Kairos Pharma, Ltd.(KAPA) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION This section presents Kairos Pharma's unaudited condensed consolidated financial statements and management's discussion and analysis Item 1. Financial Statements This section presents Kairos Pharma's unaudited consolidated financial statements and notes for periods ended June 30, 2025, and December 31, 2024 Unaudited Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $3,034 | $1,272 | | Vendor advances, net | $1,717 | $2,859 | | Total Current Assets | $4,839 | $4,169 | | Deferred offering costs | $1,692 | $1,377 | | Intangible assets, net | $142 | $222 | | Total Assets | $6,673 | $5,768 | | Accounts payable and accrued expenses | $676 | $992 | | Total Current Liabilities | $676 | $992 | | Total Shareholders' Equity | $5,997 | $4,776 | Unaudited Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (in thousands, except per share data) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenues | $0 | $0 | $0 | $0 | | Research and development | $496 | $63 | $989 | $228 | | General and administrative | $960 | $159 | $1,733 | $286 | | Total operating expenses | $1,456 | $222 | $2,722 | $514 | | Loss from operations | $(1,456) | $(222) | $(2,722) | $(514) | | Total other income (expenses), net | $34 | $(31) | $38 | $(62) | | NET LOSS | $(1,422) | $(253) | $(2,684) | $(576) | | BASIC AND DILUTED LOSS PER COMMON SHARE | $(0.08) | $(0.02) | $(0.16) | $(0.05) | | WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING | 17,213,017 | 10,562,640 | 16,307,308 | 10,562,640 | Unaudited Condensed Consolidated Statements of Shareholders' Equity (Deficit) Condensed Consolidated Statements of Shareholders' Equity (in thousands) | Item | December 31, 2024 | June 30, 2025 | | :-------------------------------- | :---------------- | :------------ | | Common Stock (Amount) | $14 | $18 | | Additional Paid-in Capital | $13,577 | $17,478 | | Accumulated Deficit | $(8,815) | $(11,499) | | Total Shareholders' Equity | $4,776 | $5,997 | - Net loss for the six months ended June 30, 2025, was $2,684 thousand, contributing to the accumulated deficit[16] - Additional paid-in capital increased by $3,901 thousand, primarily from proceeds of $3,058 thousand from the sale of common shares and pre-funded warrants, and $210 thousand from the equity line of credit[16] Unaudited Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (in thousands) | Item | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net cash used in operating activities | $(1,519) | $(132) | | Net cash provided by financing activities | $3,281 | $60 | | Net increase (decrease) in cash | $1,762 | $(72) | | Cash and cash equivalents, beginning of period | $1,272 | $93 | | Cash and cash equivalents, end of period | $3,034 | $21 | - Cash provided by financing activities in 2025 included $3,058 thousand from the sale and exercise of prefunded warrants and $223 thousand from the equity line of credit[19] Notes to Unaudited Condensed Consolidated Financial Statements NOTE 1 – BASIS OF PRESENTATION Kairos Pharma, an early-stage oncology biotech, prepares interim GAAP financials, with its going concern status reliant on future capital and profitability - Kairos Pharma, Ltd. is an early-stage biotechnology company focused on developing immunotherapy and cell therapy treatments for oncology[21] - The company incurred a net loss of $2,684 thousand and used $1,519 thousand in cash from operations during the six months ended June 30, 2025[24] - As of June 30, 2025, the company had cash and cash equivalents of $3,034 thousand and shareholders' equity of $5,997 thousand; subsequent to June 30, 2025, an additional $3,693 thousand was raised from its Equity Line of Credit (ELOC), expected to fund operations for at least 12 months[24] NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This section details significant accounting policies, including consolidation, estimates, asset accounting, and fair value measurements - The condensed consolidated financial statements include the accounts of Kairos Pharma, Ltd. and its wholly-owned subsidiary, Enviro Therapeutics, Inc[27] - Intangible assets, primarily a licensing agreement, are amortized over five years using the straight-line method, with $80 thousand amortization expense for the six months ended June 30, 2025 and 2024, respectively[31] - Deferred offering costs related to the Equity Line of Credit (ELOC) totaled $1,692 thousand as of June 30, 2025, with $13 thousand amortized as cost of capital during the three and six months ended June 30, 2025[35] NOTE 3 – VENDOR AGREEMENTS The company has various vendor agreements involving advance payments, with net vendor advances decreasing to $1,717 thousand by June 30, 2025 