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 stromal 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 bring new treatment possibilities to people facing difficult-to-treat cancers.

Objectives and Business Strategy

Our lead product candidate ERNA-101 is allogeneic pro-inflammatory cytokines 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.

Beyond oncology, we continue to advance our synthetic iMSC platform through ERNA-201, an allogeneic iMSC therapy engineered to express anti-inflammatory factors for the treatment of autoimmune diseases. In preclinical studies, ERNA-201 demonstrated disease-modifying activity in the collagen-induced arthritis model, providing proof-of-concept for the application of our engineered iMSC platform in inflammatory disease and further support the versatility of our synthetic iMSC technology across multiple therapeutic areas. Although we are prioritizing near-term resources toward the development of ERNA-101 and our oncology programs, ERNA-201 remains an important platform asset with demonstrated preclinical validation and potential future development opportunities

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 first half of 2027.

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 (e.g. Small Business Innovation Research (SBIR) funding).

Recent Developments

Disclosed Independently Validated Combination Data of ERNA-101 (July 2026):

ERNA-101 in combination with PD-1 checkpoint inhibitor exhibited complete tumor clearance and long-term survival in 10 out of 15 (67%) immunocompetent ID8luc-ova syngeneic ovarian cancer mice models. No complete tumor clearance or durable survival was observed in animals treated with anti-PD-1 or ERNA-101 alone. This study was 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.

Appointed David Polinsky to Board of Directors (August 2026)

Disclosed Efficacy of ERNA-201 (September 2026):

ERNA-201 monotherapy exhibited improvement in clinical arthritis score and disease severity in collagen-induced rheumatoid arthritis (CIA) model

Deprioritized of ERNA-201 Program & Preserve the Program for Future (September 2026):

Objective is to concentrate near-term capital and operational resources to develop ERNA-101 (nearest value creating milestone) and expand oncology pipeline

Appointed Robert J. Spiegel, M.D., FACP to Board of Directors (September 2026)

Disclosed IND-Enabling Preclinical Data of ERNA-101 (September 2026):

Repeat-dose safety: No ERNA-101-related adverse findings were observed at any dose level tested in a 50-day GLP toxicology study in tumor-bearing mice with an intact immune system.

Tumorigenicity: No teratoma formation was observed in ERNA-101-treated animals through the six-month tumorigenicity in-life phase, addressing an important safety consideration for an iPSC-derived therapy.

Biodistribution: No significant ERNA-101 signal was detected in tumor-free animals or non-tumor tissues, supporting ERNA-101's design to home to tumors without taking up residence elsewhere in the body.

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 180^th 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.

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 520,000 shares of common stock for net proceeds of approximately $3.9 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).

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) The Company satisfied the applicable conditions and maintained compliance with all Nasdaq Listing Rules through September 14, 2026. Accordingly, the Panel's jurisdiction over this matter ended on September 14, 2026. The Company remains subject to the mandatory Panel monitor through May 5, 2027. During this one-year monitoring period, should the Company become deficient with respect to the Bid Price Rule, Nasdaq will immediately issue 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 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.

Results of Operations

Comparison of the Three and Nine Months Ended September 30, 2026 and 2025

		Three months ended September 30,
(In thousands)		2026				2025				Change
Operating expenses:
Research and development		$	1,871			$	1,035			$	836
General and administrative			1,119				958				161
Total operating expenses			2,990				1,993				997
Loss from operations			(2,990	)			(1,993	)			(997	)
Other income (expense), net:
Forward sales contract expense			-				-				-
Interest income, net			49				31				18
Gain on extinguishment of contingent liability and debt			-				734				(734	)
Other expense, net			-				(6	)			6
Total other income (expense), net			49				759				(710	)
Loss before income taxes			(2,941	)			(1,234	)			(1,707	)
Benefit (provision) for income taxes			-				(6	)			6
Net loss		$	(2,941	)		$	(1,240	)		$	(1,701	)

		Nine months ended September 30,
(In thousands)		2026				2025				Change
Operating expenses:
Research and development		$	6,578			$	3,480			$	3,098
General and administrative			4,132				3,745				387
Impairment of goodwill			2,044				-				2,044
Total operating expenses			12,754				7,225				5,529
Loss from operations			(12,754)				(7,225	)			(5,529	)
Other income (expense), net:
Forward sales contract expense			-				(5,847	)			5,847
Change in fair value of warrant liabilities			-				1				(1	)
Interest income, net			148				36				112
Gain on extinguishment of contingent liability and debt			41				734				(693)
Other expense, net			69				(264	)			333
Total other income (expense), net			258				(5,340	)			5,598
Loss before income taxes			(12,496)				(12,565	)			69
Benefit (provision) for income taxes			40				(17	)			57
Net loss		$	(12,456)			$	(12,582	)		$	126

Revenues and Cost of Revenues

We had no revenues or cost of revenues for the three and nine months ended September 30, 2026 or 2025.

Research and Development Expenses

		Three months ended September 30,												Nine months ended September 30,
		2026				2025				Change				2026				2025				Change
(in thousands)
Study fees		$	1,047			$	60			$	987			$	4,322			$	472			$	3,850
Payroll and related			399				123				276				994				365				629
Professional fees			192				233				(41	)			529				591				(62	)
MSA/license fees			120				510				(390	)			320				1,810				(1,490	)
Other			113				109				4				413				242				171
Total research and development expenses		$	1,871			$	1,035			$	836			$	6,578			$	3,480			$	3,098

Total research and development expenses increased for the three months ended September 30, 2026 compared to the three months ended September 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 nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, our research and development expenses increased by approximately $3.1 million primarily due to fees recognized for services under Statement of Work 1 with Cellipont (now Kincellis) 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 decrease in MSA/License fees due to the amendment of Work Order No. 2 with Factor Bioscience Inc. starting during March 2026 and a reduction in expenses under professional fees.

