Alaunos Therapeutics(TCRT) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This part provides unaudited condensed financial statements, including balance sheets, statements of operations, cash flows, and detailed notes on accounting policies and financing activities Item 1. Condensed Financial Statements (unaudited) This section presents the unaudited condensed financial statements, including balance sheets, statements of operations, cash flows, and comprehensive notes for the reporting period Condensed Balance Sheets as of June 30, 2025 (unaudited) and December 31, 2024 This section provides a comparative overview of the company's financial position as of June 30, 2025, and December 31, 2024 Balance Sheet Summary (in thousands) | Metric | June 30, 2025 | Dec 31, 2024 | Change | | :-------------------------------- | :------------ | :----------- | :----- | | Cash and cash equivalents | $2,879 | $1,091 | +$1,788 | | Total current assets | $3,738 | $2,755 | +$983 | | Total assets | $4,735 | $2,755 | +$1,980 | | Total current liabilities | $1,074 | $692 | +$382 | | Total liabilities | $1,074 | $692 | +$382 | | Total stockholders' equity | $3,661 | $2,063 | +$1,598 | Condensed Statements of Operations for the three and six months ended June 30, 2025 and 2024 (unaudited) This section details the company's financial performance for the three and six months ended June 30, 2025, compared to the prior year Three Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | Change | % Change | | :-------------------------------- | :----- | :----- | :----- | :------- | | Revenue | $0 | $4 | $(4) | -100% | | Research and development | $185 | $180 | $5 | +3% | | General and administrative | $854 | $990 | $(136) | -14% | | Total operating expenses | $1,039 | $1,170 | $(131) | -11% | | Net loss | $(1,051) | $(1,129) | $78 | -7% | | Basic and diluted EPS | $(0.63) | $(0.71) | $0.08 | -11% | Six Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | Change | % Change | | :-------------------------------- | :----- | :----- | :----- | :------- | | Revenue | $2 | $6 | $(4) | -67% | | Research and development | $531 | $306 | $225 | +74% | | General and administrative | $1,603 | $2,607 | $(1,004) | -39% | | Total operating expenses | $2,134 | $2,913 | $(779) | -27% | | Net loss | $(2,124) | $(2,810) | $686 | -24% | | Basic and diluted EPS | $(1.30) | $(1.75) | $0.45 | -26% | Condensed Statements of Changes in Stockholders' Equity for the three and six months ended June 30, 2025 and 2024 (unaudited) This section outlines changes in stockholders' equity for the three and six months ended June 30, 2025, and 2024 Total Stockholders' Equity (in thousands) | Period | Balance at Start | Net Loss | Equity Issuances/Compensation | Balance at End | | :-------------------------------- | :--------------- | :------- | :---------------------------- | :------------- | | Three Months Ended June 30, 2025 | $1,058 | $(1,051) | $3,654 | $3,661 | | Six Months Ended June 30, 2025 | $2,063 | $(2,124) | $3,722 | $3,661 | | Three Months Ended June 30, 2024 | $4,798 | $(1,129) | $102 | $3,771 | | Six Months Ended June 30, 2024 | $6,307 | $(2,810) | $274 | $3,771 | - Equity issuances for the six months ended June 30, 2025, included $500 thousand from Series A-1 preferred stock, $998 thousand from common stock in a registered direct offering, $913 thousand from prefunded warrants, and $850 thousand from Series A-2 preferred stock[28] Condensed Statements of Cash Flows for the six months ended June 30, 2025 and 2024 (unaudited) This section presents the company's cash flow activities for the six months ended June 30, 2025, and 2024 Cash Flow Summary (Six Months Ended June 30, in thousands) | Activity | 2025 | 2024 | Change | | :-------------------------------- | :----- | :----- | :----- | | Net cash flows from operating activities | $(1,473) | $(3,598) | +$2,125 | | Net cash flows from financing activities | $3,261 | $0 | +$3,261 | | Net increase (decrease) in cash | $1,788 | $(3,598) | +$5,386 | | Cash and cash equivalents, end of period | $2,879 | $2,464 | +$415 | - Financing activities for the six months ended June 30, 2025, included $1,911 thousand from common stock and prefunded warrants, $500 thousand from Series A-1 preferred stock, and $850 thousand from Series A-2 preferred stock[34] Notes to Condensed Financial Statements (unaudited) This section provides detailed explanatory notes to the unaudited condensed financial statements, covering key accounting policies and financial events - The company has operated at a loss since inception, has no recurring revenue, and anticipates cash resources will only fund operations