Alaunos Therapeutics, Inc. 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer and our principal accounting officer, we have evaluated the effectiveness of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) or 15d-15(e) promulgated under the Exchange Act, as of December 31, 2024. Based on that evaluation, our principal executive officer and principal financial officer has concluded that as of December 31, 2024, our disclosure controls and procedures were not effective. We note that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving the stated goals under all potential future conditions. Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive officer and principal financial officer and our principal accounting officer and effected by our board of directors, management and other personnel, 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 and includes those policies and procedures that: • Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; • Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and • Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. Under the supervision and with the participation of management, including our principal executive officer and principal financial officer and our principal accounting officer, we assessed our internal control over financial reporting as of December 31, 2024, based on criteria for effective internal control over financial reporting established in Internal Control - Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Our management’s assessment of the effectiveness of our internal control over financial reporting included testing and evaluating the design and operating effectiveness of our internal controls. In management’s opinion, we have determined that our internal controls over our financial reporting was not effective due to the lack of sufficient number of personal to allow for the required segregation of duties as of December 31, 2024, based on the criteria discussed above. Inherent Limitations on Internal Controls Our management do not expect that our disclosure controls and procedures or our internal controls over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute 56 assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Changes in Internal Controls over Financial Reporting There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) of the Exchange Act) that occurred during the year ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information Trading Plans During the year ended December 31, 2024, no director or Section 16 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. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections None. 57 PART III Item 10. Directors, Executive Officers and Corporate Governance The information required by this Item 10 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2025 Annual Meeting of Stockholders and is incorporated herein by reference. Policy Prohibiting Insider Trading and Related Procedures. Our insider trading policy has been reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and Nasdaq listing standards . Our Insider Trading Policy is filed hereto as Exhibit 19.1 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Item 11. Executive Compensation The information required by this Item 11 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2025 Annual Meeting of Stockholders and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this Item 12 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2025 Annual Meeting of Stockholders and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by this Item 13 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2025 Annual Meeting of Stockholders and is incorporated herein by reference. Item 14. Principal Accountant Fees and Services The information required by this Item 14 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2025 Annual Meeting of Stockholders and is incorporated herein by reference. 58 PART IV Item 15. Exhibits, Financial Statement Schedules (1) Financial Statements: The Financial Statements required to be filed by Item 8 of this Annual Report, and filed in this Item 15, are as follows: Page Report of Independent Registered Public Accounting Firm F- 1 Report of Independent Registered Public Accounting Firm F-2 Balance Sheets as of December 31, 2024 and 2023 F-3 Statements of Operations for the Years Ended December 31, 2024 and 2023 F-4 Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2024 and 2023 F-5 Statements of Cash Flows for the Years Ended December 31, 2024 and 2023 F-6 Notes to Financial Statements F-7 (2) Financial Statement Schedules: Schedules are omitted because they are not applicable, or are not required, or because the information is included in the financial statements and notes thereto. (3) Exhibits: Exhibit No. Description of Document 2.1 Agreement and Plan of Merger among the Registrant (formerly “EasyWeb, Inc.”), ZIO Acquisition Corp. and ZIOPHARM, Inc., dated August 3, 2005 (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K, SEC File No. 000-32353, filed August 9, 2005). 3.1 Third Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Registrant's Form 8-K filed July 17, 2024) 3.2 Amended and Restated Certificate of Designation, Preferences and Rights of Series 1 Preferred Stock, as filed with the Delaware Secretary of State on July 1, 2016 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K/A, SEC File No. 001-33038, filed July 1, 2016). 3.3 Amended and Restated Bylaws of the Registrant, dated as of September 21, 2020 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, SEC File No. 001-33038, filed September 22, 2020). 4.1 Specimen common stock certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form SB-2, SEC File No. 333-129020, filed October 14, 2005). 4.2 Form of Option for the Purchase of Shares of common stock dated August 30, 2004 and issued to The University of Texas M. D. Anderson Cancer Center (incorporated by reference to Exhibit 4.6 to the Registrant’s Annual Report on Form 10-KSB, SEC File No. 000-32353, filed March 20, 2006). 4.3 Schedule identifying Material Terms of Options for the Purchase of Shares of Common Stock (incorporated by reference to Exhibit 4.7 to the Registrant’s Annual Report on Form 10-KSB, SEC File No. 000-32353, filed March 20, 2006). 4.4 Form of Warrant to Purchase Common Stock (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K SEC File No. 001-33038 filed November 13, 2018). 4.5# Warrant to Purchase Common Stock issued to The University of Texas M. D. Anderson Cancer Center (incorporated by reference to Exhibit 4.7 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 2, 2020). 4.6 Form of Warrant to Purchase Shares of Common Stock issued to SVB and certain of its Affiliates, dated December 28, 2021 (incorporated by reference to Exhibit 4.6 to the Registrant's Annual Report on Form 10-K, SEC File No. 001-33038, filed March 30, 2022). 4.7 Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (incorporated by reference to Exhibit 4.7 to the Registrant's Annual Report on Form 10-K, SEC File No. 001-33038, filed March 30, 2022). 10.2+ Employment Agreement, dated as of January 21, 2024, by and between the Registrant and Dale Curtis Hogue (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q, SEC File No. 001-33038, filed May 15, 2024. 10.3+ ZIOPHARM Oncology, Inc. 2012 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K SEC File No. 001-33038 filed September 24, 2018). 10.4+ Form of Restricted Stock Agreement Granted Under the ZIOPHARM Oncology, Inc. 2012 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K SEC File No. 001-33038 filed June 26, 2012). 10.5+ Form of Option Agreement Granted Under the ZIOPHARM Oncology, Inc. 2012 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K SEC File No. 001-33038 filed June 26, 2012). 59 10.7+ Form of Inducement Award Grant Notice and Inducement Award Grant Agreement (incorporated by reference to Exhibit 99.3 to the Registrant’s Registration Statement on Form S-8, SEC File No. 333-238090, filed May 8, 2020). 10.8+ ZIOPHARM Oncology, Inc. 2020 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K SEC File No. 001-33038 filed July 1, 2020). 10.9+ Form of Restricted Stock Agreement Granted Under the ZIOPHARM Oncology, Inc. 2020 Equity Incentive Plan (incorporated by reference to Exhibit 10.9 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 1, 2021 ). 10.10+ Form of Stock Option Agreement Granted Under the ZIOPHARM Oncology, Inc. 2020 Equity Incentive Plan (incorporated by reference to Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 1, 2021 ). 10.11+ Form of Indemnity Agreement for directors and executive officers (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K, SEC File No. 001-33038, filed January 31, 2013). 10.16+ Employment Agreement, dated August 24, 2021, by and between the Registrant and Kevin S. Boyle Sr. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, SEC File No. 001-33038, filed August 30, 2021). 10.23# Form of Retention Bonus Agreement (incorporated by reference to Exhibit 10.20 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 1, 2021). 10.24# License Agreement by and among the Registrant, Intrexon Corporation and The University of Texas System Board of Regents on behalf of The University of Texas M.D. Anderson Cancer Center dated as of January 13, 2015 (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K, SEC File No. 001-33038, filed January 28, 2015). 10.25† Exclusive License Agreement by and between the Registrant, Precigen, Inc. and Intrexon Corporation, dated October 5, 2018 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q, SEC File No. 001-33038, filed November 9, 2018). 10.26# Amendment No. 1 to the Exclusive License Agreement by and between the Registrant and PGEN Therapeutics, Inc. (formerly known as Precigen, Inc.), dated October 15, 2020 (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q SEC File No. 001-33038, filed November 5, 2020). 10.27 Amended and Restated Exclusive License Agreement, dated, April 3, 2023, by and between the Registrant and Precigen, Inc. (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q SEC File No. 001-33038, filed May 10, 2023). 10.28† License and Collaboration Agreement by and among the Registrant, Intrexon Corporation and Ares Trading S.A. dated as of March 27, 2015 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, SEC File No. 001-33038, filed April 2, 2015). 10.29# Research and Development Agreement by and among the Registrant, Intrexon Corporation and The University of Texas M.D. Anderson Cancer Center dated as of August 17, 2015 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, SEC File No. 001-33038, filed August 21, 2015). 10.30 First Amendment to the Research and Development Agreement by and among the Registrant, Intrexon Corporation and The University of Texas M.D. Anderson Cancer Center dated as of August 30, 2016 (incorporated by reference to Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 5, 2019). 10.31 Second Amendment to the Research and Development Agreement by and among the Registrant, Intrexon Corporation and The University of Texas M.D. Anderson Cancer Center dated as of January 17, 2017 (incorporated by reference to Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 5, 2019). 10.32 Third Amendment to the Research and Development Agreement by and among the Registrant, Intrexon Corporation and The University of Texas M.D. Anderson Cancer Center dated as of November 14, 2017 (incorporated by reference to Exhibit 10.23 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 5, 2019). 