TransCode Therapeutics (RNAZ) Risk Analysis

CKLS, through its wholly-owned subsidiary DEFJ, beneficially owns approximately 83.5% of the voting power of our common stock as of August 10, 2026. For so long as CKLS continues to have voting power over a significant percentage of our common stock, even if such amount is less than 50%, it will still be able to significantly influence the composition of our Board and the approval of actions requiring stockholder approval. Although the holders of our common stock will be entitled to vote on all matters on which stockholders of a corporation are generally entitled to vote under the Delaware General Corporation Law (the "DGCL"), including the election of our Board, CKLS's voting power may effectively allow it to control the outcome of matters submitted to our stockholders for approval. Accordingly, CKLS will have significant influence with respect to our Board, management, business plans and policies, including the appointment and removal of our officers. In particular, for so long as CKLS continues to beneficially own a significant percentage of our common stock, it will be able to cause or prevent a change of control of our company or a change in the composition of our Board and could preclude any unsolicited acquisition of our company. CKLS's ownership could deprive you of an opportunity to receive a premium for your shares of common stock as part of a sale of our company and ultimately might affect the market price of our common stock.

Our stockholders' equity in this Quarterly Report on Form 10-Q does not meet Nasdaq Capital Market, LLC, or Nasdaq, rules for continued listing of our stock on Nasdaq. As previously disclosed, on May 19, 2026, we received a deficiency notice to this effect from Nasdaq with the opportunity to present our plan to Nasdaq for regaining compliance. On July 20, 2026, we obtained stockholder approval for the conversion of our preferred stock and, between July 20, 2026, and August 10, 2026, all of our outstanding shares of preferred stock converted into Common Stock. As a result, we believe that we now exceed the minimum stockholders' equity requirement and Nasdaq has confirmed this conclusion. Nevertheless, there is no assurance that we will continue to meet Nasdaq rules for continued listing of our stock. On July 22, 2026, the SEC approved a new Nasdaq rule mandating immediate delisting of companies listed on Nasdaq if the market value of their listed securities, or MVLS, falls below $5 million for 30 consecutive business days. Nasdaq defines MVLS as the closing bid price of a company's stock multiplied by its total listed shares outstanding. Under the new rule, there is no cure period and appealing to a Nasdaq Hearings Panel will not halt suspension of trading on Nasdaq. While the SEC issued a stay on July 29, 2026, pausing this rule, there is no assurance that the new rule will not become effective, that our MVLS will remain above $5 million for 30 consecutive business days or that our stock will not be delisted. At August 10, 2026, based on our Nasdaq official closing price of $3.88 per share, our MVLS was approximately $65.7 million. In the event of a delisting from Nasdaq, our stock would likely be traded in the over-the-counter inter-dealer quotation system, more commonly known as the OTC. OTC transactions involve risks in addition to those associated with transactions in securities traded on the securities exchanges, such as Nasdaq, or Exchange-listed stocks. Many OTC stocks trade less frequently and in smaller volumes than Exchange-listed stocks. Accordingly, our stock would be less liquid than it would be otherwise. Also, the prices of OTC stocks are often more volatile than Exchange-listed stocks. Additionally, many institutional investors are prohibited from investing in OTC stocks, and it might be more challenging to raise capital when needed. Further, a delisting of our stock from trading on Nasdaq could also adversely affect our reputation, relationships with business partners, and access to strategic opportunities. As further described elsewhere in this Quarterly Report on Form 10-Q, in light of our financial position and our need to raise additional capital, delisting of our common stock from Nasdaq would materially limit our ability to obtain additional equity capital.

We will need to raise additional capital in the future. To the extent we raise additional capital through the issuance of equity or convertible debt securities in the future, there will be dilution to investors and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders' rights. In April 2026, we entered into the SEPA and expect to issue the First Convertible Note. The issuances of Common Stock pursuant to the SEPA and upon conversion of the First Convertible Note may cause immediate and substantial dilution to our existing stockholders and could cause a significant reduction in the market price of our Common Stock. Future issuances of our Common Stock or other equity securities, whether pursuant to the SEPA or otherwise, or the perception that such sales may occur, could adversely affect the trading price of our Common Stock and impair our ability to raise capital through future offerings of shares or equity securities. We may choose to raise additional capital through the issuance of equity or convertible debt securities due to market conditions or strategic considerations, even if we believe we have sufficient funds for our current or future operating plans. No prediction can be made as to the effect, if any, that future sales of Common Stock or securities convertible into Common Stock, or the availability of Common Stock for future sales, will have on the trading price of our Common Stock.

