Eloxx Pharmaceuticals, Inc. 10-Q

Item 1. Legal Proceedings From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business, which may include, without limitation, actions related to or based on our intellectual property and its use, customer claims, employment practices and employee complaints and other events arising out of our operations. We are currently unaware of any material pending legal proceedings to which we are party or of which our property is the subject. However, we may at times in the future become involved in litigation in the ordinary course of business. When appropriate in management’s estimation, we will record adequate reserves in our financial statements for pending litigation. Litigation is subject to inherent uncertainties, and an adverse result in any such matters could adversely impact our reputation, operations, and our financial operating results or overall financial condition. Additionally, any litigation to which we may become subject could also require significant involvement of our senior management and may divert management’s attention from our business and operations. I tem 1A. Risk Factors As a smaller reporting company, we are not required to provide the information required by this item. Please see the “Risk Factors” section in Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2025. I tem 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities. In April 2026, we amended certain pre-funded warrants held by Coastlands and Domicilium to increase the beneficial ownership limitation to 19.99% and permit shares issued upon exercise to be converted back into pre-funded warrants at the holder’s election. Following the amendments, Coastlands and Domicilium exercised a portion of their pre-funded warrants for 113,636 shares each, for a total of 227,272 shares of our common stock, at an exercise price of $0.11 per share, for proceeds of less than $0.1 million. In May 2026, Coastlands and Domicilium each converted the 113,636 shares of common stock into pre-funded warrants pursuant to the terms of the pre-funded warrant for a total aggregate amount of 227,272 shares of common stock converted into pre-funded warrants, with no proceeds being exchanged.. In June 2026, in connection with the Company’s uplisting and public offering, we amended certain pre-funded warrants held by Domicilium to increase the beneficial ownership limitation to 19.99% and permit shares issued upon exercise to be converted back into pre-funded warrants at the holder’s election. The amendments facilitated the issuance of additional shares of common stock in the offering to satisfy Nasdaq listing requirements. Following the amendments, Domicilium exercised a portion of their pre-funded warrants for 600,000 shares common stock, at an exercise price of $0.11 per share, for proceeds of approximately $0.1 million. We accounted for the amendments under ASC 815, “Derivatives and Hedging” as a modification of a freestanding equity-classified written call option that remained equity-classified after the modification. As the modification was directly attributable to the uplisting and public offering, we measured the incremental fair value using a Black-Scholes valuation model and determined the impact of the modification to be immaterial to the consolidated financial statements. In June 2026, we issued options to purchase up to 169,300 shares of common stock to certain of our employees and non-employee directors with an exercise price of $11.00 per share. All of these unregistered securities were issued pursuant to Section 4(a)(2) under the Securities Act, relative to transactions by an issuer not involving any public offering, to the extent an exemption from such registration was required. Item 3. Defaults Upon Senior Securities. None. Item 4. Mine Safety Disclosures. Not applicable.