This quarterly report on Form 10-Q and other reports filed by MyMD
Pharmaceuticals, Inc. ("MyMD," "we" or the "Company") from time to time with the
Securities and Exchange Commission (the "SEC" and such reports, 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 we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance, or achievements. Except as required by applicable law,
including the securities laws of the United States, we do 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:
? fluctuation and volatility in market price of our common stock due to market
and industry factors, as well as general economic, political and market
conditions;
? the impact of dilution on our shareholders;
? our ability to realize the intended benefits of the Merger (as defined below)
and the Contribution Transaction (as defined below);
? the impact of our ability to realize the anticipated tax impact of the Merger;
? the outcome of litigation or other proceedings we may become subject to in the
future;
? delisting of our common stock from the Nasdaq;
? our availability and ability to continue to obtain sufficient funding to
conduct planned research and development efforts and realize potential
profits;
? our ability to develop and commercialize our product candidates, including
MyMD-1, Supera-CBD and other future product candidates;
? the impact of the complexity of the regulatory landscape on our ability to
seek and obtain regulatory approval for our product candidates, both within
and outside of the U.S.;
? the required investment of substantial time, resources and effort for
successful clinical development and marketization of our product candidates;
? challenges we may face with maintaining regulatory approval, if achieved;
? the potential impact of changes in the legal and regulatory landscape, both
within and outside of the U.S.;
? the impact of the ongoing COVID-19 pandemic on the administration, funding and
policies of regulatory authorities, both within and outside of the U.S.;
? our dependence on third parties to conduct pre-clinical and clinical trials
and manufacture its product candidates;
? the impact of the ongoing COVID-19 pandemic on our results of operations,
business plan and the global economy;
? challenges we may face with respect to our product candidates achieving market
acceptance by providers, patients, patient advocacy groups, third party payors
and the general medical community;
? the impact of pricing, insurance coverage and reimbursement status of our
product candidates;
? emerging competition and rapidly advancing technology in our industry;
? our ability to obtain, maintain and protect our trade secrets or other
proprietary rights, operate without infringing upon the proprietary rights of
others and prevent others from infringing on its proprietary rights;
? our ability to maintain adequate cyber security and information systems;
? our ability to achieve the expected benefits and costs of the transactions
related to the acquisition of Supera Pharmaceuticals, Inc. ("Supera");
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? our ability to effectively execute and deliver our plans related to
commercialization, marketing and manufacturing capabilities and strategy;
? emerging competition and rapidly advancing technology in our industry;
? our ability to obtain adequate financing in the future on reasonable terms, as
and when we need it;
? challenges we may face in identifying, acquiring and operating new business
opportunities;
? our ability to retain and attract senior management and other key employees;
? our ability to quickly and effectively respond to new technological
developments;
? changes in political, economic or regulatory conditions generally and in the
markets in which we operate; and
? our compliance with all laws, rules, and regulations applicable to our
business.
Our financial statements are prepared in accordance with accounting principles
generally accepted in the 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
Following closing of the Merger and the Contribution Transaction described below
that occurred on April 16, 2021, we have been focused on developing and
commercializing two therapeutic platforms based on well-defined therapeutic
targets, MyMD-1 and Supera-CBD:
? MyMD-1 is a clinical stage small molecule that regulates the immunometabolic
system to treat autoimmune disease, including (but not limited to) multiple
sclerosis, diabetes, rheumatoid arthritis, and inflammatory bowel disease.
MyMD-1 is being developed to treat age-related illnesses such as frailty and
sarcopenia. MyMD-1 works by regulating the release of numerous
pro-inflammatory cytokines, such as TNF-?, interleukin 6 ("IL-6") and
interleukin 17 ("IL-17"). MyMD-1 will be evaluated in patients with depression
due to COVID-19 related to the release of cytokines. The company has
significant intellectual property coverage to protect these autoimmune
indications, as well as therapy as an anti-aging product;
? Supera-CBD is a synthetic derivative of cannabidiol ("CBD") being developed to
treat various conditions, including, but not limited to, epilepsy, pain, and
anxiety/depression, through its effects on the CB2 receptor, and a monoamine
oxidase enzyme ("MAO") type B. Supera-CBD has shown tremendous promise in
treating neuroinflammatory and neurodegenerative diseases, and will be a major
focus as the Company moves forward.
