Harbor BioSciences (HRBR) Risk Analysis

Harbor's certificate of incorporation and bylaws contain provisions that, among other things: - prohibit the transfer of any shares of Harbor's capital stock that would result in: (i) any person or entity becoming a "Five-Percent Stockholder" (as defined under Treasury Regulation Section 1.382-2T(g)) of Harbor's then-outstanding capital stock, or (ii) an increase in the percentage ownership of any person or entity who is already a "Five-Percent Stockholder" of Harbor's then-outstanding capital stock;- authorize the board of directors, without stockholder approval, to authorize and issue preferred stock with powers, preferences and rights that may be senior to Harbor's common stock, that could dilute the interest of, or impair the voting power of, holders of Harbor's common stock and could also have the effect of discouraging, delaying or preventing a change of control;- establish advance notice procedures that stockholders must comply with in order to nominate candidates to the board of directors and propose matters to be brought before an annual or special meeting of Harbor's stockholders, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer's own slate of directors or otherwise attempting to obtain control of the Company;- give the board of directors exclusive authority to set the number of directors and increase or decrease the number of directors by one or more resolutions, which may prevent stockholders from being able to fill vacancies on the board of directors;- authorize a majority of the board of directors to appoint a director to fill a vacancy created by the expansion of the board of directors or the resignation, death, or removal of a director, which may prevent stockholders from being able to fill vacancies on the board of directors; and - restrict the ability of stockholders to call special meetings of stockholders. These provisions may have the effect of delaying or preventing a change in control of the Company, creating a perception that a change in control cannot occur, or otherwise discouraging takeover attempts that some stockholders may consider beneficial, any of which could also adversely affect the trading price of Harbor's common stock.

Harbor is not currently in compliance with its reporting obligations under Section 15(d) of the Exchange Act because it has not timely filed all required periodic reports with the SEC. While Harbor currently intends to file all required periodic reports with the SEC and regain compliance with its reporting obligations, there can be no assurance as to the timing of making these required filings. Harbor's failure to timely file all required periodic reports with the SEC, or to regain compliance with its reporting obligations, could have a number of adverse consequences, any of which could harm our business and financial results, including: - Harbor's common stock may not be eligible for "regular way" trading on the OTC Markets or other trading platforms, which would continue to significantly limit the trading volume of the stock;- we may be subject to delisting from any securities exchange or market place on which Harbor's common stock may be listed or quoted, and brokers may be unable or unwilling to make a market in the stock;- we may be unable to use short-form registration statements for securities offerings, which could increase the cost of, and delay, future capital-raising activities;- potential acquisition targets, business partners, or counterparties may be reluctant to enter into transactions with us due to concerns about our compliance with securities laws;- we could be subject to SEC enforcement actions or civil litigation for failure to comply with our reporting obligations; and - we may experience reputational harm that negatively impacts investor confidence in us. In addition, as discussed above, Harbor's failure to timely file all required reports with the SEC has resulted in a significant reduction in the trading volume of Harbor's common stock, which may have contributed to a decline in the trading price of the common stock.

In February 2012, Harbor's predecessor, Harbor Biosciences, Inc., filed a Form 15 with the SEC to deregister its common stock pursuant to Section 12(g) of the Exchange Act. The filing of the Form 15 had the effect of suspending Harbor's obligation, pursuant to Section 15(d) of the Exchange Act, to file reports and other information with the SEC. As a result, prior to the filing of our Annual Report on Form 10-K for the year ended December 31, 2019, the last periodic report filed by Harbor was the Annual Report on Form 10-K for the year ended December 31, 2011. As of January 1, 2020, Harbor no longer met the eligibility criteria under Rule 12h-3 of the Exchange Act to suspend its reporting obligations under Section 15(d) of the Exchange Act, requiring Harbor to resume filing reports and other information with the SEC pursuant to the Exchange Act. We have incurred, and expects to continue to incur, significant direct and indirect costs, and diversion of management's time and resources, as a result of the requirement to comply with certain reporting obligations under the Exchange Act, including those incurred in connection with the preparation and filing of Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, the audit of the consolidated financial statements contained in its Annual Reports in accordance with SEC rules and Public Company Accounting Oversight Board (United States) standards, and compliance with certain provisions of the Sarbanes-Oxley Act of 2002 ("SOX"). Harbor would again become eligible to suspend its public reporting obligations if it: (i) determines in accordance with applicable SEC rules it has fewer than 300 stockholders of record as of certain points in time, (ii) does not file registration statements pursuant to the Securities Act (which it does not currently intend to do), and (iii) meets certain other requirements under applicable SEC rules. If Harbor becomes eligible to suspend its public reporting obligations in future periods, it may elect to take the actions necessary to suspend those obligations, which would result in Harbor no longer being required to file SEC reports. If Harbor ceases filing reports and other information with the SEC, it would significantly reduce the amount of publicly available information about us and our business and operations, which could have the effect of reducing the trading volume and price of Harbor's common stock. Further, notwithstanding that Harbor is currently required to file certain reports and information with the SEC pursuant to Section 15(d) of the Exchange Act, Harbor does not have a class of securities registered pursuant to Section 12(b) or Section 12(g) of the Exchange Act. As a result, Harbor is not required to comply with, and does not intend to follow, certain disclosure requirements typically applicable to public reporting companies, including the requirement to file proxy statements, information statements, tender offer disclosures, and beneficial ownership filings. Accordingly, we expect there will continue to be significantly less information available about us, including our governance policies and ownership structure, than is available for many other public reporting companies, which could have the effect of further limiting the trading volume, and further reducing the trading price, of Harbor's common stock.

