intensity-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________

FORM 10-Q

_________________________

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


o			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 001-41109

_________________________

INTENSITY THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

_________________________


Delaware			46-1488089
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

1 Enterprise Drive, Suite 430, Shelton, CT			06484-4779
(Address of Principal Executive Offices)			(Zip Code)

(203) 221-7381

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common Stock, $0.0001 par value

INTS

The Nasdaq Stock Market

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.

Yes x No o

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).

Yes x No o

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 the 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

Non-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 Act).

Yes o No x

As of November 12, 2024, the registrant had 13,867,697 shares of common stock outstanding.

Table of Contents

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this report, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “will,” “project,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about:

•the initiation, timing, progress and results of future preclinical studies and clinical trials, and our research and development programs;

•our need to raise additional funding before we can expect to generate any revenues from product sales;

•our plans to develop and commercialize our product candidates;

•the timing or likelihood of regulatory filings and approvals;

•the ability of our research to generate and advance additional product candidates;

•the implementation of our business model, strategic plans for our business, product candidates and technology;

•our commercialization, marketing and manufacturing capabilities and strategy;

•the rate and degree of market acceptance and clinical utility of our system;

•our competitive position;

•our intellectual property position;

•developments and projections relating to our competitors and our industry;

•our ability to maintain and establish collaborations or obtain additional funding;

•our expectations related to the use of our cash and cash equivalents and investments;

•our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; and

•other factors discussed herein and under the heading “Risk Factors” in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 14, 2024 (the “2023 Annual Report”), and this Quarterly Report on Form 10-Q.

In light of these assumptions, risks and uncertainties, the results and events discussed in the forward-looking statements contained in this Quarterly Report on Form 10-Q, or in any document incorporated by reference, might not occur. Stockholders are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. We are not under any obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise except as required by law. All forward-looking statements in this Quarterly Report on Form 10-Q attributable to us or to any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.

Unless otherwise indicated, the terms “Intensity,” “Company,” “we,” “us,” or “our” refer to Intensity Therapeutics, Inc.

Table of Contents


		Page
PART I - FINANCIAL INFORMATION		1
Item 1.	Condensed Financial Statements (Unaudited)	1
	Condensed Balance Sheets as of September 30, 2024 (Unaudited) and December 31, 2023	1
	Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023 (Unaudited)	2
	Condensed Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficiency) for the Three and Nine Months Ended S eptember 30, 2024 and 2023 (Unaudited)	3
	Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023 (Unaudited)	5
	Notes to the Unaudited Condensed Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	21

PART II - OTHER INFORMATION		23
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3.	Defaults Upon Senior Securities	23
Item 4.	Mine Safety Disclosures	23
Item 5.	Other Information	23
Item 6.	Exhibits	24
SIGNATURES		25

Table of Contents

Part I - Financial Information

Item 1. Condensed Financial Statements

INTENSITY THERAPEUTICS, INC.

CONDENSED BALANCE SHEETS

(in thousands, except share and per share amounts)


	September 30, 2024		December 31, 2023
	(Unaudited)		*
ASSETS
Current assets:
Cash and cash equivalents	$	2,782	$	8,556
Marketable debt securities	—		6,220
Prepaid expenses and other current assets	1,005		688

Total current assets	3,787		15,464
Right-of-use asset, net	128		147
Other assets	1,298		1,684
Total assets	$	5,213	$	17,295

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	540	$	3,048
Accrued expenses	1,749		891
Lease liability, current portion	28		20
Total current liabilities	2,317		3,959
Other long-term liabilities	—		36
Lease liability, long-term portion	117		138
Total liabilities	2,434		4,133
Commitments and contingencies

Stockholders' equity:
Preferred stock, par value $.0001. Authorized shares of 15,000,000 as of both September 30, 2024 and December 31, 2023. None issued and outstanding as of both September 30, 2024 and December 31, 2023.	—		—
Common stock, par value $.0001. Authorized shares of 135,000,000 as of September 30, 2024 and December 31, 2023, respectively. Issued and outstanding shares of 13,863,947 and 13,709,377 as of September 30, 2024 and December 31, 2023, respectively.	1		1
Additional paid-in capital	66,380		63,676
Accumulated deficit	(63,602)		(50,515)
Total stockholders’ equity	2,779		13,162
Total liabilities and stockholders’ equity	$	5,213	$	17,295

*Derived from audited financial statements

The accompanying notes are an integral part of these condensed financial statements.

