Ernexa Therapeutics Inc. 10-K

ITEM 9A. Controls and Procedures Disclosure Controls and Procedures We maintain “disclosure controls and procedures,” as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act, designed to ensure that information required to be disclosed in our reports filed pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, we recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and we were required to apply our judgment in evaluating the cost-benefit relationship of possible controls and procedures. We have carried out an evaluation as of the end of the period covered by this Annual Report on Form 10-K under the supervision, and with the participation, of our management, including our President and Chief Executive Officer (who serves as our principal executive officer) and our Senior Vice President of Finance (who serves as our principal financial officer) of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Senior Vice President of Finance concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Annual Report on Form 10-K in providing reasonable assurance of achieving the desired control objectives. Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. As of December 31, 2025, our management assessed the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control Integrated Framework (2013) (the “2013 Framework”). In adopting the 2013 Framework, management assessed the applicability of the principles within each component of internal control and determined whether they have been adequately addressed within the current system of internal control and adequately documented. Based on this assessment, management, under the supervision and with the participation of our Chief Executive Officer and Senior Vice President of Finance, concluded that, as of December 31, 2025, our internal control over financial reporting was effective based on these criteria. Changes in Internal Control over Financial Reporting There was no change in our internal control over financial reporting during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. Other Information During the quarter ended December 31, 2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K. On March 10, 2026, the Compensation Committee approved increases to the compensation of our President and Chief Executive Officer, Sanjeev Luther, and our Senior Vice President of Finance, Sandra Gurrola, effective April 1, 2026. Mr. Luther’s annual base salary increased from $550,000 to $670,000. Ms. Gurrola’s annual base salary increased from $275,000 to $300,000. Additionally, the Committee approved a bonus payment for Ms. Gurrola in the amount of $68,000 and a bonus in the amount of $319,000 for Mr. Luther. There were no other changes to any other component of Mr. Luther’s or Ms. Gurrola’s executive compensation under our compensation plans and programs as previously disclosed. ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not Applicable. 43 PART III ITEM 10. Directors, Executive Officers and Corporate Governance Directors and Executive Officers The names of our directors and executive officers and their respective ages, positions, biographies and, in the case of directors, their qualifications to serve as directors, are set forth below as of March 12, 2026. Name Age Position Sanjeev Luther 64 President and Chief Executive Officer and Director Sandra Gurrola 59 Senior Vice President, Finance James Bristol 79 Chairman of the Board Peter Cicala 64 Director Elena Ratner 49 Director William Wexler 66 Director Sanjeev Luther has served as President, Chief Executive Officer and as a member of our board of directors since January 2024. Prior to that, Mr. Luther served as President, Chief Executive Officer and a board member of Cornerstone Pharmaceuticals from November 2017 to December 2023 and as its Chief Operations Officer and Chief Business Officer from December 2014 to November 2017. Prior to that, Mr. Luther served in various leadership roles at Bristol-Myers Squibb, Novartis, Bausch and Lomb and GE Healthcare. Mr. Luther holds an MBA in Marketing and a B.S. in Marketing and Business Administration from the State University of New York at Buffalo. Mr. Luther’s qualifications to serve on our board of directors include his expertise in the healthcare industry, his business training and education, and his extensive experience managing life science companies. Sandra Gurrola has served as our Senior Vice President of Finance since May 2023 and served as our Vice President of Finance from June 2021 until May 2023. Prior to that, she served as the Senior Vice President of eGames.com Holdings, LLC from March 2021 to June 2021 and as a consultant to us. Ms. Gurrola served as Senior Vice President of Finance to NTN Buzztime, Inc. from September 2019 to March 2021 and its Vice President of Finance from 2014 until 2019. From 2009 to 2014, Ms. Gurrola served NTN Buzztime, Inc. in various leadership accounting roles, including Controller, Director of Accounting, and Director of Financial Reporting and Compliance. Previously, she was a senior manager of financial reporting for Metabasis Therapeutics, Inc., a biotechnology company. Ms. Gurrola received a B.A. in English from San Diego State University. James Bristol has served as a member of our board of directors since October 2023. Dr. Bristol worked for 40 years in drug discovery, research and preclinical development at Schering - Plough Corporation, Parke - Davis, and Pfizer Inc. (“Pfizer”), serving in various senior research and development roles. From 2003 until his retirement in 2007, Dr. Bristol served as Senior Vice President of Worldwide Drug Discovery Research at Pfizer Global Research & Development, where he oversaw 3,000 scientists at seven Pfizer sites as they produced an industry-leading number of drug development candidates in 11 therapeutic areas. In 2009, Dr. Bristol joined Frazier Life Sciences as a Senior Advisor. From August 2007 until December 2024, Dr. Bristol has served as a member of the board of directors of Deciphera Pharmaceuticals, and since 2018 he has served as a member of the board of directors of Erasca, Inc., both of which are publicly traded life science companies. He is currently a member of the board of directors of Genuiti. Dr. Bristol also served on the board of directors of Ignyta from 2014 until its acquisition by Roche in 2018, and served on the board of directors of SUDO Biosciences, Inc. from June 2021 until December 2023, and of Cadent Therapeutics, Inc. from 2011 until 2020. Dr. Bristol is the author of over 100 publications, abstracts and patents, and he conducted postdoctoral research at the University of Michigan (NIH Postdoctoral Fellow) and at The Squibb Institute for Medical Research. Dr. Bristol holds a Ph.D. in organic chemistry from the University of New Hampshire and a B.S. in Chemistry from Bates College. Dr. Bristol’s qualifications to serve on our board of directors include his vast experience in the biopharmaceutical industry, including in management and as a director, as well as his expertise in drug discovery and development. 44 Peter Cicala has served as a member of our board of directors since February 2024. Mr. Cicala currently serves as General Counsel for a private biotechnology company, where he has been since March of 2021. In November of 2019, he co-founded Pretzel Therapeutics, Inc., a biotechnology company, and still serves as an executive advisor. From March 2020 until March 2021, Mr. Cicala served as Chief Intellectual Property Counsel for Intercept Pharmaceuticals, Inc. and from March 2014 until November 2019, he served as Chief Patent Counsel for Celgene Corporation, both publicly traded biopharmaceutical companies. Mr. Cicala has practiced law for over 25 years, and also has over 10 years of experience as a medicinal chemist. He received his B.S. in chemistry from Fairleigh Dickinson University and a J.D. from Seton Hall University School of Law. Mr. Cicala’s qualifications to serve on our board of directors include his expertise in pharmaceutical and biotechnology intellectual property law and in strategic management of proprietary technology and products. Elena Ratner has served as a member of our board of directors since January 2025. Since July 2019, Dr. Ratner has been serving as a professor in the Department of Obstetrics, Gynecology and Reproductive Sciences at Yale University School of Medicine and also serves as the director of the Discovery to Cure Early Ovarian Detection program. Dr. Ratner’s clinical research has focused on new targeted drugs for ovarian cancer and on reversing chemotherapy resistance in ovarian and uterine cancers. She received her B.S. in premedical studies from Barnard College at Columbia University, her MBA at Yale University and her M.D. from the University of Buffalo. Dr. Ratner’s qualifications to serve on our board of directors include her vast expertise in obstetrics, gynecology and reproductive sciences, and specifically in ovarian cancer research and treatment. William Wexler has served as a member of our board of directors since June 2022. Prior to joining our board of directors, Mr. Wexler worked on over 150 individual projects, serving in various capacities including as Chairman, Chief Executive Officer, Chief Restructuring Officer and other designated roles of senior responsibility. Mr. Wexler has served as the Managing Member of WEXLER Consulting LLC, a management consulting firm, since 2012. From 2012 to 2019, he served in various roles, including as Chairman of the Board, interim Chief Executive Officer, Chief Executive Officer and sole director and stockholder representative of Upstate New York Power Products, Inc., a holding company that owned and operated power plants throughout upstate New York. From 2012 to 2013, Mr. Wexler served as Chief Restructuring Officer of VMR Electronics, LLC, a manufacturer of cable assembly products for the electronics interconnect industry. Prior to that, he served as a Managing Director and national finance practice lead at BBK, Ltd., a turn-around advisory firm, from 2006 to 2011. Mr. Wexler served as group Managing Director of corporate restructuring at Huron Consulting Group, LLC from 2002 to 2005. Previously, he was a Managing Director at Berenson Minella & Co., a boutique investment-banking firm, from 2000 to 2002. Between 1986 and 2000 he served as a Senior Director at BNP Paribas, where he established and led Paribas Properties, Inc., a real estate investment arm of the bank, and also where he was a lead officer of the then newly created U.S. asset workout group. Mr. Wexler started his professional career in 1981 in commercial lease brokerage, asset management and investment sales at Jones Lang Wootton (now Jones Lang LaSalle) where he worked until 1986. He earned a B.A. in Political Science from Johns Hopkins University. Mr. Wexler’s qualifications to serve on our board of directors include his experience in investment and senior management roles, as well as his business training and education. Family Relationships There are no family relationships between any of our officers or directors. Involvement in Certain Legal Proceedings None of our directors or executive officers is involved in any legal proceeding that requires disclosure under Item 401(f) of Regulation S-K. Code of Ethics Our board of directors has adopted a Code of Business Conduct and Ethics that applies to all of our employees, officers and directors, including our Chief Executive Officer, Chief Financial Officer and other executive and senior financial officers. A copy of our Code of Business Conduct and Ethics is available under the “Governance” tab of the “Investor Relations” section of our website located at www.ernexatx.com. We intend to disclose any changes in our Code of Business Conduct and Ethics or waivers from it that apply to our principal executive officer, principal financial officer, or principal accounting officer by posting such information on the same website or by filing with the SEC a Current Report on Form 8-K, in each case if such disclosure is required by SEC or Nasdaq rules. The information on our website is not intended to form a part of or be incorporated by reference into this Proxy Statement. 45 Audit Committee We have a standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. Our audit committee consists of William Wexler (Chair), James Bristol and Peter Cicala, all of whom meet the requirements for independence of audit committee members under applicable Nasdaq and SEC rules, including Rule 10A-3 promulgated under the Exchange Act. All of the members of our audit committee meet the requirements for financial literacy under the applicable rules and regulations of the SEC and Nasdaq. In addition, Mr. Wexler qualifies as our “audit committee financial expert,” as such term is defined in Item 407 of Regulation S-K. Changes in Stockholder Nomination Procedures There have been no material changes to the procedures by which stockholders may recommend nominees to our board of directors since such procedures were last described in our proxy statement filed with the SEC on April 14, 2025. Insider Trading Policy We have adopted an insider trading policy governing the purchase, sale, and other dispositions of our securities by directors, senior management, and employees. A copy of the Insider Trading Policy has been filed as exhibit 19 to this report. ITEM 11. Executive Compensation Overview When determining executive officer compensation, and the various components that comprise it, our compensation committee evaluates and considers publicly available executive officer compensation survey data to present a competitive compensation package to attract and retain top talent, including an appropriate level of salary, performance-based bonus and equity incentives. Typically, our compensation committee evaluates competitive market benchmark data for a given executive role. Additionally, our compensation committee is authorized to engage outside advisors and experts to assist and advise our compensation committee on matters relating to executive compensation. In 2023, our compensation committee retained the services of Pearl Meyer, an independent compensation consultant, to review the cash and equity compensation package that was offered to Mr. Luther prior to his appointment as our President and Chief Executive Officer. Our President and Chief Executive Officer presents compensation recommendations to our compensation committee with respect to the executive officers other than himself. Our compensation committee considers such recommendations, in conjunction with possible input from our compensation committee’s independent compensation consultant, in making compensation decisions or recommendations to the full board of directors. The full board participates in evaluating the performance of our executive officers, except that our Chief Executive Officer does not participate when our board of directors evaluates his performance and is not present during voting or deliberations regarding his performance or compensation matters. Compensation-Related Risk Assessment Our compensation committee assesses and monitors whether any of our compensation policies and programs are reasonably likely to have a material adverse effect on our Company. Our compensation committee and management do not believe that the Company presently maintains compensation policies or practices that are reasonably likely to have a material adverse effect on the Company’s risk management or create incentives that could lead to excessive or inappropriate risk taking by employees. In reaching this conclusion, our compensation committee considered all components of our compensation program and assessed any associated risks. Our compensation committee also considered the various strategies and measures employed by the company that mitigate such risk, including: (i) the overall balance achieved through our use of a mix of cash and equity, annual and long-term incentives and time-and performance-based compensation; (ii) our use of multi-year vesting periods for equity grants; and (ii) the oversight exercised by our compensation committee over performance metrics, if any, established for performance-based bonuses and its administration of our equity incentive plans. 45 Compensation Recoupment (Clawback) Policy Our clawback policy provides for the recovery of erroneously awarded incentive-based compensation related to the three fiscal years preceding the date on which the company is required to prepare an accounting restatement. The clawback policy complies with the requirements of Nasdaq’s listing rules. Named Executive Officers Under applicable SEC rules and regulations, our “named executive officers” are all individuals who served as our principal executive officer during 2025, our two most highly compensated executive officers (other than our principal executive officer) who were serving as executive officers at December 31, 2025, and up to two additional individuals who would have been one of our top two most highly compensated executive officer had they been serving as an executive officer at the end of 2025. Our 2025 named executive officers are identified in the table below: Name Title Sanjeev Luther President and Chief Executive Officer Sandra Gurrola Senior Vice President of Finance Summary Compensation Table The following table sets out the compensation for our Named Executive Officers for the years ended December 31, 2025 and December 31, 2024: 2025 Summary Compensation Table Name and Principal Position Fiscal Year Salary (US$) Bonus (US$) Stock-Based Awards (US$) (1) Option-Based Awards (US$) (1) Non-Equity Incentive Plan Compensation (US$) Nonqualified deferred compensation earnings (US$) All Other Compensation (US$) (3) Total Compensation (US$) Sanjeev Luther, President and Chief Executive Officer 2025 $ 550,000 $ — $ — $ 324,813 $ — $ — $ 14,000 $ 888,813 2024 $ 550,000 $ 75,000 (2) $ — $ 2,422,818 $ — $ — $ 14,000 $ 3,061,818 Sandra Gurrola, 2025 $ 275,000 $ — $ — $ 43,372 $ — $ — $ 11,000 $ 329,372 Sr. Vice President of Finance 2024 $ 275,000 $ — $ — $ 110,198 $ — $ — $ 11,000 $ 396,198 1 The amounts reported in this column represent the aggregate grant date fair value of stock options granted during the applicable year. These amounts were calculated in accordance with FASB ASC Topic 718, Compensation – Stock Compensation, except that any estimate of forfeitures was disregarded. For a description of the assumptions used in computing the dollar amount recognized for financial statement reporting purposes, see Note 14, Stock-Based Compensation, in the Notes to the Consolidated Financial Statements contained in this Annual Report on Form 10-K. 2 Mr. Luther was appointed as our President and Chief Executive Officer effective January 1, 2024 and amount represents a cash signing bonus pursuant to his employment agreement. 3 The amounts reported in this column represent the Company’s 401(k) match contribution. 46 Narrative to Summary Compensation Table The following is a discussion of each component of our executive compensation program for 2025. Base Salary Each of our named executive officers receives a base salary. The base salary is the fixed cash compensation component of our executive compensation program, and it recognizes individual performance, time in role, scope of responsibility, leadership skills and experience. The base salary compensates an executive for performing his or her job responsibilities on a day-to-day basis. Generally, base salaries are reviewed annually company-wide and adjusted (upward or downward) when appropriate based upon individual performance, expanded duties, changes in the competitive marketplace and, with respect to upward adjustments, if we are financially and otherwise able to pay it. We try to offer competitive base salaries to help attract and retain executive talent. In March 2026, our compensation committee approved (i) an increase to Mr. Luther’s annual base salary from $550,000 to $670,000 and (ii) an increase to Ms. Gurrola’s annual base salary from $275,000 to $300,000. Bonus and Incentive Compensation In addition to base salaries, our compensation committee has the authority to award discretionary annual bonuses to our named executive officers based on corporate and individual performance. Each year, our compensation committee or our board of directors may establish performance goals, which may be based on measures such as revenue, achievement of certain research and development milestones, completion of a strategic transaction, and other metrics the directors and management believe to provide proper incentives for achieving long-term shareholder value. Our board of directors retains full discretion over performance evaluation and the amount of any bonuses to be paid to a named executive officer. Annual bonuses, if any, are intended to reward the individual performance of each named executive officer. In addition to an assessment of corporate and individual performance, the determination of the amount of a named executive officer’s bonus may vary from year to year depending on our financial condition and conditions in the industry in which we operate. The amount of such bonuses increase with executive rank so that, as rank increases, a greater portion of total annual cash compensation is based on annual corporate and individual performance. For the year ended December 31, 2025, no performance goals were established for any named executive officer. In March 2026, our compensation committee approved discretionary bonuses to be paid to Mr. Luther and Ms. Gurrola in the amount of $319,000 and $68,000, respectively, to reward their individual performance during the 2025 fiscal year. Equity-Based Compensation Programs Historically, we have issued stock options to our employees, including our named executive officers, to provide a means whereby our employees may develop a sense of proprietorship and personal involvement in our development and financial success, and to encourage them to devote their best efforts to us, thereby advancing our interests and the interests of stockholders. Our board of directors believes that the granting of equity awards promotes continuity of management and increases incentive and personal interest in our welfare by those who are primarily responsible for shaping and carrying out our long-range plans and pursuing our growth and financial success. We do not maintain any written policies on the timing of issuing equity-based incentive awards. Our compensation committee has responsibility for granting equity-based incentive awards to our named executive officers and considers whether there is any material nonpublic information (“MNPI”) about the Company when determining the timing and terms of stock option awards. The Compensation Committee generally does not time the grant of stock options in relation to our public disclosure of MNPI. We have not timed the release of MNPI for the purpose of affecting the value of executive compensation. Vesting of equity awards is generally tied to continuous service with us and serves as an additional retention measure. In February 2025, we granted to Mr. Luther and Ms. Gurrola a time-based non-qualified stock option covering 74,890 shares of common stock and 10,000 shares of common stock, respectively, of which one-third will vest on the one-year anniversary of the grant date and the remaining shares will vest in 24 substantially equal monthly installments thereafter, subject to each of their continuous service. During fiscal year 2025, no named executive officer received a grant of stock options during the period beginning four business days before, and ending one business day after, the filing of a periodic report on Form 10-Q or Form 10-K, or the filing or furnishing of a current report on Form 8-K that discloses material nonpublic information. 