The rights to Supera-CBD were previously owned by Supera and were acquired by
MyMD Florida (as defined below) immediately prior to the closing of the Merger.
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Closing of the Merger and Reverse Stock Split
On April 16, 2021, pursuant to the previously announced Agreement and Plan of
Merger and Reorganization, dated November 11, 2020 (the "Original Merger
Agreement"), as amended by Amendment No. 1 thereto, dated March 16, 2021 (the
Original Merger Agreement, as amended by Amendment No. 1, the "Merger
Agreement"), by and among MyMD, a New Jersey corporation previously known as
Akers Biosciences, Inc., XYZ Merger Sub, Inc. ("Merger Sub"), and MyMD
Pharmaceuticals (Florida), Inc., a Florida corporation previously known as MyMD
Pharmaceuticals, Inc. ("MyMD Florida"), Merger Sub was merged with and into MyMD
Florida, with MyMD Florida continuing after the merger as the surviving entity
and a wholly owned subsidiary of the Company (the "Merger"). At the effective
time of the Merger, without any action on the part of any stockholder, each
issued and outstanding share of pre-Merger MyMD Florida's common stock, par
value $0.001 per share (the "MyMD Florida Common Stock"), including shares
underlying pre-Merger MyMD Florida's outstanding equity awards, was converted
into the right to receive (x) 0.7718 shares (the "Exchange Ratio") of the
Company's common stock, no par value per share (the "Company Common Stock"), (y)
an amount in cash, on a pro rata basis, equal to the aggregate cash proceeds
received by the Company from the exercise of any options to purchase shares of
MyMD Florida Common Stock outstanding at the effective time of the Merger
assumed by the Company upon closing of the Merger prior to the second-year
anniversary of the closing of the Merger (the "Option Exercise Period"), such
payment (the "Additional Consideration"), and (z) potential milestone payment in
shares of Company Common Stock up to the aggregate number of shares issued by
the Company to pre-Merger MyMD Florida stockholders at the closing of the Merger
(the "Milestone Payments") payable upon the achievement of certain market
capitalization milestone events during the 36-month period immediately following
the closing of the Merger (the "Milestone Period"). Immediately following the
effective time of the Merger, the Company effected a 1-for-2 reverse stock split
of the issued and outstanding Company Common Stock (the "Reverse Stock Split").
Upon completion of the Merger and the transactions contemplated in the Merger
Agreement, (i) the former MyMD Florida equity holders owned approximately 77.05%
of the outstanding equity of the Company on a fully diluted basis, assuming the
exercise in full of the pre-funded warrants to purchase 986,486 shares of
Company Common stock and including 4,188,315 shares of Company Common Stock
underlying options to purchase shares of MyMD Florida Common Stock assumed by
the company at closing and after adjustments based on the Company's net cash at
closing; and (ii) former Akers Biosciences, Inc. stockholders own approximately
22.95% of the outstanding equity of the Company.
Effective as of 4:05 pm Eastern Time on April 16, 2021, we filed an amendment to
its Amended and Restated Certificate of Incorporation to effect the Reverse
Stock Split. As a result of the Reverse Stock Split, immediately following the
effective time of the Merger, every two shares of our Common Stock held by a
stockholder immediately prior to the Reverse Stock Split were combined and
reclassified into one share of our Common Stock. No fractional shares were
issued in connection with the Reverse Stock Split. Each stockholder who did not
have a number of shares evenly divisible pursuant to the Reverse Stock Split
ratio and who would otherwise be entitled to receive a fractional share of our
Common Stock was entitled to receive an additional share of our Common Stock.
In connection with the closing of the Merger, we changed our name to MyMD
Pharmaceuticals, Inc. and its NASDAQ trading symbol to MYMD. For additional
information concerning the Merger, please see Note 3 to the Company's Unaudited
Condensed Consolidated Financial Statements.
Closing of Contribution and Assignment Agreement
We acquired 100% of the membership interests of Cystron Biotech, LLC ("Cystron")
pursuant to a Membership Interest Purchase Agreement, dated March 23, 2020 (as
amended by Amendment No. 1 on May 14, 2020, the "MIPA") from certain selling
parties (the "Cystron Sellers"). Cystron is a party to a License and Development
Agreement (as amended and restated on March 19, 2020, in connection with our
entry into the MIPA, the "License Agreement") with Premas Biotech PVT Ltd.