10.33 Fourth Amendment to Research and Development Agreement, dated September 19, 2019 by and among the Registrant, The University of Texas MD Anderson Cancer Center and Precigen, Inc. (incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q, SEC File No. 001-33038, filed November 7, 2019). 10.34# Fifth Amendment to Research and Development Agreement, dated October 22, 2019 by and among the Registrant and The University of Texas MD Anderson Cancer Center (incorporated by reference to Exhibit 10.20 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 2, 2020). 10.35# 2019 Research and Development Agreement, dated October 22, 2019, by and between the Registrant and The University of Texas MD Anderson Cancer Center (incorporated by reference to Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 2, 2020). 10.36# Patent License Agreement, dated as of May 28, 2019, by and between the Registrant and the National Cancer Institute (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q, SEC File No. 001-33038, filed August 8, 2019). 10.37# First Amendment to Patent License Agreement, dated as of January 8, 2020, by and between the Registrant and the National Cancer Institute (incorporated by reference to Exhibit 10.23 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 2, 2020). 60 10.38# Second Amendment to Patent License Agreement, dated as of September 28, 2020, by and between the Registrant and the National Cancer Institute (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q, SEC File No. 000-33038, filed November 5, 2020). 10.39# Third Amendment to Patent License Agreement, dated as of April 16, 2021, by and between the Registrant and the National Cancer Institute (incorporated by reference to Exhibit 10.38 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 30, 2022). 10.40# Fourth Amendment to Patent License Agreement, dated as of May 4, 2021, by and between the Registrant and the National Cancer Institute (incorporated by reference to Exhibit 10.39 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 30, 2022). 10.41# Fifth Amendment to Patent License Agreement, dated as of August 13, 2021, by and between the Registrant and the National Cancer Institute (incorporated by reference to Exhibit 10.40 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 30, 2022). 10.42# Cooperative Research and Development Agreement, dated January 9, 2017, by and among the Registrant, the National Cancer Institute, and Intrexon Corporation (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K SEC File No. 001-33038, filed September 26, 2019). 10.43 First Amendment to the Cooperative Research and Development Agreement, dated March 23, 2018, by and among the Registrant, National Cancer Institute, Intrexon Corporation and Precigen, Inc. (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K SEC File No. 001-33038, filed September 26, 2019). 10.44# Second Amendment to the Cooperative Research and Development Agreement, dated February 1, 2019, by and among the National Cancer Institute, the Registrant and Precigen, Inc. (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K SEC File No. 001-33038, filed September 26, 2019). 10.45 Third Amendment to the Cooperative Research and Development Agreement, dated March 15, 2022, by and among the National Cancer Institute and the Registrant (incorporated by reference to Exhibit 10.44 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 30, 2022). 10.46 Fourth Amendment to the Cooperative Research and Development Agreement, dated June 24, 2022, by and between the National Cancer Institute and the Registrant (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q, SEC File No. 001-33038, filed August 15, 2022). 10.47 Lease Agreement, dated as of October 15, 2019, by and between the Registrant and The University of Texas System Board of Regents on behalf of The University of Texas M.D. Anderson Cancer Center (incorporated by reference to Exhibit 10.39 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 1, 2021). 10.48 First Amendment, dated as of April 7, 2020, to the Lease Agreement, dated as of October 15, 2019, by and between the Registrant and The University of Texas System Board of Regents on behalf of The University of Texas M.D. Anderson Cancer Center (incorporated by reference to Exhibit 10.40 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 1, 2021). 10.49 Second Amendment, dated as of April 7, 2020, to the Lease Agreement, dated as of October 15, 2019, by and between the Registrant and The University of Texas System Board of Regents on behalf of The University of Texas M.D. Anderson Cancer Center (incorporated by reference to Exhibit 10.41 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 1, 2021). 10.50 Third Amendment, dated as of December 15, 2020, to the Lease Agreement, dated as of October 15, 2019, by and between the Registrant and The University of Texas System Board of Regents on behalf of The University of Texas M.D. Anderson Cancer Center (incorporated by reference to Exhibit 10.42 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 1, 2021). 10.51 Lease Agreement dated as of December 15, 2020, by and between the Registrant and The University of Texas System Board of Regents on behalf of The University of Texas M.D. Anderson Cancer Center (incorporated by reference to Exhibit 10.43 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 1, 2021). 10.52 Agreement dated February 4, 2021, by and among the Registrant, WaterMill Asset Management Corp. and Robert W. Postma (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, SEC File No. 001-33038, filed February 5, 2021). 10.53 Loan and Security Agreement by and among the Registrant, the lenders party thereto and Silicon Valley Bank, as administrative agent and collateral agent, dated August 6, 2021 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q, SEC File No. 001-33038, filed November 8, 2021). 10.54 First Amendment to the Loan and Security Agreement by and among the Registrant, the lenders party thereto and Silicon Valley Bank, as administrative agent and collateral agent, dated December 28, 2021 (incorporated by reference to Exhibit 10.52 to the Registrant’s Annual Report on Form 10-K, SEC File No. 001-33038, filed March 30, 2022). 10.55 Equity Distribution Agreement, dated August 12, 2022, by and between Piper Sandler & Co. and the Registrant (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q, SEC File No. 001-33038, filed August 15, 2022). 61 10.56 Underwriting Agreement, dated as of November 29, 2022, by and between Cantor Fitzgerald & Co. and the Registrant (incorporated by reference to Exhibit 1.1 to the Registrant’s Current Report on Form 8-K, SEC File No. 001-33038, filed November 30, 2022). 10.57+ Retention Agreement, dated as of August 14, 2023, between the Registrant and Melinda Lackey (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q, SEC File No. 001-33038, filed November 14, 2023). 10.58+ Retention Agreement, dated as of August 14, 2023, between the Registrant and Drew Deniger (incorporated by reference to Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q, SEC File No. 001-33038, filed November 14, 2023). 10.59+ Consulting Agreement, dated as of November 14, 2023, between the Registrant and Melinda Lackey (incorporated by reference to Exhibit 10.59 to the Registrant's Annual Report on Form 10-K, SEC File No. 001-33038, filed April 1, 2024). 10.60+ Separation Agreement, dated as of December 22, 2023, between the Registrant and Kevin S. Boyle, Sr. (incorporated by reference to Exhibit 10.59 to the Registrant's Annual Report on Form 10-K, SEC File No. 001-33038, filed April 1, 2024) . 10.61+ Consulting Agreement, dated as of December 22, 2023, between the Registrant and Kevin S. Boyle, Sr. (incorporated by reference to Exhibit 10.59 to the Registrant's Annual Report on Form 10-K, SEC File No. 001-33038, filed April 1, 2024) . 10.62+* Consulting Agreement, dated as of February 21, 2024, between the Registrant and Ferdinand Groenewald. 23.1* Consent of Independent Registered Public Accounting Firm . 19.1* Insider Trading Policy 23.2* Consent of Independent Registered Public Accounting Firm 31.1* Certification of Principal Executive Officer and Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a) or 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1** Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 97.1* Alaunos Therapeutics, Inc. Clawback Policy. 101.INS* Inline XBRL Instance Document 101.SCH* Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents 104* Cover Page Interactive Data File-the cover page interactive data is embedded within the Inline XBRL document or included within the Exhibit 101 attachments * Filed herewith. ** Furnished herewith. + Indicates management contract or compensatory plan. † Confidential treatment has been granted by the Securities and Exchange Commission as to certain portions of this document. # Portions of this document (indicated by “[***]”) have been omitted because such information is not material and is the type of information that the Registrant treats as private or confidential. Item 16. Form 10-K Summary None. 62 SIGN ATURES 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. ALAUNOS THERAPEUTICS, INC. Date: March 31, 2025 By: /s/ Dale Curtis Hogue, Jr. Dale Curtis Hogue, Jr. Interim Chief Executive Officer and Director (Principal Executive Officer and Principal Financial Officer) Date: March 31, 2025 By: /s/ Ferdinand Groenewald Ferdinand Groenewald Vice President, Finance (Principal Accounting 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 and in the capacities and on the dates indicated. Signature Title Date /s/ Dale Curtis Hogue, Jr. Dale Curtis Hogue, Jr. Interim Chief Executive Officer and Director (Principal Executive Officer and Principal Financial Officer) March 31, 2025 /s/ Ferdinand Groenewald Ferdinand Groenewald Vice President, Finance (Principal Accounting Officer) March 31, 2025 /s/ Robert Hofmeister Robert Hofmeister Director March 31, 2025 /s/ Robert W. Postma Robert W. Postma Director March 31, 2025 /s/ Jaime Vieser Jaime Vieser Director March 31, 2025 /s/ Holger Weis Holger Weis Director March 31, 2025 63 Alaunos Therapeutics, Inc. INDEX TO FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 00 677 ) F- 1 Report of Independent Registered Public Accounting Firm (PCAOB ID: 49 ) F-2 Balance Sheets as of December 31, 2024 and 2023 F-3 Statements of Operations for the Years Ended December 31, 2024 and 2023 F-4 Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2024 and 2023 F-5 Statements of Cash Flows for the Years Ended December 31, 2024 and 2023 F-6 Notes to Financial Statements F-7 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders Alaunos Therapeutics, Inc. Houston, Texas Opinion on the Financial Statements We have audited the accompanying balance sheet of Alaunos Therapeutics, Inc. (the “Company”) as of December 31, 2024, and the related statements of operations, stockholders’ equity, and cash flows the year ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the 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. The financial statements of the Company as of and for the year ended December 31, 2023, before the retroactive adjustments described in Note 3 with respect to the July 2024 one-for-ten reverse stock split were audited by other auditors whose report, dated April 1, 2024, expressed an unqualified opinion, with an explanatory paragraph expressing substantial doubt regarding the Company’s ability to continue as a going concern, on those statements. We also audited the adjustments described in Note 3 that were applied retroactively to the 2023 financial statements to reflect the July 2024 one-for-ten reverse stock split and the related disclosures included therein. In our opinion, such adjustments and related disclosures are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2023 financial statements of the Company other than with respect to the adjustments and disclosures referred to herein and, accordingly, we do not express an opinion or any other form of assurance on the 2023 financial statements taken as a whole. Substantial Doubt about the Company’s Ability to Continue as a Going Concern The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has recurring losses and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern. Management’s evaluations of the events and conditions and management’s plans regarding those matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these 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. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the 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 financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters. /s/ Cherry Bekaert LLP We have served as the Company’s auditor since 2024. Tampa, Florida March 31, 2025 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Alaunos Therapeutics, Inc. Opinion on the Financial Statements We have audited, before the effects of the adjustments to retrospectively apply the reverse stock split effective July 17, 2024 described in Note 3, the accompanying balance sheet of Alaunos Therapeutics, Inc. (the Company) as of December 31, 2023, the related statements of operations, changes in stockholders’ equity and cash flows for the year then ended, and the related notes to the financial statements (collectively, the financial statements). The 2023 financial statements before the effects of the adjustments around the July 17, 2024 reverse stock split described in Note 3 are not presented herein. In our opinion, before the effects of the adjustments to retrospectively apply the reverse stock split effective July 17, 2024, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the 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. We were not engaged to audit, review, or apply any procedures to retrospectively apply the changes in the Company's disclosures related to the reverse stock split effective July 17, 2024 described in Note 3 and, accordingly we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those adjustments were audited by other auditors. The Company’s Ability to Continue as a Going Concern The accompanying 2023 financial statements were prepared assuming that the Company would continue as a going concern. As discussed in Note 1 to the 2023 financial statements, the Company had suffered recurring losses from operations since inception and would be required to raise additional capital to fund operations. This raised substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters were also described in Note 1 to the 2023 financial statements. The 2023 financial statements did not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s 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 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. 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/ RSM US LLP We served as the Company’s auditor from 2010 to 2024. Boston, Massachusetts April 1, 2024 F- 2 A launos Therapeutics, Inc. BALANCE SHEETS (in thousands, except share and per share data) December 31, December 31, 2024 2023 ASSETS: Current assets: Cash and cash equivalents $ 1,091 $ 6,062 Receivables 5 1 Prepaid expenses and other current assets 1,659 2,198 Total current assets 2,755 8,261 Property and equipment, net — 2 Total assets $ 2,755 $ 8,263 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 516 $ 616 Accrued expenses 176 1,340 Total current liabilities 692 1,956 Total liabilities $ 692 $ 1,956 Commitments and contingencies (Note 9) Stockholders' equity Common stock $ 0.001 par value; 5,000,000 shares authorized, 1,601,252 shares issued and outstanding at December 31, 2024 and at December 31, 2023 2 2 Additional paid-in capital 922,507 922,072 Accumulated deficit ( 920,446 ) ( 915,767 ) Total stockholders' equity 2,063 6,307 Total liabilities and stockholders' equity $ 2,755 $ 8,263 The accompanying notes are an integral part of these financial statements. F- 3 A launos Therapeutics, Inc. STATEMENTS OF OPERATIONS (in thousands, except share and per share data) For the Year Ended December 31, 2024 2023 Revenue $ 10 $ 5 Operating expenses: Research and development 362 16,279 General and administrative 4,460 12,219 Gain on lease modification — ( 298 ) Restructuring costs — 1,269 Property and equipment and right-of-use asset impairment — 4,803 Total operating expenses 4,822 34,272 Loss from operations ( 4,812 ) ( 34,267 ) Other income (expense): Interest expense — ( 1,921 ) Other income, net 133 1,048 Other income (expense), net 133 ( 873 ) Net loss $ ( 4,679 ) $ ( 35,140 ) Basic and diluted net loss per share $ ( 2.92 ) $ ( 21.97 ) Weighted average common shares outstanding, basic and diluted 1,601,252 1,599,532 The accompanying notes are an integral part of these financial statements. F- 4 A launos Therapeutics, Inc. STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in thousands, except share and per share data) Common Stock Additional Paid in Capital Accumulated Deficit Total Stockholders' Equity Shares Amount Balance at January 1, 2023 1,602,738 $ 2 $ 919,180 $ ( 880,627 ) $ 38,555 Stock-based compensation — — 2,800 — 2,800 Issuance of common stock, net of expenses 1,442 — 92 — 92 Cancelled restricted common stock ( 2,928 ) — — — — Net loss — — — ( 35,140 ) ( 35,140 ) Balance at December 31, 2023 1,601,252 $ 2 $ 922,072 $ ( 915,767 ) $ 6,307 Stock-based compensation — — 435 — 435 Net loss — — — ( 4,679 ) ( 4,679 ) Balance at December 31, 2024 1,601,252 2 922,507 ( 920,446 ) 2,063 The accompanying notes are an integral part of these financial statements. F- 5 A launos Therapeutics, Inc. STATEMENTS OF CASH FLOWS (in thousands) For the Year Ended December 31, 2024 2023 Cash flows from operating activities: Net loss $ ( 4,679 ) $ ( 35,140 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 2 2,315 Property and equipment right-of-use asset impairment — 4,803 Amortization of financing costs — 1,339 Stock-based compensation 435 2,800 Decrease in the carrying amount of right-of-use assets — 286 Gain on lease modification and termination — ( 298 ) Loss on sale of equipment, net — 7 Changes in operating assets and liabilities: Receivables ( 4 ) 3 Prepaid expenses and other current assets 539 ( 1,399 ) Deposits — 42 Other non-current liability — 500 Accounts payable ( 100 ) ( 773 ) Accrued expenses ( 1,164 ) ( 3,989 ) Lease liabilities — ( 610 ) Other liabilities, non-current — ( 28 ) Net cash used in operating activities ( 4,971 ) ( 30,142 ) Cash flows from investing activities: Purchases of property and equipment — ( 197 ) Proceeds from the disposal of property and equipment — 1,543 Net cash provided by investing activities — 1,346 Cash flows from financing activities: Proceeds from the issuance of common stock — 92 Repayment of long-term debt — ( 18,105 ) Debt extinguishment — ( 125 ) Net cash used in financing activities — ( 18,138 ) Net decrease in cash, cash equivalents and restricted cash ( 4,971 ) ( 46,934 ) Cash, cash equivalents and restricted cash, beginning of period 6,062 52,996 Cash and cash equivalents, end of period $ 1,091 $ 6,062 Supplementary disclosure of cash flow information: Cash paid for interest $ — $ 2,063 Reduction in right-of-use assets for modification and termination $ — $ 1,839 The accompanying notes are an integral part of these financial statements. F- 6 Alaunos Therapeutics, Inc. NOTES TO FINANCIAL STATEMENTS 1. Organization Alaunos Therapeutics, Inc., which is referred to herein as “Alaunos,” or the “Company,” is a pre-clinical obesity and metabolic disorder and clinical-stage oncology-focused cell therapy company with a current focus on developing small molecules that are expected to be efficacious against obesity and other metabolic disorders and was historically involved in the development of adoptive TCR therapies, designed to treat multiple solid tumor types in large cancer patient populations with unmet clinical needs. The Company is currently working to develop novel small molecule-based obesity therapeutics. See Note 11 - Restructuring regarding a strategic reprioritization of the Company's business. The Company’s operations to date have consisted primarily of conducting research and development and raising capital to fund those efforts. As of December 31, 2024 there were 1,601,252 shares of common stock outstanding and an additional 142,745 shares of common stock reserved for issuance pursuant to outstanding stock options and warrants. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. The Company has operated at a loss since its inception in 2003 and has no recurring revenue from operations. The Company anticipates that losses will continue for the foreseeable future. As of December 31, 2024 , the Company had approximately $ 1.1  million of cash and cash equivalents. The Company’s accumulated deficit at December 31, 2024 was approximately $ 920.4  million. Given its current development plans and cash management efforts, the Company anticipates cash resources will be sufficient to fund operations into the second quarter of 2025. The Company continues to explore strategic alternatives, including, but not limited to, an acquisition, merger, reverse merger, sale of assets, strategic partnerships, capital raises or other transactions. The Company’s ability to continue operations after its current cash resources are exhausted depends on future events, including its ability to obtain additional financing or to achieve profitable operations, as to which no assurances can be given, nor are within the Company's control. If adequate additional funds are not available when required, or if the Company is unsuccessful in entering into partnership agreements for further development of its product candidates, management may need to curtail its development efforts and planned operations to conserve cash until sufficient additional capital is raised. There can be no assurances that such a plan would be successful. Based on the current cash forecast and the Company's dependence on its ability to obtain additional financing to fund its operations after the current resources are exhausted, about which there can be no certainty, management has determined that the Company's present capital resources will not be sufficient to fund its planned operations for at least one year from the issuance date of the financial statements, and substantial doubt as to the Company's ability to continue as a going concern exists. F- 7 Table of Contents Alaunos Therapeutics, Inc. NOTES TO FINANCIAL STATEMENTS 2. Financings 2021 Loan and Security Agreement On August 6, 2021, the Company entered into a Loan and Security Agreement, or the Loan and Security Agreement, with Silicon Valley Bank and affiliates of Silicon Valley Bank, or collectively, SVB. The Loan and Security Agreement provided for an initial term loan of $ 25.0 million funded at the closing, or the Term A Tranche, with an additional tranche of $ 25.0 million available if certain funding and clinical milestones were met by August 31, 2022, or the Term B Tranche. Effective December 28, 2021, the Company, entered into an amendment to the Loan and Security Agreement, or the First Amendment. The First Amendment extended the interest-only period through August 31, 2022. The First Amendment also eliminated the Term B Tranche, which remained unfunded, leaving only the Term A Tranche, or the SVB Facility. Under the amended Loan and Security Agreement, the SVB Facility was to mature on August 1, 2023. On May 1, 2023, the Company repaid its outstanding debt obligations under the amended Loan and Security Agreement in their entirety. 