Bluejay Diagnostics(BJDX) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited) Presents the company's unaudited condensed consolidated financial statements, including balance sheets, operations, equity changes, cash flows, and explanatory notes Condensed Consolidated Balance Sheets Presents the company's financial position, detailing assets, liabilities, and stockholders' equity as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (Unaudited) | Item | June 30, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | ASSETS | | | | Current assets: | | | | Cash and cash equivalents | $4,443,076 | $4,301,945 | | Prepaid expenses and other current assets | $305,478 | $596,938 | | Total current assets | $4,748,554 | $4,898,883 | | Property and equipment, net | $1,476,857 | $1,513,495 | | Operating lease right-of-use assets | $155,683 | $209,788 | | Other non-current assets | $22,164 | $35,257 | | Total assets | $6,403,258 | $6,657,423 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Current liabilities: | | | | Accounts payable | $108,817 | $145,122 | | Operating lease liability, current | $100,002 | $113,260 | | Accrued expenses and other current liabilities | $832,244 | $551,986 | | Total current liabilities | $1,041,063 | $810,368 | | Operating lease liability, non-current | $65,375 | $108,989 | | Other non-current liabilities | $6,589 | $8,567 | | Total liabilities | $1,113,027 | $927,924 | | Stockholders' equity: | | | | Common stock | $149 | $55 | | Additional paid-in capital | $43,779,905 | $40,398,228 | | Accumulated deficit | $(38,489,823) | $(34,668,784) | | Total stockholders' equity | $5,290,231 | $5,729,499 | | Total liabilities and stockholders' equity | $6,403,258 | $6,657,423 | - Total assets decreased by approximately $254,165 from $6,657,423 at December 31, 2024, to $6,403,258 at June 30, 2025[20] - Total current liabilities increased by approximately $230,695 from $810,368 at December 31, 2024, to $1,041,063 at June 30, 2025[20] - Accumulated deficit increased by approximately $3.82 million from $(34,668,784) at December 31, 2024, to $(38,489,823) at June 30, 2025[20] Condensed Consolidated Statements of Operations Summarizes the company's financial performance, including operating expenses, other income/expense, and net loss for the periods Condensed Consolidated Statements of Operations (Unaudited) | Category | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $889,896 | $1,032,474 | $1,674,696 | $2,366,019 | | General and administrative | $1,095,465 | $862,482 | $2,199,582 | $1,950,618 | | Sales and marketing | - | $305 | - | $6,728 | | Total operating expenses | $1,985,361 | $1,895,261 | $3,874,278 | $4,323,365 | | Operating loss | $(1,985,361) | $(1,895,261) | $(3,874,278) | $(4,323,365) | | Other income (expense), net | $28,757 | $(580,119) | $53,239 | $(480,480) | | Net loss | $(1,956,604) | $(2,475,380) | $(3,821,039) | $(4,803,845) | | Net Loss per share – Basic and diluted | $(1.41) | $(256.16) | $(3.94) | $(617.39) | | Weighted average common shares outstanding – Basic and diluted | 1,387,118 | 9,663 | 970,565 | 7,781 | - Net loss decreased by $518,776 (20.9%) for the three months ended June 30, 2025, compared to the same period in 2024, and by $982,806 (20.5%) for the six months ended June 30, 2025, compared to the same period in 2024[23] - Net loss per share significantly decreased from $(256.16) to $(1.41) for the three months ended June 30, 2025, and from $(617.39) to $(3.94) for the six months ended June 30, 2025, primarily due to a substantial increase in weighted average common shares outstanding[23] Condensed Consolidated Statements of Changes in Stockholders' Equity Details changes in stockholders' equity, including common stock, additional paid-in capital, and accumulated deficit Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) | Item | Shares | Common Stock Amount ($) | Additional Paid-In Capital ($) | Accumulated Deficit ($) | Total Stockholders' Equity ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | Balance at December 31, 2024 | 554,012 | $55 | $40,398,228 | $(34,668,784) | $5,729,499 | | Stock-based compensation expense | - | - | $1,312 | - | $1,312 | | Net loss | - | - | - | $(1,864,435) | $(1,864,435) | | Balance at March 31, 2025 | 554,012 | $55 | $40,399,540 | $(36,533,219) | $3,866,376 | | Stock-based compensation expense | - | - | $(1,563) | - | $(1,563) | | Issuance of Common Stock for vested restricted stock units | 15 | - | - | - | - | | Issuance of Common Stock in connection with April 2025 Warrant Inducement, net | 940,155 | $94 | $675,283 | - | $675,377 | | Warrant inducement cost | - | - | $2,706,645 | - | $2,706,645 | | Net loss | - | - | - | $(1,956,604) | $(1,956,604) | | Balance at June 30, 2025 | 1,494,182 | $149 | $43,779,905 | $(38,489,823) | $5,290,231 | - Total stockholders' equity decreased by $439,268 from $5,729,499 at December 31, 2024, to $5,290,231 at June 30, 2025, primarily due to net losses and stock-based compensation, partially offset by capital raised from warrant inducements[26] - The issuance of common stock in connection with the April 2025 Warrant Inducement added $675,377 to total stockholders' equity, and a warrant inducement cost of $2,706,645 was recorded as an increase to additional paid-in capital[26] Condensed Consolidated Statements of Cash Flows Summarizes cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Cash Flows (Unaudited) | Item | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | | Net loss | $(3,821,039) | $(4,803,845) | | Net cash used in operating activities | $(3,238,912) | $(4,214,891) | | Net cash used in investing activities | - | $(305,431) | | Proceeds from issuance of common stock and prefunded warrants | $3,846,692 | $12,069,075 | | Issuance costs related to issuance of common stock | $(464,670) | $(1,844,450) | | Proceeds from issuance of notes payable, net | - | $2,000,000 | | Repayment of notes payable | - | $(1,852,560) | | Net cash provided by financing activities | $3,380,043 | $10,370,221 | | Increase in cash and cash equivalents | $141,131 | $5,849,899 | | Cash and cash equivalents, end of period | $4,443,076 | $8,058,415 | - Net cash used in operating activities decreased by approximately $1.0 million (23.2%) to $3.2 million for the six months ended June 30, 2025, compared to $4.2 million in the prior year[29][119] - Net cash provided by financing activities significantly decreased by approximately $7.0 million (67.5%) to $3.4 million for the six months ended June 30, 2025, compared to $10.4 million in the prior year[29][121] Notes to Condensed Consolidated Financial Statements Note 1. Nature of Operations and Basis of Presentation Details the company's business as a medical diagnostics firm developing the Symphony platform for rapid critical care tests - The company is developing the Symphony technology platform, a rapid test system for critical care settings, with its first product candidate being the Symphony IL-6 test for sepsis. The company aims for FDA 510(k) submission in 2027[31][32][33][40] - The company requires at least $30 million in capital between Q3 2025 and end of FY2027 to execute its plan, including cartridge redevelopment and clinical trials[31][52] - The SYMON-I pilot clinical study showed IL-6 levels within 24 hours of sepsis diagnosis predict 28-day mortality, leading to the initiation of the SYMON-II pivotal clinical study in Q3 2024 to validate these findings[38][39] - The company plans to manufacture analyzers through Sanyoseiko Co. Ltd. and redevelop/manufacture cartridges through a third-party contractor and CMO, leveraging licensed technology from Toray Industries, Inc[31][42][43] - The company has undergone multiple reverse stock splits (1-for-20 in July 2023, 1-for-8 in June 2024, 1-for-50 in November 2024), totaling a 1-for-8,000 aggregate basis since July 2023[46] - The company's financial condition raises substantial doubt about its ability to continue as a going concern, with cash resources estimated to only fund operations until Q4 2025, necessitating additional material financing[51][52] Note 2. Significant Accounting Policies Outlines significant accounting policies, warrant classification, net loss per share calculation, and recent accounting standards - The company accounts for warrants as either equity-classified or liability-classified based on specific terms and FASB ASC guidance, with changes in fair value for liability-classified warrants recognized in the statements of operations[57][58] - Basic and diluted net loss per share are calculated based on weighted-average common shares outstanding; potentially dilutive securities are excluded if antidilutive[59] Potentially Dilutive Securities Listing | Item | June 30, 2025 (shares) | December 31, 2024 (shares) | | :--- | :--- | :--- | | Options to purchase common stock | 43 | 74 | | Restricted stock units (RSUs) | - | 2 | | Warrants for common stock | 660 | 664 | | Class A warrants for common stock | 310 | 310 | | Class B warrants for common stock | 9 | 9 | | 5-Year warrants for common stock | 6,730 | 6,730 | | Prefunded warrants for common stock | - | 66,960 | | Class C warrants for common stock | 287,491 | 228,297 | | Class C pre-funded warrants for common stock | 144,951 | - | | Class D warrants for common stock | - | 114,149 | | Class E warrants for common stock | 1,085,106 | - | | Placement agent warrants | 471 | 471 | - No material changes to significant accounting policies during the six months ended June 30, 2025, and no material effect expected from recently issued but not yet effective accounting pronouncements[55][61] Note 3. License and Supply Agreement with Toray Industries Details the exclusive global license with Toray Industries for Symphony detection cartridges, including royalties and amendments - The company holds an exclusive global license (excluding Japan) from Toray Industries for Symphony detection cartridges, with royalty payments of 7.5% of net sales after regulatory approval[62][63] - An amendment on July 23, 2025, extended the deadline for the company to establish an alternative cartridge manufacturing site to October 23, 2026, and confirmed Toray has provided all required know-how[64][65] - Failure to establish the manufacturing site by October 2026 could lead to termination of the license agreement, materially impacting commercialization efforts[65] Note 4. Financings Provides a detailed account of recent financing activities, including private placements, offerings, and bridge note financing Financing Event Summary | Financing Event | Gross Proceeds ($) | Offering Costs ($) | | :---------------------- | :------------- | :------------- | | April 2025 Private Placement | $3,846,692 | $464,670 | | June 2024 Offering | $8,569,075 | $1,133,419 | | May 2024 Bridge Note Financing | $2,000,000 | $212,654 | | January 2024 Offering | $3,500,000 | $711,031 | - The April 2025 Private Placement involved existing Class C warrant holders exercising warrants at a reduced price ($3.42/share) and purchasing new Class E warrants, generating $3.85 million in gross proceeds[66][68] - The modification of Class C warrants and issuance of Class E warrants in April 2025 resulted in a non-cash equity issuance cost of $2,706,645, recorded as an increase to additional paid-in capital[69] Note 5. Warrants Summarizes outstanding warrants as of June 30, 2025, detailing types, exercise prices, remaining lives, and 2024 adjustments Outstanding Warrants Summary | Warrant Type | Shares Exercisable for | Exercise Price ($) | Weighted Average Remaining Life (in Years) | | :--- | :--- | :--- | :--- | | April 2025 Class E Warrants | 1,085,106 | $3.42 | 4.8 | | April 2025 Pre-funded Class C Warrants | 144,951 | $0.0001 | 4.8 | | June 2024 Class C Warrants | 287,491 | $16.30 | 3.9 | | January 2024 Common Stock Warrants | 6,730 | $520.00 | 3.5 | | January 2024 Placement Agent Warrants | 471 | $650.00 | 3.5 | | August 2023 Common Stock Warrants | 540 | $2,896.00 | 3.2 | | August 2023 Placement Agent Warrants | 36 | $3,684.00 | 3.2 | | Class A Warrants | 310 | $56,000.00 | 1.3 | | Class B Warrants | 9 | $80,000.00 | 1.3 | | Other Pre-2024 Common Stock Warrants | 84 | $27,327.00 | 0.7 | - Class C Warrants were adjusted from $98.00 to $16.30 per share and the number of issuable shares increased to 1,372,586 following stockholder approval in August 2024, resulting in a deemed dividend of $9,282,075[83] - Class D Warrants' issuable shares increased to four shares per warrant after the stock price fell below $16.30, leading to a deemed dividend of $3,940,978. All Class D Warrants were exercised by December 31, 2024[84] Note 6. Stock Compensation Details stock incentive plans, award activity for non-vested restricted stock and options, and compensation expense recognized - The company has two stock incentive plans (2018 and 2021 Plans) with 35 and 129 shares available for grant, respectively, as of June 30, 2025[89][90] Stock-Based Compensation Expense (Unaudited) | Category | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $(1,563) | $4,520 | $(450) | $9,365 | | General and administrative | - | $1,490 | $199 | $8,519 | | Total stock-based compensation | $(1,563) | $6,010 | $(251) | $17,884 | - As of June 30, 2025, there was approximately $257 of unrecognized compensation expense related to non-vested stock option awards, expected to be recognized over 0.3 years[93] Note 7. Related Party Transactions Describes the past agreement with NanoHybrids, LLC for sharing services and facilities, and its settlement and termination - The company had a Sharing and Services Agreement with NanoHybrids, LLC (an entity where the former CTO was majority shareholder) for R&D staff and facility use, billing at burdened cost plus 10%[95] Income from NanoHybrids and Cash Receipts (Unaudited) | Category | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | :--- | :--- | | Income from NanoHybrids (Other Income) | $0 | $30,609 | $6,873 | $104,200 | | Cash receipts from NanoHybrids | $6,873 | $73,591 | $21,437 | $114,860 | - On May 8, 2025, the Sharing and Services Agreement