruses, with no personal protective equipment required. The EPA registration for SDC3A, marketed as PURE Hard Surface, includes efficacy claims against Pseudomonas aeruginosa, Salmonella enterica, HIV type 1, Rotavirus, Human Coronavirus, Influenza A (H1N1), Swine Influenza A (H1N1), Respiratory Syncytial Virus, Adenovirus Type 2, Avian Influenza A, Influenza A, and SARS-CoV-2 at 30 seconds ⁶; Hepatitis B Virus, Hepatitis C Virus, Murine Norovirus, Norovirus, Herpes Simplex Type 1, Rhinovirus, and Polio Type 2 at 60 seconds ⁷; Staphylococcus aureus, Listeria monocytogenes, Vancomycin resistant Enterococcus faecium, Methicillin resistant Staphylococcus aureus, Community Associated Methicillin resistant Staphylococcus aureus, Community Associated Methicillin resistant Staphylococcus aureus-PVL, Escherichia coli O157:H7, Acinetobacter baumannii, Campylobacter jejuni, Carbapenem resistant Escherichia coli, Carbapenem resistant Klebsiella pneumonia, and NDM-1+ at 120 seconds ⁸; and Trichophyton mentagrophytes (Athlete's Foot Fungus) at 5 minutes ⁹.

PURE Control has been approved by the FDA for poultry processing, Food Contact Notification FCN 1768, and produce processing FCN 1600. Leveraging the superior efficacy and safety of SDC, PURE Control effectively eliminates pathogens such as Salmonella, E. coli, and Listeria. For produce, PURE Control quickly reduces pathogens on treated items, minimizes the risk of cross-contamination, enhances subsequent intervention steps and does not affect the texture, taste, or color of the produce. For poultry, PURE Control has no effect on organoleptic or nutritional composition, demonstrates superior efficacy with up to a 6 log reduction ¹⁰ in Salmonella on treated products, and has no impact on yield, with no label declaration required for application on produce or poultry. In addition to PURE Hard Surface and PURE Control, the company manufactures and sells SDC-based products for end use, products preserved with SDC, and SDC as a raw material ingredient for manufacturing use. These include PURE Multi-Purpose Hi-Foam Cleaner Concentrate, an environmentally friendly, professional-grade cleaning product featuring a high foaming formulation that is free from toxic preservatives, EDTA, phosphates, ammonia, bleach, Volatile Organic Compounds, and Nonylphenol Ethoxylates, designed for multiple dilution ratios and usable on stainless steel, floors, walls, and painted areas. PURE Multi-Purpose and Floor Cleaner is designed to complement the effectiveness of PURE Hard Surface disinfectant and food contact surface sanitizer, making it suitable for sanitation in food processing plants, commercial kitchens, healthcare facilities, schools, and hospitality settings where high foam is not desirable. SILVÉRION is the company's patented SDC-based antimicrobial formulation for use as a raw material ingredient in the manufacturing of personal care products, usable as either an active ingredient or a preservative, and is currently sold domestically and outside of the United States in various personal care products. The company's patented SDC-based technology, SILVÉRION 2400, is an effective preservative and versatile antimicrobial solution that combats a wide range of microorganisms without the use of parabens, formaldehyde, halogens, or quats.

During the fiscal year ended July 31, 2026, PURE Bioscience completed a private placement and convertible debt financing to accredited investors, raising net proceeds of approximately $2.0 million ¹¹. On February 13, 2026, the company entered into the 2026 Note Purchase Agreement with certain accredited investors pursuant to which it issued convertible promissory notes with an aggregate principal balance of $970,000 ¹², with the 2026 Note Documents providing for subsequent closings for an aggregate offering size of $2.0 million ¹³ in principal balance, and Tom Y. Lee invested $970,000 ¹⁴ in the 2026 Private Placement through affiliates or directly. As of July 31, 2026, $970,000 ¹⁵ of principal was outstanding under the 2026 Note Documents. The company also has outstanding principal under its 2025 Note Documents of $2,000,000 ¹⁶, under its 2024 Note Documents of $1,000,000 ¹⁷, and under its 2023 Note Documents of $1,800,000 ¹⁸. On June 9, 2019, the company entered into a five-year strategic collaboration agreement with St. Louis-based Intercon Chemical Company, granting ICC the right to be the non-exclusive manufacturer for all SDC-based products. The company holds twelve U.S. patents ¹⁹ related to its SDC technology and holds registered trademarks for several brands, including PURE Bioscience, PURE, SILVÉRION, Powered by SDC Ag+, and PURE Control. As of October 29, 2026, the company had 10 full-time employees ²⁰ and 1 part-time employee ²¹, with executive officers and employees working remotely in a virtual office setting without lease obligations.