47 Benefits and Perquisites Employee Benefit Plans Named executive officers are eligible to participate in our employee benefit plans, including our medical, disability and life insurance plans, in each case, on the same basis as all of our other employees. Our employee benefit plans are designed to assist in attracting and retaining skilled employees. We also maintain a 401(k) plan for the benefit of our eligible employees, including the named executive officers, as discussed below. 401(k) Plan We offer to our eligible employees a defined contribution plan, organized under Section 401(k) of the Internal Revenue Code, through our co-employment arrangement with its professional employer organization (“PEO”). Under this arrangement, the PEO serves as the plan sponsor and administrator. Eligible employees may defer up to 100% of their annual compensation or a specific amount imposed by the Internal Revenue Service, whichever is less. We match employees’ contributions at a rate of 100% of the first 3% of the employee’s contribution and 50% of the next 2% of the employee’s contribution, for a maximum Company match of 4%. Pension Benefits We do not maintain any pension benefits or retirement plans other than the 401(k) Plan. Nonqualified Deferred Compensation We do not maintain any nonqualified deferred compensation plans. Named Executive Officer Employment Agreements and Change in Control Arrangements The following descriptions summarize the principal terms of our employment agreements with our named executive officers. Sanjeev Luther Sanjeev Luther was appointed as our President and Chief Executive Officer effective January 1, 2024. We entered into an employment agreement, dated as of December 19, 2023, with Mr. Luther, which provides for at-will employment until terminated by us or Mr. Luther. Mr. Luther’s employment agreement provides for an annual base salary of $550,000, which amount is subject to periodic review by our board of directors or our compensation committee. Mr. Luther also received a one-time signing bonus of $75,000. Mr. Luther is eligible to receive an annual cash bonus award in an amount up to 50% of his base salary upon achievement of agreed upon performance targets. The bonus will be determined by our board of directors or our compensation committee and paid annually by March 15 in the year following the performance year on which such bonus is based. As discussed above, in March 2026, the compensation committee approved an increase to Mr. Luther’s base salary to $670,000 and a discretionary bonus of $319,000. In accordance with the terms of his employment agreement, Mr. Luther was granted an equity award on January 1, 2024 consisting of 112,347 non-qualified stock options, which would vest over a four-year period, with 25% of the options vesting on the first anniversary of the grant date, and the remaining options vesting monthly over the remaining three years. On April 26, 2024, the compensation committee approved a modification to Mr. Luther’s stock option award to reduce the vesting term to three years rather than four years, with 25% of the shares subject to the stock option award still vesting on the first anniversary of the grant date, and the balance of the shares vesting monthly over the remaining two years. Vesting generally requires Mr. Luther’s continued employment through the relevant vesting date. 48 If Mr. Luther’s employment is terminated by us without Cause (as defined in his employment agreement) or by Mr. Luther for Good Reason (as defined in his employment agreement), we will pay Mr. Luther all amounts accrued but unpaid as of the effective date of such termination, as well as a lump sum payment equal to nine months of his salary, as well as up to nine months of continued benefits. Mr. Luther will also be paid a pro-rata performance bonus equal to (x) the performance bonus Mr. Luther would have received based on actual performance for such fiscal year if Mr. Luther had remained employed for the entire fiscal year multiplied by (y) a fraction, the numerator of which is the number of days Mr. Luther was employed during such fiscal year. Notwithstanding the foregoing, if a termination without Cause or for Good Reason occurs beginning upon the occurrence of a Change in Control (as defined in the employment agreement) and ending on the first anniversary of the occurrence of the Change in Control (“Change in Control Protection Period”), Mr. Luther will receive the benefits described in the preceding sentence, but the lump sum severance payment and the payment of benefits will be for a 12-month period and he will receive 100% of his target bonus. In addition, all outstanding and unvested equity awards granted to Mr. Luther during his employment will become immediately vested and exercisable upon such date of termination during the Change in Control Protection Period and will be exercisable for a period of 12 months following the date of termination during the Change in Control Protection Period. Any such severance benefits under the employment agreement are contingent on Mr. Luther entering into and not revoking a general release of claims in favor of our company. Sandra Gurrola We entered into an employment agreement, dated June 16, 2021, with Sandra Gurrola, which provides for our at-will employment of Ms. Gurrola commencing on June 21, 2021 and continuing until terminated by us or Ms. Gurrola. Ms. Gurrola’s employment agreement provides for an annual base salary of $220,000, which amount is subject to periodic review by our board of directors or our compensation committee. In December 2023, upon the recommendation of our compensation committee, our board of directors approved an increase to Ms. Gurrola’s annual base salary from $220,000 to $275,000. Ms. Gurrola is also eligible to receive an annual cash bonus award in an amount up to 35% of her base salary upon achievement of agreed upon performance targets. The bonus will be determined by our board of directors or our compensation committee and paid annually by March 15 in the year following the performance year on which such bonus is based. As discussed above, in March 2026, the compensation committee approved an increase to Ms. Gurrola’s base salary to $300,000 and a discretionary bonus of $68,000. In accordance with her employment agreement, in June 2021, Ms. Gurrola was granted 117 restricted stock units, 25% of which vested on each anniversary of the grant date over four years. If Ms. Gurrola’s employment is terminated by us without Cause (as defined in the employment agreement) or by Ms. Gurrola for Good Reason (as defined in the employment agreement), we will pay Ms. Gurrola all amounts accrued but unpaid as of the effective date of such termination, as well as continuation of her salary and benefits for the following six-month period. Notwithstanding the foregoing, if a termination of employment without Cause or for Good Reason occurs within 90 days before or 12 months after a Change in Control (as defined in the employment agreement), Ms. Gurrola will receive the benefits described in the preceding sentence, but the continuation of her salary and benefits will be for 12-month period, and, in addition, Ms. Gurrola will receive a lump-sum payment of her target bonus and the restricted stock units granted to her in June 2021 will fully vest. Any such severance benefits under the employment agreement are contingent on Ms. Gurrola entering into and not revoking a general release of claims in favor of our company. 49 Outstanding Equity Awards at 2025 Fiscal Year-End The following table summarizes the number of shares of our common stock underlying outstanding equity incentive plan awards for each named executive officer as of December 31, 2025. Option Awards Stock Awards Name Grant Date Number of securities underlying unexercised options (#) exercisable Number of securities underlying unexercised options (#) unexercisable Equity incentive plan awards: Number of securities underlying unexercised unearned options (#) Option exercise price ($) Option expiration date Number of shares or units of stock that have not vested (#) Market value of shares of units of stock that have not vested ($) Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#) Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested shares ($) Sanjeev Luther, President and Chief Executive Officer 2/7/2025 (1) — 74,890 — 5.10 2/07/2035 — — — — 1/1/2024 (2) 66,706 45,641 — 27.00 1/01/2034 — — — — Sandra Gurrola, Sr. Vice President 2/7/2025 (1) — 10,000 — 5.10 2/07/2035 — — — — of Finance 3/11/2022 (3) 381 — — 579.00 3/11/2032 — — — — 4/26/2024 (4) 2,962 2,371 — 26.10 4/26/2034 — — — — 1. The stock option vests over three years, with one-third vesting on the one-year anniversary of the grant date, and the remaining stock options vesting in 24 substantially equal monthly installments thereafter. 2. The stock option vests over three years, with 25% vesting on the one-year anniversary of the grant date, and the remaining stock options vesting in 24 substantially equal monthly installments thereafter. 3. The stock option vested in 36 substantially equal monthly installments. 4. The stock option vests over three years, with one-third vesting on the one-year anniversary of the grant date, and the remaining stock options vesting in 24 substantially equal monthly installments thereafter. Director Compensation We have a non-employee director compensation program to compensate our non-employee directors for their service in such capacity with annual retainers and equity compensation as described below. However, since August 2022, we have not compensated our non-employee directors in accordance with our non-employee director compensation program. 50 Our compensation committee and Board continue to assess our non-employee director compensation program, and if and when we restart compensating our non-employee directors for their service in such capacity, the elements of our non-employee director compensation program may be different from what is described below. Compensation Element Amount Annual Board Member Compensation Paid in cash or stock options at our board’s discretion. Cash paid in quarterly installments or upon the effective date of an earlier resignation of the non-employee director. Stock Options to vest quarterly over one year from grant date: Board Member: $40,000 Board Chair: $70,000 Committee Member Retainers Paid in cash or stock options at our board’s discretion. Cash paid in quarterly installments or upon the effective date of an earlier resignation of the non-employee director. Stock Options to vest quarterly over one year from grant date: Audit Committee: $7,500 Compensation Committee: $5,000 Nominating/Governance Committee: $4,000 Leadership Supplemental Retainer Paid in cash or stock options, ‘s discretion. Cash paid in quarterly installments or upon the effective date of an earlier resignation of the non- employee director. Stock Options to vest quarterly over one year from grant date: Audit Committee Chair: $15,000 Compensation Committee Chair: $10,000 Nominating/Governance Committee Chair: $8,000 New Director Equity Award (outside directors) Option for 553 shares of Common Stock, which option shall have an exercise price equal to the fair market value per share of common stock, as determined under the 2020 Plan, and, subject to continued service on our board of directors, vest in an initial installment of one-third of the shares on the first anniversary of the grant date, with the remaining shares to vest in 24 substantially equal installments thereafter. Our board of directors and our compensation committee designed our non-employee director compensation program to reward directors for their contributions to our success, align the director compensation program with stockholder interests, and provide competitive compensation necessary to attract and retain high quality non-employee directors. We do not pay fees to any of our directors for meeting attendance. 2025 Director Compensation The following table sets forth the compensation of each director, who is not a named executive officer, for service during 2025. This table excludes Mr. Luther, who is a named executive officer and does not receive any compensation from us for his service as a director. See the section above entitled “Executive Officer Compensation” for information about Mr. Luther’s compensation. 51 2025 Director Compensation Table Name Fees earned or paid in cash ($) Stock-Awards ($) ) Option Awards ($) (1) Non-Equity Incentive Plan Compensation ($) Nonqualified deferred compensation earnings ($) All Other Compensation ($) Total Compensation ($) Jame Bristol $ — $ — $ 20,840 $ — $ — $ — $ — Peter Cicala $ — $ — $ 14,887 $ — $ — $ — $ — Elena Ratner $ — $ — $ 37,199 $ — $ — $ — $ — William Wexler $ — $ — $ 36,008 $ — $ — $ — $ — (1) The amounts reported in this column represent the aggregate grant date fair value of stock options granted during 2025. These amounts were calculated in accordance with FASB ASC Topic 718, Compensation – Stock Compensation, except that any estimate of forfeitures was disregarded. For a description of the assumptions used in computing the dollar amount recognized for financial statement reporting purposes, see Note 14, Stockholders’ Equity, in the Notes to the Consolidated Financial Statements contained in this Annual Report on Form 10-K. The stock options granted during 2025 were as follows: Name Options Granted (2) James Bristol 4,804 Peter Cicala 3,432 Elena Ratner 9,338 William Wexler 8,302 (2) The options granted vest over three years, with one-third vesting on the one-year anniversary of the grant date, and the remaining shares vesting in 24 substantially equal monthly installments thereafter. ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The following table sets forth information known to us regarding beneficial ownership of common stock as of March 12, 2026 (the “Measurement Date”) by: ● each person known by us to be the beneficial owner of more than 5% of outstanding common stock; ● each of our named executive officers and directors; and ● all of our executive officers and directors as a group. Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days after the Measurement Date. In computing the number of shares beneficially owned by a person or entity and the percentage ownership of that person or entity in the table below, all shares subject to options, warrants and restricted stock units held by such person or entity were deemed outstanding if such securities are currently exercisable, or exercisable or would vest based on service-based vesting conditions within 60 days of the Measurement Date, assuming that the liquidity event vesting conditions had been satisfied as of such date. These shares were not deemed outstanding, however, for the purpose of computing the percentage ownership of any other person or entity. The beneficial ownership of our common stock is based on 29,154,431 shares of our common stock outstanding as of the Measurement Date. Unless otherwise indicated, we believe that each person named in the table below has sole voting and investment power with respect to all shares of common stock beneficially owned by him. 52 Unless otherwise noted, the business address of each of these stockholders is c/o Ernexa Therapeutics, Inc., 1035 Cambridge Street, Suite 18A, Cambridge, MA 02141. Name and Address of Beneficial Owner Common Shares Beneficially Owned Percentage of Common Shares Beneficially Owned Greater than 5% Stockholders: Charles Cherington (1) 10,791,350 32.54 % Regolith Capital Investments LP (2)^ 2,958,531 9.75 % Freebird Partners LP (3)^ 3,009,873 9.99 % John Halpern (4)^ 1,668,780 5.63 % Named Executive Officers and Directors: Sanjeev Luther (5) 115,465 * % Sandra Gurrola (6) 4,345 * James Bristol (5) 10,303 * Peter Cicala (5) 7,359 * Elena Ratner (5) 3,631 * William Wexler (5) 4,518 * All current directors and executive officers as a group (6 persons) (7) 145,622 * % Less than 1% ^ The securities beneficially owned by this stockholder include warrants, prefunded warrants or a combination of both securities that include a 9.99% blocker. The number of common shares beneficially owned, the percentage of common shares beneficially owned and the percentage of total voting power shown in the table gives effect to such blocker. Pursuant to the terms of the warrants and prefunded warrants, the number of shares of common stock that may be acquired by the holder thereof upon exercise of the warrants and prefunded warrants is limited, to the extent necessary, to ensure that following such exercise, the number of shares of common stock then beneficially owned by the holder and any other persons or entities whose beneficial ownership of common stock would be attributed to the holder for purposes of Section 13(d) of the Exchange Act does not exceed 9.99% of the total number of shares of our common stock then outstanding. Upon delivery of a written notice to us, the holder may from time -to-time increase (with such increase not effective until the 61st day after delivery of such notice) or decrease the blocker to any other percentage not in excess of 9.99%. (1) The number of common shares beneficially owned consists of (i) 6,779,440 shares of common stock, (ii) 4,000,000 shares of common stock issuable upon the exercise of warrants and (iii) 11,910 shares of common stock issuable upon the conversion of shares of Series A convertible preferred stock (assuming a conversion rate of 5.987 per share). Mr. Cherington’s address is c/o Ara Partners, LLC, 200 Berkeley Street, 26 th Floor, Boston, MA, 02116. (2) The number of common shares beneficially owned consists of (i) 1,747,668 shares of common stock held by Regolith Capital Investments LP (“Regolith”) (ii) 10,863 shares of common stock held by Shameek Konar and (iii) 1,200,000 shares of common stock issuable upon the exercise of warrants. Mr. Konar and his spouse are the General Partner of Regolith. By virtue of these relationships, each of Mr. Konar and his spouse may be deemed to share beneficial ownership of the shares held by Regolith. Regolith’s address is 10608 Stoppard View Way, Knoxville, TN, 37922. (3) The number of common shares beneficially owned consists of (i) 2,035,414 shares of common stock, (ii) 599,075 shares of common stock issuable upon the exercise of warrants and (ii) 375,384 shares of common stock issuable upon exercise of prefunded warrants. Freebird Investments LLC serves as the general partner of Freebird Partners LP. Curtis Huff is the sole member and 100% owner of Freebird Investments LLC, the President of Freebird Partners LP and the Managing Member of Freebird Investments LLC. By virtue of these relationships, each of Freebird Investments LLC and Mr. Huff may be deemed to share beneficial ownership of the securities held of record by Freebird Partners LP. The principal business address of Freebird Partners LP is 2800 Post Oak Blvd, Suite 2000, Houston, Texas 77056. (4) The number of common shares beneficially owned consists of (i) 1,161,113 shares of common stock held by the John D. Halpern Revocable Trust, of which, Mr. Halpern and Katherine H. Halpern are trustees, (ii) 500,000 shares of common stock issuable upon the exercise of warrants and (ii) 7,667 shares of common stock issuable upon exercise of prefunded warrants. Mr. Halpern and Ms. Halpern share voting and dispositive powers. Mr. Halpern’s address is PO Box 540 Portsmouth, New Hampshire 03802. (5) Consists of shares of common stock issuable upon exercise of options. (6) Includes 4,234 shares of common stock issuable upon exercise of options. 53 ITEM 13. Certain Relationships and Related Transactions, and Director Independence Except as described in Note 17 (Related Party Transactions) to the consolidated financial statements of this 2025 Annual Report , which is incorporated by reference into this Item 13, since January 1, 2024, there has not been nor are there currently proposed any transactions or series of similar transactions to which we were or are to be a party in which the amount involved exceeds the lesser of $120,000 or one percent (1%) of the average of our total assets at year-end for the last two completed fiscal years and in which any director, executive officer, holder of more than 5% of the common stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest. Related Party Transaction Policy Our audit committee is responsible for the review, approval, or ratification of any potential conflict of interest transaction involving any of our directors or executive officers, director nominees, any person known by us to be the beneficial owner of more than 5% of our outstanding capital stock, or any family member of or related party to such persons, including any transaction required to be reported under Item 404(a) of Regulation S-K promulgated by the SEC. In reviewing any such proposed transaction, our audit committee is tasked with considering all relevant facts and circumstances, including the commercial reasonableness of the terms, the benefit or perceived benefit, or lack thereof, to us, opportunity costs of alternate transactions, the materiality and character of the related person’s direct or indirect interest and the actual or apparent conflict of interest of the related person. Under our policy, employees are required to report any material transaction or relationship that could result in a conflict of interest to our compliance officer. All transactions disclosed in Note 17 (Related Party Transactions) to the consolidated financial statements of this Annual Report on Form 10-K were approved by our audit committee in accordance with our related party transaction policy. Director Independence Our board of directors undertook a review of the independence of each director. Based on information provided by each director concerning his or her background, employment, and affiliations, our board of directors determined that our board of directors meets independence standards under the applicable rules and regulations of the SEC and the listing standards of Nasdaq. Our board of directors has affirmatively determined that all of our current directors are “independent” as defined in the listing standards of Nasdaq, other than Mr. Luther, who is also an employee. In making these determinations, our board of directors considered the current and prior relationships that each non-employee director has with our Company and all other facts and circumstances our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director. ITEM 14. Principal Accounting Fees and Services Change in Certifying Accountant On June 30, 2025, the Company dismissed Grant Thornton as the Company’s independent registered public accounting firm effective immediately. The Audit Committee of the Company’s board of directors approved Grant Thornton’s dismissal on June 30, 2025. Grant Thornton performed audits of the Company’s consolidated financial statements for the years ended December 31, 2024 and 2023. Grant Thornton’s reports for such years did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles, except that, the reports included an explanatory paragraph describing that substantial doubt was raised as to the Company’s ability to continue as a going concern. During the two years ended December 31, 2024 and the subsequent interim period through June 30, 2025, there were no (i) disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K promulgated by the SEC pursuant to the Securities Exchange Act of 1934, as amended) between the Company and Grant Thornton on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to satisfaction of Grant Thornton, would have caused Grant Thornton to make reference to the subject matter of such disagreements in connection with its report, or (ii) “reportable events,” as described in Item 304(a)(1)(v) of Regulation S-K, that would require disclosure under Item 304(a)(1)(v) of Regulation S-K, except for the material weakness in the Company’s internal control over financial reporting as of and for the year ended December 31, 2023, stemming from a lack of technical accounting proficiency in complex matters. 