Table of Contents

INTENSITY THERAPEUTICS, INC.

CONDENSED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Operating expenses:
Research and development	$	2,151	$	1,352	$	8,529	$	2,985
General and administrative	1,419		1,139		4,853		1,982
Total operating expenses	3,570		2,491		13,382		4,967
Loss from operations	(3,570)		(2,491)		(13,382)		(4,967)

Other income (expense):
Interest income	48		148		286		148
Interest expense	-		-		-		(305)
Loss on debt extinguishment	-		-		-		(2,262)
Other income (expense), net	9		14		9		20
Net loss	$	(3,513)	$	(2,329)	$	(13,087)	$	(7,366)

Preferred stock deemed dividend	-		-		-		(1,324)
Net loss attributable to common stockholders	$	(3,513)	$	(2,329)	$	(13,087)	$	(8,690)

Loss per share, basic and diluted	$	(0.25)	$	(0.17)	$	(0.95)	$	(1.26)
Weighted average number of shares of common stock, basic and diluted	13,804,651		13,660,627		13,742,325		6,899,984

The accompanying notes are an integral part of these condensed financial statements.

Table of Contents

INTENSITY THERAPEUTICS, INC.

CONDENSED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIENCY)

(in thousands, except share amounts)

(Unaudited)


	Series A Redeemable Convertible Preferred Stock			Series B Convertible Preferred			Series C Convertible Preferred			Common Stock			Additional Paid in Capital		Accumulated Deficit		Stockholders’ Equity
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
Balances at December 31, 2023	-	$	-	-	$	-	-	$	-	13,709,377	$	1	$	63,676	$	(50,515)	$	13,162
Exercise of warrants	-	-		-	-		-	-		2,500	-		8		-		8
Stock-based compensation expense	-	-		-	-		-	-		-	-		1,155		-		1,155
Net loss	-	-		-	-		-	-		-	-		-		(4,603)		(4,603)
Balances at March 31, 2024	-	-		-	-		-	-		13,711,877	1		64,839		(55,118)		9,722
Exercise of options	-	-		-	-		-	-		1,000	-		3		-		3
Stock-based compensation expense	-	-		-	-		-	-		-	-		591		-		591
Net loss	-	-		-	-		-	-		-	-		-		(4,971)		(4,971)
Balances at June 30, 2024	-	-		-	-		-	-		13,712,877	1		65,433		(60,089)		5,345
Exercise of options	-	-		-	-		-	-		87,500	-		263		-		263
Stock-based compensation expense	-	-		-	-		-	-		-	-		483		-		483
Issuance of common stock in exchange for services	-	-		-	-		-	-		11,750	-		51		-		51
Issuance of common stock in ATM offering, net of $82 issuance costs	-	-		-	-		-	-		51,820	-		150		-		150
Net loss	-	-		-	-		-	-		-	-		-		(3,513)		(3,513)
Balances at September 30, 2024	-	$	-	-	$	-	-	$	-	13,863,947	$	1	$	66,380	$	(63,602)	$	2,779


	Series A Redeemable Convertible Preferred Stock			Series B Convertible Preferred			Series C Convertible Preferred			Common Stock			Additional Paid in Capital		Accumulated Deficit		Stockholders’ Equity (Deficiency)
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
Balances at December 31, 2022	5,000,000	$	10,000	1,449,113	$	-	1,800,606	$	-	3,410,103	$	-	$	23,555	$	(38,653)	$	(15,098)
Warrants issued to convertible note holders	-	-		-	-		-	-		-	-		159		-		159
Stock-based compensation expense	-	-		-	-		-	-		-	-		312		-		312
Net loss	-	-		-	-		-	-		-	-		-		(1,336)		(1,336)
Balances at March 31, 2023	5,000,000	10,000		1,449,113	-		1,800,606	-		3,410,103	-		24,026		(39,989)		(15,963)
Issuance of common stock in public offering for cash, net of $3,031 issuance costs	-	-		-	-		-	-		3,900,000	-		16,468		-		16,468
Warrants issued to underwriters in connection with public offering	-	-		-	-		-	-		-	-		1,017		-		1,017
Issuance of preferred stock for anti-dilution clauses	-	-		100,189	-		164,518	-		-	-		-		-		-
Conversion of preferred stock into common stock	(5,000,000)	(10,000)		(1,549,302)	-		(1,965,124)	-		4,124,851	1		9,999		-		10,000