Net product sales were $2,315,000 ²² and $2,198,000 ²³ for the fiscal years ended July 31, 2026 and 2025, respectively, an increase of $117,000 ²⁴ attributable to increased sales across the company's end-user network servicing the food processing industry. Cost of goods sold was $992,000 ²⁵ and $899,000 ²⁶ for the years ended July 31, 2026 and 2025, respectively, an increase of $93,000 ²⁷ primarily attributable to increased sales during the current fiscal year, with gross margin as a percentage of net product sales of 57% ²⁸ and 59% ²⁹ for the years ended July 31, 2026 and 2025, respectively. Selling, general and administrative expense was $3,077,000 ³⁰ and $3,259,000 ³¹ for the years ended July 31, 2026 and 2025, respectively, a decrease of $182,000 ³² primarily attributable to decreased personnel and board fees, partially offset by increased professional service fees. Research and development expense was $332,000 ³³ and $316,000 ³⁴ for the years ended July 31, 2026 and 2025, respectively. Interest expense was $407,000 ³⁵ and $299,000 ³⁶ for the fiscal years ended July 31, 2026 and 2025, respectively, an increase of $108,000 ³⁷ primarily due to accrued interest on the outstanding convertible notes. For the fiscal year ended July 31, 2026, the company incurred a net loss of $2,483,000 ³⁸ on net revenue of $2,318,000 ³⁹ and used $1,738,000 ⁴⁰ of cash in operating activities, leaving a cash balance of $569,000 ⁴¹ as of July 31, 2026, compared with $334,000 ⁴² in cash and cash equivalents as of July 31, 2025. As of July 31, 2026, the company had a stockholders' deficiency of $6,399,000 ⁴³ and had incurred a cumulative net loss of $141.5 million ⁴⁴.

PURE Bioscience's business strategy centers on establishing a sustainable company by commercializing SDC-based products developed through its proprietary technology platform, aiming to deliver leading antimicrobial solutions that tackle food safety risks across the entire food industry supply chain. A key element of the strategy is growing and supporting the distribution network, which the company expects to provide expanded reach through distributors' established networks and customer relationships, cost savings by reducing overhead costs associated with logistics, warehousing, and inventory management, market knowledge through distributors' local insights and expertise, faster time to market by accelerating product availability in geographic regions throughout the country, sales support through additional sales resources such as training and promotional activities, scalability without requiring significant investment from the manufacturer, and customer service through local distributors offering better customer support including faster response times and tailored services. The company is also continuing to partner with third parties seeking, or intending to seek, approvals to market SDC-based products outside the U.S., developing additional proprietary products and applications, and protecting and enhancing its intellectual property. In addition to existing food safety products, the company plans to leverage its technology platform through licensing and distribution collaborations to create new products and explore additional markets, aiming to generate multiple revenue streams.

A significant growth vector for PURE Bioscience is the expansion of PURE Control as a direct food contact processing aid. The company has received the required FDA approvals to market PURE Control as a direct food contact processing aid for raw poultry and fresh produce and has received a No Objection Letter from the USDA's Food Safety and Inspection Service granting approval for SDC-based PURE Control to be used as a spray or dip applied to poultry carcasses, parts and organs in pre-on line reprocessing, or OLR, and post chill processing of fresh poultry. The company has not, however, received the required approval from the USDA to utilize PURE Control in OLR poultry processing, and there is no assurance it will be successful in obtaining the required approvals from the FDA and USDA to utilize PURE Control as a direct food contact processing aid for raw meats, including beef and pork. If the company is unable to obtain the required regulatory approvals from the FDA and USDA, or if such efforts are delayed, its ability to commercialize PURE Control as a direct food contact processing aid for poultry and as a direct food contact processing aid for raw meats will be restricted and its business and operating results will suffer. Obtaining approvals for new SDC-based products in the U.S., or in markets outside the U.S., could take several years, or may never be accomplished.

