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| PART I – FINANCIAL INFORMATION | | 5 | |
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| Item 1. | Financial Statements (Unaudited) | | 5 |
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| | Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 | | 5 |
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| | Condensed Consolidated Statement of Operations and Comprehensive Loss for the three and nine months ended September 30, 2025 and 2024 | | 6 |
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| | Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2025 and 2024 | | 7 |
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| | Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 | | 9 |
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| | Notes to Condensed Consolidated Financial Statements | | 10 |
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| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | | 30 |
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| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | | 49 |
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| Item 4. | Controls and Procedures | | 50 |
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| PART II – OTHER INFORMATION | | 50 | |
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| Item 1. | Legal Proceedings | | 50 |
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| Item 1A. | Risk Factors | | 50 |
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| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | | 52 |
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| Item 5. | Other Information | | 53 |
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| Item 6. | Exhibits | | 54 |
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| SIGNATURES | | 55 | |
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA
This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical fact, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.
The forward-looking statements in this Quarterly Report on Form 10-Q include, among other things, statements about:
| ● | our pursuit of strategic options; |
| ● | our plans and expectations regarding our pursuit of strategic options; |
| ● | our ability to obtain additional financing; |
| ● | the possibility of entering bankruptcy or insolvency proceedings; |
| ● | our ability to monetize our assets; |
| ● | our expectations regarding the value or recovery that may be available to our stockholders as part of a bankruptcy process; |
| ● | our ability to continue as a going concern; |
| ● | developments regarding Oxford Finance LLC’s foreclosure of our assets; |
| ● | our ability to regain and maintain compliance with the Nasdaq listing standards; |
| ● | the potential benefits and advantages of KPI-012 and KPI-014; |
| ● | our ability to retain our remaining employees, consultants, advisors; |
| ● | our ability to resume research and development activities if we were to execute a strategic transaction or obtain significant additional funding; |
| ● | if we were to resume research and development activities, development efforts for KPI-012 and KPI-014 for potential ocular diseases; |
| ● | our ability to identify additional products, product candidates or technologies with significant commercial potential that are consistent with our commercial objectives; |
| ● | our expectations with respect to, and the amount of, future milestone payments we may receive from Alcon Pharmaceuticals Ltd. and Alcon Visions, LLC in connection with the sale of our commercial business; |
| ● | our expectations with respect to, and the amount of, future milestone payments we may pay in connection with the acquisition of Combangio, Inc., or Combangio, or the Combangio Acquisition; |
| ● | the rate and degree of market acceptance and clinical utility of our product candidates and our estimates regarding the market opportunity for our product candidates, if approved; |
| ● | our expectations regarding our ability to fund our operating expenses, lease and debt service obligations, and capital expenditure requirements with our cash on hand; |
| ● | our intellectual property position; |
| ● | our estimates regarding expenses, future revenue, timing of any future revenue, capital requirements and needs for additional financing; |
| ● | the impact of government laws and regulations; |
| ● | our competitive position; |
| ● | developments relating to our competitors and our industry; |
| ● | our business and business relationships; and |
| ● | the potential impact of global economic and geopolitical developments on our business, operations, strategy and goals. |
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors” section, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.
You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements contained in this Quarterly Report on Form 10-Q are made as of the date of this Quarterly Report on Form 10-Q, and we do not assume any obligation to update any forward-looking statements except as required by applicable law.
This Quarterly Report on Form 10-Q includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by us and third parties as well as our estimates of potential market opportunities. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. Our estimates of the potential market opportunity for KPI-012 include several key assumptions based on our industry knowledge, industry publications, third-party research and other surveys, which may be based on a small sample size and may fail to accurately reflect market opportunities. While we believe that our internal assumptions are reasonable, no independent source has verified such assumptions.
