Ernexa Therapeutics Inc.: Form 10-Q for the period ended Jun 30, 2026

You should read this discussion together with the unaudited interim condensed consolidated financial statements, related notes, and other financial information included elsewhere in this Quarterly Report on Form 10-Q (“Quarterly Report”) together with our audited consolidated financial statements, related notes, and other information contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the Securities and Exchange Commission (the “SEC”) on March 13, 2026 (the “2025 10-K”). The following discussion contains or is based on assumptions, estimates and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under “Risk Factors,” in this report and in Part I, Item 1A of the 2025 10-K and as described from time to time in our other filings with the SEC. These risks could cause our actual results to differ materially from those anticipated in these forward-looking statements.

Overview

We are a pre-clinical-stage synthetic allogeneic iMSC therapy company. iMSCs are induced pluripotent stem cell-derived mesenchymal stem cells. We envision a future where cell therapies powered by synthetic iMSCs can offer new options for patients with limited treatment paths, and our mission is to transform the treatment of cancer and autoimmune disease by developing scalable, affordable, off-the-shelf cell therapies that restore hope.

Objectives and Business Strategy

Our lead product candidate ERNA-101 is allogenic IL-7 and IL-15-secreting iMSCs. ERNA-101 capitalizes on the intrinsic tumor-homing ability of MSCs to slip through the tumor’s defenses and to deliver potent pro-inflammatory factors directly to the tumor microenvironment (“TME”), limiting systemic exposure and potential toxicity while potentially unleashing potent anti-cancer immune responses including enhancement of T-cell anti-tumor activity. Our initial focus is to develop ERNA-101 in platinum-resistant ovarian cancer. We collaborated with the University of Texas MD Anderson Cancer Center (“MDACC”) to investigate the ability of ERNA-101 to induce and modulate antitumor immunity in an ovarian cancer model. In preclinical study, ERNA-101 exhibited reduction of tumor growth and a statistically significant survival advantage in the ovarian cancer model as compared to the control group, and as announced in May 2026, preclinical data demonstrates that when ERNA-101 is used in combination with PD-1 blockade, it drives complete tumor clearance and 100% long-term survival in syngeneic ovarian cancer models. We have filed Patent Application No. 63/991,024 related to the use of ERNA-101 in combination with PD-1 blockade, which remains pending. It is possible that the pending application, and any that may be filed in the future, will not lead to an issued patent. Additionally, MDACC has filed a patent application based on research conducted under our collaboration agreement (the “MDACC Application”), and we were informed that none of our employees were identified as inventors on the MDACC Application. We have not yet received the MDACC Application and have not evaluated inventorship, ownership or assignment rights as of the filing of this Quarterly Report.

During the fourth quarter of 2025, we had a successful pre-Investigational New Drug (“IND”) meeting with the Food and Drug Administration (“FDA”), which resulted in regulatory alignment with our development approach. We expect to complete the Investigational New Drug (“IND”) enabling studies and IND submission in 2026 and to subsequently enter a Phase I investigator sponsored clinical trial in the second half of 2026.

We are also investigating anti-inflammatory cytokine (e.g., IL-10)-secreting iMSCs in autoimmune disorders like rheumatoid arthritis, which we refer to as ERNA-201. MSCs have an intrinsic ability to home to inflamed tissue and have been shown to dampen inflammation and drive healing through multiple secreted mediators and cell-cell interactions. We are investigating the ability of ERNA-201 to turbocharge these anti-inflammatory and regenerative effects.

We have also been accepted as one of only ten global companies for the Japan External Trade Organization acceleration program, which will allow us to receive expert-led mentoring and market-entry guidance focused on Japan’s regulatory, clinical and commercial landscape. The program also provides direct engagement opportunities with leading Japanese research and development organizations to explore potential collaborations across development, manufacturing and clinical execution.

Additionally, to expand our developmental opportunities and raise non-dilutive capital, we are actively seeking strategic partnerships to co-develop or out-license therapeutic assets and engage with potential collaborators, and we are currently applying for research grants, some of which will be used for research conducted at our Texas subsidiary, Ernexa TX2, Inc.