Vendor Advances, Net (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Total Vendor Advances | $3,271 | $3,115 | | Less: accumulated amortization | $(1,554) | $(256) | | Vendor advances, net | $1,717 | $2,859 | - Amortization expense relating to vendor advances was $1,298 thousand for the six months ended June 30, 2025[41] - An additional 384,459 common shares, valued at $328 thousand, were issued to Helena Global Investment Opportunities on April 24, 2025, related to the ELOC agreement, recorded as deferred offering costs[50] NOTE 4 – SHAREHOLDERS' EQUITY This section details changes in shareholders' equity, including common stock issuances from a private financing and an Equity Line of Credit (ELOC), the adoption of the 2023 Equity Incentive Plan, and the granting and vesting of Restricted Stock Units (RSUs) and stock warrants Common Stock Issued and Outstanding | Date | Shares Issued and Outstanding | | :---------------- | :---------------------------- | | June 30, 2025 | 17,743,765 | | December 31, 2024 | 13,736,597 | - The company closed a private financing on January 16, 2025, selling 2,500,000 pre-funded units for net proceeds of $3,058 thousand[52][53] Restricted Stock Unit (RSU) Activity (6 Months Ended June 30, 2025) | Item | Number of Restricted Shares | Fair Value (in thousands) | | :-------------------------------- | :-------------------------- | :------------------------ | | Unvested, December 31, 2024 | 172,000 | $314 | | Granted | 20,120 | $31 | | Vested | (78,521) | $(153) | | Unvested, June 30, 2025 | 113,599 | $192 | Stock Warrant Activity (6 Months Ended June 30, 2025) | Item | Number of Warrant Shares | Weighted Average Exercise Price | | :-------------------------------- | :----------------------- | :------------------------------ | | Balance, December 31, 2024 | 278,188 | $4.29 | | Granted | 6,460,700 | $0.85 | | Exercised | (2,500,000) | $0.001 | | Forfeited/Expired | (150,000) | $4.17 | | Balance, June 30, 2025 | 4,088,888 | $1.49 | NOTE 5 – COMMITMENTS AND CONTINGENCIES The company holds multiple exclusive license agreements with Cedars-Sinai for cancer and autoimmune disease, involving fees, royalties, and milestone payments - Kairos Pharma holds four exclusive license agreements with Cedars-Sinai Medical Center for patent rights related to compounds binding to RelA of NFkB, fibrosis treatment, cancer and autoimmune disease treatments, and T-cell generation for cancer therapy[66] - Milestone payments for these licenses range from $150 thousand upon Phase I completion to $1,500 thousand upon FDA approval of a new drug application, and additional payments for cumulative net sales[66] - Enviro Therapeutics has two exclusive license agreements with Cedars for patent rights related to mitochondrial DNA depletion and Endoglin antagonism for cancer therapy, with potential milestone payments totaling mid-to-high seven-figures[67][69] - Enviro is obligated to meet specific commercialization milestones, including obtaining INDs, commencing Phase I/II trials, and submitting NDA/BLAs within defined timelines, with potential license conversion or termination if not met[70] NOTE 6 – SEGMENT INFORMATION Kairos Pharma operates as a single reportable segment, focusing on cancer immunotherapy, with the CEO reviewing net income (loss) for resource allocation - The company operates and manages its business as one reportable segment, focusing on clinical-stage biopharmaceutical development for cancer[73] Significant Segment Expenses (in thousands) | Item | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Research and development, less officer compensation | $899 | $228 | | Officer compensation and wages | $200 | $0 | | Insurance | $203 | $21 | | Stock-based compensation | $153 | $0 | | Operating expenses | $1,267 | $265 | | Net Loss | $(2,684) | $(576) | NOTE 7 – SUBSEQUENT EVENTS Subsequent to June 30, 2025, the company further utilized its Equity Line of Credit (ELOC) with Helena, selling 3,000,000 common shares for net proceeds of $3,693 thousand and issuing additional warrants to placement agents - In July 2025, the company sold 3,000,000 common shares to Helena through the ELOC for net proceeds of $3,693 thousand[75] - Warrants to purchase 210,000 common shares were issued to Placement Agents in July 2025, with exercise prices of $0.40 and $0.46 per share[75] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, operations, losses, funding needs, and performance for periods ended June 30, 2025 and 2024 Overview This section provides an overview of Kairos Pharma's clinical-stage biopharmaceutical business, accumulated deficit, and future funding requirements - Kairos Pharma is a clinical-stage biopharmaceutical company focused on developing