54 The Company previously furnished Grant Thornton with a copy of the disclosure contained in this “Changes In and Disagreements with Accountants on Accounting and Financial Disclosure” section of this annual report. On July 1, 2025, the Company engaged Haskell & White LLP as the Company’s independent registered public accounting firm. The decision to engage Haskell & White was approved by the Audit Committee of the Company’s board of directors. During the two years ended December 31, 2024 and the subsequent interim period through June 30, 2025, neither the Company nor anyone acting on its behalf has consulted Haskell & White regarding either: (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s financial statements, and no written report or oral advice was provided to the Company by Haskell & White that Haskell & White concluded was an important factor considered by the Company in reaching a decision as to an accounting, auditing or financial reporting issue; or (ii) any matter that was either subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K, or a “reportable event,” as that term is described in Item 304(a)(1)(v) of Regulation S-K. Fees and Services of Independent Registered Public Accounting Firm The table below summarizes the fees billed to us by Haskell & White and Grant Thornton for the years ended December 31, 2025 and 2024. Year Audit Fees Audit- Related Fees Tax Fees All Other Fees Total 2025 $ 188,000 $ — $ — $ — $ 188,000 2024 $ 399,130 $ — $ — $ — $ 399,130 Audit Fees . Audit fees consist of fees for professional services rendered for the audit of our consolidated financial statements (including tax services performed to fulfill the auditor’s responsibility under generally accepted auditing standards), reviews of the interim financial statements included in Forms 10-Q and for services that are normally provided by the auditor in connection with statutory and regulatory filings or engagements. Audit-Related Fees . Audit-related fees consist of fees for assurance and related services (e.g., due diligence) that are reasonably related to the performance of the audit or review of our financial statements and are not reported under audit fees. The nature of those services is comprised of services for employee benefit plan audits, due diligence related to mergers and acquisitions, accounting consultations and audits in connection with proposed or consummated acquisitions, internal control reviews, attest services related to financial reporting that are not required by statute or regulation, and consultation concerning financial accounting and reporting standards. Tax Fees . Tax fees consist of fees for professional services rendered for tax compliance, tax consulting and tax planning. All Other Fees . All other fees are fees for products and services other than services in respect of which the fees are reported as audit, audit-related or tax fees. Policy for Approval of Audit and Permitted Non-Audit Services All audit and permissible non-audit services provided by the independent auditors are pre-approved by the Audit Committee (or the Chair of the Audit Committee, pursuant to a delegation of authority). These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent auditors and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent auditors in accordance with this pre-approval, and the fees for the services performed to date. The Audit Committee may also pre-approve particular services on a case-by-case basis. 55 PART IV ITEM 15. Exhibits, Financial Statement Schedules (a) The following documents are filed as a part of this Annual Report on Form 10-K: (1) Consolidated Financial Statements. The consolidated financial statements of the Company and its consolidated subsidiaries are set forth in the “Index to Consolidated Financial Statements” on page F-1. (2) Financial Statement Schedules. None (3) Exhibits. The following exhibits are submitted with this Annual Report on Form 10-K or, where indicated, incorporated by reference to other filings. Exhibit Description Incorporated By Reference Articles of Incorporation and Bylaws 3.1 Composite Restated Certificate of Incorporation of the Company Filed herewith 3.2 Third Amended and Restated Bylaws of the Company Exhibit 3.2 to Form 8-K filed on March 26, 2025 3.3 Certificate of Validation of Eterna Therapeutics Inc., as filed with the Secretary of State of the State of Delaware on September 3, 2021 Exhibit 3.1 to Form 8-K filed on September 13, 2021 Instruments Defining Rights of Security Holders 4.1 Form of Pre-Funded Warrant (Feb 2026) Exhibit 4.1 to Form 8-K filed on February 11, 2026 4.2 Form of Common Warrant (Feb 2026) Exhibit 4.2 to Form 8-K filed on February 11, 2026 4.3 Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 Filed herewith 4.4 Form of Common Stock Warrant (March 2022) Exhibit 10.3 to Form 8-K filed on March 9, 2022 4.5 Form of Warrant (December 2022) Exhibit 10.1 to Form 8-K filed on December 5, 2022 4.6 Form of Warrant (December 2023 and January 2024) Exhibit 4.2 to Form 8-K filed on December 20, 2023 Material Contracts 10.1 Placement Agency Agreement by and between Ernexa Therapeutics Inc. and Brookline Capital Markets, a division of Arcadia Securities, LLC, dated as of February 6, 2026. Exhibit 1.1 to Form 8-K filed on February 11, 2026 10.2 Form of Securities Purchase Agreement by and between Ernexa Therapeutics Inc. and certain investors, dated as of February 6, 2026. Exhibit 10.1 to Form 8-K filed on February 11, 2026 10.3 Warrant Agent Agreement, by and among Ernexa Therapeutics Inc., Computershare Inc. and Computershare Trust Company, N.A., dated as of February 10, 2026. Exhibit 10.2 to Form 8-K filed on February 11, 2026 56 10.5(a) Securities purchase agreement, dated as of September 24, 2024, between Eterna Therapeutics Inc. and the purchaser parties thereto Exhibit 10.1 to Form 8k filed on September 25, 2024 10.5(b) Form of pre-funded warrant issuable under the securities purchase agreement, dated as of September 24, 2024, between Eterna Therapeutics Inc. and the purchaser parties thereto Exhibit 10.2 to Form 8k filed on October 29, 2024 10.5(c) Form of exchange agreement, dated as of September 24, 2024, between Eterna Therapeutics Inc. and the parties thereto Exhibit 10.3 to Form 8k filed on September 25, 2024 10.5(d) Note purchase agreement, dated as of September 24, 2024, between Eterna Therapeutics Inc. and the purchaser parties thereto Exhibit 10.4 to Form 8k filed on September 25, 2024 10.5(e) Form of 12.0% senior convertible note issued under the note purchase agreement, dated as of September 24, 2024, between Eterna Therapeutics Inc. and the purchaser parties thereto Exhibit 10.5 to Form 8k filed on September 24, 2024 10.5(f) Form of pre-funded warrant issuable upon conversion of 12.0% senior convertible notes issued under the note purchase agreement, dated as of September 24, 2024, between Eterna Therapeutics Inc. and the purchaser parties thereto Exhibit 10.3 to Form 8k filed on October 29, 2024 10.5(g) Form of support agreement, dated as of September 24, 2024, between Eterna Therapeutics Inc. and the stockholder parties thereto Exhibit 10.7 to Form 8k filed on September 24, 2024 10.5(h) Form of lock-up agreement, dated as of September 24, 2024, between Eterna Therapeutics Inc. and the stockholder parties thereto Exhibit 10.8 to Form 8k filed on September 24, 2024 10.5(i) Registration Rights Agreement, dated October 29, 2024, between Eterna Therapeutics Inc. and the purchaser parties thereto Exhibit 10.1 to Form 8-K filed on November 25, 2022 10.6 Exclusive License and Collaboration Agreement, effective as of September 9, 2024, with Factor Bioscience Limited Exhibit 10.10 to Form 10-Q filed on August 13, 2024 10.7 Sublease Agreement, dated October 18, 2022, by and between E.R. Squibb & Sons, LLC and Eterna Therapeutics Inc. Exhibit 10.16 to Form 10-K filed on March 20, 2023 10.8 Sublease Termination Agreement, dated August 9, 2024, between Eterna Therapeutics Inc. and E.R. Squibb & Sons, L.L.C. Exhibit 10.11 to Form 10-Q filed on August 13, 2024 57 10.9* Employment Agreement, dated as of December 19, 2023, by and among Eterna Therapeutics Inc. and Sanjeev Luther. Exhibit 10.3 to Form 8-K filed on December 20, 2023 10.10(a)* Eterna Therapeutics Inc. 2021 Inducement Stock Incentive Plan (the “2021 Inducement Plan”) Exhibit 10.3 to Form 8-K filed on May 26, 2021 10.10(b)* Form of Stock Option Inducement Award for issuances under the 2021 Inducement Plan Exhibit 10.13(b) to Form 10-K filed on March 14, 2024 10.10(c)* Form of Restricted Stock Unit Inducement Award for issuances under the 2021 Inducement Plan Exhibit 10.13(c) to Form 10-K filed on March 14, 2024 10.11(a)* Eterna Therapeutics Inc. Restated 2020 Stock Incentive Plan (the “Restated 2020 Plan”) Exhibit 99.1 to Form 8-K filed on September 13, 2021 10.11(b)* Form of Stock Option Inducement Award for issuances under the Restated 2020 Plan Exhibit 10.14(b) to Form 10-K filed on March 14, 2024 10.11(c)* Form of Restricted Stock Unit Inducement Award for issuances under the Restated 2020 Plan Exhibit 10.14(c) to Form 10-K filed on March 14, 2024 10.11(d)* Form of Restricted Award Agreement for issuances under the Restated 2020 Plan Exhibit 10.1 to Form 10-Q filed on August 13, 2024 10.12* Inducement Stock Option Award Agreement entered into with Sanjeev Luther Exhibit 99.1 to Form S-8 filed on January 16, 2024 10.13* Employment Agreement, dated June 16, 2021, by and among Eterna Therapeutics Inc. and Sandra Gurrola. Exhibit 10.1 to Form 8-K filed on June 21, 2021 10.14 Form of indemnification agreement for directors and officers Exhibit 10.1 to Form 8-K filed on April 16, 2021 19 Insider Trading Policy Filed herewith 23.1 Consent of the Independent Registered Accounting Firm, Haskell & White LLP Filed herewith 23.2 Consent of the Independent Registered Accounting Firm, Grant Thornton LLP Filed herewith 31.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith 31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith 32.1 Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Furnished herewith 32.2 Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Furnished herewith 97 Eterna Therapeutics Inc. Clawback Policy Exhibit 97 to Form 10-K filed on March 14, 2024 101 Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) Filed herewith 104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) * Indicates management contract or compensatory plan. ** Pursuant to Item 601(a)(5) of Regulation S-K, schedules and similar attachments to this exhibit have been omitted because they do not contain information material to an investment or voting decision and such information is not otherwise disclosed in such exhibit. The Company will supplementally provide a copy of any omitted schedule or similar attachment to the U.S. Securities and Exchange Commission or its staff upon request. # Pursuant to Regulation S-K Item 601(b)(2), certain exhibits and schedules to this exhibit have been omitted. The Company agrees to furnish supplementally a copy of any omitted exhibit or schedule to the SEC upon its request. ^ Pursuant to Item 601(b)(10) of Regulation S-K, certain confidential portions of this exhibit were omitted by means of marking such portions with an asterisk because such information is both not material and is the type that the Company treats as private or confidential. ITEM 16. Form 10-K Summary None. 58 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized . ERNEXA THERAPEUTICS Inc. Date: March 13, 2026 By: /s/ Sanjeev Luther Sanjeev Luther President, Chief Executive Officer, and Director ( Principal Executive Officer ) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated. Name Title Date /s/ Sanjeev Luther President, Chief Executive Officer, and Director (Principal Executive Officer) March 13, 2026 Sanjeev Luther /s/ Sandra Gurrola Senior Vice President of Finance (Principal Financial Officer and Principal Accounting Officer) March 13, 2026 Sandra Gurrola /s/ James Bristol Chairman of the Board March 13, 2026 James Bristol /s/ Peter Cicala Director March 13, 2026 Peter Cicala /s/ Elena Ratner Director March 13, 2026 Elena Ratner /s/ William Wexler Director March 13, 2026 William Wexler 59 ERNEXA THERAPEUTICS INC. AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 200 ) F-2 Report of Independent Registered Public Accounting Firm (PCAOB ID: 248 ) F-4 Consolidated Financial Statements: Consolidated Balance Sheets as of December 31, 2025 and 2024 F-5 Consolidated Statements of Operations for the years ended December 31, 2025 and 2024 F-6 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2025 and 2024 F-7 Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024 F-8 Notes to the Consolidated Financial Statements F-10 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders Ernexa Therapeutics, Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheet of Ernexa Therapeutics, Inc. (the “Company”) as of December 31, 2025, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2025, and the consolidated results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. Substantial Doubt About the Company’s Ability to Continue as a Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has recurring losses from operations, an accumulated deficit, and requires additional working capital to achieve its operating plans. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2 to the consolidated financial statements. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. F- 2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Continued) Critical Audit Matters Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ Haskell & White LLP HASKELL & WHITE LLP We served as the Company’s auditor since 2025. Irvine, California March 13, 2026 F- 3 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders Ernexa Therapeutics Inc. Opinion on the financial statements We have audited the accompanying consolidated balance sheet of Ernexa Therapeutics Inc. (formerly known as “Eterna Therapeutics Inc.”) (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2024, the related consolidated statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Going concern The accompanying 2024 consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the 2024 consolidated financial statements, the Company incurred a net loss of approximately $44.5 million during the year ended December 31, 2024, and had an accumulated deficit of approximately $231.5 million as of December 31, 2024. These conditions, along with other matters as set forth in Note 2 to the 2024 consolidated financial statements, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2 to the 2024 consolidated financial statements. The 2024 consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ GRANT THORNTON LLP We served as the Company’s auditor from 2022 to 2025. Iselin, New Jersey March 12, 2025 (except for Note 3B, as to which the date is February 2, 2026) F- 4 ERNEXA THERAPEUTICS INC. CONSOLIDATED BALANCE SHEETS (In thousands, except par value amounts) December 31, 2025 December 31, 2024 ASSETS Current assets: Cash $ 1,884 $ 1,729 Other receivables 95 437 Due from related party 750 - Prepaid expenses and other current assets 404 186 Total current assets 3,133 2,352 Property and equipment, net 94 85 Right-of-use assets - operating leases, net 453 670 Goodwill 2,044 2,044 Other assets 110 118 Total assets $ 5,834 $ 5,269 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 1,125 $ 1,721 Accrued expenses 898 1,007 Income taxes payable 3 3 Due to related party 750 - Operating lease liabilities, current 213 207 Contingent consideration liability, current 41 - Other current liabilities 83 - Total current liabilities 3,113 2,938 Warrant liabilities - 1 Operating lease liabilities, non-current 277 477 Contingent consideration liability, non-current - 41 Other liabilities 43 111 Total liabilities 3,433 3,568 Stockholders’ equity: Preferred stock, $ 0.005 par value, 1,000 shares authorized, 156 designated and outstanding of Series A convertible preferred stock at December 31, 2025 and 2024, $ 156 liquidation preference 1 1 Common stock, $ 0.005 par value, 150,000 and 100,000 shares authorized at December 31, 2025 and 2024, respectively, 7,854 and 3,426 issued and outstanding at December 31, 2025 and 2024, respectively 39 17 Additional paid-in capital 247,997 233,219 Accumulated deficit ( 245,636 ) ( 231,536 ) Total stockholders’ equity 2,401 1,701 Total liabilities and stockholders’ equity $ 5,834 $ 5,269 The accompanying notes are an integral part of these consolidated financial statements. F- 5 ERNEXA THERAPEUTICS INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) 2025 2024 Years ended December 31, 2025 2024 Revenue $ - $ 582 Cost of revenues - 96 Gross profit - 486 Operating expenses: Research and development 4,156 4,604 General and administrative 5,163 13,132 Gain on lease termination - ( 1,576 ) Total operating expenses 9,319 16,160 Loss from operations ( 9,319 ) ( 15,674 ) Other expense, net: Forward sales contract expense ( 5,847 ) - Gain (loss) on extinguishment of debt 765 ( 22,440 ) Change in fair value of convertible notes - 1,017 Change in fair value to bridge notes derivative liability - ( 1,459 ) Change in fair value of warrant liabilities 1 414 Change in fair value of contingent consideration - 66 Interest income 83 249 Interest expense ( 27 ) ( 6,752 ) Other income, net 215 70 Total other expense, net ( 4,810 ) ( 28,835 ) Loss before income taxes ( 14,129 ) ( 44,509 ) Benefit (provision) for income taxes 45 ( 30 ) Net loss ( 14,084 ) ( 44,539 ) Series A preferred stock dividend ( 16 ) ( 16 ) Net loss attributable to common stockholders $ ( 14,100 ) $ ( 44,555 ) Net loss per common share - basic and diluted $ ( 2.24 ) $ ( 48.96 ) Weighted average shares outstanding - basic and diluted 6,307 910 The accompanying notes are an integral part of these consolidated financial statements. F- 6 ERNEXA THERAPEUTICS INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY For the years December 31, 2025 and 2024 (In thousands) Shares Amount Shares Amount Capital Deficit Total Series A Preferred Stock Common Stock Additional Paid-in Accumulated Shares Amount Shares Amount Capital Deficit Total Balances at January 1, 2025 156 $ 1 3,426 $ 17 $ 233,219 $ ( 231,536 ) $ 1,701 Issuance of common stock to Series A preferred stockholders in lieu of cash dividends - - 7 - 16 ( 16 ) - Issuance of common stock to Series A preferred stockholders in lieu of cash dividends - - 7 - 16 ( 16 ) - Issuance of common stock in connection with exercise of prefunded warrants - - 398 2 28 - 30 Issuance of common stock in connection with exercise of prefunded warrants - - 398 2 28 - 30 Issuance of common stock to consultant for services - - 38 - 141 - 141 Issuance of common stock in connection with settlement - - 20 - 69 - 69 Issuance of common stock and prefunded warrants in connection with private placement - - 3,965 20 13,028 - 13,048 Issuance of common stock and prefunded warrants in connection with private placement - - 3,965 20 13,028 - 13,048 Stock-based compensation - - - - 1,496 - 1,496 Net loss - - - - - ( 14,084 ) ( 14,084 ) Balances at December 31, 2025 156 $ 1 7,854 $ 39 $ 247,997 $ ( 245,636 ) $ 2,401 Series A Preferred Stock Common Stock Additional Paid-in Accumulated Shares Amount Shares Amount Capital Deficit Total Balances at January 1, 2024 156 $ 1 361 $ 2 $ 189,211 $ ( 186,981 ) $ 2,233 Balance 156 $ 1 361 $ 2 $ 189,211 $ ( 186,981 ) $ 2,233 Issuance of note warrants - - - - 720 - 720 Fair value of forward sale contract pursuant to common stock offering - - - - 576 - 576 Reclassification of warrants to liability - - - - ( 11,244 ) - ( 11,244 ) Issuance of common stock in exchange of Convertible Notes - - 1,891 10 31,177 - 31,187 Issuance of common stock in exchange of warrants - - 663 3 10,942 - 10,945 Issuance of common stock and prefunded warrants upon the conversion of Bridge Notes - - 416 2 9,276 - 9,278 Issuance of common stock and prefunded warrants upon the conversion of Bridge Notes - - 416 2 9,276 - 9,278 Issuance of common stock and prefunded warrants in connection with private placement, net - - 93 - 1,002 - 1,002 Issuance of common stock and prefunded warrants in connection with private placement, net - - 93 - 1,002 - 1,002 Issuance of common stock to consultant for services - - 1 - 23 - 23 Stock-based compensation - - - - 1,520 - 1,520 Issuance of common stock to Series A preferred stockholders in lieu of cash dividends - - 1 - 16 ( 16 ) - Issuance of common stock to Series A preferred stockholders in lieu of cash dividends - - 1 - 16 ( 16 ) - Net loss - - - - - ( 44,539 ) ( 44,539 ) Balances at December 31, 2024 156 $ 1 3,426 $ 17 $ 233,219 $ ( 231,536 ) $ 1,701 Balance 156 $ 1 3,426 $ 17 $ 233,219 $ ( 231,536 ) $ 1,701 The accompanying notes are an integral part of these consolidated financial statements. F- 7 ERNEXA THERAPEUTICS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) 2025 2024 For the years ended December 31, 2025 2024 Cash flows from operating activities: Net loss $ ( 14,084 ) $ ( 44,539 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 65 139 Stock-based compensation 1,496 1,520 Amortization of right-of-use asset 198 1,499 Impairment of right-of-use asset 33 - Gain on lease termination - ( 1,576 ) Loss on disposal of fixed assets 13 - Accrued interest expense 22 174 Paid-in-kind interest expense - 1,261 Amortization of debt discount and debt issuance costs - 5,259 Forward sales contract expense 5,847 - (Gain) loss on extinguishment of debt ( 765 ) 22,440 Change in fair value of convertible notes - ( 1,017 ) Fair value adjustments to bridge notes derivative liability - 1,459 Issuance of common stock in connection with settlement 69 - Issuance of common stock to consultant for services 141 - Change in fair value of warrant liabilities ( 1 ) ( 414 ) Change in fair value of contingent consideration liability - ( 66 ) Changes in operating assets and liabilities: Other receivables 342 ( 12 ) Prepaid expenses and other current assets ( 268 ) 1,319 Other non-current assets 8 2 Accounts payable and accrued expenses 60 183 Operating lease liability ( 208 ) ( 1,707 ) Due from related party ( 750 ) - Due to related party 750 ( 1,205 ) Deferred revenue - ( 582 ) Other liabilities 15 27 Net cash used in operating activities ( 7,017 ) ( 15,836 ) Cash flows from investing activities: Purchase of property and equipment ( 37 ) ( 369 ) Proceeds received from the sale of fixed assets - 4 Net cash used in investing activities ( 37 ) ( 365 ) The accompanying notes are an integral part of these consolidated financial statements. F- 8 ERNEXA THERAPEUTICS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (In thousands) For the years ended December 31, 2025 2024 Cash flows from financing activities: Proceeds received from notes payable 2,250 - Proceeds received from issuance of common stock and prefunded warrants 4,929 1,137 Fees paid related to the common stock and prefunded warrant offering - ( 135 ) Proceeds received from exercise of prefunded warrants 30 - Proceeds received from the convertible notes financing - 1,405 Fees paid related to the convertible notes financing - ( 34 ) Proceeds received from bridge notes financing - 3,887 Net cash provided by financing activities 7,209 6,260 Net increase (decrease) in cash 155 ( 9,941 ) Cash at beginning of period 1,729 11,670 Cash at end of period $ 1,884 $ 1,729 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 6 $ 48 Income taxes $ 3 $ 3 Supplemental disclosure of non-cash investing and financing activities: Offset of related party notes payable principal with related party receivable related to issuance of common stock and prefunded warrants $ 2,250 $ - Reclassification of forward sales contract to equity upon issuance of common stock $ 5,847 $ - Issuance of common stock to Series A preferred stockholders in lieu of cash dividends $ 16 $ 16 Adjustment to lease liability and ROU asset due to remeasurement $ 14 $ 4,245 Leasehold improvements funded by tenant improvement allowance $ 50 $ - Note warrants issued $ - $ 755 Unpaid fees incurred in connection with the convertible note financing $ - $ 32 Paid in-kind interest added to convertible notes principal $ - $ 1,447 Reclassification of warrants to liability $ - $ 11,244 Exchange of warrants for common stock $ - $ 10,945 Exchange of convertible notes for common stock $ - $ 31,187 Conversion of bridge notes for common stock $ - $ 9,278 The accompanying notes are an integral part of these consolidated financial statements. F- 9 ERNEXA THERAPEUTICS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31, 2025 and 2024 1. Organization and Description of Business Operations Ernexa Therapeutics Inc. (the “Company”) is a preclinical-stage synthetic allogeneic iMSC therapy company. iMSCs are induced pluripotent stem cell (“iPSC”)-derived mesenchymal stem cells. The Company envisions a future where cell therapies powered by synthetic iMSCs can offer new options for patients with limited treatment paths and its mission is to transform the treatment of cancer and autoimmune disease by developing scalable, affordable, off-the-shelf cell therapies that restore hope. As used herein, the “Company” or “Ernexa” refers collectively to Ernexa and its consolidated subsidiaries (Ernexa TX2, Inc., Novellus, Inc., Novellus Therapeutics Limited and Eterna Therapeutics LLC) unless otherwise stated or the context otherwise requires. In April 2025, the Company dissolved Eterna Therapeutics LLC, which was a single-member limited liability company and had no operations. 2. Liquidity and Capital Resources The Company has incurred significant operating losses and has an accumulated deficit as a result of its efforts to develop product candidates and provide general and administrative support for operations. As of December 31, 2025, the Company had a cash balance of approximately $ 1.9 million and an accumulated deficit of approximately $ 245.6 million. For the year ended December 31, 2025, the Company incurred a net loss of $ 14.1 million, which includes a non-cash charge of $ 5.8 million related to a forward sales contract the Company entered into on March 31, 2025. During the year ended December 31, 2025, the Company used cash of $ 7.0 million in operating activities. On September 24, 2024, the Company entered into certain financing agreements for the September 2024 Transactions (as discussed more fully in Note 15), which included (in) the private placement of $ 3.9 million of convertible Bridge Notes (as defined in Note 11), (ii) the Common Stock Private Placement of $ 1.1 million in shares of the Company’s common stock or pre-funded warrants, as well as (iii) the Exchange Transaction, which provided for the exchange of convertible notes and warrants into shares of the Company’s common stock. The September 2024 Transactions were subject to shareholder approval, and on October 29, 2024, the shareholders approved the issuance of common stock under the September 2024 Transactions. Following the conversions of the convertible notes, the Company had no convertible notes outstanding. On March 11, 2025 and March 20, 2025, the Company received $ 1.5 million and $ 0.8 million, respectively, in exchange for the issuance of two promissory notes with aggregate principal amounts of $ 2.3 million to an investor. During the year ended December 31, 2025, the Company repaid the notes in full for $ 2.3 million, including accrued interest. See Note 11 for more information on the promissory notes. On May 1, 2025, the $ 10.0 million Standby equity purchase agreement (“SEPA”) the Company entered into with Lincoln Park Capital Fund, LLC (“Lincoln Park”) expired. The Company did not sell any shares under the SEPA during the year ended December 31, 2025. The Company does not have a new SEPA in place at this time. During the year ended December 31, 2025, the Company raised $ 7.2 million in gross proceeds from the sale of shares of the Company’s common stock and prefunded warrants (the “2025 Private Placement”). See Note 15 for additional information regarding this financing. On February 10, 2026, the Company received approximately $ 9.6 million in net proceeds from a public offering (the “2026 Offering”) of (i) 21.0 million shares of the Company’s common stock or pre-funded warrants and (ii) accompanying warrants to purchase 21.0 million shares of the Company’s common stock (the “Milestone Warrants”). See Note 18 for more information regarding the 2026 Offering. F- 10 In connection with preparing the accompanying consolidated financial statements as of and for the year ended, the Company’s management concluded that there is substantial doubt regarding the Company’s ability to continue as a going concern because it does not expect to have sufficient cash or working capital resources to fund operations for the twelve-month period subsequent to the issuance date of these consolidated financial statements. The Company will need to raise additional capital, which could be through public or private equity offerings, grants, debt financings, out-licensing the Company’s intellectual property, strategic partnerships or other means. The Company currently has no arrangements for capital, and no assurances can be given that it will be able to raise capital when needed, on acceptable terms, or at all. The accompanying consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to the Company’s ability to continue as a going concern. 3. Basis of Accounting Presentation and Summary of Significant Accounting Policies 3A) Basis of Accounting Presentation The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). All significant intercompany balances and transactions have been eliminated in consolidation. 3B) Reverse Stock Split As approved by the Company’s stockholders at the Company’s Annual Meeting of Stockholders held on June 2, 2025 (the “2025 Annual Meeting”), the Company effected a reverse stock split of its common stock at a ratio of 1-for-15 , as determined by the Company’s Board of Directors within the parameters approved by the Company’s stockholders (the “Reverse Stock Split”). The Reverse Stock Split became effective under Delaware law at 12:01 a.m. Eastern time on June 12, 2025. Upon the effectiveness of the Reverse Stock Split, every fifteen shares of the issued and outstanding common stock were automatically combined and reclassified into one issued and outstanding share of common stock. The Reverse Stock Split did not alter the par value of the common stock, and the number of authorized shares of common stock remains unchanged, after giving effect to the increase in the authorized shares of the Company’s common stock from 100,000,000 to 150,000,000 shares, which occurred on June 2, 2025 following stockholder approval at the 2025 Annual Meeting. No fractional shares were issued in connection with the Reverse Stock Split, and no cash or other consideration was paid in connection with any fractional shares. Stockholders who otherwise would have held a fractional share after giving effect to the Reverse Stock Split instead owned one whole share of the post-reverse stock split common stock. The Company issued an aggregate of 153 shares for rounding up fractional shares to whole shares. All share and per share data in this Annual Report on Form 10-K have been adjusted for all periods presented to reflect the Reverse Stock Split. 3C) Summary of Significant Accounting Policies Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect: (a) the reported amounts of assets and liabilities; (b) disclosure of contingent assets and liabilities at the date of the consolidated financial statements; (c) the reported amounts of expenses during the reporting period; and (d) the reported amount of the fair value of assets acquired in connection with business combinations. On an ongoing basis, the Company evaluates its estimates, including those related to the recoverability and useful lives of long-lived assets; stock-based compensation assumptions; valuation assumptions of warrants and liabilities associated with the 2025 Private Placement and the September 2024 Transactions; contingencies; contingent consideration and the provision for income taxes, including the valuation allowance. The Company bases its estimates on a combination of historical experience and various other assumptions that it believes are reasonable under the circumstances. Actual results may differ materially from these estimates. Cash and Cash Equivalents The Company classifies highly liquid investments with a remaining contractual maturity at the date of purchase of three months or less as cash equivalents. The Company had no cash equivalents as of December 31, 2025 or 2024. F- 11 Property and Equipment Property and equipment are recorded at cost and are depreciated over their estimated useful lives using the straight-line method. Laboratory and manufacturing equipment are depreciated over an estimated useful life of seven years . Leasehold improvements are depreciated over the shorter of their estimated useful life, or the lease term. Furniture and fixtures are depreciated over an estimated useful life of five years . Computer equipment are depreciated over an estimated useful life of three years . Upon retirement or other disposition of these assets, the cost and related accumulated depreciation of these assets are removed from the accounts and the resulting gain or losses are reflected in the results of operations. Expenditures for maintenance and repairs are charged to operations. Renewals and betterments are capitalized. Goodwill Goodwill represents the excess of the purchase price over the fair value of identifiable assets acquired and liabilities assumed. Goodwill is not amortized but is tested for impairment annually or more frequently if events occur or circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying value. Events that would indicate impairment and trigger an interim impairment assessment include, but are not limited to, macroeconomic conditions, industry and market considerations, cost factors, overall financial performance and other relevant events. Management evaluates the Company as a single reporting unit, therefore, goodwill is tested for impairment at the entity level. Goodwill is tested for impairment as of December 31 st of each year, or more frequently as warranted by events or changes in circumstances mentioned above. Accounting guidance also permits an optional qualitative assessment for goodwill to determine whether it is more likely than not that the carrying value of a reporting unit exceeds its fair value. If, after this qualitative assessment, the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then no further quantitative testing will be necessary. A quantitative assessment is performed if the qualitative assessment results in a more likely than not determination or if a qualitative assessment is not performed. The quantitative assessment considers whether the carrying amount of a reporting unit exceeds its fair value, in which case an impairment charge is in an amount equal to the excess fair value.. Revenue Recognition The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers (“ASC 606”) when a customer obtains control of promised services or goods in an amount that reflects the consideration to which the Company expects to receive in exchange for those goods or services. In general, the Company applies the following steps when recognizing revenue from contracts with customers: (i) identify the contract, (ii) identify the performance obligations, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations and (v) recognize revenue when a performance obligation is satisfied. Recognition of revenue is driven by satisfaction of the performance obligations using one of two methods: revenue is either recognized over time or at a point in time. Contracts containing multiple performance obligations classify those performance obligations into separate units of account either as standalone or combined units of account. Allocation of revenue to individual elements that qualify for separate accounting is based on the separate selling prices determined for each component, and total contract consideration is then allocated across the components of the arrangement. If separate selling prices are not available, the Company will use its best estimate of such selling prices, consistent with the overall pricing strategy and after consideration of relevant market factors. The Company estimates the amount of consideration it expects to recognize as revenue that is not probable of having a significant reversal of such recognized revenue, and it places a constraint on the remaining contractual consideration. As it becomes evident that the constrained amounts are no longer at risk of a significant reversal of revenue, the Company will remove the constraint from the related revenue and recognize a cumulative catch-up adjustment to revenue in the period in which the constraint was removed. The Company had one revenue-generating contract during the year ended December 31, 2024, relating to an option and license agreement as well as certain development activities. This contract was assigned to a third party in September 2024, and the Company had no further performance obligations under the contract. See Note 4 for more information. The Company did not have any revenue generating contracts during the year ended December 31, 2025. Contract Assets: A contract asset is an entity’s right to payment for goods and services already transferred to a customer if that right to payment is conditional on something other than the passage of time. Generally, an entity will recognize a contract asset when it has fulfilled a contract obligation but must perform other obligations before being entitled to payment. Contract assets consist primarily of the cost of project contract work performed by third parties whereby the Company expects to recognize any related revenue at a later date, upon satisfaction of the contract obligations. The Company had no contract assets as of December 31, 2024. There were no revenue generating contracts during the year ended December 31, 2025. F- 12 Contract Liabilities: Contract liabilities consist primarily of consideration received, usually in the form of payment, on project work to be performed, whereby the Company expects to recognize the related revenue at a later date, upon satisfaction of the contract obligations. The Company recognized $ 0.6 million of revenue during the year ended December 31, 2024 from contract liabilities that arose in a prior year. There were no contract liabilities that arose during the year ended December 31, 2024, and there was no contract liabilities balance as of December 31, 2024. There were no revenue generating contracts during the year ended December 31, 2025. Research and Development The Company expenses its research and development costs as incurred. Research and development expenses consist of costs incurred for company-sponsored research and development activities. Upfront payments and milestone payments made for the licensing of technology are expensed as research and development in the period in which they are incurred if the technology is not expected to have any alternative future uses other than the specific research and development project for which it was intended. The major components of research and development costs include salaries and employee benefits, stock-based compensation expense, supplies and materials, preclinical study costs, expensed licensed technology, consulting, scientific advisors and other third-party costs, as well as allocations of various overhead costs related to our product development efforts. The Company has contracted with third parties to perform various studies. The financial terms of these agreements vary from contract to contract and may result in uneven payment flows. The Company accrues for third party expenses based on estimates of the services received and efforts expended during the reporting period. If the actual timing of the performance of the services or the level of effort varies from the estimate, the accrual is adjusted accordingly. The expenses for some third-party services may be recognized on a straight-line basis if the expected costs are expected to be incurred ratably during the period. Payments under the contracts depend on factors such as the achievement of certain events or milestones, the allocation of responsibilities among the parties to the agreement, and the completion of portions of the preclinical study or similar conditions. Income Taxes The Company records deferred tax liabilities and assets based on the differences between the consolidated financial statements carrying amounts and the tax basis of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse and establishing a valuation allowance when it was more likely than not that some portion or all of the deferred tax assets would not be realized. Income tax expense consists of the tax payable for the period and the change during the period in deferred tax assets and liabilities. Tax benefits from uncertain tax positions are recognized only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The Company has no material uncertain tax positions for any of the reporting periods presented. Loss Per Share The Company calculates basic and diluted net loss per share attributable to common stockholders in conformity with the two-class method required for participating securities. The Company’s convertible notes contractually entitled the holders of such notes to participate in dividends but did not contractually require the holders to participate in the Company’s losses. As such, the two-class method is not applicable during periods with a net loss. Basic net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, including the weighted average effect of prefunded warrants the Company issued in connection with the 2025 Private Placement and September 2024 Transactions (see Note 15), and without consideration for potentially dilutive securities. The Company determined that the exercise of prefunded warrants requires nominal consideration for the delivery of shares of common stock, and as a result, has considered the shares underlying prefunded warrants to be outstanding effective on the issuance date of the prefunded warrants for purposes of calculated basic net loss per share. F- 13 Diluted net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding, including the weighted average effect of the prefunded warrants, plus dilutive securities. Shares of common stock issuable upon exercise, conversion or vesting of stock options, restricted stock units, warrants and the outstanding Series A convertible preferred stock are considered potential shares of common stock and are included in the calculation of diluted net loss per share using the treasury method when their effect is dilutive. The Company did not have any convertible notes outstanding as of December 31, 2025 or 2024, therefore, there were no potential shares of common stock related to convertible notes included in the calculation of diluted net loss per share. Diluted net loss per share is the same as basic net loss per share for periods in which the effect of potentially dilutive shares of common stock is antidilutive. Segment Reporting The Company operates within a single 1 reportable operating segment being the research and development of cellular therapies. The Company has identified its president and chief executive officer as its chief operating decision maker (“CODM”), who regularly reviews the Company’s performance and allocates resources based on information reported at the consolidated entity level. Concentration of Credit Risk The Company maintains its cash balances in financial institutions located in the United States (the “U.S.”). Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 . The Company’s cash balances are uninsured for deposit accounts that exceed the FDIC insurance limit. In the Company’s business, vendor concentrations could be indicative of vulnerabilities in the Company’s supply chain, which could ultimately impact the Company’s ability to continue its research and development activities. For the years ended December 31, 2025 and 2024, there was no vendor concentration related to the Company’s research and development activities. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between willing market participants. A fair value hierarchy has been established for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows: ● Level 1 Inputs – Valued based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. ● Level 2 Inputs – Valued based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means. ● Level 3 Inputs – Valued based on inputs for which there is little or no market value, which require the reporting entity to develop its own assumptions. ● The carrying amounts reported on the consolidated balance sheet for cash, other receivables, prepaid assets and other current assets, accounts payable and accrued expenses, other current liabilities and other liabilities approximate fair value due to their short maturities. Leases The Company accounts for its leases under ASC Topic 842, Leases. Operating lease liabilities represent the present value of lease payments not yet paid. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepaid or accrued lease payments, initial direct costs, lease incentives and impairment of operating lease assets. If the interest rate implicit in the lease is not readily determinable, the Company uses the incremental borrowing rates for collateralized borrowings in an amount equal to the lease payments under similar terms. F- 14 The Company has elected the practical expedient to not separate non-lease components from the lease components to which they relate and instead account for each as a single lease component for all underlying asset classes. Some leasing arrangements require variable payments that are dependent on usage or may vary for other reasons, such as payments for insurance, tax payments and other miscellaneous costs. The variable portion of payments contemplated in the lease that do not depend on an index or rate are not included in the ROU assets or lease liabilities. Rather, variable payments that do not depend on an index or rate are expensed when the obligation for those payments is incurred and are included in lease expenses. Accordingly, all expenses associated with a lease contract are accounted for as lease expenses. The Company has also elected not to recognize ROU and lease liabilities for short-term leases that have a term of 12 months or less. The Company accounts for lease modifications as a separate contract when the modification (i) grants the lessee an additional right of use not included in the original lease contract, and (ii) increases the lease payments commensurate with the stand-alone price for the additional right of use. In this case, the lease modification would be treated as a new lease and measured in accordance with ASC 842 at the commencement date of the new lease without any impact on the existing lease. Otherwise, the Company accounts for lease modifications as a continuance of the existing lease, in which case, the Company reassesses the lease classification, remeasures the lease liability using an updated discount rate, and unless there is a full or partial termination of the lease, adjusts the ROU asset by the amount of change to the lease liability. For a full or partial lease termination, the lessee reduces the carrying amount of the ROU asset on a basis proportionate to the full or partial termination of the lease, and any difference between the adjustment to the ROU asset and the lease liability is recognized as a gain or loss in the current period. Commitment and Contingencies The Company follows ASC 450-20, Loss Contingencies , to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. Stock-Based Compensation The Company recognizes stock-based compensation expense for equity awards granted to employees, directors and certain consultants. The Company estimates the fair value of stock options using the Black-Scholes option pricing model. The fair value of stock options granted is recognized as expense over the requisite service period on a straight-line basis. Warrants The Company accounts for common stock warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the warrants and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity , and ASC 815 , Derivatives and Hedging . The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, or meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own stock and whether the holders of the warrants could potentially require net cash settlement in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. Convertible Notes The Company accounts for its convertible notes as a liability equal to the proceeds received from issuance, including the embedded conversion feature, plus any interest paid-in-kind, net of the unamortized debt issuance costs and debt discount on the consolidated balance sheets. The Company evaluates all embedded features contained in the convertible notes, such as the conversion feature, the paid-in-kind feature and the redemption feature in the event of a default, to determine if such features require bifurcation as a derivative. The conversion feature included in the convertible notes is not required to be accounted for separately as an embedded derivative because the conversion feature is considered both indexed to the Company’s own stock and qualifies to be classified in stockholders’ equity. The paid-in-kind feature is considered to be a commitment to originate a loan, and the terms of the additional loans have the same terms as the original debt instrument. Therefore, the paid-in-kind feature qualifies for the scope exception under the applicable accounting guidance and is not required to be bifurcated as a derivative. The redemption feature in the event of a default was determined to be clearly and closely related to the convertible notes and not required to be bifurcated as a derivative. F- 15 Proceeds from the sale of convertible notes with stock purchase warrants are allocated to the two elements based on their relative fair values. The portion of the proceeds allocated to warrants are recorded as a debt discount to the convertible note proceeds and presented on a net basis in the consolidated balance sheet. Debt issuance costs directly attributable to the transaction are capitalized and allocated to the convertible notes and warrants in the same manner as the proceeds. The amount of debt issuance costs allocated to the convertible notes represent a reduction of the face value of the convertible note proceeds. The Company amortizes debt issuance costs and debt discounts over the contractual term of the convertible notes, using the effective interest method, as interest expense on the consolidated statements of operations. Recent Accounting Standards Recently Adopted Accounting Standards In December 2023, the Financial Accounting Standard Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Improvements to Income Tax Disclosures , which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. ASU No. 2023-09 was effective for fiscal years beginning after December 15, 2024 and allowed for adoption on a prospective basis, with a retrospective option. The Company adopted this ASU on a prospective basis, and it did not have an impact to the Company’s consolidated financial statements, but it did result in additional disclosures made in the notes to the consolidated financial statements. Recently Issued Accounting Standards to be Adopted In October 2023, the FASB issued ASU No. 2023-06, Disclosure Improvements – Codification Amendment in Response to the SEC’s Disclosure Update and Simplification Initiative. This ASU modified the disclosure and presentation requirements of a variety of codification topics by aligning them with the SEC’s regulations. The amendments to the various topics should be applied prospectively, and the effective date will be determined for each individual disclosure based on the effective date of the SEC’s removal of the related disclosure. If the SEC has not removed the applicable requirements from Regulation S-X or Regulation S-K by June 30, 2027, then this ASU will not become effective. Early adoption is prohibited. The Company does not expect the amendments in this ASU to have a material impact on its consolidated financial statements. In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40). This ASU is intended to improve disclosures about a public business entity’s expenses by requiring disaggregated disclosure, in the notes to the financial statements, of prescribed categories of expenses within relevant income statement captions. ASU No. 2024-03 is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027 (as clarified in ASU No. 2025-01, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date) . Early adoption is permitted. The new standard may be applied either on a prospective or retrospective basis. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements. In November 2024, the FASB issued ASU No. 2024-04, Debt – Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments. This ASU clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. ASU No. 2024-04 is effective for annual reporting periods beginning after December 15, 2025 and interim reporting periods within those annual reporting periods. Early adoption is permitted, and the amendments may be applied on either a prospective or retrospective basis. The Company does not expect the amendments in this ASU to have a material impact on its consolidated financial statements. In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This ASU modernizes the accounting for internal-use software costs by removing all references to prescriptive and sequential software development stages and instead requires capitalization when (i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended have both occurred. ASU No. 2025-06 is effective for fiscal years beginning after December 15, 2027, and interim reporting periods, with early adoption permitted. The Company does not expect the amendments in this ASU to have a material impact on its consolidated financial statements. F- 16 In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. This ASU includes a disclosure principle that requires entities to disclose events since the end of the last reporting period that have a material impact on the entity, which is modeled after the SEC disclosure requirement. This ASU also clarifies the applicability of Topic 270, the types of interim reporting, and the form and content of interim financial statements in accordance with GAAP. For public business entities, this ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company does not expect the amendments in this ASU to have a material impact on its consolidated financial statements. In December 2025, the FASB issued ASU No. 2025-12, Codification Improvements. The amendments in this update represent changes to the Codification that (1) clarify, (2) correct errors, or (3) make minor improvements. The amendments in this ASU are varied in nature and may affect the application of guidance in cases in which the original guidance may have been unclear. This ASU is effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. The Company does not expect the amendments in this ASU to have a material impact on its consolidated financial statements. 4. Contract with Customer During the year ended December 31, 2024, the Company had one contract with a customer that was accounted for under ASC 606 related to an exclusive option and license agreement it entered into in February 2023, and amended in August 2023, with a customer, which provided the customer with the option (the “Option Right”) to obtain an exclusive sublicense of intellectual property from the Company and to request to have the Company develop a customized cell line. The customer paid the Company a $ 0.3 million non-refundable up-front payment (the “Option Fee”) for the Option Right and paid an initial payment of $ 0.4 million to commence the cell line customization activities. In September 2024, the Company assigned this customer contract to Factor Bioscience Limited (“Factor Limited”) whereby all the Company’s rights and obligations under the customer contract are now Factor Limited’s. Factor Limited will pay the Company thirty percent ( 30 %) of all amounts it receives from the customer under the contract in the event that the customer exercises its Option Right, and Factor Limited will pay the Company twenty percent ( 20 %) of all amounts it receives from the customer for the customization activities set forth in the contract. During the year ended December 31, 2025, Factor Limited paid the Company approximately $ 0.5 million, which was 20 % of what Factor Limited received from the customer customization activities. Factor Limited did not pay the Company anything during the year ended December 31, 2024. Prior to assigning the contract to Factor Limited, the Company recognized the $ 0.4 million received from the customer equally over the development period. However, as a result of assigning the customer contract to Factor Limited, and there being no further obligations the Company needed to fulfill for the customization activities, the Company accelerated the recognition of the remaining $ 0.2 million in deferred revenue during the year ended December 31, 2024. Likewise, there being no further obligations regarding the non-refundable payment related to the Option Right, the Company also recognized the $ 0.3 million Option Right payment in full as revenue during the year ended December 31, 2024. During the year ended December 31, 2024, the Company recognized approximately $ 0.6 million in revenue related to this customer contract for the customization activities and Option Right, including the accelerations of revenue recognition discussed above. There was no such revenue recognized during the year ended December 31, 2025. The Company recognized direct labor and supplies used in the customization activities as incurred, which were recorded as a cost of revenue. The Company was also obligated to pay Factor Limited 20 % of any amounts the Company received from a customer that was related to the licensed technology under a previous license agreement the Company had with Factor Limited , which has since been terminated. During the year ended December 31, 2024, the Company recognized approximately $ 0.1 million in fees to Factor Limited , which was recorded as a cost of revenue. There were no direct labor, supplies or license fee recognized during the year ended December 31, 2025. 5. Segment Reporting The CODM uses consolidated net loss as a measure of profit and loss and assesses Company performance through the achievement of its business strategy goals. The CODM is regularly provided with forecasted expense information that is used to determine the Company’s liquidity needs and cash allocation to execute its business strategy, and he uses cash as a measure of segment assets in managing the Company. The Company operates in the U.S., and all of its assets are located in the U.S. F- 17 The table below provides a breakdown of the Company’s significant operating expenses for the years ended December 31, 2025 and 2024 with a reconciliation to net loss for each of those years. The Company’s revenue, the total of which was generated in the U.S., and its cost of revenues for the year ended December 31, 2024 relate to a customer contract that was assigned to Factor Limited in September 2024. The Company did not have any revenue generating contracts during the year ended December 31, 2025. The Company’s purchases of property and equipment were less than $0.1 million for the year ended December 31, 2025 and approximately $0.4 million for the year ended December 31, 2024. Depreciation and amortization expense was $ 0.1 million for each of the years ended December 31, 2025 and 2024. During the year ended December 31, 2025, the Company recognized $ 5.8 million in other expense for the 2025 Private Placement and $ 0.8 million in other income for time-barred liabilities. During the year ended December 31, 2024, the Company recognized $ 22.6 million in other expense, net, related to the September 2024 Transactions. The Company recognized $ 0.1 million and $ 0.2 million in interest income for the years ended December 31 2025 and 2024, respectively, and it recognized interest expense of less than $ 0.1 million and approximately $ 6.8 million during the years ended December 31, 2025 and 2024, respectively. Schedule of Breakdown of Significant Operating Expenses Years ended December 31, 2025 2024 Revenue $ - $ 582 Cost of revenues - 96 Gross profit - 486 Operating expenses: Research and development by significant expense: MSA/license fees 1,847 3,017 Study fees 667 468 Professional fees 812 291 Payroll and related 502 591 Other 1 328 237 Research and development 4,156 4,604 General and administrative by significant expense: Stock-based compensation 1,433 1,431 Payroll and related 1,431 1,607 Professional fees 1,668 4,168 Occupancy expense 29 5,074 Other 2 602 852 General and administrative 5,163 13,132 Gain on lease termination - ( 1,576 ) Total operating expenses 9,319 16,160 Loss from operations ( 9,319 ) ( 15,674 ) Other expense, net: Forward sales contract expense ( 5,847 ) - Gain (loss) on extinguishment of debt 765 ( 22,440 ) Change in fair value of convertible notes - 1,017 Change in fair value to bridge notes derivative liability - ( 1,459 ) Change in fair value of warrant liabilities 1 414 Change in fair value of contingent consideration - 66 Interest income 83 249 Interest expense ( 27 ) ( 6,752 ) Other income, net 215 70 Total other expense, net ( 4,810 ) ( 28,835 ) Loss before income taxes ( 14,129 ) ( 44,509 ) Benefit (provision) for income taxes 45 ( 30 ) Net loss $ ( 14,084 ) $ ( 44,539 ) At December 31, 2025 2024 Cash $ 1,884 $ 1,729 Total assets $ 5,834 $ 5,269 1 Other includes certain lab supply expenses, amounts related to the close out of a former clinical trial, allocated occupancy costs, stock-based compensation, and depreciation. 2 Other includes expenses related to insurance, information technology, travel, banking, depreciation and other miscellaneous expenses. F- 18 6. Basic and Diluted Net Loss per Common Share The following table sets forth the computation of the net loss per share attributable to common stockholders, basic and diluted (in thousands, except per share data): Schedule of Computation of Net Loss Per Share Basic and Diluted Years ended December 31, 2025 2024 Numerator: Net loss attributable to common stockholders $ ( 14,100 ) $ ( 44,555 ) Denominator: Weighted average shares outstanding - basic and diluted 6,307 910 Net loss per common share - basic and diluted $ ( 2.24 ) $ ( 48.96 ) Since the Company was in a net loss position for all periods presented, the net loss per share attributable to common stockholders was the same on a basic and diluted basis, as the inclusion of all potential common equivalent shares outstanding would have been anti-dilutive. The following table presents the amount of stock options, warrants, convertible preferred stock, convertible notes and restricted stock units (“RSUs”) that were excluded from the computation of diluted net loss per share of common stock for the years ended December 31, 2025 and 2024, as their effect was anti-dilutive (in thousands): Schedule of Securities Excluded from the Computation of Diluted Net Loss per Common Stock 2025 2024 Years ended December 31, 2025 2024 Stock options 326 175 Warrants 32 32 Preferred stock converted into common stock 5 2 Total potential common shares excluded from computation 363 209 7. Property and Equipment Property and equipment consist of the following (in thousands): Schedule of Property and Equipment As of December 31, 2025 2024 Laboratory and manufacturing equipment $ 5 $ 28 Furniture and fixtures 34 19 Leasehold improvements 68 - Computer equipment and programs 184 210 Property and equipment, gross 291 257 Less accumulated depreciation and amortization ( 197 ) ( 172 ) Property and equipment, net $ 94 $ 85 During the year ended December 31, 2024, the Company recognized a loss on disposal of assets of approximately $ 0.5 million in connection with the sublease termination agreement related to the Somerville, Massachusetts lease, which is recorded as part of the gain on lease termination on the accompanying consolidated statement of operations for the year ended December 31, 2024 (See Note 12 for more details on the sublease termination agreement). During the year ended December 31, 2025, the Company recognized a de minimis loss on disposal of fixed assets. Depreciation expense was approximately $ 0.1 million for each of the years ended December 31, 2025 and 2024. No depreciation expense is recorded on fixed assets in process until such time as the assets are completed and are placed into service. F- 19 8. Goodwill The Company recorded goodwill in the amount of $ 2.0 million related to a 2018 acquisition that was accounted for as a business combination. The Company performed its annual qualitative assessments as of December 31, 2025 and 2024, and based on those assessments, the Company was unable to conclude that it was more likely than not that the fair value of the entity exceeded its carrying value as of such date. As a result, the Company performed a step-one quantitative assessment and concluded that the fair value of the reporting unit was greater than the carrying value as of December 31, 2025 and 2024, and the goodwill was considered not impaired. Therefore, the Company did not recognize an impairment charge during the years ended December 31, 2025 and 2024. 