Aptose Biosciences(APTO) - 2025 Q2 - Quarterly Report

PART I—FINANCIAL INFORMATION Item 1 – Financial Statements Presents Aptose Biosciences Inc.'s unaudited interim financial statements, emphasizing significant accumulated deficit and going concern risk - The company's financial statements are prepared assuming it will continue as a going concern, despite substantial doubt due to insufficient cash to fund operations and reliance on related party advances[24] Key Financial Position Data (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $553 | $6,152 | | Total current assets | $3,271 | $9,530 | | Total assets | $5,591 | $10,127 | | Total current liabilities | $9,000 | $4,477 | | Total liabilities | $19,962 | $14,670 | | Total shareholders' deficit | $(14,371) | $(4,543) | Key Loss and Comprehensive Loss Data (Six Months Ended June 30, 2025 vs. 2024) | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Revenue | $— | $— | | Research and development expenses | $5,662 | $10,858 | | General and administrative expenses | $6,720 | $6,247 | | Net loss | $(12,586) | $(16,892) | | Basic and diluted loss per common share | $(5.38) | $(33.91) | Condensed Consolidated Interim Statements of Financial Position Details the company's financial position, including assets, liabilities, and shareholders' deficit, at June 30, 2025, and December 31, 2024 Condensed Consolidated Interim Statements of Financial Position (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $553 | $6,152 | | Restricted cash equivalents | $745 | $555 | | Total current assets | $3,271 | $9,530 | | Total assets | $5,591 | $10,127 | | Accounts payable | $2,879 | $1,258 | | Accrued liabilities | $5,414 | $2,773 | | Total current liabilities | $9,000 | $4,477 | | Loan payable to related party | $10,962 | $10,000 | | Total liabilities | $19,962 | $14,670 | | Total shareholders' deficit | $(14,371) | $(4,543) | Condensed Consolidated Interim Statements of Loss and Comprehensive Loss Presents the company's net loss and comprehensive loss for the three and six months ended June 30, 2025, and 2024 Condensed Consolidated Interim Statements of Loss and Comprehensive Loss (Three and Six Months Ended June 30, 2025 vs. 2024) | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Revenue | $— | $— | $— | $— | | Research and development | $3,298 | $4,413 | $5,662 | $10,858 | | General and administrative | $3,623 | $2,932 | $6,720 | $6,247 | | Net loss | $(7,043) | $(7,252) | $(12,586) | $(16,892) | | Basic and diluted loss per common share | $(2.76) | $(12.99) | $(5.38) | $(33.91) | Condensed Consolidated Interim Statements of Changes in Shareholders' Deficit Summarizes changes in shareholders' deficit for the six months ended June 30, 2025, including equity transactions and net loss Changes in Shareholders' Deficit (Six Months Ended June 30, 2025) | Item | Shares (June 30, 2025) | Amount (June 30, 2025, in thousands) | | :------------------------------------ | :--------------------- | :----------------------------------- | | Balance, December 31, 2024 | 2,006,028 | $457,404 | | Common shares issued under the ESPP | 338 | $1 | | Common shares issued under 2025 ATM | 137,000 | $828 | | Common shares issued pursuant to Hanmi debt conversion | 409,063 | $1,538 | | Stock-based compensation | — | $391 | | Net loss | — | $(12,586) | | Balance, June 30, 2025 | 2,552,429 | $459,771 | - The company's accumulated deficit increased from $540.967 million at December 31, 2024, to $553.553 million at June 30, 2025, reflecting ongoing net losses[19] Condensed Consolidated Interim Statements of Cash Flows Presents the company's cash flows from operating, investing, and financing activities for the six months ended June 30, 2025, and 2024 Cash Flow Summary (Six Months Ended June 30, 2025 vs. 2024) | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Operating activities | $(8,738) | $(17,541) | | Financing activities | $3,329 | $16,601 | | Investing activities | $— | $18 | | Net decrease in cash, cash equivalents and restricted cash equivalents | $(5,409) | $(922) | | Cash, cash equivalents, and restricted cash, end of period | $1,298 | $8,330 | - Cash used in operating activities decreased significantly from $17.5 million in H1 2024 to $8.7 million in H1 2025, primarily due to reduced operating expenses and an increase in accrued liabilities[21][184] - Cash provided by financing activities decreased from $16.6 million in H1 2024 to $3.3 million in H1 2025, with 2025 financing primarily from Hanmi Facility Agreement advances and 2025 ATM share issuance[21][186][187] Notes to Condensed Consolidated Interim Financial Statements Provides detailed explanations and disclosures supporting the interim financial statements, including significant accounting policies and specific accounts Note 1. Reporting entity Describes Aptose Biosciences