Exicure (XCUR) Risk Factors

Our common stock is currently listed on Nasdaq under the symbol "XCUR." As previously disclosed, the Company has received numerous deficiency notices with respect to various Nasdaq listing requirements in the past year and recently received a delisting determination from the Nasdaq staff. These related to, or may in the future relate to: - Compliance with Nasdaq's minimum bid price rule due to the Company's stock trading below $1.00 for a sustained period of time. The Company effected a one-for-thirty reverse stock split on June 29, 2022 in order to attempt to raise the stock price. On September 13, 2023, the Company received a delinquency notification that the closing bid price of the Company's stock traded below $1.00 for the previous 30 consecutive business days. The Company effected a one-for-five reverse stock split on August 27, 2024 in order to attempt to raise the stock price. On September 13, 2024, the Company received a letter received from Nasdaq noting it met the closing bid price requirement. - Compliance with Nasdaq's rule requiring stockholders' equity of at least $2,500,000 based on the Company's balance sheet as of September 30, 2024. The Company is not in compliance with this requirement based on its September 30, 2024 balance sheet. - Compliance with Nasdaq's corporate governance requirements with respect to board and committee composition. The Company has received numerous deficiency notifications with respect to these requirements in the past year. Although the Company believes it is currently in compliance, there can be no assurance it will remain in compliance. - Compliance with Nasdaq's requirement to hold an annual meeting. On January 11, 2024, Nasdaq notified the Company that it did not comply with listing requirements by not holding an annual meeting in 2023. The Company held its combined 2023 and 2024 annual meeting on June 28, 2024 - On April 17, 2024, the Company received a delinquency notification as it had not filed its Annual Report Form 10-K for the year ended December 31, 2023. The extended deadline for compliance was established by Nasdaq at May 20, 2024, the same deadline for our Form 10-Q for the quarter ended September 30, 2023. The Annual Report Form 10-K was filed on June 6, 2024. - Although the Company filed its Form 10-Q for the quarter ended September 30, 2023 prior to the extended deadline of May 20, 2024, on May 21, 2024, the Company received a delisting determination from the Nasdaq staff as a result of not filing its Annual Report Form 10-K by the May 20, 2024 deadline and failure to timely file its Form 10-Q for the quarter ended March 31, 2024 (which was subsequently filed on June 17, 2024). The staff's delisting determination also noted the failure to hold its 2023 annual meeting as another basis of the delisting determination. - On May 28, 2024, the Company requested an appeal of the delisting determination to Nasdaq's Hearings Panel ("Panel"), and the hearing took place on July 9, 2024. On July 31, 2024, the Company received formal notice that the Panel determined to continue the Company's listing subject to the Company evidencing compliance with all applicable criteria for continued listing on The Nasdaq Capital Market by September 16, 2024. The Company received an additional extension to November 14, 2024 to satisfy the terms of the Panel's decision and to ensure the Company's continued listing on Nasdaq. - As the Company will not meet Nasdaq's listing requirements as of September 30, 2024, the Company has requested another extension by the Panel to demonstrate compliance. We cannot provide assurance that the Panel will determine to continue the Company's listing at the November 14, 2024 expiration of the current extension or that, if another extension is granted, that we will be able to meet the Panel's requirements by the deadline. We may not be successful in our appeal or be able to regain compliance with Nasdaq's listing requirements and our failure to do so may result in the delisting of our Common Stock by Nasdaq. Even if the Company is successful in our appeal, there can be no assurance that the Company will remain in compliance with Nasdaq's requirements and will not be delisted. If Nasdaq suspends or delists our securities from trading on its exchange for failure to meet the listing standards, we and our stockholders could face significant negative consequences including: - limited availability of market quotations and liquidity for our securities;- a determination that the common stock is a "penny stock" which would require brokers trading in the common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for shares of common stock;- a limited amount of analyst coverage, if any; and - a decreased ability to issue additional securities or obtain additional financing in the future. Suspension or delisting from Nasdaq could also result in other negative consequences, including the potential loss of institutional investor interest and make obtaining new financing much more challenging. In addition, fewer strategic opportunities may be available, particularly from counterparties that are interested in combining with a listed company.

