Ernexa Therapeutics Inc 10-Q for FY2026 Q2
Ernexa Therapeutics Inc. (ERNA)
About this 10-Q
Ernexa Therapeutics Inc filed this 10-Q on August 6, 2026, covering the quarter ended June 30, 2026 (FY2026 Q2).
Headline figures
Quarter ended June 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $4.01M
- compared with a net loss of $3.14M a year earlier
- Diluted EPS
- -$3.40
- compared with -$15.19 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _________ to _____________
Commission
file number:
(Exact name of registrant as specified in its charter)
| (State of incorporation) | (I.R.S. Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
Trading Symbol(s) |
Name of Each Exchange on Which Registered | ||
| The
| ||||
| The
|
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every interactive data file required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of August 6, 2026, the registrant had outstanding [] shares of common stock, $ par value per share.
TABLE OF CONTENTS
| i |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” as that term is defined under the Private Securities Litigation Reform Act of 1995 (“PSLRA”), Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include statements related to future events, results, performance, prospects and opportunities, including statements related to our strategic plans, capital needs, and our financial position. Forward-looking statements are based on information currently available to us, on our current expectations, estimates, forecasts, and projections about the industries in which we operate and on the beliefs and assumptions of management. Forward looking statements often contain words such as “expects,” “anticipates,” “could,” “targets,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “will,” “would,” and similar expressions. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our business, and other characterizations of future events or circumstances, are forward-looking statements. Forward-looking statements by their nature address matters that are, to different degrees, subject to risks and uncertainties that could cause actual results to differ materially and adversely from those expressed in any forward-looking statements. For us, particular factors that might cause or contribute to such differences include those risks and uncertainties described in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (the “SEC”) on March 13, 2026, in Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q, and in other documents we file from time to time with the SEC.
Readers are urged not to place undue reliance on the forward-looking statements in this Quarterly Report on Form 10-Q, which speak only as of the date of this Quarterly Report on Form 10-Q. We are including this cautionary note to make applicable, and take advantage of, the safe harbor provisions of the PSLRA. Except as required by law, we do not undertake, and expressly disclaim any obligation, to disseminate, after the date hereof, any updates or revisions to any such forward-looking statements to reflect any change in expectations or events, conditions or circumstances on which any such statements are based.
We believe that the expectations reflected in forward-looking statements in this Quarterly Report on Form 10-Q are based upon reasonable assumptions at the time made. However, given the risks and uncertainties, you should not rely on any forward-looking statements as a prediction of actual results, developments or other outcomes. You should read these forward-looking statements with the understanding that we may be unable to achieve projected results, developments or other outcomes and that actual results, developments or other outcomes may be materially different from what we expect.
Unless stated otherwise or the context otherwise requires, all references in this Quarterly Report on Form 10-Q to “Ernexa” refer to Ernexa Therapeutics Inc., and references to the “Company,” “we,” “us” or “our” refer to Ernexa and its subsidiaries, including Ernexa TX2 Inc. and Novellus, Inc.
| ii |
PART I. Financial Information
Item 1. Financial Statements
ERNEXA THERAPEUTICS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value amounts)
(unaudited)
| June 30, 2026 | December 31, 2025 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Other receivables | ||||||||
| Due from related party | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Right-of-use assets - operating leases, net | ||||||||
| Goodwill | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Income taxes payable | ||||||||
| Operating lease liabilities, current | ||||||||
| Due to related party | ||||||||
| Contingent consideration liability | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Operating lease liabilities, non-current | ||||||||
| Other liabilities | ||||||||
| Total liabilities | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $ par value, shares authorized, designated and outstanding of Series A
convertible preferred stock at June 30, 2026 and December 31, 2025, $ | ||||||||
| Common stock, $ par value, shares authorized at June 30, 2026 and December 31, 2025, and issued and outstanding at June 30, 2026 and December 31, 2025, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 1 |
ERNEXA THERAPEUTICS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| General and administrative | ||||||||||||||||
| Impairment of goodwill | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense), net: | ||||||||||||||||
| Forward sales contract expense | ( | ) | ( | ) | ||||||||||||
| Change in fair value of warrant liabilities | ||||||||||||||||
| Interest income (expense), net | ||||||||||||||||
| Gain on extinguishment of contingent liability | ||||||||||||||||
| Other expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other income (expense), net | ( | ) | ( | ) | ||||||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Benefit (provision) for income taxes | ( | ) | ( | ) | ||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Series A preferred stock dividend | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per common share - basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average shares outstanding - basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 2 |
ERNEXA THERAPEUTICS INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
For the three and six months ended June 30, 2026 and 2025 (unaudited)
(In thousands)
| Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||
| Series A Preferred Stock | Common Stock | Additional Paid-in | Accumulated | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||
| Balances at April 1, 2026 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Issuance of common stock to consultant for services | - | |||||||||||||||||||||||||||
| Issuance of common stock to Series A preferred stockholders in lieu of cash dividends | - | ( | ) | |||||||||||||||||||||||||
| Issuance of common stock under ATM, net | - | |||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balances at June 30, 2026 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Series A Preferred Stock | Common Stock | Additional Paid-in | Accumulated | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||
| Balances at January 1, 2026 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Issuance of common stock, prefunded warrants and warrants in connection with public offering, net | - | |||||||||||||||||||||||||||
| Issuance of common stock from the exercise of prefunded warrants, net | - | |||||||||||||||||||||||||||
| Issuance of common stock to consultant for services | - | |||||||||||||||||||||||||||
| Issuance of common stock to Series A preferred stockholders in lieu of cash dividends | - | ( | ) | |||||||||||||||||||||||||
| Issuance of common stock under ATM, net | - | |||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balances at June 30, 2026 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Series A Preferred Stock | Common Stock | Additional Paid-in | Accumulated | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||
| Balances at April 1, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Issuance of common stock to Series A preferred stockholders in lieu of cash dividends | - | ( | ) | |||||||||||||||||||||||||
| Issuance of common stock to consultant for services | - | |||||||||||||||||||||||||||
| Issuance of common stock in connection with settlement | - | |||||||||||||||||||||||||||
| Issuance of common stock and prefunded warrants in connection with private placement | - | |||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balances at June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Series A Preferred Stock | Common Stock | Additional Paid-in | Accumulated | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||
| Balances at January 1, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Balance | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Issuance of common stock to Series A preferred stockholders in lieu of cash dividends | - | ( | ) | |||||||||||||||||||||||||
| Issuance of common stock in connection with exercise of prefunded warrants | - | |||||||||||||||||||||||||||
| Issuance of common stock to consultant for services | - | |||||||||||||||||||||||||||
| Issuance of common stock in connection with settlement | - | |||||||||||||||||||||||||||
| Issuance of common stock and prefunded warrants in connection with private placement | - | |||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balances at June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Balance | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 3 |
ERNEXA THERAPEUTICS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
| 2026 | 2025 | |||||||
| For the six months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation | ||||||||
| Amortization of right-of-use asset | ||||||||
| Impairment of goodwill | ||||||||
| Issuance of common stock to consultant for services | ||||||||
| Accrued interest expense | ||||||||
| Forward sales contract expense | ||||||||
| Issuance of common stock in connection with settlement | ||||||||
| Change in fair value of warrant liabilities | ( | ) | ||||||
| Gain on extinguishment of contingent liability | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Other receivables | ||||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Other non-current assets | ||||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Operating lease liability | ( | ) | ( | ) | ||||
| Due from related party | ||||||||
| Due to related party | ( | ) | ||||||
| Other liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | ( | ) | ||||||
| Cash used in investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Gross proceeds received from the sale of common stock, prefunded warrants and Milestone Warrants in public offering | ||||||||
| Proceeds received from the issuance of common stock and prefunded warrants | ||||||||
| Fees related to public offering | ( | ) | ||||||
| Proceeds received from notes payable | ||||||||
| Gross proceeds received from the exercise of prefunded warrants | ||||||||
| Fee related to the exercise of prefunded warrants from public offering | ( | ) | ||||||
| Issuance of common stock under ATM | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase in cash | ||||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Offset of related party notes payable principal with related party receivable related to issuance of common stock and prefunded warrants | $ | $ | ||||||
| Reclassification of forward sales contract to equity upon issuance of common stock | $ | $ | ||||||
| Issuance of common stock to Series A preferred stockholders in lieu of cash dividends | $ | $ | ||||||
| Remeasurement of ROU asset and lease liability | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 4 |
ERNEXA THERAPEUTICS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| 1. | Description of Business and Basis of Presentation |
Description of Business
Ernexa Therapeutics Inc. (the “Company”) is a preclinical-stage synthetic allogeneic iMSC therapy company. iMSCs are induced pluripotent stem cell (“iPSC”)-derived mesenchymal stem cells. The Company envisions a future where cell therapies powered by synthetic iMSCs can offer new options for patients with limited treatment paths and its mission is to transform the treatment of cancer and autoimmune disease by developing scalable, affordable, off-the-shelf cell therapies that restore hope.
As used herein, the “Company” or “Ernexa” refers collectively to Ernexa and its consolidated subsidiaries (Ernexa TX2 Inc. and Novellus, Inc.) unless otherwise stated or the context otherwise requires. In March 2026, the Company dissolved Novellus Therapeutics Limited, which had no operations.
Basis of Presentation
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the unaudited financial statements include all the normal recurring adjustments that are necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented.
These condensed consolidated financial statements should be read together with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (the “SEC”) on March 13, 2026. The accompanying condensed consolidated balance sheet as of December 31, 2025 has been derived from the audited financial statements contained in the 2025 10-K but does not include all of the information and footnotes required by GAAP for complete financial statements. The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2026, or any other period.
Reverse Stock Split
As
approved on March 27, 2026 by written consent from approximately
Upon the effectiveness of the Reverse Stock Split, every twenty-five shares of the issued and outstanding common stock were automatically combined and reclassified into one issued and outstanding share of common stock. The Reverse Stock Split did not alter the par value of the common stock, and the number of authorized shares of common stock remains unchanged at shares. No fractional shares were issued in connection with the Reverse Stock Split, and no cash or other consideration was paid in connection with any fractional shares. Stockholders who otherwise would have held a fractional share after giving effect to the Reverse Stock Split instead owned one whole share of the post-reverse stock split common stock. The Company issued an aggregate of shares for rounding up fractional shares to whole shares.
All share and per share data in this Quarterly Report on Form 10-Q have been adjusted for all periods presented to reflect the Reverse Stock Split.
| 5 |
| 2. | Liquidity and Capital Resources |
The
Company has incurred significant operating losses and has an accumulated deficit as a result of its efforts to develop product candidates
and provide general and administrative support for operations. As of June 30, 2026, the Company had a cash balance of approximately $
On
February 10, 2026, the Company received approximately $
On
March 13, 2026, the Company filed a Registration Statement on Form S-3 with the SEC to offer and sell up to $
The
Company is subject to General Instruction I.B.6 of Form S-3 (the “baby shelf” rules), which limits the aggregate market value
of securities the Company may sell under the Universal Shelf to no more than one-third of its public float in any 12-month period while
its public float remains below $
In connection with preparing the financial statement as of and for the three and six months ended June 30, 2026, the Company evaluated whether there are conditions and events, considered in the aggregate, that are known and reasonably knowable that would raise substantial doubt about its ability to continue as a going concern within one year after the date that the financial statements are issued.
As
of June 30, 2026, the Company had approximately $
If the Company’s cash is not sufficient to meet future cash requirements, the Company may be required to reduce planned capital expenses, reduce operational cash uses or raise capital on terms that are not as favorable to the Company as they otherwise might be. Any actions the Company may undertake to reduce planned capital purchases or reduce expenses may be insufficient to cover shortfalls in available funds. If the Company requires additional capital, it may be unable to secure additional financing on terms that are acceptable to the Company, or at all.
| 3. | Fair Value of Financial Instruments |
Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between willing market participants. A fair value hierarchy has been established for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:
● Level 1 Inputs – Valued based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
● Level 2 Inputs – Valued based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.
● Level 3 Inputs – Valued based on inputs for which there is little or no market value, which require the reporting entity to develop its own assumptions.
| 6 |
The carrying amounts reported on the balance sheet for cash, other receivables, prepaid expenses and other current assets, accounts payable and accrued expenses, other current liabilities and other liabilities approximate fair value based due to their short maturities.
The Company issued warrants in connection with a private placement during the first quarter of 2022 (the “Q1-22 warrants”), which were determined to be classified as a liability. The Company has also recorded a three-year contingent consideration liability related to an asset acquisition in April 2023, the obligation of which terminated in April 2026.