therapeutics for cancer patients to overcome immune suppression and drug resistance[79][80] - The company has not generated any revenue from product sales and has incurred significant operating losses, with an accumulated deficit of $11,499 thousand as of June 30, 2025[81][82] - Substantial additional funding will be required to support continuing operations and growth strategy, expected to be financed through equity/debt offerings, collaborations, strategic alliances, and licensing arrangements[84] Recent Developments This section highlights recent financing activities, including the ELOC agreement and the January 2025 PIPE Offering - The company entered into an Equity Line of Credit (ELOC) agreement with Helena Global Investment Opportunities I LTD for up to $30,000 thousand of common stock[85] - As of the report date, the company sold an aggregate of 3,510,000 shares of common stock for net proceeds of $3,903 thousand under the ELOC agreement[90] - The January 2025 PIPE Offering closed on January 16, 2025, for a total purchase price of $3,498 thousand from the sale of 2,500,000 pre-funded units[91][92] Components of Results of Operations This section describes the components of the company's results of operations, focusing on R&D and G&A expenses - The company has not generated any sales revenue to date[96] - Operating expenses consist of research and development (R&D) and general and administrative (G&A) expenses[97] - R&D expenses are highly variable, influenced by factors such as clinical trial costs, number of trials, patient enrollment, and regulatory requirements[99] - G&A expenses are expected to increase due to public company operations, including accounting, audit, legal, regulatory, and investor relations costs[103] Results of Operations This section compares the company's financial performance for the three and six months ended June 30, 2025 and 2024 Comparison of the Three Months Ended June 30, 2025 and 2024 This section compares the company's financial performance for the three months ended June 30, 2025 and 2024 Net Loss Comparison (in thousands) | Period | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | | Three Months Ended | $(1,422) | $(253) | - Research and development expenses increased from $63 thousand in 2024 to $496 thousand in 2025, primarily due to the Phase 2 prostate cancer trial[105] - General and administrative expenses rose from $159 thousand in 2024 to $960 thousand in 2025, mainly due to increased vendor advance amortization[106] Comparison of the Six Months Ended June 30, 2025 and 2024 This section compares the company's financial performance for the six months ended June 30, 2025 and 2024 Net Loss Comparison (in thousands) | Period | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | | Six Months Ended | $(2,684) | $(576) | - Research and development expenses increased from $228 thousand in 2024 to $989 thousand in 2025, primarily related to the Phase 2 prostate cancer trial[109] - General and administrative expenses increased from $286 thousand in 2024 to $1,733 thousand in 2025, largely due to increased vendor advance amortization[110] Liquidity and Capital Resources This section discusses the company's cash position, equity, and recent financing activities for liquidity - The company incurred a net loss of $2,684 thousand and used $1,519 thousand in cash from operations during the six months ended June 30, 2025[112] - Cash and cash equivalents totaled $3,034 thousand at June 30, 2025, and shareholders' equity was $5,997 thousand[112] - Proceeds from private financing ($3,058 thousand) and the ELOC ($223 thousand) contributed to liquidity; subsequent ELOC financing of $3,693 thousand is expected to fund operations for at least 12 months[112] Cash Flows This section analyzes the company's cash flows from operating, investing, and financing activities Cash Flow Activities (in thousands) | Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Operating activities | $(1,519) | $(132) | | Investing activities | $0 | $0 | | Financing activities | $3,281 | $60 | | Net increase (decrease) in cash | $1,762 | $(72) | - Cash used in operating activities increased significantly in 2025 due to a higher net loss and non-cash expenses, primarily $1,298 thousand in vendor advance amortization[116] - Cash provided by financing activities increased substantially in 2025, driven by $3,058 thousand from private financing and $223 thousand from the ELOC[118] Funding Requirements This section outlines the company's expected future funding needs for research, clinical trials, and commercialization - The company expects substantial increases in expenses due to ongoing research, clinical trials, and public company operations[119] - Existing