Cardiff Oncology, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS CARDIFF ONCOLOGY, INC. CONDENSED BALANCE SHEETS (in thousands, except par value) (Unaudited) June 30, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 20,965 $ 11,943 Short-term investments 101,041 128,878 Accounts receivable and unbilled receivable 551 535 Prepaid expenses and other current assets 4,857 4,771 Total current assets 127,414 146,127 Property and equipment, net 1,138 382 Operating lease right-of-use assets 2,524 2,796 Other assets 185 239 Total Assets $ 131,261 $ 149,544 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 1,522 $ 1,439 Accrued liabilities 6,279 4,527 Operating lease liabilities 670 551 Other current liabilities 10 42 Total current liabilities 8,481 6,559 Operating lease liabilities, net of current portion 2,306 2,568 Total Liabilities 10,787 9,127 Commitments and contingencies (Note 7) Stockholders’ equity Preferred stock, 20,000 shares authorized; (Note 6) — 1 Common stock, $ 0.0001 par value, 150,000 shares authorized; 43,306 and 41,964 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively 4 4 Additional paid-in capital 402,710 400,503 Service receivables — ( 139 ) Accumulated other comprehensive loss ( 982 ) ( 142 ) Accumulated deficit ( 281,258 ) ( 259,810 ) Total stockholders’ equity 120,474 140,417 Total liabilities and stockholders’ equity $ 131,261 $ 149,544 See accompanying notes to the unaudited condensed financial statements. 3 Table of Contents CARDIFF ONCOLOGY, INC. CONDENSED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Royalty revenues $ 91 $ 68 $ 165 $ 140 Costs and expenses: Research and development 7,448 4,119 14,656 7,398 Selling, general and administrative 3,086 2,838 7,026 5,073 Total operating expenses 10,534 6,957 21,682 12,471 Loss from operations ( 10,443 ) ( 6,889 ) ( 21,517 ) ( 12,331 ) Other income (expense), net: Interest income, net 253 71 383 115 Gain (loss) from change in fair value of derivative financial instruments—warrants — 61 — 268 Other income (expense), net ( 253 ) — ( 302 ) 12 Total other income (expense), net — 132 81 395 Net loss ( 10,443 ) ( 6,757 ) ( 21,436 ) ( 11,936 ) Preferred stock dividend payable on Series A Convertible Preferred Stock ( 6 ) ( 6 ) ( 12 ) ( 12 ) Net loss attributable to common stockholders $ ( 10,449 ) $ ( 6,763 ) $ ( 21,448 ) $ ( 11,948 ) Net loss per common share — basic and diluted $ ( 0.24 ) $ ( 0.17 ) $ ( 0.50 ) $ ( 0.31 ) Weighted-average shares outstanding — basic and diluted 43,306 38,761 43,269 37,967 See accompanying notes to the unaudited condensed financial statements. 4 Table of Contents CARDIFF ONCOLOGY, INC. CONDENSED STATEMENTS OF COMPREHENSIVE LOSS (in thousands) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Net loss $ ( 10,443 ) $ ( 6,757 ) $ ( 21,436 ) $ ( 11,936 ) Other comprehensive loss: Unrealized gain (loss) on securities available-for-sale ( 234 ) 57 ( 840 ) ( 10 ) Total comprehensive loss ( 10,677 ) ( 6,700 ) ( 22,276 ) ( 11,946 ) Preferred stock dividend payable on Series A Convertible Preferred Stock ( 6 ) ( 6 ) ( 12 ) ( 12 ) Comprehensive loss attributable to common stockholders $ ( 10,683 ) $ ( 6,706 ) $ ( 22,288 ) $ ( 11,958 ) See accompanying notes to the unaudited condensed financial statements. 5 Table of Contents CARDIFF ONCOLOGY, INC. CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) (Unaudited) Preferred Stock Shares Preferred Stock Amount Common Stock Shares Common Stock Amount Additional Paid-In Capital Service Receivable Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity Balance, January 1, 2022 716 $ 1 41,964 $ 4 $ 400,503 $ ( 139 ) $ ( 142 ) $ ( 259,810 ) $ 140,417 Stock-based compensation — — — — 1,152 — — — 1,152 Other comprehensive loss — — — — — — ( 606 ) — ( 606 ) Issuance of common stock upon conversion of Series E Convertible Preferred Stock ( 328 ) ( 1 ) 1,342 — — — — — ( 1 ) Preferred stock dividend — — — — — — — ( 6 ) ( 6 ) Release of clinical trial funding commitment — — — — — 139 — — 139 Net loss — — — — — — — ( 10,993 ) ( 10,993 ) Balance, March 31, 2022 388 — 43,306 4 401,655 — ( 748 ) ( 270,809 ) 130,102 Stock-based compensation — — — — 1,055 — — — 1,055 Other comprehensive