Entero Therapeutics, Inc.(US:ENTO)2025-05-15 17:20PART I. FINANCIAL INFORMATION Unaudited Condensed Consolidated Financial Statements Q1 2025 unaudited financials show a $1.3 million net loss, lower operating expenses, and a going concern issue due to low cash Consolidated Balance Sheets Total assets slightly decreased to $85.2 million, with most held-for-sale, and cash declined to $59,000 Consolidated Balance Sheet Highlights (unaudited) | Account | March 31, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $59,352 | $163,476 | | Assets of disposal group held-for-sale | $83,170,009 | $83,170,009 | | Total Assets | $85,203,539 | $85,409,506 | | Liabilities & Equity | | | | Line of credit | $700,000 | $0 | | Liabilities held-for-sale | $23,223,137 | $22,941,497 | | Total Liabilities | $28,740,057 | $27,605,144 | | Total Stockholders' Equity (Deficit) | ($5,217,618) | ($3,876,738) | Consolidated Statements of Operations Q1 2025 net loss of $1.3 million contrasts with prior year's $5.6 million net income, driven by reduced operating expenses Consolidated Statement of Operations Summary (unaudited) | Metric | Three Months Ended March 31, 2025 ($) | Three Months Ended March 31, 2024 ($) | | :--- | :--- | :--- | | Research and development expenses | $15,827 | $554,662 | | General and administrative expenses | $805,559 | $8,544,386 | | Loss from operations | ($821,386) | ($9,099,048) | | Loss from discontinued operations | ($311,515) | ($192,808) | | Income tax benefit | $0 | $14,859,887 | | Net income (loss) | ($1,259,620) | $5,567,606 | | Income (loss) per share - diluted | ($0.28) | $0.38 | Consolidated Statements of Cash Flows Q1 2025 net cash used in operations was $0.8 million, offset by $0.7 million from financing, ending with $66,357 cash Consolidated Statement of Cash Flows Summary (unaudited) | Activity | Three Months Ended March 31, 2025 ($) | Three Months Ended March 31, 2024 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | ($818,635) | ($3,746,956) | | Net cash provided by investing activities | $0 | $88,169 | | Net cash provided by financing activities | $700,000 | $3,378,930 | | Net (decrease) in cash | ($118,635) | ($279,857) | | Cash, cash equivalents and restricted cash, ending balance | $66,357 | $3,453,435 | Note 1 - The Company and Basis of Presentation Entero Therapeutics focuses on Adrulipase, plans to dispose of IMGX assets, and faces substantial doubt about its going concern - The company is focused on the research and development of Adrulipase for GI diseases and plans to dispose of the recently acquired IMGX assets242526 - There is substantial doubt about the Company's ability to continue as a going concern. As of March 31, 2025, cash and cash equivalents were approximately $66,000 with an accumulated deficit of $203.6 million33 - The company is exploring all strategic options, including merger, sale, wind-down, or bankruptcy protection, to address its financial situation3435 Note 3 – Business Acquisition The company acquired ImmunogenX (IMGX) on March 13, 2024, for $60.1 million, adding $63 million in intangible assets - The company acquired ImmunogenX, Inc. on March 13, 2024, in a merger intended to be a tax-free reorganization68 IMGX Merger Consideration (March 13, 2024) | Component | Amount ($) | | :--- | :--- | | Common stock issued to ImmunogenX stockholders | $240,500 | | Replacement options | $1,271,000 | | Replacement warrants | $789,000 | | Preferred stock issued to ImmunogenX stockholders | $57,790,474 | | Total consideration paid | $60,090,974 | Note 4 – Discontinued Operations and Assets and Liabilities Held for Sale The company plans to dispose of IMGX assets and liabilities, classified as held for sale, with a Q1 2025 loss of $0.3 million - The company plans to dispose of the IMGX assets and liabilities, which represents a strategic shift and is now classified as discontinued operations79 Assets and Liabilities Held for Sale (as of March 31, 2025) | Category | Amount ($) | | :--- | :--- | | Assets held for sale: | | | Goodwill and intangible assets | $80,021,900 | | Other assets | $3,148,109 | | Total assets held for sale | $83,170,009 | | Liabilities held for sale: | | | Debt | $6,403,737 | | Deferred tax liability | $13,872,684 | | Other liabilities | $2,946,716 | | Total liabilities held for