TAO Synergies Inc 10-Q for FY2024 Q1
TAO Synergies Inc. (TAOX)
About this 10-Q
TAO Synergies Inc filed this 10-Q on May 15, 2024, covering the quarter ended March 31, 2024 (FY2024 Q1).
Headline figures
Quarter ended March 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $206.7K
- compared with a net loss of $1.71M a year earlier
- Diluted EPS
- -$0.41
- compared with -$6.59 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended |
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
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For the transition period from __________________ to __________________ |
Commission File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or | (I.R.S. Employer |
organization) | Identification No.) |
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(Address of principal executive offices) | (Zip code) |
(
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on |
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| The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes
As of May 13, 2024, there were
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Certain statements in this report contain or may contain forward-looking statements. These statements, identified by words such as “plan,” “anticipate,” “believe,” “estimate,” “should,” “expect” and similar expressions, include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, the significant length of time associated with drug development and related insufficient cash flows and resulting illiquidity, our patent portfolio, our inability to expand our business, significant government regulation of pharmaceuticals and the healthcare industry, lack of product diversification, availability of our raw materials, existing or increased competition, stock volatility and illiquidity, and our failure to implement our business plans or strategies. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. You should carefully review this report in its entirety, including but not limited to our financial statements and the notes thereto and the risks described in Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on April 1, 2024, as updated in our quarterly report and current reports filed with the SEC from time to time. We advise you to carefully review the reports and documents we file from time to time with the SEC including our current reports on Form 8-K. Except for our ongoing obligations to disclose material information under securities laws, we undertake no obligation to publicly release any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.
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TABLE OF CONTENTS
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PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
Synaptogenix, Inc.
Condensed Balance Sheets
(Unaudited)
| | March 31, | | December 31, | ||
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| 2024 |
| 2023 | ||
ASSETS | | | | | | |
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CURRENT ASSETS | | | | | | |
Cash and cash equivalents | | $ | | | $ | |
Prepaid Clinical trial expenses | |
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Available for sale debt security | | | | | | |
Prepaid expenses and other current assets | |
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TOTAL CURRENT ASSETS | |
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Equity method investment | | | | | | |
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Fixed assets, net of accumulated depreciation | |
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TOTAL ASSETS | | $ | | | $ | |
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LIABILITIES AND STOCKHOLDERS’ EQUITY | |
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CURRENT LIABILITIES | |
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Accounts payable | | $ | | | $ | |
Accrued expenses | |
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Accrued Series B Convertible Preferred payments payable | | | | | | |
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TOTAL CURRENT LIABILITIES | |
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Warrant liability | | | | | | |
Derivative liability | | | | | | |
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TOTAL LIABILITIES | | | | | | |
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Commitments and contingencies | |
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Series B Convertible redeemable preferred stock, $ | | | | | | |
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STOCKHOLDERS’ EQUITY | | | | | | |
Common stock - | | | | | | |
Additional paid-in capital | | | | | | |
Accumulated other comprehensive income | | | | | | |
Accumulated deficit | | | ( | | | ( |
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TOTAL STOCKHOLDERS’ EQUITY | |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | | | $ | |
*
See accompanying notes to condensed financial statements.
3
Synaptogenix, Inc.
Condensed Statements of Comprehensive Loss
(Unaudited)
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| Three Months Ended |
| Three Months Ended | ||
| | March 31, | | March 31, | ||
| | 2024 | | 2023 | ||
OPERATING EXPENSES: | | | | | | |
Research and development |
| $ | | | $ | |
General and administrative |
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TOTAL OPERATING EXPENSES |
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OTHER INCOME: |
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Interest income |
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Share of net loss in equity investment | | | ( | | | — |
Change in fair value of warrant liability | | | | | | |
Change in fair value of derivative liability | | | | | | |
TOTAL OTHER INCOME |
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Net loss before income taxes |
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Provision for income taxes |
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Net loss | | | ( | | | ( |
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Preferred Stock dividends | | | | | | |
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Net Loss attributable to common stockholders | | $ | ( | | $ | ( |
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Change in fair value of available for sale debt security | | | ( | | | — |
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Net comprehensive loss | | $ | ( | | $ | ( |
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PER SHARE DATA: | |
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Basic and diluted loss per common share * | | ( | | ( | ||
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Basic and diluted weighted average common shares outstanding * | |
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*
See accompanying notes to condensed financial statements.
4
Synaptogenix, Inc.
Condensed Statements of Changes in Stockholders’ Equity
(Unaudited)
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| Three Months Ended March 31, 2023 | ||||||||||||||||||||||
| | | | | | | | | | | | | | Additional | | | | | Accumulated Other | | | | ||
| | Preferred Stock | | | Common Stock | | Paid-In | | Accumulated | | Comprehensive | | | | ||||||||||
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| Shares |
| Amount |
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| Shares |
| Amount |
| Capital |
| Deficit |
| Income (Loss) |
| Total | |||||||
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Balance January 1, 2023 |
| | | | $ | | | | | | $ | | | $ | | | $ | ( | | $ | — | | $ | |
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Stock based compensation |
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Issuance of common stock for consulting fees |
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Preferred dividends | | | — | | | — | | | — | | | — | | | — | | | ( | | | — | | | ( |
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Net loss |
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Balance March 31, 2023 |
| $ | | | $ | | | | | | $ | | | $ | | | $ | ( | | $ | — | | $ | |
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| Three Months Ended March 31, 2024 | |||||||||||||||||||||
| | | | | | | | | | | | | Additional | | | | | Accumulated Other | | | | ||
| | Preferred Stock | | | Common Stock | | Paid-In | | Accumulated | | Comprehensive | | | | |||||||||
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| Shares |
| Amount |
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| Shares |
| Amount |
| Capital |
| Deficit |
| Income (Loss) |
| Total | ||||||
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Balance January 1, 2024 |
| | | $ | | | | | | $ | | | $ | | | $ | ( | | $ | | $ | | |
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Stock based compensation |
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Issuance of common stock for consulting fees |
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Preferred stock dividends | | — | | | | | | — | | | — | | | — | | | ( | | | — | | | ( |
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Reclassification of accrued dividends upon probable redemption of preferred stock | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | - |
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Deemed dividends on preferred stock | | — | | | | | | — | | | — | | | — | | | ( | | | — | | | ( |
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Deemed dividend - preferred stock extinguishment | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | - |
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Preferred stock redemptions and conversions | | ( | | | ( | | | | | | | | | | | | — | | | — | | | |
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Accrual of preferred stock and dividend redemption | | ( | | | ( | | | — | | | — | | | — | | | — | | | — | | | — |
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Preferred stock accretion | | — | | | | | | — | | | — | | | ( | | | — | | | — | | | ( |
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Comprehensive income | | — | | | — | | | — | | | — | | | — | | | — | | | ( | | | ( |
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Net loss |
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Balance March 31, 2024 | | | | $ | | | | | | $ | | | $ | | | $ | ( | | $ | | | $ | |
* Adjusted to reflect the impact of the :25 reverse stock split that became effective on April 4, 2024.
See accompanying notes to condensed financial statements.
5
Synaptogenix, Inc.
Condensed Statements of Cash Flows
(Unaudited)
|
| Three Months Ended |
| Three Months Ended | ||
| | March 31, 2024 | | March 31, 2023 | ||
CASH FLOW USED IN OPERATING ACTIVITIES | | | | | | |
Net loss | | $ | ( | | $ | ( |
Adjustments to reconcile net loss to net cash used by operating activities | | | | | | |
Stock based compensation | | | | | | |
Change in fair value of warrant liability | | | ( | | | ( |
Change in fair value of derivative liability | | | ( | | | ( |
Share of net loss in equity investment | |
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| — |
Consulting services paid by issuance of common stock | | | | | | |
Depreciation expense | |
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Change in assets and liabilities: | | | | | | |
(Increase) decrease in prepaid expenses and other current assets | |
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Decrease in accounts payable | |
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Decrease (increase) in accrued expenses | |
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Net Cash Used in Operating Activities | |
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CASH FLOWS USED IN INVESTING ACTIVITIES | | | | | | |
Purchase of available for sale debt security | | | ( | | | — |
Purchase of fixed assets | | | — | | | ( |
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Net Cash Used in Investing Activities | | | ( | | | ( |
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NET DECREASE IN CASH AND EQUIVALENTS | |
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CASH AND EQUIVALENTS AT BEGINNING OF PERIOD | |
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CASH AND EQUIVALENTS AT END OF PERIOD | | $ | | | $ | |
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DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | | | | | | |
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Issuance of Common Stock for Series B Convertible Preferred Stock installment conversions | | $ | | | $ | — |
Accretion of Series B Convertible Preferred Stock to redemption value | | $ | | | $ | — |
Accrual of Series B Convertible Preferred Stock and Dividend Redemption | | $ | | | $ | |
Change in fair value of available for sale debt security | | $ | ( | | $ | — |
See accompanying notes to condensed financial statements.