Recent Developments

Independent Validation of ERNA-101

In July 2026, an independently conducted study conducted by an independent contract research organization successfully reproduced earlier findings generated at MD Anderson Cancer Center, demonstrating complete tumor clearance and durable long-term survival in a substantially larger study. The results further strengthen confidence in ERNA-101's mechanism of action and provide important third-party validation as the Company advances toward its planned Investigational New Drug (IND) submission in the third quarter of 2026 and anticipated first-in-human Phase 1 clinical trial in the fourth quarter.

Reverse Stock Split

As approved on March 27, 2026 by written consent from approximately 53.34% of our stockholders (the “Consenting Stockholders), on May 4, 2026, we effected a reverse stock split of our common stock at a ratio of 1-for-25, as determined by our Board of Directors within the parameters approved by the Consenting Stockholders (the “Reverse Stock Split”).

Upon the effectiveness of the Reverse Stock Split, every twenty-five shares of the issued and outstanding common stock were automatically combined and reclassified into one issued and outstanding share of common stock. The Reverse Stock Split did not alter the par value of the common stock, and the number of authorized shares of common stock remains unchanged at 150,000,000 shares. No fractional shares were issued in connection with the Reverse Stock Split, and no cash or other consideration was paid in connection with any fractional shares. Stockholders who otherwise would have held a fractional share after giving effect to the Reverse Stock Split instead owned one whole share of the post-reverse stock split common stock. We issued an aggregate of 203 shares for rounding up fractional shares to whole shares.

All share and per share data in this Quarterly Report on Form 10-Q have been adjusted for all periods presented to reflect the Reverse Stock Split.

2026 Public Offering

On February 6, 2026, we entered into a placement agency agreement (the “Placement Agency Agreement”) with Brookline Capital Markets, a division of Arcadia Securities, LLC (“Brookline” or the “Placement Agent”), pursuant to which we engaged the Placement Agent for the public offering of 0.8 million shares of our common stock (or pre-funded warrants in lieu of common stock) and accompanying warrants to purchase 0.8 million shares of common stock (the “Milestone Warrants”), at a combined offering price of $12.50 per share of common stock and accompanying Milestone Warrant (or a combined offering price of $12.25 per share of pre-funded warrant and accompanying Milestone Warrants) (the “Public Offering”). In connection with the Public Offering, we also entered into a securities purchase agreement (each, a “Purchase Agreement”) with certain investors who purchased shares of common stock and Milestone Warrants in the Public Offering.

The pre-funded warrants were immediately exercisable (subject to certain ownership limitations) had an exercise price of $0.25 per share and did not expire until exercised in full. On February 11, 2026 and February 18, 2026, we issued 53,000 and 27,000 shares of common stock, respectively, in connection with the exercise of the pre-funded warrants, for a total exercise price of approximately $20,000. There are no remaining pre-funded warrants outstanding related to the Public Offering.

The Milestone Warrants are tradeable on The Nasdaq Capital Market under the symbol “ERNAW.” The Milestone Warrants are immediately exercisable (subject to certain ownership limitations), have an exercise price of $17.00 per share, and expire on the earlier of (i) the five-year anniversary of the original issuance date or (ii) the 180th calendar day following our public release of clinical trial data from the first cohort of the Phase 1 study of ERNA-101.

Pursuant to the Placement Agency Agreement, we paid the Placement Agent an aggregate cash fee of approximately $0.5 million, which was equal to 6.5% of the aggregate purchase price paid by investors in the Offering (or 1.5% with respect to certain existing investors). We will also pay the Placement Agent a cash fee as compensation for gross proceeds we receive from any exercise of any Milestone Warrants sold in connection with the Public Offering, payable quarterly on each January 1, April 1, July 1 and October 1 following the closing of the Public Offering (or the following business day if such day is not a business day), at the same percentage and as calculated in the manner as set forth above. We also issued approximately 9,000 shares of common stock to the Placement Agent, which was equal to 1.5% of the aggregate number of shares of common stock and pre-funded warrants sold in the Public Offering (or 0.5% with respect to sales to certain existing investors). In addition, we reimbursed the Placement Agent for its accountable offering-related legal expenses in an amount of $125,000.

