EXICURE INC

Current report

Not applicable to smaller reporting companies

Previous report

In addition to other information contained in this Quarterly Report on Form 10-Q, the following risks should be considered in evaluating our business and future prospects and an investment in our common stock. The risks and uncertainties described below are not the only ones we face. If any of the following risks and uncertainties develops into actual events, our business, financial condition, results of operations and cash flows could be materially adversely affected. In that case, the price of our common stock could decline and you may lose all or part of your investment.

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Risks Related to Our Business

Previous report

Our exploration of strategic alternatives may not be successful.

Previous report

Given the Company’s current focus to explore growth through strategic transactions with potential partners, the Company’s ability to execute its current business plan depends on its ability to obtain additional funding via a strategic transaction or a series of strategic transactions, or to obtain funding to support such a transaction. We currently have no source of significant, ongoing revenues or committed financing, and our financial resources are limited to our cash and cash equivalents. Substantial additional funding is needed in the very near term.

Previous report

The Company plans to continue pursuing strategic alternatives, however, there can be no assurance that the Company will have sufficient resources or obtain additional financing necessary to complete this effort. Even if we can obtain financing, we may not be able to consummate such a transaction in a timely manner or at all or in a manner that would not adversely impact our business. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. Strategic transactions are complex and time-consuming to identify, evaluate, negotiate and consummate in compliance with applicable laws and Nasdaq requirements. Our board and management do not have meaningful experience executing this type of endeavor in the U.S. public markets. Even if we are successful in entering into a strategic transaction, the terms and conditions of that transaction may restrict us from entering into future agreements with other potential collaborators. Additionally, such strategic transactions may not be favorable to investors nor deliver any anticipated benefits by the time of business integration.

Previous report

We need to obtain substantial funding in the very near term in order to continue operations and our exploration of strategic alternatives.

Previous report

We require significant capital resources in order to continue to operate our business and conduct our exploration of strategic alternatives, and our very limited liquidity could materially and adversely affect our business operations. Because we have no current source of significant, ongoing revenue or committed financing, our current available cash and cash equivalents provide us with very limited liquidity. Our existing cash and cash equivalents are not sufficient for us to continue to fund our business operations. Substantial additional funding is needed in the very near term. Any such required additional capital may not be available on reasonable terms, if at all, due to a variety of factors, including uncertainty about the future direction of the Company and investor reaction to our controlling stockholders and board and management composition, as well as broader conditions in the economy and capital markets, including recent volatility caused by inflation and other factors. The Company has already engaged in significant cost reductions, so our ability to further cut costs and extend our operating runway is limited. Without sufficient additional capital funding in the very near term, we may be required, among other things, to seek bankruptcy protection and/or cease operations.

Previous report

The closing of the initial common stock purchase agreement for $1.3 million with HiTron executed on November 12, 2024 is expected to close in the near term and provide the Company with proceeds to fund operations into 2025. The closing of the subsequent $8.7 million investment by HiTron would provide additional liquidity and reduce our short-term funding needs. However, it is subject to receipt of stockholder approval, among other customary conditions, so we cannot provide assurance as to whether we will satisfy those conditions and close the investment, in a timely manner or at all.

Previous report

It is uncertain if or when we will recognize any royalties or license payments arising from our historical biotechnology intellectual property and other assets.

Previous report

After we announced the wind down of our historical biotechnology activities in September 2022, we undertook an effort to generate value from our historical assets. This resulted in $2.6 million of revenues and other income in the nine months ended September 30, 2024 as we licensed certain assets and then sold our historical biotechnology intellectual property and other assets (including the licensed assets and licensing agreement) pursuant to the Purchase Agreement. However, following the Purchase Agreement, any additional value we may generate from our historical biotechnology intellectual property and other assets will be primarily through royalties and license fees that we may receive in the future under the Purchase Agreement. Whether we receive any royalties or licenses fees, and the amounts and timing thereof, are uncertain and out of our control. As a result, we cannot provide any assurance that we will ever generate additional revenue from this Purchase Agreement.

Previous report

We do not expect to be able to redeem the investment in convertible Notes Receivable.