Table of Contents


Conversion of convertible notes into common stock	-	-		-	-		-	-		1,399,716	-		7,000		-		7,000
Deemed dividend	-	-		-	-		-	-		264,707	-		1,324		(1,324)		-
Stock-based compensation expense	-	-		-	-		-	-		-	-		312		-		312
Net loss	-	-		-	-		-	-		-	-		-		(3,701)		(3,701)
Balances at June 30, 2023	-	$	-	-	$	-	-	$	-	13,099,377	$	1	$	60,146	$	(45,014)	$	15,133
Issuance of common stock in public offering for cash, net of $372 issuance costs	-	-		-	-		-	-		585,000	-		2,553		-		2,553
Warrants issued to underwriters in connection with public offering	-	-		-	-		-	-		-	-		153		-		153
Exercise of options	-	-		-	-		-	-		12,500	-		25		-		25
Exercise of warrants	-	-		-	-		-	-		12,500	-		25		-		25
Stock-based compensation expense	-	-		-	-		-	-		-	-		351		-		351
Net loss	-	-		-	-		-	-		-	-		-		(2,329)		(2,329)
Balances at September 30, 2023	-	$	-	-	$	-	-	$	-	13,709,377	$	1	$	63,253	$	(47,343)	$	15,911

The accompanying notes are an integral part of these condensed financial statements.

Table of Contents

INTENSITY THERAPEUTICS, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


	Nine Months Ended September 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(13,087)	$	(7,366)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of discount on convertible notes	-		159
Change in carrying value of right-of-use asset	19		141
Stock-based compensation expense	2,229		975
Stock issued in exchange for services	25		-
Loss on debt extinguishment	-		2,262
Changes in operating assets and liabilities, net:
Accrued interest on marketable debt securities	(134)		(111)
Prepaid expenses, other current assets, and other assets	96		(709)
Accounts payable, accrued expenses and other liabilities	(1,700)		(1,610)
Net cash used in operating activities	(12,552)		(6,259)
Cash flows from investing activities:
Purchase of marketable debt securities	(3,056)		(8,844)
Redemption of marketable debt securities	9,410		-
Net cash provided by (used in) investing activities	6,354		(8,844)
Cash flows from financing activities:
Proceeds from issuance of convertible note	-		243
Proceeds from ATM offering	232		-
Issuance costs related to ATM offering	(82)		-
Proceeds from Initial Public Offering and overallotment	-		22,425
Issuance costs related to Initial Public Offering and overallotment	-		(2,233)
Proceeds from exercise of warrants and options	274		50
Net cash provided by financing activities	424		20,485
Net (decrease) increase in cash and cash equivalents	(5,774)		5,382
Cash and cash equivalents at beginning of period	8,556		1,312
Cash and cash equivalents at end of period	$	2,782	$	6,694

Supplemental disclosure of non-cash financing activities:
Common stock issued in exchange for services	$	51	$	-

Right-of-use lease asset and operating lease liability	$	-	$	155

Conversion of convertible notes and accrued interest into common stock	$	-	$	4,737
Warrants issued in relation to issuance of convertible notes	$	-	$	159
Warrants issued to underwriter in connection with stock issuance	$	-	$	1,170
Preferred stock deemed dividend	$	-	$	1,324

The accompanying notes are an integral part of these condensed financial statements.

Table of Contents

INTENSITY THERAPEUTICS, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 1. Description of Business

Intensity Therapeutics, Inc. (the “Company”) is a biotechnology company whose treatment approach addresses both the regional and systemic nature of a patient’s cancer. The Company’s DfuseRxSM technology platform has identified a lead drug, INT230-6. The Company is based in Connecticut and was incorporated in Delaware in December 2012.