General and Administrative Expenses

		Three months ended September 30,												Nine months ended September 30,
		2026				2025				Change				2026				2025				Change
(in thousands)
Payroll and related		$	278			$	313			$	(35	)		$	1,501			$	1,134			$	367
Professional fees			322				215				107				1,160				1,041				119
Stock-based compensation			348				284				64				942				1,123				(181	)
Other			171				146				25				529				447				82
Total general and administrative expenses		$	1,119			$	958			$	161			$	4,132			$	3,745			$	387

Our general and administrative expenses for the three months ended September 30, 2026 increased by approximately $0.2 million primarily due to an increase in professional fees driven by greater reliance on third party accounting firms and investor relations firms, and an increase in stock based compensation partially offset by payroll fees.

For the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, our general and administrative expenses increased by approximately $0.4 million primarily due to increases in payroll related to certain accrued bonuses and in professional fees related to certain legal matters as well as increased other expenses for occupancy costs, depreciation, and amortization, offset by reduced insurance premiums and a reduction in stock based compensation due to a reduction in the fair values of the equity awards that are amortizing during the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025.

Impairment of Goodwill

During the nine months ended September 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 September 30, 2026, there was no remaining goodwill balance. We did not recognize a similar expense during the nine months ended September 30, 2025.

Forward sales contract expense

There was no forward sales contract expense during the three months ended September 30, 2026 or 2025.

During the nine months ended September 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 nine months ended September 30, 2026.

Change in Fair Value of Warrant Liabilities

The change in the fair value of the warrant liabilities for the three and nine months ended September 30, 2025 was de minimis. There was no change in the fair value of the warrant liabilities recognized for the three and nine months ended September 30, 2026.

Interest Income (Expense), net

For the three months ended September 30, 2026, we recognized approximately $18,000 more in interest income due to an increase of cash in interest-bearing accounts compared to the three months ended September 30, 2025.

For the nine months ended September 30, 2026, we recognized approximately $112,000 more in interest income due to an increase of cash in interest-bearing accounts compared to the nine months ended September 30, 2025.

Gain on extinguishment of contingent liability

For the nine months ended September 30, 2026, we recognized approximately $41,000 due to the extinguishment of the contingent consideration liability during the nine months ended September 30, 2026 .

During the three and nine months ended September 30, 2025, we recognized a gain on extinguishment of debt of approximately $0.7 million related to accounts payable and accrued expenses that were deemed to be time-barred from collection under the respective state laws. There was no similar gain during the three and nine months ended September 30, 2026.

Other Income (expense), net

During the nine months ended September 30, 2025, we recognized approximately $0.3 million of expenses related to the 2025 SPA transaction entered into on March 31, 2025, and other expense, net, for the three months ended September 30, 2025 was de minimis.. During the nine months ended September 30, 2026, we recognized approximately $0.1 million of other income, primarily attributable to sublease income.

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 September 30, 2026, we had cash of approximately $5.6 million, and we had an accumulated deficit of approximately $258.1 million. We have to date incurred operating losses, and we expect these losses to continue in the future. For the three and nine months ended September 30, 2026, we incurred a net loss of $2.9 million and $12.5 million, respectively, which includes the $2.0 million non-cash goodwill impairment charge. For the nine months ended September 30, 2026, we used $9.6 million of cash in operating activities.

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 September 30, 2026, we received approximately $3.7 million in net proceeds from the sale of common stock under the ATM. To date, we have sold approximately 520,000 shares of common stock for net proceeds of approximately $3.9 million under the ATM, and we have approximately $5.3 million of shares remaining to sell under this facility.

In connection with preparing the financial statement as of and for the three and nine months ended September 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 September 30, 2026, we had approximately $5.6 million in cash, which is less than that needed to effect 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 facility will cover a significant portion of the shortfall in our cash resources over the twelve months from the issuance date of these financial statements. Management is also actively pursuing other additional financing opportunities to raise capital. Subsequent to the balance sheet date of September 30, 2026, the Company sold an additional 43,700 shares for net proceeds of $0.1 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:

(in thousands)		2026				2025				Change
Cash (used in) provided by:
Operating activities		$	(9,586	)		$	(5,869	)		$	(3,717	)
Investing activities			(5	)			(22	)			17
Financing activities			13,282				7,209				6,073
Net increase in cash		$	3,691			$	1,318			$	2,373

Net Cash Used in Operating Activities

There was $9.6 million in cash used in operating activities for the nine months ended September 30, 2026 compared to $5.9 million for the nine months ended September 30, 2025. This change was due to $3.3 million increase in adjustments made for non-cash transactions, with an additional increase of $0.4 million in cash used in operating assets and liabilities for the nine months ended September 30, 2026 when compared to the nine months ended September 30, 2025.

Net Cash Used in Investing Activities

We used approximately $5,000 in cash for the purchases of property and equipment during the nine months ended September 30, 2026, compared to approximately $22,000 during the nine months ended September 30, 2025.

Net Cash Provided by Financing Activities

Net cash provided by financing activities for the nine months ended September 30, 2026 includes gross proceeds of $10.5 million received from the Public Offering, including proceeds from the exercise of prefunded warrants issued in the Public Offering and $3.7 million in net proceeds from the sale of common stock under the ATM. Net cash provided by financing activities for the nine months ended September 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 3 separate closings under the SPA. (See Note 8)

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 nine months ended September 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.