Axe Compute Inc.: Form 10-Q for the period ended Jun 30, 2025

The following discussion and analysis should be read together with our unaudited condensed consolidated financial statements and related notes thereto set forth in this Quarterly Report on Form 10-Q as well as our Annual Report on Form 10-K for the year ended December 31, 2024.

This Quarterly Report on Form 10-Q contains “forward-looking statements” that are management’s present expectations of future events. Actual results could differ materially and adversely from those anticipated in such forward-looking statements as a result of certain factors, including but not limited to those set forth below and elsewhere in this report, many of which are beyond our control. Important factors that may cause actual results to differ from forward-looking statements include:

• Our ability to continue operating beyond twelve months without additional financing;
• Continued negative operating cash flows;
• Our capital needs to accomplish our goals, including any further financing, which may be highly dilutive and may include onerous terms;
• Risks and uncertainties related to our ability to regain compliance with the Nasdaq continued listing standards in the required timeframe;
• Risks related to recent and future acquisitions, including risks related to the benefits and costs of acquisition;
• Risks related to our partnerships with other companies, including the need to negotiate the definitive agreements; possible failure to realize anticipated benefits of these partnerships; and costs of providing funding to our partner companies, which may never be repaid or provide anticipated returns;
• Risks related to the initiation, formation, or success of our collaboration arrangements, commercialization activities and product sales levels by our collaboration partners and future payments that may come due to us under these arrangements,
• Risk that we will be unable to protect our intellectual property or claims that we are infringing on others’ intellectual property;
• The impact of competition;
• Acquisition and maintenance of any necessary regulatory clearances applicable to applications of our technology;
• Inability to attract or retain qualified senior management personnel, including sales and marketing personnel;

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• Risk that we never become profitable if our products and services are not accepted by potential customers;
• Possible impact of government regulation and scrutiny;
• Unexpected costs and operating deficits, and lower than expected sales and revenues, if any;
• Adverse results of any legal proceedings;
• The volatility of our operating results and financial condition,
• Management of growth;
• Risk that our business and operations could be materially and adversely affected by disruptions caused by economic and geopolitical uncertainties as well as epidemics or pandemics; and
• Other specific risks that may be alluded to in this report.

All statements, other than statements of historical facts, included in this report regarding our growth strategy, future operations, financial position, estimated revenue or losses, projected costs, prospects and plans, and objectives of management are forward-looking statements. When used in this report, the words “will,” “may,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “plan,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. All forward-looking statements speak only as of the date of this report. We do not undertake any obligation to update any forward-looking statements or other information contained herein. Potential investors should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions, and expectations reflected in or suggested by the forward-looking statements in this report are reasonable, we cannot assure potential investors that these plans, intentions or expectations will be achieved. We disclose important factors that could cause actual results to differ materially from expectations in the “Risk Factors” section and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2024, and in Item 1A of Part II below. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

Overview

We are a knowledge and science-driven company that applies artificial intelligence (“AI”) to support the discovery and development of optimal cancer therapies, which can ultimately lead to more effective treatments and improved patient outcomes. We use AI and a proprietary biobank of 150,000+ tumor samples, categorized by tumor type, to provide actionable insights about drug compounds to improve the drug discovery process and increase the probability of drug compound success. We also create and develop tumor-specific 3D cell culture models mimicking the physiological environment of human tissue, enabling better-informed decision-making during drug development. Our suite of solutions supports oncology drug development from early discovery to clinical trials.

Our mission is to change the landscape of oncology drug discovery and enable the development of more effective therapies for the treatment of cancer. By harnessing the power of machine learning and scientific rigor, we believe that we can improve the probability of success of advancing pharmaceutical and biological drug candidates with a higher degree of confidence.

Recent Developments

Renovaro

On January 1, 2025, we entered into a binding letter of intent (the “LOI”) with Renovaro, Inc. (NASDAQ: RENB) (“Renovaro”) for Predictive Oncology to be acquired by Renovaro (the “Renovaro Merger”). Under the terms of the LOI, Predictive Oncology would be merged into Renovaro in exchange for a newly created series of preferred stock of Renovaro. On February 28, 2025, we entered into an extension agreement with Renovaro (the “Extension Agreement”), pursuant to which the parties amended certain terms of the LOI, including to extend the outside termination date of the LOI from February 28, 2025 to March 31, 2025. No definitive purchase agreement was executed as of March 31, 2025 and the LOI terminated on that date, pursuant to its terms. On April 3, 2025, our Board of Directors notified Renovaro of our decision to discontinue discussions regarding the proposed merger between the two companies. We have no further obligations with respect to the Renovaro Merger, including under the LOI or the Extension Agreement. On May 8, 2025, Renovaro filed a lawsuit in Delaware Chancery Court claiming breaches by us of the LOI and the Extension Agreement and seeking to compel our entry into a merger agreement with Renovaro. The Company does not believe the lawsuit has merit and continues to contest it vigorously. It is not possible to estimate the amount of any loss or range of possible loss that might result from this lawsuit. However, because the final outcome cannot be predicted with certainty, unfavorable or unexpected developments or outcomes could result in a material impact to the Company’s financial condition and results of operations.