There is no established public trading market for the common stock purchase warrants we have issued. We will not list the common stock purchase warrants on any securities exchange or nationally recognized trading system, including the Nasdaq Capital Market. Therefore, we do not expect a market to ever develop for the common stock purchase warrants. Without an active market, the liquidity of our common stock purchase warrants will be limited.

Common stock purchase warrants do not confer any rights of common stock ownership on their holders, such as voting rights or the right to receive dividends, but merely represent the right to acquire shares of common stock at a fixed price. Commencing on the date of issuance, holders of common stock purchase warrants may exercise their right to acquire the underlying common stock and pay the respective stated warrant exercise price per share. Until holders of common stock purchase warrants acquire shares of our common stock upon exercise thereof, such holders will have no rights with respect to shares of our common stock, except as provided in the warrants and common stock purchase warrants. Upon exercise of the warrants and common stock purchase warrants, such holders will be entitled to the rights of a common stockholder only as to matters for which the record date occurs after the exercise date.

Trading volume in shares of our common stock on the Nasdaq Capital Market has been limited. You may not be able to sell your shares quickly or at the market price if trading in shares of our common stock is not active. An active or liquid market in our common stock may not develop or, if it does develop, it may not sustain. As a result of these and other factors, shareholders may not be able to resell their shares of our common stock at or above the price at which they purchase those shares in this offering. Further, an inactive market may also impair our ability to raise capital by selling shares of our common stock and may impair our ability to enter into strategic collaborations or acquire companies or products by using our shares of common stock as consideration.

Under the terms of the Purchase Agreement and the Unleash Licensing Agreement, we agreed to call and hold a special meeting of stockholders to obtain, among other things, the requisite approvals for the conversion of all outstanding shares of Series A Preferred Stock and Series C Preferred Stock into shares of our Common Stock and to seek approval of a potential "change of control" under Nasdaq Listing Rules 5110 and 5635(C), in each case as required by the Nasdaq Stock Market LLC listing rules (the "Series A Preferred Stockholder Approval"). At the special meeting of stockholders, we also plan to seek approval of the conversion of all outstanding shares of Series C Preferred Stock into shares of Common Stock (the "Series C Preferred Stockholder Approval"). While it is anticipated that we will receive the Series A Preferred Stockholder Approval and the Series C Preferred Stockholder Approval, there can be no guarantee that such approvals will be obtained. As of the date hereof, we have not sought stockholder approval of these conversions, although we intend to seek stockholder approval in the near future. If the Series A Preferred Stockholder Approval and the Series C Preferred Stockholder Approval are not obtained, persons holding Series A Preferred Stock or Series C Preferred Stock, as applicable, will continue to hold such shares until such time as the required stockholder approvals are obtained. We have agreed to seek to obtain such approvals at an annual or special stockholders meeting to be held at least every six months thereafter until such approval is obtained, which would be time-consuming and costly.

On October 8, 2025, we consummated the Acquisition. We cannot guarantee that the Acquisition and related transactions will not impair stockholder value or otherwise adversely affect our business. The Acquisition poses significant integration challenges between our businesses and employees which could result in management and business disruptions, any of which could harm our consolidated results of operation or business prospects and impair the value of the Acquisition to our stockholders.

