MYMD PHARMACEUTICALS, INC. This quarterly report on Form 10-Q and other reports filed byAkers Biosciences, Inc. ("Akers," "Akers Bio," "we" or the "Company") from time to time with theSEC (collectively, the "Filings") contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, the Company's management as well as estimates and assumptions made by Company's management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the Filings, the words "anticipate," "believe," "estimate," "expect," "future," "intend," "plan," or the negative of these terms and similar expressions as they relate to the Company or the Company's management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks relating to the Company's business, industry, and the Company's operations and results of operations. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws ofthe United States , the Company does not intend to update any of the forward-looking statements to conform these statements to actual results. Important factors that could cause actual results to differ materially from the results and events anticipated or implied by such forward-looking statements include, but are not limited to:
? changes in the market acceptance of our products and services;
? challenges we may face in identifying, acquiring and operating new business
opportunities;
? the outcome of litigation or other proceedings to which we are subject as
described in the "Legal Proceedings" section of this Report or which we may
become subject to in the future;
? increased levels of competition;
? changes in political, economic or regulatory conditions generally and in the
markets in which we operate;
? our relationships with our key customers;
? adverse conditions in the industries in which our customers operate;
? our ability to retain and attract senior management and other key employees;
? our ability to quickly and effectively respond to new technological
developments;
? delisting of our common stock from the NASDAQ capital market;
? our ability to protect our trade secrets or other proprietary rights, operate
without infringing upon the proprietary rights of others and prevent others
from infringing on our proprietary rights;
? our ability to achieve the expected benefits and costs of the transactions
related to the acquisition of Cystron, including:
? the timing of, and our ability to, obtain and maintain regulatory approvals
for clinical trials of our vaccine product candidate;
? the timing and results of our planned clinical trials for our vaccine product
candidate;
? the amount of funds we require for our vaccine product candidate; and
? our ability to maintain our existing license with
? the impact of the recent COVID-19 outbreak on our results of operations,
business plan and the global economy.
Our financial statements are prepared in accordance with accounting principles generally accepted inthe United States ("GAAP"). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management's judgment in its application. There are also areas in which management's judgment in selecting any available alternative would not produce a materially different result. The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report. Overview We were incorporated in 1989 in the state ofNew Jersey . Our principal executive offices are located at201 Grove Road ,Thorofare, New Jersey USA 08086, and our telephone number is (856) 848-8698. Our corporate website address is www.akersbio.com. OnMarch 23, 2020 , we entered into a Membership Interest Purchase Agreement (the "MIPA") with the members ofCystron Biotech, LLC (individually, each a "Seller," and collectively, the "Sellers"), pursuant to which the Company acquired 100% of the membership interests (the "Membership Interests") ofCystron Biotech, LLC ("Cystron"). Cystron is a party to a license agreement withPremas Biotech PVT Ltd ("Premas") whereby Premas granted Cystron, amongst other things, an exclusive license with respect to Premas' vaccine platform for the development of a vaccine against COVID-19 and other coronavirus infections. We continue to sell our rapid, point-of-care screening and testing products, but at continued reduced volumes compared to prior years. As a result, we continue to experience low sales revenue from our screening and testing products. We are also experiencing a production backlog for some of our screening and testing products, which will further reduce our sales revenue. In addition, as we previously reported, we eliminated our sales force for our screening and testing products. In light of these facts and the progress that we have made in our partnership with Premas for the development of a vaccine candidate for COVID-19, as previously announced, we recently initiated a strategic review of the screening and testing products business. As part of this review, we are exploring potential strategic and alternative transactions, which may include the disposition or winddown of our screening and testing products business. As a result, the makeup of our lines of business is subject to change. COVID-19 The ultimate impact of the global COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change. We do not yet know the full extent of potential delays or impacts on our business, our vaccine development efforts, healthcare systems or the global economy as a whole. However, the effects are likely to have a material impact on our operations, liquidity and capital resources, and we will continue to monitor the COVID-19 situation closely. In response to public health directives and orders, we have implemented work-from-home policies for many of our employees and temporarily modified our operations to comply with applicable social distancing recommendations. The effects of the orders and our related adjustments in our business are likely to negatively impact