("Premas") whereby Premas granted Cystron, amongst other things, an exclusive
license with respect to Premas' genetically engineered yeast (S.
cerevisiae)-based vaccine platform, D-Crypt™, for the development of a vaccine
against COVID-19 and other coronavirus infections. We had partnered with Premas
on this initiative as we sought to advance this COVID-19 vaccine candidate
through the regulatory process, both with the U.S. Food and Drug Administration
("FDA") and the office of the drug controller in India. Premas was primarily
responsible for the development of the COVID-19 vaccine candidate through proof
of concept and was entitled to receive milestone payments upon achievement of
certain development milestones through proof of concept.
As of May 14, 2020, Premas had successfully completed its vaccine prototype and
obtained transmission electron microscopic (TEM) images of the recombinant virus
like particle (VLP) assembled in yeast. In July 2020, animal studies for the
COVID-19 vaccine candidate were initiated in India. In addition, we announced
that Premas had successfully completed the manufacturing process for the VLP
vaccine candidate. On August 27, 2020, we announced with Premas positive proof
of concept results from the animal studies conducted during a four-week test of
the COVID-19 vaccine candidate in mice. On March 18, 2021, the Company and the
Cystron Sellers, which are also shareholders of Oravax Medical, Inc. ("Oravax"),
entered into a Termination and Release Agreement terminating the MIPA effective
upon consummation of the Contribution Agreement (as defined below). In addition,
the Cystron Sellers agreed to waive any change of control payment triggered
under the MIPA as a result of the Merger.
28
On April 16, 2021, pursuant to the Contribution and Assignment Agreement, dated
March 18, 2021 (the "Contribution Agreement") by and among the Company, Cystron,
Oravax and, for the limited purpose set forth therein, Premas, the parties
consummated the transactions contemplated therein. Pursuant to the Contribution
Agreement, effective upon the closing of the Merger, the Company agreed (i) to
contribute an amount in cash equal to $1,500,000 to Oravax and (ii) cause
Cystron to contribute substantially all of the assets associated with its
business or developing and manufacturing Cystron's COVID-19 vaccine candidate to
Oravax (the "Contribution Transaction"). In consideration for the Company's
commitment to consummate the Contribution Transaction, Oravax issued to the
Company 390,000 shares of its capital stock (equivalent to 13% of Oravax's
outstanding capital stock on a fully diluted basis) and assumed all of the
obligations or liabilities in respect of the assets of Cystron (excluding
certain amounts due to Premas), including the obligations under the license
agreement with Premas. In addition, Oravax agreed to pay future royalties to the
Company equal to 2.5% of all net sales of products (or combination products)
manufactured, tested, distributed and/or marketed by Oravax or its subsidiaries.
For additional information concerning the Contribution Transaction, please see
Note 3 to the Company's Unaudited Condensed Consolidated Financial Statements.
Impact of the COVID-19 Pandemic on Our Business
The ultimate impact of the ongoing global COVID-19 pandemic or a similar health
epidemic is highly uncertain and subject to future developments. These include
but are not limited to the duration of the COVID-19 pandemic, new information
which may emerge concerning the severity of the COVID-19 pandemic, and any
additional preventative and protective actions that regulators, or our board of
directors or management of the Company, may determine are needed. We do not yet
know the full extent of potential delays or impacts on our business, healthcare
systems or the global economy. 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 have in the
past and may continue 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
generally around the globe will negatively impact regulatory authorities and the
third parties that we may engage in connection with the development and testing
of our therapeutic targets.
To date, we have encountered delays in receiving critical clinical supplies from
our manufacturer in India, which has impacted our ability to execute our
development plan and the studies needed to advance product development have been
delayed by the Company's difficulty recruiting patients for the required
clinical trials.
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 continuation of the COVID-19 pandemic could
materially affect our business and the value of our common stock.
29
RESULTS OF OPERATIONS
Summary of Statements of Operations for the Three Months Ended September 30,
2021 and 2020
We are focused on developing and commercializing two therapeutic platforms based
on well-defined therapeutic targets, MyMD-1 and Supera-CBD.