6
SYNAPTOGENIX, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Unless the context otherwise indicates, references in these Notes to the accompanying financial statements to “we,” “us,” “our” and “the Company” refer to Synaptogenix, Inc. (formerly known as Neurotrope Bioscience, Inc.), a Delaware corporation. References to “Neurotrope”, “Parent Company” or “Parent” refer to Neurotrope, Inc., a Nevada corporation.
Note 1 – Organization, Business, Risks and Uncertainties:
Organization and Business
On May 17, 2020, Neurotrope, Inc. (“Neurotrope” or “the Parent”) announced plans for the complete legal and structural separation of its wholly owned subsidiary, Neurotrope Bioscience, Inc., from Neurotrope (the “Spin-Off”). Under the Separation and Distribution Agreement, Neurotrope planned to distribute all of its equity interest in this wholly owned subsidiary to Neurotrope’s stockholders. Following the Spin-Off, Neurotrope does not own any equity interest in the Company, and the Company operates independently from Neurotrope. On December 7, 2020, the Company became an independent company, Synaptogenix, Inc., a Delaware corporation (formerly known as Neurotrope Bioscience, Inc.) (the “Company” or “Synaptogenix”) when the Company filed an amended and restated certificate of incorporation which, among other things, changed its name to Synaptogenix, Inc. The Company’s shares of common stock, par value $
On April 24, 2023, the Company received a written notice from the Listing Qualifications Department of the Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that for the preceding
On April 22, 2024, Nasdaq informed the Company that it had retained compliance with the Minimum Bid Price Requirement and that the matter was closed.
Reverse Stock Split
On April 4, 2024, the Company effected the Reverse Stock Split. All share and per share information in this quarterly report have been retroactively adjusted to reflect the Reverse Stock Split.
Liquidity Uncertainties
As of March 31, 2024, the Company had approximately $
The Company expects to need additional capital in order to initiate and pursue potential additional development projects, including the continuing development beyond the ongoing Phase 2 trial of Bryostatin-1. Any additional equity financing, if available, may not be on favorable terms and would likely be significantly dilutive to the Company’s current stockholders, and debt financing, if available, may involve restrictive covenants. If the Company is able to access funds through collaborative or licensing arrangements, it may be required to relinquish rights to some of its technologies or product candidates that the Company would otherwise seek to develop or commercialize on its own, on terms that are not favorable to the Company. The Company’s ability to access capital when needed is not assured and, if not achieved on a timely basis, will likely have a materially adverse effect on its business, financial condition and results of operations.
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Other Risks and Uncertainties
The Company operates in an industry that is subject to rapid technological change, intense competition, and significant government regulation. The Company’s operations are subject to significant risk and uncertainties including financial, operational, technological and regulatory. Such factors include, but are not necessarily limited to, the results of clinical testing and trial activities, the ability to obtain regulatory approval, the limited supply of raw materials, the ability to obtain favorable licensing, manufacturing or other agreements, including risk associated with the Company’s Cognitive Research Enterprises, Inc. (formerly known as the Blanchette Rockefeller Neurosciences Institute, or BRNI) (“CRE”) licensing agreement, and the ability to raise capital to achieve strategic objectives.
CRE has entered into a material transfer agreement with the National Cancer Institute of the National Institutes of Health (“NCI”), pursuant to which the NCI has agreed to supply bryostatin required for the Company’s pre-clinical research and clinical trials. This agreement does not provide for a sufficient amount of bryostatin to support the completion of all of the clinical trials that the Company is required to conduct in order to seek U.S. Food and Drug Administration (“FDA”) approval. Therefore, CRE or the Company would have to enter into one or more subsequent agreements with the NCI for the supply of additional amounts of bryostatin. If CRE or the Company were unable to secure such additional agreements, or if the NCI otherwise discontinues the supply, the Company would have to either secure another source of bryostatin or discontinue its efforts to develop and commercialize Bryostatin-1 for the treatment of AD. In June 2020, the Company entered into a supply agreement (the “Supply Agreement”) with BryoLogyx Inc. (“BryoLogyx”), pursuant to which BryoLogyx agreed to be the Company’s exclusive supplier of synthetic bryostatin. Pursuant to the terms of the Supply Agreement, the Company received its initial order of one gram of synthetic bryostatin. See Note 3.
Note 2 – Summary of Significant Accounting Policies:
Basis of Presentation:
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, the unaudited condensed financial statements included herein contain all adjustments necessary to present fairly the Company’s financial position and the results of its operations and cash flows for the interim periods presented. Such adjustments are of a normal recurring nature. The results of operations for the three months ended March 31, 2024 may not be indicative of results for the full year. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and the notes to those statements for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on April 1, 2024.
The Company is an emerging growth company as the term is used in The Jumpstart Our Business Startups Act, enacted on April 5, 2012, and has elected to comply with certain reduced public company reporting requirements, however, the Company may adopt accounting standards based on the effective dates for public entities.
Use of Estimates:
The preparation of financial statements in conformity with GAAP requires management to make significant estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Management evaluates its estimates on an ongoing basis using historical experience and other factors, including the general economic environment and actions it may take in the future. The Company adjusts such estimates when facts and circumstances dictate. However, these estimates may involve significant uncertainties and judgments and cannot be determined with precision. In addition, these estimates are based on management’s best judgment at a point in time and as such these estimates may ultimately differ from actual results.
Comprehensive Income (Loss)
The Company follows The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 220 in reporting comprehensive income (loss). Comprehensive income (loss) is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income (loss). Since the Company has items of other comprehensive income (loss), comprehensive income (loss) has been reflected in the Company’s financial statements.
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Net Earnings or Loss per Share:
Net earnings or loss per share is computed by dividing net income or loss by the weighted-average number of shares of Common Stock outstanding during the period, excluding shares subject to redemption or forfeiture. The Company presents basic and diluted net earnings or loss per share. Diluted net earnings or loss per share reflect the actual weighted average of shares of Common Stock issued and outstanding during the period, adjusted for potentially dilutive securities outstanding. Potentially dilutive securities are excluded from the computation of the diluted net earnings or loss per share if their inclusion would be anti-dilutive.
As all potentially dilutive securities are anti-dilutive as of March 31, 2024 and 2023, diluted net loss per share is the same as basic net loss per share for the three months ended March 31, 2024 and 2023.
The weighted average dilutive securities that have been excluded from the calculation of diluted net loss per share for the three months ended March 31, 2024 and 2023 respectively, because to do so would be anti-dilutive (in Common Stock equivalents), are as follows:
| | For the Three Months Ended | ||
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| March 31, | ||
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| 2024 |
| 2023 |
Common Stock Options |
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Convertible Preferred Stock | | | | — |
Common Stock Warrants |
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Total |
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Cash and Cash Equivalents and Concentration of Credit Risk:
The Company considers all highly liquid cash investments with an original maturity of three months or less when purchased to be cash equivalents. At March 31, 2024, the Company’s cash balances that exceed the current insured amounts under the Federal Deposit Insurance Corporation (“FDIC”) were approximately $
Investment in Debt Securities
The Company’s convertible note receivable was determined to be an available-for-sale debt security under ASC 320, Investments, which was initially recorded at fair value with unrealized holding gains and losses reported in other comprehensive income (loss) at each reporting period. The Company estimates the fair value of the convertible note receivable using the income approach, which uses as inputs the fair value of debtor’s common stock and estimates for the equity volatility and volume volatility of debtor’s common stock, the time to expiration of the convertible note, the discount rate, the stated interest rate compared to the current market rate, the risk-free interest rate for a period that approximates the time to expiration, and probability of default. Therefore, the estimate of expected future volatility is based on the actual volatility of debtor’s common stock and historical volatility of debtor’s common stock utilizing a lookback period consistent with the time to expiration. The time to expiration is based on the contractual maturity date. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of measurement for time periods approximately equal to the time to expiration. Probability of default is estimated using the S&P Global default rate for companies with a similar credit rating to debtor’s.
Fair Value of Financial Instruments:
The carrying amounts reflected in the balance sheets for prepaid expenses and payables approximate fair value due to the short maturities of these instruments. The carrying amounts for available for sale debt security, warrant liability and derivative liability approximate fair value based on level 3 of the fair value hierarchy.
9
Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy:
Level 1 — Quoted prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable markets.
Level 3 — Unobservable inputs which are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.
Fixed Assets and Leases:
The Company has two leases, both of which have a term of
Fixed assets are stated at cost less accumulated depreciation. Depreciation is computed on a straight line basis over the estimated useful life of the asset, which is deemed to be between and
Research and Development Costs:
All research and development costs, including costs to maintain or expand the Company’s patent portfolio licensed from CRE are expensed when incurred. Non-refundable advance payments for research and development are capitalized because the right to receive those services represents an economic benefit. Such capitalized advances will be expensed when the services occur and the economic benefit is realized. There were
Income Taxes:
The Company accounts for income taxes using the asset and liability approach which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts reportable for income tax purposes under the “Separate return method.” Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The Company applies the provisions for accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company has determined that there are no significant uncertain tax positions requiring recognition in the accompanying financial statements. The tax period that is subject to examination by major tax jurisdictions is generally three years from the date of filing.