productivity, disrupt our business and delay our timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course. Similar health directives and orders are affecting third parties with whom we do business. Further, restrictions on our ability to travel, stay-at-home orders and other similar restrictions on our business have limited our ability to support our operations. Severe and/or long-term disruptions in our operations will negatively impact our business, operating results and financial condition in other ways, as well. Specifically, we anticipate that the stress of COVID-19 on healthcare systems around the globe will negatively impact our ability to produce our testing products and will negatively impact the distributors and healthcare facilities that purchase these testing products. In addition, while the potential economic impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, it has significantly disrupted global financial markets, and may limit our ability to access capital, which could in the future negatively affect our liquidity. A recession or market correction resulting from the spread of COVID-19 could materially affect our business and the value of our common stock. 33 Key Events Acquisition of Cystron
On
As consideration for the Membership Interests, we delivered to the Sellers: (1) that number of newly issued shares of our common stock equal to 19.9% of the issued and outstanding shares of our common stock and pre-funded warrants as of the date of the MIPA, but, to the extent that the issuance of our common stock would have resulted in any Seller owning in excess of 4.9% of our outstanding common stock, then, at such Seller's election, such Seller received "common stock equivalent" preferred shares with a customary 4.9% blocker (with such common stock and preferred stock collectively referred to as "Common Stock Consideration"), and (2)$1,000,000 in cash. OnMarch 24, 2020 , we delivered 411,403 shares of common stock and 211,353 shares of Series D Convertible Preferred Stock with a customary 4.9% blocker. OnApril 22, 2020 , Premas, one of the sellers of Cystron, returned to us$299,074 , representing its portion of the cash purchase price to acquire Cystron. Premas has advised us that these funds were returned temporarily in order for Premas to meet certain regulatory requirements inIndia . Additionally, we are required to (A) make an initial payment to the Sellers of up to$1,000,000 upon our receipt of cumulative gross proceeds from the consummation of an initial equity offering after the date of the MIPA of$8,000,000 , and (B) pay to Sellers an amount in cash equal to 10% of the gross proceeds in excess of$8,000,000 raised from future equity offerings after the date of the MIPA until the Sellers have received an aggregate additional cash consideration equal to$10,000,000 (collectively, the "Equity Offering Payments"). OnMay 14, 2020 , the Company and the Sellers entered into an Amendment No. 1 to the MIPA, which provided that any Equity Offering Payments in respect of an equity offering that is consummated prior toSeptember 23, 2020 , shall be accrued, but shall not be due and payable untilSeptember 24, 2020 . The other provisions of the MIPA remain unmodified and in full force and effect. Upon the achievement of certain milestones, including the completion of a Phase 2 study for a COVID-19 vaccine that meets its primary endpoints, Sellers will be entitled to receive an additional 750,000 shares of our common stock or, in the event we are unable to obtain stockholder approval for the issuance of such shares, 750,000 shares of non-voting preferred stock that are valued following the achievement of such milestones and shall bear a 10% annual dividend (the "Milestone Shares"). Sellers will also be entitled to contingent payments from us of up to$20,750,000 upon the achievement of certain milestones, including the approval of a new drug application by theU.S. Food and Drug Administration ("FDA"). Pursuant to the MIPA, upon the Company's consummation of the registered direct equity offering closed onApril 8, 2020 , we paid the Sellers$250,000 onApril 20, 2020 . OnApril 30, 2020 , Premas, one of the Sellers, returned to us$83,334 , representing their portion of the$250,000 amount paid to the Sellers onApril 20, 2020 . Premas has advised us that these funds were returned temporarily in order for Premas to meet certain regulatory requirements inIndia . We shall also make quarterly royalty payments to Sellers equal to 5% of the net sales of a COVID-19 vaccine or combination product by the Company (the "COVID-19 Vaccine") for a period of five (5) years following the first commercial sale of the COVID-19 Vaccine, provided that such payment shall be reduced to 3% for any net sales of the COVID-19 Vaccine above$500 million . In addition, Sellers shall be entitled to receive 12.5% of the transaction value, as defined in the MIPA, of any change of control transaction, as defined in the MIPA, that occurs prior to the fifth (5th) anniversary of the closing date of the MIPA, provided that the Company is still developing the COVID-19 Vaccine at that time. Following the consummation of any change of control transaction, the Sellers shall not be entitled to any payments as described
above under the MIPA. Support Agreement OnMarch 23, 2020 , as an inducement to enter into the MIPA, and as one of the conditions to the consummation of the transactions contemplated by the MIPA, the Sellers entered into a shareholder voting agreement with the Company (the "Support Agreement"), pursuant to which each Seller agreed to vote their shares of our common stock or preferred stock in favor of each matter proposed and recommended for approval by our management at every meeting of the stockholders and on any action or approval by written consent of the stockholders.