loss — — — — — — ( 234 ) — ( 234 ) Preferred stock dividend — — — — — — — ( 6 ) ( 6 ) Net loss — — — — — — — ( 10,443 ) ( 10,443 ) Balance, June 30, 2022 388 $ — 43,306 $ 4 $ 402,710 $ — $ ( 982 ) $ ( 281,258 ) $ 120,474 6 Table of Contents CARDIFF ONCOLOGY, INC. CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) (Unaudited) Preferred Stock Shares Preferred Stock Amount Common Stock Shares Common Stock Amount Additional Paid-In Capital Service Receivable Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity Balance, January 1, 2021 716 $ 1 36,781 $ 4 $ 361,819 $ ( 2,171 ) $ — $ ( 231,495 ) $ 128,158 Stock-based compensation — — — — 268 — — — 268 Issuance of common stock upon exercise of warrants — — 771 — 1,263 — — — 1,263 Other comprehensive loss — — — — — — ( 67 ) — ( 67 ) Preferred stock dividend — — — — — — — ( 6 ) ( 6 ) Release of clinical trial funding commitment — — — — — 380 — — 380 Net loss — — — — — — — ( 5,179 ) ( 5,179 ) Balance, March 31, 2021 716 1 37,552 4 363,350 ( 1,791 ) ( 67 ) ( 236,680 ) 124,817 Stock-based compensation — — — — 1,036 — — — 1,036 Sale of common stock, net of expenses (1) — — 2,000 — 19,225 — — — 19,225 Other comprehensive gain — — — — — — 57 — 57 Preferred stock dividend — — — — — — — ( 6 ) ( 6 ) Release of clinical trial funding commitment — — — — — 546 — — 546 Net loss — — — — — — — ( 6,757 ) ( 6,757 ) Balance, June 30, 2021 716 $ 1 39,552 $ 4 $ 383,611 $ ( 1,245 ) $ ( 10 ) $ ( 243,443 ) $ 138,918 (1) Net of expenses of $ 0.8 million. See accompanying notes to the unaudited condensed financial statements. 7 Table of Contents CARDIFF ONCOLOGY, INC. CONDENSED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) Six Months Ended June 30, 2022 2021 Operating activities Net loss $ ( 21,436 ) $ ( 11,936 ) Adjustments to reconcile net loss to net cash used in operating activities: Loss on disposal of assets — 1 Depreciation 69 228 Stock-based compensation expense 2,207 1,304 Amortization of premiums on short-term investments 557 698 Change in fair value of derivative financial instruments—warrants — ( 268 ) Release of clinical trial funding commitment 139 926 Changes in operating assets and liabilities: Other assets 54 141 Accounts receivable and unbilled receivable ( 16 ) 12 Prepaid expenses and other assets 18 68 Operating lease right-of-use assets 272 165 Accounts payable and accrued expenses 1,367 ( 1,121 ) Operating lease liabilities ( 143 ) ( 461 ) Other liabilities ( 32 ) 58 Net cash used in operating activities ( 16,944 ) ( 10,185 ) Investing activities: Capital expenditures ( 483 ) — Insurance proceeds from casualty loss 71 — Maturities of short-term investments 48,801 5,510 Purchases of short-term investments ( 57,309 ) ( 141,948 ) Sales of short-term investments 34,886 5,735 Net cash provided by (used in) investing activities 25,966 ( 130,703 ) Financing activities: Proceeds from sales of common stock, net of expenses of $0 and $ 776 , respectively — 19,225 Proceeds from exercise of warrants — 1,263 Net cash provided by financing activities — 20,488 Net change in cash and cash equivalents 9,022 ( 120,400 ) Cash and cash equivalents—Beginning of period 11,943 130,981 Cash and cash equivalents—End of period $ 20,965 $ 10,581 Supplementary disclosure of cash flow activity: Cash paid for taxes $ 1 $ 1 Supplemental disclosure of non-cash investing and financing activities: Acquisition of property and equipment included in accounts payable and accrued expenses $ 456 $ 27 Acquisition of property and equipment included in insurance proceeds receivable $ 43 $ — Preferred stock dividend payable on Series A Convertible Preferred Stock $ 12 $ 12 8 Table of Contents See accompanying notes to the unaudited condensed financial statements. 9 Table of Contents CARDIFF ONCOLOGY, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) 1. Organization and Basis of Presentation Business Organization and Overview Cardiff Oncology, Inc. (“Cardiff Oncology” or the “Company”) headquartered in San Diego, California, is a clinical-stage biotechnology company leveraging Polo-like Kinase 1 (“PLK1”) inhibition to develop novel therapies across a range of cancers with the greatest unmet medical need, including KRAS-mutated metastatic colorectal cancer, metastatic pancreatic cancer and metastatic castration-resistant prostate cancer. The Company's common stock is listed on the Nasdaq Capital Market under the ticker symbol "CRDF". Basis of Presentation The accompanying unaudited interim condensed financial statements of Cardiff Oncology have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) related to a quarterly report on Form 10-Q. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations. The unaudited interim condensed financial statements reflect all adjustments consisting of normal recurring adjustments which, in the opinion of management, are necessary for a fair statement of the Company’s financial position and the results of its operations and cash flows for the periods presented. The unaudited condensed balance sheet at December 31, 2021, has been derived from the audited financial statements at that date but does not include all of the information and disclosures required by GAAP for annual financial statements. The operating results presented in these unaudited interim condensed financial statements are not necessarily indicative of the results that may be expected for any future periods. These unaudited interim condensed financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2021, included in the Company’s annual report on Form 10-K filed with the SEC on February 24, 2022. Liquidity The Company has incurred net losses since its inception and has negative operating cash flows. As of June 30, 2022, the Company had $ 122.0 million in cash, cash equivalents and short-term investments and believes it has sufficient cash to meet its funding requirements for at least the next 12 months following the issuance date of these financial statements. For the foreseeable future, the Company expects to continue to incur losses and require additional capital to further advance its clinical trial programs and support its other operations. The Company cannot be certain that additional funding will be available on acceptable terms, or at all. To the extent that the Company can raise additional funds by issuing equity securities, the Company’s stockholders may experience additional dilution. 2. Summary of Significant Accounting Policies During the six months ended June 30, 2022, there have been no changes to the Company’s significant accounting policies as described in its Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Net Loss Per Share Basic and diluted net loss per common share is determined by dividing net loss applicable to common stockholders by the weighted-average common shares outstanding during the period. Preferred dividends are included in net loss attributable to common stockholders in the computation of basic and diluted earnings per share. 10 Table of Contents The following table sets forth the outstanding potentially dilutive securities that have been excluded in the calculation of diluted net loss per share because their effect was anti-dilutive: June 30, 2022 2021 Options to purchase Common Stock 5,131,195 2,966,843 Warrants to purchase Common Stock 4,490,159 4,490,159 Series A Convertible Preferred Stock 877 877 Series E Convertible Preferred Stock 1,342,250 2,684,607 10,964,481 10,142,486 Recently Adopted Accounting Pronouncement In May 2021, the FASB issued ASU No. 2021-04 ("ASU 2021-04"), Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force). The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company has prospectively adopted this standard as of January 1, 2022 for periods presented after the adoption. The adoption of ASU 2021-04 did not have a material impact on the Company's financial statements. Recent Accounting Pronouncement Not Yet Adopted In August 2020, the FASB issued ASU No. 2020-06 ("ASU 2020-06"), Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). ASU 2020-06 eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, ASU 2020-06 modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2021 (or December 15, 2023, for companies who meet the SEC definition of Smaller Reporting Companies), and interim periods within those fiscal years. The amendment is to be adopted through either a fully retrospective or modified retrospective method of transition. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its financial statements and related disclosures. 11 Table of Contents 3. Fair Value Measurements The following table presents the Company’s assets and liabilities that are measured and recognized at fair value on a recurring basis classified under the appropriate level of the fair value hierarchy as of June 30, 2022 and December 31, 2021: Fair Value Measurements at June 30, 2022 (in thousands) Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Assets: Money market fund $ 20,089 $ — $ — $ 20,089 Total included in cash and cash equivalents 20,089 — — 20,089 Available for sale investments: Certificate of deposit — 12,860 — 12,860 Corporate debt securities — 63,386 — 63,386 Commercial paper — 10,135 — 10,135 U.S. treasury securities 14,660 — — 14,660 Total available for sale investments (1) 14,660 86,381 — 101,041 Total assets measured at fair value on a recurring basis $ 34,749 $ 86,381 $ — $ 121,130 Fair Value Measurements at December 31, 2021 (in thousands) Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Assets: Money market fund $ 10,990 $ — $ — $ 10,990 Total included in cash and cash equivalents 10,990 $ — — 10,990 Available for sale investments: Certificate of deposit — 1,260 — 1,260 Corporate debt securities — 88,390 — 88,390 Commercial paper — 14,454 — 14,454 Non U.S. government — 728 — 728 U.S. treasury securities 24,046 — — 24,046 Total available for sale investments (1) 24,046 104,832 — 128,878 Total assets measured at fair value on a recurring basis $ 35,036 $ 104,832 $ — $ 139,868 (1) Included in short-term investments in the accompanying balance sheets. The Company’s policy is to recognize transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. There were no transfers into or out of Level 3 during the six months ended June 30, 2022 . 12 Table of Contents 4. Supplementary Balance Sheet Information Investments available for sale Investments available for sale consist of the following: As of June 30, 2022 (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Market Value Maturity less than 1 year: Certificate of deposit $ 12,922 $ 1 $ ( 63 ) $ 12,860 Corporate debt securities 59,453 — ( 626 ) 58,827 Commercial paper 10,228 — ( 93 ) 10,135 U.S. treasury securities 13,034 — ( 133 ) 12,901 Total maturity less than 1 year 95,637 1 ( 915 ) 94,723 Maturity 1 to 2 years: Corporate debt securities 4,616 — ( 57 ) 4,559 U.S. treasury securities 1,770 — ( 11 ) 1,759 Total maturity 1 to 2 years 6,386 — ( 68 ) 6,318 Total short-term investments $ 102,023 $ 1 $ ( 983 ) $ 101,041 As of December 31, 2021 (in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Market Value Maturity less than 1 year: Certificate of deposit $ 1,260 $ — $ — $ 1,260 Corporate debt securities 58,822 2 ( 38 ) 58,786 Commercial paper 14,453 4 ( 3 ) 14,454 Non U.S. government 728 — — 728 U.S. treasury securities 20,380 — ( 24 ) 20,356 Total maturity less than 1 year 95,643 6 ( 65 ) 95,584 Maturity 1 to 2 years: Corporate debt securities 29,676 1 ( 73 ) 29,604 U.S. treasury securities 3,701 — ( 11 ) 3,690 Total maturity 1 to 2 years 33,377 1 ( 84 ) 33,294 Total short-term investments $ 129,020 $ 7 $ ( 149 ) $ 128,878 Unrealized losses in investments available for sale debt securities at June 30, 2022, were primarily due to increases in interest rates, not due to increased credit risks associated with specific securities. We do not intend to sell these investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity. 13 Table of Contents Property and equipment Property and equipment consist of the following: (in thousands) As of June 30, 2022 As of December 31, 2021 Furniture and office equipment $ 1,212 $ 955 Leasehold improvements 2,445 1,962 Laboratory equipment 956 906 4,613 3,823 Less—accumulated depreciation and amortization ( 3,475 ) ( 3,441 ) Property and equipment, net $ 1,138 $ 382 Accrued Liabilities Accrued liabilities consisted of the following: (in thousands) As of June 30, 2022 As of December 31, 2021 Accrued compensation $ 1,304 $ 1,435 Preferred stock dividend 426 414 Clinical trials 1,780 1,639 Research agreements and