with NanoHybrids was terminated via a settlement agreement, which included a $50,000 payment to NanoHybrids and reimbursement of up to $30,000 in legal fees[95] Note 8. Property and Equipment Provides a breakdown of the company's property and equipment, net of accumulated depreciation, as of June 30, 2025 and 2024 Property and Equipment, Net (Unaudited) | Asset Category | June 30, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Construction-in-process | $1,351,179 | $1,351,179 | | Furniture, fixtures, and equipment | $128,452 | $136,312 | | Software | $0 | $4,457 | | Lab equipment | $173,268 | $173,268 | | Leasehold improvements | $43,231 | $43,231 | | Total | $1,696,130 | $1,708,447 | | Less: Accumulated depreciation | $(219,273) | $(194,952) | | Property and equipment, net | $1,476,857 | $1,513,495 | - Construction-in-process, primarily Symphony cartridge manufacturing equipment, remained unchanged at $1,351,179, with no commitments to complete as of June 30, 2025[97] Note 9. Leases Summarizes lease arrangements for office, laboratory space, and copiers, including terms, discount rates, assets, and liabilities Lease Information Summary | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Weighted average remaining lease term – operating leases (in years) | 1.8 | 2.4 | | Weighted average remaining lease term – finance leases (in years) | 2.6 | 3.6 | | Weighted average discount rate – operating leases | 7.0% | 7.0% | | Weighted average discount rate – finance leases | 7.0% | 7.0% | | Operating cash flows from operating leases | $63,259 | $88,428 | | Operating cash flows from finance leases | $424 | $559 | Lease Assets and Liabilities (Unaudited) | Category | June 30, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Operating lease right-of-use asset | $155,683 | $209,788 | | Finance lease asset – property & equipment, net | $8,055 | $10,421 | | Total lease assets | $163,738 | $220,209 | | Current portion of operating lease liability | $100,002 | $113,260 | | Current portion of finance lease liability (accrued expenses) | $4,807 | $4,807 | | Non-current portion of operating lease liabilities | $65,375 | $108,989 | | Non-current portion of finance lease liabilities (other non-current) | $6,589 | $8,567 | | Total lease liabilities | $176,773 | $235,623 | Note 10. Commitments and Contingencies Outlines commitments, including a CTO separation agreement, minimum royalty obligations, and general indemnification provisions - The company has a severance liability of $193,440 for its former CTO, Jason Cook, who departed on May 30, 2025, with $178,560 remaining accrued as of June 30, 2025[99][100] - Minimum annual royalty payments to Toray of $60,000 (first year) and $100,000 (thereafter) will commence after the first sale of cartridges following regulatory approval. No sales or revenues from cartridges have occurred through June 30, 2025[62][101] - The company accrues for known indemnification issues when probable and estimable but has not incurred any losses to date, thus no accruals or expenses for indemnification[102] Note 11. Supplemental Balance Sheet Information Provides detailed breakdown of prepaid expenses, other current assets, accrued expenses, and other current liabilities Prepaid Expenses and Other Current Assets (Unaudited) | Category | June 30, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Prepaid insurance | $210,864 | $489,174 | | Vendor prepayments | $600 | $21,946 | | Prepaid and other | $94,014 | $85,818 | | Total | $305,478 | $596,938 | Accrued Expenses and Other Current Liabilities (Unaudited) | Category | June 30, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Accrued personnel costs | $107,279 | $100,974 | | Accrued legal fees | $58,444 | $48,860 | | Accrued clinical trial expenses | $164,631 | $191,673 | | Accrued board of director fees | $95,000 | $95,000 | | Accrued expenses for CTO separation agreement | $178,560 | $0 | | Accrued other | $160,256 | $115,479 | | Accrued Delaware franchise tax | $68,074 | $0 | | Total | $832,244 | $551,986 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Provides management's perspective on the company's financial condition and results of operations for the three and six months ended June 30, 2025, compared to 2024 Overview The company is a medical diagnostics company focused on developing the Symphony platform for rapid critical care tests - The company is developing the Symphony technology platform, a rapid test system for critical care settings, with its first product candidate being the Symphony IL-6 test for sepsis. The company aims for FDA 510(k) submission in 2027[105][106][107] - The company incurred net losses of $2.0 million (Q2 2025) and $3.8 million (H1 2025), with an accumulated deficit of $38.5 million as of June 30, 2025[109] - The company had $4.4 million in cash and cash equivalents and $1.0 million in current liabilities as of June 30, 2025, and requires significant additional capital to continue operations beyond Q4 2025[111][122] Results of Operations Analyzes changes in operating expenses and other income/expense, highlighting R&D, sales & marketing, and other income shifts Condensed Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $889,896 | $1,032,474 | $1,674,696 | $2,366,019 | | General and administrative | $1,095,465 | $862,482 | $2,199,582 | $1,950,618 | | Sales and marketing | $0 | $305 | $0 | $6,728 | | Total operating expenses | $1,985,361 | $1,895,261 | $3,874,278 | $4,323,365 | | Operating loss | $(1,985,361) | $(1,895,261) | $(3,874,278) | $(4,323,365) | | Total other income (expense), net | $28,757 | $(580,119) | $53,239 | $(480,480) | | Net loss | $(1,956,604) | $(2,475,380) | $(3,821,039) | $(4,803,845) | Research and Development - R&D expenses decreased by approximately $0.14 million (13.8%) for Q2 2025 and $0.69 million (29.2%) for H1 2025, primarily due to reduced technology transfer efforts, partially offset by increased clinical trial expenses[113] General and Administrative - G&A expenses increased by approximately $0.23 million (26.9%) for Q2 2025 and $0.25 million (12.8%) for H1 2025, driven by capital raising efforts and public company reporting requirements[114] Sales and Marketing - Sales and marketing expenses were zero for Q2 and H1 2025, a significant decrease from $305 (Q2 2024) and $6,728 (H1 2024), due to a cessation of all sales and marketing efforts[115] Other Income (Expense), net - Total other income (expense), net, shifted from an expense of $580,000 in Q2 2024 to an income of $29,000 in Q2 2025, primarily due to higher interest expense ($626,000) in 2024 related to Bridge Note Financing[116] Summary Statement of Cash Flows Summarizes cash flows from operating, investing, and financing activities, highlighting changes and their primary drivers Condensed Consolidated Statements of Cash Flows (Unaudited) | Cash proceeds (used in) provided by: | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | | Operating activities | $(3,238,912) | $(4,214,891) | | Investing activities | - | $(305,431) | | Financing activities | $3,380,043 | $10,370,221 | | Net increase in cash and cash equivalents | $141,131 | $5,849,899 | Net cash used in operating activities - Net cash used in operating activities decreased by approximately $1.0 million (23.2%) to $3.2 million for H1 2025, primarily due to a lower net loss compared to H1 2024[119] Net cash used in investing activities - Net cash used in investing activities decreased by approximately $305,000 to zero for H1 2025, as there were no purchases of manufacturing equipment, compared to H1 2024[120] Net cash used in financing activities - Net cash provided by financing activities decreased by approximately $7.0 million (67.5%) to $3.4 million for H1 2025, primarily due to the smaller scale of the April 2025 private placement compared to the larger public offerings and bridge note financing in H1 2024[121] Liquidity and Going Concern Uncertainty Reaffirms substantial doubt about going concern due to losses, negative cash flows, and need for $30M additional capital - As of June 30, 2025, the company had $4.4 million in cash and $1.0 million in current liabilities, with an accumulated deficit of $38.5 million[122] - The company expects negative operating cash flows for several years and estimates current cash resources will only fund operations until Q4 2025[122] - The company needs to raise at least $30 million between Q3 2025 and the end of FY2027 to fund cartridge redevelopment, clinical trials, and FDA submission, with failure potentially leading to liquidation[122] Recent Offerings Recaps details of recent offerings and private placements, focusing on capital raised, associated costs, and warrant terms - The January 2024 Offering raised $3.5 million gross, involving common stock, prefunded warrants, and January 2024 Warrants, with $711,031 in offering costs[124][127] - The May 2024 Bridge Note Financing provided $2 million in cash through senior secured notes and common stock issuance, incurring $212,654 in debt issuance costs[128][129] - The June 2024 Offering generated $8.57 million gross from common and prefunded units, including Class C and Class D Warrants, with $1,133,419 in offering costs[131][132] - The April 2025 Private Placement raised $3.85 million gross by inducing Class C warrant exercises and selling new Class E warrants, with $464,670 in offering costs and a