cash, including IPO and January 2025 PIPE Offering proceeds, is estimated to fund operations for at least the next 12 months[120] - Additional funding will be required for clinical development and commercialization, likely through equity/debt financings, collaborations, strategic alliances, or licensing arrangements[121] Contractual Obligations and Commitments This section details the company's advance payment and exclusive license agreements, including fees and milestones - The company has advance payment agreements with Prevail Infoworks ($900 thousand), PreCheck Health Services ($900 thousand), CEO.CA Technologies ($250 thousand), Belair Capital Advisors ($365 thousand), and Cross Current Capital LLC ($200 thousand cash + $500 thousand in shares)[122][123][124][125][126] - Exclusive license agreements with Cedars-Sinai Medical Center involve initial license fees, annual maintenance fees, royalties (3.75% to 4.25% of net sales), sublicense fees (5% to 35%), and milestone payments upon clinical trial success and FDA approvals[127][66][68] Item 3. Quantitative and Qualitative Disclosures About Market Risks As a "smaller reporting company," Kairos Pharma is not required to provide detailed quantitative and qualitative disclosures about market risks in this report - The company is exempt from providing detailed market risk disclosures as a "smaller reporting company"[129] Item 4. Control and Procedures The company's disclosure controls were not effective as of June 30, 2025, due to a persistent material weakness in review and segregation of duties - Disclosure controls and procedures were concluded to be not effective at a reasonable assurance level as of June 30, 2025[130] - A material weakness persists due to insufficient review procedures and segregation of duties, and a lack of process documentation for review[132] - No material changes in internal control over financial reporting occurred during the six months ended June 30, 2025[132][133] PART II - OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, and other disclosures Item 1. Legal Proceedings Kairos Pharma is not currently involved in any material legal proceedings or claims that are expected to have a significant adverse effect on its business, financial condition, or operating results - The company is not currently party to any pending or threatened material legal proceedings or claims[135] Item 1A. Risk Factors As a smaller reporting company, Kairos Pharma is exempt from new risk factor disclosures, with no material changes from its Annual Report - The company is exempt from providing new risk factor disclosures as a "smaller reporting company"[136] - No material changes to the risk factors described in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024, have occurred as of the report date[136] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company completed its IPO, raising $6,200,000 gross proceeds, and issued 1,055,100 shares under an ELOC agreement via Section 4(a)(2) exemption - The IPO was completed on September 17, 2024, raising $6,200,000 in gross proceeds from 1,550,000 shares at $4.00 per share[137] - No material change in the planned use of IPO proceeds has occurred[138] - A total of 1,055,100 shares were issued to Helena Global Investment Opportunities I Ltd. in conjunction with an Equity Line of Credit agreement, under a Section 4(a)(2) exemption[139] Item 3. Defaults Upon Senior Securities This item is not applicable to the company - Not applicable[140] Item 4. Mine Safety Disclosure This item is not applicable to the company - Not applicable[141] Item 5. Other Information During the period ended June 30, 2025, none of the company's directors or executive officers adopted or terminated any "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" - No directors or executive officers adopted or terminated Rule 10b5-1 trading arrangements during the period ended June 30, 2025[142] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including the Certificate of Incorporation, Bylaws, Form of Representative's Warrant, various certifications (302 and 906), a Services Agreement, and Inline XBRL Taxonomy documents - The report includes certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2)[143] - A Services Agreement dated June 10, 2025, between Kairos Pharma Ltd. and Baretto Pacific Corporation is incorporated by reference[143] SIGNATURES The report is duly signed on August 12, 2025, by John S. Yu, Chief Executive Officer and Chairman of the Board of Directors, and Douglas Samuelson, Chief Financial Officer - The report was signed on August 12, 2025, by John S. Yu (Chief Executive Officer and Chairman of the Board of Directors) and Douglas Samuelson (Chief Financial Officer)[146]