Eagan Asset Sale to DeRoyal

On March 14, 2025, we entered into an asset purchase agreement and closed the transactions contemplated therein with DeRoyal Industries, Inc. (“DeRoyal”), to sell and assign to DeRoyal assets and liabilities exclusively related to the business of providing products for automated, direct-to-drain medical fluid disposal, including our STREAMWAY® product line, in exchange for a total purchase price of $625,000, plus the assumption of certain liabilities.

Nasdaq Notice of Delisting

On June 9, 2025, we received a letter (the “Notice”) from the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that because the Company had not regained compliance with the minimum $2,500,000 stockholders’ equity requirement for continued listing on The Nasdaq Capital Market as set forth in Nasdaq Listing Rule 5550(b)(1) (the “Stockholders’ Equity Requirement”), the Staff has determined to delist the Company’s securities from The Nasdaq Capital Market. The Company was unable to complete its previously submitted plan of compliance within the 180-day extension period provided under the Listing Rules. On June 11, 2025, we submitted a hearing request to Nasdaq’s Hearings Panel (the “Panel”), which stayed the suspension of the Company’s securities and the filing of the Form 25-NSE pending the Panel’s decision. On June 12, 2025, we were notified that the Panel agreed to consider our appeal at an oral hearing, which the Panel scheduled for July 17, 2025. The Panel has discretion to take actions as prescribed by Nasdaq Listing Rule 5815(c)(1) including, but not limited to, granting an exception to the continued listing standards for a period not to exceed 180 days from the date of the Notice.

On July 8, 2025, we received a letter from the Staff indicating that the bid price for our common stock had closed below $1.00 per share for 30 consecutive business days, and that the Company is therefore not in compliance with the minimum bid price requirement for continued listing under Nasdaq Marketplace Rule 5550(a)(2) (the “Minimum Bid Price Requirement”). The notification had no immediate effect on the listing of the Company’s common stock. The Company has a period of 180 calendar days, or until January 5, 2026, to regain compliance with the Minimum Bid Price Requirement. If, at any time before January 5, 2026, the bid price of our common stock closes at or above $1.00 per share for a minimum of 10 consecutive business days, Nasdaq will provide written notification that the Company has achieved compliance with the Minimum Bid Price Requirement.

On July 17, 2025, we attended an oral hearing with the Panel, where we presented plans for coming into compliance with the continued listing standards, which include, but are not limited to, continued sales of common stock pursuant to our at-the-market offering, sales of common stock pursuant to the SEPA (as defined below), expanding availability of our live cell ChemoFx drug response assay and business collaborations, as well as a potential reverse stock split. We also requested an exception from the continued listing standards through December 8, 2025, to provide us the ability to evidence compliance with the standards.

On July 23, 2025, we were notified by Nasdaq that the Panel had granted our request for continued listing on The Nasdaq Capital Market pursuant to an extension through December 8, 2025, to demonstrate compliance with all continued listing requirements, including the Stockholders’ Equity Requirement and Minimum Bid Price Requirement. We are pursuing several actions to timely satisfy the terms of the Panel’s decision; however, there can be no assurance that we will be able to do so.

The potential alternatives we continue to explore for purposes of our Nasdaq listing (as well as for our ability to continue as a going concern) could involve significant transactions that result in a fundamental change to our primary business operations or the control of the Company by a single or group of investors, or a decision by management and our Board of Directors to pursue a transaction that results in us being acquired by another company.

On August 7, 2025, we filed a preliminary proxy statement with the SEC for a special meeting of stockholders seeking, among other things, stockholder approval for (i) a reverse stock split of our outstanding common stock at a ratio of 1-for-15 and (ii) the issuance of up to $10 million of our common stock pursuant to the standby equity purchase agreement (“SEPA”) in order for us to sell to Yorkville shares in excess of the Exchange Cap (as defined below). We intend to file a definitive proxy statement and hold the special meeting as soon as is practicable.