The Public Offering closed on February 10, 2026, for aggregate gross proceeds of approximately $10.5 million before deducting Placement Agent fees and other offering expenses payable by us. We are using the net proceeds from the Public Offering to support the advancement of our development programs and for working capital and general corporate purposes.

The Placement Agency Agreement and the Purchase Agreements contain customary representations, warranties and agreements by us, customary conditions to closing, indemnification obligations of us, the Placement Agent, or the investors, as the case may be, and other obligations of the parties.

Pursuant to the terms of the Purchase Agreements and the Placement Agency Agreement, we have agreed that for a period of ninety (90) days from the closing of the Public Offering, that neither we nor any subsidiary may (i) issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of common stock or common stock equivalents or (ii) file any registration statement or prospectus, or any amendment or supplement thereto, in each case, subject to certain exceptions, unless waived by the Placement Agent. We have also agreed not to effect or enter into an agreement to effect any issuance of common stock or common stock equivalents involving a Variable Rate Transaction, as defined in the Purchase Agreements, for a period of ninety (90) days following the closing of the Public Offering, subject to certain exceptions, unless waived by the Placement Agent. In addition, as part of the Purchase Agreement, subject to certain exceptions, our officers and directors entered into lock-up agreements, pursuant to which they agreed not to sell or otherwise dispose of any of the common stock for a period of ninety (90) days following the date of closing of the Public Offering.

Universal Shelf and ATM

On March 13, 2026, we filed a Registration Statement on Form S-3 with the SEC to offer and sell up to $50.0 million of our common stock from time to time in one or more offerings (the “Universal Shelf”), which became effective on March 30, 2026. The Universal Shelf includes a prospectus supplement providing for sales of up to $9.2 million of common stock pursuant to an At-the-Market (“ATM”) program under a sales agent agreement we entered into with Brookline.

We are subject to General Instruction I.B.6 of Form S-3 (the “baby shelf” rules), which limits the aggregate market value of securities we may sell under the Universal Shelf to no more than one-third of our public float in any 12-month period while our public float remains below $75.0 million. As of the filing of the Universal Shelf, one-third of our public float was approximately $9.2 million, representing the maximum amount to be sold under the ATM. To date, we have sold approximately 463,000 shares of common stock for net proceeds of approximately $3.7 million under the ATM.

Nasdaq Compliance

Our common stock is listed on The Nasdaq Capital Market (“Nasdaq”). Nasdaq requires that listed companies satisfy certain continued listing requirements, including Listing Rule 5550(a)(2), which requires that listed companies maintain a minimum bid price of their common stock of at least $1.00 per share (the “Bid Price Rule”).

On March 18, 2026, we received written notice from Nasdaq indicating that our common stock failed to maintain the Bid Price Rule for 30 consecutive business days. While companies are typically afforded a 180-calendar day compliance period, as specified under Nasdaq Listing Rule 5810(c)(3)(A), to comply with the Bid Price Rule, Nasdaq concluded that we are not eligible for the compliance period pursuant to Nasdaq Listing Rule 5810(c)(3)(A)(iv) due to the fact that we effected a reverse stock split over the prior one-year period. Accordingly, we requested a hearing before the Nasdaq Hearing Panel (the “Panel”), which automatically stayed any suspension or delisting action pending the hearing and the expiration of any additional extension period granted by the Panel following the hearing. Our hearing was held on April 28, 2026, during which we requested an extension for continued listing on Nasdaq through May 15, 2026, the date we expected to demonstrate compliance with the Bid Price Rule (as discussed further below).