The Company had federal operating loss carryforwards for income tax purposes of approximately $
10
The Company may be subject to significant U.S. federal income tax-related liabilities with respect to the Spin-Off if there is a determination that the Spin-Off is taxable for U.S. federal income tax purposes. In connection with the Spin-Off, the Company believes that, among other things, the Spin-Off should qualify as a tax-free transaction for U.S. federal income tax purposes under Section 355 and Section 368(a)(1)(D) of the Internal Revenue Code of 1986 (the “Code”). If the conclusions of the tax opinions are not correct, or if the Spin-Off is otherwise ultimately determined to be a taxable transaction, the Company would be liable for U.S. federal income tax related liabilities. Pursuant to the Separation and Distribution Agreement and the Tax Matters Agreement, Neurotrope agreed to indemnify Synaptogenix for certain liabilities, and Synaptogenix agreed to indemnify Neurotrope for certain liabilities, in each case for uncapped amounts. Indemnities that Synaptogenix may be required to provide Neurotrope are not subject to any cap, may be significant and could negatively impact Synaptogenix’s business, particularly with respect to indemnities provided in the Tax Matters Agreement. Third parties could also seek to hold Synaptogenix responsible for any of the liabilities that Neurotrope has agreed to retain. Further, the indemnity from Neurotrope may not be sufficient to protect Synaptogenix against the full amount of such liabilities, and Neurotrope may not be able to fully satisfy its indemnification obligations. Moreover, even if Synaptogenix ultimately succeeds in recovering from Neurotrope any amounts for which Synaptogenix is held liable, Synaptogenix may be temporarily required to bear these losses. At December 31, 2023 and as of the date of financial statement issuance date, the Company does not have any indemnification liabilities.
Under Section 382 of the Code, as amended, changes in the Company’s ownership may limit the amount of its net operating loss carryforwards that could be utilized annually to offset future taxable income, if any. This limitation would generally apply in the event of a cumulative change in ownership of the Company of more than 50% within a three-year period. In addition, the significant historical operating losses incurred by the Company may limit the amount of its net operating loss carryforwards that could be utilized annually to offset future taxable income, if any. The Company believes that operating loss carryforwards may be limited under Section 382 limitations although Section 382 studies have not been conducted to determine the actual limitations.
The Company has concluded that there are no significant uncertain tax positions requiring recognition in the accompanying financial statements. The tax period that is subject to examination by major tax jurisdictions is generally three years from the date of filing.
Recently Issued Accounting Pronouncements Adopted and Not Yet Adopted:
As of March 31, 2024 and for the 3 months then ended, there were no recently issued accounting standards adopted or not yet adopted which would have a material effect on the Company’s financial statements.
Note 3– Collaborative Agreements and Commitments:
Stanford License Agreements
On May 12, 2014, the Company entered into a license agreement (the “Stanford Agreement”) with The Board of Trustees of The Leland Stanford Junior University (“Stanford”), pursuant to which Stanford has granted to the Company a revenue-bearing, world-wide right and exclusive license, with the right to grant sublicenses (on certain conditions), under certain patent rights and related technology for the use of bryostatin structural derivatives, known as “bryologs,” for use in the treatment of central nervous system disorders, lysosomal storage diseases, stroke, cardio protection and traumatic brain injury, for the life of the licensed patents. The Company is required to use commercially reasonable efforts to develop, manufacture and sell products (“Licensed Products”) in the Licensed Field of Use (as defined in the Stanford Agreement) during the term of the licensing agreement which expires upon the termination of the last valid claim of any licensed patent under this agreement. In addition, the Company must meet specific product development milestones, and upon meeting such milestones, make specific milestone payments to Stanford. The Company must also pay Stanford royalties of
11
On January 19, 2017, the Company entered into a second license agreement with Stanford, pursuant to which Stanford has granted to the Company a revenue-bearing, world-wide right and exclusive license, with the right to grant sublicenses (on certain conditions), under certain patent rights and related technology for the use of “Bryostatin Compounds and Methods of Preparing the Same,” or synthesized bryostatin, for use in the treatment of neurological diseases, cognitive dysfunction and psychiatric disorders, for the life of the licensed patents. The Company paid Stanford $
The Company has advanced the development of synthetic bryostatin by demonstrating the equivalence of the synthetic to the natural bryostatin product. The estimated cost to initiate and produce sufficient quantities of the synthetic bryostatin drug product is approximately $
Mt. Sinai License Agreement
On July 14, 2014, the Company entered into an Exclusive License Agreement (the “Mount Sinai Agreement”) with the Icahn School of Medicine at Mount Sinai (“Mount Sinai”). Pursuant to the Mount Sinai Agreement, Mount Sinai granted the Company (a) a revenue-bearing, world-wide right and exclusive license, with the right to grant sublicenses (on certain conditions), under Mount Sinai’s interest in certain joint patents held by the Company and Mount Sinai (the “Joint Patents”) as well as in certain results and data (the “Data Package”) and (b) a non-exclusive license, with the right to grant sublicenses on certain conditions, to certain technical information, both relating to the diagnostic, prophylactic or therapeutic use for treating diseases or disorders in humans relying on activation of Protein Kinase C Epsilon (“PKC ε”), which includes Niemann-Pick Disease (the “Mount Sinai Field of Use”). The Mount Sinai Agreement allows the Company to research, discover, develop, make, have made, use, have used, import, lease, sell, have sold and offer certain products, processes or methods that are covered by valid claims of Mount Sinai’s interest in the Joint Patents or an Orphan Drug Designation Application covering the Data Package (“Mount Sinai Licensed Products”) in the Mount Sinai Field of Use (as such terms are defined in the Mount Sinai Agreement).
The Company is required to pay Mt. Sinai milestone payments of $
Agreements with BryoLogyx
On June 9, 2020, the Company entered into a supply agreement (the “Supply Agreement”) with BryoLogyx Inc. (“BryoLogyx”), pursuant to which BryoLogyx agreed to serve as the Company’s exclusive supplier of synthetic bryostatin. Pursuant to the terms of the Supply Agreement, the Company placed an initial order and subsequently received one gram of current good manufacturing practice (“cGMP”) synthetic bryostatin as an active pharmaceutical ingredient to be used in a drug product (“API”). The Company may place additional orders for API beyond the initial order by making a written request to BryoLogyx no later than six months prior to the requested delivery date. The Company is not currently using synthetic bryostatin for its current Phase 2 clinical trial and will determine when to incorporate the synthetic into the clinical trial process.
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In connection with the Supply Agreement, on June 9, 2020, the Company entered into a transfer agreement (the “Transfer Agreement”) with BryoLogyx. Pursuant to the terms of the Transfer Agreement, the Company agreed to assign and transfer to BryoLogyx all of the Company’s right, title and interest in and to that certain Cooperative Research and Development Agreement, dated as of January 29, 2019 (the “CRADA”), by and between the Company and the U.S. Department of Health and Human Services, as represented by the NCI, under which Bryostatin-1’s ability to modulate CD22 in patients with relapsed/refractory CD22+ disease has been evaluated to date. Pursuant to guidance provided by NCI, the Company CRADA has been cancelled and BryoLogyx has initiated a request for a new CRADA in its name. BryoLogyx will be filing its own investigational new drug application (“IND”) for CD22 with the FDA. As consideration for the transfer of rights to the CRADA, BryoLogyx has agreed to pay to the Company
Nemours Agreement
On September 5, 2018, the Company announced a collaboration with Nemours A.I. DuPont Hospital (“Nemours”), a premier U.S. children’s hospital, to initiate a clinical trial in children with Fragile X syndrome, a genetic disorder. In addition to the primary objective of safety and tolerability, measurements will be made of working memory, language and other functional aspects such as anxiety, repetitive behavior, executive functioning, and social behavior. On August 5, 2021, the Company announced its memorandum of understanding with Nemours to initiate a clinical trial using Bryostatin-1, under Orphan Drug Status, to treat Fragile X. The Company intends to provide the Bryostatin-1 and obtain the IND, and Nemours intends to provide the clinical site and attendant support for the trial. The Company and Nemours, jointly, will develop the trial protocol. The Company estimates its total trial and IND cost to be approximately $
The Company has filed an IND with the FDA. The FDA has placed the development of the IND on clinical hold pending completion of further analytics relating to drug pharmacokinetics and pharmacodynamics. The Company is currently evaluating its plans to advance Fragile X development.
Cleveland Clinic
On February 23, 2022, the Company announced its collaboration with Cleveland Clinic to pursue possible treatments for Multiple Sclerosis (“MS”), and on July 19, 2023, the Company announced that it had entered into an agreement with Cleveland Clinic to conduct a Phase 1 trial of Bryostatin-1 in MS. Cleveland Clinic will manage the clinical trial’s implementation, including an IND submission to the FDA and patient enrollment. The total estimated costs associated with this collaboration are approximately $
Strategic Investment in Debt and Equity Securities of Cannasoul
On October 31, 2023, the Company entered into a share purchase agreement (the “Purchase Agreement”) with Cannasoul Analytics Ltd. (“Cannasoul”), pursuant to which the Company agreed to purchase from Cannasoul (i)
Additionally, the Company agreed to purchase up to
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In connection with the Purchase Agreement, Cannasoul adopted amended and restated articles of incorporation (the “Cannasoul Charter”). Pursuant to the Cannasoul Charter, the Company has a number of rights as investor, including (i) the right to appoint and dismiss
It was determined that Cannasoul is considered a variable interest entity (“VIE”), but the Company lacks the power to direct the activities that most significantly influence the VIE’s economic performance. As such, the Company is not the primary beneficiary of the VIE and is not required to consolidate Cannasoul in accordance with ASC 810-10-25-38A.