sale | $23,223,137 | Note 12 – Agreements The company terminated its license agreement with Sanofi for the Capeserod program on February 26, 2025 - On February 26, 2025, the Company provided notice to Sanofi to terminate the License Agreement for Capeserod. No payments are due to Sanofi138 Note 18 - Contingencies The company faces two legal proceedings: a settled loan default case against IMGX and a new lawsuit for $749,000 in unpaid legal fees - A lawsuit from Mattress Liquidators, Inc. against subsidiary IMGX was settled on May 8, 2025. The settlement involved a payment of $5.5 million by the guarantors and approximately $62,000 by ImmunogenX, LLC for legal fees163168 - On March 17, 2025, law firm Ellenoff Grossman & Schole LLP filed a lawsuit against the Company for $749,301 in alleged unpaid legal fees for services rendered between September 2023 and January 2025166 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses strategic shift to Adrulipase, IMGX merger rescission, and critical liquidity issues with only $66,000 cash - The company is now focused on developing Adrulipase and has discontinued its Latiglutenase, Capeserod, and Niclosamide programs173 - In March 2025, the company entered into a Rescission Agreement to unwind the merger with IMGX, returning IMGX to its former shareholders and canceling the stock issued in the transaction175192193 - The company's liquidity is severely constrained, with only $66,000 in cash and cash equivalents as of March 31, 2025. Management has concluded there is substantial doubt about the company's ability to continue as a going concern and is dependent on raising additional capital201203 Comparison of Consolidated Results of Operations | Metric | Three Months Ended March 31, 2025 ($) | Three Months Ended March 31, 2024 ($) | Change ($) | | :--- | :--- | :--- | :--- | | Research and development expenses | $15,827 | $554,662 | ($538,835) | | General and administrative expenses | $805,559 | $8,544,386 | ($7,738,827) | | Total operating expenses | $821,386 | $9,099,048 | ($8,277,662) | | Net income (loss) | ($1,259,620) | $5,567,606 | ($6,827,226) | - The $7.7 million decrease in G&A expenses was primarily due to a $4.2 million non-cash expense for financial advisor fees related to the IMGX merger in Q1 2024, along with lower legal fees, share-based compensation, and public company costs in Q1 2025223 Quantitative and Qualitative Disclosures About Market Risk This section is not applicable to the company - Not applicable237 Controls and Procedures Disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures are effective as of the end of the period covered by the report238 - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls239 PART II. OTHER INFORMATION Legal Proceedings The company reports two legal proceedings: a settled loan default case against IMGX and a new lawsuit for $749,301 in unpaid legal fees - A lawsuit by Mattress Liquidators, Inc. against subsidiary IMGX concerning a loan default was settled. The settlement involved a payment of $5.5 million by guarantors and approximately $62,000 by ImmunogenX, LLC for legal fees, with amended loan documents established242247248 - On March 17, 2025, law firm Ellenoff Grossman & Schole LLP sued the company for $749,301 in alleged unpaid legal fees. The company is investigating and plans to defend the action249250 Risk Factors No material changes to risk factors from the Annual Report on Form 10-K/A for the year ended December 31, 2024 - No material changes from the risk factors set forth in the Annual Report on Form 10-K/A for the year ended December 31, 2024251 Unregistered Sales of Equity Securities and Use of Proceeds None reported for the period - None252 Defaults Upon Senior Securities None reported for the period - None253 Mine Safety Disclosures This section is not applicable to the company - Not applicable254 Other Information No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading plan during the quarter - No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement during the quarter255 Exhibits This section lists exhibits filed with the Form 10-Q, including corporate documents and Sarbanes-Oxley Act certifications - Lists exhibits filed with the report, including Sarbanes-Oxley Act certifications and Inline XBRL documents257