EXICURE INC

Previous wording

The following information should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included in this Quarterly Report on Form 10-Q and the audited financial information and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the Securities and Exchange Commission, or SEC, on March 27, 2023, as amended by Amendment No. 1 filed with the SEC on May 1, 2023 (the “Annual Report”). This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that involve significant risks and uncertainties. Our actual results, performance or experience could differ materially from what is indicated by any forward-looking statement due to various important factors, risks, uncertainties, assumptions and other factors including, but not limited to, those identified in this Quarterly Report on Form 10-Q and those set forth under the section titled “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q and in our other SEC filings.

Current wording

The following information should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included in this Quarterly Report on Form 10-Q and the audited financial information and the notes thereto included in our Annual Report on Form 10-K (the “Annual Report”) for the year ended December 31, 2023, which was filed with the Securities and Exchange Commission, or SEC, on June 6, 2024. This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that involve significant risks and uncertainties. Our actual results, performance or experience could differ materially from what is indicated by any forward-looking statement due to various important factors, risks, uncertainties, assumptions and other factors including, but not limited to, those identified in this Quarterly Report on Form 10-Q and those set forth under the section titled “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q and in our other SEC filings.

Previous wording

Since our inception in 2011, we have primarily funded our operations through sales of our securities, loans and collaborations. On February 24, 2023, we raised gross proceeds of $5.4 million on the closing of the Private Placement (as defined below) (or net proceeds of approximately $4.6 million after transaction expenses). However, we have largely already used these net proceeds for severance payments, warrant put payments, acquisition of the Bonds and general working capital purposes as we pursue strategic alternatives. As of September 30, 2023, our cash and cash equivalents were $0.9 million. Subsequent to September 30, 2023, our cash and cash equivalents have decreased to approximately $0.2 million as of April 30, 2024. We will attempt to redeem the $2.0 million aggregate principal amount of the Bonds in the third quarter of 2024, however, there can be no assurance that we will be able to do so, in the near term or at all. See “Risk Factors – We may not be able to redeem the Bonds.”

Current wording

Since our inception in 2011, we have primarily funded our operations through sales of our securities, loans and collaborations. On February 24, 2023, we raised gross proceeds of $5.4 million on the closing of the Private Placement (as defined below) (or net proceeds of approximately $4.6 million after transaction expenses). However, we already used these net proceeds for severance payments, warrant put payments, acquisition of the Notes Receivable, payroll, and general working capital purposes as we pursue strategic alternatives. As of March 31, 2024, our cash and cash equivalents were $0.4 million. Subsequent to March 31, 2024, our cash and cash equivalents have decreased to approximately $0.2 million as of May 31, 2024. We will attempt to redeem the $2.0 million aggregate principal amount of the Notes Receivable in the third quarter of 2024, however, there can be no assurance that we will be able to do so, in the near term or at all. See “Risk Factors – We may not be able to redeem the investment in notes receivable.”

Previous wording

•Compliance with Nasdaq’s rule requiring stockholders’ equity of at least $2,500,000 based on the Company’s balance sheet as of September 30, 2022. The Company believes it is in compliance with this requirement based on its September 30, 2023 balance sheet, but there can be no assurance it will remain in compliance.

Current wording

•Compliance with Nasdaq’s rule requiring stockholders’ equity of at least $2,500,000 based on the Company’s balance sheet as of March 31, 2024. The Company is not in compliance with this requirement based on its March 31, 2024 balance sheet.

Previous wording

•On April 17, 2024, the Company received a delinquency notification as it had not filed its Annual Report Form 10-K for the year ended December 31, 2023.

Current wording

•On April 17, 2024, the Company received a delinquency notification as it had not filed its Annual Report Form 10-K for the year ended December 31, 2023. The extended deadline for compliance was established by Nasdaq at May 20, 2024, the same deadline for our Form 10-Q for the quarter ended September 30, 2023. The Annual Report Form 10-K was filed on June 6, 2014.

Previous wording

We may not be able to regain compliance with Nasdaq’s listing requirements and our failure to do so may result in the delisting of our Common Stock by Nasdaq. Even if the Company regains compliance with Nasdaq’s listing requirements and addresses the outstanding deficiency notices to Nasdaq’s satisfaction, there can be no assurance that the Company will remain in compliance with Nasdaq’s requirements and will not be delisted.

Current wording

Even if the Company regains compliance with Nasdaq’s listing requirements and addresses the outstanding deficiency notices to Nasdaq’s satisfaction, there can be no assurance that the Company will remain in compliance with Nasdaq’s requirements and will not be delisted.