As of October 1, 2026 Harbor had 58,429,836 shares of common stock outstanding. As of the same date, Amun LLC ("Amun") held 20,000,000 shares of Harbor's common stock, representing approximately 34.2% of outstanding shares of Harbor's common stock, and Southshore Aircraft Holdings, LLC, through its affiliates (together, "Southshore"), held 16,500,000 shares of common stock, representing approximately 28.2% of the outstanding shares of Harbor's common stock. As a result, Amun and Southshore collectively control a majority of the voting power of Harbor's outstanding common stock and, therefore, are able to exercise significant influence over the establishment and implementation of our business plans and strategic objectives, as well as to control all matters submitted to Harbor's stockholders for approval, including certain strategic alternatives, such as a sale of the Company, registration as an investment company, liquidation, or a significant acquisition. These stockholders may manage our business in ways with which certain investors may disagree and may be adverse to their interests. In addition, there can be no assurance that any particular strategic transaction these stockholders approve will result in enhanced stockholder value. The significant concentration of ownership may also have the effect of delaying, deterring or preventing a liquidation or change in control transaction, depriving Harbor's stockholders of an opportunity to receive a premium for their investment, or otherwise negatively affecting the trading price or trading volume of Harbor's common stock. Mr. Bartlett, one of Harbor's directors, may be deemed to be the beneficial owner of the shares of Harbor's common stock held by Amun due to his status as a member of the board of managers of Amun and his ownership of equity interests in Amun. In addition, Mr. Bartlett may be deemed to be the beneficial owner of the shares of Harbor's common stock held by Southshore due to his status as a member of the board of managers of Southshore and his ownership of equity interests in Southshore. Accordingly, Mr. Bartlett may be able to exercise influence over decisions involving the voting or disposition of shares of Harbor's common stock. However, Mr. Bartlett does not control voting or investment decisions made by either Amun or Southshore.

The trading price of Harbor's common stock has been, and may continue to be, volatile. We believe Harbor's stock price will be subject to wide fluctuations in response to a variety of factors, including the following: - failing to meet the conditions of the Transient Investment Company Exemption or another exemption from the registration requirements of the Investment Company Act or being required to register as an investment company;- actual or anticipated fluctuations in our financial condition, results of operations and liquidity position from period to period;- actual or potential changes in economic conditions, recessionary concerns, interest rates, inflation and tariffs;- completion of significant investments, acquisitions or other strategic transactions by us;- threatened or actual litigation, regulatory inquiries or government investigations;- purchases or sales of shares of Harbor's common stock pursuant to Harbor's publicly announced stock repurchase program, pursuant to one or more tender offers or otherwise;- issuances of one or more cash dividends to Harbor's stockholders;- the illiquidity of Harbor's common stock;- speculative trading practices of Harbor's stockholders and other market participants;- perceptions about securities that are traded on the OTC Market;- Harbor's ability to regain compliance with its reporting obligations under SEC rules and the related timing;- the impact of the application of accounting guidance; and - actual or potential changes in geopolitical conditions, including wars, outbreak of hostilities, terrorism, or government sanctions. In recent years, the stock market has experienced significant price and volume fluctuations. This volatility has had a significant impact on the market price of securities issued by companies across industries. These changes may occur without regard to the financial condition or operating performance of the affected companies. Accordingly, the price of Harbor's common stock could fluctuate based upon factors that have little or nothing to do with Harbor, and these fluctuations could materially reduce the trading price and trading volume of Harbor's common stock.

Harbor has not listed, and does not currently intend to list, its common stock for trading on any national securities exchange. Although Harbor's common stock is traded under the symbol "HRBR" on the OTC Market, the trading volume for the common stock has historically been limited. Trading on the OTC Market has been further limited due to the fact that Harbor is not currently in compliance with its reporting obligations under Section 15(d) of the Exchange Act because it has not timely filed all required periodic reports with the SEC. As a result of these and other factors, we expect Harbor's common stock to continue to be highly illiquid for the foreseeable future. Investors should be aware that an active trading market for the common stock may never develop or be sustained, and that the delay in filing certain required periodic reports with the SEC could have a prolonged negative impact on the trading volume of the common stock. The absence of an active trading market for the common stock could result in additional volatility with respect to, and a further decline in, the trading price of the common stock. As a result of these and other factors, investors should also be aware that they may lose all or part of their investment.