The Company’s investment in the Preferred Shares represents an investment in an equity security in accordance with ASC 320. The Preferred Shares are convertible at any time after the date of issuance, automatically upon a payment default, an IPO, or the written consent of the holders of a majority of the Preferred Shares. The conversion price is subject to traditional anti-dilution adjustments. The Company will account for its investment in Cannasoul’s Preferred Shares under the equity method of accounting as it was determined the Company has significant influence over Cannasoul based on its board representation and other veto rights per ASC 323-10-15-6 to
The Company has elected to record the equity in earnings of the equity method investment on a three-month lag which is recognized in other comprehensive income (loss). As a result, the Company recorded a loss of $
The Cannasoul Convertible Notes are not traded in active markets and the fair value was determined using a probability weighted scenario-based model. The Cannasoul Convertible Notes are accounted for as an available-for-sale debt security based on “Level 3” inputs, which consist of unobservable inputs and reflect management’s estimates of assumptions that market participants would use in pricing the asset (i.e., implied market rate, risk free rate, share price, and probability of scenarios). Holding gains and losses are recorded in other comprehensive income (loss).
Below is a summary of activity for the Cannasoul Convertible Notes as of March 31, 2024:
Balance of Cannasoul Convertible Notes as of January 1, 2023 |
| $ | — |
Issued | |
| |
Change in fair value | |
| |
Balance of Cannasoul Convertible Notes as of December 31, 2023 | | $ | |
Issued | |
| |
Change in fair value | |
| ( |
Balance of Cannasoul Convertible Notes as of March 31, 2024 | | $ | |
Cognitive Research Enterprises, Inc. (“CRE”)
Effective October 31, 2012, the Company executed a Technology License and Services Agreement (the “TLSA”) with CRE, a related party, and NRV II, LLC (“NRV II”), another affiliate of CRE, which was amended by Amendment No. 1 to the TLSA as of August 21, 2013, as amended and restated on February 4, 2015 (the “CRE License Agreement”). Pursuant to the CRE License Agreement, CRE and NRV II provide research services and have granted the Company the exclusive and nontransferable world-wide, royalty-bearing right, with a right to sublicense (in accordance with the terms and conditions described below), under CRE’s and NRV II’s respective right, title and interest in and to certain patents and technology owned by CRE or licensed to NRV II by CRE as of or subsequent to October 31, 2012, to develop, use, manufacture, market, offer for sale, sell, distribute, import and export certain products or services for therapeutic applications for AD and other cognitive dysfunctions in humans or animals (the “Field of Use”). Additionally, the CRE License Agreement specifies that all patents that issue from a certain patent application shall constitute licensed patents and all trade secrets, know-how and other confidential information claimed by such patents constitute licensed technology under the CRE License. The CRE License Agreement terminates on the later of the date (a) the last of the licensed patent expires, is abandoned, or is declared unenforceable or invalid or (b) the last of the intellectual property enters the public domain.
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After Neurotrope’s initial Series A Stock financing, the CRE License Agreement required the Company to enter into scope of work agreements with CRE as the preferred service provider for any research and development services or other related scientific assistance and support services. There were
In addition, on November 10, 2018, the Company and CRE entered into a second amendment (the “Second Amendment”) to the TLSA pursuant to which CRE granted certain patent prosecution and maintenance rights to the Company. Under the Second Amendment, the Company will have the sole and exclusive right and the obligation, to apply for, file, prosecute and maintain patents and applications for the intellectual property licensed to the Company, and pay all fees, costs and expenses related to the licensed intellectual property.
Note 4- Related Party Transactions:
On August 4, 2016, Neurotrope entered into a consulting agreement with SM Capital Management, LLC (“SMCM”), a limited liability company owned and controlled by the Company’s Chairman of the Board, Mr. Joshua N. Silverman (the “Consulting Agreement”). Pursuant to the Consulting Agreement, SMCM shall provide consulting services which shall include, but not be limited to, providing business development, financial communications and management transition services, for a
Note 5 – Other Commitments:
Clinical Trial Services Agreements
On July 23, 2020, the Company entered into a services agreement with WCT (the “2020 Services Agreement”). The 2020 Services Agreement related to services for the current Phase 2 clinical trial assessing the safety, tolerability and long-term efficacy of Bryostatin-1 in the treatment of moderately severe AD subjects not receiving memantine treatment (the “2020 Study”).On January 22, 2022, the Company executed a change order with WCT to accelerate trial subject recruitment totaling approximately $
The Company was awarded a $
On May 12, 2022, the Company entered into a services agreement with WCT (the “2022 Services Agreement”). The 2022 Services Agreement related to services for a Phase 2 “open label,” dose ranging study, clinical trial assessing the safety, tolerability and efficacy of Bryostatin-1 administered via infusion in the treatment of moderately severe to severe AD subjects not receiving memantine treatment (the “2022 Study”).
Pursuant to the terms of the 2022 Services Agreement, WCT provided services to enroll approximately
The Company incurred approximately $
15
Employment Agreements
On December 7, 2020, the Company entered into an offer letter (as amended on August 4, 2022 and June 16, 2023, the “Offer Letter”) with Alan J. Tuchman, M.D., pursuant to which Dr. Tuchman agreed to serve as the Company’s Chief Executive Officer, commencing on December 7, 2020. In addition, in connection with his appointment as the Company’s Chief Executive Officer, Dr. Tuchman was appointed to the board of directors of the Company. Dr. Tuchman receives an annual base salary of $
Other Commitments and Agreements
See Notes 3 and 4 for Collaboration and License Agreement related commitments.
Contingencies
Pursuant to the Separation Agreement and Tax Matters Agreement with Neurotrope, Neurotrope agreed to indemnify Synaptogenix for certain liabilities, and Synaptogenix agreed to indemnify Neurotrope for certain liabilities, in each case for uncapped amounts. Indemnities that Synaptogenix may be required to provide Neurotrope are not subject to any cap, may be significant and could negatively impact Synaptogenix’s business, particularly with respect to indemnities provided in the Tax Matters Agreement. Third parties could also seek to hold Synaptogenix responsible for any of the liabilities that Neurotrope has agreed to retain. Further, the indemnity from Neurotrope may not be sufficient to protect Synaptogenix against the full amount of such liabilities, and Neurotrope may not be able to fully satisfy its indemnification obligations. Moreover, even if Synaptogenix ultimately succeeds in recovering from Neurotrope any amounts for which Synaptogenix is held liable, Synaptogenix may be temporarily required to bear these losses ourselves. As of the reporting date, there are no claims relating to the indemnification agreement.
Note 6 – Stockholders’ Equity:
The Company’s certificate of incorporation authorizes it to issue
The holders of Common Stock are entitled to receive dividends out of assets or funds legally available for the payment of dividends at such times and in such amounts as the Board from time to time may determine. To date, the Company has not paid dividends on its Common Stock. Holders of Common Stock are entitled to
November 2022 Private Placement
On November 17, 2022, the Company entered into a Securities Purchase Agreement (as amended on May 11, 2023, the “November Purchase Agreement”) with certain accredited investors (the “November Investors”), pursuant to which it agreed to sell to the November Investors (i) an aggregate of
16
The terms of the Series B Preferred Stock are as set forth in the Certificate of Designations for the Series B Preferred Stock (as amended on March 17, 2023, May 12, 2023 and September 22, 2023, the “Certificate of Designations”). The Series B Preferred Stock will be convertible into Series B Preferred Shares at the election of the holder at any time at an initial conversion price of $
On March 17, 2023, the Company filed an amendment (the “First CoD Amendment”) to the Certificate of Designations with the Secretary of State for the State of Delaware, pursuant to which it amended the terms of the Series B Preferred Stock by revising the definition of “floor price” for purposes of calculating amortization payments, extending the date for the first required amortization payments, extending the deadline for stockholder approval and extending the maturity date to August 31, 2024. On May 12, 2023, the Company filed an amendment (the “Second CoD Amendment”) to the Certificate of Designations with the Secretary of State for the State of Delaware, pursuant to which the Company amended the terms of the Series B Preferred Stock by removing all references to the “Make-Whole Amount”. In connection with the Second CoD Amendment, on May 11, 2023, the Company entered into an amendment to the November Purchase Agreement pursuant to which it agreed to extend the investors’ right of participation in a subsequent financing until the one year anniversary following the later of (x) such time that the Series B Preferred Shares are no longer outstanding and (y) the maturity date of the Series B Preferred Stock. On September 22, 2023, the Company filed an amendment (the “Third CoD Amendment”) to the Certificate of Designations with the Secretary of State for the State of Delaware, pursuant to which the Company amended the terms of the Series B Preferred Stock by providing that the Company and November Investors shall be permitted to mutually agree, in connection with any waiver of an Equity Conditions Failure (as defined in the Certificate of Designations), as to (i) whether the monthly amortization payments made to the Investors will be made in cash or shares of Common Stock, (ii) the methodology for calculating any applicable true-up shares required to be paid in connection with an amortization payment (including whether such true-up shares will be paid in cash or shares of Common Stock) and for calculating the conversion price in connection with any accelerated conversions, and (iii) whether any premium will apply in connection with any payment of true-up shares in cash instead of shares of Common Stock, subject to certain limitations as set forth in the Third CoD Amendment.