non-cash equity issuance cost of $2,706,645[133][134][135] Emerging Growth Company and Smaller Reporting Company Status States the company's status as an 'emerging growth company' and 'smaller reporting company' under JOBS Act and Exchange Act - The company is an 'emerging growth company' and 'smaller reporting company,' allowing for certain exemptions from disclosure requirements[137][139] - The company has irrevocably elected not to use the extended transition period for complying with new or revised accounting standards, adopting them on public company effective dates[137][140] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[142] Item 4. Controls and Procedures Discusses effectiveness of disclosure controls, remediation of material weakness, and absence of other internal control changes Evaluation of Disclosure Controls and Procedures - The President and CEO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[143] Remediation of Previously Reported Material Weakness - A material weakness in internal control over financial reporting related to accounting for complex equity transactions (specifically warrant reset features) was identified in the 2024 Annual Report on Form 10-K[144] - Management remediated the material weakness by implementing new controls over equity transaction review and approval, including engaging external consultants, and concluded these controls were operating effectively as of June 30, 2025[145][146] Changes in Internal Control Over Financial Reporting - Other than the remediation activities, there were no material changes in internal control over financial reporting during the quarter ended June 30, 2025[147] PART II OTHER INFORMATION Item 1. Legal Proceedings States that the company is not currently involved in any material legal proceedings, though it may be subject to litigation - The company is not currently involved in any material legal proceedings[150] Item 1A. Risk Factors Supplements previously disclosed risk factors, emphasizing capital need and impact of downsizing on product development Additional Risks Related to Our Financial Condition and Capital Requirements - The company has an accumulated deficit of $38.5 million and requires at least $30 million in additional capital by the end of 2027 to execute its strategic plan[151] - Failure to raise imminent material capital could force the company into liquidation under U.S. bankruptcy laws, likely resulting in little to no value for common stockholders[151] Additional Risks Related to Our Business - To preserve cash, the company has reduced its full-time employee headcount to 5 persons, including the departure of the CTO and VP of Operations, which may hinder business continuity, patent applications, and product development timelines[152][153] - The downsizing and loss of institutional knowledge are expected to make it more difficult to meet technical challenges for Symphony product development and FDA submission[153] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Details the April 2025 Private Placement, where Class E Warrants were sold for unregistered shares, with proceeds for general purposes - In April 2025, the company sold 1,085,106 Class E Warrants to purchase unregistered shares of Common Stock at $0.125 per warrant, with an exercise price of $3.42 per share, expiring April 8, 2030[154] - The proceeds from the Class E Warrants sale were used for general corporate purposes, and the company filed a Form S-3 to register the resale of shares issuable upon exercise[154][155] Item 3. Defaults Upon Senior Securities States that there are no defaults upon senior securities - There were no defaults upon senior securities[156] Item 4. Mine Safety Disclosures Not applicable for the company - Mine Safety Disclosures are not applicable to the company[157] Item 5. Other Information Reports that no directors or officers adopted, modified, or terminated any Rule 10b5-1 trading arrangements during the quarter - No directors or officers adopted, modified, or terminated any Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[158] Item 6. Exhibits Provides an index of exhibits filed with the Form 10-Q, including forms of warrants, settlement agreements, and certifications - The report includes an index of exhibits, such as Form of Class E Common Stock Purchase Warrant, Settlement Agreement and Release with Nanohybrids, and Separation and Release Agreement with Jason Cook[160] Signatures Contains the required signatures for the Form 10-Q, confirming its submission by authorized personnel - The report is signed by Neil Dey, President, Chief Executive Officer, Principal Financial Officer, and Principal Accounting Officer, on August 7, 2025[164]