Annual Report for Fiscal Year Ending June 30, 2026 (Form 20-F)

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis includes certain forward-looking statements with respect to the business, financial condition and results of operations of our Company. The words "estimate", "project", "intend", "expect" and similar expressions are intended to identify forward-looking statements within the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated by such forward-looking statements, including those risk factors contained in Item 3.D. of this annual report. You should read the following discussion and analysis in conjunction with our consolidated financial statements and the notes thereto included in this annual report.

A. Operating Results

For analysis and discussion of years ending 2025 and 2024 please refer to the 20-F filed with the SEC on September 25, 2025.

Overview

We were incorporated under the laws of Australia in 1994 and have been listed on the ASX since April 30, 1999. Our ADSs have traded on The NASDAQ Capital Market since June 13, 2017.

Our consolidated financial statements appearing in this annual report comply with IFRS as issued by IASB. In this annual report, all references to "U.S. dollars" or "US$" are to the currency of the U.S., and all references to "Australian dollars", "A$" or "$" are to the currency of Australia. Unless otherwise indicated or the context implies otherwise, items included in the financial statements of each of the group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are presented in Australian dollar ("A$" or "$"), which is Immuron Limited's functional and presentation currency. All of our revenues are generated in Australian dollars, United States dollars and Canadian dollars, and the majority of our expenses are incurred in Australian dollars.

Immuron Limited is a commercial and clinical-stage biopharmaceutical company with a proprietary technology platform focused on the development and commercialization of a novel class of specifically targeted polyclonal antibodies in the treatment of diseases associated with the gastrointestinal tract. We believe that we can address this significant unmet medical need. Our oral polyclonal antibodies are orally active and offer localized delivery within the gastrointestinal ("GI") tract. We currently market our flagship commercial product Travelan^®, and ProIBS^® in Australia, both products are listed medicines on the Australian Register for Therapeutic Goods. Travelan^® is an over-the-counter product indicated to reduce the risk of travelers' diarrhea and is sold in pharmacies throughout Australia. ProIBS^® (AUST L 482225) is an over-the-counter orally administered product containing the proprietary ingredient AVH200^® which has a unique dual mode of action, forming a gentle hydrogel film inside the gut, creating a protective, non-invasive barrier that supports the intestinal lining, balances microflora, and helps soothe IBS symptoms. ProIBS^® is indicated for the relief of symptoms of medically diagnosed Irritable Bowel Syndrome. Protectyn^® was sold online and in health practitioner clinics and was marketed as an immune supplement to help maintain a healthy digestive function and liver. The company cancelled and removed the product from the Australian Register for Therapeutic Goods in June 2026. We also market Travelan^® in Canada where it is licensed as a natural health product indicated to reduce the risk of travelers' diarrhea, and presently market Travelan^® in the U.S. as a dietary supplement for digestive tract protection.

We believe that our lead drug candidates, currently in clinical development have the potential to transform the existing treatment paradigms for Enterotoxigenic Escherichia coli (ETEC) infections, travelers' diarrhea and for Clostridioides difficile infections.

Results of Operations

The following discussion relates to our consolidated results of operations, financial condition and capital resources. You should read this discussion in conjunction with our consolidated financial statements and the notes thereto contained elsewhere in this annual report.

Comparison of the fiscal years ended June 30, 2026 and 2025

Revenue and Other income

Revenues received from the sale of goods increased by A$426,599, or 6%, from fiscal 2025 to fiscal 2026, primarily due to the growth in the Australian and U.S. markets for Travelan®. We anticipate that revenues from sales of our Travelan® product will continue to increase in the future.

For the fiscal 2026, the group has included an item in other income of $782,313 (2025: $1,110,577) to recognize income over the year necessary to match the R&D tax incentive on a systematic basis with the costs that they are intended to compensate. There was an decrease in eligible Australian Research & Development expenditure during the fiscal year ended 30 June 2026 and consequently an decrease in the accrual for the Australian R&D tax incentive refund. There was increased eligible expenditure on IMM-529 (Clostridioides difficile infection) and IMM-124E (new manufacturing processes and new colostrum harvest and collection methods). There was a reduction in ineligible expenditure on IMM-124E (overseas clinical trial).

