Exicure : Non-Reliance on Previously Issued Financial Report - Form 8-K

Item 4.02 Non-Reliance On Previously Issued Financial Statements Or A Related Audit Report Or Completed Interim Review.

On November 28, 2023, the Audit Committee of the Board of Directors (the "Audit Committee") of Exicure, Inc. (the "Company"), after discussions with its management, concluded that, as a result of the Company's previously disclosed wind down of historical biotechnology activities and transition to an exploration of broader strategic alternatives, it was no longer appropriate to record expenses as research and development for the quarters ended March 31, 2023, and June 30, 2023 under ASC 730-10.

In connection with preparing its financial statements for the quarter ended September 30, 2023, the Company identified it was no longer appropriate to record certain research and development expenses with its wind down activities in 2023. As a result, approximately $0.6 million of expenses were incorrectly classified as research and development in the Company's previously issued unaudited consolidated financial statements for the three months ended March 31, 2023, and approximately $0.9 million and $1.5 million of expenses were incorrectly classified as research and development in the Company's previously issued unaudited consolidated financial statements for the three and six months ended June 30, 2023, respectively, ("Affected Periods"); as well as the relevant portions of the Company's earnings release with respect to the Affected Periods. Therefore, the financial statements for the Affected Periods should no longer be relied upon and are to be restated.

Approximately $0.6 million of expenses in the first quarter of 2023 will be corrected from research and development into general and administrative. These expenses related to separation pay from former R&D employees and legal costs associated with our intellectual property. Approximately $0.9 million of expenses in the second quarter of 2023 will be corrected from research and development into general and administrative. These expenses primarily related to the office lease, depreciation of scientific equipment, legal costs associated with our intellectual property, and other wind down costs. The corrections do not impact our net loss for the periods.

The Company expects to file restated financial statements for the Affected Periods on two separate Form 10-Q/A's as soon as reasonably practical. The Company also expects to file its Form 10-Q for the three and nine months ended September 30, 2023 promptly thereafter.

The Company's management has concluded that in light of the restatement described above, a material weakness exists in the Company's internal control over financial reporting and that the Company's disclosure controls and procedures were not effective. Additional information with respect to such material weakness will be provided in the Form 10-Q for the quarter ended September 30, 2023 and in the Form 10-Q/A's for March 31, 2023 and June 30, 2023.

The Company's management and the Audit Committee have discussed the matters disclosed in this Current Report on Form 8-K pursuant to this Item 4.02 with Marcum LLP, the Company's independent registered public accounting firm.