Product Revenue
We had no product revenue from operations during the three months ended
September 30, 2021 and 2020.
Research and Development Expenses
Research and Development expenses for the three months ended September 30, 2021
totaled $2,767,663 as compared to $908,119 for the three months ended September
30, 2020.
The table below summarizes our research and development expenses for the three
months ended September 30, 2021 and 2020 as well as the percentage of change
year-over-year:
For the Three Months Ended
September 30, Percent
Description 2021 2020 Change
Salaries and Wages $ 3,732 $ 3,739 - %
Development Programs 2,102,575 865,346 143 %
Professional Services 20,450 57,595 (65 )%
Regulatory Expenses 640,906 10,200 6,183 %
Other Research and Development Expenses - (28,761 ) (100 )%
Total Research and Development Expenses $ 2,767,663 $ 908,119 205 %
Research and Development Expenses totaled $2,767,663 (2020: $908,119), an
increase of 205%. Generally, the overall increases are due to our ability to
implement our long-term development program as a result of the financial
resources available upon consummation of the Merger.
The increased costs in our clinical development programs include costs for
active pharmaceutical ingredients, optimization and pre-clinical toxicology
studies.
Professional services are primarily related to legal and patent related fees
associated with protecting our intellectual property.
Regulatory expenses include clinical research organizations (CRO) and regulatory
consulting fees associated with Phase 2 clinical study designs, protocol
preparations and the maintenance of the investigator brochures.
Administrative Expenses
Administrative expenses for the three months ended September 30, 2021 totaled
$1,640,540 as compared to $759,216 for the three months ended September 30,
2020.
30
The table below summarizes our administrative expenses for the three months
ended September 30, 2021 and 2020 as well as the percentage of change
year-over-year:
For the Three Months Ended
September 30, Percent
Description 2021 2020 Change
Personnel Costs $ 509,121 $ 180,458 182 %
Professional Service Costs 405,463 232,077 75 %
Stock Market & Investor Relations Costs 206,183 57,570 258 %
Other Administrative Costs 519,773 289,111 80 %
Total Administrative Expense $ 1,640,540 $ 759,216 116 %
Administration expenses totaled $1,640,540 for the three months ended September
30, 2021 and $759,216 for the three months ended September 30, 2020. The
increased costs include additional personnel added at the time of the Merger,
legal and accounting fees associated with the Merger, investor relations firm
fees, NASDAQ listing fees, printing and other Merger-related costs.
Interest Expense and Debt Discount
Interest Expense and Debt Discount for the three months ended September 30, 2021
and September 30, 2020 totaled $0 and $1,297,363 which includes interest expense
and the amortization of the debt discount.
Amortization of Intangible Assets
Amortization of Intangible Assets includes the amortization of the website for
the three months ended September 30, 2020. No amortization was recorded for the
three months ended September 30, 2021 as the intangible assets were fully
amortized as of December 31, 2020.
Stock-Based Compensation
During the three months ended September 30, 2020, we issued 173,655 stock
options to key employees with a fair market value of $272,700. No stock-based
compensation was issued during the three months ending September 30, 2021.
Other Income / Expense
Other expenses, net of income, for the three months ended September 30, 2021
totaled $1,059,078. Other income, net of expenses totaled $135 for the three
months ended September 30, 2020.
The table below summarizes our other income and expenses for the three months
ended September 30, 2021 and 2020, as well as the percentage of change
year-over-year:
For the Three Months Ended
September 30, Percent
Description 2021 2020 Change
Realized Loss on Investments $ 1,650 $ - - %
Equity Investments Losses 298 - - %
Interest and Dividend Income (1,714 ) (135 ) 1,170 %
Currency Conversion Losses 758 - - %
Uninsured Casualty Losses 1,058,086 - - %
Total Other (Income)/Expense $ 1,059,078 $ (135 ) (784,602 )%
For the three months ended September 30, 2021, we have identified an uninsured
casualty loss of $1,058,086 related to wire fraud due to a compromised
electronic mail account. This incident began in late August 2021 and was
discovered on October 26, 2021. Additional losses totaling $207,220 occurred
during October 2021. The Company's internal review of disbursements made during
the period of the incident is continuing and additional losses may be
identified.