into Q1 2026, raising substantial doubt about its ability to continue as a going concern[39][40][41] - The company received a notice from Nasdaq on April 7, 2025, for failing to meet the $2.5 million stockholders' equity requirement, reporting $2.1 million as of December 31, 2024. A compliance plan was submitted[48][49] Note 1. Organization This note describes the company's business, liquidity, going concern status, and significant corporate governance changes - Alaunos Therapeutics, Inc. is a preclinical obesity and metabolic disorder and clinical-stage oncology-focused cell therapy company, currently prioritizing small molecules for obesity, having historically developed adoptive TCR therapies for solid tumors[37] Shares Outstanding (June 30, 2025) | Metric | Shares | | :-------------------------------- | :------- | | Common Stock | 2,074,746 | | Series A-1 Preferred Stock | 500 | | Series A-2 Preferred Stock | 850 | | Common stock reserved for options/warrants | 337,081 | Overview This subsection provides a general description of the company's primary operations and strategic focus - The company's operations to date have consisted primarily of conducting research and development and raising capital to fund those efforts[38] Liquidity and Going Concern This subsection addresses the company's financial viability and ability to continue operations for the foreseeable future - The company has operated at a loss since its inception in 2003, has no recurring revenue, and had an accumulated deficit of approximately $922.6 million as of June 30, 2025[40] - As of June 30, 2025, the company had approximately $2.9 million of cash and cash equivalents, which are anticipated to fund operations into the first quarter of 2026[40] - Management has determined that the company's present capital resources will not be sufficient to fund its planned operations for at least one year, raising substantial doubt about its ability to continue as a going concern[41] Basis of Presentation This subsection outlines the principles and assumptions underlying the preparation of the interim financial statements - The accompanying unaudited interim condensed financial statements reflect all necessary adjustments for fair presentation and should be read in conjunction with the audited financial statements for the year ended December 31, 2024[42] Use of Estimates This subsection highlights critical accounting estimates and judgments made by management in preparing financial statements - Management identifies clinical trial expenses, other research and development expenses, collaboration agreements, fair value measurements of share-based arrangements, and income taxes as its most critical accounting estimates[52] Increase in Authorized Shares This subsection details the recent approval to increase the number of authorized common stock shares - On July 3, 2025, company stockholders approved an amendment to increase the number of authorized shares of common stock from 5,000,000 to 50,000,000[46] Equity Incentive Plan Amendment This subsection describes the amendment to the company's equity incentive plan, increasing authorized shares for awards - On July 3, 2025, stockholders approved an amendment to the 2020 Equity Incentive Plan to increase authorized shares from 130,745 to 1,130,745[47] Nasdaq Stockholders' Equity Deficiency Notice This subsection addresses the company's non-compliance with Nasdaq's minimum stockholders' equity requirement - On April 7, 2025, Nasdaq notified the company of non-compliance with the $2.5 million stockholders' equity requirement, as reported stockholders' equity was $2.1 million as of December 31, 2024[48] - The company submitted a compliance plan on May 22, 2025, and is awaiting Nasdaq's response; if accepted, an extension of up to 180 calendar days from April 7, 2025, may be granted[49] Note 2. Financings This note details the company's financing activities, including equity distribution agreements and capital raising efforts - The company has an Equity Distribution Agreement with Piper Sandler & Co. to sell up to $50.0 million of common stock in an 'at the market offering,' but no sales occurred under this agreement during the six months ended June 30, 2025 or 2024[50] Note 3. Summary of Significant Accounting Policies This note outlines the key accounting principles and methods used in preparing the financial statements - Derivative liabilities are initially recorded at fair value and subsequently remeasured at each reporting period, with changes recognized in earnings; if modified to qualify for equity classification, they are reclassified at fair value to equity[53][55] - There