Standby Equity Purchase Agreement

On July 1, 2025, we entered into the SEPA with YA II PN, LTD., a Cayman Islands exempt limited company (“Yorkville”). Pursuant to the SEPA, we have the right to sell to Yorkville up to $10 million in shares of our common stock from time to time, subject to certain limitations and conditions set forth in the SEPA, including that in no event may we issue to Yorkville under the SEPA more than 1,921,706 shares of our common stock (the “Exchange Cap”), unless (i) we obtain stockholder approval to issue shares of our common stock in excess of the Exchange Cap, or (ii) the average price of all applicable sales of shares of common stock under the SEPA equal or exceed $0.83 per share. For more information regarding the SEPA, see Note 14, Subsequent Events, to the unaudited condensed consolidated financial statements of this Quarterly Report on Form 10-Q.

Capital Requirements

Since inception, we have been unprofitable. We incurred losses from continuing operations of $4,264,311 and $6,020,774 for the six months ended June 30, 2025 and 2024, respectively. As of June 30, 2025 and December 31, 2024, we had an accumulated deficit of $184,939,606 and $180,426,271, respectively.

We have never generated sufficient revenues to fund our capital requirements. We have funded our operations through a variety of debt and equity instruments. Since 2017, we have diversified our business by investing in ventures, including making significant loans and investments in early-stage companies. These activities led to the acquisition of Helomics Corporation in April 2019 and the acquisition of zPREDICTA Inc. in November 2021, each of which has accelerated our capital needs. Since 2023, we have monetized certain assets and curtailed expenses to focus on our mission. See “Liquidity and Capital Resources – Liquidity and Plan of Financing; Going Concern” and “Liquidity and Capital Resources – Financing Transactions” below.

Our future cash requirements and the adequacy of available funds depend on our ability to generate revenues from and reach profitability in our oncology business located in Pittsburgh and the availability of future financing to fulfill our business plans. See “Liquidity and Capital Resources – Liquidity and Plan of Financing; Going Concern” below.

Our limited history of operations, especially in our drug discovery business, and our change in the emphasis of our business, starting in 2017, makes prediction of future operating results difficult. We believe that period-to-period comparisons of our operating results should not be relied on as predictive of our future results.

Results of Operations

Comparison of three and six months ended June 30, 2025 and 2024

In July 2024, our Board of Directors approved a plan to dispose of the assets and discontinue the operations of our Birmingham laboratory. On March 14, 2025, we entered into an asset purchase agreement and closed the transactions contemplated therein with DeRoyal Industries, Inc. (“DeRoyal”), to sell and assign to DeRoyal assets and liabilities exclusively related to the business of providing products for automated, direct-to-drain medical fluid disposal, including the STREAMWAY® product line, which constituted our Eagan operating segment, in exchange for a total purchase price of $625,000, plus the assumption of certain liabilities.

As a result of these developments, the former Birmingham and Eagan operating segments have been reflected as discontinued operations in the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. Additional disclosures regarding discontinued operations, including results from discontinued operations, are provided in Note 2, Discontinued Operations, to the unaudited condensed consolidated financial statements of this Quarterly Report on Form 10-Q.

Revenue. We recorded revenue of $2,682 and $67,255 in the three months ended June 30, 2025 and 2024, respectively. The decrease in revenue from the comparative period was primarily due to decreased sales of tumor-specific 3D models and 3D kits in the three months ended June 30, 2025.

We recorded revenue of $112,992 and $72,113 in the six months ended June 30, 2025 and 2024, respectively. The increase in revenue from the comparative period was primarily due to completion of a tumor-specific 3D model in the 2025 period, while no tumor-specific 3D models were completed in the comparable 2024 period.

Cost of sales. Cost of sales was $18,221 and $13,858 in the three months ended June 30, 2025 and 2024, respectively. The gross margin decline from the 2024 period was primarily due to increased overhead costs, including indirect labor, associated with our clinical laboratory.

Cost of sales was $63,339 and $36,291 in the six months ended June 30, 2025 and 2024, respectively. The gross profit margin was approximately 44% and 50% in the six months ended June 30, 2025 and 2024, respectively. The decline in gross profit margin for the six months ended June 30, 2025, was primarily due to increased overhead costs, including indirect labor, associated with our clinical laboratory, which were partially offset by lower material costs driven by timing of work related to tumor-specific 3D models.

General and administrative expenses. General and administrative (“G&A”) expenses primarily consist of management salaries, professional fees, consulting fees, administrative fees, and general office expenses. G&A expenses increased by $50,481 to $1,875,655 in the three months ended June 30, 2025, compared to $1,825,174 in the comparable period in 2024. The increase was primarily due to increased legal fees, offset by decreased fees to consultants and outside advisors, as well as decreased employee compensation related to lower headcount.