The holders of the Series B Preferred Stock will be entitled to dividends of
Notwithstanding the foregoing, the Company’s ability to settle conversions and make amortization payments using shares of Common Stock is subject to certain limitations set forth in the Certificate of Designations, including a limit on the number of shares that may be issued until the time, if any, that the Company’s stockholders have approved the issuance of more than 19.9% of the Company’s outstanding shares of Common Stock in accordance with Nasdaq listing standards (the “Nasdaq Stockholder Approval”). The Company agreed to seek stockholder approval of these matters at a meeting to be held no later than June 1, 2023, and such approval was obtained at the Company’s special meeting of stockholders held on April 14, 2023. Further, the Certificate of Designations contains a certain beneficial ownership limitation after giving effect to the issuance of shares of Common Stock issuable upon conversion of, or as part of any amortization payment under, the Certificate of Designations or November Warrants.
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The Certificate of Designations includes certain Triggering Events (as defined in the Certificate of Designations), including, among other things, the failure to file and maintain an effective registration statement covering the sale of the holder’s securities registrable pursuant to the November Registration Rights Agreement (defined below) and the Company’s failure to pay any amounts due to the holders of the Series B Preferred Stock when due. In connection with a Triggering Event, each holder of Series B Preferred Stock will be able to require the Company to redeem in cash any or all of the holder’s Series B Preferred Stock at a premium set forth in the Certificate of Designations.
The Company will be subject to certain affirmative and negative covenants regarding the incurrence of indebtedness, acquisition and investment transactions, the existence of liens, the repayment of indebtedness, the payment of cash in respect of dividends (other than dividends pursuant to the Certificate of Designations), distributions or redemptions, and the transfer of assets, among other matters.
The November Warrants are exercisable for Warrant Shares immediately at an exercise price of $
In connection with the November Purchase Agreement, the Company and the November Investors entered into a Registration Rights Agreement (the “November Registration Rights Agreement”) on November 17, 2022. Under the terms of the November Registration Rights Agreement, the Company agreed to register
In connection with the November Private Placement, pursuant to an Engagement Letter, between the Company and Katalyst Securities LLC (the “November Placement Agent”), the Company paid the November Placement Agent (i) a cash fee equal to
During the three months ended March 31, 2024, the Company redeemed $
As of March 31, 2024 and December 31, 2023, the Company has accrued a liability for installment payments owed to investors in either cash or shares of $
Subsequent to March 31, 2024, and as of May 13, 2024, the Company has issued
The Company effected the Reverse Stock Split on April 4, 2024. Pursuant to the terms of the Certificate of Designations and the November Warrants, the exercise price of November Warrants and the conversion price of the Series B Preferred Stock were proportionately adjusted.
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Accounting Treatment of November Private Placement
Series B Preferred Shares
Effective March 17, 2023, the Company filed the First CoD Amendment. The First CoD Amendment modified (i) the definition of Floor Price to mean the lower of (i) $
On May 11, 2023, the Company filed the Second CoD Amendment. The Second CoD Amendment removed the definition of Make-Whole Amount (as was previously defined in the Agreement) and modified the definition of the Conversion Amount so as to remove the Make-Whole Amount from said definition. In accordance with ASC 470-50 and 470-60, the Company accounted for the amendment as a modification as the change in fair value of the Series B Preferred Stock was
The Series B Preferred Shares were determined to be more akin to a debt-like host than an equity-like host. The Company identified the following embedded features that are not clearly and closely related to the debt host instrument: 1) make-whole interest upon a contingent redemption event, 2) make-whole interest upon a conversion event, 3) an installment redemption upon an Equity Conditions Failure (as defined in the Certificate of Designations), and 4) variable share-settled installment conversion. These features were bundled together, assigned probabilities of being affected and measured at fair value. Subsequent changes in fair value of these features are recognized in the Consolidated Statement of Operations. The Company estimated the $
The discount to the fair value is included as a reduction to the carrying value of the Series B Preferred Shares. During 2022, the Company recorded a total discount of approximately $
During the three months ended March 31, 2024 and 2023, the Company recorded a gain of $
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Common Stock Warrants
Pursuant to the Private Placement, the Company issued to investors Warrants and, pursuant to its advisory agreements, the Company issued to its advisor additional Warrants with the same terms. The Broker Warrants are within the scope of ASC 718 pursuant to ASC 718-10-20 but are subject to liability classification as they would be required to be classified as liabilities in accordance with ASC 480.
The Warrants were determined to be within the scope of ASC 480-10 as they are puttable to the Company at Holders’ election upon the occurrence of a Fundamental Transaction (as defined in the agreements). As such, the Company recorded the Warrants as a liability at fair value with subsequent changes in fair value recognized in earnings. The Company utilized the Black Scholes Model to calculate the value of these warrants issued during the year ended December 31, 2023. The fair value of the Warrants of approximately $
Transaction costs incurred attributable to the issuance of the Warrants of $
During the three months ended March 31, 2024 and 2023, the Company recorded a gain of $
Reverse Stock Split
At the Company’s annual meeting of stockholders held on December 20, 2023, the stockholders approved an amendment to the Company’s amended and restated certificate of incorporation to effect one reverse stock split of the Company’s outstanding shares of Common Stock, at any ratio between and . On April 4, 2024, the Company effected the Reverse Stock Split. As a result of the Reverse Stock Split, every 25 shares of the Common Stock outstanding before the Reverse Stock Split was combined and reclassified into one share of Common Stock. These financial statements have been adjusted to retrospectively reflect the Reverse Stock Split.
Based upon the Reverse Stock Split and pursuant to the November Private Placement, the total number of November Warrants held by the November Investors has been adjusted to
Note 7 – Stock Based Compensation:
2020 Equity Incentive Plan
Upon completion of the Spin-Off, the Company’s 2020 Equity Incentive Plan (the “2020 Plan”) became effective on December 7, 2020. On December 20, 2023, the Company held its annual meeting of stockholders at which time the Company’s stockholders approved an amendment to the Company’s 2020 Plan was amended to increase the total number of shares of Common Stock authorized for issuance from
The Compensation Committee of the Company’s board of directors (the “Committee”) administers the 2020 Plan and has full power to grant stock options and Common Stock, construe and interpret the 2020 Plan, establish rules and regulations and perform all other acts, including the delegation of administrative responsibilities, as it believes reasonable and proper. The Committee, in its absolute discretion, may award Common Stock to employees, consultants, and directors of the Company, and such other persons as the Committee may select, and permit holders of options to exercise such options prior to full vesting.
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Stock and Option Grants
The following is a summary of stock option activity under the stock option plans for the three months ended March 31, 2024:
|
| |
| |
| Weighted- |
| | ||
| | | | | | Average | | Aggregate | ||
| | | | Weighted- | | Remaining | | Intrinsic | ||
| | Number | | Average | | Contractual | | Value | ||
| | of | | Exercise | | Term | | (in | ||
| | Shares | | Price | | (Years) | | millions) | ||
Options outstanding at January 1, 2024 |
| | | $ | |
| | $ | | |
Options granted |
| — | | $ | — |
| — | |
| — |
Less options forfeited |
| — | | $ | — |
| — | |
| — |
Less options expired/cancelled |
| — | | $ | — |
| — | |
| — |
Less options exercised |
| — | | $ | — |
| — | |
| — |
Options outstanding at March 31, 2024 |
| | | $ | |
| | $ | | |
Options exercisable at March 31, 2024 |
| | | $ | |
| | $ | | |
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing price of the Common Stock, which was $
As of March 31, 2024, the Company had unrecognized stock option expense of $
On April 8, 2024, Synaptogenix granted stock options to
Director’s Compensation Policy
On March 29, 2023, Synaptogenix adopted an amended and restated non-employee director compensation policy (the “Director Compensation Policy”). The Director Compensation Policy provides for the annual automatic grant of nonqualified stock options to purchase up to
The Company recorded total expenses relating to the outstanding stock options of $
Restricted Stock Issuances
On January 5, 2023, the Company issued
On January 8, 2024, the Company issued
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Stock Compensation Expense
Total stock-based compensation for the three months ended March 31, 2024 and 2023 was $
The Company currently estimates, beginning at the closing date of the November Private Placement, implied volatility factor for all options and warrants based upon a blend of the Parent Company’s and Company’s historical volatility. Up until November 21, 2022, the Company computed implied volatility based upon a blend of the Parent Company’s and Company’s historical volatility along with the volatility of selected comparable publicly traded companies as, at that time, the Company lacked sufficient historical stock trading activity. It incorporated the historical volatility of the Parent Company as the Parent Company’s historical volatility provides a good estimation of the Company’s volatility since its operations were identical to the Company’s prior to the spin-out.