We have engaged a forensic technology firm to investigate the incident and to
recommend improvements to our systems to prevent future attacks.
31
Summary of Statements of Operations for the Nine Months Ended September 30, 2021
and 2020
Product Revenue
We had no product revenue from operations during the nine months ended September
30, 2021 and September 30, 2020.
Research and Development Expenses
Research and Development expenses for the nine months ended September 30, 2021
totaled $5,437,147 as compared to $1,435,696 for the nine months ended September
30, 2020.
The table below summarizes our research and development expenses for the nine
months ended September 30, 2021 and 2020 as well as the percentage of change
year-over-year:
For the Nine Months Ended
September 30, Percent
Description 2021 2020 Change
Salaries and Wages $ 11,235 $ 11,230 - %
Development Programs 4,374,072 1,073,120 308 %
Professional Services 44,715 77,840 (43 )%
Regulatory Expenses 984,221 249,142 295 %
Other Research and Development Expenses 22,904 24,364 (6 )%
Total Research and Development Expenses $ 5,437,147 $ 1,435,696 279 %
Research and Development expenses totaled $5,437,147 (2020: $1,435,696), an
increase of 279% during the nine months ended September 30, 2021. Generally, the
overall increases are due to our ability to implement our long-term development
program as a result of the financial resources available upon consummation of
the Merger.
The increased costs in our clinical development program include costs for active
pharmaceutical ingredients, optimization, pre-clinical toxicology studies and a
Phase 1 Multiple Ascending Dose / Single Ascending Dose study.
Professional services are primarily related to legal and patent related fees
associated with the protection of our intellectual property.
The increased costs in regulatory expenses include clinical research
organizations (CRO) and regulatory consulting fees associated with Phase 2
clinical study design, protocol preparation and updating of the investigator
brochure.
Administrative Expenses
Administrative expenses for the nine months ended September 30, 2021 totaled
$4,601,853 as compared to $1,920,109 for the nine months ended September 30,
2020.
32
The table below summarizes our administrative expenses for the nine months ended
September 30, 2021 and 2020 as well as the percentage of change year-over-year:
For the Nine Months Ended
September 30, Percent
Description 2021 2020 Change
Personnel Costs $ 1,260,878 $ 476,999 164 %
Professional Service Costs 1,327,465 546,135 143 %
Stock Market & Investor Relations Costs 546,154 57,570 849 %
Other Administrative Costs 1,467,356 839,405 75 %
Total Administrative Expense $ 4,601,853 $ 1,920,109 140 %
Administration expenses totaled $4,601,853 for the nine months ended September
30, 2021 and $1,920,109 for the nine months ended September 30, 2020. The
increased costs include additional personnel added at the time of the Merger,
legal and accounting fees associated with the Merger, investor relations firm
fees, NASDAQ listing fees, printing and other Merger-related costs.
Interest Expense and Debt Discount
Interest Expense and Debt Discount for the nine months ended September 30, 2021
and September 30, 2020 totaled $701,090 and $1,666,173 which includes interest
expense and the amortization of the debt discount.
Amortization of Intangible Assets
Amortization of Intangible Assets includes the amortization of the website for
the nine months ended September 30, 2020. No amortization was recorded for the
nine months ended September 30, 2021 as the intangible assets were fully
amortized as of December 31, 2020.
Stock-Based Compensation
During the nine months ended September 30, 2020, we issued 183,303 stock options
with a fair market value of $287,700. No stock-based compensation was issued
during the nine months ending September 30, 2021.
Stock Option Modification Expenses
During the nine months ended September 30, 2021, we recorded $15,036,051 in
stock option modification expenses related to the 4,188,315 pre-Merger MyMD
Florida options that were assumed by MyMD upon the consummation of the merger.
Other Income and Expense
Other expenses, net of income, for the nine months ended September 30, 2021
totaled $873,180. Other income, net of expense, for the nine months ended
September 30, 2020 totaled $141.
