Ernexa Therapeutics Inc.

An investment in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described under Part I, Item 1A, “Risk Factors,” in our 2025 10-K, in addition to other information in this report, when evaluating our business and before deciding whether to purchase, hold or sell shares of our common stock. Each of these risks and uncertainties, as well as additional risks and uncertainties not presently known to us or that we currently consider immaterial, could harm our business, financial condition, results of operations and/or growth prospects, as well as adversely affect the market price of our common stock, in which case you may lose all or part of your investment. There have been no material changes to the risk factors described in the 2025 10-K.

Our common stock is listed on The Nasdaq Capital Market. Nasdaq requires that listed companies satisfy certain continued listing requirements. Listing Rule 5550(a)(2) requires that listed companies maintain a minimum compliance with the Bid Price Rule. Listing Rule 5550(b) requires that listed companies maintain compliance with: (1) the Stockholders’ Equity Rule; (2) the MVLS Rule; or (3) the Net Income Rule.

On March 18, 2026, we received written notice from Nasdaq that our common stock had failed to maintain compliance with the Bid Price Rule for 30 consecutive business days. Because we had effected a reverse stock split within the prior one-year period, Nasdaq determined that we were not eligible for the standard 180-calendar-day compliance period ordinarily available under Nasdaq Listing Rule 5810(c)(3)(A). Accordingly, we requested a hearing before a Nasdaq Hearings Panel (the “Panel”), which automatically stayed any suspension or delisting action pending the hearing and any additional extension period granted by the Panel. Following a hearing held on April 28, 2026, the Panel granted our request for continued listing on Nasdaq, subject to the following conditions: (i) that we demonstrate compliance with the Bid Price Rule on or before May 15, 2026; (ii) that we maintain compliance with all Nasdaq Listing Rules from the date of the Panel’s decision through September 14, 2026, the end of the Panel’s jurisdiction over this matter; and (iii) that we be subject to a mandatory panel monitor for a period of one year from the date of the Panel’s determination pursuant to Nasdaq Listing Rule 5815(d)(4)(B).

On May 4, 2026, we effected a 1-for-25 reverse stock split of our common stock. On May 29, 2026, we received notice from Nasdaq that we had regained compliance with the Bid Price Rule. Notwithstanding this notice, the Panel continues to retain jurisdiction over us through September 14, 2026 with respect to compliance with all Nasdaq Listing Rules, and we must remain in compliance with the Bid Price Rule through May 5, 2027. If we fail to maintain compliance with all Nasdaq Listing Rules through September 14, 2026, the Panel will immediately delist our securities from Nasdaq, without further notice or opportunity to cure.

There can be no assurance that we will maintain compliance with the Bid Price Rule, the Stockholders’ Equity Rule, or any other applicable Nasdaq continued listing requirement through September 14, 2026 or May 5, 2027, or thereafter. Our stockholders’ equity, MVLS, and net income position will continue to depend on our ability to raise additional capital, our future operating results, and the trading price of our common stock, each of which is subject to significant uncertainty. If we fail to satisfy any Nasdaq continued listing requirement during the Panel’s monitoring period or thereafter, Nasdaq may take immediate steps to delist our common stock, and we can provide no assurance that any action we take to restore or maintain compliance would be successful.

If our common stock is ultimately delisted by Nasdaq, and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, then we could face significant material adverse consequences, including: a material reduction in the liquidity of our common stock and a corresponding material reduction in the trading price of our common stock; a more limited market quotations for our securities; a determination that our common stock is a “penny stock” that requires brokers to adhere to more stringent rules and possibly resulting in a reduced level of trading activity in the secondary trading market for our securities; more limited research coverage by stock analysts; loss of reputation; more difficult and more expensive equity financings in the future; the potential loss of confidence by investors; and fewer business development opportunities.

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” If our common stock remains listed on Nasdaq, our common stock will be covered securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. If our securities were no longer listed on Nasdaq and therefore not “covered securities,” we would be subject to regulation in each state in which we offer our securities.