Inc. as a clinical-stage biotechnology company focused on developing precision oncology medicines - Aptose Biosciences Inc. is a science-driven, clinical-stage biotechnology company focused on developing precision medicines for oncology, particularly hematology[22] - The company's pipeline includes two clinical-stage investigational products for hematological malignancies: tuspetinib (lead agent, myeloid kinase inhibitor) and luxeptinib (dual lymphoid and myeloid kinase inhibitor)[23] Note 2. Significant accounting policies Outlines the key accounting policies and estimates used in preparing the financial statements, including the going concern assumption - On February 26, 2025, the Company effected a 1-for-30 reverse stock split of its Common Shares, retroactively adjusted for all periods presented[24] - Substantial doubt exists about the Company's ability to continue as a going concern due to insufficient cash to fund operations and reliance on advances from Hanmi[24][215] - The Company incurred a net loss of $12.6 million for the six months ended June 30, 2025, and had an accumulated deficit of $553.6 million, negative working capital of $5.7 million, and negative shareholders' equity of $14.4 million as of June 30, 2025[26] Note 3. Cash and cash equivalents Details the composition and changes in the company's cash and cash equivalents as of June 30, 2025, and December 31, 2024 Cash and Cash Equivalents (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Cash | $600 | $1,500 | | High interest savings accounts, money market funds | $0 | $4,700 | | Total | $600 | $6,200 | - Cash and cash equivalents significantly decreased from $6.2 million at December 31, 2024, to $0.6 million at June 30, 2025[33] Note 4. Restricted cash equivalents Provides details on restricted cash equivalents, primarily related to unspent proceeds from the Hanmi Facility Agreement Restricted Cash Equivalents (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Restricted cash balance | $700 | $600 | - Restricted cash equivalents were $0.7 million as of June 30, 2025, primarily reflecting unspent proceeds from the Hanmi Facility Agreement[34][36] - Proceeds from the $10.0 million Hanmi Loan Agreement (August 2024) were fully utilized for Tuspetinib-related operations by June 30, 2025[35] - Hanmi provided an uncommitted facility of up to $8.5 million (Hanmi Facility Agreement, June 2025) for Tuspetinib development and operations, with advances up to $2.5 million each until December 31, 2025[36] Note 5. Prepaid expenses Details the composition and changes in the company's prepaid expenses as of June 30, 2025, and December 31, 2024 Prepaid Expenses (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Prepaid research and development | $651 | $1,648 | | Prepaid insurance | $218 | $558 | | Other prepaid operating expenses | $988 | $47 | | Total | $1,857 | $2,253 | - Total prepaid expenses decreased from $2.253 million at December 31, 2024, to $1.857 million at June 30, 2025, mainly due to a reduction in prepaid R&D and insurance[37] Note 6. Right-of-use assets, operating leases Details the company's right-of-use assets for operating leases as of June 30, 2025, and December 31, 2024 Right-of-Use Assets, Operating Leases (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Right-of-use assets, net | $377 | $571 | - Net right-of-use assets for operating leases decreased from $0.571 million at December 31, 2024, to $0.377 million at June 30, 2025, reflecting accumulated amortization[38] Note 7. Fair value measurements and financial instruments Discusses the fair value measurements of the company's financial instruments as of June 30, 2025, and December 31, 2024 Fair Value of Assets (in thousands) | Asset | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | High interest savings accounts | $0 | $5,201 | - The Company had no assets measured at fair value on a recurring basis as of June 30, 2025, compared to $5.2 million in high-interest savings accounts at December 31, 2024[40] Note 8. Accrued liabilities Details the composition and changes in the company's accrued liabilities as of June 30, 2025, and December 31, 2024 Accrued Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Accrued personnel related costs | $2,197 | $982 | | Accrued research and development expenses | $3,067 | $1,647 | | Other accrued expenses | $150 | $144 | | Total | $5,414 | $2,773 | - Total accrued liabilities increased significantly from $2.773 million at December 31, 2024, to $5.414 million at June 30, 2025, driven by higher personnel and R&D related costs[41] Note 9. Lease liability Details the company's lease liabilities, including current and long-term portions, as of June 30, 2025, and December 31, 2024 Lease Liabilities (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Lease liability, current portion | $413 | $428 | | Lease liability, long-term portion | $0 | $193 | | Total | $413 | $621 | - The weighted-average remaining term of operating leases decreased from 1.4 years at December 31, 2024, to 0.9 years at June 30, 2025, with the weighted-average discount rate remaining at 7.90%[44] Note 10. Related party transactions Details significant transactions and agreements with related parties, primarily Hanmi, including licensing, loan, and facility agreements - Aptose has a licensing agreement with Hanmi for tuspetinib, involving an upfront payment ($5.0M cash, $7.5M shares) and potential future milestone payments up to $407.5 million plus tiered royalties[45] - Hanmi provided a $10.0 million loan (Hanmi Loan Agreement, August 2024) for Tuspetinib operations, repayable by January 31, 2027, at 6% interest[48] - In March 2025, $1.5 million of Hanmi's loan indebtedness was converted into 409,063 Common Shares at $3.70 per share[49] - Hanmi provided an uncommitted facility of up to $8.5 million (Hanmi Facility Agreement, June 2025) for Tuspetinib development and operations, with $5.6 million received as of the filing date[52] - The CEO provided a $100,000 interest-free short-term advance on June 17, 2025, which was repaid in full on June 26, 2025[55] Note 11. Share capital Details the company's common share activity, including issuances, outstanding shares, and impact on loss per share - As of June 30, 2025, the Company had 2,552,429 common shares issued and outstanding, up from 2,006,028 at December 31, 2024[15][19] - The Company entered into a 2025 Committed Equity Facility with Keystone for up to $25 million in Common Shares and a 2025 At-The-Market (ATM) Facility with AGP for up to $1.0 million in Common Shares[57][59] - In November 2024, the Company completed a public offering of 1,333,333 Common Shares and warrants, generating $8.0 million gross proceeds[60] - Basic and diluted loss per common share for the six months ended June 30, 2025, was $(5.38), significantly lower than $(33.91) for the same period in 2024, partly due to the increased weighted average number of common shares outstanding[75] Note 12. Warrants Details the company's outstanding warrants, their exercise terms, and potential dilutive effects on common shares Warrant Activity (Six Months Ended June 30, 2025) | Metric | Common Shares Issuable upon Exercise | Weighted average exercise price | Weighted average remaining contractual life (years) | | :-------------------------- | :----------------------------------- | :------------------------------ | :------------------------------------------------ | | Outstanding, beginning of period | 1,267,585 | $22.40 | 4.4 | | Outstanding, end of period | 1,267,585 | $22.40 | 3.8 | - As of June 30, 2025, 1,267,585 Common Shares were issuable upon the exercise of outstanding warrants, which could dilute existing shareholders[76] Note 13. Stock‑based compensation Details the company's stock-based compensation expense and unrecognized compensation costs related to non-vested stock options - The Company recorded $0.391 million in share-based compensation expense for the six months ended June 30, 2025, down from $1.016 million in the prior year period[19][87] - As of June 30, 2025, there was $0.2 million of total unrecognized compensation cost related to non-vested stock options, expected to be recognized over an estimated weighted-average period of 1.2 years[84] Note 14. Subsequent events Reports significant events occurring after the reporting period, including additional advances received from Hanmi - After June 30, 2025, Aptose received additional advances of $2.0 million (July 15, 2025) and $1.1 million (August 4, 2025) from Hanmi under the Hanmi Facility Agreement, bringing the total advances to $5.6 million[88] Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations Discusses Aptose Biosciences Inc.'s business, clinical programs, corporate developments, financial condition, liquidity, and results of operations - Aptose is a clinical-stage biotechnology company focused on developing precision medicines for hematologic oncology, with executive offices in San Diego, California, and head office in Toronto, Canada[92] - The company does not currently generate revenues from drug candidates and relies on equity financing and strategic partners to fund R&D and commercialization[152][157] - As of the filing date, the company lacks sufficient cash to fund operations and depends on advances from Hanmi, raising substantial doubt about its ability to continue as a going concern[152][159][161] Overview Provides a general overview of Aptose's business, strategic focus, and clinical development programs, particularly for Tuspetinib and Luxeptinib - Aptose's lead program, Tuspetinib, is an oral myeloid kinase inhibitor being developed for frontline combination therapy