Another growth vector is the expansion of the company's distribution network and end-user adoption in the food processing industry, which drove the increase in net product sales of $117,000 for the fiscal year ended July 31, 2026. The company works with distribution partners and end-use customers to solve their unique needs related to contamination prevention and control, and its products offer specialized industry solutions that can effectively reduce food processing risks while optimizing operational efficiency. The company's patented SDC molecule enables it to create powerful products without harsh chemicals like bleach, ammonia, or VOCs, making them safe for use in food processing facilities without the need for specialized personal protective equipment, and its non-corrosive surface products are designed to protect equipment and machinery and can be applied to both food and non-food contact surfaces, including processing equipment, spiral freezers, belts, conveyors, walls, floors, drains, and piping systems. The company's products are designed to optimize resource use by reducing water consumption, minimizing waste, conserving time and labor, and limiting the introduction of harsh chemicals into the environment. In the food service and hospitality segment, in-store field testing of PURE Hard Surface on critical food contact areas resulted in a 96% improvement ⁴⁵ in efficacy, leading to a significant reduction in food safety risk, and employees consistently expressed preference for PURE Hard Surface's attributes including its ease of use, odorless scent, and lack of skin irritation. In transportation, the company, in conjunction with its application system partner, has developed the Pure Transport Sanitization System offering full coverage sanitation for motor and rail vehicle application, with each refrigeration unit and air ducting treated with every use, significantly reducing trailer downtime to minutes instead of hours, and providing up to a 5 log pathogen reduction ⁴⁶.

PURE Bioscience's margin trajectory is influenced by product mix, with gross margin as a percentage of net product sales of 57% for the fiscal year ended July 31, 2026 compared to 59% for the prior year. Gross margin is a result of product mix, with bulk volume products having higher margin formulations compared to smaller configurations that require increased labor and packaging costs. The company expects that its margins may be reduced by using ICC and other third parties to blend, package and provide fulfillment activities for finished products in future periods, and its ability to maintain product quality may not be as extensive or effective as when it produces these products in its own facilities. Commodity prices for some ingredients can vary significantly and the margins the company is able to generate could decline if prices rise, with both silver and citric acid prices having been volatile in recent periods. The company is generally unable to increase its product prices to customers, partners and distributors quickly in order to maintain its margins, and significant price increases for key inputs could therefore have an adverse effect on its results of operations. The company also relies on producers of specialized packaging inputs such as bottles and labels for finished products, and due to their specialized nature, the supply of such inputs can be periodically constrained and result in additional costs to obtain these items, which may in turn inhibit its ability to supply products to its customers.

PURE Bioscience's operational outlook is shaped by its reliance on third-party manufacturing and its virtual office structure. The company does not have any manufacturing facilities and currently relies on ICC to manufacture its SDC-based products, and may in the future rely on one or more third-party manufacturers to properly manufacture its products. ICC is the company's single manufacturer for its concentrated SDC-based products and may not be replaced without significant effort and delay in production. A supply interruption or an increase in demand beyond the current manufacturer's capabilities could harm the company's ability to manufacture such products until new manufacturers are identified and qualified. The company expects ICC to be the sole source supplier of its SDC concentrate and may use other third parties to blend, package and provide fulfillment activities for its finished products in future periods. The company's executive officers and employees work remotely in a virtual office setting without lease obligations, and as of October 29, 2026, the company had 10 full-time employees and 1 part-time employee . In order to implement its business plan and achieve and maintain market acceptance of its SDC-based products, the company expects to expand its business operations and hire additional sales and support personnel, though it may not have sufficient resources to do so.