The group's other grant income comprises grants received by the group in relation to its research and development (R&D) activities. Grants are recognized as other income when the group is reasonably assured that it will comply with the conditions attaching to it and the grant will be received.

For the year ended 30 June 2026, the group has recognized $nil (2025: $146,252) R&D grant from Medical Technology Enterprise Consortium ("MTEC") matching the R&D grant on a systematic basis with the costs that they are intended to compensate.

For the year ended 30 June 2026, the group has recognized $339,819 (2025: $124,164) R&D grant from Henry M Jackson Foundation (HJF).

Cost of Goods Sold ("COGS") and Gross Profit

The decrease in gross profit margin from 65.4% in fiscal 2025 to 64.5% in fiscal 2026 indicates that expenditure remained relatively consistent during the year.

Expenses

General and administrative expenses. General and administrative expenses decreased by A$178,068 from fiscal year 2025 to fiscal year 2026, in which investor relations decreased by A$62,470 from fiscal 2025 to fiscal 2026.

Research and development expenses. Research and development expenses decreased by A$1,663,856 from fiscal 2025 to fiscal 2026 reflecting the decreased research and development activity after a primary endpoint did not reach statistical significance in December 2025

Selling and marketing expenses. Selling and marketing expenses increased by A$19,140 from fiscal 2025 to fiscal 2026 driving increased sales in Australia and North America.

Loss for the period. As a result of the foregoing, our loss for the period after income tax benefit decreased by A$1,535,988, or 29%, from A$5,215,987 in fiscal 2025 to A$3,679,999 in fiscal 2026.

Given our, and our subsidiaries', history of recent losses, we have not recognized a deferred tax asset regarding unused tax losses and other temporary differences, as it has not been determined whether we, or our subsidiaries, will generate sufficient future taxable income against which we can utilize these unused tax losses and any uncalculated potential deferred tax assets, together with any other temporary differences. Should the need arise, we can, and will, revisit this position.

Inflation and Seasonality

Management believes inflation has not had a material impact on our Company's operations or financial condition and that our operations are not currently subject to seasonal influences.

Foreign currency fluctuations

Our ordinary shares are quoted in Australian dollars on the ASX and the ADS are quoted in U.S. dollars on NASDAQ. Movements in the Australian dollar/U.S. dollar exchange rate may adversely affect the U.S. dollar price of the ADS. In the past year the Australian dollar has generally weakened against the U.S. dollar. However, this trend may not continue and may be reversed. If the Australian dollar weakens against the U.S. dollar, the U.S. dollar price of the ADS could decline, even if the price of our ordinary shares in Australian dollars increases or remains unchanged.

We are exposed to fluctuations in foreign currencies that arise from foreign currencies held in bank accounts and the translation of results from our operations outside Australia. Our foreign exchange exposure is primarily to the U.S. dollar and Canadian dollar. Foreign currency risks arising from commitments in foreign currencies are managed by holding cash in that currency. Foreign currency translation risk is not hedged as the cost of hedging at this time outweighs any benefits that may be obtained. For more information, see "Note 19 (Financial Risk Management Objectives and Policies - Market Risk - Foreign Exchange Risk)" under "Part III - Item 18 - Financial Statements" on page F-35 below.

Conditions in Australia

We are incorporated under the laws of, and our principal offices and research and development facilities are located in, the Commonwealth of Australia. Therefore, we are directly affected by political and economic conditions in Australia. See Item 3.D. "Key Information - Risk Factors" for a description of factors that could materially affect our operations. See also Notes to the Consolidated Financial Statements 1, 2, 3, and 8 as they relate to the Australian Research & Development Tax Incentive Scheme under "Part III - Item 18 - Financial Statements" below.