G&A expenses decreased by $446,983 to $3,703,855 in the six months ended June 30, 2025, compared to $4,150,838 in the comparable period in 2024. The decrease was primarily due to decreased fees to consultants and outside advisors, decreased audit fees, decreased business taxes, and decreased employee compensation, partially offset by increased legal fees. Audit fees and business taxes decreased primarily due to timing differences between the 2025 and 2024 periods. Employee compensation decreased due to lower headcount. Legal fees increased primarily due to the Renovaro lawsuit and corporate development activities during the six months ended June 30, 2025.

Operations, research and development expenses. Operations, research and development expenses primarily consist of expenses related to product development, prototyping, and testing. Operations, research and development expenses decreased by $58,977 to $499,715 in the three months ended June 30, 2025 compared to $558,692 in the comparable period in 2024. The decrease was primarily due to decreased headcount and decreased consultant fees.

Operations, research and development expenses decreased by $168,656 to $1,020,121 in the six months ended June 30, 2025, compared to $1,188,777 in the comparable period in 2024. The decrease was primarily due to decreased headcount and decreased consultant fees.

Sales and marketing expense. Sales and marketing expenses consist of expenses required to market and sell our products and services. Sales and marketing expenses increased by $134,773 to $268,959 in the three months ended June 30, 2025, compared to $134,186 in the comparable period in 2024. The increase was primarily due to increased fees for digital marketing consultants, partially offset by lower employee compensation resulting from lower headcount.

Sales and marketing expense decreased by $470,304 to $272,592 in the six months ended June 30, 2025, compared to $742,896 in the comparable period in 2024. The decrease was primarily due to decreased employee compensation, including severance related to a former executive recorded in 2024 and a reduction in headcount following separation of marketing employees in the third quarter of 2024, partially offset by increased fees for digital marketing consultants.

Other income. We earned other income of $682,424 during the three months ended June 30, 2025, compared to $9,461 in the comparable period in 2024. We earned other income of $685,852 during the six months ended June 30, 2025, compared to $28,118 in the comparable period in 2024. Other income in the 2025 periods primarily related to the write off of aged accounts payable and related accrued expenses, while other income in the 2024 periods primarily consisted of interest income.

Liquidity and Capital Resources

Cash Flows

On June 30, 2025, we had $506,078 in cash and cash equivalents. Cash and cash equivalents decreased by $228,595 from December 31, 2024, due to the following factors.

Net cash used in operating activities of continuing operations was $4,280,632 in the six months ended June 30, 2025, compared to $5,504,158 in the six months ended June 30, 2024. Cash used in operating activities of continuing operations decreased in the 2025 period primarily due to lower cash operating losses, partially offset by increased cash used in working capital. Lower cash operating losses were primarily due to decreased operating expenses. Cash used in working capital increased due to increases in prepaid expenses and decreases in operating lease liabilities, offset by increases in accounts payable and accrued expenses. The increases in accounts payable and accrued expenses were partially offset by write-offs of aged accounts payable and related accrued expenses.

No cash was used in investing activities of continuing operations in the six months ended June 30, 2025, while $3,032 was used in investing activities of continuing operations in the six months ended June 30, 2024 to acquire property and equipment.

Net cash provided by financing activities of continuing operations was $3,226,593 in the six months ended June 30, 2025, compared to $3,246,692 provided by financing activities of continuing operations in the six months ended June 30, 2024. Cash provided by financing activities of continuing operations in the 2025 period was primarily related to proceeds from the exercise of warrants into common stock, proceeds from the issuance of common stock pursuant to the Extension Agreement with Renovaro, proceeds from the issuance of common stock pursuant to a Registered Direct Offering, and proceeds from a May 2025 private placement of common stock, while the cash provided in the 2024 period was primarily related to proceeds from the issuance of common stock pursuant to the ATM offering in May 2024.

Net cash provided by discontinued operations was $825,444 in the six months ended June 30, 2025, compared to $1,136,392 used in discontinued operations in the six months ended June 30, 2024. Net cash provided by operating activities of discontinued operations for the six months ended June 30, 2025, was $200,444, while net cash used in operating activities of discontinued operations for the six months ended June 30, 2024, was $1,129,914. This change primarily relates to decreased cash losses due to ceasing the discontinued operations. Net cash provided by investing activities of discontinued operations was $625,000 for the six months ended June 30, 2025, while net cash used in investing activities of discontinued operations was $6,478 for the six months ended June 30, 2024. The cash provided in the 2025 period related to proceeds from the sale of Eagan assets pursuant to the asset purchase agreement executed with DeRoyal in March 2025, while cash used in the 2024 period related to purchases of equipment.