in newly diagnosed Acute Myeloid Leukemia (AML) patients[93] - Tuspetinib is positioned as an ideal third agent for addition to the VEN+HMA backbone therapy (TUS+VEN+HMA triplet) due to its broad activity across AML populations, favorable safety profile, and ability to avoid typical toxicities[94] - Luxeptinib development has been paused due to current funding constraints and prioritization of tuspetinib, despite a new G3 formulation showing improved absorption[101][143] Program Updates Provides updates on the clinical development status and progress of the company's investigational product candidates, Tuspetinib and Luxeptinib Tuspetinib Details the clinical development progress of Tuspetinib, including trial status, key findings, and regulatory designations - Tuspetinib is in a U.S.-based Phase 1/2 clinical trial (TUSCANY Study) as a TUS+VEN+HMA triplet in newly diagnosed AML patients, with dose escalation approved up to 160 mg[95][103][108] - The TUSCANY study has shown complete remissions (CRs) and MRD-negativity in difficult-to-treat AML patients across 40 mg, 80 mg, and 120 mg TUS doses, with no significant safety concerns or dose-limiting toxicities[95][111][116] - Tuspetinib received Orphan Drug Designation from the FDA in October 2018 for AML, providing benefits like tax credits, grant opportunities, and seven years of marketing exclusivity[104] - Aptose is collaborating with the National Cancer Institute (NCI) on the clinical development of tuspetinib in NCI-sponsored myeloMATCH trials for molecularly defined AML and MDS populations[105][106] - Preclinical studies indicate tuspetinib targets venetoclax (VEN) resistance mechanisms and, in combination with VEN, could prevent the emergence of resistance to both agents[128][136][137] Luxeptinib Provides an update on the development status of Luxeptinib, noting the pause in funding due to strategic prioritization - Funding for luxeptinib development has been paused due to current financial constraints and the prioritization of tuspetinib[101][143] Other corporate matters Discusses various corporate developments, including compliance issues with Nasdaq listing requirements and subsequent delisting Nasdaq private placement deficiency requirement Addresses the Nasdaq deficiency related to a private placement to Hanmi and the company's subsequent actions to regain compliance - The Company received a Nasdaq deficiency letter in February 2024 for violating Rule 5635(d) due to a private placement to Hanmi without shareholder approval[144] - Aptose regained compliance by April 2024 after amending the warrant agreement with Hanmi to prohibit exercise beyond the 19.99% Nasdaq cap without shareholder approval[145] Nasdaq Minimum Bid Price requirement Discusses the Nasdaq deficiency related to the minimum bid price and the company's actions, including a reverse stock split, to regain compliance - Aptose received a Nasdaq deficiency letter in July 2024 for failing to meet the minimum $1.00 bid price requirement[146] - A 1-for-30 reverse stock split was effected on February 26, 2025, and the Company regained compliance with the Minimum Bid Price Requirement by March 14, 2025[148][149] Nasdaq Equity Rule requirement Addresses the company's failure to meet the Nasdaq stockholders' equity requirement, resulting in delisting from Nasdaq - The Company was delisted from Nasdaq effective April 2, 2025, for failing to regain compliance with the $2.5 million stockholders' equity requirement by March 31, 2025[150][151] - Aptose's Common Shares remain listed on the TSX under "APS" and were upgraded to trade on the OTCQB Market under "APTOF" starting July 1, 2025[151] Liquidity and Capital Resources Discusses the company's liquidity, capital resources, and reliance on external financing, highlighting significant challenges and going concern risks - The Company's cash and cash equivalents, including restricted cash, decreased from $6.7 million at December 31, 2024, to $1.3 million at June 30, 2025[154] - Working capital shifted from a positive $5.1 million at December 31, 2024, to a negative $5.7 million at June 30, 2025[154] - Shareholders' deficit increased from $4.5 million at December 31, 2024, to $14.4 million at June 30, 2025[154] - The Company incurred a net loss of $12.6 million for the six months ended June 30, 2025, and had an accumulated deficit of $553.6 million[158] - Management plans to raise additional funds through debt or equity financing, collaborations, or reorganization to reduce operational expenses, but there's no assurance of obtaining liquidity on acceptable terms[159] Sources of liquidity Identifies the historical and current sources of funding for the company's operations, including equity financing and related party advances - Aptose has historically financed operations through equity financing, warrant/option