Australian Disclosure Requirements

Significant Changes in the State of Affairs

There have been no significant changes within the state of affairs during the year ended June 30, 2026 except as noted in the "Operating and Financial Review and Prospects" included in item 5.

Events occurring after the Reporting Date

On 4 September 2026, Immuron Limited announced that it has executed an exclusive distribution agreement for ProIBS^® in the United States with Calmino group AB. Immuron launched ProIBS^® in Australia during FY26.

No other matter or circumstance has occurred subsequent to period end that has significantly affected, or may significantly affect, the operations of the group, the results of those operations or the state of affairs of the group or economic entity in subsequent financial years.

Likely Developments and Expected Results of Operations

The group aims to create value for shareholders through a two-pronged approach. In the short- and medium-term, Immuron Limited sells and licenses its Travelan® over-the-counter product. Beyond this, the group is researching and clinically developing products, principally for the treatment of travelers' diarrhea and Clostridium difficile infections.

More information on these developments is noted in the "Business Overview" section included in item 4.B.

Environmental Regulations

The group is not affected by any significant environmental regulation in respect of its operations.

B. Liquidity and Capital Resources

We have incurred cumulative losses and negative cash flows from operations since our inception in 1994 and as of June 30, 2026 we had accumulated losses of A$84,970,154.

On July 3, 2024, the Company announced that it had filed a Form F-3 Registration Statement. The Form F-3 enables the Company as a 'foreign private issuer' to raise up to US$15 million in the United States over a three year period and supersedes the Company's recently expired US$100 million Form F-3 announced on 9 April 2019. The Form F-3 maintains the Company's flexibility with direct access to U.S. capital markets. The Company also announced that it entered into an at-the-market offering agreement dated July 2, 2024, with H.C. Wainwright & Co., LLC as sales agent, relating to American Depositary Shares, or ADSs, representing our ordinary shares, no par value per share, offered by prospectus. Each ADS represents 40 ordinary shares. In accordance with the terms of the Offering Agreement and the prospectus, we may offer and sell our ADSs having an aggregate offering price of not more than US$2,069,083 from time to time through Wainwright acting as our sales agent. In July 2025, Immuron raised total gross proceeds of US$1,822,322 (A$2,809,177) through the existing At-the-market (ATM) facility. On 6 October 2025, Immuron announced it had filed an ATM supplementary prospectus with the United States Securities and Exchange Commission. Immuron strategically extended the ATM funding facility with H.C. Wainwright & Co., LLC to an additional aggregate offering price of approximately US$2,847,954 (A$4,339,521) providing the Company with a costeffective and efficient mechanism to raise additional equity capital, if and when required in response to operational requirements, market opportunities. Immuron subsequently utilised the extended ATM in full in the current half-year period taking advantage of higher than typical trading volumes on NASDAQ and prices in excess of the ASX equivalent at the time.

Immuron anticipates that it will continue to incur losses for the foreseeable future. We expect that as we continue research efforts and the development of our product candidates, hire additional staff, including clinical, scientific, operational, financial and management personnel we will need additional capital to fund our operations which we may raise through a combination of equity offerings, debt financings, other third-party funding and other collaborations, strategic alliances and licensing arrangements.

The commitment to these projects will require additional external funding, at least until we are able to generate sufficient cash flow from sale of one or more of our products to support our continued operations. If adequate funding is not available, we may be required to delay, scale back or eliminate certain aspects of our operations or attempt to obtain funds through unfavorable arrangements with partners or others that may force us to relinquish rights to certain of our technologies, products or potential markets or that could impose onerous financial or other terms. Management is continuing its efforts to obtain additional funds so that we can meet our obligations and sustain operations. For more information, see "Note 19 (Financial Risk Management Objectives and Policies)" under "Part III - Item 18 - Financial Statements" on page F-35 below.