The Company used a Black-Scholes option pricing model to estimate the fair value of the Q1-22 warrant liabilities and a Monte Carlo simulation model to estimate the fair value of the contingent consideration liability, both of which are considered a Level 3 fair value measurement. The Company remeasures these liabilities at each reporting period and recognizes changes in their respective fair value in the accompanying condensed consolidated statement of operations.
In
connection with the 2025 SPA (as defined in Note 8) that the Company entered into on March 31, 2025, the Company recorded a forward sales
contract liability at fair value and recognized $
The Company determined the expense related to the forward sales contract as of March 31, 2025 by taking the difference between (i) the fair value of the expected shares to be purchased by the investors as of the March 31, 2025 date the Company entered into the 2025 SPA and (ii) the discounted purchase price of the shares. The forward sales contract liability was remeasured at fair value at each reporting date or immediately prior to settlement, with changes in fair value recognized in the condensed consolidated statements of operations. Upon settlement, the liability was reclassified as a component of stockholders’ equity. The 2025 SPA closed during the second quarter of 2025, and as a result, there was no SPA liability remaining as of June 30, 2026 or December 31, 2025.
The following table summarizes the liabilities that are measured at fair value as of June 30, 2026 and December 31, 2025 (in thousands):
Schedule of Liabilities Measured at Fair Value
| Description | Level | June 30, 2026 | December 31, 2025 | |||||||||
| Liabilities: | ||||||||||||
| Contingent consideration | 3 | $ | $ | |||||||||
Certain inputs used in Black-Scholes and Monte Carlo models may fluctuate in future periods based upon factors that are outside of the Company’s control. A significant change in one or more of these inputs used in the calculation of the fair value may cause a significant change to the fair value of the Company’s warrant liabilities or contingent consideration liabilities, which could also result in material non-cash gains or losses being reported in the Company’s condensed consolidated statement of operations.
The
Company remeasured the fair value of the Q1-22 warrants at June 30, 2026, and the result of the remeasurement was de minimis.
The Company assessed the fair value of the contingent consideration liability at each reporting period through March 31, 2026 and determined
that there were no material changes to the remeasurement that would have resulted in a material change to the liability. The obligation
under the contingent consideration liability terminated in April 2026. Therefore, the Company reversed the liability and recognized a
gain in the statement of operations of $
| 7 |
| 4. | Goodwill |
The
Company recorded goodwill in the amount of $
| 5. | Accrued Expenses |
Accrued expenses at June 30, 2026 and December 31, 2025 consisted of the following (in thousands):
Schedule of Accrued Expenses
June 30, 2026 | December 31, 2025 | |||||||
| Study Fees | $ | $ | ||||||
| Accrued compensation | ||||||||
| Professional fees | ||||||||
| Other | ||||||||
| Total accrued expenses | $ | $ | ||||||
| 6. | Operating Leases |
As of June 30, 2026, the Company had an operating lease for an office in Cambridge, Massachusetts (the “Cambridge Lease”), which expires in 2028.
The
Company also leased an office in the Borough of Manhattan
in New York, New York (the “Manhattan Office”), which was to expire in January 2027,
and was subleasing the Manhattan Office to a sublessee. The sublease was to expire in October 2026. On February 16, 2026, the
Company entered into a sublease termination agreement with the sublessee of the Manhattan Office effective March 13, 2026. Pursuant to
the sublease termination agreement, the sublessee agreed to surrender and vacate the premises in exchange for a termination payment of
approximately $
On
February 18, 2026, the Company entered into a lease termination agreement with the lessor of the Manhattan Office effective March 13,
2026. Pursuant to the lease termination agreement, the Company agreed to surrender and vacate the premises in exchange for a termination
payment of approximately $
The
lease termination agreement was accounted for as a modification to the Manhattan Office lease rather than as a lease termination because
the Company did not contemporaneously terminate the Manhattan Office lease upon the February 18, 2026 modification date and had a continued
right-of-use of the facility through March 13, 2026. As a result, the Company remeasured the remaining lease payments, including the
$
| 8 |
For the three and six months ended June 30, 2026 and 2025, the net operating lease expenses were as follows (in thousands):
Schedule of Net Operating Lease Expense
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Operating lease expense | $ | $ | $ | $ | ||||||||||||
| Sublease income | ( | ) | ( | ) | ( | ) | ||||||||||
| Gain on sublease termination | ( | ) | ||||||||||||||
| Variable lease expense | ||||||||||||||||
| Total lease expense | $ | $ | $ | $ | ||||||||||||
The tables below show the beginning balances of the operating ROU assets and lease liabilities as of January 1, 2026 and the ending balances as of June 30, 2026, including the changes during the period (in thousands).
Schedule of Operating Lease Right-of-use Assets and Liabilities
| Operating Lease ROU Assets | ||||
| Operating lease ROU assets at January 1, 2026 | $ | |||
| Remeasurement of ROU asset | ( | ) | ||
| Amortization of operating lease ROU assets | ( | ) | ||
| Operating lease ROU assets at June 30, 2026 | $ | |||
| Operating Lease Liabilities | ||||
| Operating lease liabilities at January 1, 2026 | $ | |||
| Remeasurement of lease liability | ( | ) | ||
| Principal payments on operating lease liabilities | ( | ) | ||
| Operating lease liabilities at June 30, 2026 | ||||
| Less non-current portion | ( | ) | ||
| Current portion at June 30, 2026 | $ | |||
As
of June 30, 2026, the Company’s operating lease had a remaining life of
Maturities of Operating Lease Liabilities
| As of June 30, 2026 | ||||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| Total payments | ||||
| Less imputed interest | ( | ) | ||
| Total operating lease liabilities | $ | |||
| 7. | Stock-Based Compensation |
Stock Options
Schedule of Stock Option Granted
| 2026 | 2025 | |||||||
| Three months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Stock options granted | ||||||||
| 2026 | 2025 | |||||||
| Six months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Stock options granted | ||||||||
| 9 |
The Company recognizes stock-based compensation expense for stock options granted to employees, directors and certain consultants. The Company estimates the fair value of stock options using the Black-Scholes option pricing model. The fair value of stock options granted is recognized as expense over the requisite service period on a straight-lined basis.
Schedule of Weighted-Average Assumptions Used for Stock Options Granted
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Weighted average risk-free rate | % | % | % | % | ||||||||||||
| Weighted average volatility | % | % | % | % | ||||||||||||
| Dividend yield | % | % | % | % | ||||||||||||
| Expected term | years | years | years | years | ||||||||||||
Schedule of Weighted Average Grant-date Fair Value of Stock Options
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Weighted average grant date fair value | $ | $ | $ | $ | ||||||||||||
Vesting of all stock options is subject to continuous service with the Company through the applicable vesting date. As of June 30, 2026, there were approximately shares of the Company’s common stock subject to outstanding stock options.
Restricted Stock Units
The Company recognizes the fair value of RSUs as expense on a straight-line basis over the requisite service period. For performance-based RSUs, the Company begins recognizing the expense once the achievement of the related performance goal is determined to be probable.
Outstanding RSUs are settled in an equal number of shares of common stock on the vesting date of the award. An RSU award is settled only to the extent vested. Vesting generally requires continued employment or service by the award recipient through the applicable vesting date. Because RSUs are settled in an equal number of shares of common stock without any offsetting payment by the recipient, the measurement of cost is based on the quoted market price of the stock at the measurement date, which is the grant date.
In lieu of paying cash to satisfy withholding taxes due upon the settlement of vested RSUs, at the Company’s discretion, an employee may elect to have shares of common stock withheld that would otherwise be issued at settlement, the value of which is equal to the amount of withholding taxes payable. RSUs vested during the three and six months ended June 30, 2026 and 2025. The Company did t grant RSUs during the three and six months ended June 30, 2026 and 2025, and as of June 30, 2026, there were RSUs outstanding.
| 10 |
Stock-Based Compensation Expense
Schedule of Stock-based Compensation Expense
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| General and administrative | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| 8. | Equity Transactions |
2026 Public Offering
On February 6, 2026, the Company entered into a placement agency agreement (the “Placement Agency Agreement”) with Brookline Capital Markets, a division of Arcadia Securities, LLC (“Brookline” or the “Placement Agent”), pursuant to which the Company engaged the Placement Agent for the 2026 Offering, which included the public offering of (i) million shares of the Company’s common stock (or pre-funded warrants in lieu of common stock) and accompanying Milestone Warrants to purchase million shares of common stock, at a combined offering price of $ per share of common stock and accompanying Milestone Warrant (or $ per pre-funded warrant and accompanying Milestone Warrant). In connection with the Public Offering, the Company also entered into a securities purchase agreement (each, a “Purchase Agreement”) with certain investors who purchased common stock and Milestone Warrants in the Public Offering.
The
pre-funded warrants were immediately exercisable (subject to certain ownership limitations) had an exercise price of $
The
Milestone Warrants are tradeable on The Nasdaq Capital Market under the symbol “ERNAW.” The Milestone Warrants are immediately
exercisable (subject to certain ownership limitations), have an exercise price of $
Pursuant
to the Placement Agency Agreement, the Company paid the Placement Agent an aggregate cash fee of approximately $
The
Public Offering closed on February 10, 2026, for aggregate gross proceeds of approximately $
The Placement Agency Agreement and the Purchase Agreements contain customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company, the Placement Agent, or the investors, as the case may be, and other obligations of the parties.
| 11 |
Pursuant to the terms of the Purchase Agreements and the Placement Agency Agreement, the Company has agreed that for a period of ninety (90) days from the closing of the Public Offering, that neither the Company nor any subsidiary may (i) issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of common stock or common stock equivalents or (ii) file any registration statement or prospectus, or any amendment or supplement thereto, in each case, subject to certain exceptions, unless waived by the Placement Agent. The Company has also agreed not to effect or enter into an agreement to effect any issuance of common stock or common stock equivalents involving a Variable Rate Transaction, as defined in the Purchase Agreements, for a period of ninety (90) days following the closing of the Public Offering, subject to certain exceptions, unless waived by the Placement Agent. In addition, as part of the Purchase Agreement, subject to certain exceptions, the Company’s officers and directors entered into lock-up agreements, pursuant to which they agreed not to sell or otherwise dispose of any of the Common Stock for a period of ninety (90) days following the date of closing of the Public Offering.
Universal Shelf and ATM
On
March 13, 2026, the Company filed the Universal Shelf to offer and sell up to $
The
Company is subject to the “baby shelf” rules, which limits the aggregate market value of securities the Company may sell
under the Universal Shelf to no more than one-third of its public float in any 12-month period while its public float remains below $
2025 Private Placement
On
March 31, 2025, the Company entered into a securities purchase agreement (the “2025 SPA”) with certain accredited investors
to sell in a private placement an aggregate of approximately shares of common stock at a purchase price of $ per share,
or pre-funded warrants in lieu of common stock at a purchase price of $ per pre-funded warrant (the “2025 Private Placement”).
The pre-funded warrants will be exercisable until exercised in full at a nominal exercise of $
The
2025 SPA represented a forward sale contract obligating the Company to sell a fixed number of shares of its common stock at a fixed price
per share and contained an adjustment to the settlement amount based on shareholder approval, which is not an input into the pricing
of a fixed-for-fixed forward on equity shares. The Company measured the fair value of the forward sale contract as the difference between
(i) the fair value of the expected shares to be purchased by the investors as of the date the Company entered into the 2025 SPA and (ii)
the discounted purchase price of the shares and recorded a liability of approximately $ million at the contract inception date. The
Company also recognized a corresponding $
Schedule of Common Stock and Pre-funded Warrants
| Date | Common Stock | Pre-funded Warrants | Gross Proceeds | |||||||||
| April 2, 2025 | $ | |||||||||||
| June 9, 2025 | ||||||||||||
| June 27, 2025 | ||||||||||||
| $ | ||||||||||||
| 12 |
Warrants
As of June 30, 2026, the Company had the following warrants outstanding:
Schedule of Warrants Outstanding
| Warrants Outstanding | Exercise Price | Expiration Date | Classification | |||||||||
| Q1-22 Warrants | $ | |||||||||||
| December 2022 Warrants | $ | |||||||||||
| Milestone Warrants | $ | * | ||||||||||
| Prefunded warrants | $ | None | ||||||||||
| * |
As
of June 30, 2026, the weighted average remaining contractual life of expiring warrants outstanding was
The following table shows the warrant activity from January 1, 2026 through June 30, 2026:
Schedule of Warrants Activity
| Outstanding January 1, 2026 | Granted | Exercised | Outstanding June 30, 2026 | |||||||||||||
| Q1-22 Warrants | ||||||||||||||||
| December 2022 Warrants | ||||||||||||||||
| Milestone Warrants | ||||||||||||||||
| Prefunded warrants | ( | ) | ||||||||||||||
| Total | ( | ) | ||||||||||||||
On
February 11, 2026 and February 18, 2026, the Company issued approximately and shares of common stock, respectively, in
connection with the exercise of the pre-funded warrants from the Public Offering, for a total exercise price of approximately $
Stock Repurchase Program
In
November 2024, the Company’s Board of Directors authorized a stock repurchase program (the “Repurchase Program”) of
up to $
| 9. | Net Loss Per Share |
The Company calculates basic and diluted net loss per share attributable to common stockholders in conformity with the two-class method required for participating securities. Basic net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, including the weighted average effect of prefunded warrants, and without consideration for potentially dilutive securities.