PURE Bioscience's capital allocation priorities are focused on funding continuing operations and implementing its business plan, with the company stating that it does not currently have the capital necessary to fund its continuing operations and will require additional capital. Research and development expense was $332,000 for the fiscal year ended July 31, 2026, primarily consisting of third-party fees and personnel costs, with the company prioritizing innovation as a key element of its business strategy and long-term success, aiming to leverage its technology platform to create additional proprietary products and applications, including both end-use products and raw material formulations. Most research and development activities are conducted in-house, complemented by independent testing from third-party laboratories, and the company also collaborates with development partners who invest in specific product and process research using its SDC technology. The company has never paid dividends and has no current plans to do so, and currently anticipates that it will retain all of its future earnings, if any, for use in the development and expansion of its business and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of the Board and will depend upon the company's results of operations, financial condition and other factors that the Board, in its discretion, may deem relevant. The company has historically supported its operations through the issuance of equity and debt securities and may continue to do so in the future, and during the fiscal years ended July 31, 2026 and 2025, completed a private placement and convertible debt financings to accredited investors, raising net proceeds of approximately $4.0 million ⁴⁷.

PURE Bioscience faces significant headwinds and constraints to its growth plan. The company has a history of recurring losses, and as of July 31, 2026 had incurred a cumulative net loss of $141.5 million , and during the fiscal year ended July 31, 2026 recorded a net loss of $2.5 million ⁴⁸ on recorded net revenue of $2.32 million ⁴⁹, used $1.7 million ⁵⁰ in operating activities, and had a cash balance of $569,000 as of July 31, 2026. As a result, the company's existing cash resources are not sufficient to meet its anticipated needs over the next twelve months from the date hereof, and it will need to raise additional capital to continue its operations and to implement its business plan, which capital may not be available on acceptable terms or at all. As of July 31, 2026, convertible notes payable of $1,015,000 ⁵¹ were past due, and these conditions raise substantial doubt about the company's ability to continue as a going concern within one year after the date of the report. The company's capital requirements will depend on many factors, including the market acceptance of, and demand for, its products, the timing and costs of executing its sales and marketing strategies, its ability to successfully complete the in-plant validation trials requested by potential customers and convert these trials into customer orders, the costs and time required to obtain the necessary regulatory approvals for its products including the required USDA approvals, the extent to which it invests in new testing and product development including in-plant optimization trials, the extent to which its customers continue to place product orders as expected and expand their existing use of its products, the cost and time to satisfy unique customer requirements regarding validation trials or to support the value proposition and benefits of its products, the timing of vendor payments and the collection of receivables, its ability to control the timing and amount of its operating expenses including the costs to attract and retain personnel with the skills required to implement its business plan, and the costs to file, prosecute and defend its intellectual property rights.

Additional constraints on PURE Bioscience's growth plan include the company's limited sales, marketing and product distribution experience. The company began to focus on the food safety market in August 2013, and after acquiring necessary regulatory approvals began to commercialize its products in 2016. As a result, its sales and marketing experience with these products is limited, and its current sales, distribution and marketing strategies and programs may not be successful. The sales cycle to secure a new customer is long and unpredictable, and potential customers typically require that the company complete extensive in-plant validation studies with its products. The company may not be successful in demonstrating the effectiveness of PURE Control in actual in-plant use situations or satisfy the requirements of its potential customers, and may not be successful in converting in-plant trials into customer product orders. The company also has a relatively small sales and marketing organization and a limited number of distributors, and may not be able to establish the sales, marketing, and distribution capabilities necessary to generate sales and build its business to generate sufficient revenues to support its operations and the implementation of its business plan. Additionally, the company's quarterly operating results may vary, and it has limited insight into trends that may emerge and affect its business, with forecasting future revenues difficult especially because it has only recently begun to generate meaningful revenues from the sale of its SDC-based products, its products are novel, and market acceptance of its products is reliant on its customers' confidence, based on scientific data and actual in-plant trials, that its product can improve their food safety efforts.