have been no material changes in accounting policies since the 2024 Annual Report, except for those related to Derivative Liabilities[52] Note 4. Net earnings per share This note explains the calculation of basic and diluted net earnings per share and related adjustments - Basic earnings per share is computed by dividing net loss by the weighted average common shares outstanding; diluted EPS includes dilutive effects of options and warrants unless antidilutive[56] Antidilutive Securities Excluded from Diluted EPS (June 30, 2025) | Type | Number of Shares | | :-------------------- | :--------------- | | Common stock options | 55,455 | | Warrants | 281,626 | | Total | 337,081 | Note 5. Commitments and Contingencies This note discloses the company's contractual obligations, license agreements, and potential liabilities - The company has various license agreements, including with Precigen (terminated), The University of Texas MD Anderson Cancer Center (for TCR technologies), and Solasia Pharma K.K. (for darinaparsin)[57][59][68] - During the six months ended June 30, 2025, the company entered into a six-year insurance arrangement, amortizing the prepaid expense related to the contract[71] License Agreements This subsection details the company's various intellectual property license agreements and their current status - The Amended and Restated Exclusive License Agreement with Precigen for TCR products was fully terminated on October 4, 2024, following a strategic review and recognition that the non-viral Sleeping Beauty gene transfer platform patent will expire in 2026[57][58] - The company holds an exclusive worldwide license with MD Anderson for certain CAR T-cell therapies, non-viral gene transfer systems, and TCRs, and a 2019 R&D Agreement for TCR program collaboration, which will terminate on December 31, 2026[59][63][64] - Under the Solasia License and Collaboration Agreement for darinaparsin, the company earned royalty revenue of $2 thousand for the six months ended June 30, 2025, a decrease from $6 thousand in the same period of 2024[68][70] Insurance Contract This subsection describes the company's significant insurance arrangement and its financial classification - As of June 30, 2025, $857 thousand of the prepaid insurance contract is classified as current assets and $997 thousand as non-current assets[71] Director Resignation This subsection reports on the recent resignation of a member from the Board of Directors - Dr. Hofmeister resigned as a member of the Board of Directors on April 15, 2025, with immediate effect, and his resignation was not due to any disagreement with the company[72] Note 6. Equity This note details changes in the company's equity, including preferred stock issuances and director compensation - In April 2025, the company sold 500 shares of Series A-1 Convertible Preferred Stock for an aggregate purchase price of $500,000, convertible into common stock at $2.76 per share with 10% annual dividends[75][77] - In June 2025, the company sold 850 shares of Series A-2 Convertible Preferred Stock for aggregate gross proceeds of $850,000, convertible into common stock at $4.49 per share with 10% annual dividends[80][82] - In June 2025, a registered direct offering of 338,725 common shares and 271,674 pre-funded warrants generated $1,911,000 in net proceeds; 96,500 prefunded warrants were exercised by June 30, 2025[79] Series A-1 Preferred Stock This subsection describes the terms and issuance of the company's Series A-1 Convertible Preferred Stock - 500 shares of Series A-1 Convertible Preferred Stock were sold in April 2025 at $1,000 per share, totaling $500,000[75] - The Series A-1 Preferred Stock is convertible into common stock at an initial fixed conversion price of $2.76 per share and entitles holders to 10% annual dividends, payable in Series A-1 Preferred Stock[77] Director Compensation This subsection outlines the equity-based compensation provided to the company's Board of Directors - On April 13, 2025, the Board elected to receive $139,000 in equity for Q1 2025 deferred board service fees, issuing 38,269 common shares (fair value $111,750) and granting 10,904 fully vested stock options (fair value $27,250)[78] Securities Purchase Agreement for Registered Direct Offering This subsection details the terms and proceeds from the company's recent registered direct offering of common stock and warrants - In June 2025, the company sold 338,725 common shares at $3.36 per share and 271,674 pre-funded warrants at $3.359 per warrant share, resulting in net proceeds of $1,911,000[79] - By June 30, 2025, 96,500 prefunded warrants were exercised, with