Moleculin Biotech, Inc. 10-Q

ITEM 1A. RISK FACTORS For information regarding factors that could affect our results of operations, financial condition and liquidity, refer to the section entitled “Risk Factors” in Part I, Item 1A in our annual report on Form 10-K for the year ended December 31, 2024. Except as set forth below, there have been no material changes from the risk factors previously disclosed in our annual report on Form 10-K for the year ended December 31, 2024, as filed with the SEC. We are not in compliance with multiple of Nasdaq’s continued listing requirements and if we are unable to regain compliance with the listing requirements, our common stock will be delisted from Nasdaq which could have a material adverse effect on our financial condition and could make it more difficult for stockholders to sell their shares. Our common stock is listed on Nasdaq, and we are therefore subject to its continued listing requirements, including requirements with respect to the market value of publicly held shares, market value of listed shares, minimum bid price per share, and minimum stockholder’s equity, among others, and requirements relating to board and committee independence. If we fail to satisfy one or more of the requirements, we may be delisted from Nasdaq. On May 23, 2025, we received a letter from the Staff of the Listing Qualifications Department of Nasdaq notifying us that we do not presently comply with Nasdaq’s Listing Rule 5550(b)(1) (the “Equity Rule”), which requires that we maintain a minimum of $2.5 million in stockholders’ equity, and that we also do not meet the alternatives of market value of listed securities or net income from continuing operations set forth in the Equity Rule. We have submitted a plan to regain compliance. If our plan is accepted, the Staff can grant an extension of up to 180 calendar days from May 23, 2025 to evidence compliance. After review of the plan of compliance, the Staff will provide written notification to us whether it accepts the plan, and if the Staff does not accept the plan, we would then be entitled to appeal the Staff’s determination to the Nasdaq Hearings Panel. There can be no assurance that, if we do appeal the determination to the Nasdaq Hearings Panel, that such appeal would be successful. We are accounting for the Series E warrants issued in the June 2025 Offering as a warrant liability at fair value as of issuance and any subsequent changes in fair value each reporting period will be reported in earnings, as either a gain or loss. The initial accounting for the warrant liability and the future impact of changes in fair value on earnings will have an adverse effect on our net income and our stockholders’ equity. Additionally, such warrant liability may hinder our ability to meet the stockholders’ equity required in the Equity Rule. On June 27, 2025, we received another deficiency letter from the Staff of the Listing Qualifications Department of Nasdaq notifying us that for the last 30 consecutive business days the bid price for our common stock had closed below the minimum $1.00 per share requirement for continued inclusion on the Nasdaq pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). In accordance with Nasdaq Listing Rule 5810(c)(3)(A) (the “Compliance Period Rule”), we have been provided an initial period of 180 calendar days, or until December 24, 2025 (the “Compliance Date”), to regain compliance with the Bid Price Rule. If, at any time before the Compliance Date, the bid price for our common stock closes at $1.00 or more for a minimum of 10 consecutive business days as required under the Compliance Period Rule, the Staff will provide written notification to us that we comply with the Bid Price Rule, unless the Staff exercises its discretion to extend this 10 day period pursuant to Nasdaq Listing Rule 5810(c)(3)(H). If we are not in compliance with the Bid Price Rule by December 24, 2025, we may be afforded a second 180 calendar day period to regain compliance. To qualify, we would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for Nasdaq, except for the minimum bid price requirement. In addition, we would be required to notify Nasdaq of our intent to cure the minimum bid price deficiency, which may include, if necessary, implementing a reverse stock split. If we do not regain compliance with the Bid Price Rule by the Compliance Date and are not eligible for an additional compliance period at that time, the Staff will provide written notification to us that our common stock may be delisted. We would then be entitled to appeal the Staff’s determination to a Nasdaq Listing Qualifications Panel and request a hearing. There can be no assurance that, if we do appeal the delisting determination by the Staff to the Nasdaq Listing Qualifications Panel, such appeal would be successful. 20 Table of Contents Delisting from Nasdaq would adversely affect our ability to raise additional financing through the public or private sale of equity securities, may significantly affect the ability of investors to trade our securities and may negatively affect the value and liquidity of our common stock. Delisting also could have other negative results, including the potential loss of employee confidence, the loss of institutional investors and general investors that will consider investing in our common stock, a reduction in the number of market makers in our common stock, a reduction in the availability of information concerning the trading prices and volume of our common stock, a reduction in the number of broker-dealers willing to execute trades in shares of our common stock or interest in business development opportunities. Further, we would likely become a “penny stock”, which would make trading of our common stock more difficult. Our ability to regain compliance with Nasdaq ’ s bid price requirements may be hindered by the June 2025 Offering we completed and the future exercises of the Series E warrants. As discussed in the prior risk factor, on June 27, 2025, we received a deficiency letter from the Staff of the Listing Qualifications Department of Nasdaq notifying us that for the last 30 consecutive business days the bid price for our common stock had closed below the minimum $1.00 per share requirement for continued inclusion on Nasdaq. The future exercise of the Series E warrants issued in the June 2025 Offering we completed may depress our common stock price. In addition, if the exercise price adjustment provisions of the Series E warrants are triggered in the future, which would cause a reduction in the exercise price of the Series E warrants (subject to the floor price) and a proportionate increase in the number of shares underling the Series E warrants, such event may further depress our common stock price. In order to increase our common stock price, we may in the future complete a reverse stock split. If we complete a reverse stock split and the lowest daily volume weighted average price during the period commencing five consecutive trading days immediately preceding and the five consecutive trading days commencing on the date of such split is less than the exercise price of the Series E warrants then in effect, then the exercise price of the Series E warrants will be reduced to the lowest daily volume weighted average price during such period and, following the date our shareholders approve an increase in our authorized shares of common stock, the number of shares issuable upon exercise will be proportionately adjusted such that the aggregate price will remain unchanged, subject to the floor price. This future potential adjustment of the Series E warrants may significantly increase the number of shares of common stock underlying the Series E warrants and cause dilution to our shareholders. At our Annual Meeting of Stockholders to be held on August 18, 2025, we will seek stockholder approval granting our Board of Directors authority to effect a reverse stock split of the outstanding shares of our common stock, at a reverse stock split ratio of between 1-for-2 to 1-for-30 (or any whole number in between), as determined by the Board in its sole discretion, prior to the one-year anniversary of such approval. We will require additional financing in the near term, which financing may result in the reduction of the exercise price of the Series E warrants we issued in our June 2025 Offering and the increase in the number of shares underlying the Series E warrants, which would dilute the ownership interest of our stockholders. Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is expensive. We will require substantial additional future capital in order to complete clinical development and commercialize Annamycin. The Series E warrants we issued in the June 2025 Offering provide that if, while the Series E warrants are outstanding, we sell any common stock and/or common stock equivalents other than in connection with certain exempt issuances, at a purchase price per share less than the exercise price of the Series E warrants in effect immediately prior to such sale, then immediately after such sale the exercise price of the Series E warrants then in effect will be reduced to an amount equal to the new issuance price, and, following the date that we amend our certificate of incorporation to increase our authorized shares of common stock, the number of shares issuable upon exercise of the Series E warrants will be proportionately adjusted such that the aggregate price will remain unchanged, subject to the floor price. The floor price is $0.12, and the total number of shares potentially issuable under the Series E warrants if the exercise price of the Series E warrants was reduced to the floor price would be 148,740,000 shares of common stock. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. MINE SAFETY DISCLOSURE Not applicable.