As a result of its initial public offering (the “IPO”) that priced on June 29, 2023, the Company began trading on The Nasdaq Capital Market under the symbol “INTS” on June 30, 2023. The IPO closed on July 5, 2023 at the IPO price of $5.00 per share, at which time the Company issued 3,900,000 shares of its common stock for gross proceeds of $19.5 million. After deducting offering expenses of $2.0 million, the Company received net proceeds of $17.5 million. On July 7, 2023, the Company sold the full over-allotment shares at the IPO price of $5.00 per share, resulting in the issuance of 585,000 shares of its common stock for gross proceeds of $2.9 million. After deducting offering expenses of $0.2 million, the Company received an additional $2.7 million in net cash proceeds.

Note 2. Liquidity and Plan of Operation

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”), which contemplate continuation of the Company as a going concern.

The Company is a research and development company and has not generated any revenue from its product candidates. The Company has experienced net losses and negative cash flows from operations each year since its inception. Through September 30, 2024, the Company has an accumulated deficit of $63.6 million. The Company’s operations have been financed primarily through the sale of equity securities and convertible notes. The Company’s net loss for the nine months ended September 30, 2024 was $13.1 million. The Company expects to incur significant expenses to complete development of its product candidates. The Company may never be able to obtain regulatory approval for the marketing of any of its product candidates in the United States or internationally and there can be no assurance that the Company will generate revenues or ever achieve profitability. The Company does not expect to receive significant product revenue in the near term. The Company, therefore, expects to continue to incur substantial losses for the foreseeable future.

Cash and cash equivalents totaled $2.8 million as of September 30, 2024. Until such time the Company can generate substantial product revenue, the Company plans to finance its operations through a combination of equity offerings and convertible debt financings. The Company does not have any committed external source of funds. To the extent that the Company can raise additional capital through the sale of equity or convertible debt securities, the ownership interest of the existing Company stockholders may be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of the common stockholders. If the Company is unable to raise additional funds through equity or debt financings when needed, the Company may be required to delay, limit, reduce or terminate its research and product development.

Based on the cash and cash equivalents as of September 30, 2024, the Company believes that it has sufficient cash into the first quarter of 2025 for its projected current operations. As a result, the Company believes there is substantial doubt about its ability to continue as a going concern.

Note 3. Basis of Presentation and Summary of Significant Accounting Policies

Basis of presentation

The interim condensed financial statements included herein are unaudited. In the opinion of management, these statements include all adjustments, consisting only of normal, recurring adjustments, necessary for a fair presentation of the financial position of the Company at September 30, 2024, and its results of operations and its cash flows for the three and nine months ended September 30, 2024 and 2023. The interim results of operations are not necessarily indicative of the results to be expected for a full year. These interim unaudited financial statements should be read in conjunction with the audited financial statements for the years ended December 31, 2023 and 2022 and notes thereto. The accompanying financial statements have been prepared in accordance with GAAP and reflect the operations of the Company. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations of the Securities and Exchange Commission relating to interim financial

Table of Contents

statements. The December 31, 2023 balance sheet information was derived from the audited financial statements as of that date. The Company neither owns nor controls any subsidiary companies.

Fair value measurement

The Company reports its investments at fair value. Fair value is an estimate of the exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (i.e., the exit price at the measurement date). Fair value measurements are not adjusted for transaction costs. A fair value hierarchy provides for prioritizing inputs to valuation techniques used to measure fair value into three levels:


			Level 1			Unadjusted quoted prices in active markets for identical assets or liabilities.

			Level 2			Inputs other than quoted market prices that are observable, either directly or indirectly, and reasonably available. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the Company.

			Level 3			Unobservable inputs. Unobservable inputs reflect the assumptions that the Company develops based on available information about what market participants would use in valuing the asset or liability.

An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Availability of observable inputs can vary and is affected by a variety of factors. The Company uses judgment in determining fair value of assets and liabilities and Level 3 assets and liabilities involve greater judgment than Level 1 or Level 2 assets or liabilities.

As of September 30, 2024 and December 31, 2023, the Company invested zero and $6.2 million, respectively in U.S. Treasury Bills, included in marketable debt securities, which were classified as available-for-sale. U.S. Treasury Bills were valued at market prices obtained from independent vendor services, which the Company believes to be reliable. In some cases, the pricing vendor may provide prices quoted by a single broker or market maker. U.S. Treasury Bills were categorized in Level 2 of the fair value hierarchy.