an additional 112,875 exercised subsequent to June 30, 2025[79] Series A-2 Preferred Stock This subsection describes the terms and issuance of the company's Series A-2 Convertible Preferred Stock - In June 2025, 850 shares of Series A-2 Convertible Preferred Stock were sold in a private placement for aggregate gross proceeds of $850,000[80] - The Series A-2 Preferred Stock is convertible into common stock at an initial fixed conversion price of $4.49 per share and entitles holders to 10% annual dividends, payable in Series A-2 Preferred Stock[82] Note 7. Stock-Based Compensation This note provides details on the company's stock-based compensation expense and related option activity Stock-Based Compensation Expense (in thousands) | Period | R&D | G&A | Total | | :-------------------------------- | :---- | :---- | :---- | | Three Months Ended June 30, 2025 | $(1) | $185 | $184 | | Three Months Ended June 30, 2024 | $2 | $99 | $101 | | Six Months Ended June 30, 2025 | $1 | $251 | $252 | | Six Months Ended June 30, 2024 | $13 | $260 | $273 | Stock Option Activity (Six Months Ended June 30, 2025) | Metric | Shares | Avg Exercise Price | | :-------------------------------- | :------- | :----------------- | | Outstanding, Dec 31, 2024 | 33,237 | $153.79 | | Granted | 22,904 | $2.16 | | Cancelled | (686) | $68.63 | | Outstanding, June 30, 2025 | 55,455 | $92.21 | - Total unrecognized compensation costs related to unvested stock options amounted to $140 thousand as of June 30, 2025, expected to be recognized over a weighted-average period of 1.67 years[85] Note 8. Warrants This note details the company's warrant activity, including issuances, exercises, and reclassification events Warrant Activity (Six Months Ended June 30, 2025) | Metric | Number of Shares | Weighted Average Exercise Price | | :-------------------------------- | :--------------- | :------------------------------ | | Outstanding, Dec 31, 2024 | 26,552 | $28.50 | | Granted | 351,574 | $0.76 | | Exercised | (96,500) | $0.001 | | Outstanding, June 30, 2025 | 281,626 | $3.64 | Equity Purchase Agreement and Warrant This subsection describes the equity purchase agreement and the associated warrant issued by the company - In May 2025, the company entered an equity purchase agreement to sell up to $25.0 million of common stock over 24 months and issued a warrant to purchase 79,900 common shares at $4.00 per share[89] - The warrant was initially classified as a derivative liability ($177 thousand fair value) due to anti-dilution and variable pricing features, but was reclassified to equity on June 9, 2025, after an amendment, resulting in a $31 thousand charge to earnings[90] Note 9. Segment Information This note clarifies the company's operating segments, identifying it as a single reportable segment - The Chief Executive Officer, as the Chief Operating Decision Maker, reviews operating results on an aggregate basis, leading to the determination that the company has a single reportable and operating segment related to biopharmaceutical research and development[92] Note 11. Subsequent Events This note discloses significant events occurring after the reporting period, including changes in corporate governance Changes in Corporate Governance This subsection details recent changes in the company's executive leadership and Board of Directors - Dale Curtis Hogue, Jr. resigned as CEO and Board member on July 1, 2025; Holger Weis was appointed CEO on July 2, 2025, with an annual base salary of $275,000 and options for 130,000 shares[96][97] - On July 3, 2025, certain Board members received 7,450 common shares for $37,250 in Q2 deferred board service fees[98] - Michael A. Jerman was appointed independent director on July 15, 2025, filling vacancies and becoming Chair of the Audit Committee[99] - Melinda Lackey will resign as Legal and Administrative Officer and Corporate Secretary effective August 15, 2025; Ferdinand Groenewald was appointed Corporate Secretary on August 14, 2025[100][101] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes the company's financial condition and operational results, focusing on its strategic shift to an obesity program, cost reductions, and liquidity needs Overview This subsection provides a high-level summary of the company's strategic reprioritization and financial performance - The company is evaluating its small molecule oral obesity program and has reprioritized its business, winding down its TCR-T Library Phase 1/2 Trial due to substantial development costs and a challenging financing environment[105][106][107] - The company incurred a net loss of $2.1 million for the six months ended June 