Note 8 – Common Stock Warrants:
As of March 31, 2024, the Company had warrants outstanding consisting of the following:
|
| Number |
| | of shares |
Warrants outstanding January 1, 2023 |
| |
Warrants issued |
| |
Warrants exercised |
| |
Warrants expired | | |
Warrants outstanding and exercisable March 31, 2024 |
| |
As of March 31, 2024, the weighted average exercise price and the weighted average remaining life of the total warrants were $
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Note 9 - Fair Value on a Recurring Basis
The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. The estimated fair value of the warrant liability and bifurcated embedded derivatives represent Level 3 measurements. The following table presents information about the Company’s liabilities that are measured at fair value on a recurring basis at March 31, 2024 and December 31, 2023, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
| | | | March 31, | | December 31, | ||
Description |
| Level |
| 2024 |
| 2023 | ||
Liabilities: |
|
|
| |
|
| |
|
Warrant liability (Note 6) |
| 3 | | $ | | | $ | |
Bifurcated embedded derivative liability (Note 6) |
| 3 | | $ | | | $ | |
The following table sets forth a summary of the change in the fair value of the warrant liability that is measured at fair value on a recurring basis:
|
| March 31, 2024 | |
Balance on December 31, 2022 | | $ | |
Change in fair value of warrant liability | |
| ( |
Balance on December 31, 2023 | | $ | |
Change in fair value of warrant liability | |
| ( |
Balance on March 31, 2024 | | $ | |
The following table sets forth a summary of the change in the fair value of the bifurcated embedded derivative liability that is measured at fair value on a recurring basis:
|
| March 31, 2024 | |
Balance on December 31, 2022 | | $ | |
Change in fair value of bifurcated embedded derivative | |
| ( |
Balance on December 31, 2023 | | $ | |
Change in fair value of warrant liability | |
| ( |
Balance on March 31, 2024 | | $ | |
Note 10 – Subsequent Events
Refer to Notes 6 and 7 for disclosure of applicable subsequent events.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes appearing elsewhere in this report. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included elsewhere in this report and our Annual Report on Form 10-K for the year ended December 31, 2023.
The following discussion highlights our results of operations and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the periods described, and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on the unaudited financial statements contained in this report, which we have prepared in accordance with United States generally accepted accounting principles. You should read the discussion and analysis together with such financial statements and the related notes thereto.
Basis of Presentation
The unaudited financial statements for the three months ended March 31, 2024 and 2023 include a summary of our significant accounting policies and should be read in conjunction with the discussion below and our financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. In the opinion of management, all material adjustments necessary to present fairly the results of operations for such periods have been included in the financial statements. All such adjustments are of a normal recurring nature.
Overview
We are a biopharmaceutical company with product candidates in pre-clinical and clinical development. We began operations in October 2012. We are principally focused on developing a product platform based upon a drug candidate called Bryostatin-1 for the treatment of Alzheimer’s disease, which is in the clinical testing stage. We are also evaluating Bryostatin-1 for other neurodegenerative or cognitive diseases and dysfunctions, such as Fragile X syndrome, Multiple Sclerosis, and Niemann-Pick Type C disease, which have undergone pre-clinical testing.
Neurotrope, our predecessor company, had been a party to a technology license and services agreement with the original Blanchette Rockefeller Neurosciences Institute (which has been known as Cognitive Research Enterprises, Inc. since October 2016), and its affiliate NRV II, LLC, which we collectively refer to herein as “CRE,” pursuant to which we now have an exclusive non-transferable license to certain patents and technologies required to develop our proposed products. We were formed for the primary purpose of commercializing the technologies initially developed by BRNI for therapeutic applications for AD or other cognitive dysfunctions. These technologies have been under development by BRNI since 1999 and, until March 2013, had been financed through funding from a variety of non-investor sources (which include not-for-profit foundations, the NIH, which is part of the U.S. Department of Health and Human Services, and individual philanthropists). From March 2013 forward, development of the licensed technology has been funded principally through us in collaboration with CRE.
November 2022 Private Placement
On November 17, 2022, we entered into the November Purchase Agreement with the November Investors, pursuant to which we agreed to sell to the November Investors (i) an aggregate of 15,000 shares of Series B Preferred Stock and (ii) November Warrants to acquire up to an aggregate of 77,419 shares of Common Stock. We received total gross proceeds of approximately $15 million from the November Private Placement.
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The terms of the Series B Preferred Stock are as set forth in the Certificate of Designations. The Series B Preferred Stock will be convertible into Series B Preferred Shares at the election of the holder at any time at the Conversion Price. The Conversion Price is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable Conversion Price (subject to certain exceptions). We will be required to redeem the Series B Preferred Stock in 15 equal monthly installments, commencing on June 1, 2023. The amortization payments due upon such redemption are payable, at our election, in cash, or subject to certain limitations, in shares of Common Stock valued at the lower of (i) the Conversion Price then in effect and (ii) the greater of (A) a 15% discount to the average of the three lowest closing prices of the Common Stock during the thirty trading day period immediately prior to the date the amortization payment is due or (B) the lower of $31.25 and $4.30, which is equal to 20% of the Minimum Price (as defined in Rule 5635 of the Rule of the Nasdaq Stock Market) on April 14, 2023, the date of receipt of Nasdaq Stockholder Approval; provided that if the amount set forth in clause B is the lowest effective price, we will be required to pay the amortization payment in cash. We may require holders to convert their Series B Preferred Stock into Series B Preferred Shares if the closing price of the Common Stock exceeds $290.625 per share for 20 consecutive trading days and the daily trading volume of the Common Stock exceeds 100,000 shares per day during the same period and certain equity conditions described in the Certificate of Designations are satisfied.
The holders of the Series B Preferred Stock are entitled to dividends of 7% per annum, compounded monthly, which are payable in cash or shares of Common Stock at our option, in accordance with the terms of the Certificate of Designations. Upon the occurrence and during the continuance of a Triggering Event (as defined in the Certificate of Designations), the Series B Preferred Stock will accrue dividends at the rate of 15% per annum. The holders of Series B Preferred Stock have no voting rights on account of the Series B Preferred Stock, other than with respect to certain matters affecting the rights of the Series B Preferred Stock. Further, the Certificate of Designations contains a certain beneficial ownership limitation after giving effect to the issuance of shares of Common Stock issuable upon conversion of, or as part of any amortization payment under, the Certificate of Designations or November Warrants.
The Certificate of Designations includes certain Triggering Events (as defined in the Certificate of Designations), including, among other things, the failure to file and maintain an effective registration statement covering the sale of the holder’s securities registrable pursuant to the November Registration Rights Agreement (defined below) and our failure to pay any amounts due to the holders of the Series B Preferred Stock when due. In connection with a Triggering Event, each holder of Series B Preferred Stock will be able to require us to redeem in cash any or all of the holder’s Series B Preferred Stock at a premium set forth in the Certificate of Designations.
We are subject to certain affirmative and negative covenants regarding the incurrence of indebtedness, acquisition and investment transactions, the existence of liens, the repayment of indebtedness, the payment of cash in respect of dividends (other than dividends pursuant to the Certificate of Designations), distributions or redemptions, and the transfer of assets, among other matters.
The November Warrants are exercisable for Warrant Shares immediately at an exercise price of $193.75 per share (the “Exercise Price”) and expire five years from the date of issuance. The Exercise Price is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment, on a “full ratchet” basis, in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable Exercise Price (subject to certain exceptions).
In connection with the November Purchase Agreement, we and the November Investors entered into a Registration Rights Agreement (the “November Registration Rights Agreement”) on November 17, 2022. Under the terms of the November Registration Rights Agreement, we agreed to register 200% of the Series B Preferred Shares, the Warrant Shares and the shares of Common stock issuable as amortization payments as well as any shares of Common stock paid as dividends. We filed a registration statement for the resale of such securities on December 16, 2022. We also agreed to other customary obligations regarding registration, including indemnification and maintenance of the effectiveness of the registration statement.
In connection with the November Private Placement, pursuant to an Engagement Letter with Katalyst Securities LLC (the “November Placement Agent”), we paid the November Placement Agent (i) a cash fee equal to 7% of the gross proceeds from any sale of securities in the November Private Placement and (ii) warrants to purchase shares of Common Stock equal to 3% of the number of shares of Common Stock that the Series B Preferred Shares are initially convertible into, with an exercise price of $193.75 per share and a five-year term.
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During the three months ended March 31, 2024 we redeemed $3,000,000 of the Series B Preferred Stock and $87,500 of accrued dividends by issuing 106,126 shares of Common Stock through installment conversions and proportionately relieved $2,455,656 of discount related to the redeemed Series B Preferred Stock. During the three months ended March 31, 2024, we recognized a deemed dividend of $130,959 related to cash premiums.
During the three months ended March 31, 2023 we redeemed $0 of the Series B Preferred Stock and recognized $266,074 of accrued dividends.
As of March 31, 2024 we have accrued a liability for installment payments owed to investors in either cash or shares of $6,015,115.