Previous wording

Research and development expense was $1.4 million for the nine months ended September 30, 2023, reflecting a decrease of $17.3 million, or 92% from research and development expense of $18.7 million for nine months ended September 30, 2022. The decrease in research and development expense for the nine months ended September 30, 2023 of $17.3 million reflects the suspension of clinical, preclinical, and discovery program activities and the reduction in headcount resulting from the restructuring activities that were announced in December 2021 and September 2022. As a result, after the first quarter of 2023, we determined it was no longer appropriate to record any research and development expenses during the nine months ended September 30, 2023, as the Company began exploring strategic alternatives in April 2023.

Current wording

Research and development expense was $0.0 million for the three months ended March 31, 2024, reflecting a decrease of $1.4 million, or 100% from research and development expense of $1.4 million for three months ended March 31, 2023. In 2022, the Company suspended its clinical, preclinical, and discovery program activities and reduced headcount as it began exploring strategic alternatives in April 2023. As a result, after the first quarter of 2023, we determined it was no longer appropriate to record any research and development expenses.

Previous wording

General and administrative expense was $11.2 million for the nine months ended September 30, 2023, representing an increase of $2.4 million or 27%, from $8.8 million for the nine months ended September 30, 2022. The increase for the nine months ended September 30, 2023 was mostly due to $1.5 million of certain expenses that previously had been recorded as research and development expenses, such as office facilities, legal, and payroll related costs, that no longer met the criteria to be classified as research and development expenses due to the shift in our historical business operations discontinuing all research and development activities as discussed above. The increase was also due to higher costs from the separation pay of former executives and related stock based compensation expense, and increased franchise taxes; partially offset by lower professional fees as a result of reduced operations.

Current wording

General and administrative expense was $1.3 million for the three months ended March 31, 2024, representing an decrease of $(1.8) million or (57)%, from $3.1 million for the three months ended March 31, 2023. The decrease for the three months ended March 31, 2024 was mostly due to lower professional fees as a result of reduced operations and higher costs in 2023 from the separation pay of former executives and related stock based compensation expense.

Previous wording

As of September 30, 2023, our cash and cash equivalents were $0.9 million as compared to $8.6 million as of December 31, 2022. To date, we have funded our operations primarily with proceeds received from equity financings and to a lesser extent, payments received in connection with collaboration agreements. Subsequent to September 30, 2023, our cash and cash equivalents have decreased to approximately $0.2 million as of April 30, 2024. We will attempt to redeem the $2.0 million aggregate principal amount of the Bonds in August 2024, however, there can be no assurance that we will be able to do so, in the near term or at all. See “Risk Factors – We may not be able to redeem the Bonds.”

Current wording

As of March 31, 2024, our cash and cash equivalents were $0.4 million as compared to $0.8 million as of December 31, 2023. To date, we have funded our operations primarily with proceeds received from equity financings and to a lesser extent, payments received in connection with collaboration agreements. Subsequent to March 31, 2024, our cash and cash equivalents have decreased to approximately $0.2 million as of May 31, 2024. We will attempt to redeem the $2.0 million aggregate principal amount of the convertible notes receivable in August 2024, however, there can be no assurance that we will be able to do so, in the near term or at all. See “Risk Factors – We may not be able to redeem the investment in convertible notes receivable.”

Previous wording

We incurred net losses of approximately $15.4 million and $21.0 million for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, we have generated an accumulated deficit of $206.9 million since inception and expect to incur significant expenses and negative cash flows for the foreseeable future.

Current wording

We incurred net losses of approximately $0.8 million and $4.4 million for the three months ended March 31, 2024 and 2023, respectively. We expect to incur significant expenses and negative cash flows for the foreseeable future.

Previous wording

The following table shows a summary of our cash flows for the nine months ended September 30, 2023 and 2022:

Current wording

The following table shows a summary of our cash flows for the three months ended March 31, 2024 and 2023:

Previous wording

Net cash used in operating activities was $9.5 million and $28.4 million for the nine months ended September 30, 2023 and 2022, respectively. The decrease in cash used in operating activities for the nine months ended September 30, 2023 of $18.8 million was due to the suspension of R&D activities and lower headcount from the September 2022 and December 2021 restructurings.

Current wording

Net cash used in operating activities was $0.5 million and $3.3 million for the three months ended March 31, 2024 and 2023, respectively. The decrease in cash used in operating activities for the three months ended March 31, 2024 of $2.9 million was due to the reduction of operating activities and lower headcount.

Previous wording

Net cash used in investing activities was $1.8 million and provided by investing activities was $4.5 million for the nine months ended September 30, 2023 and 2022, respectively. The decrease in cash provided by investing activities of $6.3 million was primarily due to a decrease in proceeds from the maturity, net of purchases of available-for-sale securities.

Current wording

Net cash used in investing activities was $0.0 million and provided by investing activities was $0.1 million for the three months ended March 31, 2024 and 2023, respectively. The decrease in cash provided by investing activities of $0.1 million was primarily due to the lack of investing activities and a sale of scientific equipment in 2023.