Transcode Therapeutics Inc

Factors that could cause our actual results to differ materially from those in this Quarterly Report on Form 10-Q are any of the risks described in our Annual Report on Form 10-K for the year ended December 31, 2023, or our Annual Report, filed with the SEC, as amended and supplemented by the information in our subsequent Quarterly Reports on Form 10-Q or other subsequent filings, together with all of the other information contained in this Quarterly Report, including our unaudited financial statements and the related notes appearing elsewhere in this Quarterly Report, and the risk factors set forth below. The risk factor disclosure in our Annual Report and subsequent Quarterly Reports on Form 10-Q is qualified by the information that is described in this Quarterly Report. Any of these factors could result in a significant or material adverse effect on our business, results of operations or financial condition. Additional risk factors not currently known to us or that we currently deem immaterial may also have a material adverse effect on our business, financial condition or results of operations. You should review the risk factors in our Annual Report and the risk factors discussed below for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in this Quarterly Report. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

We could lose our listing on the Nasdaq Capital Market if we do not meet Nasdaq stockholders’ equity requirement, if the closing bid price of our common stock does not increase, or if Nasdaq determines that our equity offerings do not qualify as public offerings as defined under Nasdaq rules. The loss of our Nasdaq listing would in all likelihood make our common stock significantly less liquid and adversely affect its value.

Nasdaq Listing Rule 5550(b)(1) requires that companies listed on the Nasdaq Capital Market, or the Exchange, maintain stockholders’ equity of at least $2,500,000, or the Stockholders’ Equity Requirement. We had not met this requirement until January 22, 2024, but there is no assurance that we will be able to continue to meet this requirement in the future. Our stockholders’ equity at June 30, 2024, was approximately $1.3 million but adding the approximate $2.4 million of net proceeds from our July 2024 Offering results in apro forma stockholders’ equity of approximately $3.7 million. There is no assurance that Nasdaq will assess our stockholders’ equity on apro forma basis.

Additionally, on August 13, 2024, we received a letter from the Staff notifying us that for the 30 consecutive business day period prior to that date, our common stock had not maintained a minimum closing bid price of $1.00 per share, or the Minimum Bid Price Requirement, required for continued listing on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2). As a result, our shares are subject to delisting from The Nasdaq Capital Market. Normally, a company would be afforded a 180-calendar day period to demonstrate compliance with the Minimum Bid Price Requirement. However, pursuant to Listing Rule 5810(c)(3)(A)(iv), we are not eligible for any compliance period specified in Rule 5810(c)(3)(A) because we effected two reverse stock splits over the prior two-year period with a cumulative ratio of more than 250 shares to one. We have the right until August 20, 2024, to appeal the Staff’s determination to a Hearings Panel (the “Panel”). A hearing request will stay the suspension of our shares and we expect that our stock would remain listed pending the Panel’s decision. There can be no assurance that, if we do appeal the Staff’s determination to the Panel, such appeal would be successful.

The continued listing of our common stock on the Nasdaq Capital Market also depends on our compliance with other Nasdaq requirements including but not limited to Market Place Rule 5635, or the shareholder approval rule. The shareholder approval rule prohibits the issuance of shares of common stock (or derivatives) in excess of 20% of our outstanding shares of common stock without shareholder approval, unless those shares are sold at a price that equals or exceeds the Minimum Price, as defined in the shareholder approval rule, or are sold in what Nasdaq deems a Public Offering, as defined in the shareholder approval rule. The securities sold in our recent offerings were at a significant discount to the Minimum Price and we did not obtain stockholder approval for those issuances. We have sought to conduct these offerings as Public Offerings, but that determination is a qualitative analysis based on several factors as determined by Nasdaq. Nasdaq has also published guidance that an offering of securities sold at a price that is “deeply discounted” to the Minimum Price (for example, a discount of 50% or more) will typically preclude a determination that the offering qualifies as Public Offering for purposes of the shareholder approval rule. If Nasdaq determines that any of our offerings was not conducted in compliance with the shareholder approval rule, Nasdaq may cite a deficiency and move to delist our securities from the Nasdaq Capital Market.

Upon a delisting from the Nasdaq Capital Market, our stock would likely be traded in the over-the-counter inter-dealer quotation system, more commonly known as the OTC. OTC transactions involve risks in addition to those associated with transactions in securities traded on the securities exchanges, such as the Nasdaq Capital Market, or, together, Exchange-listed stocks. Many OTC stocks trade less frequently and in smaller volumes than Exchange-listed stocks. Accordingly, our stock would be less liquid than it would be otherwise. Also, prices of OTC stocks are often more volatile than Exchange-listed stocks. Additionally, institutional investors are usually prohibited from investing in OTC stocks, and it would likely be more challenging to raise capital when needed.

We have identified conditions and events that raise substantial doubt about our ability to continue operations in the near-term. We may need to seek an in-court or out-of-court restructuring of our liabilities.

We may be forced to amend, delay, limit, reduce or terminate the scope of our development programs and/or limit or cease our operations if we are unable to obtain additional funding. As of June 30, 2024, we had cash of approximately $3.4 million, plus approximately $2.4 million in estimated net proceeds received from our July 2024 equity offering. We do not believe that this cash will enable us to fund our operating expenses and capital requirements beyond late 2024. We will need to raise additional capital to continue as a going concern. The failure to obtain sufficient additional funds on commercially acceptable terms to fund our operations and satisfy our obligations to creditors may have a material adverse effect on our business, results of operations and financial condition and jeopardize our ability to continue operations in the near-term. We will likely need to consider additional cost reduction strategies, which may include, among others, amending, delaying, limiting, reducing, or terminating our development programs, and we may need to seek an in-court or out-of-court restructuring of our liabilities. In the event of such future restructuring activities, holders of our common stock and other securities will likely suffer a total loss of their investment.