Pursuant to our amended and restated bylaws, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any state law claims for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation and our amended and restated bylaws, (iv) any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or by-laws or (v) any action asserting a claim that is governed by the internal affairs doctrine, in each case subject to the Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein, or the Delaware Forum Provision. The Delaware Forum Provision will not apply to any causes of action arising under the Securities Act or the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Unless we consent in writing to the selection of an alternate forum, the United States District Court for the District of Massachusetts shall be the sole and exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, or the Federal Forum Provision, as our principal office is located in Boston, Massachusetts. In addition, our amended and restated bylaws provide that any person or entity purchasing or otherwise acquiring any interest in our shares of common stock is deemed to have notice of and consented to the Delaware Forum Provision and the Federal Forum Provision; provided, however, that stockholders cannot and will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder. The Delaware Forum Provision and the Federal Forum Provision may impose additional litigation costs on stockholders who assert the provision is not enforceable and may impose more general additional litigation costs in pursuing any such claims, particularly if the stockholders do not reside in or near the State of Delaware or the Commonwealth of Massachusetts. In addition, these forum selection clauses in our bylaws may limit our stockholders' ability to bring a claim in a judicial forum that they find favorable for disputes with us or our directors, officers or employees, which may discourage such lawsuits against us and our directors, officers and employees even though an action, if successful, might benefit our stockholders. Moreover, while the Delaware Supreme Court ruled in March 2020 that federal forum selection provisions purporting to require claims under the Securities Act be brought in federal court were "facially valid" under Delaware law, there is uncertainty as to whether other courts will enforce our Federal Forum Provision. If the Federal Forum Provision is found to be unenforceable, we may incur additional costs associated with resolving such matters. The Federal Forum Provision may also impose additional litigation costs on stockholders who assert the provision is not enforceable or invalid. The Court of Chancery of the State of Delaware may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring the action, and such judgments may be more or less favorable to us than our stockholders.

Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that could delay or prevent a change of control of our company or changes in our Board that our stockholders might consider favorable. Some of these provisions include: Øa prohibition on stockholder action through written consent, which requires that all stockholder actions be taken at a meeting of our stockholders; Øa requirement that special meetings of stockholders be called only by the Board acting pursuant to a resolution approved by the affirmative vote of a majority of the directors then in office; Øadvance notice requirements for stockholder proposals and nominations for election to our Board; Øa requirement that no member of our Board may be removed from office by our stockholders except for cause and, in addition to any other vote required by law, upon the approval of not less than two-thirds of all outstanding shares of our voting stock then entitled to vote in the election of directors; Øa requirement for approval by not less than two-thirds of all outstanding shares of our voting stock to amend any bylaws by stockholder action or to amend specific provisions of our certificate of incorporation; and Øthe authority of the Board to issue preferred stock on terms determined by the Board without stockholder approval and which preferred stock may include rights superior to the rights of the holders of common stock. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporate Law, or DGCL, which may prohibit certain business combinations with stockholders owning 15% or more of our outstanding voting stock. These antitakeover provisions and other provisions in our amended and restated certificate of incorporation and amended and restated bylaws could make it more difficult for stockholders or potential acquirers to obtain control of our Board or initiate actions that are opposed by the then-current Board and could also delay or impede a merger, tender offer or proxy contest involving our company. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing or cause us to take other corporate actions you desire. Any delay or prevention of a change of control transaction or changes in our Board could cause the market price of our common stock to decline.

The trading market for our common stock may be influenced, in part, by the research and reports that industry or financial analysts publish about us or our business. If begun, we may lose research coverage by industry or financial analysts. If no or few analysts maintain coverage of us, the trading price of our stock would likely decrease. If one or more of the analysts covering our business downgrade their evaluations of our stock, the price of our stock would likely decline. If one or more of these analysts cease to cover our stock, we could lose visibility in the market for our stock, which in turn could cause our stock price to decline.

We are an emerging growth company, or EGC, as defined in the JOBS Act, enacted in April 2012. For as long as we continue to be an EGC, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not EGCs, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, or Section 404, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding nonbinding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved. We could be an EGC for up to five years following the year in which we completed our initial public offering, although circumstances could cause us to lose that status earlier. We will remain an EGC until the earlier of (i) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering (i.e., December 31, 2026), (b) in which we have total annual gross revenue of at least $1.235 billion or (c) in which we are deemed to be a large accelerated filer, which requires the market value of our common stock that is held by non-affiliates to exceed $700.0 million as of the prior June 30th, and (ii) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. We may choose to take advantage of some, but not all, of the available exemptions. We cannot predict whether investors will find our common stock less attractive if we rely on certain or all of 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 stock price may be more volatile. Under the JOBS Act, EGCs can also delay adopting new or revised accounting standards until such time as those standards apply to private companies, which may make our consolidated financial statements less comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