Previous report

In March 2024, the Company notified the issuer of the investment in convertible Notes Receivable that it was exercising its redemption right with respect to the entire principal amount of the investment in convertible Notes Receivable after the first anniversary of their issue dates (May 3 and May 16, 2024, respectively) for an aggregate redemption price of $2.090 million (representing the principal amount plus 4.5% per annum yield to the redemption date).

Previous report

In response, the issuer took the position that the investment in convertible Notes Receivable were not redeemable until August 3, 2024 and August 16, 2024.

Previous report

We again attempted to redeem the entire principal amount of the convertible Notes Receivable in in May, but have not received a response to our most recent request. As a result, management does not believe the Notes Receivable are recoverable and they have been written down to $0 on our balance sheet.

Previous report

Our controlling stockholders, executive officers and members of our board, have limited experience controlling or governing a public company operating in the United States.

Previous report

Our controlling stockholders have not previously controlled a U.S. public company. In addition, no members of the board or our chief executive officer or chief financial officer have experience serving as directors or management of a U.S. publicly traded company. This could make it difficult to ensure that the Company complies with all applicable laws and stock exchange requirements, maintains adequate internal and disclosure controls and appropriately assesses and manages risk. This concern is exacerbated by the limited resources the Company has following recent reductions in force, and if there are further reductions in force or members of management leave the Company, it may be very difficult to manage this risk. The transitional state of the Company and ongoing exploration of strategic alternatives also exacerbates the challenging environment in this respect. If the board of directors does not successfully or efficiently manage their roles and responsibilities, including the significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of investors, our prospects may be adversely impacted. In addition, against this backdrop, it may be difficult to earn the confidence of prospective investors or strategic partners, threatening our ability to obtain much needed financing and hindering our exploration of strategic alternatives.

Previous report

Turnover of our board and senior management, and any inability to attract and retain qualified management and other key personnel, could impair our ability to implement our business plan.

Previous report

As we continue our exploration of strategic alternatives, and potentially pursue transactions involving new business lines or industries, we may experience additional turnover in our board and senior management. Departures of members of our senior management team and board members have created, and will create if they continue, significant continuity risks and challenges to our ability to operate our business, assess and manage risks and comply with applicable laws. If key members of our senior management team depart, it will be important that we attract and retain qualified managers promptly and develop and implement an effective succession plan. We expect to face significant competition in attracting experienced executives and other key personnel, and there can be no assurance that we will be able to do so. In addition, there are significant uncertainties as to how our transitional state of operations, financial condition and related matters will impact our ability to attract the necessary personnel and manage these succession risks. Our urgent need to raise capital and engage with potential partners in strategic transactions magnify these risks. If we are unable to adequately address these concerns in the near term, and earn the confidence of potential investors and/or business partners, our prospects and financial condition would be adversely impacted.

Previous report

Our consolidated financial statements have been prepared assuming that we will continue as a going concern.

Previous report

Our ability to continue as a going concern will require us to obtain additional funding. Based on our current operating plans and existing working capital at September 30, 2024, our current liquidity is not sufficient to continue to fund operations. As a result, there is substantial doubt about our ability to continue as a going concern. Substantial additional financing will be needed by us in the very near term to fund our operations and exploration of strategic alternatives. The perception of our ability to continue as a going concern may make it more difficult for us to obtain financing for the continuation of our operations and could result in the loss of confidence by investors and employees. Obtaining additional financing contains risks, including:

Previous report

•additional equity financing may not be available to us on satisfactory terms and any equity we are able to issue could lead to dilution for current stockholders;

Previous report

•loans or other debt instruments may have terms and/or conditions, such as interest rate, restrictive covenants and control or revocation provisions;

Previous report

•the current environment in capital markets combined with our capital constraints may prevent us from being able to obtain adequate debt financing; and

Previous report

•if we fail to obtain required additional financing to grow our business we may need to seek bankruptcy protection in the near term.

Previous report

We currently do not comply with the Nasdaq continued listing requirements and have received a delisting determination notice from the Nasdaq staff. Our common stock may be delisted from Nasdaq which could negatively impact the price of our common stock, liquidity and our ability to access the capital markets.