Diluted net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding, including the weighted average effect of the prefunded warrants, plus dilutive securities. Shares of common stock issuable upon exercise, conversion or vesting of stock options, restricted stock units, warrants and the outstanding Series A convertible preferred stock are considered potential shares of common stock and are included in the calculation of diluted net loss per share using the treasury method when their effect is dilutive. Diluted net loss per share is the same as basic net loss per share for periods in which the effect of potentially dilutive shares of common stock is antidilutive.
| 13 |
Schedule of Securities Excluded from the Computation of Diluted Net Loss per Common Stock
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Stock options | ||||||||||||||||
| Warrants | ||||||||||||||||
| Preferred stock converted into common stock | ||||||||||||||||
| Total potential common shares excluded from computation | ||||||||||||||||
| 10. | Commitments and Contingencies |
Litigation Matters
The Company is involved in litigation and arbitrations from time to time in the ordinary course of business. Legal fees and other costs associated with such actions are expensed as incurred. In addition, the Company assesses the need to record a liability for litigation and contingencies. The Company reserves for costs relating to these matters when a loss is probable, and the amount can be reasonably estimated. The Company is not currently party to any material legal proceedings.
Licensing Agreements
The Company has an exclusive license and collaboration agreement (“the Factor L&C Agreement”) with Factor Bioscience Limited (“Factor Limited”), which was effective September 24, 2024 (the “Effective Date”). Under the Factor L&C Agreement, the Company has obtained exclusive licenses in the fields of cancer, autoimmune disorders, and rare diseases with respect to certain licensed technology and has the right to develop the licensed technology directly or enter into co-development agreements with partners who can help bring such technology to market. The Factor L&C Agreement also provides for certain services and materials to be provided by Factor Bioscience to facilitate the development of the licensed technology and to enable the Company to scale up production at third party facilities.
The
initial term of the Factor L&C Agreement was one year after the Effective Date, and it automatically renews yearly thereafter. The
Company may terminate the Factor L&C Agreement for any reason upon
Pursuant
to the Factor L&C Agreement, the Company paid Factor Bioscience approximately $
Contingent Consideration
The
Company previously recorded a three-year contingent consideration liability related to an asset acquisition in April 2023.
| 14 |
Retirement Savings Plan
The
Company offers to its eligible employees a defined contribution plan, organized under Section 401(k) of the Internal Revenue Code, through
its co-employment arrangement with its professional employer organization (“PEO”). Under this arrangement, the PEO serves
as the plan sponsor and administrator. Eligible employees may defer up to
| 11. | Related Party Transactions |
Recent Financings
Investors
who participated in the Public Offering and the 2025 Private Placement included Charles Cherington. Mr. Cherington participated in the
applicable financing under the same terms and subject to the same conditions as all the other investors. Mr.
Cherington served on the Company’s board of directors from March 2021 to July 6, 2023. As of June 30, 2026, Mr. Cherington owned
approximately
March 2025 Promissory Notes
On
March 11, 2025, the Company received $
As
a result of completing the 2025 Private Placement, the Company repaid the outstanding principal plus accrued interest on the notes in
full in the aggregate amount of $
| 12. | Segment Reporting |
The
Company operates within a single
The CODM uses consolidated net loss as a measure of profit and loss and assesses Company performance through the achievement of its business strategy goals. The CODM is regularly provided with forecasted expense information that is used to determine the Company’s liquidity needs and cash allocation to execute its business strategy, and he uses cash as a measure of segment assets in managing the Company. The Company operates in the United States, and all of its assets are located in the United States.
The table below provides a breakdown of the Company’s significant operating expenses for the three and six months ended June 30, 2026 and 2025, with a reconciliation to net loss for each of those years.
| 15 |
The
Company had
Schedule of Breakdown of Significant Operating Expenses
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development by significant expense: | ||||||||||||||||
| Study fees | $ | $ | $ | $ | ||||||||||||
| Payroll and related | ||||||||||||||||
| Professional fees | ||||||||||||||||
| MSA/license fees | ||||||||||||||||
| Other1 | ||||||||||||||||
| Research and development | ||||||||||||||||
| General and administrative by significant expense: | ||||||||||||||||
| Payroll and related2 | ||||||||||||||||
| Professional fees2 | ||||||||||||||||
| Stock-based compensation | ||||||||||||||||
| Other2 | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Impairment of goodwill | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Forward sales contract expense | ( | ) | ( | ) | ||||||||||||
| Change in fair value of warrant liabilities | ||||||||||||||||
| Interest income (expense), net | ||||||||||||||||
| Gain on extinguishment of contingent liability | ||||||||||||||||
| Other expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other income (expense), net | ( | ) | ( | ) | ||||||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Benefit (provision) for income taxes | ( | ) | ( | ) | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| June 30, 2026 | December 31, 2025 | |||||||
| Cash | $ | $ | ||||||
| 1 |
| 2 |
| 13. | Recent Accounting Pronouncements |
No new Accounting Standards Updates have been issued by the Financial Accounting Standards Board since January 1, 2026 that would apply to the Company and were not disclosed in the 2025 10-K.
| 14. | Subsequent Events |
On
July 15, 2026, the Company sold shares of common stock for proceeds of $
| 16 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read this discussion together with the unaudited interim condensed consolidated financial statements, related notes, and other financial information included elsewhere in this Quarterly Report on Form 10-Q (“Quarterly Report”) together with our audited consolidated financial statements, related notes, and other information contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the Securities and Exchange Commission (the “SEC”) on March 13, 2026 (the “2025 10-K”). The following discussion contains or is based on assumptions, estimates and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under “Risk Factors,” in this report and in Part I, Item 1A of the 2025 10-K and as described from time to time in our other filings with the SEC. These risks could cause our actual results to differ materially from those anticipated in these forward-looking statements.
Overview
We are a pre-clinical-stage synthetic allogeneic iMSC therapy company. iMSCs are induced pluripotent stem cell-derived mesenchymal stem cells. We envision a future where cell therapies powered by synthetic iMSCs can offer new options for patients with limited treatment paths, and our mission is to transform the treatment of cancer and autoimmune disease by developing scalable, affordable, off-the-shelf cell therapies that restore hope.
Objectives and Business Strategy
Our lead product candidate ERNA-101 is allogenic IL-7 and IL-15-secreting iMSCs. ERNA-101 capitalizes on the intrinsic tumor-homing ability of MSCs to slip through the tumor’s defenses and to deliver potent pro-inflammatory factors directly to the tumor microenvironment (“TME”), limiting systemic exposure and potential toxicity while potentially unleashing potent anti-cancer immune responses including enhancement of T-cell anti-tumor activity. Our initial focus is to develop ERNA-101 in platinum-resistant ovarian cancer. We collaborated with the University of Texas MD Anderson Cancer Center (“MDACC”) to investigate the ability of ERNA-101 to induce and modulate antitumor immunity in an ovarian cancer model. In preclinical study, ERNA-101 exhibited reduction of tumor growth and a statistically significant survival advantage in the ovarian cancer model as compared to the control group, and as announced in May 2026, preclinical data demonstrates that when ERNA-101 is used in combination with PD-1 blockade, it drives complete tumor clearance and 100% long-term survival in syngeneic ovarian cancer models. We have filed Patent Application No. 63/991,024 related to the use of ERNA-101 in combination with PD-1 blockade, which remains pending. It is possible that the pending application, and any that may be filed in the future, will not lead to an issued patent. Additionally, MDACC has filed a patent application based on research conducted under our collaboration agreement (the “MDACC Application”), and we were informed that none of our employees were identified as inventors on the MDACC Application. We have not yet received the MDACC Application and have not evaluated inventorship, ownership or assignment rights as of the filing of this Quarterly Report.
During the fourth quarter of 2025, we had a successful pre-Investigational New Drug (“IND”) meeting with the Food and Drug Administration (“FDA”), which resulted in regulatory alignment with our development approach. We expect to complete the Investigational New Drug (“IND”) enabling studies and IND submission in 2026 and to subsequently enter a Phase I investigator sponsored clinical trial in the second half of 2026.
We are also investigating anti-inflammatory cytokine (e.g., IL-10)-secreting iMSCs in autoimmune disorders like rheumatoid arthritis, which we refer to as ERNA-201. MSCs have an intrinsic ability to home to inflamed tissue and have been shown to dampen inflammation and drive healing through multiple secreted mediators and cell-cell interactions. We are investigating the ability of ERNA-201 to turbocharge these anti-inflammatory and regenerative effects.
We have also been accepted as one of only ten global companies for the Japan External Trade Organization acceleration program, which will allow us to receive expert-led mentoring and market-entry guidance focused on Japan’s regulatory, clinical and commercial landscape. The program also provides direct engagement opportunities with leading Japanese research and development organizations to explore potential collaborations across development, manufacturing and clinical execution.
Additionally, to expand our developmental opportunities and raise non-dilutive capital, we are actively seeking strategic partnerships to co-develop or out-license therapeutic assets and engage with potential collaborators, and we are currently applying for research grants, some of which will be used for research conducted at our Texas subsidiary, Ernexa TX2, Inc.
| 17 |
Recent Developments
Independent Validation of ERNA-101
In July 2026, an independently conducted study conducted by an independent contract research organization successfully reproduced earlier findings generated at MD Anderson Cancer Center, demonstrating complete tumor clearance and durable long-term survival in a substantially larger study. The results further strengthen confidence in ERNA-101's mechanism of action and provide important third-party validation as the Company advances toward its planned Investigational New Drug (IND) submission in the third quarter of 2026 and anticipated first-in-human Phase 1 clinical trial in the fourth quarter.
Reverse Stock Split
As approved on March 27, 2026 by written consent from approximately 53.34% of our stockholders (the “Consenting Stockholders), on May 4, 2026, we effected a reverse stock split of our common stock at a ratio of 1-for-25, as determined by our Board of Directors within the parameters approved by the Consenting Stockholders (the “Reverse Stock Split”).
Upon the effectiveness of the Reverse Stock Split, every twenty-five shares of the issued and outstanding common stock were automatically combined and reclassified into one issued and outstanding share of common stock. The Reverse Stock Split did not alter the par value of the common stock, and the number of authorized shares of common stock remains unchanged at 150,000,000 shares. No fractional shares were issued in connection with the Reverse Stock Split, and no cash or other consideration was paid in connection with any fractional shares. Stockholders who otherwise would have held a fractional share after giving effect to the Reverse Stock Split instead owned one whole share of the post-reverse stock split common stock. We issued an aggregate of 203 shares for rounding up fractional shares to whole shares.
All share and per share data in this Quarterly Report on Form 10-Q have been adjusted for all periods presented to reflect the Reverse Stock Split.
2026 Public Offering
On February 6, 2026, we entered into a placement agency agreement (the “Placement Agency Agreement”) with Brookline Capital Markets, a division of Arcadia Securities, LLC (“Brookline” or the “Placement Agent”), pursuant to which we engaged the Placement Agent for the public offering of 0.8 million shares of our common stock (or pre-funded warrants in lieu of common stock) and accompanying warrants to purchase 0.8 million shares of common stock (the “Milestone Warrants”), at a combined offering price of $12.50 per share of common stock and accompanying Milestone Warrant (or a combined offering price of $12.25 per share of pre-funded warrant and accompanying Milestone Warrants) (the “Public Offering”). In connection with the Public Offering, we also entered into a securities purchase agreement (each, a “Purchase Agreement”) with certain investors who purchased shares of common stock and Milestone Warrants in the Public Offering.