2022 Public Offering On November 29, 2022, the Company entered into an underwriting agreement, or the Underwriting Agreement, with Cantor as the sole underwriter, relating to the issuance and sale in an underwritten offering, or the Offering, of 161,524 shares, or the Firm Shares, of the Company’s common stock to Cantor at a price of $ 18.573 per share. The net proceeds to the Company from the Offering were $ 14.7 million (before accounting for the partial exercise of Cantor's option as described below) after deducting underwriting discounts and commissions and offering expenses payable by the Company. Under the terms of the Underwriting Agreement, the Company granted Cantor an option, exercisable for 30 days , to purchase up to an additional 24,228 shares of common stock, which we refer to, together with the Firm Shares, as the Shares, at the same price per share as the Firm Shares. On January 5, 2023, Cantor partially exercised its option to purchase an additional 1,442 shares of common stock. 3. Summary of Significant Accounting Policies Basis of Presentation The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Although the Company regularly assesses these estimates, actual results could differ from those estimates. Changes in estimates are recorded in the period in which they become known. The Company’s most significant estimates and judgments used in the preparation of the financial statements are: • Clinical trial expenses and other research and development expenses; • Collaboration agreements; • Fair value measurements of stock-based compensation; and • Income taxes. F- 8 Table of Contents Alaunos Therapeutics, Inc. NOTES TO FINANCIAL STATEMENTS Cash and Cash Equivalents Cash equivalents consist primarily of demand deposit accounts, certificates of deposit and deposits in short-term U.S. treasury money market mutual funds. Cash equivalents are stated at cost, which approximates fair market value. Concentrations of Credit Risk Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company maintains cash accounts in commercial banks, which may, at times, exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents. Property and Equipment Property and equipment are stated at cost, less accumulated depreciation and amortization. Expenditures for maintenance and repairs are charged to expense while the costs of significant improvements are capitalized. Depreciation and amortization is calculated on a straight-line basis using the following periods, which represent the estimated useful lives of the assets: Office and computer equipment 3 years Software 3 years Laboratory equipment 5 years Leasehold improvements Life of the lease Costs, including certain design, construction and installation costs related to assets that are under construction and are in the process of being readied for their intended use, are recorded as construction in progress and are not depreciated until such time as the subject asset is placed in service. Repairs and maintenance that do not extend the useful life of the asset are expensed as incurred. Upon sale, retirement or other disposition of these assets, the costs and related accumulated depreciation are removed from the respective accounts and any gain or loss on the disposition is included in the statements of operations. Long-Lived Assets Assessments of long-lived assets and the remaining useful lives of such long-lived assets are reviewed for impairment whenever a triggering event occurs or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. An asset, or group of assets, is considered to be impaired when the undiscounted estimated net cash flows expected to be generated by the asset, or group of assets, are less than its carrying amount. The impairment recognized is the amount by which the carrying amount exceeds the fair market value of the impaired asset, or group of assets, based on the present value of the expected future cash flows associated with the use of the asset. During the year ended December 31, 2023, the Company recorded impairment charge of $ 4.8 million, which was primarily related to leasehold improvements of $ 3.8 million and lab equipment of $ 1.0 million. Operating Segments Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the Company’s chief operating decision maker (“CODM”) and relied upon when making decisions regarding resource allocation and assessing performance. When evaluating the Company’s financial performance, the CODM reviews total revenues, total expenses, and expenses by functional classification; using this information to make decisions on a company-wide basis. The Company views its operations and manages its business in one operating segment. Warrants The Company assesses whether warrants issued require accounting as derivatives. The Company determined that the warrants were (1) indexed to the Company’s own stock and (2) classified in stockholders’ equity in accordance with Financial Accounting Standards Board, or FASB, ASC Topic 815, Derivatives and Hedging . As such, the Company has concluded the warrants meet the scope exception for determining whether the instruments require accounting as derivatives and should be classified in stockholders’ equity. F- 9 Table of Contents Alaunos Therapeutics, Inc. NOTES TO FINANCIAL STATEMENTS Fair Value Measurements The Company has certain financial assets and liabilities recorded at fair value which have been classified as Level 1, 2 or 3 within the fair value hierarchy as described in the accounting standards for fair value measurements. • Level 1—Quoted prices in active markets for identical assets or liabilities. • Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Assets and liabilities measured at fair value on a recurring and nonrecurring basis as of December 31, 2024 and 2023 are as follows: ($ in thousands) Fair Value Measurements at Reporting Date Using Description Balance as of December 31, 2024 Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash equivalents $ 779 $ 779 $ — $ — ($ in thousands) Fair Value Measurements at Reporting Date Using Description Balance as of December 31, 2023 Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash equivalents $ 5,744 $ 5,744 $ — $ — The cash equivalents represent demand deposit accounts and deposits in a short-term United States treasury money market mutual fund quoted in an active market and classified as a Level 1 asset. There have been no changes to the valuation methods during the years ended December 31, 2024 and 2023. The Company had no financial assets or liabilities that were classified as Level 2 or Level 3 during the years ended December 31, 2024 and 2023. Revenue Recognition from Collaboration Agreements Revenue for the year ended December 31, 2024 consisted of $ 10 thousand and for the year ended December 31, 2023 consisted of $ 5 thousand . For the years ended December 31, 2024 and 2023, the Company recognized revenue through its Collaboration Agreement with Solasia Pharma K.K. primarily due to the achievement of milestones, as further described in Note 9, Commitments and Contingencies. Research and Development Costs As part of the process of preparing the Company's financial statements, the Company is required to estimate its accrued research and development expenses. This process involves reviewing open contracts and purchase orders, communicating with its personnel and third-party vendors to identify services that have been performed on its behalf and estimating the level of service performed and the associated costs incurred for the services when the Company has not yet been invoiced or otherwise notified of the actual costs. The majority of the Company's service providers invoice the Company in arrears for services performed, on a predetermined schedule or when contractual milestones are met; however, a few require advanced payments. The Company makes estimates of its accrued expenses as of each balance sheet date in its financial statements based on facts and circumstances known to it at that time. Examples of estimated accrued research and development expenses include fees paid to: • clinical research organizations, or CROs, in connection with performing research services on its behalf and clinical trials; • investigative sites or other providers in connection with clinical trials; • vendors in connection with preclinical and clinical development activities; and • vendors related to product manufacturing, development, and distribution of preclinical and clinical supplies. F- 10 Table of Contents Alaunos Therapeutics, Inc. NOTES TO FINANCIAL STATEMENTS The Company bases its expenses related to preclinical studies and clinical trials on its estimates of the services received and efforts expended pursuant to quotes and contracts with CROs that conduct and manage clinical trials on its behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to the Company's vendors will exceed the level of services provided and result in a prepayment of the clinical expense. Payments under some of these contracts depend on factors such as the completion of clinical trial milestones. In accruing service fees, the Company estimates the time period over which services will be performed, enrollment of patients, number of sites activated and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from its estimate, the Company adjusts the accrual or amount of prepaid expense accordingly. Although the Company does not expect its estimates to be materially different from amounts actually incurred, its understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in it reporting amounts that are too high or too low in any particular period. Income Taxes Income taxes are accounted for under the liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences of temporary differences between the financial statement carrying amounts and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which the temporary differences are expected to be recovered or settled. The Company evaluates the realizability of its deferred tax assets and establishes a valuation allowance when it is more likely than not that all or a portion of deferred tax assets will not be realized. The Company accounts for uncertain tax positions using a “more-likely-than-not” threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors including, but not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position. The Company evaluates this tax position on an annual basis. The Company also accrues for potential interest and penalties related to unrecognized tax benefits in income tax expense (Refer to Note 12, Income Taxes ). Accounting for Stock-Based Compensation Stock-based compensation cost is measured at the grant date based on the estimated fair value of the award and is recognized as expense over the employee’s requisite service period. Stock-based compensation expense is based on the number of awards ultimately expected to vest and is reduced for forfeitures as they occur. Consistent with prior years, the Company uses the Black-Scholes option pricing model, which requires estimates of the expected term option holders will retain their options before exercising them and the estimated volatility of the Company’s common stock price over the expected term. The Company recognized the full impact of its share-based employee payment plans in the statements of operations for each of the years ended December 31, 2024 and 2023 and did not capitalize any such costs on the balance sheets. The Company recognized $ 0.4 million