Results of Most Recent Extended Confirmatory Phase 2 Clinical Trial
On July 23, 2020, we entered into the 2020 Services Agreement with WCT. The 2020 Services Agreement relates to services for our Phase 2 clinical study assessing the safety, tolerability and long-term efficacy of Bryostatin-1 in the treatment of moderately severe AD subjects not receiving memantine treatment. On January 22, 2022, we executed a change order with WCT to accelerate trial subject recruitment totaling approximately $1.4 million. The updated total estimated budget for the services, including pass-through costs, is approximately $11.0 million. As previously disclosed, on January 22, 2020, we were granted a $2.7 million award from the NIH, which award is being used to support the 2020 Study, resulting in a current estimated net budgeted cost of the 2020 Study to us of $8.3 million. Of the $2.7 million grant, virtually all has been received as of February 22, 2022. The 2020 Study was completed in December 2023.
On December 16, 2022, we issued a press release announcing that an extended confirmatory Phase 2 study of Bryostatin-1 in moderate to severe AD (Study #204) did not achieve statistical significance on the primary endpoint, which was change from baseline to Week 13 in the SIB total score assessment obtained after completion of the second seven-dose course of treatment (week 28 of trial). On March 7, 2023, we announced results of our analysis of secondary endpoints and post hoc analysis from our Phase 2 study of Bryostatin-1. In the secondary endpoint analysis, changes from baseline at Weeks 9, 20, 24, 30, and 42 in the SIB (Severe Impairment Battery) total score were not statistically significant in the total patient population, and no pre-specified secondary endpoints were met with statistical significance in the low-to-moderately severe AD patient stratum. However, nearly all pre-specified secondary endpoints in the most advanced and severe AD (MMSE: 10-14) patient population, with baseline MMSE-2 (Mini-Mental State Examination, 2nd Edition) scores of 10-14, were achieved with statistical significance (p = <0.05, 2-tailed). Data also showed statistical significance in exploratory secondary endpoints for the MMSE-2 10-14 stratum, and post hoc analysis was positive.
Open Label Dose Ranging Clinical Trial
On May 12, 2022, we entered into a services agreement with WCT (the “2022 Services Agreement”). The 2022 Services Agreement relates to services for a Phase 2 “open label,” dose ranging study, clinical trial assessing the safety, tolerability and efficacy of Bryostatin-1 administered via infusion in the treatment of moderately severe to severe AD subjects not receiving memantine treatment (the “2022 Study”).
Pursuant to the terms of the 2022 Services Agreement, WCT provided services to enroll approximately 12 2022 Study subjects. The first 2022 Study site was initiated during the third quarter of 2022. As of March 31, 2024, we incurred approximately $1.6 million of cumulative expenses associated with the 2022 Study. We terminated the 2022 Services Agreement in December 2022. Of the total $1.6 million incurred for the trial as of March 31, 2024, $0 and approximately $124,000 is reflected in the statement of operations for the three months ended March 31, 2024 and 2023, respectively.
Other Development Projects
To the extent resources permit, we may pursue development of selected technology platforms with indications related to the treatment of various disorders, including neurodegenerative disorders such as AD, based on our currently licensed technology and/or technologies available from third party licensors or collaborators.
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Nemours Agreement
On September 5, 2018, we announced a collaboration with Nemours, a premier U.S. children’s hospital, to initiate a clinical trial in children with Fragile X. In addition to the primary objective of safety and tolerability, measurements will be made of working memory, language and other functional aspects such as anxiety, repetitive behavior, executive functioning, and social behavior. On August 5, 2021, we announced our memorandum of understanding with Nemours A.I. DuPont Hospital (“Nemours”) to initiate a clinical trial using Bryostatin-1, under Orphan Drug Status, to treat Fragile X. We intend to provide the Bryostatin-1 drug product candidate and obtain the IND and Nemours intends to provide the clinical site and attendant support for the trial. We and Nemours, jointly, will develop the trial protocol. We currently estimate our total trial and IND cost to be approximately $2 million. As of March 31, 2024, we have incurred cumulative expenses associated with this agreement of approximately $100,000.
We have filed for an IND with the FDA. The FDA has placed the development of the IND on clinical hold pending completion of further analytics relating to drug pharmacokinetics and pharmacodynamics. We are currently evaluating our plans to advance Fragile X development.
Cleveland Clinic
On February 23, 2022, we announced our collaboration with Cleveland Clinic to pursue possible treatments for MS, and on July 19, 2023, we announced that we had entered into an agreement with Cleveland Clinic to conduct a Phase 1 trial of Bryostatin-1 in MS. Cleveland Clinic will manage the clinical trial’s implementation, including an IND submission to the FDA and patient enrollment. The total estimated costs associated with this collaboration are approximately $2.0 million. As of March 31, 2024, we have paid Cleveland Clinic approximately $375,000 which was expensed during the current quarter.
Results of Operations
Comparison of the three months ended March 31, 2024 and 2023
The following table summarizes our results of operations for the three months ended March 31, 2024 and 2023:
| | Three Months ended | | | | | |
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| | March 31, | | Dollar | | |
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| 2024 |
| 2023 |
| Change |
| % Change |
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Operating Expenses: | |
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Research and development expenses | | $ | 609,249 | | $ | 877,717 | | $ | (268,468) | | (30.6) | % |
General and administrative expenses | | $ | 1,082,245 | | $ | 2,044,224 | | $ | (961,979) | | (47.1) | % |
Other income, net | | $ | 1,484,795 | | $ | 1,210,157 | | $ | 274,638 | | 22.7 | % |
Net loss | | $ | (206,699) | | $ | (1,711,784) | | $ | 1,505,085 | | (87.9) | % |
Operating Expenses
Overview
Total operating expenses for the three months ended March 31, 2024 were $1,691,494 as compared to $2,921,941 for the three months ended March 31, 2023, a decrease of approximately 42.1%. The decrease in total operating expenses is due to the decrease in research and development activities and general and administrative expenses.
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Research and Development Expenses
For the three months ended March 31, 2024, we incurred $609,249 in research and development expenses as compared to $877,717 for the three months ended March 31, 2023, a decrease of approximately 30.6%. These expenses were incurred primarily in connection with developing the potential AD therapeutic product and the initiation of the MS trial with Cleveland Clinic. Of these expenses, for the three months ended March 31, 2024, $421,823 was incurred principally relating to our current MS clinical trial and our storage of drug product, $170,444 for clinical consulting services, $7,104 of amortization of prepaid licensing fees relating to the Stanford License Agreement and Mount Sinai Agreement, 9,878 for development of alternative drug supply with Stanford University; comparatively, for the three months ended March 31, 2023, $675,262 was incurred principally relating to our confirmatory clinical trial and related storage of drug product, $81,746 for clinical consulting services, $5,261 of amortization of prepaid licensing fees relating to the Stanford License Agreement and Mount Sinai Agreement, $15,722 for development of alternative drug supply with Stanford University and $99,726 of non-cash stock options compensation expense.
Our research and development expenses have significantly decreased as our current Phase 2 clinical trial for AD was concluded by the end of 2023 and our Phase 2 dose ranging study was discontinued partially offset by the initiation of our MS clinical trial. Other development expenses might increase, as our resources permit, in order to advance our potential products. We are continuing to determine how to proceed with respect to our other current development programs for Bryostatin-1.
General and Administrative Expenses
We incurred $1,082,244 and $2,044,224 of general and administrative expenses for the three months ended March 31, 2024 and 2023, respectively, a decrease of approximately 47.1%. During the three months ended March 31, 2024, $342,659 was incurred primarily for wages, bonuses, vacation pay, severance, taxes and insurance, versus $319,762 for the three months ended March 31, 2023; $113,656 was incurred for legal expenses versus $281,681 for the 2023 comparable period. The higher legal fees for 2023 is based upon the prior year’s increased fees for special stockholder vote requirements and for regulatory compliance; $262,002 was incurred for outside operations consulting services during the three months ended March 31, 2024, versus $250,300 for the comparable period in 2023; $34,881 was incurred for travel expenses during the three months ended March 31, 2024, versus $22,897 for the comparable period in 2023 as post-COVID travel has increased; $164,732 was incurred for investor relations services during the three months ended March 31, 2024, versus $184,661 for the comparable period in 2023; $20,713 was incurred for professional fees associated with auditing, financial, accounting and tax advisory services during the three months ended March 31, 2024, versus $121,324 for the comparable period in 2023. The decrease for the current period is primarily attributable to additional audit work for the November Private Placement and auditor change in 2023; $154,965 was incurred for insurance during the three months ended March 31, 2024, versus $193,723 for the comparable period in 2023; $(25,771) was incurred for utilities, supplies, license fees, filing costs, rent, advertising and other during the three months ended March 31, 2024, versus $124,821 for the comparable period in 2023. We overpaid franchise taxes which have been credited for the current fiscal quarter; and $14,407 was recorded as non-cash stock options compensation expense during the three months ended March 31, 2024, versus $545,055 for the comparable period in 2023.