On May 5, 2026, the Panel granted our request for continued listing on Nasdaq, subject to the following conditions: (i) on or before May 15, 2026, we shall demonstrate compliance with the Bid Price Rule; (ii) from the date of the Panel decision until September 14, 2026 (the end of the Panel’s jurisdiction in this matter), we shall maintain compliance with all Nasdaq Listing Rules; and (iii) we will be subject to a mandatory panel monitor for a period of one year from the date of this determination pursuant to Rule 5815(d)(4)(B). If we do not maintain compliance with all Nasdaq Listing Rules through September 14, 2026, the Panel will immediately delist our securities from Nasdaq. Additionally, should we become deficient again with the Bid Price Rule during the one-year period ending May 5, 2027, Nasdaq will immediately issue us a delisting determination.

On May 4, 2026, we effected the Reverse Stock Split and on May 29, 2026, we received notice from Nasdaq that we have regained compliance with the Bid Price Rule. The Panel maintains jurisdiction over the Company until September 14, 2026 with respect to all Nasdaq Listing Rules, and the Company must continue to remain compliant with the Bid Price Rule through May 5, 2027 to avoid delisting.

Basis of Presentation

Revenues and Cost of Revenues

We are a pre-clinical stage company and do not currently have any revenues from product sales or cost of revenues. We will not have revenues from product sales or cost of revenues until such time as we receive regulatory approval of our product candidates and successfully commercialize our products.

Research and Development Expenses

We expense our research and development costs as incurred. Research and development expenses consist of costs incurred for company-sponsored research and development activities. Upfront payments and milestone payments made for the licensing of technology are expensed as research and development in the period in which they are incurred if the technology is not expected to have any alternative future uses other than the specific research and development project for which it was intended.

The major components of research and development costs include preclinical study costs, salaries and employee benefits, stock-based compensation expense, supplies and materials, expensed licensed technology, consulting, scientific advisors and other third-party costs, as well as allocations of various overhead costs related to our product development efforts.

We have contracted with third parties to perform various studies. The financial terms of these agreements vary from contract to contract and may result in uneven payment flows. We accrue for third party expenses based on estimates of the services received and efforts expended during the reporting period. If the actual timing of the performance of the services or the level of effort varies from the estimate, the accrual is adjusted accordingly. The expenses for some third-party services may be recognized on a straight-line basis if the expected costs are expected to be incurred ratably during the period. Payments under the contracts depend on factors such as the achievement of certain events or milestones, the allocation of responsibilities among the parties to the agreement, and the completion of portions of the preclinical study or similar conditions.

General and Administrative Expenses

Our general and administrative expenses consist primarily of salaries, benefits and other costs, including stock-based compensation, for our executive and administrative personnel, legal and other professional fees, travel, insurance, and other corporate costs.

Results of Operations

Comparison of the Three and Six Months Ended June 30, 2026 and 2025

(In thousands)

(In thousands)

21

Revenues and Cost of Revenues

We had no revenues or cost of revenues for the three and six months ended June 30, 2026 or 2025.

Research and Development Expenses

(in thousands)

Total research and development expenses increased for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, primarily due to increased study fees related to ERNA-101 as well as increased payroll due to an increase in our research and development headcount and increased other expenses, which includes travel, supplies and allocated rent. These increases were offset by a reduction in expenses related to our Master Service Agreement (“MSA”) and the license and collaboration agreement (“the Factor L&C Agreement”) with Factor Bioscience Limited (“Factor Limited”). Pursuant to the Factor L&C Agreement, we paid Factor Bioscience approximately $0.2 million per month from September 2024 through August 2025, and we paid approximately $0.1 million per month from September 2024 through May 2025. The Company will also pay certain milestone payments, royalty payments on net sales of commercialized products and sublicensing fee payments, when applicable.

For the six months ended June 30, 2026 compared to the six months ended June 30, 2025, our research and development expenses increased by approximately $2.3 million primarily due to fees recognized for services under Statement of Work 1 with Cellipont for development and manufacturing services, increased study fees related to ERNA-101 as well as increased payroll due to an increase in research and development headcount. These increases were partially offset by a reduction in expenses under professional fees due to the amendment of W02 starting during March 2026.