9. Fair Value of Financial Instruments In connection with the Bridge Notes (as defined in Note 11) on September 24, 2024, the Company recorded a derivative liability of approximately $ 5.5 million, with a corresponding $ 3.9 million reduction in the carrying value of the Bridge Notes recorded as a debt discount and a $ 1.6 million charge to expense for the incremental fair value of the derivative liability. The Company determined the fair value of the derivative liability by taking the difference between the fair value of the Bridge Notes with the conversion feature and without the conversion feature. The Company remeasured the fair value of the Bridge Notes at each reporting period or immediately prior to converting the Bridge Notes to shares of common stock and recorded changes in fair value of approximately $ 0.2 million. Pursuant to the approval of the September 2024 Transactions by the Company’s stockholders at the 2024 Annual Meeting, the Bridge Notes were converted to shares of the Company’s common stock, and the outstanding principal and interest of the Bridge Notes, as well as the derivative liability of approximately $ 5.3 million, were reclassified to equity. As of December 31, 2024, there was no derivative liability balance. In connection with the Exchanged Warrants (as defined in Note 15), the Company reclassified the fair value of the Exchanged Warrants of approximately $ 11.2 million from equity to a liability. The Company determined the fair value of the Exchanged Warrants as of September 24, 2024 by taking the number of shares of common stock issuable from the Exchanged Warrants multiplied by the closing stock price of $ 16.95 and reclassified approximately $ 11.2 million from equity to warrant liabilities. The Company remeasured the fair value of the Exchanged Warrants at each reporting period or immediately prior to exchanging the Exchanged Warrants to shares of common stock and recorded a change in fair value of approximately $ 0.3 million. Upon approval of the September 2024 Transactions at the 2024 Annual Meeting, the Company exchanged the Exchanged Warrants for shares of common stock and reclassified the $ 10.4 million fair value of the Exchanged Warrants from liabilities to equity. There was no remaining Exchanged Warrants liability as of December 31, 2024. The Company issued approximately 23,000 warrants in connection with a private placement during the first quarter of 2022 (the “Q1-22 warrants”), which were determined to be classified as a liability. The Company has also recorded a three-year contingent consideration liability related to an asset acquisition in April 2023, which is recorded in current liabilities at December 31, 2025 due to the Company’s obligation for this liability terminating in April 2026. The Company uses a Black-Scholes option pricing model to estimate the fair value of the Q1-22 warrant liabilities and a Monte Carlo simulation model to estimate the fair value of the contingent consideration liability , both of which are considered a Level 3 fair value measurement. The Company remeasures these liabilities at each reporting period and recognizes changes in their respective fair value in the accompanying consolidated statements of operations. In connection with the 2025 Private Placement, the Company recorded a forward sales contract liability at fair value and recognized $ 5.3 million of expense b ecause the fair value of the expected shares to be purchased by the investors exceeded the proceeds under the 2025 Private Placement . The Company determined the expense related to the forward sales contract by taking the difference between (I) the fair value of the expected shares to be purchased by the investors as of the March 31, 2025 date the Company entered into the 2025 Private Placement and (ii) the discounted purchase price of the shares . The Company remeasured the fair value of the forward sales contract liability at each reporting period or immediately prior to the settlement of the shares purchased under the 2025 Private Placement and recognized approximately $ 0.2 million for the changes in the fair value in the accompanying consolidated statement of operations. During the year ended December 31, 2025, the Company completed the sale of the shares under the 2025 Private Placement, and as a result, the forward sales contract liability was reclassified to equity. There was no remaining forward sales contract liability balance as of December 31, 2025. F- 20 The following table summarizes the liabilities that are measured at fair value as of December 31, 2025 and 2024 (in thousands): Schedule of Liabilities Measured at Fair Value Description Level December 31, 2025 December 31, 2024 Liabilities: Warrant liabilities - Q1-22 warrants 3 $ - $ 1 Contingent consideration 3 $ 41 $ 41 Liability fair value disclosure 3 $ 41 $ 41 Certain inputs used in Black-Scholes and Monte Carlo models may fluctuate in future periods based upon factors that are outside of the Company’s control. A significant change in one or more of these inputs used in the calculation of the fair value may cause a significant change to the fair value of the Company’s warrant liabilities or contingent consideration liabilities, which could also result in material non-cash gains or losses being reported in the Company’s consolidated statements of operations. The following table presents the changes in the liabilities measured at fair value from January 1, 2025 through December 31, 2025 (in thousands): Schedule of Changes in Warrant Liabilities Warrant Liabilities Contingent Consideration Forward Sales Contract Fair value at January 1, 2025 $ 1 $ 41 $ - Initial measurement - - 5,335 Change in fair value ( 1 ) - 512 Reclassification of forward sales contract liability to equity - - ( 5,847 ) Fair value at December 31, 2025 $ - $ 41 $ - The Company remeasured the fair value of the Q1-22 warrants at December 31, 2025, and the result of the remeasurement was de minimis. The Company assessed the fair value of the contingent consideration liability at each reporting period through December 31, 2025 and determined that there were no material changes to the inputs used in the December 31, 2024 remeasurement that would have resulted in a material change to the liability at December 31, 2025. Therefore, the Company did not recognize a change in fair value of the contingent consideration liability for the year ended December 31, 2025. 10. Accounts Payable and Accrued Expenses During the year ended December 31, 2025, the Company requested its legal counsel to provide guidance with respect to vendor collectability of various accounts payable and accrued expenses carried on its balance sheet from 2020 and prior. Based on the review of the statute of limitations for the various jurisdictions by which the liabilities were governed, legal counsel provided a conclusion as to whether such statute of limitation had expired in the respective jurisdiction. The statute of limitations is an affirmative defense in which the defendant introduces evidence, which, if found to be credible, will negate criminal or civil liability, even if it is proven the defendant committed the alleged acts. The party raising the affirmative defense has the burden of proof on establishing that it applies. In a civil action in which a creditor demands payment on a written instrument evidencing a debt, the successful assertion of the statute of limitations defense will bar collection of the debt. In order to assert the statute of limitations as a defense, a defendant must specifically assert the defense is the answer. If a defendant fails to specifically plead the defense, it will be deemed to be waived. Since no action to enforce such liabilities was brought before December 31, 2025, it is our legal counsel’s opinion that the liabilities are time-barred from collection under the respective state laws and should be removed from the Company’s balance sheet. Therefore, the Company wrote off approximately $ 0.6 million of accounts payable and approximately $ 0.2 million of accrued expenses, which resulted in a gain on extinguishment of debt of $ 0.8 million report in the accompanying consolidated statement of operations for the year ended December 31, 2025. The Company did not write off any time-barred liabilities for the year ended December 31, 2024. F- 21 Accrued expenses at December 31, 2025 and 2024 consisted of the following (in thousands): Schedule of Accrued Expenses December 31, 2025 December 31, 2024 Professional fees $ 535 $ 446 Legal matters 336 323 Accrued compensation 12 12 Other 15 226 Total accrued expenses $ 898 $ 1,007 11. Promissory Notes and Bridge Notes Promissory Notes On March 11, 2025, the Company received $ 1.5 million for the issuance of a promissory note in the principal amount of $ 1.5 million to Charles Cherington, and on March 21, 2025 the Company received $ 0.8 million for the issuance of a second promissory note in the principal amount of $ 0.8 million to Mr. Cherington. The promissory notes had a maturity date of the earlier of (i) June 15, 2025 or (ii) upon the Company receiving $ 5.0 million in gross proceeds from a subsequent capital raise. Each of the promissory notes accrued interest at a rate of 5.0 % per annum, payable at maturity. As a result of completing the 2025 Private Placement discussed in Note 15, the Company offset the outstanding principal plus accrued interest on the notes in full in the aggregate amount of $ 2.3 million with the receivable due to the Company from Mr. Cherington for his purchase of shares in the 2025 Private Placement, and as of December 31, 2025, there were no outstanding balances on the notes. Bridge Notes Financing On September 24, 2024, the Company entered into a purchase agreement with certain purchasers for the private placement of $ 3.9 million of convertible notes (the “Bridge Notes”). The interest rate on the Bridge Notes was 12 % per year, payable quarterly in arrears. At the Company’s election, it may pay interest either in cash or in-kind by increasing the outstanding principal amount of the Bridge Notes. The Bridge Notes were to mature on the one 1 -year anniversary of the date of their issuance, unless earlier converted or repurchased. The Company did not have the option to redeem any of the Bridge Notes prior to maturity. The Bridge Notes financing closed on September 24, 2024. The only conversion event for the Bridge Notes was upon stockholder approval at the Company’s annual meeting of stockholders on October 29, 2024 (the “2024 Annual Meeting”), in which case, 100 % of the principal amount of the Bridge Notes plus all accrued and unpaid interest thereon, and interest that would have accrued on the principal amount through December 24, 2024, would automatically convert into shares of the Company’s common stock at a conversion price of $ 7.50 . Otherwise, the Bridge Notes could only be paid in cash upon maturity. The Company was required to bifurcate the conversion feature from the Bridge Notes and record it as a derivative liability at its fair value. The Company determined the fair value of the derivative liability by taking the difference between the fair value of the Bridge Notes with the conversion feature and without the conversion feature, which resulted in the Company recording a $ 5.5 million derivative liability, with a corresponding $ 3.9 million reduction in the carrying value of the Bridge Notes recorded as a debt discount and a $ 1.6 million charge to expense for the incremental fair value of the derivative liability as of September 24, 2024. The debt discount was amortized as a component of interest expense. During the year ended December 31, 2024, the Company remeasured the fair value of the Bridge Notes derivative liability and recorded a reduction in the liability of $ 0.2 million. The corresponding credit of $ 0.2 million was recorded as a component of the fair value adjustments to Bridge Notes derivative liability on the accompanying consolidated statement of operations for the year ended December 31, 2024, which also includes the $ 1.6 million incremental expense noted above. See Note 9 for more information on the fair value of the Bridge Notes. On October 29, 2024, all of the Bridge Notes were converted to common stock as part of the September 2024 Transactions (as defined in Note 15) that the Company’s stockholders approved at the 2024 Annual Meeting. As of December 31, 2025 and 2024, there were no liabilities remaining on the Bridge Notes. F- 22 12. Leases Operating Leases As of December 31, 2025, the Company had operating leases for offices in the Borough of Manhattan in New York, New York (the “Manhattan Lease”), and Cambridge, Massachusetts (the “Cambridge Lease”), which expire in 2027 and 2028, respectively. During the year ended December 31, 2024, the Company entered into a sublease termination agreement with a sublessor related to a sublease of office, laboratory, and research and development space in Somerville, Massachusetts (the “Somerville Sublease Termination Agreement”), which was effective on August 31, 2024. Prior to the Somerville Sublease Termination Agreement, the Company was paying approximately $ 0.6 million per month in base rent, parking, common area maintenance costs and taxes under the Somerville Sublease, which was originally scheduled to expire in 2033. Pursuant to the Somerville Sublease Termination Agreement, the Company agreed to the following: to surrender and vacate the premises; that the Company’s right, title and interest in all furniture, fixtures and laboratory equipment at the premises will become the property of the sublessor; and that both parties will be released of their obligations under the sublease. As a result of the sublease termination, the Company recognized a gain on lease termination of approximately $ 1.6 million for the year ended December 31, 2024, which includes a loss on disposal of fixed assets of approximately $ 0.5 million. For the years ended December 31, 2025 and 2024, the net operating lease expenses were as follows (in thousands): Schedule of Net Operating Lease Expense 2025 2024 Years ended December 31, 2025 2024 Operating lease expense $ 271 $ 4,447 Sublease income ( 84 ) ( 84 ) Variable lease expense 21 893 Total lease expense $ 208 $ 5,256 The tables below show the beginning balances of the operating ROU assets and lease liabilities as of January 1, 2025 and the ending balances as of December 31, 2025, including the changes during the period (in thousands). Schedule of Operating Lease Right-of-use Assets and Liabilities Operating Lease ROU Assets Operating lease ROU assets at January 1, 2025 $ 670 Amortization of operating lease ROU assets ( 198 ) Remeasurment of ROU asset 14 Impairment of ROU asset ( 33 ) Operating lease ROU assets at December 31, 2025 $ 453 Operating Lease Liabilities Operating lease liabilities at January 1, 2025 $ 684 Principal payments on operating lease liabilities ( 208 ) Remeasurment of lease liability 14 Operating lease liabilities at December 31, 2025 490 Less non-current portion ( 277 ) Current portion at December 31, 2025 $ 213 The Cambridge Lease, which commenced in June 2021, included a tenant improvement allowance of up to $ 50,000 (the “TI Allowance”), which was not paid or payable at lease commencement, and the amount of payment from the lessor was contingent on future events (e.g., the timing and the amount of qualified costs the Company incurs to construct leasehold improvements). Therefore, the TI Allowance was not previously included in the consideration of the contract when the Company measured the lease liability and ROU asset. F- 23 During the year ended December 31 2025, the Company made some leasehold improvements to the Cambridge office space of approximately $ 0.1 million, of which $ 50,000 qualified to be reimbursed under the TI Allowance. As a result, the contingent aspects of the TI Allowance were resolved and became fixed, which resulted in the Company remeasuring the lease liability. The TI Allowance of $ 50,000 was deducted from the ROU asset balance immediately prior to the re-measurement. The remaining unpaid lease payments, including the reimbursement of the TI Allowance, which is considered a reduction in the consideration of the contract, were then remeasured using the current index and interest rate and resulted in an approximately $ 14,000 increase to the lease liability, with a corresponding adjustment to the ROU asset. The $ 0.1 million of leasehold improvements was recorded as a fixed asset and is being depreciated over the remaining lease term. During the year ended December 31, 2025, the Company tested the Manhattan Lease ROU asset for recoverability and determined that the carrying value of the ROU asset was more than its fair value. As a result, the Company recognized an impairment loss of approximately $ 33,000 during the year ended December 31, 2025, which was recorded in general and administrative expense in the accompanying consolidated statement of operations. There were no impairment losses recognized for the year ended December 31, 2024. As of December 31, 2025, the Company’s operating leases had a weighted-average remaining life of 2.2 years with a weighted-average discount rate of 11.93 %. The maturities of the operating lease liabilities are as follows (in thousands): Maturities of Operating Lease Liabilities As of December 31, 2025 2026 $ 254 2027 200 2028 95 Total payments 549 Less imputed interest ( 59 ) Total operating lease liabilities $ 490 In February 2026, the Company entered into a lease termination agreement related to the Manhattan Lease. See Note 18 for more information on this agreement. Manhattan Sublease In April 2019, the Company entered into a sublease with an unaffiliated third party (the “Subtenant”), whereby the Subtenant agreed to sublease the space rented by the Company under the Manhattan Lease. The term of this sublease expires on October 31, 2026 with no option to extend. Rent payments by the Subtenant under the sublease began on September 1, 2019. The sublease stipulates an annual rent increase of 2.25 %. The Subtenant is also responsible for paying to the Company all tenant energy costs, annual operating costs, and annual tax costs attributable to the subleased space during the term of the sublease. The Company received sublease payments of approximately $ 0.1 million for each of the years ended December 31, 2025 and 2024, respectively. The Company treats the sublease as a separate lease, as the Company was not relieved of the primary obligation under the related lease. The Company continues to account for the related lease as a lessee and in the same manner as prior to the commencement date of the sublease. The Company accounts for the sublease as a lessor of the lease. The sublease is classified as an operating lease, as it does not meet the criteria of a sale-type or direct financing lease. In February 2026, the Company entered into a sublease termination agreement with the Subtenant. See Note 18 for more information on this agreement. 13. Commitments and Contingencies Litigation Matters The Company is involved in litigation and arbitrations from time to time in the ordinary course of business. Legal fees and other costs associated with such actions are expensed as incurred. In addition, the Company assesses the need to record a liability for litigation and contingencies. The Company reserves for costs relating to these matters when a loss is probable, and the amount can be reasonably estimated. F- 24 Donoghue v. Cherington and Ernexa Dennis J. Donoghue, a security owner of the Company, initiated a lawsuit against the Company as a nominal defendant, and Charles Cherington as defendant, on October 20, 2025 in the Southern District of New York (Case No. 25-cv-8653) alleging a violation of Section 16(b) of the Securities Exchange Act of 1934, 15 U.S.C. Section 78p(b) and seeking recovery of alleged short swing profits by Mr. Cherington (the “Donoghue Matter”). On December 19, 2025, Mr. Donoghue, the Company and Mr. Cherington entered into a settlement agreement. Novellus, Inc. v. Sowyrda et al., C.A. No. 2184CV02436-BLS2 On October 25, 2021 Novellus, Inc. filed a complaint in the Superior Court of Massachusetts, Suffolk County, against former Novellus, Inc. employees Paul Sowyrda and John Westman and certain other former investors in Novellus LLC (Novellus, Inc.’s former parent company prior to our acquisition of Novellus, Inc.), alleging breach of fiduciary duty, breach of contract and civil conspiracy. The Company acquired Novellus, Inc. on July 16, 2021. On May 27, 2022 Novellus, Inc. amended the complaint to withdraw all claims against all defendants except Paul Sowyrda and John Westman. Since 2022, the parties have engaged in legal proceedings relating to alleged conduct that took place before the Company acquired Novellus, Inc., including certain counterclaims against Novellus LLC, Novellus Inc., Factor Bioscience Inc., Christopher Rohde, Matthew Angel and the Company (the “Counterclaim Defendants”). On July 31, 2024, Counterclaim Defendants and Sowyrda informed the Court that they had reached a settlement and requested that all claims pending between them be dismissed with prejudice, and on August 9, 2024, the Court approved the motion for approval of dismissal of all such claims with prejudice. On April 22, 2025, Counterclaim Defendants and Westman reached a confidential settlement with an effective date of April 30, 2025. Such settlement included the issuance of 20,000 shares of the Company’s common stock and a cash payment of less than $0.1 million. On May 27, 2025, Counterclaim Defendants and Westman filed stipulation of dismissal with prejudice with the Court. Licensing Agreements On September 24, 2024, the Company entered into the Exclusive License and Collaboration Agreement (“the Factor L&C Agreement”) with Factor Limited. The Factor L&C Agreement terminated a previous license agreement, as well as a license that the Company acquired from a third party pursuant to an asset purchase agreement in April 2023. Under the Factor L&C Agreement, the Company has obtained exclusive licenses in the fields of cancer, autoimmune disorders, and rare diseases with respect to certain licensed technology and has the right to develop the licensed technology directly or enter into co-development agreements with partners who can help bring such technology to market. The Factor L&C Agreement also provides for certain services and materials to be provided by Factor Limited to facilitate the development of the licensed technology and to enable the Company to scale up production at third party facilities. The initial term of the Factor L&C Agreement is one year after the effective date, and it automatically renews yearly thereafter. The Company may terminate the Factor L&C Agreement for any reason upon 90 days’ written notice to Factor Limited, and the parties otherwise have customary termination rights, including in connection with certain uncured material breaches and specified bankruptcy events. Pursuant to the Factor L&C Agreement, the Company will pay Factor Limited approximately $ 0.2 million per month for the first twelve months, approximately $ 0.1 million per month for the first nine months toward patent costs, certain milestone payments, royalty payments on net sales of commercialized products and sublicensing fee payments. F- 25 Contingent Consideration The Company has recorded a three-year contingent consideration liability related to an asset acquisition in April 2023. If during the three-year period since April 26, 2023, the Company’s market cap equals or exceeds $100 million for at least ten consecutive trading days, then the Company will issue to the seller shares of the Company’s common stock equal to (a) $2.0 million divided by (b) the quotient of $100 million divided by the number of the Company’s then issued and outstanding shares of common stock. If during that three-year period, the Company’s market cap equals or exceeds $200 million for at least ten consecutive trading days, then the Company will issue to the seller additional shares of the Company’s common stock equal to (a) $2.0 million divided by (b) the quotient of $200 million dividend by the number of the Company’s then issued and outstanding shares of common stock. As discussed in Note 9, the Company records the contingent consideration liability at its fair value, and as of December 31, 2025 the fair value of the liability was approximately $ 41,000 . The contingent consideration obligation will expire on April 26,2026 . Retirement Savings Plan The Company offers to its eligible employees a defined contribution plan, organized under Section 401(k) of the Internal Revenue Code, through its co-employment arrangement with its professional employer organization (“PEO”). Under this arrangement, the PEO serves as the plan sponsor and administrator. Eligible employees may defer up to 100 % of their annual compensation or a specific amount imposed by the Internal Revenue Service, whichever is less. The Company matches employees’ contributions at a rate of 100 % of the first 3 % of the employee’s contribution and 50 % of the next 2 % of the employee’s contribution, for a maximum Company match of 4 %. The Company matched less than $ 0.1 million towards employees’ 401k contributions for each of the years ended December 31, 2025 and 2024. 