exercises, and interest income, but does not expect positive cash flow from operations in the foreseeable future[157] - The Hanmi Facility Agreement provides an uncommitted facility of up to $8.5 million for Tuspetinib development and operations, with $5.6 million received as of the filing date, but Hanmi can cancel availability at any time[152] Equity Financing Activities Summarizes recent equity financing activities, including committed equity facilities, ATM offerings, and public offerings of common shares and warrants - In February 2025, Aptose entered a 2025 Committed Equity Facility with Keystone for up to $25 million in Common Shares and a 2025 At-The-Market (ATM) Facility with AGP for up to $1.0 million, issuing 137,000 shares for $0.8 million net proceeds under the ATM[162][163][165] - In November 2024, a public offering generated $8.0 million gross proceeds from the sale of 1,333,333 Common Shares and warrants[166] - In June 2024, a Registered Direct Offering and concurrent private placement generated approximately $4.4 million gross proceeds from 60,000 Common Shares and pre-funded warrants[168][170] - In January 2024, a public offering generated $9.7 million gross proceeds from 188,304 Common Shares and warrants, and a concurrent private placement with Hanmi generated $4.0 million gross proceeds from 70,175 Common Shares and warrants[171][173][174] Cash flows Analyzes the company's cash flows from operating, financing, and investing activities for the six months ended June 30, 2025, and 2024 Cash Flow Summary (Six Months Ended June 30, 2025 vs. 2024) | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Operating activities | $(8,738) | $(17,541) | | Financing activities | $3,329 | $16,601 | | Investing activities | $— | $18 | | Net decrease in cash and cash equivalents | $(5,409) | $(922) | - Cash used in operating activities decreased by $8.8 million (from $17.5M to $8.7M) for the six months ended June 30, 2025, compared to 2024, primarily due to reduced operating expenses and increased accrued liabilities[183][184] - Cash provided by financing activities decreased by $13.3 million (from $16.6M to $3.3M) for the six months ended June 30, 2025, compared to 2024, mainly from lower proceeds from equity offerings[186][187] Contractual Obligations and Commitments States that there were no material changes to the company's contractual obligations and commitments since the last annual report - There were no material changes to the Company's contractual obligations and commitments as described in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024[189] Results of Operations Analyzes the company's financial performance, highlighting changes in net loss, R&D, and general and administrative expenses Results of Operations (Three and Six Months Ended June 30, 2025 vs. 2024) | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Revenue | $— | $— | $— | $— | | Research and development expenses | $3,298 | $4,413 | $5,662 | $10,858 | | General and administrative expenses | $3,623 | $2,932 | $6,720 | $6,247 | | Net loss | $(7,043) | $(7,252) | $(12,586) | $(16,892) | - Net loss decreased by $0.2 million to $7.0 million for the three months ended June 30, 2025, and by $4.3 million to $12.6 million for the six months ended June 30, 2025, compared to the respective prior year periods[190] Research and Development Analyzes changes in research and development expenses, detailing program costs for Tuspetinib and Luxeptinib, and personnel-related expenses Research and Development Expenses (Three and Six Months Ended June 30, 2025 vs. 2024) | Category | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Program costs – Tuspetinib | $2,233 | $2,666 | $3,712 | $6,589 | | Program costs – Luxeptinib | $100 | $304 | $198 | $512 | | Personnel-related expenses | $952 | $1,379 | $1,598 | $3,333 | | Total | $3,298 | $4,413 | $5,662 | $10,858 | - R&D expenses decreased by $1.1 million (25%) for the three months and $5.2 million (48%) for the six months ended June 30, 2025, compared to 2024[194] - The decrease in R&D expenses was primarily due to reduced activity in the APTIVATE clinical trial, lower manufacturing activity for tuspetinib, and decreased clinical trial and manufacturing activities for luxeptinib, along with lower headcount[198] General and Administrative Analyzes changes in general and administrative expenses, including personnel-related costs, stock-based compensation, and other operating expenses General and Administrative Expenses (Three and Six Months Ended June 30, 2025 vs. 2024) | Category | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | General and administrative, excluding items below | $3,568 | $2,790 | $6,476 | $5,618 | | Stock-based compensation | $51 | $137 | $237 | $618 | | Total | $3,623 | $2,932 | $6,720 | $6,247 | - G&A expenses