General and Administrative Expenses

(in thousands)

Our general and administrative expenses for the three months ended June 30, 2026 decreased by approximately $0.05 million primarily due to bonuses paid out to general counsel as part of an amendment to their employment agreement in 2025, offset by an increase in recruiting expense.

For the six months ended June 30, 2026 compared to the six months ended June 30, 2025, our general and administrative expenses increased by approximately $0.1 million primarily due to increases in payroll related to certain accrued bonuses and in professional fees related to certain legal matters, offset by a reduction in stock based compensation due to a reduction in the fair values of the equity awards that are amortizing during the six months ended June 30, 2026 compared to the six months ended June 30, 2025, as well as decreased other expenses for occupancy costs, depreciation and amortization, and reduced insurance premiums.

Impairment of Goodwill

During the six months ended June 30, 2026, we recognized a $2.0 million impairment charge of the goodwill we had on our balance sheet from a 2018 acquisition because we concluded that the fair value of the reporting unit was less than the carrying value as of March 31, 2026, and the goodwill was considered fully impaired. As of June 30, 2026, there was no remaining goodwill balance. We did not recognize a similar expense during the six months ended June 30, 2025.

Forward sales contract expense

During the three months ended June 30, 2025, we recognized expense of $0.5 million related to a forward sales contract because the fair value of the shares that were expected to be issued under a securities purchase agreement entered into on March 31, 2025 (the “2025 SPA”) exceeded the expected proceeds. There was no similar transaction for the three months ended June 30, 2026.

During the six months ended June 30, 2025, we recognized expense of $5.8 million related to a forward sales contract because the fair value of the shares that were expected to be issued under a securities purchase agreement entered into on March 31, 2025 (the “2025 SPA”) exceeded the expected proceeds. There was no similar transaction for the six months ended June 30, 2026.

Change in Fair Value of Warrant Liabilities

The change in the fair value of the warrant liabilities for the three and six months ended June 30, 2025 was de minimis. There was no change in the fair value of the warrant liabilities recognized for the three and six months ended June 30, 2026.

Interest Income (Expense), net

For the three months ended June 30, 2026, we recognized approximately $55,000 more in interest income due to an increase of cash in interest-bearing accounts compared to the three months ended June 30, 2025.

For the six months ended June 30, 2026, we recognized approximately $94,000 more in interest income due to an increase of cash in interest-bearing accounts compared to the six months ended June 30, 2025.

Gain on extinguishment of contingent liability

For the three and six months ended June 30, 2026, we recognized approximately $41,000 due to the extinguishment of the contingent consideration liability during the three months ended June 30, 2026.

Other Expense, net

During the three and six ended June 30, 2025, we recognized approximately $0.1 million and $0.3 million of expenses related to the 2025 SPA transaction entered into on March 31, 2025. There was no comparable expense for the three and six months ended June 30, 2026.

Benefit (provision) for Income Taxes

During 2026, we expect to incur state income tax liabilities related to our operations. We have established a full valuation allowance for all deferred tax assets, including our net operating loss carryforwards, since we could not conclude that we were more likely than not able to generate future taxable income to realize these assets. The effective tax rate differs from the statutory tax rate due primarily to our full valuation allowance.

Liquidity and Capital Resources

As of June 30, 2026, we had cash of approximately $5.0 million, and we had an accumulated deficit of approximately $255.2 million. We have to date incurred operating losses, and we expect these losses to continue in the future. For the three and six months ended June 30, 2026, we incurred a net loss of $4.0 million and $9.5 million, respectively, which includes the $2.0 million non-cash goodwill impairment charge. For the six months ended June 30, 2026, and we used $6.4 million of cash in operating activities.

On February 10, 2026, we received approximately $9.5 million in net proceeds from the Public Offering. On March 13, 2026, we filed the Universal Shelf, which included a prospectus for a $9.2 million ATM. The Universal Shelf is subject to the baby shelf rules, and as of the filing of the Universal Shelf, one-third of our public float was approximately $9.2 million, representing the maximum amount to be sold under the ATM. As of June 30, 2026, we received approximately $6,000 in net proceeds from the sale of common stock under the ATM. To date, we have sold approximately 463,000 shares of common stock for net proceeds of approximately $3.7 million under the ATM, and we have approximately $5.4 million of shares remaining to sell under this facility.