services 1,697 726 Director fees 122 141 Professional fees and outside services 28 63 Patent, license and other fees 40 43 Other accrued liabilities 882 66 Total accrued liabilities $ 6,279 $ 4,527 5. Leases As a lessee, the Company’s current leases include its master facility lease and immaterial equipment leases, all of which are considered operating leases. Master Facility Lease The Company currently leases 12,300 square feet of office and lab space in San Diego that expires on February 28, 2027. The lease currently requires monthly payments of approximately $ 60,000 per month with 3 % annual escalation. Facility Subleases As a result of corporate restructurings in previous years, the Company vacated a portion of its facility and subleased the space to third parties under three separate sublease agreements, which all expired on December 31, 2021. Prior to the expiration of the sublease agreements, the Company as a sublessor was leasing approximately 16,600 square feet of space to third parties. The components of lease expense were as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 Operating lease cost $ 190 $ 92 $ 381 $ 187 Operating sublease income — ( 101 ) — ( 202 ) Net operating lease cost $ 190 $ ( 9 ) $ 381 $ ( 15 ) 14 Table of Contents Supplemental balance sheet information related to leases was as follows: (in thousands) As of June 30, 2022 As of December 31, 2021 Operating lease ROU assets $ 2,524 $ 2,796 Current operating lease liabilities $ 670 $ 551 Non-current operating lease liabilities 2,306 2,568 Total operating lease liabilities $ 2,976 $ 3,119 Weighted-average remaining lease term–operating leases 4.7 years 5.2 years Weighted-average discount rate–operating leases 7.0 % 7.0 % Supplemental cash flow and other information related to leases was as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 180 $ 243 $ 251 $ 483 Total remaining annual commitments under non-cancelable lease agreements for each of the years ended December 31 are as follows: (in thousands) Year Ending December 31, Operating Leases 2022 (excluding the six months ended June 30, 2022) $ 300 2023 737 2024 754 2025 775 2026 796 Thereafter 137 Total future minimum lease payments 3,499 Less imputed interest ( 523 ) Total $ 2,976 6. Stockholders’ Equity Stock Options Stock-based compensation expense related to Cardiff Oncology equity awards have been recognized in operating results as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 Included in research and development expense $ 126 $ 72 $ 460 $ 112 Included in selling, general and administrative expense 929 964 1,747 1,192 Total stock-based compensation expense $ 1,055 $ 1,036 $ 2,207 $ 1,304 The unrecognized compensation cost related to non-vested stock options outstanding at June 30, 2022, net of estimated forfeitures, was $ 10.8 million, which is expected to be recognized over a weighted-average remaining vesting period of 3.0 years. The weighted-average remaining contractual term of outstanding options as of June 30, 2022, was approximately 7.9 15 Table of Contents years. The total fair value of stock options vested during the six months ended June 30, 2022 and 2021, were $ 3.0 million and $ 1.2 million, respectively. The estimated fair value of stock option awards was determined on the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions during the following periods indicated: Six Months Ended June 30, 2022 2021 Risk-free interest rate 1.87 % 0.94 % Dividend yield 0 % 0 % Expected volatility of Cardiff Oncology common stock 106 % 108 % Expected term 6.0 years 6.0 years A summary of stock option activity and changes in stock options outstanding is presented below: Total Options Weighted-Average Exercise Price Per Share Intrinsic Value Balance outstanding, December 31, 2021 3,771,984 $ 7.13 $ 6,405,258 Granted 1,731,136 $ 3.15 Canceled / Forfeited ( 371,125 ) $ 4.77 Expired ( 800 ) $ 165.84 Balance outstanding, June 30, 2022 5,131,195 $ 5.93 $ 80,809 Exercisable at June 30, 2022 2,030,219 $ 7.49 $ 34,443 Vested and expected to vest at June 30, 2022 5,042,299 $ 5.95 $ 77,880 2021 Equity Incentive Plan In June 2021 the Company's stockholders approved the 2021 Omnibus Equity Incentive