CBI USA and DGP collectively own approximately 47% of outstanding Common Stock as of September 30, 2024 and exercised significant influence over us. We previously had been a "controlled company" under the corporate governance rules for Nasdaq-listed companies. Members of our board and management are directly affiliated with CBI USA and DGP and will be affiliated with HiTron after the closing of its investments. HiTron will be a significant investor after the closing of its initial investment of $1.3 million, which is expected to occur within 10 days after November 12, 2024 and will be the largest stockholder in the Company after the closing of its subsequent investment of $8.7 million, which is subject to stockholder approval, among other conditions. Investors may be hesitant to invest in the Company given the influence of CBI, DGP, and HiTron and potential influence of other significant investors if DGP's agreement to sell 612,000 shares to third parties is completed. In addition, should the interest or interests of our controlling stockholders differ from those of other stockholders, the other stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance rules for Nasdaq-listed companies. Additionally, it is possible we could pursue strategic or financing transactions with our controlling stockholders or their affiliates. The interests of the controlling stockholders and other stockholders would diverge in this case, and the lack of an independent board to evaluate such a transaction could adversely impact other stockholders. These conflicts of interest (or the perception that they could occur) might adversely affect our business and prospects for obtaining financing or completing a strategic transaction. For so long as CBI USA, DGP, and HiTron own a significant stake, they (and/or their transferees) will have substantial control over the elections of our directors and to approve any other corporate action requiring the affirmative vote of holders of a majority of the outstanding shares of our Common Stock. This could deter investment in the Company and adversely impact our stock price and ability to obtain financing. These impacts may be more pronounced in the near term as investors assess the direction of the Company under the control of HiTron, CBI USA, and DGP and the actions of the new board and management. This could deter investment as it creates uncertainty as to the transferees' intentions with respect to the Company. Potential partners considering engaging in a strategic transaction with the Company could have similar concerns. Given our urgent need for additional funding and/or to complete a strategic transaction, it is imperative that our controlling stockholders and our board and management earn the confidence of investors and potential partners in the near term and there is no assurance this will occur.

Our stock price will continue to be volatile. As a result of this volatility, investors may not be able to sell their common stock at or above the price paid for the shares. The market price for our common stock may be influenced by a variety of factors, including the other risks described in this section titled "Risk Factors" and the following: - our ability or inability to raise additional capital and the terms on which we raise it;- the development, execution and announcement of any proposed strategic alternative;- investors may react negatively to our controlled company status and the influence of our controlling stockholder or our reconstituted board and/or our uncertain business strategy;- strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy;- we are unable to achieve the perceived benefits of our Company as rapidly or to the extent anticipated by financial or industry analysts; and - changes in general economic, industry, political and market conditions, including, but not limited to, the ongoing impact of the COVID-19 pandemic. In addition, the stock markets in general, and the markets for pharmaceutical and biotechnology stocks in particular, have experienced extreme volatility that has been often unrelated to the operating performance of the issuer. These broad market and industry factors, such as those related to the COVID-19 pandemic, Russia's invasion of Ukraine, and the Israel/Hamas war and retaliatory actions taken by the United States, NATO and others, may seriously harm the market price of our common stock, regardless of our operating performance.

Until such time, if ever, as we can generate substantial revenues, we expect to attempt to finance our cash needs through a combination of equity offerings and debt financings. As discussed elsewhere, it may be very challenging to obtain equity or debt financing given the current transitional state of the Company. However, to the extent that we raise additional capital through the issuance of shares or other securities convertible into shares, our stockholders will be diluted. Future issuances of our common stock or other equity securities, or the perception that such sales may occur, could adversely affect the prevailing market price of our common stock and impair our ability to raise capital through future offerings of equity or equity-linked securities.

We were an "emerging growth company" as defined in the JOBS Act until December 31, 2023. As such, we took advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including (1) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, (2) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and (3) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. In addition,as an emerging growth company, we were only required to provide two years of audited financial statements. Even though we no longer qualify as an emerging growth company as of 2024, we still qualify as a "smaller reporting company" and a "non-accelerated filer" which allows us to continue to take advantage of many of the same exemptions from disclosure requirements including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our share price may be more volatile.

Provisions in our amended and restated certificate of incorporation and our bylaws may delay or prevent an acquisition of us or a change in our management. These provisions include a classified board of directors, a prohibition on actions by written consent of our stockholders, and the ability of the Board of Directors of the Company, or the Board, to issue preferred stock without stockholder approval. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, or DGCL, which prohibits stockholders owning in excess of 15% of the outstanding combined organization voting stock from merging or combining with the combined organization. Although we believe these provisions collectively will provide for an opportunity to receive higher bids by requiring potential acquirers to negotiate with our Board, they would apply even if the offer may be considered beneficial by some stockholders. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove then-current management by making it more difficult for stockholders to replace members of the Board, which is responsible for appointing the members of management.