In connection with preparing the financial statement as of and for the three and six months ended June 30, 2026, we evaluated whether there are conditions and events, considered in the aggregate, that are known and reasonably knowable that would raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued.

As of August 4, 2026, we had approximately $7.4 million in cash, which is less than that needed to affect our current operating plan and forecasted cash requirements for the next twelve months. However, we expect that our ability to access additional capital under our ATM will cover shortfalls in our cash resources over the next twelve months from the issuance date of these financial statements. Subsequent to the balance sheet date of June 30, 2026, the Company sold an additional 461,851 shares for net proceeds of $3.7 million in cash under the ATM.

If our cash is not sufficient to meet future cash requirements, we may be required to reduce planned capital expenses, reduce operational cash uses or raise capital on terms that are not as favorable to us as they otherwise might be. Any actions we may undertake to reduce planned capital purchases or reduce expenses may be insufficient to cover shortfalls in available funds. If we require additional capital, we may be unable to secure additional financing on terms that are acceptable to us, or at all.

Cash Flows

Cash flows from operating, investing and financing activities, as reflected in the accompanying condensed consolidated statements of cash flows, are summarized as follows:

(in thousands)

Net Cash Used in Operating Activities

There was an increase of approximately $1.8 million, respectively, in cash used in operating activities for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This change was due to a $2.3 million increase in net loss, after giving effect to adjustments made for non-cash transactions, offset by an increase of $0.5 million in cash used in operating assets and liabilities for the six months ended June 30, 2026 when compared to the six months ended June 30, 2025.

Net Cash Used in Investing Activities

We used approximately $5,000 in cash for the purchases of property and equipment during the six months ended June 30, 2026, and we made no purchases of property and equipment during the six months ended June 30, 2025.

Net Cash Provided by Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2026 includes net proceeds of $9.5 million received from the Public Offering, including proceeds from the exercise of prefunded warrants issued in the Public Offering. Net cash provided by financing activities for the six months ended June 30, 2025 includes $2.3 million of gross proceeds received from the issuance of two promissory notes and $4.9 million of proceeds received from the First Closing and Second Closing under the SPA.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under applicable SEC rules.

Critical Accounting Estimates

There were no significant changes in our critical accounting estimates during the three and six months ended June 30, 2026 from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of the 2025 10-K.

Recent Accounting Pronouncements

See Note 13 to the accompanying condensed consolidated financial statements.

Under the rules and regulations of the SEC, as a smaller reporting company we are not required to provide the information otherwise required by this item.

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act, designed to ensure that information required to be disclosed in our reports filed pursuant to 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 officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

In designing and evaluating the disclosure controls and procedures, we recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and we were required to apply our judgment in evaluating the cost-benefit relationship of possible controls and procedures. We have carried out an evaluation as of the end of the period covered by this Quarterly Report under the supervision, and with the participation, of our management, including our President and Chief Executive Officer (who serves as our principal executive officer and as our interim principal financial officer) of the effectiveness of the design and operation of our disclosure controls and procedures.

Based on that evaluation, our Chief Executive Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report in providing reasonable assurance of achieving the desired control objectives.

Changes in Internal Control over Financial Reporting

On June 22, 2026, Sandra Gurrola, who served as the Company’s Senior Vice President of Finance, resigned from the Company, as previously disclosed in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 26, 2026. In connection with Ms. Gurrola’s departure, Sanjeev Luther, the Company’s President and Chief Executive Officer, has been appointed to the role of interim principal financial officer on an interim basis, in addition to his existing role as principal executive officer. The Company has engaged outside accounting personnel to support the financial statement close and reporting process during this transition.