The sale of additional equity or convertible debt could result in additional dilution to our shareholders. The incurrence of indebtedness would result in debt service obligations and could result in operating and financing covenants that would restrict our operations. We can provide no assurance that financing will be available in the amounts we need or on terms acceptable to us, if at all. If we are unable to secure adequate additional funding we may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, and/or suspend or curtail planned programs. Any of these actions could materially harm our business.

We do not currently have any credit facilities in place. We currently have limited treasury activities and do not maintain formal funding or treasury policies. Our cash and cash equivalents are primarily held in Australian dollars and U.S. dollars, reflecting our operational footprint and liquidity needs. We have not incurred any material borrowings to date and therefore have no exposure to fixed or variable interest rate debt. We do not currently utilize financial instruments for hedging purposes. Should our operations expand and require more sophisticated treasury management, we intend to implement appropriate controls and policies to manage liquidity, currency exposure, and interest rate risk, including the potential use of hedging instruments. Currently, the cost of hedging outweighs any benefits that may be obtained. For more information, see "Note 19 (Financial Risk Management Objectives and Policies)" under "Part III - Item 18 - Financial Statements" on page F-35 below.

As of June 30, 2026, we had cash of A$9,017,814 as compared to cash of A$2,830,526 as of June 30, 2025. The Company had other current assets of A$258,197 (June 30, 2025: A$3,486,744). For the year ended 30 June 2025 other current assets amount includes a 90-day fixed term deposit, which matured on July 27, 2025. The company is in a position to meet future commitments in the current business cycle and pay its debts as and when they fall due. Furthermore, the Company is able to progress its research and development programs for at least the next 12 months from September 24, 2026. The annual report has been prepared on a going concern basis. Accordingly, the annual report does not include adjustments relating to the recoverability and classification of recorded asset amounts, or the amounts and classification of liabilities that might be necessary should the group not continue as a going concern. The Company is a going concern and is of the opinion that no asset is likely to be realized for an amount lower than the amount at which it is recorded in our Consolidated Statement of Financial Position as of June 30, 2026. For more information, see "Note 19 (Financial Risk Management Objectives and Policies)" under "Part III - Item 18 - Financial Statements" on page F-35 below.

We expect that our current cash, and cash equivalents will be sufficient to fund our capital requirements for at least 12 months from the issuance date of the financial statements. Our future funding requirements will depend on many factors, including, but not limited to:

Cash flows

The following table sets forth the primary sources and uses of cash for each of the periods set forth below:

Operating activities. Net cash used in operating activities decreased by A$2,877,229 from A$6,136,949 in fiscal year 2025 to A$3,259,720 in fiscal year 2026. The use of net cash in all periods resulted from our ordinary business operations. Net cash used in operating activities decreased by approximately 47% in fiscal year 2026 due to higher receipts from customers and funding from government grants and other grants.

Investing activities. Net cash from investing activities during the twelve months ended June 30, 2026 included proceeds from the matured 90-day fixed term deposit of $3,036,278 (2025: 3,036,278), which matured on July 27, 2025.

Financing activities. During the twelve months ended June 30, 2026, net cash provided by financing activities was A$6,475,160, which comprised of proceeds from issue of securities through an At the Market Facility (less costs associated with the issue), principal elements of lease payments and interest paid.

During the twelve months ended June 30, 2025, net cash provided by financing activities was A$199,747, which comprised of proceeds from issue of securities through an At the Market Facility (less costs associated with the issue), principal elements of lease payments and interest paid.

During the twelve months ended June 30, 2024, net cash inflow in relation to financing activities was A$829, which comprised of principal elements of lease payments, interest paid and net proceeds from issues of shares.

Contractual Obligations

The group had no contingent liabilities at June 30, 2026 (June 30, 2025: Nil).

Off balance sheet arrangements

We are not a party to any material off-balance sheet arrangements. In addition, we have no unconsolidated special purpose financing or partnership entities that are likely to create material contingent obligations.