Registration Rights Agreement
To induce the Sellers to enter into the MIPA, onMarch 23, 2020 , we entered into a registration rights agreement (the "Registration Rights Agreement") with the Sellers, pursuant to which we shall by the 30th day following the closing of the transactions contemplated by the MIPA, file with theUnited States Securities and Exchange Commission (the "SEC") an initial Registration Statement on Form S-3 (if such form is available for use by the Company at such time) or, otherwise, on Form S-1, covering all of the shares of our common stock issued, or underlying the preferred stock issued, at closing under the MIPA and to subsequently register the common stock issued or underlying the preferred stock issued as Milestone Shares. License Agreement Cystron is a party to a License and Development Agreement (the "Initial License Agreement") with Premas. As a condition to the Company's entry into the MIPA, Cystron amended and restated the Initial License Agreement onMarch 19, 2020 (as amended and restated, the "License Agreement"). Pursuant to the License Agreement, Premas granted Cystron, among other things, an exclusive license with respect to Premas' vaccine platform for the development of a vaccine against COVID-19 and other coronavirus infections. Upon the achievement of certain developmental milestones by Cystron, Cystron shall pay to Premas a total of up to$2,000,000 . OnApril 16, 2020 , we paid Premas$500,000 for the achievement of the first two development milestones, of which$250,000 was accrued as research and development expense for the three months endedMarch 31, 2020 . OnMay 14, 2020 , we and Premas agreed that Milestone No. 3 under the License Agreement has been satisfied. Due to the achievement of this milestone, Premas is entitled to receive a payment of$500,000 from the Company. 34
Series D Convertible Preferred Stock
OnMarch 24, 2020 , we filed the Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock (the "Certificate of Designation") with the Secretary of State of theState of New Jersey . Pursuant to the Certificate of Designation, in the event of the Company's liquidation or winding up of its affairs, the holders of our Series D Convertible Preferred Stock (the "Preferred Stock") will be entitled to receive the same amount that a holder of our common stock would receive if the Preferred Stock were fully converted (disregarding for such purposes any conversion limitations set forth in the Certificate of Designation) to common stock which amounts shall be paid pari passu with all holders of the Company's common stock. Each share of Preferred Stock has a stated value equal to$0.01 (the "Stated Value"), subject to increase as set forth in Section 7 of the Certificate of Designation.