The extent of any trading market for Harbor's common stock will depend, in part, on the content of any reports that securities or industry analysts publish about our business, as well as any press releases or other publications issued by us. Analyst coverage of the Company has been extremely limited, and we are not aware of any reputable analysts that cover us. In addition, we do not intend to regularly issue press releases in the future. Investors should not purchase Harbor's common stock with the expectation that we will have analyst coverage or that we will publish press releases, and should be aware that the information available about our business may be significantly less than information about other public companies. In the absence of these reports or other publications, an active trading market for Harbor's common stock may not develop or be sustained. Moreover, as discussed above, Harbor is not current in filing certain reports with the SEC as required pursuant to Section 15(d) of the Exchange Act. Harbor's failure to be timely in its SEC reporting obligations has had, and may continue to have, a material adverse impact on the trading volume and trading price of its common stock.

Harbor is a "smaller reporting company" under applicable SEC rules, and it will continue to be a "smaller reporting company" for so long as either: (i) the market value of Harbor's common stock held by non-affiliates as of the end of its most recently completed second quarter is less than $250 million; or (ii) the market value of Harbor's common stock held by non-affiliates is less than $700 million and the annual revenues of Harbor are less than $100 million during the most recently completed fiscal year. Because Amun and Southshore, both of which are affiliates of Harbor, collectively hold a significant percentage of the outstanding shares of Harbor's common stock, it would require a significant increase in the market value of the common stock for Harbor to no longer qualify as a "smaller reporting company." As a "smaller reporting company," Harbor has relied on exemptions from certain disclosure requirements that are applicable to other public reporting companies. These exemptions include reduced financial disclosure and disclosure regarding executive compensation. Investors may find Harbor's common stock less attractive because it relies on these exemptions, which could lead to a less active trading market for Harbor's common stock and negatively impact the trading price. In addition, as previously discussed, Harbor does not have a class of securities registered pursuant to Section 12(b) or 12(g) of the Exchange Act, which further reduces its disclosure obligations.

One strategic alternative that we may consider is a liquidation of the Company and distribution of its remaining assets to stockholders. If we were to pursue a liquidation, the amount and timing of distributions to stockholders would be subject to significant uncertainty. We may be required to establish reserves for known and contingent liabilities, including potential claims that may arise after we announce or commence a liquidation. The amount of any such reserves would be determined by Harbor's board of directors in the exercise of its business judgment and may be more than is ultimately required, resulting in delayed or reduced distributions. Additionally, the process of liquidating our assets and winding down our affairs could take a significant period of time, during which we would continue to incur expenses that would reduce the amount available for distribution. Stockholders may not receive any distributions from a liquidation for an extended period, and the ultimate amount of distributions may be materially less than anticipated. Finally, any distribution could be subject to significant federal, state or local tax, depending upon a stockholder's personal financial situation. The tax consequences of any potential liquidation and distribution would likely be a significant consideration in determining whether to pursue a potential liquidation transaction.

Our stockholders may have different views on what strategic alternatives would best serve their interests. Some stockholders may prefer that we return capital through cash dividends, share repurchases or tender offers, while others may prefer that we pursue acquisitions or other investments to grow our business. We may not be able to satisfy the expectations of all stockholders. Additionally, certain strategic alternatives, such as a sale of the Company, registration as an investment company, liquidation, or a significant acquisition, may require stockholder approval. There can be no assurance that our stockholders would approve any particular transaction. There can also be no assurance that any particular strategic transaction we pursue will result in enhanced stockholder value.

In March 2021 Harbor's board of directors adopted a stock repurchase program pursuant to which Harbor may repurchase shares of its common stock from time to time. From the inception of the program through March 31, 2025, Harbor purchased approximately 12.9 million shares of its common stock pursuant to the program. Due to its failure to timely file certain reports with the SEC, Harbor has not repurchased shares pursuant to the program since March 31, 2025. Although the board of directors has authorized the repurchase program, and Harbor has completed the purchase of shares of common stock, it does not obligate us to repurchase any additional dollar amount or number of shares, and the program may be modified, suspended or terminated at any time and for any reason. The additional number of shares to be repurchased, and the timing of any such repurchases, depends on a number of factors, including the trading price and volume of the common stock, our business strategy, financial performance, liquidity position and capital requirements, restrictions in commercial agreements, general market conditions, applicable legal requirements and other factors. Repurchases of Harbor's common stock could increase the volatility of the trading price and reduce the trading volume of the common stock, either of which could have a negative impact on the trading price. Similarly, the future announcement of the termination or suspension of the repurchase program, or our decision not to utilize the full authorized repurchase amount under the repurchase program, could result in a decrease in the trading price. Further, the trading volume of Harbor's common stock has been limited due to the fact that Harbor is not currently in compliance with its reporting obligations under Section 15(d) of the Exchange Act, which has severely limited our ability to utilize the repurchase program and may result in further downward pressure on the trading price. In addition, as discussed above, we are in the process of considering strategic alternatives, which could include the implementation of various methodologies for repurchasing shares, including amendments to our stock repurchase program, the commencement of one or more tender offers, or privately negotiated repurchases. However, there can be no assurance that any share repurchases we do elect to make will enhance stockholder value because the market price of Harbor's common stock may decline below the levels at which we repurchased shares. We cannot guarantee that share repurchases will enhance long-term stockholder value.