of compensation expense related to stock options for the year ended December 31, 2024 and $ 2.5 million of compensation expense related to stock options for the year ended December 31, 2023. The Company recognized $ 0.0 million of compensation expense related to restricted stock for the year ended December 31, 2024 and $ 0.3 million for the year ended December 31, 2023 (refer to Note 13, Stock Option Plan ). The total compensation expense relating to vesting of stock options and restricted stock awards for the year ended December 31, 2024 was $ 0.4 million and $ 2.8 million for the year ended December 31, 2023. The following table presents share-based compensation expense included in the Company’s statements of operations: For the Year Ended December 31, (in thousands) 2024 2023 Research and development $ 17 $ 439 General and administrative 418 2,361 Stock-based compensation expense $ 435 $ 2,800 The fair value of each stock option is estimated at the date of grant using the Black-Scholes option pricing model. Assumptions regarding volatility, expected term, dividend yield and risk-free interest rate are required for the Black-Scholes model. The volatility assumption is based on the historical experience. The Company calculated expected term using the simplified method described in SEC Staff Accounting Bulletin, or SAB, No. 107 and No. 110. Reverse Stock Splits F- 11 Table of Contents Alaunos Therapeutics, Inc. NOTES TO FINANCIAL STATEMENTS On January 31, 2024, the Company filed a Second Amended and Restated Certificate of Incorporation (the “Charter Amendment”) with the Secretary of State of the State of Delaware in order to effect a reverse stock split of the Company’s common stock at a ratio of 1-for-15 (the “Reverse Split”). The Charter Amendment decreased the number of authorized shares of common stock from 520,000,000 to 34,666,667 . The Charter Amendment does not affect the par value of the Company’s common stock or change the number of authorized shares or par value of the Company’s preferred stock. The Charter Amendment became effective on January 31, 2024. On July 17, 2024, the Company filed a Third Amended and Restated Certificate of Incorporation or Third Charter Amendment with the Secretary of State of the State of Delaware in order to effect a reverse stock split of the Company’s common stock at a ratio of 1-for-10 (the "Second reverse Split", the "Reverse Splits") or the Second Reverse Split, collectively the Reverse Splits. The Third Charter Amendment decreased the number of authorized shares of common stock from 34,666,667 to 5,000,000 . The Third Charter Amendment does not affect the par value of the Company’s common stock or change the number of authorized shares or par value of the Company’s preferred stock. The Third Charter Amendment became effective on July 17, 2024. No fractional shares were issued in connection with the Reverse Splits. Stockholders of record who would otherwise have been entitled to receive fractional shares as a result of the Reverse Splits received a cash payment in lieu thereof at a price equal to the fraction to which the stockholder would otherwise be entitled multiplied by the closing sales price per share of the common stock (as adjusted for the Reverse Splits) on the Nasdaq Capital Market on January 31, 2024 and July 17, 2024. All share and per share amounts of common stock, options, warrants, and restricted stock in the accompanying financial statements and notes thereto have been retroactively adjusted for all periods presented to reflect the Reverse Splits as if they had occurred at the beginning of the earliest period presented. Net Loss per Share Basic net loss per common share is computed by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net loss per share is computed using the weighted-average number of shares of common stock outstanding during the period, plus the dilutive effect of outstanding options and warrants, using the treasury stock method and the average market price of the Company’s common stock during the applicable period, unless their effect on net loss per share is antidilutive. The effect of computing diluted net loss per common share was antidilutive for any potentially issuable shares of common stock from the conversion of stock options, unvested restricted stock and warrants and, as such, have been excluded from the calculation. Certain shares related to some of the Company’s outstanding common stock options, unvested restricted stock and warrants have not been included in the computation of diluted net loss per share for the years ended December 31, 2024 and 2023 as the result would be antidilutive. Such potential common shares on December 31, 2024 and 2023 consist of the following: December 31, 2024 2023 Common stock options 33,237 46,589 Warrants 26,555 145,239 59,792 191,828 New Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, “Improvements to Reportable Segment Disclosures (Topic 280)” which is intended to improve reportable segment disclosure requirements, primarily through incremental disclosures of segment information on an annual and interim basis for all public entities. The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items and interim disclosures of a reportable segment’s profit or loss and assets. The ASU is effective for our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and interim periods thereafter with and before it has been applied retrospectively to all prior periods presented. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 provide for enhanced income tax F- 12 Table of Contents Alaunos Therapeutics, Inc. NOTES TO FINANCIAL STATEMENTS information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for the Company prospectively to all annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this standard. 4. Debt On August 6, 2021, the Company entered into the Loan and Security Agreement with SVB. The Loan and Security Agreement provided for the funding of the Term A Tranche at the closing, with the Term B Tranche available if certain funding and clinical milestones were met by August 31, 2022. The SVB Facility and related obligations under the Loan and Security Agreement were secured by substantially all of the Company's properties, rights and assets, except for its intellectual property (which was subject to a negative pledge under the Loan and Security Agreement). In addition, the Loan and Security Agreement contained customary representations, warranties, events of default and covenants. On December 28, 2021, the Company entered into the First Amendment to the Loan and Security Agreement. The First Amendment eliminated the unfunded Term B Tranche, among other things. The SVB Facility bore interest at a floating rate per annum on outstanding loans, payable monthly, at the greater of (a) 7.75 % and (b) the current published U.S. prime rate, plus a margin of 4.5 %. All outstanding obligations under the amended Loan and Security Agreement were due and payable on August 1, 2023 . In connection with the payment of all of the Company's outstanding obligations, the Company also owed SVB 5.75 % of the original principal amounts borrowed as a final payment, or the Final Payment. Effective March 30, 2023, the Company entered into a Third Amendment to the Loan and Security Agreement, or the Third Amendment. Under the terms of the Third Amendment, the Company was no longer required to maintain all of its operating accounts, depository accounts and excess cash with SVB or one of its affiliates, and was instead only required to maintain a single operating or depository account at Silicon Valley Bank. The Third Amendment also modified the cash collateralization requirement, such that the Company was required to cash collateralize the entire sum of the outstanding principal amount of the SVB Facility, plus an amount equal to the Final Payment, which amount was to be reduced commensurate with each regularly scheduled monthly payment of principal and interest on the SVB Facility. On May 1, 2023, the Company paid SVB an amount equal to the entire outstanding principal amount under the SVB Facility, all accrued and unpaid interest and the Final Payment. In accordance with the First Amendment, the payment was subject to a prepayment premium of 2.00 %. During the year ended December 31, 2023, the Company recorded the remaining amounts associated with the Final Payment of $ 0.5 million and the prepayment premium of $ 0.1 million as interest expense within the statement of operations. In connection with its entry into the Loan and Security Agreement in August 2021, the Company issued to SVB warrants to purchase (i) up to 2,886 shares of the Company’s common stock, in the aggregate, and (ii) up to an additional 2,886 shares of common stock, in the aggregate, in the event the Company achieved certain clinical milestones, in each case at an exercise price per share of $ 333 . In connection with its entry into the First Amendment in December 2021, the Company amended and restated the warrants issued to SVB. As amended and restated, the warrants are for up to 4,331 shares of the Company's common stock, in the aggregate, with an exercise price of $ 174 per share, or the SVB Warrants. The SVB Warrants expire on August 6, 2031 . The issuance costs for the Loan and Security Agreement, including the First Amendment, were approximately $ 1.2 million and primarily related to the SVB Warrants, which were amortized into interest expense over the term of the loan. Interest expense, including the amortization of issuance costs, was $ 1.9 million for the year ended December 31, 2023. As a result of the repayments there were no debt obligations outstanding at December 31, 2024 or 2023. 5. Property and Equipment, net Property and equipment, net, consists of the following: December 31, December 31, ($ in thousands) 2024 2023 Office and computer equipment $ 15 $ 15 15 15 Less: accumulated depreciation ( 15 ) ( 13 ) Property and equipment, net $ - $ 2 Depreciation expense for the year ended December 31, 2024 was $ 2.0 thousand and was $ 2.3 million for the year ended December 31, 2023. F- 13 Table of Contents Alaunos Therapeutics, Inc. NOTES TO FINANCIAL STATEMENTS 6. Accrued Expenses Accrued expenses consist of the following: ($ in thousands) 2024 2023 Clinical $ 97 $ 568 Employee compensation - 43 Professional services 79 717 Manufacturing services - 12 $ 176 $ 1,340 7. Related Party Transactions Joint Venture with TriArm Therapeutics/Eden BioCell On December 18, 2018, the Company and TriArm Therapeutics, Ltd., or TriArm, launched Eden BioCell, Ltd., or Eden BioCell, as a joint venture to lead commercialization of the Company’s Sleeping Beauty -generated CAR-T therapies in the People’s Republic of China (including Macau and Hong Kong), Taiwan and Korea. The Company licensed to Eden BioCell the rights in Greater China for its third-generation Sleeping Beauty-generated CAR-T therapies targeting the CD19 antigen. Eden BioCell is owned equally by the Company and TriArm and the parties share decision-making authority. TriArm contributed $ 10.0 million to Eden BioCell and has committed up to an additional $ 25.0 million to this joint venture. TriArm also managed all clinical development in the territory pursuant to a master services agreement between TriArm and Eden BioCell. James Huang was the founder and serves as managing partner of Panacea Venture, which is an investor in TriArm. Mr. Huang was the Chair of the Company's board of directors until September 22, 2023 and had been a director since July 2020. He also serves as a member of Eden BioCell’s board of directors. On January 3, 2019, Eden BioCell was incorporated in Hong Kong