The pre-funded warrants were immediately exercisable (subject to certain ownership limitations) had an exercise price of $0.25 per share and did not expire until exercised in full. On February 11, 2026 and February 18, 2026, we issued 53,000 and 27,000 shares of common stock, respectively, in connection with the exercise of the pre-funded warrants, for a total exercise price of approximately $20,000. There are no remaining pre-funded warrants outstanding related to the Public Offering.
The Milestone Warrants are tradeable on The Nasdaq Capital Market under the symbol “ERNAW.” The Milestone Warrants are immediately exercisable (subject to certain ownership limitations), have an exercise price of $17.00 per share, and expire on the earlier of (i) the five-year anniversary of the original issuance date or (ii) the 180th calendar day following our public release of clinical trial data from the first cohort of the Phase 1 study of ERNA-101.
Pursuant to the Placement Agency Agreement, we paid the Placement Agent an aggregate cash fee of approximately $0.5 million, which was equal to 6.5% of the aggregate purchase price paid by investors in the Offering (or 1.5% with respect to certain existing investors). We will also pay the Placement Agent a cash fee as compensation for gross proceeds we receive from any exercise of any Milestone Warrants sold in connection with the Public Offering, payable quarterly on each January 1, April 1, July 1 and October 1 following the closing of the Public Offering (or the following business day if such day is not a business day), at the same percentage and as calculated in the manner as set forth above. We also issued approximately 9,000 shares of common stock to the Placement Agent, which was equal to 1.5% of the aggregate number of shares of common stock and pre-funded warrants sold in the Public Offering (or 0.5% with respect to sales to certain existing investors). In addition, we reimbursed the Placement Agent for its accountable offering-related legal expenses in an amount of $125,000.
| 18 |
The Public Offering closed on February 10, 2026, for aggregate gross proceeds of approximately $10.5 million before deducting Placement Agent fees and other offering expenses payable by us. We are using the net proceeds from the Public Offering to support the advancement of our development programs and for working capital and general corporate purposes.
The Placement Agency Agreement and the Purchase Agreements contain customary representations, warranties and agreements by us, customary conditions to closing, indemnification obligations of us, the Placement Agent, or the investors, as the case may be, and other obligations of the parties.
Pursuant to the terms of the Purchase Agreements and the Placement Agency Agreement, we have agreed that for a period of ninety (90) days from the closing of the Public Offering, that neither we nor any subsidiary may (i) issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of common stock or common stock equivalents or (ii) file any registration statement or prospectus, or any amendment or supplement thereto, in each case, subject to certain exceptions, unless waived by the Placement Agent. We have also agreed not to effect or enter into an agreement to effect any issuance of common stock or common stock equivalents involving a Variable Rate Transaction, as defined in the Purchase Agreements, for a period of ninety (90) days following the closing of the Public Offering, subject to certain exceptions, unless waived by the Placement Agent. In addition, as part of the Purchase Agreement, subject to certain exceptions, our officers and directors entered into lock-up agreements, pursuant to which they agreed not to sell or otherwise dispose of any of the common stock for a period of ninety (90) days following the date of closing of the Public Offering.
Universal Shelf and ATM
On March 13, 2026, we filed a Registration Statement on Form S-3 with the SEC to offer and sell up to $50.0 million of our common stock from time to time in one or more offerings (the “Universal Shelf”), which became effective on March 30, 2026. The Universal Shelf includes a prospectus supplement providing for sales of up to $9.2 million of common stock pursuant to an At-the-Market (“ATM”) program under a sales agent agreement we entered into with Brookline.
We are subject to General Instruction I.B.6 of Form S-3 (the “baby shelf” rules), which limits the aggregate market value of securities we may sell under the Universal Shelf to no more than one-third of our public float in any 12-month period while our public float remains below $75.0 million. As of the filing of the Universal Shelf, one-third of our public float was approximately $9.2 million, representing the maximum amount to be sold under the ATM. To date, we have sold approximately 463,000 shares of common stock for net proceeds of approximately $3.7 million under the ATM.
Nasdaq Compliance
Our common stock is listed on The Nasdaq Capital Market (“Nasdaq”). Nasdaq requires that listed companies satisfy certain continued listing requirements, including Listing Rule 5550(a)(2), which requires that listed companies maintain a minimum bid price of their common stock of at least $1.00 per share (the “Bid Price Rule”).
On March 18, 2026, we received written notice from Nasdaq indicating that our common stock failed to maintain the Bid Price Rule for 30 consecutive business days. While companies are typically afforded a 180-calendar day compliance period, as specified under Nasdaq Listing Rule 5810(c)(3)(A), to comply with the Bid Price Rule, Nasdaq concluded that we are not eligible for the compliance period pursuant to Nasdaq Listing Rule 5810(c)(3)(A)(iv) due to the fact that we effected a reverse stock split over the prior one-year period. Accordingly, we requested a hearing before the Nasdaq Hearing Panel (the “Panel”), which automatically stayed any suspension or delisting action pending the hearing and the expiration of any additional extension period granted by the Panel following the hearing. Our hearing was held on April 28, 2026, during which we requested an extension for continued listing on Nasdaq through May 15, 2026, the date we expected to demonstrate compliance with the Bid Price Rule (as discussed further below).
| 19 |
On May 5, 2026, the Panel granted our request for continued listing on Nasdaq, subject to the following conditions: (i) on or before May 15, 2026, we shall demonstrate compliance with the Bid Price Rule; (ii) from the date of the Panel decision until September 14, 2026 (the end of the Panel’s jurisdiction in this matter), we shall maintain compliance with all Nasdaq Listing Rules; and (iii) we will be subject to a mandatory panel monitor for a period of one year from the date of this determination pursuant to Rule 5815(d)(4)(B). If we do not maintain compliance with all Nasdaq Listing Rules through September 14, 2026, the Panel will immediately delist our securities from Nasdaq. Additionally, should we become deficient again with the Bid Price Rule during the one-year period ending May 5, 2027, Nasdaq will immediately issue us a delisting determination.
On May 4, 2026, we effected the Reverse Stock Split and on May 29, 2026, we received notice from Nasdaq that we have regained compliance with the Bid Price Rule. The Panel maintains jurisdiction over the Company until September 14, 2026 with respect to all Nasdaq Listing Rules, and the Company must continue to remain compliant with the Bid Price Rule through May 5, 2027 to avoid delisting.
Basis of Presentation
Revenues and Cost of Revenues
We are a pre-clinical stage company and do not currently have any revenues from product sales or cost of revenues. We will not have revenues from product sales or cost of revenues until such time as we receive regulatory approval of our product candidates and successfully commercialize our products.
Research and Development Expenses
We expense our research and development costs as incurred. Research and development expenses consist of costs incurred for company-sponsored research and development activities. Upfront payments and milestone payments made for the licensing of technology are expensed as research and development in the period in which they are incurred if the technology is not expected to have any alternative future uses other than the specific research and development project for which it was intended.
The major components of research and development costs include preclinical study costs, salaries and employee benefits, stock-based compensation expense, supplies and materials, expensed licensed technology, consulting, scientific advisors and other third-party costs, as well as allocations of various overhead costs related to our product development efforts.
We have contracted with third parties to perform various studies. The financial terms of these agreements vary from contract to contract and may result in uneven payment flows. We accrue for third party expenses based on estimates of the services received and efforts expended during the reporting period. If the actual timing of the performance of the services or the level of effort varies from the estimate, the accrual is adjusted accordingly. The expenses for some third-party services may be recognized on a straight-line basis if the expected costs are expected to be incurred ratably during the period. Payments under the contracts depend on factors such as the achievement of certain events or milestones, the allocation of responsibilities among the parties to the agreement, and the completion of portions of the preclinical study or similar conditions.
General and Administrative Expenses
Our general and administrative expenses consist primarily of salaries, benefits and other costs, including stock-based compensation, for our executive and administrative personnel, legal and other professional fees, travel, insurance, and other corporate costs.
| 20 |
Results of Operations
Comparison of the Three and Six Months Ended June 30, 2026 and 2025
| Three months ended June 30, | ||||||||||||
| (In thousands) | 2026 | 2025 | Change | |||||||||
| Operating expenses: | ||||||||||||
| Research and development | $ | 2,792 | $ | 1,136 | $ | 1,656 | ||||||
| General and administrative | 1,312 | 1,365 | (53 | ) | ||||||||
| Total operating expenses | 4,104 | 2,501 | 1,603 | |||||||||
| Loss from operations | (4,104 | ) | (2,501 | ) | (1,603 | ) | ||||||
| Other income (expense), net: | ||||||||||||
| Forward sales contract expense | - | (512 | ) | 512 | ||||||||
| Interest income, net | 55 | - | 55 | |||||||||
| Gain on extinguishment of contingent liability | 41 | - | 41 | |||||||||
| Other expense, net | (1 | ) | (123 | ) | 122 | |||||||
| Total other income (expense), net | 95 | (635 | ) | 730 | ||||||||
| Loss before income taxes | (4,009 | ) | (3,136 | ) | (873 | ) | ||||||
| Benefit (provision) for income taxes | - | (3 | ) | 3 | ||||||||
| Net loss | $ | (4,009 | ) | $ | (3,139 | ) | $ | (870 | ) | |||
| Six months ended June 30, | ||||||||||||
| (In thousands) | 2026 | 2025 | Change | |||||||||
| Operating expenses: | ||||||||||||
| Research and development | $ | 4,707 | $ | 2,445 | $ | 2,262 | ||||||
| General and administrative | 2,943 | 2,786 | 157 | |||||||||
| Impairment of goodwill | 2,044 | - | 2,044 | |||||||||
| Total operating expenses | 9,694 | 5,231 | 4,463 | |||||||||
| Loss from operations | (9,694 | ) | (5,231 | ) | (4,463 | ) | ||||||
| Other income (expense), net: | ||||||||||||
| Forward sales contract expense | - | (5,847 | ) | 5,847 | ||||||||
| Change in fair value of warrant liabilities | - | 1 | (1 | ) | ||||||||
| Interest income, net | 99 | 5 | 94 | |||||||||
| Gain on extinguishment of contingent liability | 41 | - | 41 | |||||||||
| Other expense, net | (1 | ) | (258 | ) | 257 | |||||||
| Total other income (expense), net | 139 | (6,099 | ) | 6,238 | ||||||||
| Loss before income taxes | (9,555 | ) | (11,330 | ) | 1,775 | |||||||
| Benefit (provision) for income taxes | 40 | (11 | ) | 51 | ||||||||
| Net loss | $ | (9,515 | ) | $ | (11,341 | ) | $ | 1,826 | ||||
| 21 |
Revenues and Cost of Revenues
We had no revenues or cost of revenues for the three and six months ended June 30, 2026 or 2025.
Research and Development Expenses
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
| Study fees | $ | 2,008 | $ | 60 | $ | 1,948 | $ | 3,275 | $ | 412 | $ | 2,863 | ||||||||||||
| Payroll and related | 359 | 114 | 245 | 595 | 211 | 384 | ||||||||||||||||||
| Professional fees | 173 | 202 | (29 | ) | 337 | 358 | (21 | ) | ||||||||||||||||
| MSA/license fees | 131 | 663 | (532 | ) | 200 | 1,300 | (1,100 | ) | ||||||||||||||||
| Other | 121 | 97 | 24 | 300 | 164 | 136 | ||||||||||||||||||
| Total research and development expenses | $ | 2,792 | $ | 1,136 | $ | 1,656 | $ | 4,707 | $ | 2,445 | $ | 2,262 | ||||||||||||
Total research and development expenses increased for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, primarily due to increased study fees related to ERNA-101 as well as increased payroll due to an increase in our research and development headcount and increased other expenses, which includes travel, supplies and allocated rent. These increases were offset by a reduction in expenses related to our Master Service Agreement (“MSA”) and the license and collaboration agreement (“the Factor L&C Agreement”) with Factor Bioscience Limited (“Factor Limited”). Pursuant to the Factor L&C Agreement, we paid Factor Bioscience approximately $0.2 million per month from September 2024 through August 2025, and we paid approximately $0.1 million per month from September 2024 through May 2025. The Company will also pay certain milestone payments, royalty payments on net sales of commercialized products and sublicensing fee payments, when applicable.
For the six months ended June 30, 2026 compared to the six months ended June 30, 2025, our research and development expenses increased by approximately $2.3 million primarily due to fees recognized for services under Statement of Work 1 with Cellipont for development and manufacturing services, increased study fees related to ERNA-101 as well as increased payroll due to an increase in research and development headcount. These increases were partially offset by a reduction in expenses under professional fees due to the amendment of W02 starting during March 2026.