30, 2025, and an accumulated deficit of approximately $922.6 million since its inception[108] Small Molecule Oral Obesity Program This subsection details the company's preclinical development of a small molecule program for obesity and metabolic disorders - The company is advancing its preclinical small molecule program for obesity and metabolic disorders, focusing on a novel, non-hormonal mechanism of action with potential for lean muscle mass preservation and improved tolerability[109] - Preclinical studies are underway, including in vitro characterization (being repeated due to initial methodological issues) and in vivo pharmacokinetic and pilot proof-of-concept studies for ALN1003 in a diet-induced obesity mouse model[110] - Initial data from these studies are anticipated by the fourth quarter of 2025, which will inform future development strategy and indication selection, subject to securing additional capital[111][112][113] Historical Development and Achievements in Cancer Therapeutics This subsection reviews past achievements in cancer therapeutics and the strategic decision to wind down TCR-T programs - The TCR-T Library Phase 1/2 Trial (2022-2023) treated eight solid tumor patients, showing TCR-T cells were well-tolerated with one partial response (13%) and six stable diseases (87% disease control rate), establishing proof-of-concept[120] - In August 2023, due to substantial development costs and a challenging financing environment, the company announced a strategic reprioritization, winding down the TCR-T Library Phase 1/2 Trial and ceasing further clinical development of TCR-T programs[114] - This reprioritization included workforce reductions (approximately 95% by end of 2023), cost-cutting measures, and termination of key licenses and agreements, such as the NCI patent license and Precigen exclusive license[120] - The company is actively exploring strategic alternatives, including monetizing cancer-related assets like the TCR library or hunTR platform, with Cantor Fitzgerald & Co. as a strategic advisor[116] Nasdaq Shareholders Equity Deficiency Notice This subsection addresses the company's non-compliance with Nasdaq's minimum stockholders' equity requirement and compliance plan - On April 7, 2025, Nasdaq notified the company of non-compliance with the $2.5 million stockholders' equity requirement, reporting $2.1 million as of December 31, 2024[117] - The company submitted a compliance plan on May 22, 2025, and is awaiting Nasdaq's response; if accepted, an extension until October 4, 2025, may be granted to evidence compliance[118][119] Results of Operations This subsection analyzes the company's financial results for the three and six months ended June 30, 2025, compared to 2024 - Net loss decreased by $78 thousand (7%) for the three months ended June 30, 2025, compared to the same period in 2024, and by $686 thousand (24%) for the six months ended June 30, 2025, compared to 2024[23] - Total operating expenses decreased by $131 thousand (11%) for the three months ended June 30, 2025, and by $779 thousand (27%) for the six months ended June 30, 2025, primarily due to reduced general and administrative expenses[23] Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024 This subsection compares the company's financial performance for the second quarter of 2025 against the same period in 2024 - Royalty revenue decreased by $4 thousand (100%) to $0 in Q2 2025[121] - Research and development expenses increased by $5 thousand (3%) to $185 thousand, primarily due to increased consulting fees for the obesity program[122] - General and administrative expenses decreased by $136 thousand (14%) to $854 thousand, mainly due to lower insurance, filing fees, bank fees, and travel costs from downsized operations[123] - Other income, net, decreased by $18 thousand (49%) to $19 thousand, primarily due to reduced interest from lower cash reserves[124] Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024 This subsection compares the company's financial performance for the first half of 2025 against the same period in 2024 - Royalty revenue decreased by $4 thousand (67%) to $2 thousand[125] - Research and development expenses increased by $225 thousand (74%) to $531 thousand, primarily due to $200 thousand for regulatory submissions for clinical wind-down activities and consulting fees for the obesity program[126] - General and administrative expenses decreased by $1,004 thousand (39%) to $1,603 thousand, driven by reductions in employee-related expenses ($200k), consulting expenses ($400k), and insurance/filing/travel costs ($400k)[127] - Other income, net, decreased by $58 