Management's message to shareholders emphasizes the company's dedication to developing and commercializing proprietary antimicrobial products that address health and environmental challenges related to pathogen and hygienic control, with a technology platform based on patented stabilized ionic silver and initial products containing Silver Dihydrogen Citrate. The company's goal is to establish a sustainable company by commercializing SDC-based products developed through its proprietary technology platform, aiming to deliver leading antimicrobial solutions that tackle food safety risks across the entire food industry supply chain. Management's strategic priorities for the period ahead center on growing and supporting the distribution network, continuing to partner with third parties seeking or intending to seek approvals to market SDC-based products outside the U.S., developing additional proprietary products and applications, and protecting and enhancing intellectual property. The company also plans to leverage its technology platform through licensing and distribution collaborations to create new products and explore additional markets, aiming to generate multiple revenue streams. Management acknowledges significant challenges, stating that the company has a history of recurring losses, and as of July 31, 2026 had incurred a cumulative net loss of $141.5 million , and that during the fiscal year ended July 31, 2026 it recorded a net loss of $2.5 million on recorded net revenue of $2.32 million , used $1.7 million in operating activities, and had a cash balance of $569,000 as of July 31, 2026. Management states that the company's existing cash resources are not sufficient to meet its anticipated needs over the next twelve months from the date hereof, and it will need to raise additional capital to continue its operations and to implement its business plan, which capital may not be available on acceptable terms or at all. Management also notes that as of July 31, 2026, convertible notes payable of $1,015,000 were past due, and that these conditions raise substantial doubt about the company's ability to continue as a going concern within one year after the date of the report. The company's auditors have expressed substantial doubt about its ability to continue as a going concern. Management's forward-looking statements include that it expects to continue to have losses in future periods, and that it may not achieve profitability, and may never achieve profitability again. The company expects that sales of SDC and SDC-based products as a food safety solution will constitute a substantial portion, or all, of its revenues in future periods.

Net product sales were $2,315,000 for the fiscal year ended July 31, 2026, compared to $2,198,000 for the fiscal year ended July 31, 2025, an increase of $117,000 attributable to increased sales across the company's end-user network servicing the food processing industry. Net revenue, which includes royalty revenue, was $2,318,000 for the fiscal year ended July 31, 2026. The company incurred a net loss of $2,483,000 for the fiscal year ended July 31, 2026, compared to a net loss of $2.4 million ⁵⁵ for the fiscal year ended July 31, 2025. Loss per share was not disclosed in the filing. Cost of goods sold was $992,000 for the fiscal year ended July 31, 2026, compared to $899,000 for the fiscal year ended July 31, 2025, an increase of $93,000 primarily attributable to increased sales during the current fiscal year. Gross margin, as a percentage of net product sales, was 57% for the fiscal year ended July 31, 2026, compared to 59% for the fiscal year ended July 31, 2025, with gross margin a result of product mix, as bulk volume products have higher margin formulations compared to smaller configurations that require increased labor and packaging costs. Selling, general and administrative expense was $3,077,000 for the fiscal year ended July 31, 2026, compared to $3,259,000 for the fiscal year ended July 31, 2025, a decrease of $182,000 primarily attributable to decreased personnel and board fees, partially offset by increased professional service fees. Share-based compensation expense included in selling, general and administrative expense was $197,000 ⁵⁶ and $147,000 ⁵⁷ for the fiscal years ended July 31, 2026 and 2025, respectively, an increase of $50,000 ⁵⁸ due to the current year vesting of stock options granted to employees, directors and consultants supporting the company's selling, general and administrative functions. Research and development expense was $332,000 for the fiscal year ended July 31, 2026, compared to $316,000 for the fiscal year ended July 31, 2025, with the slight increase primarily attributable to increased third-party testing and research supporting the company's EPA and FDA efforts. Interest expense was $407,000 for the fiscal year ended July 31, 2026, compared to $299,000 for the fiscal year ended July 31, 2025, an increase of $108,000 primarily due to accrued interest on the outstanding convertible notes. Other income was $7,000 ⁵⁹ for the fiscal year ended July 31, 2026, compared to other income of $172,000 ⁶⁰ for the fiscal year ended July 31, 2025, during which the company received $175,000 ⁶¹ from the U.S. Government's Employee Retention Tax Credit Program. As of July 31, 2026, the company had $569,000 in cash and cash equivalents compared with $334,000 as of July 31, 2025, with the net increase attributable to cash received from financing activities of $1,973,000 ⁶². As of July 31, 2026, the company had $7,592,000 ⁶³ of total liabilities, including $820,000 ⁶⁴ in accounts payable, compared with $6,174,000 ⁶⁵ of total liabilities, including $784,000 ⁶⁶ in accounts payable as of July 31, 2025. As of July 31, 2026, the company had a stockholders' deficiency of $6,399,000 and had incurred a cumulative net loss of $141.5 million . For the fiscal year ended July 31, 2026, the company used $1,738,000 of cash in operating activities. As of July 31, 2026, convertible notes payable of $1,015,000 were past due, and the company had an aggregate principal amount of $5.8 million ⁶⁷ of convertible promissory notes outstanding, which pursuant to the terms of the notes may be converted into shares of common stock at a conversion price based on a volume weighted average price of the company's common stock that can range from at least $0.07 per share ⁶⁸ and less than or equal to $0.23 per share ⁶⁹. The company's top three customers accounted for $824,000 ⁷⁰ of net product sales for the fiscal year ended July 31, 2026, and one customer accounted for 24% of net product sales, with no other individual customer accounting for 10% or more of net product sales. There were no foreign sales during the fiscal year ended July 31, 2026. For the fiscal year ended July 31, 2025, one customer accounted for 18% ⁷¹ of net product sales, with no other individual customer accounting for 10% or more of net product sales, and there were no foreign sales during that period.