Liquidity and Plan of Financing; Going Concern

We have incurred significant and recurring losses from operations for the past several years and, as of June 30, 2025, had an accumulated deficit of $184,939,606. We had cash and cash equivalents of $506,078 as of June 30, 2025, and need to raise significant additional capital to meet our operating needs. We had short-term obligations of $3,845,439 and long-term operating lease obligations of $1,243,327 as of June 30, 2025. We do not expect to generate sufficient operating revenue to sustain our operations in the near term. During the six months ended June 30, 2025, we incurred negative cash flows from continuing operating activities of $4,280,632. Although we have attempted to improve our cash flows from continuing operating activities by bolstering revenues and curtailing expenses and continue to seek ways to generate revenue through business development activities, there is no guarantee that we will be able to improve our cash flows from continuing operating activities sufficiently or achieve profitability in the near term. As a result of these conditions, substantial doubt exists about our ability to continue as a going concern within one year after the date our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q are issued.

We continue to evaluate alternatives to obtain the required additional funding to maintain future operations, but there can be no assurances that such funding will be available under acceptable terms, if at all. Alternatives to obtain additional funding may include, but are not limited to, equity financing, issuing debt, entering into other financing arrangements, or monetizing assets. These possibilities, to the extent available, may be on terms that result in significant dilution to our existing stockholders or that result in our existing stockholders losing part or all of their investment. For example, in February 2025, we issued shares of our common stock in a registered direct offering for gross proceeds of $545,004. Also, in March 2025, pursuant to an extension agreement in connection with the LOI with Renovaro, Renovaro purchased shares of our common stock for an aggregate of $500,000. In March 2025, we entered into an asset purchase agreement pursuant to which we sold and assigned assets and liabilities exclusively related to the business of providing products for automated, direct-to-drain medical fluid disposal, including our STREAMWAY product line, which previously made up our Eagan operating segment, for $625,000, plus assumed liabilities. In May 2025, we offered and sold shares of our common stock in a private placement for gross proceeds of $300,000. During May and June 2025, we offered and sold 284,742 shares of our common stock pursuant to our ATM program for aggregate gross proceeds of approximately $286,000. Despite these sources of funding, we may be unable to access additional financing or obtain additional liquidity when needed or under acceptable terms, if at all. If such financing or adequate funds from operations are not available, we would be forced to limit our business activities and we could default on existing payment obligations, which would have a material adverse effect on our financial condition and results of operations, and may ultimately be required to cease our operations and liquidate our business. The condensed consolidated financial statements as of and for the quarterly period ended June 30, 2025, included in this Quarterly Report on Form 10-Q, do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if we were unable to continue as a going concern.

Financing Transactions

We have primarily funded our operations through a combination of debt and equity instruments including short-term borrowings, and a variety of debt and equity offerings. We have no off-balance sheet transactions.

Registered Direct Offering

On February 18, 2025, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with several institutional and accredited investors for the sale by us of 363,336 shares (the “Registered Direct Offering Shares”) of our common stock, par value $0.01 per share, at a purchase price of $1.50 per share, in a registered direct offering. The offering closed on February 19, 2025. Our gross proceeds from the offering were approximately $545,004, before deducting the placement agent’s fees and other offering expenses. We offered and sold the Registered Direct Offering Shares pursuant to an effective shelf registration statement on Form S-3, which was filed with the SEC on May 21, 2024, and subsequently declared effective on May 21, 2024 (File No. 333-279123), and a related prospectus supplement filed on February 19, 2025.

We agreed to pay H.C. Wainwright & Co., LLC (“Wainwright”), as placement agent, an aggregate fee equal to 7.0% of the gross proceeds we received from the sale of the securities in the offering as well as a management fee equal to 1.0% of such gross proceeds, and $15,000 for fees and expenses of legal counsel. We also issued to Wainwright, or its designees, warrants to purchase up to 7.0% of the aggregate number of shares of our common stock sold in the transactions, or warrants to purchase up to an aggregate of 25,434 shares of our common stock (the “Registered Direct Offering Placement Agent Warrants”). The Registered Direct Offering Placement Agent Warrants are exercisable for five years from the commencement of sales in the offering and have an exercise price equal to 125% of the purchase price of shares of our common stock sold in the offering, or $1.875 per share. The Registered Direct Offering Placement Agent Warrants and the shares issuable upon exercise of the Registered Direct Offering Placement Agent Warrants were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act as transactions not involving a public offering and in reliance on similar exemptions under applicable state laws.

Renovaro Subscription Agreement

On March 13, 2025, we executed a share subscription agreement with Renovaro, pursuant to the Extension Agreement dated February 28, 2025, that amended the previous LOI between the parties. Pursuant to the share subscription agreement, Renovaro subscribed to purchase and we agreed to sell 467,290 unregistered shares of our common stock at a price of $1.07 per share for a total purchase price of $500,000.