14. Stock-Based Compensation Equity Incentive Plans The Company’s stock-based compensation plans consist of the Restated 2020 Equity Incentive Plan (the “Restated 2020 Plan”) and the 2021 Inducement Equity Incentive Plan (the “2021 Inducement Plan”). The Company’s board of directors has designated its compensation committee as the administrator of the foregoing plans (the “Plan Administrator”). Among other things, the Plan Administrator selects persons to receive awards under the foregoing plans and determines the number of shares subject to each award and the terms, conditions, performance measures, if any, and other provisions of the award. The Restated 2020 Plan provides for (a) approximately 48,000 shares of common stock that can be issued under the Restated 2020 Plan, which includes an increase to the Restated 2020 Plan of 20,000 that was approved by the Company’s stockholders at the 2023 annual meeting of stockholders in June 2023, and (b) an annual increase in the number of shares reserved for issuance on January 1 of each year from 2022 through 2031 equal to the lesser of (i) 5 % of the number of shares of common stock outstanding on the immediately preceding December 31 and (ii) such smaller number of shares of common stock as may be determine by the board of directors (the provision providing for the increase described in clause (b) is referred to as the “evergreen provision”). Pursuant to the evergreen provision, shares issuable under the Restated 2020 Plan was increased by approximately 206,000 in the aggregate. Awards under the Restated 2020 Plan may be granted to officers, directors, employees and consultants of the Company. Stock options granted under the Restated 2020 Plan may either be incentive stock options or nonqualified stock options, may have a term of up to ten years , and are exercisable at a price per share not less than the fair market value, as defined in the Restated 2020 Plan, on the date of grant. As of December 31, 2025, there were approximately 326,000 stock options outstanding and no RSUs outstanding under the Restated 2020 Plan. As of December 31, 2025, there were approximately 2,000 shares of common stock remaining to be issued under the Restated 2020 Plan. The 2021 Inducement Plan provides for the grant of up to 5,000 share-based awards as material inducement awards to new employees in accordance with the employment inducement grant rules set forth in Section 711(a) of the NYSE American LLC Company Guide (the Company’s common stock was listed on the NYSE American at the time the 2021 Inducement Plan was adopted). The 2021 Inducement Plan expires in May 2031. As of December 31, 2025, there were approximately 5,000 shares of common stock remaining to be issued under the 2021 Inducement Plan. As of December 31, 2025, there were no stock options outstanding and or RSUs outstanding under the 2021 Inducement Plan. F- 26 Equity Awards Stock Options The following weighted-average assumptions were used for stock options granted during the years ended December 31, 2025 and 2024: Schedule of Weighted-Average Assumptions Used for Stock Options Granted 2025 2024 Year ended December 31, 2025 2024 Weighted average risk-free rate 4.34 % 4.44 % Weighted average volatility 118.75 % 98.09 % Dividend yield 0 % 0 % Expected term 7.11 years 6.04 years The risk-free rate is based on the observed interest rates appropriate for the expected term. The expected term (estimated period of time outstanding) of the stock options granted is estimated using the “simplified” method as permitted by the SEC’s Staff Accounting Bulletin No. 110, Share-Based Payment . Expected volatility is based on the volatility of the Company’s peer group over the expected term of the stock option granted, and the Company assumes no dividends. Forfeitures are recognized as incurred. The following table summarizes stock option activity for the years ended December 31, 2025 and 2024 (in thousands except for per-share and remaining contractual life data): Schedule of Stock Option Activity Outstanding Options Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value Outstanding January 1, 2024 26 $ 675 7.04 $ - Granted 166 26 Cancelled ( 17 ) 120 Outstanding December 31, 2024 175 113 8.77 - Granted 160 4 Cancelled ( 9 ) 1,636 Outstanding December 31, 2025 326 $ 18 8.67 $ - Options vested and exercisable at December 31, 2025 137 $ 27 8.45 $ - The per-share weighted average grant-date fair value of stock options granted during the year ended December 31, 2025 and 2024 was $ 3.68 and $ 20.77 , respectively. As of December 31, 2025, the unamortized stock-based compensation expense related to outstanding unvested options was approximately $ 1.4 million with a weighted average remaining requisite service period of 1.37 years. The Company expects to amortize this expense over the remaining requisite service period of these stock options. Vesting of all stock options is subject to continuous service with the Company through their applicable vesting dates. On January 1, 2024, Sanjeev Luther was appointed as President, Chief Executive Officer and a director of the Company. Upon his appointment, he was granted a non-qualified stock option to purchase approximately 112,000 shares of the Company’s common stock. The stock option has an exercise price of $ 27 per share, which was equal to the fair market value (as defined in the 2020 Restated Equity Incentive Plan) of the Company’s common stock on the date of grant, will vest over four years , with 25 % of the shares vesting on the first anniversary of the grant date and the remaining 75 % of the shares vesting in equal monthly installments over the three years thereafter, in each case, subject to continued service. The stock option was granted pursuant to the terms of Mr. Luther’s employment agreement and as a material inducement to his joining the Company in accordance with Nasdaq Listing Rule 5635(c)(4). F- 27 On April 26, 2024, the vesting terms of Mr. Luther’s stock option award were amended so that the option vests over three years , with 25 % of the shares vesting on the first anniversary of the grant date and the remaining 75 % of the shares will vest in equal monthly installments over the remaining two years , in each case, subject to continued service. Since the only modification to Mr. Luther’s stock option award was to the vesting terms, there was no change to the fair value of the stock option and the total compensation cost was unchanged. However, the total compensation cost will be recognized over three years rather than four years, and as a result, the Company recognized approximately $ 0.1 million in additional stock-based compensation expense during the year ended December 31, 2024 as a result of the modification. There was no modification expense recorded during the year ended December 31, 2025. Restricted Stock Units The following table summarizes RSU activity for the years ended December 31, 2025 and 2024 : Schedule of RSU Activity Outstanding Restricted Stock Units Weighted Average Fair Value per Share January 1, 2024 59 $ 4,830 Released ( 29 ) 4,830 December 31, 2024 30 4,830 Released ( 30 ) 4,816 December 31, 2025 - $ - The Company recognizes the fair value of RSUs granted as expense on a straight-line basis over the requisite service period. For performance based RSUs, the Company begins recognizing the expense once the achievement of the related performance goal is determined to be probable. Outstanding RSUs are settled in an equal number of shares of common stock on the vesting date of the award. An RSU award is settled only to the extent vested. Vesting generally requires the continued employment or service by the award recipient through the respective vesting date. Because RSUs are settled in an equal number of shares of common stock without any offsetting payment by the recipient, the measurement of cost is based on the quoted market price of the stock at the measurement date, which is the grant date. In lieu of paying cash to satisfy withholding taxes due upon the settlement of vested RSUs, at the Company’s discretion, an employee may elect to have shares of common stock withheld that would otherwise be issued at settlement, the value of which is equal to the amount of withholding taxes payable. During the years ended December 31, 2025 and 2024, less than 1,000 RSUs vested in each year, and as of December 31, 2025, there are no RSUs outstanding. Stock-Based Compensation Expense For the years ended December 31, 2025 and 2024, the Company recognized stock-based compensation expense as follows (in thousands): Schedule of Stock-Based Compensation Expense 2025 2024 Years ended December 31, 2025 2024 Research and development $ 63 $ 89 General and administrative 1,433 1,431 Total $ 1,496 $ 1,520 15. Stockholders’ Equity and Warrants 2025 Private Placement On March 31, 2025, the Company entered into a securities purchase agreement (the “2025 SPA”) with certain accredited investors to sell in a private placement an aggregate of approximately 4,621,000 shares of common stock at a purchase price of $ 1.569 per share (or pre-funded warrants in lieu of common stock at a purchase price of $ 1.494 per pre-funded warrant). The pre-funded warrants will be exercisable until exercised in full at a nominal exercise of $ 0.075 per share and may not be exercised to the extent such exercise would cause the holder to beneficially own more than 4.99% or 9.99% , as applicable, of the Company’s outstanding common stock. F- 28 The 2025 SPA represented a forward sale contract obligating the Company to sell a fixed number of shares of its common stock at a fixed price per share and contained an adjustment to the settlement amount based on shareholder approval, which is not an input into the pricing of a fixed-for-fixed forward on equity shares. The Company measured the fair value of the forward sale contract as the difference between (i) the fair value of the expected shares to be purchased by the investors as of the date the Company entered into the 2025 SPA and (ii) the discounted purchase price of the shares and recorded a liability of approximately $ 5.3 million at the contract inception date. The Company also recognized a corresponding $ 5.3 million charge to expense on the contract inception date because the fair value of the expected shares to be purchased by the investors exceeded the expected proceeds under the 2025 SPA. During the year ended December 31, 2025, the Company sold the following shares of common stock and pre-funded warrants under the 2025 SPA (in thousands): Schedule of Common Stock and Pre-funded Warrants Date Common Stock Pre-funded Warrants Gross Proceeds April 2, 2025 662 34 $ 1,090 June 9, 2025 3,182 622 5,921 June 27, 2025 121 - 190 3,965 656 $ 7,201 The shares sold on April 2, 2025 (the “First Closing”) represented 19.99 % of the Company’s outstanding shares of common stock as of March 31, 2025. The shares sold in June 2025 (the “Second Closing”) were subject to satisfaction or waiver of certain conditions, including without limitation, receipt of stockholder approval for such issuance as required under applicable Nasdaq listing rules, which the Company received at the 2025 Annual Meeting. Immediately before each settlement date, the Company remeasured the fair value of the respective forward sales contract liability and recognized changes in fair value of approximately $ 0.5 million in the accompanying consolidated statement of operations. Upon settlement, the Company then reclassified the respective forward sales contract liability to equity. For the year ended December 31, 2025, the Company recognized $ 5.8 million of forward sales contract expense. During the year ended December 31, 2025, the Company reclassified the $ 5.8 million forward sales contract liability to equity, and at December 31, 2025, there was no forward sales contract liability balance. September 2024 Transactions 2024 Exchange Transaction On September 24, 2024, the Company entered into exchange agreements (the “Exchange Agreements”) with (i) the holders of all convertible notes issued in convertible note financings during 2023 (the “2023 Convertible Notes), (ii) all holders of warrants issued in connection with the 2023 Convertible Notes and (iii) substantially all of the holders of warrants issued in December 2022 (the “December 2022 Warrants”). One holder of a December 2022 Warrants to purchase approximately 9,000 shares of our common stock did not enter into the Exchange Agreement. Subject to approval by the Company’s stockholders at the 2024 Annual Meeting, under the Exchange Agreements (i) the holders of the warrants agreed to exchange all their warrants for shares of the Company’s common stock at an exchange ratio of 0.50 shares of a share of common stock for every one share of common stock issuable upon exercise of the applicable warrant (rounded up to the nearest whole number), and (ii) the holders of the convertible notes agreed to exchange all their convertible notes for shares of the Company’s common stock at an exchange ratio equal to (A) the sum expressed in U.S. dollars of (1) the principal amount of the applicable convertible note, plus (2) all accrued and unpaid interest thereon through the date the applicable convertible note is exchanged plus (3) all interest that would have accrued through, but not including, the maturity date of applicable convertible note if it was outstanding from the date such convertible note is exchanged through its maturity date (the sum of (A) totaling approximately $ 28.4 million), divided by (B) $ 15.00 (rounded up to the nearest whole number) (the “Exchange Transactions”). F- 29 The Company determined that the modifications to the convertible notes should be accounted for as an extinguishment of debt because there was at least a 10 % change in the cash flows of the modified debt instrument compared to the carrying amount of the original debt instrument, and as such, the difference between the reacquisition price (which includes any premium) and the net carrying amount of the debt being extinguished (which includes any deferred debt issuance costs) should be recognized as a gain or loss when the debt is extinguished. As of September 24, 2024, prior to entering into the Exchange Agreements, there was approximately $ 10.1 million of net carrying amount of the 2023 Convertible Notes, which was comprised of $ 19.4 million of principal and accrued interest through such date, offset by approximately $ 9.3 million of unamortized debt issuance costs. Upon entering into the Exchange Agreements, the fair value of the 2023 Convertible Notes was $ 32.0 million and was determined by multiplying approximately 1,890,000 shares the Company would be issuing on October 29, 2024 by the closing stock price of $ 16.95 per share on September 24, 2024. The difference between the reacquisition price and the net carrying amount of the 2023 Convertible Notes being extinguished was approximately $ 21.9 million. Accordingly, the Company increased the carrying value of the 2023 Convertible Notes to $ 32.0 million and recognized a loss on extinguishment of debt of approximately $ 21.9 million during the year ended December 31, 2024. As discussed further below, upon conversion of the Convertible Notes to shares of common stock on October 29, 2024, the Company recorded $ 1.0 million in income for the change in fair value of the shares of common stock being issued. Because shareholder approval was required for the Exchange Transactions to occur, the Company determined that the modifications to the Exchanged Warrants resulted in a change in classification from equity to liability. A provision that requires shareholder approval precludes equity classification because such approval is not an input into a fixed-for-fixed valuation model. As a result, the Company recorded the Exchanged Warrants at fair value as of September 24, 2024 by taking the number of shares of common stock issuable from the exchanged warrants multiplied by the closing stock price of $ 16.95 and reclassified approximately $ 11.2 million from equity to warrant liabilities. The Company remeasured the fair value of the Exchanged Warrants at each reporting period or immediately prior to exchanging the Exchanged Warrants to shares of common stock and recorded a change in fair value of approximately $ 0.3 million. A corresponding credit of $ 0.3 million was recognized as a change in fair value of warrant liabilities for the year ended December 31, 2024 on the accompanying consolidated statement of operations. 2024 Private Placement On September 24, 2024, the Company entered into a securities purchase agreement (the “2024 SPA”) with certain accredited investors to sell in a private placement an aggregate of approximately 101,000 shares of the Company’s common stock (or, in lieu thereof, pre-funded warrants to purchase one share of our common stock) for a purchase price of $ 11.25 per share of common stock and $ 11.175 per pre-funded warrant (the “2024 Private Placement” and together with the Bridge Notes and the Exchange Transactions, the “September 2024 Transactions”). The closing of the 2024 Private Placement was conditioned upon receiving stockholder approval at the 2024 Annual Meeting. The 2024 SPA represented a forward sale contract obligating the Company to sell a fixed number of shares of its common stock at a fixed price per share upon obtaining shareholder approval at the 2024 Annual Meeting. The Company measured the fair value of the forward sale contract as the difference between (A) the fair value of the expected shares to be purchased by the investors as of the date the Company entered into the 2024 SPA and (B) the purchase price of the shares and recorded approximately $ 0.6 million to additional paid-in capital as of September 24, 2024. Because of the concurrent execution of the 2024 SPA and the Exchange Agreements, and because the investors in the 2024 SPA were also parties to the Exchange Transactions, the $ 0.6 million was added to the $ 21.9 million loss on extinguishment of debt discussed above for a total loss of $ 22.4 million during the year ended December 31, 2024 in the accompanying consolidated statement of operations. Summary of Shares Issued in the September 2024 Transactions On October 29, 2024, the Company held the 2024 Annual Meeting, the Company’s stockholders approved the September 2024 Transactions, and as a result, the following occurred on October 29, 2024: ● Under the 2024 Private Placement, the Company issued approximately 93,000 shares of common stock and pre-funded warrants to purchase approximately 8,000 shares of common stock and received approximately $ 1.1 million in gross proceeds from the issuance of such securities. The pre-funded warrants have an exercise price of $ 0.075 per share, are exercisable at any time and will not expire until exercised in full. F- 30 ● Under the Bridge Notes, approximately $ 3.0 million of the principal amount of the Bridge Notes plus all accrued and unpaid interest thereon, plus such amount of interest that would have accrued on the principal amount through December 24, 2024, was automatically converted at a conversion price of $ 7.50 into approximately 416,000 shares of the Company’s common stock and approximately $ 0.9 million of the principal amount of the Bridge Notes plus all accrued and unpaid interest thereon, plus such amount of interest that would have accrued on the principal amount through December 24, 2024, was automatically converted at a conversion price of $ 7.50 into pre-funded warrants to purchase approximately 118,000 shares of common stock. The pre-funded warrants have an exercise price of $ 0.075 per share, are exercisable at any time and will not expire until exercised in full. As of October 29, 2024, there were no Bridge Notes outstanding. ● Under the Exchange Transactions, (i) the holders of the Exchanged Warrants exchanged approximately 1,327,000 warrants for approximately 663,000 shares of the Company’s common stock, and (ii) the holders of the Convertible Notes exchanged all their Convertible Notes for approximately 1,890,000 shares of our common stock for a total of 2,553,000 shares of our common stock under the Exchange Transactions. As of October 29, 2024, there were no Convertible Notes outstanding. Warrants As of December 31, 2025, the Company had the following common warrants outstanding: Schedule of Warrants Outstanding Warrants Outstanding (in thousands) Exercise Price Issuance Date Expiration Date Classification Q1-22 Warrants 23 $ 572.98 03/09/22 09/09/27 Liability December 2022 Warrants 9 $ 21.45 12/02/22 06/02/28 Equity Prefunded warrants 75 $ 0.075 10/29/24 None Equity Prefunded warrants 34 $ 0.075 04/02/25 None Equity Prefunded warrants 274 $ 0.075 06/09/25 None Equity 415 As of December 31, 2025, the weighted average remaining contractual life of expiring warrants outstanding was 1.90 years and the weighted average exercise price for the expiring warrants was $ 411.74 . The prefunded warrants do not expire and have a weighted average exercise price of $ 0.075 . The following table shows the warrant activity for the years ended December 31, 2025 and 2024 (in thousands): Schedule of Warrants Activity Outstanding January 1, 2024 Granted