as a private company. Eden BioCell, the Company and TriArm entered into a Share Subscription Agreement on January 23, 2019, where the Company and TriArm agreed to contribute certain intellectual property, services and cash (only with respect to TriArm) to Eden BioCell to subscribe for a certain number of newly issued ordinary shares in the share capital of Eden BioCell. The closing of the transaction occurred on July 5, 2019. The Framework Agreement and Share Subscription Agreements were each respectively amended to be effective as of this date. Upon consummation of the joint venture, Eden BioCell and the Company also entered into a license agreement, pursuant to which the Company licensed the rights to Eden BioCell for third generation Sleeping Beauty -generated CAR-T therapies targeting the CD19 antigen for the territory of China (including Macau and Hong Kong), Taiwan and Korea. TriArm and the Company each received a 50 % equity interest in the joint venture in exchange for their contributions to Eden BioCell. The Company determined that Eden BioCell was considered a variable interest entity, or VIE, and concluded that it was not the primary beneficiary of the VIE as it did not have the power to direct the activities of the VIE. As a result, the Company accounted for the equity interest in Eden BioCell under the equity method of accounting as it had the ability to exercise significant influence. In September 2021, TriArm and the Company mutually agreed to dissolve the joint venture, which has now been terminated. The Eden BioCell entity has been dissolved as of July 2023. Collaboration with Dune Lake Capital In January 2023, the Company entered into a consulting agreement with Dune Lake Capital, LLC, or Dune Lake Capital, which was founded by Dale Curtis Hogue, Jr., the Company's interim Chief Executive Officer. During the year ended December 31, 2023 , the Company recorded expenses of approximately $ 37 thousand for consulting services performed by Dune Lake Capital with respect to the period from January 2023 to August 2023. The Company did no t incur expenses to Dune Lake Capital during the year ended December 31, 2024. On January 20, 2024, the Board of Directors appointed Dale Curtis Hogue, Jr. as Interim Chief Executive Officer of the Company, effective immediately. On January 21, 2024, the Company entered into an employment agreement with Mr. Hogue, under which he will receive an annual base salary of $ 250 thousand. Mr. Hogue was awarded 40,000 shares of common stock of the Company with an exercise price of $ 1.80 . F- 14 Table of Contents Alaunos Therapeutics, Inc. NOTES TO FINANCIAL STATEMENTS 8. Leases In April 2022, the Company modified its real estate lease agreement executed on December 15, 2020 with MD Anderson for office space in Houston, Texas, which reduced the Company's leased space from 18,111 square feet to 3,228 square feet. As a result, the associated lease liability and right-of-use asset were remeasured to $ 0.4 million based on revised lease payments. A gain of $ 0.1 million was recorded on the lease modification during the year ended December 31, 2022. In June 2022, the Company executed an agreement to sub-sublease 4,772 square feet of subleased office space in Boston. For the year ended December 31, 2023 , the Company recognized $ 43 thousand in lease income. Lease income is classified within other income on the statement of operations. On April 19, 2023 , the Company terminated its office lease in Boston, Massachusetts, which was set to expire on August 31, 2026. In connection with the termination, the Company also assigned to the landlord its sub-sublease of the Boston office space, which had a term expiring on June 30, 2025 with an option to extend through July 31, 2026 . Termination costs for the Boston office lease were $ 0.2 million. A gain of $ 0.2 million was recorded on the lease termination during the year ended December 31, 2023. In August 2023, in accordance with the lease agreement, the Company notified, as landlord, of its intention to terminate. As a result, the associated lease liability and right-of-use asset were remeasured to $ 19 thousand, reflecting the revised lease payments and term end date of November 2023. On November 1, 2023, the Company and MD Anderson, as landlord, agreed to mutually terminate the leases dated October 15, 2019 and April 7, 2020, which represented office space totaling 14,037 square feet, effective November 15, 2023. As a result, the Company agreed to make a final payment of $ 0.1 million to the landlord. A gain of $ 0.1 million was recorded on the lease termination during the year ended December 31, 2023. The components of lease expense were as follows: Year Ended December 31, Year Ended December 31, ($ in thousands) 2024 2023 Operating lease cost $ — $ 428 Total lease cost $ — $ 428 Weighted-average remaining lease term (years) — — Weighted-average discount rate — — The Company paid $ 0.4 million in operating lease costs for the year-ended December 31, 2023. The Company did no t recognize new operating lease assets obtained in exchange for operating lease liabilities for the year-ended December 31, 2023. The Company did no t have any leases, other than a short-term lease, as of December 31, 2023. 9. Commitments and Contingencies Exclusive License Agreement with Precigen On October 5, 2018, the Company entered into an exclusive license agreement, or License Agreement, with PGEN Therapeutics, or PGEN, a wholly owned subsidiary of Precigen Inc., or Precigen, which was formerly known as Intrexon Corporation. Except where the context otherwise requires, the Company refers to PGEN and Precigen together as Precigen. Pursuant to the terms of the License Agreement, the Company had exclusive, worldwide rights to research, develop and commercialize (i) TCR products designed for neoantigens for the treatment of cancer, (ii) products utilizing Precigen’s RheoSwitch® gene switch, or RTS, for the treatment of cancer, referred to as IL-12 Products and (iii) CAR products directed to (A) CD19 for the treatment of cancer, referred to as CD19 Products, and (B) BCMA for the treatment of cancer, subject to certain obligations to pursue such target under the License and Collaboration Agreement effective March 27, 2015 between the Company, Precigen and ARES TRADING S.A., a subsidiary of Merck KGaA, as assigned by Precigen to PGEN. Under the License Agreement, the Company also had exclusive, worldwide rights for certain patents relating to the Sleeping Beauty technology to research, develop and commercialize TCR products for both neoantigens and shared antigens for the treatment of cancer, referred to as TCR Products. The Company was responsible for all aspects of the research, development and commercialization and was required to use commercially reasonable efforts to develop certain products. F- 15 Table of Contents Alaunos Therapeutics, Inc. NOTES TO FINANCIAL STATEMENTS In consideration of the licenses and other rights granted by Precigen, the Company was required to pay Precigen an annual license fee of $ 0.1 million, reimburse Precigen for certain historical costs, pay Precigen milestones up to an additional $ 52.5 million for each exclusively licensed program upon the achievement of certain milestones, and pay Precigen tiered royalties up to a maximum royalty amount of $ 100.0 million in the aggregate. The Company was also obligated to pay Precigen 20 % of any sublicensing income received by us relating to the licensed products. The Company was responsible for all development costs associated with each of the licensed products. On April 3, 2023, the Company entered into the Amended and Restated Exclusive License Agreement with Precigen, or the A&R License Agreement, which restated and amended the parties' previous license agreement in full. Under the A&R License Agreement, the Company still had exclusive, worldwide rights to research, develop and commercialize TCR products designed for neoantigens or driver mutations for the treatment of cancer and non-exclusive rights to use non-driver mutation TCRs. On October 4, 2024, pursuant to Section 10.2 of the License Agreement, the Company duly notified Precigen of its full termination of all rights under the License Agreement. The Company remains solely responsible for all aspects of the research, development and commercialization of the exclusively licensed products for the treatment of cancer. The (i) products utilizing Precigen’s RheoSwitch® gene switch, or RTS, for the treatment of cancer, referred to as IL-12 Products and (ii) CAR products directed to (A) CD19 for the treatment of cancer, referred to as CD19 Products, and (B) BCMA for the treatment of cancer, subject to certain obligations to pursue such target under the License and Collaboration Agreement effective March 27, 2015 between the Company, Precigen and ARES TRADING S.A., a subsidiary of Merck KGaA, as assigned by Precigen to PGEN are no longer exclusively licensed to the Company. The Company is no longer obligated to use commercially reasonable efforts for the exclusively licensed products. The A&R License Agreement further eliminates any royalty or milestone obligations to Precigen, with an annual license fee of $ 75 thousand due on the anniversary of the A&R License Agreement effective date. Precigen is no longer obligated to pay the Company royalties on the net sales derived from the sale of Precigen's CAR products. License Agreement and 2015 Research and Development Agreement —The University of Texas MD Anderson Cancer Center On January 13, 2015 , the Company, together with Precigen, entered into a license agreement, or the MD Anderson License with MD Anderson (which Precigen subsequently assigned to PGEN). Pursuant to the MD Anderson License, the Company, together with Precigen, holds an exclusive, worldwide license to certain technologies owned and licensed by MD Anderson including technologies relating to novel CAR T-cell therapies, non-viral gene transfer systems, genetic modification and/or propagation of immune cells and other cellular therapy approaches, Natural Killer, or NK Cells, and TCRs. On August 17, 2015, the Company, Precigen and MD Anderson entered into the 2015 R&D Agreement to formalize the scope and process for the transfer by MD Anderson, pursuant to the terms of the MD Anderson License, of certain existing research programs and related technology rights, as well as the terms and conditions for future collaborative research and development of new and ongoing research programs. The rights and obligations of Precigen under the 2015 R&D Agreement were assigned to the Company pursuant to the Fourth Amendment to 2015 R&D Agreement which was entered into on September 19, 2019 (the “Fourth Amendment”) with an effective date of October 5, 2018. As provided under the MD Anderson License, the Company provided funding for research and development activities in support of the research programs under the 2015 R&D Agreement for a period of three years and in an amount of no less than $ 15.0 million and no greater than $ 20.0 million per year. On November 14, 2017, the Company entered into an amendment to the 2015 R&D Agreement, extending its term until April 15, 2021. In connection with the execution of the 2019 R&D Agreement described below, on October 22, 2019, the Company amended the 2015 R&D Agreement to extend the term of the 2015 R&D Agreement until December 31, 2026 and to allow cash resources on hand at MD Anderson under the 2015 R&D Agreement to be used for development costs under the 2019 Research and Development Agreement, or the 2019 R&D Agreement, which the Company entered into on October 22, 2019, with MD Anderson, pursuant to which the Company agreed to collaborate with respect to the TCR program. For the year ended December 31, 2023 the Company incurred clinical expenses of $ 0.1 million from MD Anderson related to the 2015 R&D Agreement. The Company did no t incur clinical costs from MD Anderson related to the 2015 R&D Agreement for the year ended December 31, 2024. 