May 2025 Private Placement

On May 13, 2025, we executed a share subscription agreement with an institutional and accredited investor for the sale, in a private placement, by the Company of 280,374 shares of our common stock at a price of $1.07 per share for a total purchase price of $300,000. The closing of this share issuance occurred on June 3, 2025.

At The Market Offering

On May 3, 2024, we entered into an ATM Sales Agreement (the “Sales Agreement”) with Wainwright, pursuant to which we may offer and sell, from time to time, through Wainwright, shares of our common stock through an “at the market offering” program pursuant to which Wainwright will act as sales agent. Subject to the terms and conditions of the Sales Agreement, Wainwright is permitted to sell the shares by methods deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended. The Sales Agreement provides that Wainwright will be entitled to compensation for its services of 3.0% of the gross sales price of all shares sold through Wainwright under the Sales Agreement. We are subject to certain restrictions on our ability to offer and sell shares of our common stock under the Sales Agreement.

On May 6, 2024, following execution of the Sales Agreement, we filed with the SEC a shelf registration statement on Form S-3 (the “May 2024 Shelf Registration Statement”). The May 2024 Shelf Registration Statement, as amended, was declared effective by the SEC on May 21, 2024 and included a prospectus supplement (the “Initial ATM Prospectus Supplement”) to the base prospectus related to the offering of up to $3,696,000 of shares of the Company’s common stock under the Sales Agreement. As of May 31, 2024, we had offered and sold 1,607,100 shares of common stock under the Initial ATM Prospectus Supplement for gross proceeds of approximately $3,696,000. The net proceeds from the shares offered and sold in May 2024, after deducting commissions and offering expenses, were approximately $3,122,000. No further shares were available to be sold under the Sales Agreement as of May 31, 2024 due to restrictions contained in the Sales Agreement.

On April 18, 2025, in accordance with the terms of the Sales Agreement, we determined that we were again able to sell shares under the Sales Agreement, and on April 18, 2025, filed a prospectus supplement to the May 2024 Shelf Registration Statement relating to the offer and sale of up to an additional $1,491,000 of our shares of common stock. As of May 31, 2025, we had offered and sold 121,792 shares of common stock under the prospectus supplement filed April 18, 2025 for gross proceeds of approximately $139,000, and we had an aggregate of approximately $1,352,000 remaining available pursuant to the April 18, 2025 prospectus supplement.

On June 2, 2025, in accordance with the terms of the Sales Agreement, we determined to further increase the number of shares we may sell under the Sales Agreement, from the approximately $1,352,000 remaining as of May 31, 2025 up to an aggregate of $3,398,000, and we filed an additional prospectus supplement with the SEC on June 2, 2025. As of June 30, 2025, we had offered and sold 162,950 shares of common stock under the prospectus supplement filed June 2, 2025 for gross proceeds of approximately $147,000. Approximately $3,251,000 remains available to us for sales of our common stock pursuant to the June 2, 2025 prospectus supplement.

The net proceeds from the shares offered and sold pursuant to the Sales Agreement during the three months ended June 30, 2025, after deducting commissions and offering expenses, were approximately $163,000.

Accounting Standards and Recent Accounting Developments

See Note 1, Organization and Summary of Significant Accounting Policies, to the unaudited condensed consolidated financial statements of this Quarterly Report on Form 10-Q for a discussion of recent accounting developments.

Evaluation of Disclosure Controls and Procedures

Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), defines the term “disclosure controls and procedures” as those controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Management, with the participation of our Chief Executive Officer and Interim Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as of June 30, 2025. Based on that evaluation, our Chief Executive Officer and Interim Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective as of June 30, 2025.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to our risk factors from those disclosed under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 31, 2025, other than as set forth below.

Our common stock could be delisted from the Nasdaq Capital Market, which delisting could hinder your ability to obtain accurate quotations on the price of our common stock or dispose of our Common Stock in the secondary market.