The Company’s financial instruments, including cash equivalents and current liabilities are carried at cost, which approximates fair value due to the short-term nature of these instruments.

Stock-based compensation

The Company accounts for stock-based compensation to employees and non-employees, which consists of stock option grants, through the Statements of Operations based on their fair values at the date of grant.

The Company calculates the fair value of option grants utilizing the Black-Scholes pricing model. The resulting stock-based compensation expense for both employee and non-employee awards is generally recognized on a straight-line basis over the requisite service period of the award. Forfeitures are recognized as they occur.

The Company had been a private company and lacked company-specific historical and implied volatility information for its shares. Therefore, the Company estimated its expected share price volatility based on the historical volatility of publicly traded peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded share price.

Research and development costs

The Company is required to estimate its expenses resulting from its obligations under contracts with vendors, consultants, contract research organizations (“CRO”), and contract manufacturing organizations (“CMO”) in connection with conducting research and development activities. The financial terms of these contracts vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided under such contracts.

Research and development costs are expensed in the period in which they are incurred. External costs consist primarily of payments to outside consultants, third-party CROs, CMOs, clinical trial sites and central laboratories in connection with the Company’s clinical manufacturing and clinical development activities. External expenses are recognized based on an evaluation of the progress to completion of specific tasks using information provided to the Company by its service providers or its estimate of the level of service that has been performed at each reporting date. The Company tracks external costs based on research and development initiative, including preclinical, individual clinical study, and

Table of Contents

manufacturing activities. Internal costs consist primarily of employee-related costs and costs related to compliance with regulatory requirements. The Company does not track internal costs by program because these costs are deployed across multiple programs and, as such, are not separately classified.

The Company makes estimates of accrued expenses as of each balance sheet date based on facts and circumstances known at that time. The Company periodically confirms the accuracy of its estimates with the service providers and makes adjustments if necessary. The significant estimates in its accrued research and development expenses include the costs incurred for services performed by vendors in connection with research and development activities for which the Company has not yet been invoiced.

In July 2024, the Company initiated a Phase 3 open-label, randomized study for certain soft tissue sarcoma subtypes, which is expected to span several years. In connection with this study, the Company recorded an advance payment of $1.7 million in December 2023, which will be applied to future invoices during and at the end of the study. As of September 30, 2024 and December 31, 2023, the advance payment balances were $1.2 million and $1.7 million, respectively, and were recorded in Other Assets in the Balance Sheet.

Basic and dilutive loss per share

Basic net loss per share is determined using the weighted average number of shares of common stock outstanding during each period. Dilutive net loss per share includes the effect, if any, from the potential exercise or conversion of securities, such as stock options and stock warrants, which would result in the issuance of incremental shares of common stock. The computation of diluted net loss per share does not include the conversion of securities that would have an anti-dilutive effect. Potential shares of common stock issuable upon the exercise of stock options and warrants are excluded from the computation of diluted weighted average shares outstanding listed in the table below because, when the Company is in a net loss position, they are anti-dilutive. There were no preferred shares or convertible notes outstanding at September 30, 2024 and 2023.

As of September 30, 2024 and 2023, the following shares of common stock underlying options and warrants were excluded from the computation of diluted weighted average shares outstanding:


	September 30,
	2024	2023
Options outstanding	1,949,629	1,081,750
Warrants outstanding	829,450	689,200
	2,779,079	1,770,950

Recently issued pronouncements

The Company does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material impact on its financial statements.

Note 4. Cash and Cash Equivalents

Cash and cash equivalents consisted of the following (in thousands):


	September 30, 2024		December 31, 2023
Savings and checking accounts at major U.S. financial institutions	$	322	$	367
U.S. Treasury securities money market fund	2,460		8,189

Total	$	2,782	$	8,556

Note 5. Marketable Debt Securities

Marketable debt securities as of December 31, 2023 consisted entirely of U.S. Treasury Bills purchased with maturities over three months but less than twelve months. All marketable debt securities matured during 2024.