Until such time, if ever, as we can generate the cash we need from operations, we expect to finance our cash needs through a combination of private and public equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. We do not currently have any committed external source of funds. To the extent that we raise additional capital through the sale of common stock or securities convertible into or exchangeable for common stock, the ownership interest of our shareholders will be diluted, and the terms of these new securities may include liquidation or other preferences that materially adversely affect the rights of our shareholders. Debt financing, if available, would increase our fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third-parties, we may have to relinquish valuable rights to our intellectual property, future revenue streams, research programs or current or future therapeutic candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds when needed, we may be required to delay, scale back or discontinue the development and commercialization of one or more of our therapeutic candidates, delay our pursuit of potential licenses or acquisitions, grant rights to develop and market current or future therapeutic candidates that we would otherwise prefer to develop and market ourselves, or restrict or curtail our operations.

Effective June 30, 2020, the SEC implemented Regulation Best Interest requiring that "A broker, dealer, or a natural person who is an associated person of a broker or dealer, when making a recommendation of any securities transaction or investment strategy involving securities (including account recommendations) to a retail customer, shall act in the best interest of the retail customer at the time the recommendation is made, without placing the financial or other interest of the broker, dealer, or natural person who is an associated person of a broker or dealer making the recommendation ahead of the interest of the retail customer." This is a significantly higher standard for broker-dealers to recommend securities to retail customers than under prior FINRA suitability rules. FINRA suitability rules still apply to institutional investors and require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending securities to their customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information, and, for retail customers, determine that the investment is in the customer's "best interest," and meets other SEC requirements. Both SEC Regulation Best Interest and FINRA's suitability requirements may make it more difficult for broker-dealers to recommend that their customers buy speculative, low-priced securities. They may affect investing in our common stock, which may have the effect of reducing the level of trading activity in our securities. As a result, fewer broker-dealers may be willing to make a market in our common stock, reducing a stockholder's ability to resell shares of our common stock.

Our stock price has been volatile since our initial public offering. The stock market in general, and the market for the stocks of many smaller biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations often unrelated or disproportionate to the operating performance of particular companies. We believe that this has occurred for numerous reasons including as a result, economic events and expectations, the war in the Ukraine and the current armed conflict in Israel and the Gaza Strip, with Israel having declared of war on Hamas, a U.S. designated Foreign Terrorist Organization, due to recent attacks. Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance. As a result of the foregoing, shareholders may not be able to sell their common stock at or above the price at which they purchase those shares in this offering or otherwise. The market price for our common stock may be influenced by many factors, including: Øthe success of competitive drugs or technologies; Øresults of clinical trials of our current or future therapeutic candidates or those of our competitors; Øregulatory or legal developments in the U.S. and other countries; Ødevelopments or disputes concerning patent applications, issued patents or other proprietary rights; Øthe recruitment or departure of key personnel; Øthe level of expenses related to any of our current or future therapeutic candidates or clinical development programs; Øthe results of our efforts to discover, develop, acquire or license additional current or future therapeutic candidates or drugs; Øactual or anticipated changes in estimates as to consolidated financial results, development timelines or recommendations by securities analysts; Øvariations in our consolidated financial results or those of companies that are perceived to be similar to us; Øchanges in the structure of healthcare payment systems; Ømarket conditions in the pharmaceutical and biotechnology sectors; Øfuture sales of our Common Stock, debt securities convertible into equity, and conversion of our Series A Preferred Stock, Series B Preferred Stock, and Series C Preferred Stock and the Convertible Notes; Øgeneral economic, industry and market conditions; Øpotential delisting from Nasdaq; and Øthe other factors described in this "Risk Factors" section. If the market price of our common stock declines, you may not realize any return on your investment in us and further you may lose some or all of your investment. Additionally, in the past, securities class action litigation has often been instituted against companies following periods of volatility in the market price of a company's securities. This type of litigation, if instituted, could result in substantial costs and a diversion of management's attention and resources.

If we are unable to realize the full strategic and financial benefits currently anticipated from the Acquisition and Investment, stockholders will have experienced substantial dilution of their ownership interests in us without receiving commensurate benefit, or, to the extent we are able to realize only part of the strategic and financial benefits currently anticipated from the Acquisition and Investment, only receiving part of the commensurate benefit.