Risk Factors Update Summary

• Research and development expenses decreased by $45.7 million due to winding down development efforts.
• Restructuring charges increased from $2.4 million to $3.8 million, a notable rise of $1.4 million.
• Discontinued PRISM4 Phase 3 trial of CP101 in recurrent CDI in January 2023. This resulted in a reduction of expenses by scaling back and terminating vendor contracts, reducing headcount to one full-time employee.
• Recoupment methods include reimbursement, canceling equity awards, adjusting unpaid compensation, and reducing future entitlements.
• Employees, consultants, and contractors may engage in misconduct. Expanded to include consultants and contractors.
• Deadline for regaining compliance with Nasdaq bid price requirement extended to May 13, 2024.
• The company's interest expense decreased from $663 million to $851 million, impacting financial performance significantly.
• General and administrative expenses decreased by $12.1 million primarily due to a decrease in personnel expenses.
• Operating lease obligations decreased from $6,255 to $4,795, a significant reduction of $1,460.
• Policy effective October 2, 2023, covers officers subject to Section 16 of the Exchange Act.
• Addition of a Consulting Agreement with Mark Smith, dated May 16, 2023, with potential earnings up to $150,000.
• Notification of delisting from Nasdaq due to business strategy change. Market value requirement increased to $5.0 million.
• Scaled back expenses, including terminating vendor contracts and reducing headcount to one full-time employee. This led to a workforce reduction of approximately 95%.
• Completed all site close-out visits and enrollment in the Phase 3 clinical trial of CP101 for the prevention of recurrent CDI. This trial was paused following an FDA clinical hold letter.
• The Company incurred a loss of $1.4 million due to loan extinguishment, including a $0.8 million final payment fee.
• Deferred income tax benefit increased to $3.5 million in 2023, with $1.4 million federal and $2.1 million state.
• Inclusion of Milestone Payments for achievements, such as $100,000 for specific milestones before March 31, 2024.
• Accounts payable decreased by $956 million, affecting liquidity and working capital management.
• Discontinuation of Phase 3 clinical trial and focus on intellectual property value realization.
• Impairment of long-lived assets decreased by $6.2 million due to certain equipment no longer being used.
• Potential delisting from Nasdaq GSM could reduce stock liquidity and attract new investors.
• Market value of publicly held shares requirement increased from $1.00 to $5.00 per share.
• Recoupment policy applies to cash/equity incentives based on financial measures for three fiscal years.
• Operating lease liabilities decreased by $831 million, impacting long-term financial obligations.
• Change in ownership percentage from greater than 50% to approximately 40% by executive officers and directors.
• Shifted strategic focus towards realizing the value of intellectual property estate and assets. This strategic reprioritization has been costly, time-consuming, and complex.
• Stock options granted increased from 289,383 to 383,109, a significant rise of 93,726 options.
• New Retention Bonus Agreement for Marc Blaustein, enhancing employee retention strategies.
• Net cash used in operating activities decreased by $36.1 million primarily due to reduced net loss.
• The Company recognized revenue related to the Takeda Agreement of $0.9 million in 2022, down from $18.5 million in 2021.
• Total revenue increased by $18.5 million.
• Weighted-average grant date fair value of stock options decreased from $9.87 to $6.76 per option.
• Detailed terms for Services, Compensation, and Milestone Payments to ensure clarity and alignment.
• Net cash used in operating activities decreased from $31.5 billion to $74.8 billion, affecting cash flow management.
• Reduced workforce by approximately 95% through a restructuring in April 2023. This restructuring may cause concerns from third parties and impact business relationships.
• Stock-based compensation expense increased by $3.9 million.
• Proceeds on sale of property and equipment decreased from $1.3 billion to $327 million, impacting asset sales.
• Indemnification clause added, holding Consultant liable for third-party claims, enhancing risk management.
• Engaged in discussions with UMN to amend agreements regarding specific deadlines for achieving milestones. This amendment may impact commercialization obligations.
• Repayment of loan decreased by $15 billion, affecting debt management and financial leverage.
• Inclusion of Anti-Corruption Laws compliance clause, ensuring adherence to international anti-bribery statutes.
• Reduced board compensation and equity grants. Impact of these events could make it more difficult to attract and retain qualified individuals for the board and senior management.
• Depreciation and amortization expense increased by $3.0 million.
• Detailed Ownership of Work Product clause, emphasizing Finch's rights to all Inventions and Work Product.
• Net cash provided by financing activities decreased from $16.2 billion to $14.9 billion, impacting capital structure and funding sources.