Other Income / Expense
We recognized total other income of $1,484,795 for the three months ended March 31, 2024 as compared to a total other income of $1,210,157 for the three months ended March 31, 2023, which consisted, for 2024 and 2023, of interest income on funds deposited in interest bearing money market accounts and investments in short-term US treasury bills and changes in fair value of warrant liability and derivative liability. The increase in interest income and unrealized gains on treasury bills totaling $463,395 for the three months ended March 31, 2023 is primarily attributable to the increase in money market interest income rates. The total increase is primarily attributable to the increase in interest income of $18,679, the unrealized gains in marketable securities of $48,359 and the increase in change in fair value of derivative liability of $746,200 partially offset by the decrease in change in fair value of warrant liability of $530,000.
Net loss
We recognized losses of $206,699 and $1,711,784 for the three months ended March 31, 2024 and 2023, respectively. The decreased loss was primarily attributable to the increase in other income and the decreases in net research and development expenses associated with our clinical trials and decrease in general and administrative expenses.
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Financial Condition, Liquidity and Capital Resources
Cash and Working Capital
Since inception, we have incurred negative cash flows from operations. As of March 31, 2024, we had working capital of $22,528,628 as compared to working capital of $26,256,291 as of December 31, 2023. The $3,727,663 decrease in working capital was primarily attributable to approximately $1.7 million of operating expenses, increase in preferred stock liabilities of approximately $2.6 million and uses of cash of approximately $0.7 million partially offset by non-cash expenses of approximately $0.9 million and interest income of approximately $0.4 million.
We expect that our current cash and cash equivalents of approximately $25.9 million will be sufficient to support our projected operating requirements for at least the next 12 months from the date of this Quarterly Report on Form 10-Q, which would include the continuing development of Bryostatin-1, our novel drug candidate targeting the activation of PKCε, our initiation and possible development of a therapeutic for MS and other possible therapeutics.
We expect to require additional capital in order to initiate, pursue and complete all potential AD clinical trials and obtain regulatory approval of one or more therapeutic candidates. However, additional future funding may not be available to us on acceptable terms, or at all. If we are unable to access additional funds when needed, we may not be able to initiate, pursue and complete all planned clinical trials or continue the development of our product candidates or we could be required to delay, scale back or eliminate some or all of our development programs and operations. Any additional equity financing, if available, may not be available on favorable terms, would most likely be significantly dilutive to our current stockholders and debt financing, if available, and may involve restrictive covenants. If we are able to access funds through collaborative or licensing arrangements, we may be required to relinquish rights to some of our technologies or product candidates that we would otherwise seek to develop or commercialize on our own, on terms that are not favorable to us. Our ability to access capital when needed is not assured and, if not achieved on a timely basis, would likely materially harm our business and financial condition.
Sources and Uses of Liquidity
We expect to continue to incur expenses, resulting in losses and negative cash flows from operations, over at least the next several years as we continue to develop AD and other therapeutic products. We anticipate that this development may include clinical trials in addition to our current ongoing clinical trial and additional research and development expenditures.
| | Three Months Ended March 31, | ||||
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| 2024 |
| 2023 | ||
Cash used in operating activities | | $ | 1,831,541 | | $ | 1,695,812 |
Cash used in investing activities | |
| 500,000 | |
| 2,038 |
Cash used in (provided by) financing activities | |
| — | | | — |
Net Cash Used in Operating Activities
Cash used in operating activities was $1,831,541 for the three months ended March 31, 2024, compared to $1,695,812 for the three months ended March 31, 2023. The $135,729 increase primarily resulted from the increase in prepaid expenses of approximately $0.5 million, the increase in accounts payable and accrued expenses of approximately $0.3 million, the changes in fair value of non-cash warrant and derivative liabilities totaling approximately $0.2 and the decrease in non-cash stock-based compensation and consulting fees of approximately $0.6 million, partially offset by the decrease in net loss of approximately $1.5 million.
Net Cash Used in Investing Activities
Net cash used in investing activities was $500,000 for the three months ended March 31, 2024 compared to $2,038 for the three months ended March 31, 2023. The cash used in investing activities for the three months ended March 31, 2024 was for the purchase of available for sale debt securities versus capital expenditures for three months ended March 31, 2023.
Net Cash Used in / Provided by Financing Activities
Net cash used in financing activities was $0 for the three months ended March 31, 2024 and 2023, respectively.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable to a smaller reporting company.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
An evaluation was performed under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, our principal executive officer and principal financial and accounting officer, respectively, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are not effective due to: inadequate segregation of duties consistent with control objectives in the areas over certain payroll and banking systems and user access controls; ineffective processes over period end financial disclosure and reporting including documentation of GAAP disclosure and reporting reviews supporting the financial reporting process and changes to chart of accounts; and ineffective information technology (IT) general computing controls including lack of risk and design assessments supporting IT security policies and procedures, user access, and IT controls within third party contracts. These weaknesses may affect management’s ability to determine if errors or inappropriate actions have taken place. Management is required to apply its judgment in evaluating the cost-benefit relationship of possible changes in our disclosure controls and procedures.
We previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, that our management, including our Chairman of the Board, principal executive officer and principal financial and accounting officer, assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in the 2013 Internal Control— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by the Annual Report on Form 10-K for the fiscal year ended December 31, 2023, such internal controls and procedures were not effective to detect the inappropriate application of US generally accepted accounting principles.
Based on management’s review, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were ineffective as of March 31, 2024. Notwithstanding the material weaknesses described above, our management, including the Chief Executive Officer and Chief Financial Officer, has concluded that financial statements, and other financial information included in this Quarterly Report on Form 10-Q, fairly present in all material respects our financial condition, results of operations, and cash flows as of and for the periods presented in this Quarterly Report on Form 10-Q.
Changes in Internal Controls over Financial Reporting
There was no change in our internal controls over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
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PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
You should carefully review and consider the information regarding certain factors that could materially affect our business, consolidated financial condition or results of operations set forth under Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. There have been no material changes from the risk factors disclosed in such Form 10-K. We may disclose changes to risk factors from time to time in our future filings with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On March 7, 2024, we issued 981 shares of Common Stock to Neil Cataldi in exchange for investor relations services.
The foregoing transaction did not involve any underwriters or any public offering. The sale of the above securities were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act (and Regulation D promulgated thereunder) or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public offering. The recipient of the securities in the transaction represented their intentions to acquire the securities for investment only and not with a view to, or for sale in connection with, any distribution thereof, and appropriate legends were affixed to the securities issued in these transactions. The recipient received or had, through his relationships with us, adequate access to information about us.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Rule 10b5-1 Trading Plans
During the fiscal quarter ended March 31, 2024, none of our directors or executive officers
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Item 6. Exhibits.
Exhibit |
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3.1 | | |
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31.1 |
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31.2 |
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32.1* |
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32.2* |
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101 |
| The following financial information from this Quarterly Report on Form 10-Q for the period ended March 31, 2024, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Statements of Operations; (ii) the Condensed Balance Sheets; (iii) the Condensed Statements of Cash Flows; and (iv) the Notes to Financial Statements, tagged as blocks of text. |
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104 | | Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit) |
* The certifications attached as Exhibit 32.1 and Exhibit 32.2 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Synaptogenix, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of such Form 10-Q), irrespective of any general incorporation language contained in such filing.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Synaptogenix, Inc. | |
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Date: May 15, 2024 | By: | /s/ Alan J. Tuchman, M.D. |
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| Alan J. Tuchman, M.D. |
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| Chief Executive Officer |
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| (principal executive officer) |
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Date: May 15, 2024 | By: | /s/ Robert Weinstein |
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| Robert Weinstein |
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| Chief Financial Officer, Executive Vice President, Secretary and Treasurer |
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Exhibit 31.1
CERTIFICATION
OF
ALAN J. TUCHMAN, M.D.
CHIEF EXECUTIVE OFFICER
OF
SYNAPTOGENIX, INC.
I, Alan J. Tuchman, M.D., Chief Executive Officer of Synaptogenix, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Synaptogenix, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 15, 2024
| /s/ Alan J. Tuchman, M.D. |
| Alan J. Tuchman, M.D. |
| Chief Executive Officer |
| (principal executive officer) |
Exhibit 31.2
CERTIFICATION
OF
ROBERT WEINSTEIN
CHIEF FINANCIAL OFFICER
OF
SYNAPTOGENIX, INC.
I, Robert Weinstein, Chief Financial Officer of Synaptogenix, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Synaptogenix, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant's board of directors:
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 15, 2024
| /s/ Robert Weinstein |
| Robert Weinstein |
| Chief Financial Officer, Executive Vice President, Secretary and Treasurer |
| (principal financial officer and principal accounting officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Synaptogenix, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alan J. Tuchman, M.D., Chief Executive Officer of the Company, state and certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: May 15, 2024
| /s/ Alan J. Tuchman, M.D. |
| Alan J. Tuchman, M.D. |
| Chief Executive Officer |
| (principal executive officer) |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Synaptogenix, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert Weinstein, Chief Financial Officer of the Company, state and certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: May 15, 2024
| /s/ Robert Weinstein |
| Robert Weinstein |
| Chief Financial Officer, Executive Vice President, Secretary and Treasurer |
| (principal financial officer and principal accounting officer) |