2019 Research and Development Agreement—The University of Texas MD Anderson Cancer Center Under the 2019 R&D Agreement, the Company and MD Anderson will, among other things, collaborate on programs to expand the Company's TCR library and conduct clinical trials. The activities under the 2019 R&D Agreement are directed by a joint steering committee comprised of two members from the Company and one member from MD Anderson. The Company will own all inventions and intellectual property developed under the 2019 R&D Agreement and the Company will retain all rights to all intellectual property, patentable or not, for oncology products manufactured using non-viral gene transfer technologies under the 2019 R&D Agreement, including the Company's Sleeping Beauty technology. The Company has granted MD Anderson an exclusive license for such F- 16 Table of Contents Alaunos Therapeutics, Inc. NOTES TO FINANCIAL STATEMENTS intellectual property to develop and commercialize autologous TCR products manufactured using viral gene transfer technologies and any products outside the field of oncology and a non-exclusive license for allogenic TCR products manufactured using viral-based technologies. Under the 2019 R&D Agreement, the Company agreed, beginning on January 1, 2021, to reimburse MD Anderson up to a total of $ 20.0 million for development costs under the 2019 R&D Agreement, after the funds from the 2015 R&D Agreement are exhausted. In addition, the Company will pay MD Anderson royalties on net sales of its TCR products. The Company is required to make performance-based payments upon the successful completion of clinical and regulatory benchmarks relating to its TCR products. The aggregate potential benchmark payments are $ 36.5 million, of which only $ 3.0 million will be due prior to the first marketing approval of the Company's TCR products. The royalty rates and benchmark payments owed to MD Anderson may be reduced upon the occurrence of certain events. The Company also agreed to sell its TCR products to MD Anderson at preferential prices and will sell the Company's TCR products in Texas exclusively to MD Anderson for a limited period of time following the first commercial sale of the Company's TCR products . For the year end December 31, 2024 the Company did no t incur clinical expenses from MD Anderson related to the 2019 R&D Agreement, compared to the y ear ended December 31, 2023, the Company incurred clinical expenses of $ 0.8 million from MD Anderson related to the 2019 R&D Agreement. The 2019 R&D Agreement will terminate on December 31, 2026 and either party may terminate the 2019 R&D Agreement following written notice of a material breach. The 2019 R&D Agreement also contains customary provisions related to indemnification obligations, confidentiality and other matters. In connection with the execution of the 2019 R&D Agreement, on October 22, 2019, the Company issued MD Anderson a warrant to purchase 22,222 shares of the Company's common stock, which is referred to as the MD Anderson Warrant. The MD Anderson Warrant has an initial exercise price of $ 0.15 per share, expires on December 31, 2026 , and vests upon the occurrence of certain clinical milestones. As of December 31, 2024, the milestones have not been met. License Agreement with the NCI On May 28, 2019, the Company entered into a patent license agreement, or the Patent License, with the NCI. Pursuant to the Patent License, the Company held an exclusive, worldwide license to certain intellectual property to develop and commercialize patient-derived (autologous), peripheral blood T-cell therapy products engineered by transposon-mediated gene transfer to express TCRs reactive to mutated KRAS, TP53 and EGFR neoantigens. In addition, pursuant to the Patent License, the Company held an exclusive, worldwide license to certain intellectual property for manufacturing technologies to develop and commercialize autologous, peripheral blood T-cell therapy products engineered by non-viral gene transfer to express TCRs, as well as a non-exclusive, worldwide license to certain additional manufacturing technologies. On May 29, 2019, January 8, 2020, September 28, 2020, April 16, 2021, May 4, 2021 and August 13, 2021 the Company amended the Patent License to expand its TCR library to include additional TCRs reactive to mutated KRAS and TP53 neoantigens licensed from the NCI. On October 27, 2023, the Company provided the NCI the requisite notice of its intent to terminate the Patent License, effective December 26, 2023 . The Company discovered multiple proprietary TCRs targeting driver mutations through its hunTR TCR discovery platform, including many of the same KRAS and TP53 mutations licensed from the NCI. The Company incurred no expenses under this agreement in 2024, compared to $ 0.4 million in 2023. Cooperative Research and Development Agreement (CRADA) with the NCI On January 9, 2017, the Company entered into a Cooperative Research and Development Agreement, or the CRADA, with the NCI. The purpose of this collaboration was to advance a personalized TCR-T approach for the treatment of solid tumors. Using the Company's Sleeping Beauty technology, the NCI would analyze a patient’s own cancer cells, identify their unique neoantigens and TCRs reactive against those neoantigens and then use the Company's Sleeping Beauty technology to transpose one or more TCRs into T cells for re-infusion. Research conducted under the CRADA was under the direction of Steven A. Rosenberg, M.D., Ph.D., Chief of the Surgery Branch at the NCI, in collaboration with the Company's researchers. The Company was responsible for providing the NCI with the test materials necessary for them to conduct their studies, and eventually, clinical trials pursuant to the CRADA. Inventions, data and materials discovered or produced in connection with performance of the research plan under the CRADA would have remained the sole property of the party who produced the discovery. The parties would have jointly owned all inventions jointly discovered under the research plan. The owner of any invention under the CRADA would have made the decision to file a patent covering the invention, or in the case of a jointly owned invention, the Company would have the first opportunity to file a patent covering the invention. If the Company failed to provide timely notice of its decision to the NCI or decided not to file a patent covering the joint invention, the NCI had the right to make the filing. For any invention solely owned by the NCI or jointly made by the NCI and the Company for which a patent application was filed, the U.S. Public Health service granted the Company an exclusive option to elect an exclusive or non-exclusive commercialization F- 17 Table of Contents Alaunos Therapeutics, Inc. NOTES TO FINANCIAL STATEMENTS license. For inventions owned solely by the NCI or jointly owned by the NCI and the Company, which were licensed according to the terms described above, the Company agreed to grant to the U.S. government a non-exclusive, non-transferable, irrevocable and paid up license to practice the invention or have the invention practiced on its behalf throughout the world. The Company was also required to grant the U.S. government a non-exclusive, non-transferable, irrevocable and paid up license to practice the invention or have the invention practiced on its behalf throughout the world for any of the Company's solely owned inventions. The agreement could be terminated by any of the parties upon 60 days' prior written consent. On October 13, 2023 , the Company terminated the CRADA per its terms. The Company did no t record expenses under the CRADA for the year ended December 31, 2024, compared to $ 0.5 million for year ended December 31, 2023. Patent and Technology License Agreement—The University of Texas MD Anderson Cancer Center and the Texas A&M University System On August 24, 2004, the Company entered into a patent and technology license agreement with MD Anderson and the Texas A&M University System, which the Company refers to, collectively, as the Licensors. Under this agreement, the Company was granted an exclusive, worldwide license to rights (including rights to U.S. and foreign patent and patent applications and related improvements and know-how) for the manufacture and commercialization of two classes of organic arsenicals (water- and lipid-based) for human and animal use. The class of water-based organic arsenicals includes darinaparsin. Under the terms of the agreement, the Company may be required to make additional payments to the Licensors upon achievement of certain milestones in varying amounts which, on a cumulative basis could total up to an additional $ 4.5 million. In addition, the Licensors are entitled to receive royalty payments on sales from a licensed product and will also be entitled to receive a portion of any fees that the Company may receive from a possible sublicense under certain circumstances. During the year ended December 31, 2024, the Company did no t incur any milestone expenses or royalty expe nses on sales under this agreement. During the year ended December 31, 2023, the Company did no t incur any milestone expenses under this agreement, and the Company incurred $ 1 thousand in royalty expenses on sales under this agreement during the year ended December 31, 2023. Collaboration Agreement with Solasia Pharma K.K. On March 7, 2011, the Company entered into a License and Collaboration Agreement with Solasia Pharma K. K., or Solasia, which was amended on July 31, 2014 to include an exclusive worldwide license and amended on October 14, 2021 to revise certain payment schedule details, or, as so amended, the Solasia License and Collaboration Agreement. Pursuant to the Solasia License and Collaboration Agreement, the Company granted Solasia an exclusive license to develop and commercialize darinaparsin in both intravenous and oral forms and related organic arsenic molecules, in all indications for human use. As consideration for the license, the Company is eligible to receive from Solasia development- and sales-based milestones, a royalty on net sales of darinaparsin, once commercialized, and a percentage of any sublicense revenue generated by Solasia. During the year ended December 31, 2024, the Company did no t earn collaboration revenue and earned $ 10 thousand in royalty revenues on net sales under the Solasia License and Collaboration Agreement. During the year ended December 31, 2023, the Company did no t earn collaboration revenue and earned $ 5 thousand in royalty revenues on net sales under the Solasia License and Collaboration Agreement. KBI Biopharma Litigation On March 17, 2023, KBI Biopharma , Inc., or KBI, filed a complaint against the Company in the District Court of Harris County, Texas, 165th Judicial District, asserting breach of an Amended and Restated Master Services Agreement between the Company and KBI relating to the development of an autologous gene modified T-cell therapy product, or the KBI Agreement. KBI was primarily seeking unspecified monetary damages in excess of $ 3.2 million. On May 1, 2023, the Company filed an answer generally denying all of KBI’s allegations and asserting affirmative and other defenses as well as counterclaims for breach of the KBI Agreement and conversion. On October 20, 2023, the Company entered into an agreement with KBI to settle all claims asserted by KBI against the Company and the Company's counterclaims against KBI at issue in the litigation for $ 1.0 million. 