thousand (60%) to $39 thousand, due to reduced interest income from lower cash reserves[128] Liquidity and Capital Resources This subsection discusses the company's current cash position, funding sources, and future capital requirements - As of June 30, 2025, cash and cash equivalents were approximately $2.9 million[132] - The company anticipates its cash resources will be sufficient to fund operations into the first quarter of 2026[130][132] - Additional capital will be required to continue operations beyond the forecasted runway, with no committed sources other than an equity line of credit[132] Liquidity This subsection assesses the company's ability to meet its short-term financial obligations and fund operations - The company has historically financed operations through public offerings, private placements of equity, term debt, and collaborations[129] - Working capital as of June 30, 2025, was $2.6 million, consisting of $3.7 million in current assets and $1.1 million in current liabilities[131] - Management has determined that present capital resources are insufficient to fund planned operations for at least one year, raising substantial doubt about the company's ability to continue as a going concern[133] Sources of Liquidity This subsection identifies the company's available and potential sources of funding for its operations - Aside from an equity line of credit, the company has no committed sources of additional capital at this time[132] Series A-1 Preferred Stock This subsection details the issuance and terms of the company's Series A-1 Convertible Preferred Stock - In April 2025, the company sold 500 shares of Series A-1 Convertible Preferred Stock for an aggregate purchase price of $500,000[134] - The Series A-1 Preferred Stock is convertible into common stock at an initial fixed conversion price of $2.76 per share and entitles holders to 10% annual dividends, payable in Series A-1 Preferred Stock[136] Securities Purchase Agreement for Registered Direct Offering This subsection describes the registered direct offering of common stock and pre-funded warrants - In June 2025, the company sold 338,725 common shares and 271,674 pre-funded warrants, generating net proceeds of $1,911,000[137] - By June 30, 2025, 96,500 prefunded warrants were exercised, with an additional 112,875 exercised subsequent to June 30, 2025[137] Series A-2 Preferred Stock This subsection details the issuance and terms of the company's Series A-2 Convertible Preferred Stock - In June 2025, the company sold 850 shares of Series A-2 Convertible Preferred Stock for aggregate gross proceeds of $850,000[138] - The Series A-2 Preferred Stock is convertible into common stock at an initial fixed conversion price of $4.49 per share and entitles holders to 10% annual dividends, payable in Series A-2 Preferred Stock[141] Cash Flows This subsection analyzes the company's cash inflows and outflows from operating, investing, and financing activities - Net cash used in operating activities decreased from $(3,598) thousand in H1 2024 to $(1,473) thousand in H1 2025, primarily due to reductions in net loss[142] - Net cash flows from financing activities were $3,261 thousand in H1 2025 (compared to $0 in H1 2024), attributable to proceeds from common stock, prefunded warrants, and preferred stock sales[143] Capital Resources This subsection outlines the company's available capital and future funding requirements - As of June 30, 2025, the company has no lease commitments other than a short-term lease[144] - Royalty revenue from Solasia Pharma K.K. decreased from $6 thousand in H1 2024 to $2 thousand in H1 2025[145] Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, Alaunos Therapeutics, Inc. is not required to provide detailed quantitative and qualitative disclosures about market risk - The company is exempt from providing quantitative and qualitative disclosures about market risk as it qualifies as a smaller reporting company[146] Item 4. Controls and Procedures This section addresses the effectiveness of the company's disclosure controls and procedures and internal controls over financial reporting. Management concluded that disclosure controls were not effective as of June 30, 2025, but reported no material changes in internal controls over financial reporting during the period Evaluation of Disclosure Controls and Procedures This subsection presents management's assessment of the effectiveness of the company's disclosure controls and procedures - Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025[148] Changes in Internal Controls over Financial Reporting This subsection reports on any material