Except for this change in the individual(s) serving in the role of interim principal financial officer and the resulting temporary consolidation of the roles of principal executive officer and principal financial officer described above, there was no change in our internal control over financial reporting during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

An investment in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described under Part I, Item 1A, “Risk Factors,” in our 2025 10-K, in addition to other information in this report, when evaluating our business and before deciding whether to purchase, hold or sell shares of our common stock. Each of these risks and uncertainties, as well as additional risks and uncertainties not presently known to us or that we currently consider immaterial, could harm our business, financial condition, results of operations and/or growth prospects, as well as adversely affect the market price of our common stock, in which case you may lose all or part of your investment. There have been no material changes to the risk factors described in the 2025 10-K.

Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock.

Our common stock is listed on The Nasdaq Capital Market. Nasdaq requires that listed companies satisfy certain continued listing requirements. Listing Rule 5550(a)(2) requires that listed companies maintain a minimum compliance with the Bid Price Rule. Listing Rule 5550(b) requires that listed companies maintain compliance with: (1) the Stockholders’ Equity Rule; (2) the MVLS Rule; or (3) the Net Income Rule.

On March 18, 2026, we received written notice from Nasdaq that our common stock had failed to maintain compliance with the Bid Price Rule for 30 consecutive business days. Because we had effected a reverse stock split within the prior one-year period, Nasdaq determined that we were not eligible for the standard 180-calendar-day compliance period ordinarily available under Nasdaq Listing Rule 5810(c)(3)(A). Accordingly, we requested a hearing before a Nasdaq Hearings Panel (the “Panel”), which automatically stayed any suspension or delisting action pending the hearing and any additional extension period granted by the Panel. Following a hearing held on April 28, 2026, the Panel granted our request for continued listing on Nasdaq, subject to the following conditions: (i) that we demonstrate compliance with the Bid Price Rule on or before May 15, 2026; (ii) that we maintain compliance with all Nasdaq Listing Rules from the date of the Panel’s decision through September 14, 2026, the end of the Panel’s jurisdiction over this matter; and (iii) that we be subject to a mandatory panel monitor for a period of one year from the date of the Panel’s determination pursuant to Nasdaq Listing Rule 5815(d)(4)(B).

On May 4, 2026, we effected a 1-for-25 reverse stock split of our common stock. On May 29, 2026, we received notice from Nasdaq that we had regained compliance with the Bid Price Rule. Notwithstanding this notice, the Panel continues to retain jurisdiction over us through September 14, 2026 with respect to compliance with all Nasdaq Listing Rules, and we must remain in compliance with the Bid Price Rule through May 5, 2027. If we fail to maintain compliance with all Nasdaq Listing Rules through September 14, 2026, the Panel will immediately delist our securities from Nasdaq, without further notice or opportunity to cure.

There can be no assurance that we will maintain compliance with the Bid Price Rule, the Stockholders’ Equity Rule, or any other applicable Nasdaq continued listing requirement through September 14, 2026 or May 5, 2027, or thereafter. Our stockholders’ equity, MVLS, and net income position will continue to depend on our ability to raise additional capital, our future operating results, and the trading price of our common stock, each of which is subject to significant uncertainty. If we fail to satisfy any Nasdaq continued listing requirement during the Panel’s monitoring period or thereafter, Nasdaq may take immediate steps to delist our common stock, and we can provide no assurance that any action we take to restore or maintain compliance would be successful.

If our common stock is ultimately delisted by Nasdaq, and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, then we could face significant material adverse consequences, including: a material reduction in the liquidity of our common stock and a corresponding material reduction in the trading price of our common stock; a more limited market quotations for our securities; a determination that our common stock is a “penny stock” that requires brokers to adhere to more stringent rules and possibly resulting in a reduced level of trading activity in the secondary trading market for our securities; more limited research coverage by stock analysts; loss of reputation; more difficult and more expensive equity financings in the future; the potential loss of confidence by investors; and fewer business development opportunities.

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” If our common stock remains listed on Nasdaq, our common stock will be covered securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. If our securities were no longer listed on Nasdaq and therefore not “covered securities,” we would be subject to regulation in each state in which we offer our securities.