PURE Bioscience faces material risks that are specific to its financial condition, business model, and competitive position. The company has a history of recurring losses, and as of July 31, 2026 had incurred a cumulative net loss of $141.5 million , and during the fiscal year ended July 31, 2026 recorded a net loss of $2.5 million on recorded net revenue of $2.32 million , used $1.7 million in operating activities, and had a cash balance of $569,000 as of July 31, 2026. As a result, the company's existing cash resources are not sufficient to meet its anticipated needs over the next twelve months from the date hereof, and it will need to raise additional capital to continue its operations and to implement its business plan, which capital may not be available on acceptable terms or at all. As of July 31, 2026, convertible notes payable of $1,015,000 were past due, and these conditions raise substantial doubt about the company's ability to continue as a going concern within one year after the date of the report. The company's auditors have expressed substantial doubt about its ability to continue as a going concern. The company is dependent on its core SDC technology, and if its efforts to achieve or maintain market acceptance of its core SDC technology are not successful, it is unlikely to continue to maintain profitability. The company is subject to intense competition in the food safety market, where its SDC-based product offerings, especially at higher silver ion concentration levels, are typically more expensive to produce than existing treatment chemicals, and as a result, customers may not purchase its products for cost reasons, even if the company is successful in demonstrating the superior efficacy of its products. Most competitors have been in business for a longer period of time than the company, offer a greater number of products and services, and have greater financial, technical, sales and other resources, and recent trends in the industry are for large food safety companies to consolidate into a smaller number of very large entities, which further concentrates financial, technical and market strength and increases competitive pressure. The company is dependent on a third-party, Intercon Chemical Company, over whom it has limited control, to manufacture its SDC-based products, and ICC is the company's single manufacturer for its concentrated SDC-based products and may not be replaced without significant effort and delay in production. A loss of one or more of the company's key customers could adversely affect its business, as for the year ended July 31, 2026, one individual customer accounted for 24% ⁵² of net product sales, and although the company has agreements with many of its customers, these agreements typically do not prohibit customers from purchasing products and services from competitors or contain minimum purchase obligations. The company may not be able to utilize all, or any, of its tax net operating loss carry-forwards, as at July 31, 2026, it had federal and state tax net operating loss carry-forwards of approximately $104.8 million ⁵³ and $60.5 million ⁵⁴, respectively, and utilization of these net operating loss carry-forwards may be subject to a substantial annual limitation due to ownership change limitations that may have occurred, including with respect to recent private placements, or that could occur in the future, as required by Section 382 of the Internal Revenue Code as well as similar state provisions.