Quantitative and qualitative disclosures about market risks

We are exposed to market risk related to changes in interest rates and exchange rates. As of June 30, 2026, we had cash and cash equivalents of A$9,017,814, held in bank accounts. The Company had no borrowings as of June 30, 2026. Our primary exposure to market risk is interest rate sensitivity, which is affected primarily by changes in the general level of Australian interest rates. We are exposed to interest rate risks relating to our cash. Interest rate risk is the risk that a financial instrument's value will fluctuate as a result of changes in market interest rates.

We are exposed to fluctuations in foreign currencies that arise from foreign currencies held in bank accounts and the translation of results from our operations outside Australia. Our foreign exchange exposure is primarily to the U.S. dollar and Canadian dollar. Foreign currency risks arising from commitments in foreign currencies are managed by holding cash in that currency. Foreign currency translation risk is not hedged.

C. Research and Development, Patents and Licenses

In recent years, we have continued our practice of building valuable research collaborations with institutes based in Australia, the United States, Europe and other countries to enable us to investigate a variety of therapeutic indications including ETEC, Shigella and Clostridioides Infections. These collaborative arrangements ensure that we work with well-respected key opinion leaders and laboratories with specific expertise in screening and animal modelling of relevance to the particular indication, without incurring ongoing administrative and personnel costs. We maintain in-house patent counsel and research and development project expertise to coordinate these research collaborations.

When a lead compound is identified as suitable for clinical development, we establish a project team to coordinate all non-clinical and clinical development and manufacturing activities. Typically, we would project manage all the project activities, tasks and milestones and engage clinical research organizations and contract manufacturing organizations to assist. We manage our manufacturing campaigns through contract manufacturing organizations for quality assurance and cGMP compliance. All clinical, non-clinical, clinical development and manufacturing of our compounds is performed in compliance with the appropriate governing authorities, regulators and standards (for example, the International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use).

Research and development expenses amounted to A$1,933,440, A$3,597,296, and A$5,375,461 during the years ended June 30, 2026, 2025 and 2024, respectively. Costs associated with patent applications and defense of patent applications are classified as research and development expenses and amounted to approximately A$24,708, A$126,313, and A$42,000 during the years ended June 30, 2026, 2025 and 2024, respectively.

Our research and development expenses consist primarily of expenses for contracted research and development activities conducted by third parties on our behalf, including personnel, testing facilities and other payments in accordance with our research and clinical agreements. Research and development expenses also include costs associated with the acquisition and development of patents. Due to the numerous variables and the uncertain nature of the development of a clinical compound, including obtaining regulatory approvals, we are not able to reasonably estimate the nature, timing and costs of the future expenditures necessary to complete our research and development projects, the anticipated completion dates of each project and when material net cash flows from our research and development programs will commence.

D. Trend Information

We are a commercial and clinical development stage company, and while we believe that our technology will offer novel therapeutic strategies into an expanding market, we cannot predict with any degree of accuracy the outcome of our research or commercialization efforts. Accordingly, any trends within the markets in which we operate are expected to have more direct impact on our business in the event that we are successful in commercializing our new product candidates, including our current lead product candidates.

Over the past few years, there has been increasing pressure to reduce drug prices in the developed markets as a consequence of political initiatives and regulations aiming to curb continuous increases in healthcare spending. Any revenue we earn in the future may be negatively affected by such political initiatives and regulations. The increased burden of healthcare costs in the aging population have led to an increased focus on reducing costs and, therefore, have further increased the pressure to lower drug prices which may impact profitability. We expect this trend to continue in the years ahead. However, we believe spending in the healthcare industry, as compared to many other industries, is less linked to economic trends. We expect sales growth to continue at higher levels in emerging markets and also for niche, orphan indications. We also expect that demographic developments, increased treatment penetration, especially in newly established drug markets, and better diagnostic tools to enable the tailoring of drugs to specific needs, will result in continuing growth in overall global drug sales.

E. Critical Accounting Estimates

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

We make estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

See Note 2 to our financial statements for the fiscal year ended June 30, 2026 for a discussion of critical accounting judgements, estimates and assumptions.