changes in the company's internal controls over financial reporting during the period - There were no changes in internal control over financial reporting during the six months ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[149] PART II. OTHER INFORMATION This part provides additional information, including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings The company is not currently involved in any pending litigation that management believes would have a material adverse effect on its business, financial condition, results of operations, cash flows, or prospects - The company does not have any pending litigation that, separately or in the aggregate, would be reasonably likely to have a material adverse effect on its business, financial condition, results of operations, cash flows, or prospects[153] Item 1A. Risk Factors This section outlines significant risks and uncertainties that could materially and adversely affect the company's business, financial condition, results of operations, cash flows, and prospects. Key risks include the potential failure of strategic reprioritization, the need for substantial additional financing, Nasdaq delisting risk due to equity deficiency, and the potential negative effects of artificial intelligence RISKS RELATED TO OUR BUSINESS This subsection details risks specific to the company's operations, strategic initiatives, and financial viability - The company's strategic reprioritization may not be successful, and it may be unsuccessful in identifying and implementing any strategic transaction, potentially leading to dissolution and liquidation[14] - The company may require substantial additional financial resources to continue as a going concern, and if additional funds are raised, it may affect the value of common stock[14] - The company received a delisting notice from Nasdaq due to stockholders' equity falling below $2.5 million; failure to get the compliance plan approved or to regain compliance could prevent maintaining an active trading market[14][156][157] - The company has identified a material weakness in its internal control environment, which may result in material misstatements of financial statements or have a material adverse effect on its business or stock price[14] - The company may not be able to commercialize, generate significant revenues from, or attain profitability from its small molecule oral obesity program or, should it resume development of, its TCR-T product candidates[14] - Risks include failure to adequately protect or enforce intellectual property rights, third-party claims of infringement, and the expiration of the non-viral Sleeping Beauty gene transfer platform patent in 2026[14][15][58] OTHER RISKS RELATED TO OUR COMPANY This subsection addresses broader risks impacting the company, including those related to technology and corporate governance - Artificial intelligence used by the company or its partners/vendors may lead to negative effects such as cybersecurity threats, fraud, regulatory non-compliance, ethical/reputational harm, operational disruptions, and competitive disadvantages[158] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's unregistered sales of equity securities, including the issuance of Series A-1 and Series A-2 Convertible Preferred Stock, common stock and stock options for director compensation, and a warrant in connection with an equity purchase agreement - In April 2025, the company sold 500 shares of Series A-1 Convertible Preferred Stock for $500,000 to an accredited investor[160] - On April 13, 2025, the Board issued 38,269 common shares (fair value $111,750) and 10,904 stock options (fair value $27,250) as compensation for $139,000 in Q1 2025 deferred board service fees[161] - In May 2025, the company issued a warrant to purchase 79,900 common shares at $4.00 per share in connection with an equity purchase agreement[162] - In June 2025, the company sold 850 shares of Series A-2 Convertible Preferred Stock for $850,000 in a private placement to accredited investors[163] Item 3. Defaults Upon Senior Securities Not applicable - This item is not applicable[164] Item 4. Mine Safety Disclosures Not applicable - This item is not applicable[165] Item 5. Other Information No other information to report - None[166] Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including corporate governance documents, certifications, and XBRL data - Exhibits include the Second Amended and Restated Certificate of Incorporation, Certificates of Designation for Series A-1 and A-2 Preferred Stock, Amended and Restated Bylaws, certifications (31.1+, 32.1++), and Inline XBRL documents[167]