Exchanged Outstanding December 31, 2024 Granted Exercised Outstanding December 31, 2025 Q1-22 Warrants 23 - - 23 - - 23 December 2022 Warrants 9 - - 9 - - 9 Exchanged Warrants 1,229 98 ( 1,327 ) - - Prefunded warrants - 125 - 125 656 ( 398 ) 383 Total 1,261 223 ( 1,327 ) 157 656 ( 398 ) 415 Stock Repurchase Program In November 2024, the Company’s Board of Directors authorized a stock repurchase program (the “Repurchase Program”) of up to $ 1.0 million of the Company’s outstanding common stock. Under the Repurchase Program, the repurchases may be made by the Company from time to time through open-market purchases, privately negotiated transactions or other means in accordance with applicable securities laws. The timing and amount of repurchases will be determined by the Company, taking into consideration market conditions, stock price, and other factors. The Repurchase Program does not have a set expiration date and may be suspended, modified or discontinued at any time without prior notice. The Company did no t repurchase any of its shares under the Repurchase Program during the years ended December 31, 2025 or 2024. F- 31 Cumulative Convertible Preferred Stock The Company has authorized 156,000 shares of preferred stock, all of which is designated as Series A Cumulative Convertible Preferred Stock (the “Series A Preferred Stock”), and all of which were issued and outstanding as of December 31, 2025 and 2024. The Series A Preferred Stock provides for a cumulative annual dividend of $ 0.10 per share, payable in semi-annual installments in June and December. Dividends may be paid in cash or with shares of common stock. The Company issued approximately 7,000 shares of common stock for the payment of dividends during the year ended December 31, 2025. The Company paid approximately $ 8,000 in cash and issued approximately 1,000 shares of common stock for payment of dividends during the year ended December 31, 2024. The Series A Preferred Stock has no voting rights and has a $ 1.00 per share liquidation preference over the Company’s common stock. The holder of shares of Series A Preferred Stock has the right at any time to convert such shares into that number of shares of common stock that equals the number of shares of Series A Preferred Stock divided by the conversion rate. At December 31, 2025, the conversion rate was 32.3618 and, based on that conversion rate, one share of Series A Preferred Stock would have converted into approximately 0.03 shares of common stock, and all the outstanding shares of the Series A Preferred Stock would have converted into approximately 5,000 shares of common stock in the aggregate. There were no conversions during the years ended December 31, 2025 and 2024. There is no mandatory conversion term, date or any redemption features associated with the Series A Preferred Stock. The conversion rate will adjust under the following circumstances: (i) If the Company (a) pays a dividend or makes a distribution in shares of its common stock, (b) subdivides its outstanding shares of common stock into a greater number of shares, (c) combines its outstanding shares of common stock into a smaller number of shares, or (d) issues by reclassification of its shares of common stock any shares of its common stock (other than a change in par value, or from par value to no par value, or from no par value to par value), then the conversion rate in effect immediately prior to the applicable event will be adjusted so that the holders of the Series A Preferred Stock will be entitled to receive the number of shares of common stock which they would have owned or have been entitled to receive immediately following the happening of the event, had the Series A Preferred Stock been converted immediately prior to the record or effective date of the applicable event. (ii) If the outstanding shares of the Company’s common stock are reclassified (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision, combination or stock dividend), or if the Company consolidates with or merge into another corporation and the Company is not the surviving entity, or if the Company sells all or substantially all of its property, assets, business and goodwill, then the holders of the Series A Preferred Stock will thereafter be entitled upon conversion to the kind and amount of shares of stock or other equity securities, or other property or assets which would have been receivable by such holders upon such reclassification, consolidation, merger or sale, if the Series A Preferred Stock had been converted immediately prior thereto. (iii) If the Company issues common stock without consideration or for a consideration per share less than the then applicable Equivalent Preference Amount (as defined below), then the Equivalent Preference Amount will immediately be reduced to the amount determined by dividing (A) an amount equal to the sum of (1) the number of shares of common stock outstanding immediately prior to such issuance multiplied by the Equivalent Preference Amount in effect immediately prior to such issuance and (2) the consideration, if any, received by the Company upon such issuance, by (B) the total number of shares of common stock outstanding immediately after such issuance. The “Equivalent Preference Amount” is the value that results when the liquidation preference of one share of Series A Preferred Stock (which is $ 1.00 ) is multiplied by the conversion rate in effect at that time; thus the conversion rate applicable after the adjustment in the Equivalent Preference Amount as described herein will be the figure that results when the adjusted Equivalent Preference Amount is divided by the liquidation preference of one share of Series A Preferred Stock. SEPA On May 1, 2025, the Company’s $ 10.0 million SEPA with Lincoln Park expired in accordance with its terms. The Company did not sell any shares under the SEPA during the years ended December 31, 2025 or 2024. F- 32 16. Income Taxes Loss before income taxes consist of the following (in thousands): Schedule of Loss Before Income Taxes 2025 2024 Years ended December 31, 2025 2024 (in thousands) Domestic $ ( 14,129 ) $ ( 44,529 ) Foreign - 20 Total loss before income taxes $ ( 14,129 ) $ ( 44,509 ) For each of the years ended December 31, 2025 and 2024, current tax provisions and current deferred tax provisions were recorded as follows (in thousands): Schedule of Income Tax Provision 2025 2024 Years ended December 31, 2025 2024 Current Tax Provision Federal $ - $ - State 3 3 Foreign - - Current tax provision 3 3 Deferred Tax Provision Federal 19 - State ( 67 ) 27 Foreign - - Deferred tax provision ( 48 ) 27 Total tax provision (benefit) for income taxes $ ( 45 ) $ 30 Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Realization of net deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. The table below consists of the Company’s net deferred tax assets and liabilities as of December 31, 2025 and December 31, 2024 (in thousands). Deferred tax assets have been substantially reserved for by a valuation allowance since it is more likely than not that such tax benefits will not be realized. Schedule of Deferred Tax Assets and Liabilities 2025 2024 As of December 31, 2025 2024 Deferred Tax Assets: Net operating losses $ 19,420 $ 16,496 Foreign net operating losses - 782 Stock compensation 2,325 2,646 In-process research and development 704 1,030 Capitalized research and development expenses 3,336 4,548 Accrued expenses 52 192 R&D credit carryforwards 437 437 ROU Liabilities 103 187 Other 27 29 Total gross deferred tax assets 26,404 26,347 Valuation allowance ( 26,145 ) ( 26,023 ) Net deferred tax assets 259 324 Deferred Tax Liabilities: ROU Assets ( 95 ) ( 183 ) Intangibles - goodwill ( 205 ) ( 229 ) Total deferred tax liabilities ( 300 ) ( 412 ) Net deferred taxes $ ( 41 ) $ ( 88 ) F- 33 The reconciliation between the Company’s effective tax rate on income from continuing operations and the federal statutory tax rate of 21 % for the years ended December 31, 2025 and 2024 is as follows (in thousands, except for percentages): Schedule of Reconciliation of Computed Expected Income Taxes to Effective Income Taxes As of December 31, 2025 2024 $ % $ % Current tax at federal statutory rate $ ( 2,967 ) 21.00 % $ ( 9,347 ) 21.00 % State income tax, net of federal tax (a) ( 51 ) 0.36 % ( 1,315 ) 2.95 % Foreign tax differential - 0.00 % - 0.00 % Non-deductible expenses/excludable items 21 ( 0.15 )% 24 ( 0.05 )% Financing costs 1,022 ( 7.23 )% - 0.00 % Convertible debt - 0.00 % 4,079 ( 9.16 )% Credits - 0.00 % 79 ( 0.18 )% Other 12 ( 0.09 )% ( 1,210 ) 2.72 % Change in valuation allowance 1,918 ( 13.58 )% 7,720 ( 17.35 )% (Provision) benefit for income taxes $ ( 45 ) 0.31 % $ 30 ( 0.07 )% (a) For the years ended December 31, 2025, state taxes in Massachusetts made up the majority (greater than 50%) of the tax effect in this category. The net change in the total valuation allowance for the year ended December 31, 2025 was an increase of approximately $ 0.1 million. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. Management considered the scheduled reversal of deferred tax liabilities, projected future taxable income and planning strategies in making this assessment. Based on the level of historical operating results and projections for the taxable income for the future, management has determined that it is more likely than not that the deferred taxes assets will not be utilized. Accordingly, the Company has recorded a full valuation allowance. The net deferred tax liability represents an indefinite life intangible liability related to tax deductible goodwill, partially offset by an indefinite life deferred tax asset. At December 31, 2025 and 2024, the Company has available net operating loss (“NOL”) carryforwards of approximately $ 71.5 million and $ 62.1 million for federal income tax purposes, respectively, of which approximately $ 70.8 million can be carried forward indefinitely. Federal NOL carryforwards generated after tax year 2021 are subject to an 80% limitation on taxable income, do not expire and will carryforward indefinitely. The Company has available $ 55.2 million and $ 52.6 million state NOLs for the years ended December 31, 2025 and 2024, respectively, which begin to expire in 2041 . The Company also has foreign NOL carryforwards of approximately $ 6.3 million for each of the years ended December 31, 2025 and 2024, which carry forward indefinitely . Section 382 of the Internal Revenue Code (“IRC”) imposes limits on the ability to use NOL carryforwards that existed prior to a change in control to offset future taxable income. Such limitations would reduce, potentially significantly, the gross deferred tax assets disclosed in the table above related to the NOL carryforwards. The Company continues to disclose the NOL carryforwards at their original amount in the table above as no potential limitation has been quantified. The Company has also established a full valuation allowance for all deferred tax assets, including the NOL carryforwards, since the Company could not conclude that it was more likely than not able to generate future taxable income to realize these assets. The Company has federal and state income tax credit carryforwards of approximately $ 0.4 million at both December 31, 2025 and 2024. The credits begin to expire in 2041. In accordance with authoritative guidance, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. The following table summarizes amounts the Company recorded for uncertain tax positions as of December 31, 2025 and 2024 (in thousands): Schedule of Uncertain Tax Positions 2025 2024 As of December 31, 2025 2024 Beginning balance of uncertain tax positions $ 393 $ 393 Additions based on current year’s tax positions - - Net changes based on prior year’s tax positions - - Ending balance of uncertain tax positions $ 393 $ 393 F- 34 It is reasonably possible that unrecognized tax benefits may increase or decrease within the next twelve months due to tax examination changes, expiration of statute of limitations, or changes in tax law. The Company does not anticipate any significant changes to unrecognized tax benefits over the next 12 months. The Company recognizes interest and penalties related to unrecognized tax positions within the income tax expense line in the accompanying consolidated statements of operations. There were no accrued interest and penalties associated with uncertain tax positions as of December 31, 2025 or December 31, 2024. The Company is also subject to certain non-income taxes such as value added taxes, sales taxes and property taxes. The Company has taken certain positions that management feels, although not free from doubt, should not result in a successful challenge by certain tax authorities. The Company is subject to U.S. federal, state, and foreign income tax. The Company’s income tax returns are subject to examination by the relevant taxing authorities. As of December 31, 2025, the 2022 – 2025 tax years remain subject to examination in the U.S. federal tax, various state, and foreign tax jurisdictions. The Company is not currently under examination by federal state, or foreign jurisdictions. For the years ended December 31, 2025, the components of total income taxes paid, net of refunds, by jurisdiction were as follows (in thousands): Summary of Income Tax Examinations Year ended December 31, 2025 Federal $ - State: California 2 Massachusetts 1 Total state 3 Total cash paid for income taxes (net of refunds) $ 3 The table above excludes jurisdictions that do not meet the 5% of total taxes paid reporting threshold for the respective periods. On July 4, 2025, the One Big Beautiful Bill (“OBBBA”) was enacted, introducing significant and wide-ranging changes to the U.S. federal tax system. Significant components include restoration of 100% accelerated tax depreciation on qualifying property including expansion to cover qualified production property. Another major aspect includes the return to immediate expensing of domestic research and experimental expenditures (“R&E”), which in some cases may include retroactive application back to 2021 for businesses with gross receipts of less than $ 31 million or accelerated tax deductions of R&E that was previously capitalized for larger businesses. The legislation also reinstates EBITDA-based interest deductions for tax purposes and makes several business tax incentives permanent. Less favorable business provisions include limitations on tax deductions for charitable contributions. The OBBBA modified the U.S. International Tax provisions for Global Intangible Low-Taxed Income (“GILTI”), Foreign-Derived Intangible Income (“FDII”), and the Base-erosion Anti-abuse Tax (“BEAT”) effective for tax years starting after December 31, 2025. The tax rate on GILTI, now renamed to Net CFC Tested Income (“NCTI”), is now 12.6 %. The FDII rules, now renamed to Foreign Derived Deduction Eligible Income (“FDDEI”), now carry a 14 % tax rate on FDDEI eligible income. The OBBB Act increases the BEAT rate from 10 % to 10.5 %. 17. Related Party Transactions Recent Financings Investors who participated in the September 2024 Transactions and the 2025 Private Placement that are discussed in Note 15 and in the 2026 Offering discussed in Note 18 included Charles Cherington. Mr. Cherington participated in the applicable financing under the same terms and subject to the same conditions as all the other investors. Mr. Cherington served on the Company’s board of directors from March 2021 to July 6, 2023. As of December 31, 2025, Mr. Cherington owned approximately 35 % of the Company’s outstanding common stock, and after the 2026 Offering and exercise of the related prefunded warrants, he owned approximately 23 %. F- 35 March 2025 Promissory Notes On March 11, 2025, the Company received $ 1.5 million for the issuance of a promissory note in the principal amount of $ 1.5 million to Mr. Cherington, and on March 21, 2025 the Company received $ 0.8 million for the issuance of a second promissory note in the principal amount of $ 0.8 million to Mr. Cherington. The promissory notes had a maturity date of the earlier of (i) June 15, 2025 or (ii) upon us receiving $ 5 million in gross proceeds from a subsequent capital raise. Each of the promissory notes accrued interest at a rate of 5.0 % per annum, payable at maturity. Upon issuance of the notes, Mr. Cherington owned approximately 32 % of our outstanding common stock and currently owns approximately 25 % of our outstanding common stock. As a result of completing the 2025 Private Placement discussed in Note 15, the Company repaid the outstanding principal plus accrued interest on the notes in full in the aggregate amount of $ 2.3 million, and as of September 30, 2025, there were no outstanding balances on the notes. 18. Subsequent Events 2026 Offering On February 6, 2026, the Company entered into a placement agency agreement (the “Placement Agency Agreement”) with Brookline Capital Markets, a division of Arcadia Securities, LLC (the “Placement Agent”), pursuant to which the Company engaged the Placement Agent for the 2026 Offering, which included the public offering of (i) 19.0 million shares (the “Shares”) of the Company’s common stock, par value $ 0.005 per share (“Common Stock”) and accompanying Milestone Warrants to purchase 19.0 million shares of Common Stock, at a combined offering price of $ 0.50 per share of Common Stock and accompanying Milestone Warrant and (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase 2.0 million shares of Common Stock and accompanying Milestone Warrants to purchase 2.0 million shares of Common Stock, at a combined offering price of $ 0.49 per Pre-Funded Warrant and accompanying Milestone Warrant. In connection with the 2026 Offering, the Company also entered into a securities purchase agreement (each, a “Purchase Agreement”) with certain investors who purchased Shares, Pre-Funded Warrants and Milestone Warrants in the 2026 Offering. The Pre-Funded Warrants are immediately exercisable subject to certain ownership limitations, have an exercise price of $ 0.01 per share, and may be exercised at any time until all of the Pre-Funded Warrants are exercised in full. On February 11, 2026 and February 18, 2026, the holder of the Pre-Funded Warrants exercised 1.3 million and 0.7 million Pre-Funded Warrants, respectively, for a total exercise price of approximately $ 20,000 . There are no remaining Pre-Funded Warrants related to the 2026 Offering outstanding. On February 6, 2026, the Milestone Warrants commenced trading on The Nasdaq Capital Market under the symbol “ERNAW.” The Milestone Warrants are immediately exercisable subject to certain ownership limitations, have an exercise price of $ 0.68 per share, and expire on the earlier of (i) the five (5)-year anniversary of the original issuance date or (ii) the 180 th calendar day following the public release by the Company of clinical trial data from the first cohort of the Phase 1 study of ERNA-101. F- 36 Pursuant to the Placement Agency Agreement, the Company paid the Placement Agent an aggregate cash fee of approximately $ 0.5 million, which was equal to 6.5% of the aggregate purchase price paid by investors in the Offering (or 1.5% with respect to certain existing investors). The Company will also pay the Placement Agent a cash fee as compensation for gross proceeds the Company receives from any exercise of any Milestone Warrants sold in connection with the 2026 Offering, payable quarterly on each January 1, April 1, July 1 and October 1 following the closing of the 2026 Offering (or the following business day if such day is not a business day), at the same percentage and as calculated in the manner as set forth above. The Company also issued approximately 0.2 million shares of Common Stock to the Placement Agent (the “Agent’s Shares”), which was equal to 1.5% of the aggregate number of Shares and Pre-Funded Warrants sold in the Offering (or 0.5% with respect to sales to certain existing investors). In addition, the Company reimbursed the Placement Agent for its accountable offering-related legal expenses in an amount of $ 125,000 . The 2026 Offering closed on February 10, 2026, for aggregate gross proceeds of approximately $ 10.5 million before deducting Placement Agent fees and other offering expenses payable by the Company. The Company intends to use the net proceeds from the 2026 Offering to support the advancement of its development programs, working capital and general corporate purposes. The Placement Agency Agreement and the Purchase Agreements contain customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company, the Placement Agent, or the investors, as the case may be, and other obligations of the parties. Pursuant to the terms of the Purchase Agreements and the Placement Agency Agreement, the Company has agreed that for a period of ninety (90) days from the closing of the 2026 Offering, that neither the Company nor any subsidiary may (i) issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock equivalents or (ii) file any registration statement or prospectus, or any amendment or supplement thereto, in each case, subject to certain exceptions. The Company has also agreed not to effect or enter into an agreement to effect any issuance of Common Stock or Common Stock equivalents involving a Variable Rate Transaction, as defined in the Purchase Agreements, for a period of ninety (90) days following the closing of the 2026 Offering, subject to certain exceptions, unless waived by the Placement Agent. In addition, as part of the Purchase Agreement, subject to certain exceptions, the Company’s officers and directors entered into lock-up agreements, pursuant to which they agreed not to sell or otherwise dispose of any of the Common Stock for a period of ninety (90) days following the date of closing of the 2026 Offering. On February 10, 2026, the Company also entered into a Warrant Agent Agreement (the “Warrant Agent Agreement”) with it transfer agent pursuant to which the transfer agent agreed to act as warrant agent with respect to the Milestone Warrants. Lease and Sublease Termination Agreements On February 16, 2026, the Company entered into a sublease termination agreement with the Subtenant of the Manhattan Lease (the “Manhattan Sublease Termination Agreement”) effective March 13, 2026. Pursuant to the Manhattan Sublease Termination Agreement, the Subtenant agreed to surrender and vacate the premises in exchange for a sublease termination payment of approximately $ 0.1 million to the Company. On February 18, 2026, the Company entered into a lease termination agreement with the lessor of the Manhattan Lease (the “Manhattan Lease Termination Agreement”) effective March 13, 2026. Pursuant to the Manhattan Lease Termination Agreement, the Company agreed to surrender and vacate the premises in exchange for a lease termination payment of approximately $ 0.1 million to the lessor. F- 37