A holder of Preferred Stock is entitled at any time to convert any whole or
partial number of shares of Preferred Stock into shares of our common stock
determined by dividing the Stated Value of the Preferred Stock being converted
by the conversion price of
A holder of Preferred Stock will be prohibited from converting Preferred Stock into shares of our common stock if, as a result of such conversion, the holder, together with its affiliates, would own more than 4.99% of the total number of shares of our common stock then issued and outstanding (with such ownership restriction referred to as the "Beneficial Ownership Limitation"). However, any holder may increase or decrease such percentage to any other percentage not in excess of 9.99%, provided that any increase in such percentage shall not be effective until 61 days after such notice to us. Subject to the Beneficial Ownership Limitation, on any matter presented to our stockholders for their action or consideration at any meeting of our stockholders (or by written consent of stockholders in lieu of a meeting), each holder of Preferred Stock will be entitled to cast the number of votes equal to the number of whole shares of our common stock into which the shares of Preferred Stock beneficially owned by such holder are convertible as of the record date for determining stockholders entitled to vote on or consent to such matter (taking into account all Preferred Stock beneficially owned by such holder). Except as otherwise required by law or by the other provisions of our certificate of incorporation, the holders of Preferred Stock will vote together with the holders of our common stock and any other class or series of stock entitled to vote thereon as a single class.
A holder of Preferred Stock shall be entitled to receive dividends as and when paid to the holders of our common stock on an as-converted basis.
Production Backlog of PIFA® Heparin/PF4 and PIFA® PLUSS/PF4
We are currently experiencing a production backlog of our PIFA® Heparin/PF4 and PIFA® PLUSS/PF4 rapid assays. While we believe that we will be able to remedy the production backlog, we cannot be certain what impact this backlog will have on our business, and it may have an adverse effect on our 2020 revenues and results of operation. As discussed above, we recently initiated a strategic review of the screening and testing products business.
Exploration of Strategic Alternatives
OnNovember 7, 2018 , we announced that our board of directors had initiated a process to evaluate strategic alternatives to maximize shareholder value. The Company will continue its strategic alternatives review and has identified the hemp and minor cannabinoid sectors as potential opportunities that could benefit from our core competencies. The Company continues to explore how to leverage its 30 years of operational history in its medical device business, where its current products have FDA clearance, its current operations practice Good Manufacturing Processes (cGMP), its medical device facility is certified under ISO 13485 - 2016 and the facility carries an Analytical Lab Certification for Schedules 2, 3, 4 and 5 controlled substances issued by theU.S. Drug Enforcement Administration (DEA) and theState of New Jersey . The Company intends to pursue opportunities in the extraction, testing, purification and formulation of safe cannabinoids within the hemp industry, including pathways to consumer products with a focus on minor cannabinoids. 35
Summary of Statements of Operations for the Three Months Ended
Product Revenue
Akers' product revenue for the three months ended
For the Three Months Ended
March 31, Percent
Product Lines 2020 2019 Change
Particle ImmunoFiltration Assay ("PIFA")
(38 )%
MicroParticle Catalyzed Biosensor ("MPC") - 23,320 (100 )%
Other 9,057 12,486 (27 )%
Total Product Revenue $ 363,515 $ 612,123 (41 )%
Product revenue from the Company's PIFA products decreased 38% to$354,458 (2019:$576,317 ) during the three months endedMarch 31, 2020 , as compared to the same period of 2019. The decrease in the 2020 quarter was principally attributable to product supply issues encountered in the 2020 quarter that were not experienced in the 2019 quarter. The Company shipped orders during the first quarter, however production issues remain and there are still back orders to fill. Aker's largestU.S. distribution partners are Cardinal Health and Thermo Fisher Scientific. Domestic net sales for the three months endedMarch 31, 2020 for these two distributors accounted for$344,559 of the total PIFA related product revenue as compared to$547,276 for the same period of 2019.
The Company's MPC product sales decreased by 100% to
Other revenue decreased to$9,057 (2019:$12,486 ) during the three months endedMarch 31, 2020 due to a decline in shipping/handling revenue. The category is made up principally of shipping and handling charges. Gross Income The Company's gross profit percentage declined to 52% (2019: 60%), principally due to the impact of fixed production costs (personnel, consumables and facility costs) against lower revenue. Gross income declined to$190,644 (2019:$366,186 ) for the three months endedMarch 31, 2020 , principally due to reduced revenue as compared to the prior period.