increased by $0.7 million (24%) for the three months and $0.5 million (8%) for the six months ended June 30, 2025, compared to 2024[197][199] - The increase in G&A expenses was primarily due to higher legal expenses and bonuses recognized in the current period, partially offset by a decrease in stock-based compensation[202] Critical Accounting Policies Discusses the company's critical accounting policies and estimates, emphasizing management judgment and assumptions for uncertain future outcomes - The Company's critical accounting policies and estimates, particularly regarding research and development expenses, involve significant management judgment and assumptions about inherently uncertain future outcomes[200] - Management estimates R&D expenses based on services received and progress of clinical studies, with potential for $0.4 million over/understatement if estimates differ by 10%[200][201] Updated share information Provides updated information on the company's outstanding common shares, stock options, and warrants as of August 8, 2025 Outstanding Shares and Options (As of August 8, 2025) | Item | Number of Shares | | :-------------------------- | :--------------- | | Common Shares outstanding | 2,552,429 | | Stock options issuable | 38,211 | | Warrants issuable | 1,267,585 | Item 3 – Qualitative and Quantitative Disclosures about Market Risk As a smaller reporting company, Aptose Biosciences Inc. is exempt from providing qualitative and quantitative disclosures about market risk - The Company is not required to provide qualitative and quantitative disclosures about market risk due to its status as a smaller reporting company[207] Item 4 – Controls and Procedures Management concluded disclosure controls were ineffective due to a material weakness in accounting for complex financial instruments, with a remediation plan initiated - Disclosure controls and procedures were deemed not effective as of June 30, 2025, due to a material weakness in internal control over financial reporting related to accounting for complex financial instruments (warrants)[208][210] - The remediation plan includes identifying specific clauses for warrant liability classification, engaging a specialized firm for technical accounting analysis of warrants, and providing additional training to employees[211] - No other material changes in internal control over financial reporting occurred during the quarter, apart from the remediation efforts for the identified material weakness[212] Ongoing Remediation Plan Outlines the specific steps and initiatives undertaken by management to address the identified material weakness in internal controls Changes in Internal Control Over Financial Reporting Reports on any material changes in the company's internal control over financial reporting during the most recent fiscal quarter PART II—OTHER INFORMATION Item 1 – Legal Proceedings Aptose Biosciences Inc. is not currently involved in material active legal actions, but may face various pending or threatened legal actions - The Company is not involved in any material active legal actions but may face various pending or threatened legal actions in the ordinary course of business[214] Item 1A – Risk Factors Outlines key risk factors, particularly substantial doubt about the company's going concern ability due to insufficient cash and reliance on Hanmi advances - The Company's financial statements are prepared on a going concern basis, but management believes its cash balance is insufficient for the next 12 months, relying on Hanmi advances[215] - Substantial doubt exists about the Company's ability to continue as a going concern without significant restructuring and/or financing, with risks including imminent bankruptcy and the need for immediate substantial funding[215][217] - Key risks include the inability to obtain additional equity or debt financing on satisfactory terms, potential work stoppages by suppliers or clinical sites, and challenges in maintaining an adequate supply of clinical drug product[215][216] - As of the filing date, the Company has approximately $1.6 million cash-on-hand and a working capital deficiency, with no material product sales or cash sources other than financings[217] Item 6 – Exhibits Lists the exhibits filed with the Form 10-Q, including officer certifications and consolidated financial statements in Inline XBRL format - The report includes certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2)[219] - Consolidated financial statements are provided in Inline XBRL format as Exhibit 101[219] Signatures Contains the required signatures for the Form 10-Q, confirming its submission on August 13, 2025, by Aptose Biosciences Inc. - The report was signed on August 13, 2025, by William G. Rice, Ph.D., President and Chief Executive Officer of Aptose Biosciences Inc.[222][223]