General and Administrative Expenses
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||
| 2026 | 2025 | Change | 2026 | 2025 | Change | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
| Payroll and related | $ | 421 | $ | - | $ | 421 | $ | 1,223 | $ | 821 | $ | 402 | ||||||||||||
| Professional fees | 391 | 440 | (49 | ) | 838 | 826 | 12 | |||||||||||||||||
| Stock-based compensation | 300 | 353 | (53 | ) | 596 | 839 | (243 | ) | ||||||||||||||||
| Other | 200 | 572 | (372 | ) | 286 | 300 | (14 | ) | ||||||||||||||||
| Total general and administrative expenses | $ | 1,312 | $ | 1,365 | $ | (53 | ) | $ | 2,943 | $ | 2,786 | $ | 157 | |||||||||||
Our general and administrative expenses for the three months ended June 30, 2026 decreased by approximately $0.05 million primarily due to bonuses paid out to general counsel as part of an amendment to their employment agreement in 2025, offset by an increase in recruiting expense.
For the six months ended June 30, 2026 compared to the six months ended June 30, 2025, our general and administrative expenses increased by approximately $0.1 million primarily due to increases in payroll related to certain accrued bonuses and in professional fees related to certain legal matters, offset by a reduction in stock based compensation due to a reduction in the fair values of the equity awards that are amortizing during the six months ended June 30, 2026 compared to the six months ended June 30, 2025, as well as decreased other expenses for occupancy costs, depreciation and amortization, and reduced insurance premiums.
| 22 |
Impairment of Goodwill
During the six months ended June 30, 2026, we recognized a $2.0 million impairment charge of the goodwill we had on our balance sheet from a 2018 acquisition because we concluded that the fair value of the reporting unit was less than the carrying value as of March 31, 2026, and the goodwill was considered fully impaired. As of June 30, 2026, there was no remaining goodwill balance. We did not recognize a similar expense during the six months ended June 30, 2025.
Forward sales contract expense
During the three months ended June 30, 2025, we recognized expense of $0.5 million related to a forward sales contract because the fair value of the shares that were expected to be issued under a securities purchase agreement entered into on March 31, 2025 (the “2025 SPA”) exceeded the expected proceeds. There was no similar transaction for the three months ended June 30, 2026.
During the six months ended June 30, 2025, we recognized expense of $5.8 million related to a forward sales contract because the fair value of the shares that were expected to be issued under a securities purchase agreement entered into on March 31, 2025 (the “2025 SPA”) exceeded the expected proceeds. There was no similar transaction for the six months ended June 30, 2026.
Change in Fair Value of Warrant Liabilities
The change in the fair value of the warrant liabilities for the three and six months ended June 30, 2025 was de minimis. There was no change in the fair value of the warrant liabilities recognized for the three and six months ended June 30, 2026.
Interest Income (Expense), net
For the three months ended June 30, 2026, we recognized approximately $55,000 more in interest income due to an increase of cash in interest-bearing accounts compared to the three months ended June 30, 2025.
For the six months ended June 30, 2026, we recognized approximately $94,000 more in interest income due to an increase of cash in interest-bearing accounts compared to the six months ended June 30, 2025.
Gain on extinguishment of contingent liability
For the three and six months ended June 30, 2026, we recognized approximately $41,000 due to the extinguishment of the contingent consideration liability during the three months ended June 30, 2026.
Other Expense, net
During the three and six ended June 30, 2025, we recognized approximately $0.1 million and $0.3 million of expenses related to the 2025 SPA transaction entered into on March 31, 2025. There was no comparable expense for the three and six months ended June 30, 2026.
Benefit (provision) for Income Taxes
During 2026, we expect to incur state income tax liabilities related to our operations. We have established a full valuation allowance for all deferred tax assets, including our net operating loss carryforwards, since we could not conclude that we were more likely than not able to generate future taxable income to realize these assets. The effective tax rate differs from the statutory tax rate due primarily to our full valuation allowance.
Liquidity and Capital Resources
As of June 30, 2026, we had cash of approximately $5.0 million, and we had an accumulated deficit of approximately $255.2 million. We have to date incurred operating losses, and we expect these losses to continue in the future. For the three and six months ended June 30, 2026, we incurred a net loss of $4.0 million and $9.5 million, respectively, which includes the $2.0 million non-cash goodwill impairment charge. For the six months ended June 30, 2026, and we used $6.4 million of cash in operating activities.
| 23 |
On February 10, 2026, we received approximately $9.5 million in net proceeds from the Public Offering. On March 13, 2026, we filed the Universal Shelf, which included a prospectus for a $9.2 million ATM. The Universal Shelf is subject to the baby shelf rules, and as of the filing of the Universal Shelf, one-third of our public float was approximately $9.2 million, representing the maximum amount to be sold under the ATM. As of June 30, 2026, we received approximately $6,000 in net proceeds from the sale of common stock under the ATM. To date, we have sold approximately 463,000 shares of common stock for net proceeds of approximately $3.7 million under the ATM, and we have approximately $5.4 million of shares remaining to sell under this facility.
In connection with preparing the financial statement as of and for the three and six months ended June 30, 2026, we evaluated whether there are conditions and events, considered in the aggregate, that are known and reasonably knowable that would raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued.
As of August 4, 2026, we had approximately $7.4 million in cash, which is less than that needed to affect our current operating plan and forecasted cash requirements for the next twelve months. However, we expect that our ability to access additional capital under our ATM will cover shortfalls in our cash resources over the next twelve months from the issuance date of these financial statements. Subsequent to the balance sheet date of June 30, 2026, the Company sold an additional 461,851 shares for net proceeds of $3.7 million in cash under the ATM.
If our cash is not sufficient to meet future cash requirements, we may be required to reduce planned capital expenses, reduce operational cash uses or raise capital on terms that are not as favorable to us as they otherwise might be. Any actions we may undertake to reduce planned capital purchases or reduce expenses may be insufficient to cover shortfalls in available funds. If we require additional capital, we may be unable to secure additional financing on terms that are acceptable to us, or at all.
Cash Flows
Cash flows from operating, investing and financing activities, as reflected in the accompanying condensed consolidated statements of cash flows, are summarized as follows:
| For the Six months ended June 30, | ||||||||||||
| (in thousands) | 2026 | 2025 | Change | |||||||||
| Cash (used in) provided by: | ||||||||||||
| Operating activities | $ | (6,416 | ) | $ | (4,597 | ) | $ | (1,819 | ) | |||
| Investing activities | (5 | ) | - | (5 | ) | |||||||
| Financing activities | 9,565 | 7,183 | 2,382 | |||||||||
| Net increase in cash | $ | 3,144 | $ | 2,586 | $ | 558 | ||||||
Net Cash Used in Operating Activities
There was an increase of approximately $1.8 million, respectively, in cash used in operating activities for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This change was due to a $2.3 million increase in net loss, after giving effect to adjustments made for non-cash transactions, offset by an increase of $0.5 million in cash used in operating assets and liabilities for the six months ended June 30, 2026 when compared to the six months ended June 30, 2025.
Net Cash Used in Investing Activities
We used approximately $5,000 in cash for the purchases of property and equipment during the six months ended June 30, 2026, and we made no purchases of property and equipment during the six months ended June 30, 2025.
| 24 |
Net Cash Provided by Financing Activities
Net cash provided by financing activities for the six months ended June 30, 2026 includes net proceeds of $9.5 million received from the Public Offering, including proceeds from the exercise of prefunded warrants issued in the Public Offering. Net cash provided by financing activities for the six months ended June 30, 2025 includes $2.3 million of gross proceeds received from the issuance of two promissory notes and $4.9 million of proceeds received from the First Closing and Second Closing under the SPA.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under applicable SEC rules.
Critical Accounting Estimates
There were no significant changes in our critical accounting estimates during the three and six months ended June 30, 2026 from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of the 2025 10-K.
Recent Accounting Pronouncements
See Note 13 to the accompanying condensed consolidated financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Under the rules and regulations of the SEC, as a smaller reporting company we are not required to provide the information otherwise required by this item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act, designed to ensure that information required to be disclosed in our reports filed pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.
In designing and evaluating the disclosure controls and procedures, we recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and we were required to apply our judgment in evaluating the cost-benefit relationship of possible controls and procedures. We have carried out an evaluation as of the end of the period covered by this Quarterly Report under the supervision, and with the participation, of our management, including our President and Chief Executive Officer (who serves as our principal executive officer and as our interim principal financial officer) of the effectiveness of the design and operation of our disclosure controls and procedures.
Based on that evaluation, our Chief Executive Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report in providing reasonable assurance of achieving the desired control objectives.
Changes in Internal Control over Financial Reporting
On June 22, 2026, Sandra Gurrola, who served as the Company’s Senior Vice President of Finance, resigned from the Company, as previously disclosed in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 26, 2026. In connection with Ms. Gurrola’s departure, Sanjeev Luther, the Company’s President and Chief Executive Officer, has been appointed to the role of interim principal financial officer on an interim basis, in addition to his existing role as principal executive officer. The Company has engaged outside accounting personnel to support the financial statement close and reporting process during this transition.
Except for this change in the individual(s) serving in the role of interim principal financial officer and the resulting temporary consolidation of the roles of principal executive officer and principal financial officer described above, there was no change in our internal control over financial reporting during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| 25 |
PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
The information set forth under “Note 10—Commitments and Contingencies—Litigation Matters” to the accompanying condensed consolidated financial statements included in this Quarterly Report is incorporated in this Item 1 by reference.
From time to time, we may become involved in legal proceedings arising in the ordinary course of business. We are not currently party to any material legal proceedings.
Item 1A. Risk Factors.
An investment in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described under Part I, Item 1A, “Risk Factors,” in our 2025 10-K, in addition to other information in this report, when evaluating our business and before deciding whether to purchase, hold or sell shares of our common stock. Each of these risks and uncertainties, as well as additional risks and uncertainties not presently known to us or that we currently consider immaterial, could harm our business, financial condition, results of operations and/or growth prospects, as well as adversely affect the market price of our common stock, in which case you may lose all or part of your investment. There have been no material changes to the risk factors described in the 2025 10-K.
Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock.
Our common stock is listed on The Nasdaq Capital Market. Nasdaq requires that listed companies satisfy certain continued listing requirements. Listing Rule 5550(a)(2) requires that listed companies maintain a minimum compliance with the Bid Price Rule. Listing Rule 5550(b) requires that listed companies maintain compliance with: (1) the Stockholders’ Equity Rule; (2) the MVLS Rule; or (3) the Net Income Rule.
On March 18, 2026, we received written notice from Nasdaq that our common stock had failed to maintain compliance with the Bid Price Rule for 30 consecutive business days. Because we had effected a reverse stock split within the prior one-year period, Nasdaq determined that we were not eligible for the standard 180-calendar-day compliance period ordinarily available under Nasdaq Listing Rule 5810(c)(3)(A). Accordingly, we requested a hearing before a Nasdaq Hearings Panel (the “Panel”), which automatically stayed any suspension or delisting action pending the hearing and any additional extension period granted by the Panel. Following a hearing held on April 28, 2026, the Panel granted our request for continued listing on Nasdaq, subject to the following conditions: (i) that we demonstrate compliance with the Bid Price Rule on or before May 15, 2026; (ii) that we maintain compliance with all Nasdaq Listing Rules from the date of the Panel’s decision through September 14, 2026, the end of the Panel’s jurisdiction over this matter; and (iii) that we be subject to a mandatory panel monitor for a period of one year from the date of the Panel’s determination pursuant to Nasdaq Listing Rule 5815(d)(4)(B).
On May 4, 2026, we effected a 1-for-25 reverse stock split of our common stock. On May 29, 2026, we received notice from Nasdaq that we had regained compliance with the Bid Price Rule. Notwithstanding this notice, the Panel continues to retain jurisdiction over us through September 14, 2026 with respect to compliance with all Nasdaq Listing Rules, and we must remain in compliance with the Bid Price Rule through May 5, 2027. If we fail to maintain compliance with all Nasdaq Listing Rules through September 14, 2026, the Panel will immediately delist our securities from Nasdaq, without further notice or opportunity to cure.