Product cost of sales for the three months ended
Research and Development Expenses
Research and development expenses for the three months endedMarch 31, 2020 totaled$2,483,057 , which was a 100% increase as compared to$0 for the three months endedMarch 31, 2019 . During the three months endedMarch 31, 2020 , we acquired a license for the research and development of the COVID-19 Vaccine. The table below summarizes our research and development expenses for the three months endedMarch 31, 2020 and 2019 as well as the percentage of change year-over-year: For the Three Months Ended March 31, Description 2020 2019 Percent Change
Vaccine License and Development Costs 2,483,057 - 100 %Total Research and Development Expenses$ 2,483,057 $
- 100 % Vaccine license and development costs increased by 100%, for the three months endedMarch 31, 2020 , as compared to the same period of 2019, due to the Cystron acquisition costs of$2,233,057 ($1,000,000 in cash,$1,233,057 in Common and Preferred stock), and$250,000 recorded upon Premas, our license developer
achieving a milestone. Administrative Expenses
Administrative expenses for the three months ended
36 The table below summarizes our administrative expenses for the three months endedMarch 31, 2020 and 2019 as well as the percentage of change year-over-year: For the Three Months Ended March 31, Percent Description 2020 2019 Change Personnel Costs$ 283,507 $ 208,038 36 % Professional Service Costs 547,356 229,883 138 %
Stock Market & Investor Relations Costs 47,882 214,554
(78 )%
Other Administrative Costs 278,987 330,478 (16 )%
Total Administrative Expense $ 1,157,732 $ 982,953 18 %
Personnel expenses increased by 36% for the three months ended March 31, 2020 as
compared to the same period of 2019 due to the addition of an executive staff
member who was not on payroll during the three months ended March 31, 2019 .
Professional service costs increased 138% for the three months ended March 31,
2020 as compared to the same period of 2019, principally due to increased legal
fees $391,154 (2019: $150,322 ), the timing for recording audit fees $85,000
(2019: $40,041 ) and an increase in advisory and temporary consultants fees
$71,202 (2019: $39,520 ). The higher costs in 2020 were principally attributable
to the investigation into new products and the legal costs associated with the
acquisition of the COVID-19 Vaccine license.
Stock market and investor costs decreased 78% for the three months ended March
31, 2020 . The decrease in these costs was principally associated with the
Company having delisted from the London Stock Exchange during the first quarter
of 2019, and thereafter avoiding the costs associated with a presence on the
London Stock Exchange .
Other administrative expenses decreased by 16%, principally attributable to
decreased Board of Directors' fees and expenses
Sales and Marketing Expenses Sales and marketing expenses for the three months endedMarch 31, 2020 totaled$14,463 which was a 90% decrease compared to$149,841 for the three months
endedMarch 31, 2019 . The table below summarizes our sales and marketing expenses for the three months endedMarch 31, 2020 and 2019 as well as the percentage of change year-over-year: For the Three Months Ended March 31, Percent Description 2020 2019 Change Personnel Costs $ -$ 65,832 (100 )% Professional Service Costs (12,677 ) 22,391 (157 )%
Royalties and Outside Commission Costs 20,890 43,459 (52 )% Other Sales and Marketing Costs 6,250 18,159 (66 )% Total Sales and Marketing Expenses$ 14,463 $ 149,841
(90 )%
During the first quarter of 2019, as part of our cost savings measures, we eliminated the personnel within the sales and marketing departments, including employees, consultants and third-party related representatives.
Personnel expenses decreased by 100% for the three months endedMarch 31, 2020 as compared to the same period of 2019 on account of the reduction in the sales and marketing headcount to zero during the three months endingMarch 31, 2019 . Professional service costs decreased 157% for the three months endedMarch 31, 2020 , as compared to the same period of 2019, principally on account of reductions in the services provided by third party vendors and the reversal of a$15,000 charge for a marketing program. 37
Royalties and outside commission costs decreased by 52 %, on account of the reduced revenues resulting in less royalties owed and the elimination of independent sales representatives (ISRs) in 2019.