10. Warrants The following is a summary of the Company's warrant activity for the years ended December 31, 2024: F- 18 Table of Contents Alaunos Therapeutics, Inc. NOTES TO FINANCIAL STATEMENTS (in thousands, except share and per share data) Number of Shares Weighted- Average Exercise Price Weighted- Average Contractual Term (Years) Outstanding, December 31, 2022 145,236 $ 863.25 2.17 Granted - - Exercised - - Forfeited - - Outstanding, December 31, 2023 145,236 $ 268.50 1.17 Granted - - Exercised - - Forfeited ( 118,684 ) 1,050 Outstanding, December 31, 2024 26,552 $ 28.50 2.75 11. Restructuring On August 14, 2023, the Company announced a strategic reprioritization of its business and wind down of its TCR-T Library Phase 1/2 Trial. In connection with the reprioritization, the Company reduced its workforce during the third and fourth quarters of 2023. During the year ended December 31, 2023, the Company recorded termination benefits of $ 1.3 million, recorded in restructuring costs within the statement of operations. The termination benefits were fully paid as of December 31, 2023. During the year ended December 31, 2024, the Company did no t incur any restructuring costs. 12. Income Taxes There is no provision for income taxes because the Company has incurred operating losses since inception. The reported amounts of income tax expense for the years ended December 31, 2024 and 2023 differ from the amounts that would result from applying domestic federal statutory tax rates to pretax losses primarily because of the changes in the valuation allowance. Significant components of the Company’s deferred tax assets at December 31, 2024 and 2023 are as follows: December 31, (in thousands) 2024 2023 Deferred tax assets: Net operating loss carryforwards $ 154,634 $ 148,009 Start-up and pre-clinical studies 11,011 13,754 Research and development credit carryforwards 40,486 39,838 Stock-based compensation 699 681 Capitalized acquisition costs 1,050 1,570 Lease liability — — Depreciation 1 1 Capitalized research expenses 5,400 7,176 Other 0 2 213,281 211,031 Less valuation allowance ( 213,281 ) ( 211,031 ) Total deferred tax assets — — Right-of-use asset — — Total deferred tax liabilities $ — $ — Net deferred taxes $ — $ — Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. At December 31, 2024, the Company has aggregate net operating loss carryforwards for federal tax purposes of approximately $ 737 million, of which approximately $ 342 million expire at various dates through December 31, 2037 and approximately $ 395 million can be carried forward indefinitely. The Company is reducing its approximately $ 498 million F- 19 Table of Contents Alaunos Therapeutics, Inc. NOTES TO FINANCIAL STATEMENTS of state net operating loss carryforwards to $ 0 as these state net operating loss carryforwards all related to Massachusetts filings and, as of December 31, 2023 the Company no longer had any employees or property in Massachusetts and, as a result, the Company will no longer have income tax nexus in Massachusetts or an income tax filing obligation after the year ended December 31, 2023. Additionally, the Company has approximately $ 40.5 million of federal and state research and development credits at December 31, 2024, expiring in varying amounts through 2043 , which may be available to reduce future taxes. The Company has reduced its Massachusetts credits carryforward to $ 0 . The Company has provided a valuation allowance for the full amount of its net deferred tax assets since it is more likely than not that these future benefits will not be realized. However, these deferred tax assets may be available to offset future income tax liabilities and expenses. The valuation allowance increased by $ 2,250 thousands in 2024 due primarily to the reduction of Massachusetts net operating loss carryforwards and Massachusetts research and development credits. Income taxes using the federal statutory income tax rate differ from the Company’s effective tax rate primarily due to non-deductible expenses related to the Company’s issuance of warrants along with the change in the valuation allowance on deferred tax assets. A reconciliation of income tax expense (benefit) at the statutory federal income tax rate and income taxes as reflected in the financial statements is as follows: Year Ended December 31, (in thousands) 2024 2023 Federal income tax at statutory rates 21 % 21 % State income tax, net of federal tax benefit ( 2 )% ( 92 )% Research and development credits — % 2 % Research and development true-up 29 % ( 1 )% Stock-based compensation 0 — % Federal/state rate change 0 % ( 3 )% Change in valuation allowance ( 48 )% 73 % Effective tax rate — % — % The Company adopted ASC 740, Accounting for Uncertain Tax Positions on January 1, 2007. ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes.” ASC 740 prescribes a recognition threshold and measurement of a tax position taken or expected to be taken in a tax return. The Company did not establish any additional reserves for uncertain tax liabilities upon adoption of ASC 740. There were no adjustments to its uncertain tax positions in the years ended December 31, 2024 and 2023. The Company has no t recognized any interest and penalties in the statements of operations because of the Company’s net operating losses and tax credits that are available to be carried forward. When necessary, the Company will account for interest and penalties related to uncertain tax positions as part of its provision for federal and state income taxes. The Company does not expect the amounts of unrecognized benefits will change significantly within the next twelve months. 13. Stock Option Plan The Company adopted the 2020 Equity Incentive Plan, or the 2020 Plan, in June 2020. As of December 31, 2024, there were 33,236 shares reserved for issuance and 142,745 shares available for future grant. The Company reserved 140,000 shares for issuance plus a carryover of 7,109 shares from the 2012 Plan for a total of 147,109 shares. In addition, returning shares from the 2012 Plan are available for issuance under the 2020 Plan. Stock options generally vest ratably in either quarterly or annual installments over three or four years, commencing on the first anniversary of the grant date and have contractual terms of ten years. Stock options to directors generally vest ratably over one or two years and have contractual terms of ten years. Stock options are valued using the Black-Scholes option pricing model and compensation is recognized based on such fair value over the period of vesting on a straight-line basis. F- 20 Table of Contents Alaunos Therapeutics, Inc. NOTES TO FINANCIAL STATEMENTS Stock option activity under the Company's stock options plans for the years ending December 31, 2024 and 2023 were as follows: (in thousands, except share and per share data) Number of Shares Weighted- Average Exercise Price Weighted- Average Contractual Term (Years) Aggregate Intrinsic Value Outstanding, December 31, 2022 69,391 $ 276.00 8.69 $ 3 Granted 25,912 73.50 Exercised - - Cancelled ( 48,714 ) 177.00 Outstanding, December 31, 2023 46,589 $ 268.50 7.64 $ — Granted 13,289 10.84 Exercised - - Cancelled ( 26,641 ) 283.09 Outstanding, December 31, 2024 33,237 $ 153.79 7.15 $ — Options exercisable, December 31, 2024 23,903 $ 224.53 7.41 $ — Options available for future grant, December 31, 2024 142,745 The estimated weighted-average fair value of stock options granted to employees in the year ended December 31, 2024 was approximately $ 10.84 per share and was approximately $ 55.80 per share for the year ended December 31, 2023. On December 31, 2024, total unrecognized compensation costs related to non-vested stock options outstanding amounted to $ 0.4 million, which is expected to be recognized over a weighted-average period of 1.29 years. The assumptions for volatility, expected life, dividend yield and risk-free interest rate are presented in the table below: For the Year Ended December 31, 2024 2023 Risk-free interest rate 3.70 – 4.09 % 3.51 – 4.01 % Expected life in years 5.04 - 6.06 5.06 – 6.25 Expected volatility 112.17 - 170.50 % 89.69 – 112.12 % Expected dividend yield — % — % Restricted Stock During the year ended December 31, 2023, 3,332 restricted shares vested with a weighted average exercise price of $ 179.4 and 2,928 restricted shares were cancelled with a weighted average exercise of $ 246.00 . No restricted shares remained unvested at December 31, 2023. For the year ended December 31, 2024 and 2023 the Company did no t issue shares of restricted stock. 14. Employee Benefit Plan The Company sponsors a qualified 401(k) retirement plan under which employees are allowed to contribute certain percentages of their pay, up to the maximum allowed under Section 401(k) of the IRC, or the 401(k) Plan. The Company may make contributions to the 401(k) Plan at its discretion. The Company contributed approximately $ 0.0 million to the 401(k) Plan during the year ended December 31, 2024 and $ 0.2 million during the year ended December 31, 2023. 15. Segment Information The CODM for the Company is the Chief Executive Officer (the "CEO"). The Company’s CEO reviews operating results on an aggregate basis and manages the Company’s operations as a whole for the purpose of evaluating financial performance and allocating resources. This decision-making process reflects the way in which financial information is regularly reviewed and used by the CODM to evaluate performance, set F- 21 Table of Contents Alaunos Therapeutics, Inc. NOTES TO FINANCIAL STATEMENTS operational targets, forecast future financial results, and allocate resources. Accordingly, the Company has determined that it has a single reportable and operating segment related to biopharmaceutical research and development. The Company’s CODM assesses financial performance and allocates resources based on consolidated operating results which are also reported on the consolidated statements of operations. The measure of segment assets is reported on the balance sheet as total consolidated assets. The CODM utilizes consolidated operating results by comparing actual results against budgeted amounts. As part of this process, consolidated net loss is a critical performance measure used to evaluate the Company’s operating performance and guide strategic decisions and resource allocations, including additional investments in research and development. The table below provides information about the Company’s revenue, significant segment expenses and other segment expenses. The table below provides information about the Company’s revenue, significant segment expenses and other segment expenses. For the Years Ended December 31, ($ in thousands) 2024 2023 Revenues $ 10 $ 5 Less segment expenses: Research and development 340 16,279 General and administrative 4,436 12,219 Gain on lease modification - ( 298 ) Restructuring costs - 1,269 Property and equipment and right-of-use asset impairment - 4,803 Total operating and segment expense 4,776 34,272 Plus: Interest expense - ( 1,921 ) Other income, net 133 1,048 Segment Net loss $ ( 4,633 ) $ ( 35,140 ) 16. Subsequent Events The Company evaluated all events and transactions that occurred after the balance sheet date through the date of this Annual Report on Form 10-K. Other than as described in the notes to the financial statements, the Company did not have any material subsequent events that impacted its financial statements or disclosures. F- 22