There can be no assurance that we will maintain compliance with the Bid Price Rule, the Stockholders’ Equity Rule, or any other applicable Nasdaq continued listing requirement through September 14, 2026 or May 5, 2027, or thereafter. Our stockholders’ equity, MVLS, and net income position will continue to depend on our ability to raise additional capital, our future operating results, and the trading price of our common stock, each of which is subject to significant uncertainty. If we fail to satisfy any Nasdaq continued listing requirement during the Panel’s monitoring period or thereafter, Nasdaq may take immediate steps to delist our common stock, and we can provide no assurance that any action we take to restore or maintain compliance would be successful.
| 26 |
If our common stock is ultimately delisted by Nasdaq, and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, then we could face significant material adverse consequences, including: a material reduction in the liquidity of our common stock and a corresponding material reduction in the trading price of our common stock; a more limited market quotations for our securities; a determination that our common stock is a “penny stock” that requires brokers to adhere to more stringent rules and possibly resulting in a reduced level of trading activity in the secondary trading market for our securities; more limited research coverage by stock analysts; loss of reputation; more difficult and more expensive equity financings in the future; the potential loss of confidence by investors; and fewer business development opportunities.
The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” If our common stock remains listed on Nasdaq, our common stock will be covered securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. If our securities were no longer listed on Nasdaq and therefore not “covered securities,” we would be subject to regulation in each state in which we offer our securities.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Set forth below is information regarding shares of common stock issued by us during the three months ended June 30, 2026 that were not registered under the Securities Act.
On May 12, 2026, the Company issued 2,000 shares of the Company’s common stock to its IR Firm as part of their consulting agreement.
In connection with the foregoing, the Company relied upon the exemption from registration provided by Section 4(a)(2) under the Securities Act for transactions not involving a public offering.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
(a)
Fourth Amended and Restated Bylaws
On August 4, 2026, the Board of Directors approved the adoption of the Fourth Amended and Restated Bylaws of the Company to (i) make the office of Secretary an optional office of the Company rather than a mandatory office and (ii) revise the quorum requirement for meetings of stockholders and class votes from a majority of the shares entitled to vote thereon to thirty-three and one-third percent (33 1/3%) of the shares entitled to vote thereon; revise the advance notice requirements for stockholder proposals and director nominations at annual meetings to replace the outdated notice provisions tied to the 2006 through 2008 annual meetings; (iv) delete the loans to officers provision; (v) designate the federal district courts of the United States as the exclusive forum for Securities Act of 1933 claims; and (vi) revise the voting power requirement for stockholders to adopt, amend, or repeal a bylaw to a majority of the Company’s voting power.
Appointment of Sanjeev Luther as Acting Chief Financial Officer
On August 4, 2026, the Board of Directors appointed the Company’s President and Chief Executive Officer, Sanjeev Luther, to serve as the Company’s interim Principal Financial Officer through August 10, 2026.
Sanjeev Luther has served as President, Chief Executive Officer and as a member of our board of directors since January 2024. Prior to that, Mr. Luther served as President, Chief Executive Officer and a board member of Cornerstone Pharmaceuticals from November 2017 to December 2023 and as its Chief Operations Officer and Chief Business Officer from December 2014 to November 2017. Prior to that, Mr. Luther served in various leadership roles at Bristol-Myers Squibb, Novartis, Bausch and Lomb and GE Healthcare. Mr. Luther holds an MBA in Marketing and a B.S. in Marketing and Business Administration from the State University of New York at Buffalo.
Mr. Luther will not receive further compensation in connection with his appointment as the Company’s interim Principal Financial Officer.
There are no arrangements or understandings between Mr. Luther and any other person or persons pursuant to which Mr. Luther was appointed as the Company’s interim Principal Financial Officer, and there is no family relationship between Mr. Luther and any other director or executive officer of the Company or any person nominated or chosen by the Company to become a director or executive officer. There are no transactions between the Company and Mr. Luther that are reportable pursuant to Item 404(a) of Regulation S-K.
| 27 |
Appointment of Mark J. Keeley as Fractional Chief Financial Officer
Effective August 10, 2026, the Company engaged Mark J. Keeley as a fractional Chief Financial Officer on a consulting basis pursuant to a Consulting Agreement dated August 5, 2026 (the "Keeley Agreement"), and designated Mr. Keeley as the Company's Principal Financial Officer and Principal Accounting Officer, succeeding Mr. Luther in such capacities. Mr. Keeley's engagement was approved by the Board on August 4, 2026.
Under the Keeley Agreement, Mr. Keeley will dedicate approximately 25% of his full-time equivalent (approximately 10 hours per week) to the Company. In consideration of his services, Mr. Keeley will receive share-based compensation in the Company's common stock at the rate of $62,500 per quarter (representing an annualized rate of $250,000 on a full-time equivalent basis, prorated to approximately $62,500 per year for the fractional engagement). Fee shares will be issued quarterly in arrears at the market price at the close of business on the last day of each quarter as reported by The Nasdaq Stock Market, under the Company's Restated 2026 Stock Incentive Plan. For the first quarter, fee shares will be prorated from the Start Date through September 30, 2026, and will be issued on or before October 15, 2026. Mr. Keeley's services are contingent upon the Company's maintenance of a Directors and Officers (D&O) insurance policy with the CFO being a covered officer. The Keeley Agreement is terminable by either party upon at least 30 days' prior written notice. Mr. Keeley will serve as an independent contractor and not as an employee of the Company.
Mark J. Keeley, MBA, CPA, CITP, is a public company director, Chief Financial Officer, and former Big 4 partner with over 40 years of domestic and international experience, including 15 years as a signing partner with PricewaterhouseCoopers LLP and 10 years as a financial expert on boards of directors, as a Chief Financial Officer, and as an independent advisor for a number of private and public entities. Mr. Keeley has extensive experience identifying and addressing financial, operational, and compliance issues with boards of directors, external auditors, investors, and regulators. He has also dedicated ten years of service to the U.S. Federal Government, where he testified to the United States Congress about financial audit readiness. Mr. Keeley has been a Certified Public Accountant (CPA) for over 40 years and was one of the first holders of the Certified Information Technology Professional (CITP) designation granted by the American Institute of Certified Public Accountants (AICPA). He holds a Bachelor's Degree in Accounting and Computer Science from The University of Massachusetts, where he graduated Summa Cum Laude, and a Master's Degree in Finance from Boston College.
There are no arrangements or understandings between Mr. Keeley and any other person or persons pursuant to which Mr. Keeley was engaged as the Company's Chief Financial Officer and designated as the Company's Principal Financial Officer, other than the Keeley Agreement described above. There is no family relationship between Mr. Keeley and any director or executive officer of the Company or any person nominated or chosen by the Company to become a director or executive officer. There are no transactions between the Company and Mr. Keeley that are reportable pursuant to Item 404(a) of Regulation S-K.
Appointment of David Polinsky to the Board of Directors.
On August 4, 2026, upon the recommendation of the Nominating and Corporate Governance Committee of the Board, the Board approved the appointment of David Polinsky to serve as a member of the Board, effective August 5, 2026, and approved an increase in the number of authorized board seats from five to six. Mr. Polinsky will serve until his successor is duly elected and qualified, or until his earlier death, resignation, or removal.
Mr. Polinsky will be compensated in accordance with the Company's Board of Directors Compensation Plan adopted effective August 15, 2026, as described below.
There are no arrangements or understandings between Mr. Polinsky and any other person or persons pursuant to which Mr. Polinsky was appointed as a director of the Company, and there is no family relationship between Mr. Polinsky and any other director or executive officer of the Company or any person nominated or chosen by the Company to become a director or executive officer. There are no transactions between the Company and Mr. Polinsky that are reportable pursuant to Item 404(a) of Regulation S-K.
Adoption of the Board Compensation Plan
On August 5, 2026, the Board adopted the Board of Directors Compensation Plan of Ernexa Therapeutics Inc. (the “Board Compensation Plan”), effective August 15, 2026. The material terms of the Board Compensation Plan are as follows:
Eligibility. Only non-employee directors are eligible to participate in the Board Compensation Plan.
Compensation. Each eligible director will receive an annual retainer of $50,000 per year. No separate committee retainer is payable. Directors may elect to receive compensation in cash or in the equivalent form of a non-qualified stock option grant to purchase shares of the Company's common stock (an “Option Grant”).
Timing of Election. The form of payment election must be made no later than January 15 of each year, covering the subsequent twelve months. For the prorated annual board retainer covering the remainder of 2026, such election must be made no later than August 15, 2026. If no election is made by the applicable deadline, or if a director joins the Board after the election date, the director will receive compensation in cash until the next election date. If directors are in possession of material non-public information on the election date, the election will be delayed until the directors are no longer in possession of such information.
Timing of Payment. Cash retainer payments will be made quarterly in arrears on the last day of August, November, February, and May of each year, commencing on August 31, 2026 (prorated from the effective date for the first payment). Option Grants will be issued on a yearly basis on January 15 of each year, commencing January 15, 2027 (the first grant for the remainder of calendar year 2026 will be prorated from the effective date to December 31, 2026).
Terms of Option Grants. Option Grants will be issued under the Company's 2026 Omnibus Equity Incentive Plan. The number of stock options granted will be determined based on a Black-Scholes fair value on the date of grant, will vest at the end of twelve months from the date of grant, and will have a per share exercise price equal to the fair market value on the date of grant. Performance Expectations. Directors are expected to attend at least 75% of board meetings, prepare adequately for meetings, participate in committee activities, and comply with governance policies and fiduciary responsibilities.
(b) None.
(c)
During the quarter covered by this report, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act)
| 28 |
Item 6. Exhibits
| 29 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ERNEXA THERAPEUTICS INC. | ||
| Date: August 6, 2026 | By: | /s/ Sanjeev Luther |
| Sanjeev Luther | ||
| President and Chief Executive Officer | ||
| (Principal Executive Officer and Interim Principal Financial Officer) | ||
| 30 |
Exhibit 3.2
BYLAWS
OF
ERNEXA THERAPEUTICS INC.
(as amended and restated through August 4, 2026)
FOURTH AMENDED AND RESTATED
BYLAWS
OF
ERNEXA THERAPEUTICS INC.
Effective August 4, 2026
CORPORATE OFFICES
| 1.1 | Registered Office. |
The registered office of the Corporation shall be in the City of Wilmington, County of New Castle, State of Delaware. The name of the registered agent of the Corporation at such location is Corporate Agents, Inc.
| 1.2 | Other Offices. |
The Board of Directors may at any time establish other offices at any place or places where the Corporation is qualified to do business.
MEETINGS OF STOCKHOLDERS
| 2.1 | Annual Meetings. |
The annual meeting of the stockholders of the Corporation, for the purpose of election of directors and for such other business as may lawfully come before it, shall be held on such date and at such time as may be designated from time to time by the Board of Directors. The Board of Directors may, in its sole discretion, determine that the meeting may be held solely by means of remote communication, as permitted by Section 211 of the Delaware General Corporation Law (the “DGCL”).
At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be: (A) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (B) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (C) otherwise properly brought before the meeting by a stockholder. For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the secretary of the Corporation. To be timely, a stockholder’s notice must be delivered to or mailed and received at the principal executive offices of the Corporation no earlier than one hundred twenty (120) calendar days and no later than ninety (90) calendar days prior to the anniversary of the preceding year’s annual meeting of stockholders; provided, however, that if the date of the annual meeting is advanced more than 30 days before or delayed by more than 30 days after the anniversary of the preceding year’s annual meeting, or if the Corporation did not hold an annual meeting in the preceding year, notice by the stockholder to be timely must be so delivered not later than the close of business on the later of the 90th day before such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. A stockholder’s notice to the secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting: (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and address, as they appear on the Corporation’s books, of the stockholder proposing such business, (iii) the class and number of shares of the Corporation which are beneficially owned by the stockholder, (iv) any material interest of the stockholder in such business and (v) any other information that is required to be provided by the stockholder pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act’”), in his capacity as a proponent to a stockholder proposal. In addition to the foregoing, in order to include information with respect to a stockholder proposal in the proxy statement and form of proxy for a stockholders’ meeting, stockholders must provide notice as required by the regulations promulgated under the Exchange Act to the extent such regulations require notice that is different from the notice required above. Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at any annual meeting except in accordance with the procedures set forth in this paragraph (b) of this Section 2.1. The chairman of the meeting shall have the power and the duty to determine whether any business proposed to be brought before the meeting has been made in accordance with the procedures set forth in these Bylaws and, if any proposed business is not in compliance with these Bylaws, to declare that such defectively proposed business shall not be presented for stockholder action at the meeting and shall be disregarded.
Only persons who are nominated in accordance with the procedures set forth in this paragraph (c) shall be eligible for election as directors. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of stockholders by or at the direction of the Board of Directors or by any stockholder of the Corporation entitled to vote in the election of directors at the meeting who complies with the notice procedures set forth in this paragraph (c). Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the secretary of the Corporation in accordance with the provisions of paragraph (b) of this Section 2.1. Such stockholder’s notice shall set forth (i) as to each person, if any, whom the stockholder proposes to nominate for election or re-election as a director: (A) the name, age, business address and residence address of such person, (B) the principal occupation or employment of such person, (C) the class and number of shares of the Corporation that are beneficially owned by such person, (D) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nominations are to be made by the stockholder, and (E) any other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act (including without limitation such person’s written consent to being named in the proxy statement, if any, as a nominee and to serving as a director if elected); and (ii) as to such stockholder giving notice, the information required to be provided pursuant to subitems (ii), (iii) and (iv) of paragraph (b) of this Section 2.1. At the request of the Board of Directors, any person nominated by a stockholder for election as a director shall furnish to the secretary of the Corporation that information required to be set forth in the stockholder’s notice of nomination which pertains to the nominee. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this paragraph (c). The chairman of the meeting shall have the power and the duty to determine whether a nomination has been made in accordance with the procedures set forth in these Bylaws and, if any proposed nomination is not in compliance with these Bylaws, to declare that such defectively proposed nomination shall not be presented for stockholder action at the meeting and shall be disregarded.
Nothing in this Section 2.1 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.
| 2.2 | Special Meetings. |
Special meetings of the stockholders, other than those required by statute, may be called at any time by the Board of Directors acting pursuant to a resolution adopted by a majority of the Whole Board. For purposes of these Bylaws, the term “Whole Board” shall mean the total number of authorized directors whether or not there exist any vacancies in previously authorized directorships. The Board of Directors may postpone or reschedule any previously scheduled special meeting.
Only such business shall be conducted at a special meeting of the stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of the meeting.
Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (i) by or at the direction of the Board of Directors or (ii) by any stockholder of record at the time of giving of notice provided for in this paragraph, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 2.2. Nominations by stockholders of persons for election to the Board of Directors may be made at such a special meeting of stockholders if the stockholder’s notice has been delivered to the secretary at the principal executive offices of the Corporation not later than the close of business on the later of the 90th day before such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting.
Nothing in this Section 2.2 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.
| 2 |
| 2.3 | Notice of Stockholders’ Meetings. |
Notice of the place, if any, date and time of all meetings of stockholders, and the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present and person and vote at such meeting, shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting, except as otherwise provided herein or required by law or the Certificate of Incorporation. Written notice of any meeting of stockholders, if mailed, is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the Corporation. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders may be given by electronic mail or other electronic transmission, in the manner provided in Section 232 of the DGCL. An affidavit of the secretary or an assistant secretary or of the transfer agent of the Corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken; provided, however, that if the date of any adjourned meeting is more than 30 days after the date for which the meeting was originally noticed, or if a new record date is fixed for the adjourned meeting, notice of the place, if any, date, and time of the adjourned meeting and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting, shall be given in conformity herewith. At any adjourned meeting, any business may be transacted which might have been transacted at the original meeting.
| 2.4 | Quorum. |
At any meeting of the stockholders, the holders of 33 1/3% of the shares of stock entitled to vote at the meeting, present in person or by proxy, shall constitute a quorum for all purposes, except as otherwise provided by the DGCL or by the Certificate of Incorporation. Where a separate vote by a class or classes or series is required, 33 1/3% of the shares of such class or classes or series present in person or by proxy shall constitute a quorum entitled to take action with respect to that vote on that matter.
If a quorum shall fail to attend any meeting, the chairman of the meeting may adjourn the meeting to another place, if any, date or time.
| 2.5 | Organization; Conduct of Business. |
The chief executive officer of the Corporation or, if no such officer has been appointed or in his or her absence, the president of the Corporation or, in his or her absence, the chairman of the Board of Directors, shall call to order any meeting of the stockholders and act as chairman of the meeting. In the absence of the secretary of the Corporation, the secretary of the meeting shall be such person as the chairman of the meeting appoints.
The chairman of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including the manner of voting and the conduct of business. The chairman shall have the power to adjourn the meeting to another place, if any, date and time. The date and time of opening and closing of the polls for each matter upon which the stockholders will vote at the meeting shall be announced at the meeting.
| 2.6 | Proxies and Voting. |
At any meeting of the stockholders, every stockholder entitled to vote may vote in person or by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting. Any copy, facsimile communication or other reliable reproduction of the writing or transmission created pursuant to this paragraph may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.
| 3 |
The Corporation may, and to the extent required by law, shall, in advance of any meeting of stockholders, appoint one or more inspectors to act at the meeting and make a written report thereof. The Corporation may designate one or more alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the chairman of the meeting may, and to the extent required by law, shall, appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. Every vote taken by ballots shall be counted by a duly appointed inspector or inspectors.
All elections of directors shall be determined by a plurality of the votes cast, and except as otherwise required by law, all other matters shall be determined by a majority of the votes cast affirmatively or negatively.
| 2.7 | Waiver of Notice. |
Whenever notice is required to be given under any provision of the DGCL or of the Certificate of Incorporation or these Bylaws, a written waiver thereof, signed by the person entitled to notice, or waiver by electronic mail or other electronic transmission by such person, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice, or any waiver of notice by electronic transmission, unless so required by the Certificate of Incorporation or these Bylaws.
| 2.8 | Record Date for Stockholder Notice. |
In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date on which the resolution fixing the date is adopted and which record date shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 60 days before any other action.
If the Board of Directors does not so fix a record date:
The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.
The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting, if such adjournment is for 30 days or less; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
DIRECTORS
| 3.1 | Number of Directors. |
The number of directors constituting the Whole Board shall be determined by the Board from time to time by a resolution duly adopted by the Board, subject to the rights of the holders of any series of preferred stock to elect directors under specified circumstances. No decrease in the number of authorized directors shall shorten the term of any incumbent director.
| 3.2 | Election and Term of Office of Directors. |
Except as provided in Section 3.3 of these Bylaws, and unless otherwise provided in the Certificate of Incorporation, directors shall be elected at each annual meeting of stockholders to hold office until the next annual meeting at which the term of office of the class to which they have been elected expires. Each director, including a director elected to fill a vacancy, shall hold office until his or her successor is elected or until his or her earlier resignation or removal.
| 4 |
| 3.3 | Director Resignations, Newly Created Directors and Vacancies. |
Any director may resign at any time upon written notice to the attention of the secretary of the Corporation or, if there is no secretary in office, then to the attention of any other corporate officer or to the Board of Directors as a whole. When one or more directors so resigns and the resignation is effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in this section in the filling of other vacancies.
Subject to the rights of the holders of any series of preferred stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, removal from office or other cause shall, unless otherwise required by law or by resolution of the Board of Directors, be filled only by a majority vote of the directors then in office, though less than a quorum, and directors so chosen shall serve for a term expiring at the next annual meeting of stockholders at which the term of office of the class to which they have been elected expires or until such director’s successor shall have been duly elected. Unless otherwise required by law or by resolution of the Board of Directors, the stockholders shall have no right or power to fill any such vacancies or newly created directorships.
Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the Certificate of Incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected.
If at any time, by reason of death or resignation or other cause, the Corporation should have no directors in office, then any officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder, may call a special meeting of stockholders in accordance with the provisions of the Certificate of Incorporation or these Bylaws, or may apply to the Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the DGCL.
If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the Whole Board (as constituted immediately before any such increase), then the Court of Chancery may, upon application of any stockholder or stockholders holding at least 10% of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of Section 211 of the DGCL as far as applicable.
| 3.4 | Participation in Meetings by Conference Telephone. |
Members of the Board of Directors, or of any committee thereof, may participate in a meeting of the Board of Directors, or any committee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.
| 3.5 | Regular Meetings. |
Regular meetings of the Board of Directors may be held at such place, date and time as shall from time to time be determined by the Board of Directors. A notice of each regular meeting shall not be required.
| 3.6 | Special Meetings. |
Special meetings of the Board of Directors may be called by the Chairman of the Board, the president or by a majority of the Whole Board, and shall be held at such place, date and time as he, she or they shall fix.
| 5 |
Notice of the place, date and time of special meetings shall be delivered personally or by telephone to each director or sent by first-class mail, charges prepaid, or by facsimile or electronic mail, addressed to each director at that director’s address as it is shown on the records of the Corporation. If the notice is mailed, it shall be deposited in the United States mail at least four days before the time of the holding of the meeting. If the notice is delivered personally, or by facsimile, electronic mail or telephone, it shall be delivered at least 24 hours before the time of the holding of the meeting. The notice need not specify the place of the meeting, if the meeting is to be held at the principal executive office of the Corporation. Any and all business may be transacted at a special meeting, unless otherwise indicated in the notice thereof.
| 3.7 | Quorum. |
At any meeting of the Board of Directors, a majority of the Whole Board shall constitute a quorum for all purposes, except as may be otherwise specifically provided by statute or by the Certificate of Incorporation. If a quorum shall fail to attend any meeting, then a majority of the directors present may adjourn the meeting to another place, date or time, without further notice or waiver thereof.
A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting.
| 3.8 | Waiver of Notice. |
Whenever notice of a Board of Directors meeting is required to be given under any provision of the DGCL or of the Certificate of Incorporation or these Bylaws, a written waiver thereof, signed by the person entitled to notice, or waiver by electronic mail or other electronic transmission by such person, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of,
any regular or special meeting of the directors, or members of a committee of directors, need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the Certificate of Incorporation or these Bylaws.
| 3.9 | Conduct of Business; Board Action by Written Consent Without a Meeting. |
At any meeting of the Board of Directors, business shall be transacted in such order and manner as the Board of Directors may from time to time determine, and all matters shall be determined by the vote of a majority of the directors present, except as otherwise provided in these Bylaws or by law.
Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board of Directors or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or committee. Such filings shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
| 3.10 | Compensation of Directors. |
The Board of Directors shall have the authority to fix the compensation of the directors. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors, and may be paid a fixed sum for attendance at each meeting of the Board of Directors, or paid a stated salary or paid other compensation as director. No such compensation shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefore. Members of special or standing committees may be allowed compensation for attending committee meetings.
| 3.11 | Removal of Directors. |
Unless otherwise restricted by statute, the Certificate of Incorporation or these Bylaws, any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors.
| 6 |
| 3.12 | Chairman of the Board of Directors. |
The Corporation may have, at the discretion of the Board of Directors, a Chairman of the Board of Directors who shall not be considered by virtue of holding such position an officer of the Corporation.
COMMITTEES
| 4.1 | Committees of Directors. |
The Board of Directors may from time to time designate committees of the Board of Directors, with such lawfully delegable powers and duties as it thereby confers, to serve at the pleasure of the Board of Directors and shall, for those committees and any others provided for herein, elect a director or directors to serve as the member or members, designating, if it desires, other directors as alternate members who may replace any absent members at any meeting of the committee. In the absence of any member of any committee and any alternate member in his or her place, the member or members of the committee present at the meeting, whether or not he or she or they constitute a quorum, may by unanimous vote appoint another member of the Board of Directors to act at the meeting in the place of the absent member. Any Board committee may create one or more subcommittees, each subcommittee to consist of one or more members of such committee, and delegate to the subcommittee any or all of the powers of the committee.
| 4.2 | Committee Minutes. |
Each committee shall keep regular minutes of its meetings and maintain them in the Corporation’s official minute book.
| 4.3 | Conduct of Business. |
Each committee may determine the procedural rules for meeting and conducting its business and shall act in accordance therewith, except as otherwise provided herein or required by law. Adequate provision shall be made for notice to members of all meetings; one-half of the members shall constitute a quorum; and all matters shall be determined by a majority vote of the members present. Action may be taken by any committee without a meeting if all members thereof consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of the proceedings of such committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
The Board of Directors may adopt rules for the governance of any committee not inconsistent with these Bylaws.
OFFICERS
| 5.1 | Officers. |
The officers of the Corporation shall be a chief executive officer and a president. The Corporation may also have, at the discretion of the Board of Directors, one or more vice presidents, a secretary and one or more assistant secretaries, a treasurer and one or more assistant treasurers, and any such other officers as may be appointed in accordance with these Bylaws. Any number of offices may be held by the same person.
| 5.2 | Appointment of Officers. |
The officers of the Corporation, except such officers as may be appointed in accordance with the provisions of Sections 5.3 or 5.5 of these Bylaws, shall be appointed by the Board of Directors.
| 5.3 | Subordinate Officers. |
The Board of Directors may appoint, or empower the chief executive officer or the president to appoint, such other officers and agents as the business of the Corporation may require, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in these Bylaws or as the Board of Directors or such other officer may from time to time determine. The Board of Directors may empower the chief executive officer or the president to define the authority and duties of such subordinate officers.
| 7 |
| 5.4 | Removal and Resignation of Officers. |
Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the Board of Directors at any regular or special meeting of the Board of Directors or, except in the case of an officer chosen by the Board of Directors, by any officer upon whom such power of removal may be conferred by the Board of Directors.