Plan ("2021 Plan"). The number of authorized shares in the 2021 Plan is equal to the sum of (i) 3,150,000 shares, plus (ii) the number of shares of Common Stock reserved, but unissued under the 2014 Plan; and (iii) the number of shares of Common Stock underlying forfeited awards under the 2014 Plan. On June 9, 2022 the shareholders approved an increase of shares authorized in the 2021 Plan to 5,150,000 from 3,150,000 . As of June 30, 2022, there were 3,055,281 shares available for issuance under the 2021 Plan. 2014 Equity Incentive Plan Subsequent to the adoption of the 2021 Plan, no additional equity awards can be made under the terms of the 2014 Plan. Inducement Grants In July 2021, the Company began issuing equity awards to certain new employees as inducement grants outside of its 2021 Plan. As of June 30, 2022, an aggregate of 920,208 shares were issuable upon the exercise of inducement grant stock options approved by the Company. Modification of Stock Options In June 2022 one of the Company's directors did not seek another term on the Board of Directors. At the time of departure, the Compensation Committee passed a resolution to extend the expiration date of the vested stock options, and to immediately accelerate the vesting of the unvested options. The Company recorded incremental reduction to stock compensation expense of $ 0.1 million during the three months ended June 30, 2022, related to the modifications. 16 Table of Contents Warrants A summary of warrant activity and changes in warrants outstanding, including both liability and equity classifications is presented below: Total Warrants Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Term Balance outstanding, December 31, 2021 4,490,159 $ 5.80 3.0 years Balance outstanding, June 30, 2022 4,490,159 $ 5.80 2.5 years Preferred Stock A summary of our Company's classes of preferred stock is presented below: Shares outstanding Class Par value Shares designated Liquidation preference As of June 30, 2022 As of December 31, 2021 Series A Convertible Preferred Stock $ 0.001 277,100 $ 606,000 60,600 60,600 Series B Convertible Preferred Stock $ 0.001 8,860 None — — Series C Convertible Preferred Stock $ 0.001 200,000 None — — Series D Convertible Preferred Stock $ 0.0001 154,670 None — — Series E Convertible Preferred Stock $ 0.001 865,824 None 327,509 655,044 7. Commitments and Contingencies Executive Agreements Certain executive agreements provide for severance payments in case of terminations without cause or certain change of control scenarios. Research and Development Agreements In March 2017, the Company entered into a license agreement with Nerviano which granted the Company development and commercialization rights to NMS-1286937, which Cardiff Oncology refers to as onvansertib. Onvansertib, an investigational drug, is an oral, and a highly selective adenosine triphosphate competitive inhibitor of the serine/threonine PLK1. The Company is developing onvansertib in cancer indications with the greatest medical need for new treatment options. Terms of the agreement provide for the Company to pay development milestones and royalties based on sales volume. The Company is a party to various agreements under which it licenses technology on an exclusive basis in the field of oncology therapeutics. These agreements include License fees, Royalties and Milestone payments. The Company also has a legacy license agreement in the field of oncology diagnostics under which royalty payments are due. These royalty payments are calculated as a percent of revenue. For the six months ended June 30, 2022 and 2021, payments have not been material. Litigation Cardiff Oncology does not believe that it has legal liabilities that are probable or reasonably possible that require either accrual or disclosure. From time to time, the Company may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in matters may arise from time to time that may harm the Company’s business. As of the date of this report, management believes that there are no claims against the Company, which it believes will result in a material adverse effect on the Company’s business or financial condition. 17 Table of Contents