The table below summarizes our other income and expenses for the nine months
ended September 30, 2021 and 2020, as well as the percentage of change
year-over-year:
For the Nine Months Ended
September 30, Percent
Description 2021 2020 Change
Realized Gains on Investments $ (39,797 ) - $ - %
Equity Investments Losses
41,745 - - %
Interest and Dividend Income (7,355 ) (141 ) 5,116 %
Currency Conversion Losses 758 - - %
Uninsured Casualty Loss 1,058,086 - - %
Gain on Debt Forgiveness (180,257 ) - - %
Total Other (Income)/Expense $ 873,180 $ (141 ) 131,039 %
Other expenses, net of income, totaled $873,180 for the nine months ended
September 30, 2021, and other income, net of expenses, totaled $141 for the nine
months ended September 30, 2020. The gain on debt forgiveness is associated with
the negotiated settlement of an outstanding debt on a lease totaling $109,657
and the forgiveness of our Payroll Protection Program loans totaling $70,600.
For the nine months ended September 30, 2021, we have identified an uninsured
casualty loss of $1,058,086 related to wire fraud due to a compromised
electronic mail account. This incident began in late August 2021 and was
discovered on October 26, 2021. Additional losses totaling $207,220 occurred
during October 2021. The Company's internal review of disbursements made during
the period of the incident is continuing and additional losses may be
identified.
We have engaged a forensic technology firm to investigate the incident and to
recommend improvements to our systems to prevent future attacks.
Liquidity and Capital Resources
As of September 30, 2021, our cash on hand totaled $1,375,014 and marketable
securities totaled $14,002,767. We incurred a net loss from operations of
$26,649,321 for the nine months ended September 30, 2021. As of September 30,
2021, we had working capital of $13,855,132 and stockholders' equity of
$25,891,924, including an accumulated deficit of $75,321,846. During the nine
months ended September 30, 2021, cash flows used in operating activities were
$14,704,008, consisting primarily of a net loss of $26,649,321 and a decrease in
trade and other payables of $4,292,143. Since our inception, we have met our
liquidity requirements principally through the sale of our common stock in
public offerings and private placements.
Concurrently with the Merger Agreement, on November 11, 2020, we entered into
the Securities Purchase Agreement, by and between us and certain institutional
and accredited investors (the "SPA Purchasers"), pursuant to which we agreed to
issue and sell to the SPA Purchasers in a private placement (i) an aggregate of
4,882,980 shares of our Common Stock, at an offering price of $3.70 per share
or, at the election of each investor, Prefunded Warrants (as defined therein),
and (ii) for each share of our Common Stock (or for each Prefunded Warrant, as
applicable) purchased in the private placement, a common warrant to purchase one
share of our Common Stock, for gross proceeds of approximately $18.1 million
before the deduction of placement agent fees and expenses and estimated offering
expenses.
We believe that that our current financial resources as of the date of the
issuance of these condensed consolidated financial statements are sufficient to
fund our current twelve-month operating budget, and satisfying our estimated
liquidity needs for twelve months from the issuance of these condensed
consolidated financial statements.
Operating Activities
Our net cash used by operating activities totaled $14,704,008 during the nine
months ended September 30, 2021. Net cash used consisted principally of the net
losses from operations of $26,649,321 and a decrease in trade and other payables
of $4,292,143 partially offset by non-cash option modification expenses of
$15,036,051.
Our net cash used by operating activities totaled $3,415,364 during the nine
months ended September 30, 2020. Net cash used consisted principally of the net
loss from continuing operations of $5,318,704 partially offset by non-cash
amortization of the debt discount of $1,536,277 and stock option expenses of
287,700.
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Investing Activities
Our net cash provided by investing activities totaled $16,852,177 for the nine
months ended September 30, 2021 as compared to cash provided by investing
activities totaling $0 during the nine months ended September 30, 2020. During
the nine months ended September 30, 2021 we purchased securities totaling
$11,851 (2020: $0) and sold securities totaling $15,483,176 (2020: $0) and
received $1,380,852 from the merger.
Financing Activities
Net cash consumed by financing activities during the nine months ended September
30, 2021 was $921,439 which consisted of the payoff of our lines of credit
totaling $3,062,444 offset by proceeds of $120,000 from the line of credit and
$1,826,137 from the Promissory Note. Net cash provided by financing activities
totaled $3,327,849 during the nine months ended September 30, 2020 which
consisted of proceeds from the line of credit of $1,277,249, $1,980,000 from the
issuance of common stock and $70,600 from the Payroll Protection Program.
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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