Any officer may resign at any time by giving written notice to the secretary of the Corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Corporation under any contract to which the officer is a party.
| 5.5 | Vacancies in Offices. |
Any vacancy occurring in any office of the Corporation shall be filled in the manner prescribed in these Bylaws for regular appointments to that office.
| 5.6 | Chief Executive Officer. |
Subject to such supervisory powers, if any, as may be given by the Board of Directors to the chairman of the board, if any, the chief executive officer of the Corporation, if such an officer is appointed, shall, subject to the control of the Board of Directors, have general supervision, direction, and control of the business and the officers of the Corporation. He or she shall preside at all meetings of the stockholders and, in the absence or nonexistence of a chairman of the board, at all meetings of the Board of Directors, shall have the general powers and duties of management usually vested in the office of chief executive officer of a Corporation and shall have such other powers and duties as may be prescribed by the Board of Directors or these Bylaws.
| 5.7 | President. |
Subject to such supervisory powers, if any, as may be given by the Board of Directors to the chairman of the board, if there is one, or the chief executive officer, if such an officer is appointed, the president shall be the principal executive officer of the company and shall, subject to the control of the Board of Directors, have general supervision, direction, and control of the business and other officers of the Corporation. He or she shall have the general powers and duties of management usually vested in the office of president of a Corporation and such other powers and duties as may be prescribed by the Board of Directors or these Bylaws.
| 5.8 | Vice Presidents. |
In the absence or disability of the chief executive officer and president, the vice presidents, if any, in order of their rank as fixed by the Board of Directors or, if not ranked, a vice president designated by the Board of Directors, shall perform all the duties of the president and when so acting shall have all the powers of, and be subject to all the restrictions upon, the president. The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively (in order of priority) by the Board of Directors, the chief executive officer, or the president.
| 5.9 | Secretary. |
The secretary shall keep or cause to be kept, at the principal executive office of the Corporation or such other place as the Board of Directors may direct, a book of minutes of all meetings and actions of directors, committees of directors, and stockholders. The minutes shall show the time and place of each meeting, the names of those present at directors’ meetings or committee meetings, the number of shares present or represented at stockholders’ meetings, and the proceedings thereof.
| 8 |
The secretary shall keep, or cause to be kept, at the principal executive office of the Corporation or at the office of the Corporation’s transfer agent or registrar, as determined by resolution of the Board of Directors, a share register, or a duplicate share register, showing the names of all stockholders and their addresses, the number and classes of shares held by each, the number and date of certificates evidencing such shares, and the number and date of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the Board of Directors required to be given by law or by these Bylaws. He or she shall keep the seal of the Corporation, if one be adopted, in safe custody and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or by these Bylaws.
| 5.10 | Principal Financial Officer. |
The Board of Directors shall designate an officer appointed pursuant to Section 5.1 of the Bylaws to serve as the principal financial officer of the Company. The principal financial officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the Corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital retained earnings, and shares.
The principal financial officer shall deposit all moneys and other valuables in the name and to the credit of the Corporation with such depositories as may be designated by the Board of Directors. He or she shall disburse the funds of the Corporation as may be ordered by the Board of Directors, shall render to the president, the chief executive officer, or the directors, upon request, an account of all his or her transactions as principal financial officer and of the financial condition of the Corporation, and shall have other powers and perform such other duties as may be prescribed by the Board of Directors or the Bylaws.
| 5.11 | Action with Respect to Securities of Other Corporations. |
Unless otherwise directed by the Board of Directors, the chief executive officer, the president or any officer of the Corporation authorized by the chief executive officer or the president is authorized to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of stockholders of or with respect to any action of stockholders of any other corporation in which the Corporation may hold securities and otherwise to exercise any and all rights and powers which the Corporation may possess by reason of its ownership of securities in such other corporation.
| 5.12 | Delegation of Authority. |
Notwithstanding any other provision in these Bylaws, the Board of Directors may from time to time delegate the powers or duties of any officer to any other officers or agents.
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND OTHER AGENTS
| 6.1 | Indemnification of Directors and Officers. |
Each person who was or is made a party to or is threatened to be made a party to, witness or other participant in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he or she is or was a director or officer of the Corporation (an “Indemnities”), whether the basis of the Proceeding is alleged action in an official capacity as a director or officer or in any other capacity while serving as a director or officer, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide before such amendment), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by Indemnitee in connection therewith; provided, however, the Corporation shall not indemnify any such Indemnitee in connection with a Proceeding (or part thereof) (i) initiated by such Indemnitee against the Corporation or any director or officer of the Corporation unless the Corporation has joined in or consented to the initiation of such Proceeding or (ii) made on account of Indemnitee’s conduct which constitutes a breach of Indemnitee’s duty of loyalty to the Corporation or its stockholders, or is an act or omission not in good faith which involves intentional misconduct or a knowing violation of the law. For purposes of this Section 6.1, a “director” or “officer” of the Corporation includes any person who (i) is or was a director or officer of the Corporation , (ii) is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or (iii) was a director or officer of a corporation that was a predecessor corporation of the Corporation or of another enterprise at the request of such predecessor corporation.
| 9 |
| 6.2 | Indemnification of Others. |
The Corporation shall have the power, to the maximum extent and in the manner permitted by the DGCL, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide before such amendment), to indemnify each of its employees and agents against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such employees and agents in connection therewith; provided, however, provided, however, the Corporation shall not indemnify any such employee or agent in connection with a Proceeding (or part thereof) (i) initiated by such employee or agent against the Corporation or any director or officer of the Corporation unless the Corporation has joined in or consented to the initiation of such Proceeding or (ii) made on account of such employee’s or agent’s conduct which constitutes a breach of such employee’s or agent’s duty of loyalty to the Corporation or its stockholders, or is an act or omission not in good faith which involves intentional misconduct or a knowing violation of the law. For purposes of this Section 6.2, an “employee” or “agent” of the Corporation includes any person other than a director or officer (i) who is or was an employee or agent of the Corporation, (ii) who is or was serving at the request of the Corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or (iii) who was an employee or agent of a corporation which was a predecessor corporation of the Corporation or of another enterprise at the request of such predecessor corporation.
| 6.3 | Payment of Expenses in Advance. |
Expenses incurred in defending any Proceeding for which indemnification is required pursuant to Section 6.1 shall be, or for which indemnification is permitted pursuant to Section 6.2 following authorization thereof by the Board of Directors may be, paid by the Corporation in advance of the final disposition of such Proceeding upon receipt of an undertaking, by or on behalf of the indemnified party to repay such amount if it shall ultimately be determined, by final judicial decision from which there is no further right to appeal, that the indemnified party is not entitled to be indemnified as authorized in this Article VI.
| 6.4 | Indemnity Not Exclusive. |
The indemnification provided by this Article VI shall not be deemed exclusive of any other rights to which those seeking indemnification may been entitled under any Bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office.
| 6.5 | Insurance. |
The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another Corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of the DGCL.
| 10 |
RECORDS AND REPORTS
| 7.1 | Maintenance and Inspection of Records. |
The Corporation shall, either at its principal executive offices or at such place or places as designated by the Board of Directors, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these Bylaws as amended to date, accounting books and other records.
Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the Corporation’s stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person’s interest as a stockholder. In every instance where an attorney or other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing that authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the Corporation at its registered office in Delaware or at its principal place of business.
A complete list of stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order for each class of stock and showing the address of each such stockholder and the number of shares registered in each such stockholder’s name, shall be open to the examination of any such stockholder for a period of at least ten days before the meeting in the manner provided by law. The stock list shall also be open to the examination of any stockholder during the whole time of the meeting as provided by law. This list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them.
| 7.2 | Inspection by Directors. |
Any director shall have the right to examine the Corporation’s stock ledger, a list of its stockholders, and its other books and records for a purpose reasonably related to his or her position as a director.
GENERAL MATTERS
| 8.1 | Checks. |
From time to time, the Board of Directors shall determine by resolution which person or persons may sign or endorse all checks, drafts, other orders for payment of money, notes or other evidences of indebtedness that are issued in the name of or payable to the Corporation, and only the persons so authorized shall sign or endorse those instruments.
| 8.2 | Execution of Corporate Contracts and Instruments. |
The Board of Directors, except as otherwise provided in these Bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the Board of Directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.
| 8.3 | Stock Certificates. |
The shares of the Corporation shall be represented by certificates provided, however, that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be represented by uncertificated shares, and provided, further, that any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Every holder of stock represented by certificates shall be entitled to have a certificate signed by, or in the name of the Corporation by the chairman or vice-chairman of the Board of Directors, or the president or vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the Corporation. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, the certificate may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.
No stock certificates will be issued in bearer form.
| 11 |
| 8.4 | Special Designation on Certificates. |
If the Corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
| 8.5 | Lost Certificates. |
Except as provided in this Section 8.5, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the Corporation and canceled at the same time. The Corporation may issue a new certificate of stock in the place of any certificate previously issued by it, alleged to have been lost, stolen, mutilated or destroyed, and the Corporation may require the owner of the lost, stolen, mutilated or destroyed certificate, or the owner’s legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft, mutilation or destruction of any such certificate or the issuance of such new certificate.
| 8.6 | Construction; Definitions. |
Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the DGCL shall govern the construction of these Bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “person” includes both a corporation and a natural person.
| 8.7 | Fiscal Year. |
The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors and may be changed by the Board of Directors.
| 8.8 | Seal. |
The Corporation may adopt a corporate seal, which may be altered at pleasure, and may use the same by causing it or a facsimile thereof, to be impressed or affixed or in any other manner reproduced.
| 8.9 | Transfers of Stock. |
Transfers of stock shall be made only upon the transfer books of the Corporation kept at an office of the Corporation or by transfer agents designated to transfer shares of the stock of the Corporation.
| 8.10 | Registered Stockholders. |
The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.
| 12 |
| 8.11 | Facsimile Signatures. |
In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board of Directors or a committee thereof.
| 8.12. | Exclusive Forum. |
Unless the Corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (A) any derivative action or proceeding brought on behalf of the Corporation, (B) any action asserting a claim of breach of a fiduciary duty owed by any director or officer or stockholder of the Corporation to the Corporation or the Corporation’s stockholders, (C) any action asserting a claim against the Corporation or any director or officer or stockholder of the Corporation arising pursuant to any provision of the DGCL or the Certificate of Incorporation or these Bylaws, or (D) any action asserting a claim against the Corporation or any director or officer or stockholder of the Corporation governed by the internal affairs doctrine, shall be a state court located within the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware). Unless the Corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended.
If any provision of this Section 8.12 is held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provision in any other circumstance and of the remaining provisions of this Section 8.12 (including, without limitation, each portion of any sentence of this Section 8.12 containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities or circumstances shall not in any way be affected or impaired thereby.
AMENDMENTS
9.1 Amendments to the Bylaws. The Bylaws of the Corporation may be adopted, amended or repealed, in whole or in part, by the majority vote of the Board of Directors or by the stockholders entitled to vote; provided, however, that no bylaw may be adopted, amended or repealed by the stockholders except by the vote or written consent of at least the majority of the voting power of the Corporation.
| 13 |
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Sanjeev Luther, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Ernexa Therapeutics Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: August 6, 2026 | /s/ Sanjeev Luther |
| Sanjeev Luther | |
| President and Chief Executive Officer | |
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Sanjeev Luther, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Ernexa Therapeutics Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: August 6, 2026 | /s/ Sanjeev Luther |
| Sanjeev Luther | |
| President and Chief Executive Officer | |
| (Interim Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Ernexa Therapeutics Inc. for the quarterly period ended June 30, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge on the date hereof:
1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Ernexa Therapeutics Inc. for the period presented therein.
| Date: August 6, 2026 | /s/ Sanjeev Luther |
| Sanjeev Luther | |
| President and Chief Executive Officer | |
| (Principal Executive Officer) |
The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Ernexa Therapeutics Inc. for the quarterly period ended June 30, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to her knowledge on the date hereof:
1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Ernexa Therapeutics Inc. for the period presented therein.
| Date: August 6, 2026 | /s/ Sanjeev Luther |
| Sanjeev Luther | |
| President and Chief Executive Officer | |
| (Interim Principal Financial Officer) |
The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.