Previous report

Our common stock is currently listed on Nasdaq under the symbol “XCUR.” As previously disclosed, the Company has received numerous deficiency notices with respect to various Nasdaq listing requirements in the past year and recently received a delisting determination from the Nasdaq staff. These related to, or may in the future relate to:

Previous report

•Compliance with Nasdaq’s minimum bid price rule due to the Company’s stock trading below $1.00 for a sustained period of time. The Company effected a one-for-thirty reverse stock split on June 29, 2022 in order to attempt to raise the stock price. On September 13, 2023, the Company received a delinquency notification that the closing bid price of the Company’s stock traded below $1.00 for the previous 30 consecutive business days. The Company effected a one-for-five reverse stock split on August 27, 2024 in order to attempt to raise the stock price. On September 13, 2024, the Company received a letter received from Nasdaq noting it met the closing bid price requirement.

Previous report

•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, 2024. The Company is not in compliance with this requirement based on its September 30, 2024 balance sheet.

Previous report

•Compliance with Nasdaq’s corporate governance requirements with respect to board and committee composition. The Company has received numerous deficiency notifications with respect to these requirements in the past year. Although the Company believes it is currently in compliance, there can be no assurance it will remain in compliance.

Previous report

•Compliance with Nasdaq’s requirement to hold an annual meeting. On January 11, 2024, Nasdaq notified the Company that it did not comply with listing requirements by not holding an annual meeting in 2023. The Company held its combined 2023 and 2024 annual meeting on June 28, 2024

Previous report

•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, 2024.

Previous report

•Although the Company filed its Form 10-Q for the quarter ended September 30, 2023 prior to the extended deadline of May 20, 2024, on May 21, 2024, the Company received a delisting determination from the Nasdaq staff as a result of not filing its Annual Report Form 10-K by the May 20, 2024 deadline and failure to timely file its Form 10-Q for the quarter ended March 31, 2024 (which was subsequently filed on June 17, 2024). The staff’s delisting determination also noted the failure to hold its 2023 annual meeting as another basis of the delisting determination.

Previous report

•On May 28, 2024, the Company requested an appeal of the delisting determination to Nasdaq’s Hearings Panel (“Panel”), and the hearing took place on July 9, 2024. On July 31, 2024, the Company received formal notice that the Panel determined to continue the Company’s listing subject to the Company evidencing compliance with all applicable criteria for continued listing on The Nasdaq Capital Market by September 16, 2024. The Company received an additional extension to November 14, 2024 to satisfy the terms of the Panel’s decision and to ensure the Company’s continued listing on Nasdaq.

Previous report

•As the Company will not meet Nasdaq’s listing requirements as of September 30, 2024, the Company has requested another extension by the Panel to demonstrate compliance. We cannot provide assurance that the Panel will determine to continue the Company’s listing at the November 14, 2024 expiration of the current extension or that, if another extension is granted, that we will be able to meet the Panel’s requirements by the deadline.

Previous report

We may not be successful in our appeal or 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 is successful in our appeal, there can be no assurance that the Company will remain in compliance with Nasdaq’s requirements and will not be delisted.

Previous report

If Nasdaq suspends or delists our securities from trading on its exchange for failure to meet the listing standards, we and our stockholders could face significant negative consequences including:

Previous report

•limited availability of market quotations and liquidity for our securities;

Previous report

Suspension or delisting from Nasdaq could also result in other negative consequences, including the potential loss of institutional investor interest and make obtaining new financing much more challenging. In addition, fewer strategic opportunities may be available, particularly from counterparties that are interested in combining with a listed company.

Previous report

We have a history of losses. We expect to continue to incur significant losses for the foreseeable future and may never achieve or maintain profitability, which could result in a decline in the market value of our common stock.

Previous report

Between our inception in June 2011 and the Company’s decision to engage in a broader exploration of strategic alternatives, we devoted our resources to the development of SNA technology, and are currently exploring out-licensing opportunities and strategic alternatives to maximize stockholder value. We have had significant operating losses since our inception. As of September 30, 2024, we have generated an accumulated deficit of $210.9 million, including $18,837 of additional paid-in capital reclassed to accumulated deficit upon C-corporation conversion. For the nine months ended September 30, 2024 and 2023, our net loss was $2.5 million and $15.4 million, respectively. Substantially all of our losses have resulted from expenses incurred in connection with our research programs and from general and administrative costs associated with our operations.