On May 13, 2022, we received a letter from the Listing Qualifications Department of Nasdaq (the “Staff”) informing us that because the closing bid price for our common stock listed on Nasdaq was below $1.00 for 30 consecutive trading days, we did not comply with the minimum closing bid price requirement for continued listing under Nasdaq Listing Rule 5550(a)(2), requiring a minimum bid price of $1.00 per share (the “Minimum Bid Price Requirement”). The letter stated that we had 180 days, or until November 9, 2022, to regain compliance by maintaining a closing bid price of at least $1.00 for a minimum of 10 consecutive trading days. This deadline was subsequently extended by Nasdaq to May 8, 2023. On April 23, 2023, we effected a 20-for-1 reverse stock split to cure this deficiency. As a result, our stock price increased significantly, and we regained compliance with the Minimum Bid Price Requirement. After a subsequent decline in our stock price, on September 19, 2024, we received another letter from the Staff informing us that we did not meet the Minimum Bid Price Requirement. The letter stated that we had 180 days, or until March 18, 2025, to regain compliance by maintaining a closing bid price of at least $1.00 for a minimum of 10 consecutive trading days. We regained compliance with the Minimum Bid Price Requirement, as our stock price began trading above the minimum requirement.

On November 20, 2024, we received a letter from the Staff notifying us that we were not in compliance with the minimum stockholders’ equity requirement for continued listing as set forth in Nasdaq Listing Rule 5550(b)(1) (the “Stockholders’ Equity Requirement”), because our stockholders’ equity of $1,966,969, as reported in our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2024, was below the required minimum of $2.5 million, and because, as of the date of the notice, we did not meet either of the alternative compliance standards, relating to market value of listed securities of at least $35 million or net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years. Under Nasdaq rules and as specified in the notice, we had until Monday, January 6, 2025 to submit to Nasdaq a plan to regain compliance with the Stockholders’ Equity Requirement. If our plan to regain compliance is accepted, Nasdaq may grant an extension of up to 180 calendar days from the date of the Notice for the Company to evidence compliance. We submitted our plan on January 6, 2025, citing the Company’s proposed merger with Renovaro, and requested a 180-day extension to regain compliance with the Stockholders’ Equity Requirement. In response, the Nasdaq requested upon execution, or by no later than March 1, 2025, a copy of the definitive merger documentation and a detailed timeline to complete the merger. On February 28, 2025, the Company notified the Staff that the Company continues to progress in discussions with Renovaro to finalize the merger. The Company also notified the Staff of the Extension Agreement entered into with Renovaro on February 28, 2025, which extended the outside termination date from February 28, 2025, to March 31, 2025. As a result of the termination of negotiations with Renovaro, we were unable to complete the previously submitted plan.

On June 9, 2025, we received a letter from the Staff notifying us that because the Company had not regained compliance with the Stockholders’ Equity Requirement, the Staff determined to delist the Company’s securities from The Nasdaq Capital Market. On June 11, 2025, we submitted a hearing request to Nasdaq’s Hearings Panel (the “Panel”), which stayed the suspension of the Company’s securities and the filing of the Form 25-NSE pending the Panel’s decision. On June 12, 2025, we were notified that the Panel agreed to consider our appeal at an oral hearing, which the Panel scheduled for July 17, 2025. The Panel has discretion to take actions as prescribed by Nasdaq Listing Rule 5815(c)(1) including, but not limited to, granting an exception to the continued listing standards for a period not to exceed 180 days from the date of the Notice.

On July 8, 2025, we received a letter from the Staff indicating that the bid price for our common stock had closed below $1.00 per share for 30 consecutive business days, and that the Company is therefore not in compliance with the Minimum Bid Price Requirement. The notification had no immediate effect on the listing of the Company’s common stock. The Company has a period of 180 calendar days, or until January 5, 2026, to regain compliance with the Minimum Bid Price Requirement. We intend to continue actively monitoring the bid price for our common stock and will consider available options to resolve the deficiency and regain compliance with the Minimum Bid Price Requirement.

On July 17, 2025, we attended an oral hearing with the Panel, where we presented plans for coming into compliance with the continued listing standards, which include, but are not limited to, continued sales of common stock pursuant to our at-the-market offering, sales of common stock pursuant to the SEPA, expanding availability of our live cell ChemoFx drug response assay and business collaborations, as well as a potential reverse stock split. We also requested an exception from the continued listing standards through December 8, 2025, to provide us the ability to evidence compliance with the standards.

On July 23, 2025, we were notified by Nasdaq that the Panel had granted our request for continued listing on The Nasdaq Capital Market pursuant to an extension through December 8, 2025, to demonstrate compliance with all continued listing requirements, including the Stockholders’ Equity Requirement and Bid Price Requirement. We are pursuing several actions to timely satisfy the terms of the Panel’s decision; however, there can be no assurance that we will be able to do so.

On August 7, 2025, we filed a preliminary proxy statement with the SEC for a special meeting of stockholders seeking, among other things, stockholder approval for (i) a reverse stock split of our outstanding common stock at a ratio of 1-for-15 and (ii) the issuance of up to $10 million of our common stock pursuant to the SEPA in order for us to sell to Yorkville shares in excess of the Exchange Cap. We intend to file a definitive proxy statement and hold the special meeting as soon as is practicable.