Other sales and marketing costs declined to
Regulatory and Compliance Expenses
Regulatory and Compliance expenses for the three months endedMarch 31, 2020 totaled$72,091 , which was an 18% decrease, as compared to$88,391 for the three months endedMarch 31, 2019 . The table below summarizes our regulatory and compliance expenses for the three months endedMarch 31, 2020 and 2019, as well as the percentage of change year-over-year: For the Three Months Ended March 31, Percent Description 2020 2019 Change Personnel Costs$ 61,736 $ 71,167 (13 )% Professional Service Costs 7,355 8,743 (16 )%
Other Regulatory and Compliance Costs 3,000 8,481 (65 )%
Total Regulatory and Compliance Expenses
(18 )%
Personnel costs decreased by 13% for the three months ended March 31, 2020 as
compared to the same period of 2019. In January 2019 , our headcount was reduced
by one full-time employee.
Professional service costs declined by 16% for the three months ended
Other regulatory and compliance costs decreased 65%, for the three months endedMarch 31, 2020 , as compared to the same period of 2019, principally due to a decrease in the costs of lab supplies. 38 Other Income and Expense
Other income, net of expense, for the three months ended
The table below summarizes our other income and expenses for the three months endedMarch 31, 2020 and 2019, as well as the percentage of change year-over-year: For the Three Months Ended March 31, Percent Description 2020 2019 Change
Impairment of Intangible Assets
100 %
Currency Translation Losses - 4,659 (100 )%
Losses on Investments 36,714 3,718 887 %
Interest and Dividend Income (46,703 ) (31,421 ) 49 %Total Other Income, Net of Expenses$ (7,037 ) $ (23,044 )
(69 )% Impairment of intangible assets, increased 100% to$2,952 for the three months endedMarch 31, 2020 as compared to 2019. The increase is due to the impairment of intellectual property related to breathscan products.
Foreign currency translation loss for the three months ended
Loss on investments of$36,714 (2019 $$3,718) was principally due to the impact of COVID-19 on the financial markets. Interest and dividend income increased to$46,703 (2019$31,421 ) principally due to the increase in funds available for investment.
Liquidity and Capital Resources
As ofMarch 31, 2020 , the Company's cash on hand was$927,533 (which included restricted cash of$115,094 ), and its marketable securities were$6,629,434 . The Company has incurred net losses of$3,538,536 for the three months endedMarch 31, 2020 and$3,888,249 for the year endedDecember 31, 2019 , respectively. As ofMarch 31, 2020 , the Company had working capital of$6,116,477 and stockholder's equity of$6,817,451 . During the three months endedMarch 31, 2020 , cash flows used in operating activities were$1,966,983 , consisting primarily of a net loss of$3,538,536 , which includes, principally, research and development costs in connection with the purchase of a license and milestone license fees in the aggregate amount of$2,483,057 . Since its inception, the Company has met its liquidity requirements principally through the sale of its common stock in public and private placements. OnApril 7, 2020 , pursuant to a Securities Purchase Agreement (the "Purchase Agreement") with certain institutional and accredited investors (the "Purchasers"), the Company agreed to issue and sell in a registered direct offering (the "Offering") an aggregate of 766,667 shares of common stock of the Company at an offering price of$6.00 per share, for gross and net proceeds of$4,600,002 and$4,146,102 , respectively. The Offering closed onApril 8, 2020 . Upon closing of the offering, the Company issued to the Placement Agent for the Offering warrants (the "April Placement Agent Warrants") to purchase up to 61,333 shares of common stock at an exercise price of$7.50 . The April Placement Agent Warrants are exercisable at any time and from time to time, in whole or in part, following the date of issuance and for a term of five years fromApril 7, 2020 .
On
During the period ofApril 6, 2020 throughApril 16, 2020 , warrants to purchase an aggregate of 1,043,500, shares of Series C Preferred Stock were exercised at an exercise price of$4.00 per share, yielding proceeds of$4,174,000 . OnMay 14, 2020 , we entered into a Securities Purchase Agreement (the "May Purchase Agreement") with certain institutional and accredited investors (the "May Purchasers"), pursuant to which the Company agreed to issue and sell in a registered direct offering (the "May Offering") an aggregate of 1,366,856 shares (the "May Shares") of our common stock at an offering price of$3.53 per share, for gross and net proceeds of approximately$4.8 million and$4.3 million , respectively. The closing of the May Offering is subject to the satisfaction of customary closing conditions set forth in the May Purchase Agreement and is expected to occur on or aboutMay 18, 2020 . In connection with the May Offering, the Company has agreed to grant to the placement agent (the "Placement Agent") warrants to purchase up to 109,348 shares of our common stock at an exercise price of$4.4125 (the "May Placement Agent Warrants") in a private placement. The May Placement Agent Warrants will be exercisable at any time and from time to time, in whole or in part, following the date of issuance and for a term of five years from the effective date of the May Offering. Our current cash resources will not be sufficient to fund the development of our COVID-19 Vaccine candidate through all of the required clinical trials to receive regulatory approval and commercialization. While we do not currently have an estimate of all of the costs that we will incur in the development of our COVID-19 Vaccine candidate, we anticipate we will need to raise significant additional funds in order to continue the development of our COVID-19 Vaccine candidate during the next twelve months. In addition, we may also have increased capital needs if we are to engage in a strategic transaction in the cannabinoid space. Our ability to obtain additional capital may depend on prevailing economic conditions and financial, business and other factors beyond our control. The COVID-19 pandemic has caused an unstable economic environment globally. Disruptions in the global financial markets may adversely impact the availability and cost of credit, as well as our ability to raise money in the capital markets. Current economic conditions have been and continue to be volatile. Continued instability in these market conditions may limit our ability to access the capital necessary to fund and grow our business. The Company believes that its current financial resources as of the date of the issuance of these consolidated financial statements, are sufficient to fund its current twelve month operating budget, alleviating any substantial doubt raised by our historical operating results and satisfying our estimated liquidity needs for twelve months from the issuance of these consolidated financial statements. 39 Operating Activities Our net cash used by operating activities totaled$1,966,983 during the three months endedMarch 31, 2020 . Net cash used consisted principally of the net loss of$3,538,536 , offset by a non-cash adjustment principally consisting of the fair value of shares issued for the purchase of a license of$1,233,057 . Our net cash consumed by operating activities totaled$748,735 during the three months endedMarch 31, 2019 . Cash was consumed by the loss of$916,958 reduced by non-cash adjustments principally consisting of$2,314 for accrued loss on marketable securities,$15,437 for depreciation and amortization of non-current assets,$4,247 for the allowance of doubtful accounts and$15,542 for share based compensation. For the three months endedMarch 31, 2019 , within changes of assets and liabilities, cash provided consisted of a decrease in deposits and other receivables of$9,347 , a decrease in prepaid expenses of$182,655 , and an increase in trade and other payables of$107,159 , offset by an increase in trade receivables of$152,445 and an increase in inventories of$16,033 . Investing Activities The Company's net cash provided by investing totaled$2,261,901 , as compared to$822,502 during the three months endedMarch 31, 2020 and 2019, respectively. Net cash provided by investing activities for the three months endedMarch 31, 2020 consisted of proceeds from the sale of marketable securities of$2,303,890 , offset by$41,989 consumed by the purchase of marketable securities. During the three months endedMarch 31, 2019 , investing activities consisted of proceeds from the sale of marketable securities of$852,520 , offset by$30,018 consumed by the purchase of marketable securities and capital expenditures. Financing Activities The Company's net cash provided by financing activities during the three months endedMarch 31, 2020 was$77.00 (2019:$0 ). Net cash provided during the 2020 period reflected principally net proceeds from the exercise of pre-funded equity forward contracts for the purchase of common stock. Critical Accounting Policies
See accounting policies in Note 2 of the condensed consolidated financial statements included in Part I, Item 1 of this report.
Off-Balance Sheet Arrangements
We have no significant known off balance sheet arrangements.
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