Table of Contents

Note 6. Prepaid Expenses and Other Current Assets

Prepaid expenses consisted of the following (in thousands):


	September 30, 2024		December 31, 2023
Prepaid insurance	$	566	$	647
Prepaid research and development costs	311		—
Prepaid other	128		41
Total	$	1,005	$	688

Note 7. Accrued Expenses

Accrued expenses consisted of the following (in thousands):


	September 30, 2024		December 31, 2023
Accrued research and development costs	$	1,073	$	439
Accrued employee compensation-related expenses	616		392
Accrued other	60		60
Total	$	1,749	$	891

Note 8. Stockholders’ Equity

Initial public offering

On July 5, 2023, as described in Note 1, the Company completed its IPO, issuing 3,900,000 shares of common stock at the IPO price of $5.00 per share. On July 7, 2023, the Company sold the full over-allotment of the IPO shares and issued 585,000 shares of common stock at the IPO price of $5.00 per share.

At The Market Offering Agreement

On July 3, 2024, the Company entered into an At The Market Offering Agreement (the “Sales Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”), pursuant to which the Company may sell and issue, from time to time, up to $15.0 million of shares of its common stock (the “Shares”) through Wainwright as the Company’s sales agent (the “ATM Offering”). The Company has no obligation to sell any of the Shares and may at any time suspend offers under the Sales Agreement or terminate the Sales Agreement pursuant to its terms. For the three and nine months ended September 30, 2024, the Company issued 51,820 shares of common stock under the ATM Agreement for net proceeds of $0.2 million.

Note 9. Stock Based Compensation

The Company has a 2013 Stock Option Plan (the “2013 Plan”), which is administered by the Compensation Committee of the Company’s board of directors. Under the 2013 Plan, stock options to purchase shares of common stock could be granted to eligible employees, officers, directors and consultants of the Company.

In 2021, the Company established the 2021 Stock Incentive Plan (the “2021 Plan”), authorizing the granting of equity awards for the issuance of up to 3,000,000 shares of common stock. Upon adoption of the 2021 Plan, no more shares would be issued under the 2013 Plan. Starting on January 1, 2022, the shares authorized under the 2021 Plan shall have an annual increase of the lessor of (a) 3.5% of the aggregate number of shares of common stock outstanding on the final day of the preceding calendar year, or (b) such smaller amount as determined by the Board. On January 1, 2024, an additional 479,828 shares were authorized under the 2021 Plan. As of September 30, 2024, 2,519,149 shares were available for issuance under the 2021 Plan.

Table of Contents

The Company recorded total stock-based compensation for its outstanding stock options and warrants in its Statements of Operations as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Research and development	$	187	$	186	$	970	$	651
General and administrative	296		165		1,259		324
Total stock-based compensation expense	$	483	$	351	$	2,229	$	975

Stock options

The following table summarizes the range of assumptions used to estimate the fair value of stock options issued using the Black-Scholes-Merton option pricing model:


	Nine Months Ended September 30,
	2024	2023
Stock price	$3.76 to $5.19	$6.43
Exercise price	$3.76 to $5.19	$6.43
Expected volatility	97.06% to 101.55%	99.74%
Risk free interest rates	4.12% to 4.46%	3.87%
Expected term (years)	5 to 7	5.75

For the nine months ended September 30, 2024 and 2023, a dividend yield of 0% was used because the Company has not historically paid and does not intend to pay a dividend on common stock in the foreseeable future. The expected stock price volatility assumption was estimated based on the historical volatilities for industry peers, as the Company had no active market for its stock prior to the IPO and limited history for issuance price of its stock. The risk-free rate assumption is determined using the yield currently available on U.S. Treasury zero coupon issues with a remaining term commensurate with the expected term of the award. The expected term of the option represents the period the options are expected to be outstanding.

The following table summarizes the activity for stock options for the nine months ended September 30, 2024:


	Options	Weighted- Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2023	1,239,750	$	8.00	6.4	$	1,865
Issued	798,379	$	5.06
Exercised	(88,500)	$	3.01
Forfeited and cancelled	—	$	—
Outstanding at September 30, 2024	1,949,629	$	7.02	7.5	$	81
Exercisable at September 30, 2024	1,053,525	$	8.24	6.0	$	—

All options expire 10 years from date of grant. Options outstanding begin to expire in October 2024. Options that were granted to employees and consultants have vesting periods that vary by award to recipient and range from immediate vesting to a period of up to 4 years.

The weighted average grant date fair value of stock options issued was $3.98 for the nine months ended September 30, 2024.

Table of Contents

As of September 30, 2024, total unrecognized compensation cost related to options was approximately $3.0 million and is expected to be recognized over the remaining weighted average service period of 2.5 years.

Warrants

The following table summarizes the range of assumptions used to estimate the fair value of warrants issued using the Black-Scholes-Merton option pricing model:


	Nine Months Ended September 30,
	2024	2023
Stock price	$4.50 to $5.19	$4.50 to $5.00
Exercise price	$4.50 to $5.19	$6.00 to $6.25
Expected volatility	97.06% to 100.64%	101.46% to 103.85%
Risk free interest rates	4.12% to 4.39%	3.59% to 3.97%
Expected term (years)	5 to 6.25	3 to 5

For the nine months ended September 30, 2024 and 2023, a dividend yield of 0% was used because the Company has not historically paid and does not intend to pay a dividend on common stock in the foreseeable future. The expected stock price volatility assumption was estimated based on the historical volatilities for industry peers, as the Company had no active market for its stock prior to the IPO and limited history for issuance price of its stock. The risk-free rate assumption is determined using the yield currently available on U.S. Treasury zero coupon issues with a remaining term commensurate with the expected term of the award. The expected term of the warrant represents the period the warrants are expected to be outstanding.

The following table summarizes the activity for warrants for the nine months ended September 30, 2024:


	Warrants	Weighted- Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2023	801,950	$	6.30	3.9	$	2,096
Issued	50,000	$	4.85
Exercised	(2,500)	$	3.00
Forfeited and cancelled	(20,000)	$	3.00
Outstanding at September 30, 2024	829,450	$	6.31	3.7	$	42
Exercisable at September 30, 2024	760,200	$	6.36	3.3	$	42

All warrants outstanding are exercisable for purchase of common stock.

As of September 30, 2024, total unrecognized compensation cost related to warrants was approximately $0.3 million and is expected to be recognized over the remaining weighted average service period of 2.9 years.

Restricted Stock

In September 2024, the Company issued 11,750 restricted shares of its common stock (the “Restricted Stock”) to a consultant as compensation for its services to the Company through the end October 2024 valued at $51,000. The Restricted Stock will include a restricted legend for a period of at least six months from the date of issuance, after which time such restricted legend may be removed. During the three and nine months ended September 30, 2024, the Company recognized $25,000 to general and administrative expenses and $26,000 to prepaid expenses and other current assets.

Table of Contents

Note 10. Leases

In January 2017, the Company entered into a lease for approximately 2,500 square feet of office space in Westport, Connecticut, (the “Westport Lease”), which was subsequently extended and increased to approximately 4,000 square feet. In June 2023, the Westport Lease was terminated.

In July 2023, the Company signed a 5.5-year lease for approximately 2,700 square feet of office space in Shelton, Connecticut, (the “Shelton Lease”). The Company has a one-time option to cancel the Shelton Lease after 36 months if it provides written notice before the end of month 30. A payment of approximately $47,000 would be due at the end of month 36 if the Company exercises this option. This option is not reasonably certain to occur.

Rent expense for the three and nine months ended September 30, 2024 was approximately $9,000 and $26,000, respectively, and for the three and nine months ended September 30, 2023 was $3,000 and $55,000, respectively.

Cash paid for operating leases for the three and nine months ended September 30, 2024 was approximately $17,000 and $38,000, respectively, and for the three and nine months ended September 30, 2023 was zero and $49,000, respectively.

The following table summarizes the balance sheet classification of the operating lease asset and related lease liabilities as of September 30, 2024 and December 31, 2023 (in thousands):


	September 30, 2024		December 31, 2023

Right-of-use asset, net	$	128	$	147

Lease liability, current portion	28		20
Lease liability, net of current portion	117		138
	$	145	$	158

The following variables were used to determine the right-of-use asset and the operating lease liabilities at September 30, 2023 and 2022:


	September 30, 2024		September 30, 2023
Weighted average remaining lease term	4.4 years		5.4 years
Weighted average operating lease discount rate	6.4	%	6.4	%

Future minimum lease payments under the lease agreement as of September 30, 2024 were as follows (in thousands):


Year ended

SEC Form 10-Q filed by Intensity Therapeutics Inc.