In the event our common stock is delisted from the Nasdaq Capital Market and we are also unable to maintain listing on another alternate exchange, trading in our common stock could thereafter be conducted through one or more over-the-counter markets. In such event, the liquidity of our common stock would likely be impaired, not only in the number of shares which could be bought and sold, but also through delays in the timing of the transactions, and there would likely be a reduction in our coverage by security analysts and the news media, thereby resulting in lower prices for our common stock than might otherwise prevail.

In an attempt to regain compliance with Nasdaq’s Minimum Bid Price Requirement, we have determined to pursue and conduct a 1-for-15 reverse stock split, the impact of which on the future market price of our common stock and our ability to maintain the listing of our common stock on Nasdaq will be uncertain.

We have determined to pursue and conduct a 1-for-15 reverse stock split in an attempt to regain compliance with Nasdaq’s Minimum Bid Price Requirement; however, we cannot assure stockholders that the proposed reverse stock split will be approved by stockholders, sufficiently increase our stock price, or be completed before Nasdaq commences delisting procedures related to the Minimum Bid Price Requirement. The effect of a reverse stock split on our stock price cannot be predicted with any certainty, and the history of reverse stock splits for other companies, including those in our industry, is varied, particularly since some investors may view a reverse stock split negatively. It is possible that our stock price after a reverse stock split will not increase in the same proportion as the reduction in the number of shares outstanding, causing a reduction in our overall market capitalization. Further, even if we implement a reverse stock split, our stock price may decline due to various factors, including our future performance and general industry, market and economic conditions. This percentage decline, as an absolute number and as a percentage of our overall market capitalization, may be greater than would occur in the absence of a reverse stock split.

In addition, a reverse stock split may decrease the liquidity of our common stock and result in higher transaction costs. The liquidity of our common stock may be negatively impacted by the reduced number of shares outstanding after a reverse stock split, which would be exacerbated if the stock price does not increase following the reverse stock split. In addition, a reverse stock split would increase the number of stockholders owning “odd lots” of fewer than 100 shares, trading in which generally results in higher transaction costs. Accordingly, a reverse stock split may not achieve the desired results of increasing marketability and liquidity.

The implementation of a reverse stock split would not have an effect on the actual or intrinsic value of our business or a stockholder’s proportional ownership interest (subject to the treatment of fractional shares). However, should the overall value of our common stock decline after a reverse stock split, then the actual or intrinsic value of shares held by stockholders will also proportionately decrease as a result of the overall decline in value.

We are pursuing alternatives to obtain additional funding for our business and to avoid delisting of our common stock from the Nasdaq Capital Market, which could change the nature of our business and your investment.

We continue to evaluate alternatives to obtain additional funding to maintain our future operations and to regain and maintain continued listing on The Nasdaq Capital Market. These alternatives could include transactions that result in a change to our business operations, capital or ownership structure, including those that make the continuation of the SEPA no longer necessary or advisable, or a transaction that results in our common stock no longer being listed on The Nasdaq Capital Market (notwithstanding our current intention to regain and maintain such listing), such as a merger or acquisition. The decision to pursue and enter into any such transaction will be made by management and our Board of Directors based on determinations of what is in the best interest of the Company and its stockholders. Depending on alternatives that may be pursued, and the timing of any such actions, the focus and nature of our business could ultimately be different than it is currently or at the time of investors’ purchases of shares, we may not be able to successfully implement any such alternatives, and investors purchasing shares may experience a decline in the value of their shares or lose their investment entirely.

After the expiration of the letter of intent with Renovaro and our decision not to engage in further discussions with Renovaro regarding a potential merger, Renovaro has filed a lawsuit against us, which could be costly and time-consuming.

As previously disclosed, the letter of intent with Renovaro regarding a proposed merger transaction expired by its terms on March 31, 2025, and on April 3, 2025, our Board of Directors notified Renovaro of our decision to discontinue discussions regarding the proposed merger. On May 8, 2025, Renovaro filed a lawsuit alleging a breach of contract and the implied covenant of good faith and fair dealing. We do not believe Renovaro’s claims have merit and intend to continue to vigorously contest the lawsuit. The results of litigation cannot be predicted with certainty, and regardless of the merits, litigation can be costly and time-consuming for the Company. The diversion of management’s attention, the costs of defense and the possibility of an adverse decision could negatively impact the Company’s results of operations and financial condition.

In addition to the information set forth in this Quarterly Report on Form 10-Q, the reader should carefully consider the risks included in Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, before making an investment decision. Our business could be harmed by any of these risks. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment.