UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 2020
OR
☐ TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934
From the transition period from to
Commission File Number 001-37853
AZURRX BIOPHARMA, INC. | ||
(Exact name of small business issuer as specified in its charter) |
Delaware | 46-4993860 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
777 Yamato Road, Suite 304
Boca Raton, Florida 33431
(Address of principal executive offices)
(561) 589-7020
(Issuer’s telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||
Common stock, par value $0.0001 per share | AZRX | Nasdaq Capital Market |
Securities registered under Section 12(g) of the Exchange Act: None
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 (Sec.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X]☒ No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 | ☐ |
Non-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).
There were 30,412,10093,261,897 shares of the registrant’s common stock, $0.0001 par value (“
TABLE OF CONTENTS
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| Table of Contents |
FINANCIAL INFORMATION
ITEM 1.
UNAUDITED CONSOLIDATED FINANCIALSTATEMENTSIn our opinion, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly our financial position, results of operations, and cash flows for the interim periods presented. We have condensedconsolidated such financial statements in accordance with the rules and regulations of the Securities and Exchange Commission (“
These financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 20192020 included in our Annual Report filed on Form 10-K, filed with the SEC on March 30, 2020.
The results of operations for the three and ninesix months ended SeptemberJune 30, 20202021 are not necessarily indicative of the results to be expected for the fiscal year endedending December 31, 2020.
Consolidated Balance Sheets (unaudited)
September 30, | December 31, | |
2020 | 2019 | |
| ASSETS | ||
| Current Assets: | ||
| Cash | $11,368,680 | $175,796 |
| Other receivables | 20,688 | 2,637,303 |
| Prepaid expenses | 148,604 | 595,187 |
| Total Current Assets | 11,537,972 | 3,408,286 |
| Property, equipment, and leasehold improvements, net | 54,070 | 77,391 |
| Other Assets: | ||
| Patents, net | 3,011,423 | 3,407,084 |
| Goodwill | 1,968,519 | 1,886,686 |
| Operating lease right-of-use assets | 104,196 | 82,386 |
| Deposits | 45,841 | 41,047 |
| Total Other Assets | 5,129,979 | 5,417,203 |
| Total Assets | $16,722,021 | $8,902,880 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current Liabilities: | ||
| Accounts payable and accrued expenses | $1,686,003 | $1,754,682 |
| Accounts payable and accrued expenses - related party | 38,453 | 533,428 |
| Note payable | - | 444,364 |
| Accrued Dividends Payable | 408,043 | - |
| Convertible debt | - | 1,076,938 |
| Other current liabilities | 492,815 | 476,224 |
| Total Current Liabilities | 2,625,314 | 4,285,636 |
| Other liabilities | 31,469 | - |
| Total Liabilities | 2,656,783 | 4,285,636 |
| Stockholders' Equity: | ||
| Common stock - Par value $0.0001 per share; 150,000,000 shares authorized; 28,881,984 and 26,800,519 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively. | 2,888 | 2,680 |
| Series B preferred stock- Par value $0.0001 per share; 5,194.805195 shares authorized; 2,878.455557 and 0 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively. | - | - |
| Additional paid-in capital | 93,239,704 | 68,575,851 |
| Accumulated deficit | (77,965,806) | (62,694,732) |
| Accumulated other comprehensive loss | (1,211,548) | (1,266,555) |
| Total Stockholders' Equity | 14,065,238 | 4,617,244 |
| Total Liabilities and Stockholders' Equity | $16,722,021 | $8,902,880 |
|
| June 30, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
ASSETS |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
Current Assets: |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 8,074,491 |
|
| $ | 6,062,141 |
|
Other receivables |
|
| 0 |
|
|
| 551,489 |
|
Prepaid expenses |
|
| 540,786 |
|
|
| 1,256,154 |
|
Total Current Assets |
|
| 8,615,277 |
|
|
| 7,869,784 |
|
|
|
|
|
|
|
|
|
|
Property, equipment, and leasehold improvements, net |
|
| 89,243 |
|
|
| 18,329 |
|
|
|
|
|
|
|
|
|
|
Other Assets: |
|
|
|
|
|
|
|
|
Patents, net |
|
| 2,615,762 |
|
|
| 2,879,536 |
|
Goodwill |
|
| 1,991,287 |
|
|
| 2,054,048 |
|
Operating lease right-of-use assets |
|
| 395,634 |
|
|
| 74,238 |
|
Deposits |
|
| 69,596 |
|
|
| 27,920 |
|
Total Other Assets |
|
| 5,072,279 |
|
|
| 5,035,742 |
|
Total Assets |
| $ | 13,776,799 |
|
| $ | 12,923,855 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
| $ | 4,643,885 |
|
| $ | 1,685,603 |
|
Payable related to license agreement |
|
| 1,250,000 |
|
|
| 13,250,000 |
|
Accrued dividend payable |
|
| 231,043 |
|
|
| 0 |
|
Note payable |
|
| 139,569 |
|
|
| 552,405 |
|
Other current liabilities |
|
| 189,625 |
|
|
| 57,417 |
|
Total Current Liabilities |
|
| 6,454,122 |
|
|
| 15,545,425 |
|
|
|
|
|
|
|
|
|
|
Other liabilities |
|
| 285,753 |
|
|
| 19,123 |
|
Total Liabilities |
|
| 6,739,875 |
|
|
| 15,564,548 |
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity: |
|
|
|
|
|
|
|
|
Common stock - Par value $0.0001 per share; 250,000,000 shares authorized; 82,585,075 and 31,150,309 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively. |
|
| 8,260 |
|
|
| 3,115 |
|
Series B preferred stock- Par value $0.0001 per share; 5,194.81 shares authorized; 676.05 and 2,773.6 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively. |
|
| 0 |
|
|
| 0 |
|
Series C preferred stock- Par value $0.0001 per share; 57,000 shares authorized; 0 shares issued and outstanding at June 30, 2021 and December 31, 2020. |
|
| 0 |
|
|
| 0 |
|
Additional paid-in capital |
|
| 120,584,938 |
|
|
| 93,834,936 |
|
Accumulated deficit |
|
| (112,330,771 | ) |
|
| (95,366,198 | ) |
Accumulated other comprehensive loss |
|
| (1,225,503 | ) |
|
| (1,112,546 | ) |
Total Stockholders’ Equity |
|
| 7,036,924 |
|
|
| (2,640,693 | ) |
Total Liabilities and Stockholders’ Equity |
| $ | 13,776,799 |
|
| $ | 12,923,855 |
|
See accompanying notes to consolidated financial statements
Consolidated Statements of Operations and Comprehensive Loss (unaudited)
Three Months | Three Months | Nine Months | Nine Months | |
Ended | Ended | Ended | Ended | |
09/30/20 | 09/30/19 | 09/30/20 | 09/30/19 | |
| Research and development expenses | $1,795,684 | $2,221,933 | $4,438,229 | $7,927,907 |
| General and administrative expenses | 1,916,250 | 1,860,141 | 4,595,860 | 5,690,001 |
| Loss from operations | (3,711,934) | (4,082,074) | (9,034,089) | (13,617,908) |
| Other: | ||||
| Interest expense | (1,203,404) | (110,398) | (5,838,417) | (278,155) |
| Gain (Loss) on Settlement | 211,430 | 211,430 | ||
| Gain (Loss) on Debt Extinguishment | (609,998) | (609,998) | ||
| Total other | (1,601,972) | (110,398) | (6,236,985) | (278,155) |
| Loss before income taxes | (5,313,906) | (4,192,472) | (15,271,074) | (13,896,063) |
| Income taxes | - | - | - | - |
| Net loss | (5,313,906) | (4,192,472) | (15,271,074) | (13,896,063) |
| Other comprehensive loss: | ||||
| Foreign currency translation adjustment | 108,712 | (138,241) | (55,007) | (207,034) |
| Total comprehensive loss | $(5,205,194) | $(4,330,713) | $(15,326,081) | $(14,103,097) |
| Net loss | $(5,313,906) | $(4,192,472) | $(15,271,074) | $(13,896,063) |
| Deemed dividend of preferred stock | (8,155,212) | - | (8,155,212) | - |
| Net loss applicable to common stockholders | (13,469,118) | (4,192,472) | (23,426,286) | (13,896,063) |
| Basic and diluted weighted average shares outstanding | 28,518,835 | 24,962,691 | 27,828,235 | 21,080,701 |
| Net loss per share - basic and diluted | $(0.47) | $(0.17) | $(0.84) | $(0.66) |
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Research and development expenses |
| $ | 5,647,798 |
|
| $ | 1,089,177 |
|
| $ | 8,163,825 |
|
| $ | 2,642,537 |
|
General and administrative expenses |
|
| 3,629,090 |
|
|
| 1,304,527 |
|
|
| 9,326,604 |
|
|
| 2,679,618 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
| (9,276,888 | ) |
|
| (2,393,704 | ) |
|
| (17,490,429 | ) |
|
| (5,322,155 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
| (2,954 | ) |
|
| (2,302,174 | ) |
|
| (8,098 | ) |
|
| (4,635,013 | ) |
Other income |
|
| 898 |
|
|
| 0 |
|
|
| 1,601 |
|
|
| 0 |
|
Change in fair value of liability |
|
|
|
|
|
| 0 |
|
|
| 532,353 |
|
|
| 0 |
|
Total other income (expenses) |
|
| (2,056 | ) |
|
| (2,302,174 | ) |
|
| 525,856 |
|
|
| (4,635,013 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
| $ | (9,278,944 | ) |
| $ | (4,695,878 | ) |
| $ | (16,964,573 | ) |
| $ | (9,957,168 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
| 21,840 |
|
|
| (163,719 | ) |
|
| (112,957 | ) |
|
| (6,225 | ) |
Total comprehensive loss |
| $ | (9,257,104 | ) |
| $ | (4,859,597 | ) |
| $ | (17,077,530 | ) |
| $ | (9,963,393 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
| $ | (9,278,944 | ) |
| $ | (4,695,878 | ) |
| $ | (16,964,573 | ) |
| $ | (9,957,168 | ) |
Deemed dividend on preferred stock issuances |
|
| - |
|
|
| 0 |
|
|
| (4,507,125 | ) |
|
| 0 |
|
Deemed dividend on preferred stock exchanges |
|
| (3,424,205 | ) |
|
| 0 |
|
|
| (21,008,253 | ) |
|
| 0 |
|
Preferred stock dividends |
|
| (26,661 | ) |
|
| 0 |
|
|
| (231,043 | ) |
|
| 0 |
|
Net loss applicable to common shareholders |
| $ | (12,729,810 | ) |
| $ | (4,695,878 | ) |
| $ | (42,710,994 | ) |
| $ | (9,957,168 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding |
|
| 78,124,399 |
|
|
| 28,016,478 |
|
|
| 66,799,183 |
|
|
| 27,479,140 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share - basic and diluted |
| $ | (0.16 | ) |
| $ | (0.17 | ) |
| $ | (0.64 | ) |
| $ | (0.36 | ) |
See accompanying notes to consolidated financial statements
Consolidated Statements of Changes in Stockholders'Stockholders’ Equity (unaudited)
Convertible | Additional | Other | ||||||
Preferred Stock | Common Stock | Paid In | Accumulated | Comprehensive | ||||
Shares | Amount | Shares | Amount | Capital | Deficit | Loss | Total | |
| Balance, January 1, 2019 | - | $- | 17,704,925 | $1,771 | $53,139,259 | $(47,517,046) | $(1,150,112) | $4,473,872 |
| Common stock issued from public offerings | 7,522,097 | 752 | 9,491,265 | 9,492,017 | ||||
| Common stock issued to consultants | 62,158 | 6 | 112,494 | 112,500 | ||||
| Common stock issued to Mayoly for patents | 775,931 | 77 | 1,740,882 | 1,740,959 | ||||
| Stock-based compensation | 541,725 | 541,725 | ||||||
| Restricted stock granted to employees/directors | 90,000 | 9 | 556,879 | 556,888 | ||||
| Warrant modification | 325,320 | 325,320 | ||||||
Received from stockholder in relation to warrant modification | 61,590 | 61,590 | ||||||
| Foreign currency translation adjustment | (207,034) | (207,034) | ||||||
| Net loss | (13,896,063) | (13,896,063) | ||||||
| Balance, September 30, 2019 | - | $- | 26,155,111 | $2,615 | $65,969,414 | $(61,413,109) | $(1,357,146) | $3,201,774 |
| Balance, January 1, 2020 | - | $- | 26,800,519 | $2,680 | $68,575,851 | $(62,694,732) | $(1,266,555) | $4,617,244 |
| Issuance of Series B preferred stock and warrants for cash, conversion of promissory notes, net of offering costs | 2,912 | - | 14,460,155 | 14,460,155 | ||||
| Warrants issued in connection with Series B convertible preferred stock private placement | 5,952,516 | 5,952,516 | ||||||
| Warrants issued as inducement to exchange promissory notes into Series B convertible preferred stock private placement | 986,526 | 986,526 | ||||||
| Beneficial conversion feature of Series B preferred stock | 8,155,212 | 8,155,212 | ||||||
| Deemed dividend of preferred stock | (8,155,212) | (8,155,212) | ||||||
| Accrued dividends on Series B preferred stock | (412,829) | (412,829) | ||||||
| Deemed dividend related to exchange of promissory notes into Series B preferred stock | (1,129,742) | (1,129,742) | ||||||
| Conversion of Series B preferred shares into common stock | (34) | - | 341,274 | 34 | (34) | - | ||
| Issuance of common stock for accrued dividends upon conversion of Series B preferred stock | 6,214 | 1 | 4,785 | 4,786 | ||||
| Common stock issued to settle accounts payable | 105,937 | 11 | 131,126 | 131,137 | ||||
| Common stock issued to Lincoln Park for Equity Purchase agreement | 1,495,199 | 149 | 988,199 | 988,348 | ||||
| Warrants issued in association with convertible debt issuance | 1,252,558 | 1,252,558 | ||||||
| Beneficial conversion feature on convertible debt issuances | 1,838,422 | 1,838,422 | ||||||
| Common stock issued to consultants | 132,841 | 13 | 109,592 | 109,605 | ||||
| Settlement with former chief executive officer | 85,770 | 85,770 | ||||||
| Stock-based compensation | 396,809 | 396,809 | ||||||
| Foreign currency translation adjustment | - | 55,007 | 55,007 | |||||
| Net loss | (15,271,074) | (15,271,074) | ||||||
| Balance, September 30, 2020 | 2,878 | $- | 28,881,984 | $2,888 | $93,239,704 | $(77,965,806) | $(1,211,548) | $14,065,238 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
| |
|
|
|
|
|
|
|
| Additional |
|
|
|
| Other |
|
|
|
|
| ||||||
|
| Common Stock |
|
| Paid In |
|
| Accumulated |
|
| Comprehensive |
|
|
|
|
| ||||||||
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Loss |
|
| Total |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, April 1, 2020 |
|
| 27,157,651 |
|
| $ | 2,716 |
|
| $ | 72,103,490 |
|
| $ | (67,956,022 | ) |
| $ | (1,109,061 | ) |
| $ | 3,041,123 |
|
Common stock issued to Lincoln Park for Equity Purchase agreement |
|
| 1,345,199 |
|
|
| 134 |
|
|
| 844,214 |
|
|
| 0 |
|
|
| 0 |
|
|
| 844,348 |
|
Stock-based compensation |
|
| - |
|
|
| 0 |
|
|
| 176,676 |
|
|
| 0 |
|
|
| 0 |
|
|
| 176,676 |
|
Foreign currency translation adjustment |
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| (163,719 | ) |
|
| (163,719 | ) |
Net loss |
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| (4,695,878 | ) |
|
| 0 |
|
|
| (4,695,878 | ) |
Balance, June 30, 2020 |
|
| 28,502,850 |
|
| $ | 2,850 |
|
| $ | 73,124,380 |
|
| $ | (72,651,900 | ) |
| $ | (1,272,780 | ) |
| $ | (797,450 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
| ||||||
|
|
|
| Additional |
|
|
|
| Other |
|
|
| ||||||||||||
|
| Common Stock |
|
| Paid In |
|
| Accumulated |
|
| Comprehensive |
|
|
|
| |||||||||
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Loss |
|
| Total |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Balance, January 1, 2020 |
|
| 26,800,519 |
|
| $ | 2,680 |
|
| $ | 68,575,851 |
|
| $ | (62,694,732 | ) |
| $ | (1,266,555 | ) |
| $ | 4,617,244 |
|
Common stock issued to settle accounts payable |
|
| 105,937 |
|
|
| 11 |
|
|
| 131,126 |
|
|
| 0 |
|
|
| 0 |
|
|
| 131,137 |
|
Common stock issued to consultants |
|
| 101,195 |
|
|
| 10 |
|
|
| 87,095 |
|
|
| 0 |
|
|
| 0 |
|
|
| 87,105 |
|
Common stock issued to Lincoln Park for Equity Purchase agreement |
|
| 1,495,199 |
|
|
| 149 |
|
|
| 988,199 |
|
|
| 0 |
|
|
| 0 |
|
|
| 988,348 |
|
Warrants issued in association with convertible debt issuances |
|
| - |
|
|
| 0 |
|
|
| 1,252,558 |
|
|
| 0 |
|
|
| 0 |
|
|
| 1,252,558 |
|
Beneficial conversion feature on convertible debt issuances |
|
| - |
|
|
| 0 |
|
|
| 1,838,422 |
|
|
| 0 |
|
|
| 0 |
|
|
| 1,838,422 |
|
Stock-based compensation |
|
| - |
|
|
| 0 |
|
|
| 251,129 |
|
|
| 0 |
|
|
| 0 |
|
|
| 251,129 |
|
Foreign currency translation adjustment |
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| (6,225 | ) |
|
| (6,225 | ) |
Net loss |
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| (9,957,168 | ) |
|
| 0 |
|
|
| (9,957,168 | ) |
Balance, June 30, 2020 |
|
| 28,502,850 |
|
| $ | 2,850 |
|
| $ | 73,124,380 |
|
| $ | (72,651,900 | ) |
| $ | (1,272,780 | ) |
| $ | (797,450 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
| ||||||||||
|
| Series C Convertible |
|
| Series B Convertible |
|
|
|
|
|
|
|
| Additional |
|
|
|
|
| Other |
|
|
|
| ||||||||||||||||
|
| Preferred Stock |
|
| Preferred Stock |
|
| Common Stock |
|
| Paid In |
|
| Accumulated |
|
| Comprehensive |
|
|
|
| |||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Loss |
|
| Total |
| ||||||||||
Balance, April 1, 2021 |
|
| - |
|
| $ | 0 |
|
|
| 1,209 |
|
| $ | 0 |
|
|
| 74,926,902 |
|
| $ | 7,493 |
|
| $ | 118,693,364 |
|
| $ | (103,051,827 | ) |
| $ | (1,247,343 | ) |
| $ | 14,401,687 |
|
Issuance of Series C preferred stock upon exchange of Series B preferred stock |
|
| 5,639 |
|
|
| 0 |
|
|
| (533 | ) |
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| (422 | ) |
|
| 0 |
|
|
| 0 |
|
|
| (422 | ) |
Warrants issued in connection with exchange of Series B preferred stock |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 3,424,626 |
|
|
| 0 |
|
|
| 0 |
|
|
| 3,424,626 |
|
Deemed dividend related to exchange of Series B preferred stock |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 3,424,205 | ) |
|
| 0 |
|
|
| 0 |
|
|
| (3,424,205 | ) |
Dividends on preferred stock |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| (26,661 | ) |
|
| 0 |
|
|
| 0 |
|
|
| (26,661 | ) |
Common stock and pre-funded warrants issued upon conversion of Series C preferred stock |
|
| (5,639 | ) |
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 5,639,153 |
|
|
| 564 |
|
|
| (564 | ) |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
Issuance of common stock at-the-market for cash, net of offering costs |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 1,495,645 |
|
|
| 150 |
|
|
| 1,174,198 |
|
|
| 0 |
|
|
| 0 |
|
|
| 1,174,348 |
|
Common stock issued upon exercise of warrants |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 328,375 |
|
|
| 33 |
|
|
| 282,755 |
|
|
| 0 |
|
|
| 0 |
|
|
| 282,788 |
|
Common stock and warrants issued to consultants |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 195,000 |
|
|
| 20 |
|
|
| 147,791 |
|
|
| 0 |
|
|
| 0 |
|
|
| 147,811 |
|
Settlement with former placement agent |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
Stock-based compensation |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 314,056 |
|
|
| 0 |
|
|
| 0 |
|
|
| 314,056 |
|
Foreign currency translation adjustment |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 21,840 |
|
|
| 21,840 |
|
Net loss |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| (9,278,944 | ) |
|
| 0 |
|
|
| (9,278,944 | ) |
Balance, June 30, 2021 |
|
| - |
|
| $ | 0 |
|
|
| 676 |
|
| $ | 0 |
|
|
| 82,585,075 |
|
| $ | 8,260 |
|
| $ | 120,584,938 |
|
| $ | (112,330,771 | ) |
| $ | (1,225,503 | ) |
| $ | 7,036,924 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
| |||||||||||||||||||
|
| Series C Convertible |
|
| Series B Convertible |
|
|
|
|
|
|
| Additional |
|
|
|
| Other |
|
|
|
| ||||||||||||||||||
|
| Preferred Stock |
|
| Preferred Stock |
|
| Common Stock |
|
| Paid In |
|
| Accumulated |
|
| Comprehensive |
|
|
|
| |||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Loss |
|
| Total |
| ||||||||||
Balance, January 1, 2021 |
|
| - |
|
| $ | 0 |
|
|
| 2,774 |
|
| $ | 0 |
|
|
| 31,150,309 |
|
| $ | 3,115 |
|
| $ | 93,834,936 |
|
| $ | (95,366,198 | ) |
| $ | (1,112,546 | ) |
| $ | (2,640,693 | ) |
Issuance of Series C preferred stock and warrants for cash, net of offering costs |
|
| 10,667 |
|
|
| 1 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 7,105,167 |
|
|
| 0 |
|
|
| 0 |
|
|
| 7,105,168 |
|
Issuance of Series C preferred stock for license acquired |
|
| 3,290 |
|
|
| 1 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 2,467,648 |
|
|
| 0 |
|
|
| 0 |
|
|
| 2,467,649 |
|
Beneficial conversion feature of Series C preferred stock |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 4,507,125 |
|
|
| 0 |
|
|
| 0 |
|
|
| 4,507,125 |
|
Deemed dividend of Series C preferred stock |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| (4,507,125 | ) |
|
| 0 |
|
|
| 0 |
|
|
| (4,507,125 | ) |
Issuance of Series C preferred stock upon exchange of Series B preferred stock |
|
| 19,140 |
|
|
| 1 |
|
|
| (1,839 | ) |
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| (1,431 | ) |
|
| 0 |
|
|
| 0 |
|
|
| (1,430 | ) |
Warrants issued in connection with exchange of Series B preferred stock |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 21,009,683 |
|
|
| 0 |
|
|
| 0 |
|
|
| 21,009,683 |
|
Deemed dividend related to exchange of Series B preferred stock |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| (21,008,253 | ) |
|
| 0 |
|
|
| 0 |
|
|
| (21,008,253 | ) |
Common stock issued upon conversion of Series B preferred stock |
|
| - |
|
|
| 0 |
|
|
| (259 | ) |
|
| 0 |
|
|
| 2,582,782 |
|
|
| 258 |
|
|
| (258 | ) |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
Dividends on preferred stock |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| (231,043 | ) |
|
| 0 |
|
|
| 0 |
|
|
| (231,043 | ) |
Common stock and pre-funded warrants issued upon conversion of Series C preferred stock |
|
| (33,097 | ) |
|
| (3 | ) |
|
| - |
|
|
| 0 |
|
|
| 31,254,595 |
|
|
| 3,126 |
|
|
| (3,123 | ) |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
Issuance of common stock, pre-funded warrants and warrants for cash, net of offering costs |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 5,800,000 |
|
|
| 580 |
|
|
| 9,058,710 |
|
|
| 0 |
|
|
| 0 |
|
|
| 9,059,290 |
|
Issuance of common stock at-the-market for cash, net of offering costs |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 1,495,645 |
|
|
| 150 |
|
|
| 1,174,198 |
|
|
| 0 |
|
|
| 0 |
|
|
| 1,174,348 |
|
Common stock issued upon exercise of warrants |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 9,456,443 |
|
|
| 946 |
|
|
| 4,905,684 |
|
|
| 0 |
|
|
| 0 |
|
|
| 4,906,630 |
|
Common stock and warrants issued to consultants |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 770,301 |
|
|
| 78 |
|
|
| 1,092,232 |
|
|
| 0 |
|
|
| 0 |
|
|
| 1,092,310 |
|
Settlement with former placement agent |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 75,000 |
|
|
| 7 |
|
|
| 94,492 |
|
|
| 0 |
|
|
| 0 |
|
|
| 94,499 |
|
Stock-based compensation |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| - |
|
|
| 1,086,296 |
|
|
| 0 |
|
|
| 0 |
|
|
| 1,086,296 |
|
Foreign currency translation adjustment |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| (112,957 | ) |
|
| (112,957 | ) |
Net loss |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| (16,964,573 | ) |
|
| 0 |
|
|
| (16,964,573 | ) |
Balance, June 30, 2021 |
|
| - |
|
| $ | 0 |
|
|
| 676 |
|
| $ | 0 |
|
|
| 82,585,075 |
|
| $ | 8,260 |
|
| $ | 120,584,938 |
|
| $ | (112,330,771 | ) |
| $ | (1,225,503 | ) |
| $ | 7,036,924 |
|
See accompanying notes to consolidated financial statements
Consolidated Statements of Cash Flows (unaudited)
Nine Months | Nine Months | |
Ended | Ended | |
09/30/20 | 09/30/19 | |
| Cash flows from operating activities: | ||
| Net loss | $(15,271,074) | $(13,896,063) |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||
| Depreciation | 26,556 | 51,261 |
| Amortization | 395,661 | 825,063 |
| Non-cash lease expense | (4,855) | (3,218) |
| Common stock issued to settle accounts payable for board fees | 131,137 | - |
| Stock-based compensation | 369,517 | 541,725 |
| Restricted stock granted to employees/directors | 27,292 | 556,888 |
| Common stock granted to consultants | 109,605 | 112,500 |
| Accreted interest on convertible debt | 234,334 | 124,932 |
| Accretion of debt discount | 4,580,167 | 147,461 |
| Loss on debt extinguishment | 609,998 | - |
| Gain on settlement | (211,430) | - |
| Beneficial conversion feature related to promissory note exchange | 798,413 | - |
| Changes in assets and liabilities: | ||
| Accounts receivables | (220,094) | - |
| Other receivables | 2,121,336 | (261,981) |
| Prepaid expenses | 446,766 | 420,218 |
| Deposits | (4,180) | (4,125) |
| Accounts payable and accrued expenses | 90,147 | 601,096 |
| Accrued dividends payable | 408,043 | - |
| Other liabilities | 31,104 | (23,274) |
| Net cash used in operating activities | (5,331,557) | (10,807,517) |
| Cash flows from investing activities: | ||
| Purchase of property and equipment | (2,808) | (17,243) |
| Net cash used in investing activities | (2,808) | (17,243) |
| Cash flows from financing activities: | ||
| Proceeds from issuance of notes payable, net | 179,408 | - |
| Proceeds from issuance of common stock, net | 988,348 | 9,492,016 |
| Proceeds from issuance of convertible debt, net | 3,227,002 | 2,000,000 |
| Proceeds from issuance of preferred stock, net | 13,197,740 | - |
| Received from stockholder in relation to warrant modification | - | 61,590 |
| Repayments of convertible debt | (475,000) | - |
| Repayments of note payable | (623,772) | (255,032) |
| Net cash provided by financing activities | 16,493,726 | 11,298,574 |
| Increase in cash | 11,159,361 | 473,814 |
| Effect of exchange rate changes on cash | 33,523 | (38,332) |
| Cash, beginning balance | 175,796 | 1,114,343 |
| Cash, ending balance | $11,368,680 | $1,549,825 |
| Supplemental disclosures of cash flow information: | ||
| Cash paid for interest | $105,460 | $5,762 |
| Non-cash investing and financing activities: | ||
| Common stock issued for patents purchased from Mayoly | $- | $1,740,959 |
| Warrant modification related to convertible debt issuance | $- | $325,320 |
| Deemed dividend on preferred stock | $8,155,212 | $- |
| Accrued dividends on preferred stock | $408,043 | $- |
| Exchange of promissory notes into preferred stock and warrants | $609,998 | $- |
|
| Six Months Ended June 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
|
|
|
|
|
|
| ||
Cash flows from operating activities: |
|
| ||||||
Net loss |
| $ | (16,964,573 | ) |
| $ | (9,957,168 | ) |
Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
| 3,014 |
|
|
| 18,368 |
|
Amortization |
|
| 263,774 |
|
|
| 263,774 |
|
Non-cash lease expense |
|
| (4,855 | ) |
|
| (6,065 | ) |
Common stock issued to settle accounts payable |
|
| 0 |
|
|
| 131,137 |
|
Change in fair value of liability |
|
| (532,353 | ) |
|
| 0 |
|
Stock-based compensation |
|
| 1,086,296 |
|
|
| 230,126 |
|
Restricted stock granted to employees/directors |
|
| 0 |
|
|
| 21,003 |
|
Common stock granted to consultants |
|
| 1,186,809 |
|
|
| 87,105 |
|
Accreted interest on convertible debt |
|
| 0 |
|
|
| 319,196 |
|
Accretion of debt discount |
|
| 0 |
|
|
| 4,203,182 |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivables |
|
| 0 |
|
|
| (36,033 | ) |
Other receivables |
|
| 551,489 |
|
|
| 2,548,659 |
|
Prepaid expenses |
|
| 715,368 |
|
|
| 274,019 |
|
Right of use assets |
|
| (316,541 | ) |
|
| (108,447 | ) |
Deposits |
|
| (41,676 | ) |
|
| 5,000 |
|
Accounts payable and accrued expenses |
|
| 2,958,282 |
|
|
| (571,728 | ) |
Deferred offering costs |
|
| 0 |
|
|
| (192,071 | ) |
Accrued dividends payable |
|
| 0 |
|
|
| 0 |
|
Other liabilities |
|
| 398,838 |
|
|
| 135,210 |
|
Net cash used in operating activities |
|
| (10,696,128 | ) |
|
| (2,634,733 | ) |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Purchase of property and equipment |
|
| (73,928 | ) |
|
| (2,808 | ) |
Payment made related to license agreement |
|
| (9,000,000 | ) |
|
| 0 |
|
Net cash used in investing activities |
|
| (9,073,928 | ) |
|
| (2,808 | ) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Proceeds from issuance of notes payable, net |
|
| 0 |
|
|
| 179,418 |
|
Proceeds from issuance of preferred stock, net |
|
| 7,105,168 |
|
|
| 0 |
|
Proceeds from issuance of common stock, net |
|
| 10,233,638 |
|
|
| 988,348 |
|
Proceeds from exercise of warrants |
|
| 4,906,630 |
|
|
| 0 |
|
Proceeds from issuance of convertible debt, net |
|
| 0 |
|
|
| 3,227,002 |
|
Repayments of convertible debt |
|
| 0 |
|
|
| (450,000 | ) |
Repayments of note payable |
|
| (412,836 | ) |
|
| (511,173 | ) |
Net cash provided by financing activities |
|
| 21,832,600 |
|
|
| 3,433,595 |
|
|
|
|
|
|
|
|
|
|
Increase in cash |
|
| 2,062,544 |
|
|
| 796,054 |
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
|
| (50,194 | ) |
|
| 13,100 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning balance |
|
| 6,062,141 |
|
|
| 175,796 |
|
Cash and cash equivalents, ending balance |
| $ | 8,074,491 |
|
| $ | 984,950 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|
Cash paid for interest |
| $ | 0 |
|
| $ | 104,153 |
|
Cash paid for income taxes |
| $ | 0 |
|
| $ | 0 |
|
|
|
|
|
|
|
|
|
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
Deemed dividend on preferred stock issuances |
| $ | (4,507,125 | ) |
| $ | 0 |
|
Deemed dividend on preferred stock exchanges |
| $ | (21,008,253 | ) |
| $ | 0 |
|
Accrued dividends on preferred stock |
| $ | (231,043 | ) |
| $ | 0 |
|
Issuance of preferred stock to settle liability related to license agreement |
| $ | 2,467,649 |
|
| $ | 0 |
|
See accompanying notes to consolidated financial statements
| 5 |
| Table of Contents |
AZURRX BIOPHARMA, INC.
Notes to Unaudited Consolidated Financial Statements
N
ote 1 - TheThe Company
AzurRx BioPharma, Inc. (“
AzurRx” or “Parent”) was incorporated on January 30, 2014 in the State of Delaware. In June 2014,The Company is engaged in the research and development of targeted, non-systemic biologicstherapies for the treatment of patients with gastrointestinal disorders.(“GI”) diseases. Non-systemic biologicstherapies are non-absorbable drugs that act locally, i.e., in the intestinal lumen, skin or mucosa, without reaching an individual’s systemic circulation.
Our lead drug candidate is MS1819,
aIn 2021, we are launching two new clinical programs using proprietary formulations of niclosamide, a small molecule with anthelminthic, anti-viral and anti-inflammatory properties. The first FW-1022, is for Severe Acute Respiratory Syndrome Coronavirus 2 (“COVID-19”) gastrointestinal infections. In April 2021, we launched the Phase 2 RESERVOIR COVID-19 GI clinical trial using a proprietary oral immediate-release tablet formulation of micronized niclosamide. The second, FW-420, is for Grade 1 and Grade 2 Immune Checkpoint Inhibitor-Associated Colitis (“ICI-AC”) and diarrhea in advanced stage oncology patients. We are preparing to initiate our Phase 1b/2a PASSPORT ICI-AC trial using both an oral immediate-release tablet and a topical rectal enema foam formulations of niclosamide in the second half of 2021.
Since its inception, the Company has devoted substantially all its efforts to research and development, business development, and raising capital, and has primarily financed its operations through issuance of common stock, convertible preferred stock, convertible debt, and other debt/equity instruments. The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development and regulatory success, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, and ability to secure additional capital to fund clinical trials and operations.
Historically, the Company’s major sources of cash have been comprised of proceeds from various public and private offerings of its capital stock. As of June 30, 2021, the Company had approximately $8.1 million in cash and cash equivalents. The Company has incurred recurring losses, has experienced recurring negative operating cash flows, and requires significant cash resources to execute its business plans. The Company has an accumulated deficit of approximately $112.3 million as of June 30, 2021.
The Company has implemented business continuity plans designed to address and mitigate the impact of the COVID-19 pandemic on our business. The extent to which the ongoing COVID-19 pandemic impacts our business, our clinical development and regulatory efforts, our corporate development objectives and the value of and market for our Common Stock, will depend on future developments that are highly uncertain and cannot be predicted with confidence at this time, such as the ultimate duration of the pandemic, travel restrictions, quarantines, social distancing and business closure requirements in the U.S. and, Europe and other countries, and the Combination therapy trialeffectiveness of actions taken globally to contain and treat the disease. The global economic slowdown, the overall disruption of global healthcare systems and the other risks and uncertainties associated with the pandemic could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
In addition, the Company is subject to other challenges and risks specific to its business and its ability to execute on its strategy, as well as risks and uncertainties common to companies in Europe, consistingthe biotechnology and pharmaceutical industries with development and commercial operations, including, without limitation, risks and uncertainties associated with: obtaining regulatory approval of MS1819its drug candidates; delays or problems in conjunctionthe manufacture and supply of its drug candidates, loss of single source suppliers or failure to comply with porcine-derived pancreatic enzyme replacement therapy,manufacturing regulations; identifying, acquiring or in-licensing additional products or drug candidates; pharmaceutical product development and the current standardinherent uncertainty of care.
| 6 |
| Table of Contents |
AZURRX BIOPHARMA, INC.
Notes to Unaudited Consolidated Financial Statements
Basis of Presentation and Principles of Consolidation
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles generally accepted in the United States of America (“
In our opinion, the accompanying unaudited interim consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly our financial position, results of operations, and cash flows. The consolidated balance sheet at December 31, 2019,2020, has been derived from audited financial statements of that date. The unaudited interim consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the Securities and Exchange Commission
Going Concern Uncertainty
The accompanying unaudited interim consolidated financial statements have been prepared as if the Company will continue as a going concern. The Company has incurred significant operating losses and negative cash flows from operations since inceptioninception. On June 30, 2021, we had cash and hadcash equivalents of approximately $8.1 million, and an accumulated deficit of approximately $78.0 million at September 30, 2020.$112.3 million. The Company is dependent on obtaining and continues to pursue, additional working capital funding from the sale of equity and/or debt securities and debt in order to continue to execute its development planplans and continue operations.
Without adequate working capital, the Company may not be able to meet its obligations and continue as a going concern. These conditions raise substantial doubt about ourthe Company’s ability to continue as a going concern. The financial statements do not include any adjustments
Note 2 - Significant Accounting Policies and Recent Accounting Pronouncements
Use of Estimates
The accompanying unaudited consolidated financial statements are prepared in conformity with U.S. GAAP and include certain estimates and assumptions whichthat affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements (including goodwill, intangible assets, and contingent consideration), and the reported amounts of revenuesrevenue and expensesexpense during the reporting period, including contingencies. Accordingly, actual results may differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less from date of purchase to be cash equivalents. All cash balances were highly liquid at Septemberon June 30, 20202021, and December 31, 2019,2020, respectively.
Concentrations of Credit Risk
Financial instruments that potentially expose the Company to concentrations of credit risk consist of cash. The Company primarily maintains its cash balances with financial institutions in federally insured accounts in the U.S. The Company may from time to time have cash in banks in excess of FDIC insurance limits. At SeptemberOn June 30, 20202021, and December 31, 2019,2020, the Company had approximately $11.1$3.8 million and $0,$2.7 million, respectively, in one account in the U.S. in excess of these limits. The Company has not experienced any losses to date resulting from this practice. The Company mitigates its risk by maintaining the majority of its cash and cash equivalents with high quality financial institutions.
The Company also has exposure to foreign currency risk as its subsidiary in France has a functional currency in Euros.
| 7 |
| Table of Contents |
AZURRX BIOPHARMA, INC.
Notes to Unaudited Consolidated Financial Statements
Debt Instruments
Detachable warrants issued in conjunction with debt are measured at their relative fair value, if they are determined to be equity instrument, or their fair value, if they are determined to be liability instruments, and recorded as a debt discount. Conversion features that are in the money at the commitment date constitute a beneficial conversion feature that is measured at its intrinsic value and recognized as debt discount. Debt discount is amortized as interest expense over the maturity period of the debt using the effective interest method. Contingent beneficial conversion features are recognized when the contingency has been resolved.
Debt Issuance Costs
Debt issuance costs are recorded as a direct reduction of the carrying amount of the related debt. Debt issuance costs are amortized over the maturity period of the related debt instrument using the effective interest method.
Equity-Based Payments to Non-Employees
Equity-based payments to non-employees are measured at fair value on the grant date per ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting.
Fair Value Measurements
The Company follows Accounting Standards Codification (“ASC”) Topic 820-10, Fair Value Measurements and Disclosures (“ASC 820”), which among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.
As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows:
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions, which reflect those that a market participant would use.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the overall fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument.
The Company recognizes transfers between levels as if the transfers occurred on the last day of the reporting period.
Foreign Currency Translation
The Company’s foreign subsidiaries withsubsidiary has operations denominated in a foreign currency, and assets and liabilities are translated to U.S. dollars, which is the functional currency, at period end exchange rates. Income and expense items are translated at average rates of exchange prevailing during the periods presented. Gains and losses from translation adjustments are accumulated in a separate component of stockholders’ equity.
| 8 |
| Table of Contents |
Goodwill and Intangible Assets
Goodwill represents the excess of the purchase price of the acquired business over the fair value of amounts assigned to assets acquired and liabilities assumed. Goodwill and other intangible assets with indefinite useful lives are reviewed for impairment annually or more frequently if events or circumstances indicate impairment may be present. Any excess in carrying value over the estimated fair value is charged to results of operations. The Company has not recognized any impairment charges through SeptemberJune 30, 2020.
Intangible assets subject to amortization consist of in process research and development, license agreements, and patents reported at the fair value at date of the acquisition less accumulated amortization. Amortization expense is provided using the straight-line method over the estimated useful lives of the assets as follows:
Patents 7.2 years
Impairment of Long-Lived Assets
The Company periodically evaluates its long-lived assets for potential impairment in accordance with ASC Topic 360, Property, Plant and Equipment (“ASC 360”). Potential impairment is assessed when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recovered. Recoverability of these assets is assessed based on undiscounted expected future cash flows from the assets, considering a number of factors, including past operating results, budgets and economic projections, market trends and product development cycles. If impairments are identified, assets are written down to their estimated fair value. The Company has not recognized any impairment charges through SeptemberJune 30, 2020.
Income Taxes
Income taxes are recorded in accordance with ASC 740, Accounting for Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. The Company determines its deferred tax assets and liabilities based on differences between financial reporting and tax bases of assets and liabilities, which are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. At SeptemberOn June 30, 20202021, and December 31, 2019,2020, the Company does not have any significant uncertain tax positions. All tax years are still open for audit.
Leases
The Company adopted Accounting Standards Update (“ASU”) No. 2016-02, “Leases.” This ASU requires substantially alldetermines if an arrangement is a lease at inception. Operating leases be recorded on the balance sheet as right of useare included in right-of-use (“ROU”) assets, and lease obligations.liability obligations are included in the Company’s balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liability obligations represent its obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the Company’s leases typically do not provide an implicit rate, the Company estimates its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company adopteduses the ASU usingimplicit rate when readily determinable. The ROU asset also includes any lease payments made and excludes lease incentives and lease direct costs. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense is recognized on a modified retrospective adoption method at January 1, 2019,straight-line basis over the lease term. Please refer to Note 15 for additional information.
| 9 |
| Table of Contents |
AZURRX BIOPHARMA, INC.
Notes to Unaudited Consolidated Financial Statements
License Agreements
As more fully discussed in Note 14, the Company entered into a license agreement (the “First Wave License Agreement”) with First Wave Bio, Inc. (“First Wave”), pursuant to which First Wave granted the Company an exclusive license to certain patents and patent applications related to a proprietary formulation of niclosamide for use in the fields of ICI-AC and COVID-19 GI infections. The acquisition of intellectual property and patents for the worldwide, exclusive right to develop, manufacture, and commercialize proprietary formulations of niclosamide for the fields of treating ICI-AC and COVID-19 in humans was accounted for as outlinedan asset acquisition and initial liabilities of approximately $13.3 million in ASU No. 2018-11, “Leases - Targeted Improvements.connection with the license acquisition were recorded as research and development expense, because it was determined to have no alternative future uses and therefore no separate economic value, which included cash payments totaling approximately $10.3 million and the issuance of approximately $3.0 million worth of preferred stock.
As more fully discussed in Note 14, the Company entered into a sublicense agreement with TransChem, Inc. (“TransChem” Under), pursuant to which TransChem granted the Company an exclusive license to certain patents and patent applications. Payments made to TransChem in connection with this method of adoption, there is no impact to the comparative condensed consolidated statements of operationssublicense agreement were recorded as research and condensed consolidated balance sheets.development expense. The Company determined that there was no cumulative-effect adjustment to beginning retained earnings onterminated the consolidated balance sheet. In addition,sublicense agreement with TransChem during the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed carryforward of historical lease classifications. Adoption of this standard did not materially impact the Company’s results of operations and had no impact on the consolidated statements of cash flows.
Research and Development
Research and development (“R&D”) costs are charged to operations when incurred and are included in operating expense. R&Dexpense, except for goodwill related to patents. Research and development costs consist principally of compensation of employees and consultants that perform the Company’s research activities, payments to third parties for preclinical and non-clinical activities, expenses with clinical research organizations (CROs), investigative sites, consultants and contractors that conduct or provide other services relating to clinical trials, costs to acquire drug product, drug supply and clinical trial materials from contract development and clinical activities,manufacturing organization (CDMOs) and third-party contractors relating to chemistry, manufacturing and controls (“CMC”) efforts, the fees paid for and to maintain the Company’s licenses, and the payments to third parties for manufacturing drug supply and clinical trials, laboratory and other supply expenses and amortization of intangible assets.
Stock-Based Compensation
The Company’s board of directors (the “Board”) and stockholders have adopted and approved the Amended and Restated 2014 Omnibus Equity Incentive Plan (the “2014 Plan”) which took effect on May 12, 2014, and the 2020 Omnibus Equity Incentive Plan, which took effect on September 11, 2020 (the “2020 Plan”). From the effective date of the 2020 Plan, no new awards have been or will be made under the 2014 Plan. The Company accounts for its stock-based compensation awards to employees and Board members in accordance with ASC Topic 718, Compensation—Stock Compensation (“ASC 718”). ASC 718 requires all stock-based payments to employees and Board members, including grants of employee stock options, to be recognized in the statements of operations by measuring the fair value of the award on the date of grant and recognizing this fair value as stock-based compensation using a straight-line method over the requisite service period, generally the vesting period.
For awards with performance conditions that affect their vesting, such as the occurrence of certain transactions or the achievement of certain operating or financial milestones, recognition of fair value of the award occurs when vesting becomes probable.
The Company estimates the grant date fair value of stock option awards using the Black-Scholes option-pricing model. The use of the Black-Scholes option-pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the Common Stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the Common Stock.
Subsequent Events
The Company considered events or transactions occurring after the balance sheet date but prior to the date the consolidated financial statements are available to be issued for potential recognition or disclosure in its consolidated financial statements.
| 10 |
| Table of Contents |
AZURRX BIOPHARMA, INC.
Notes to Unaudited Consolidated Financial Statements
Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board (“FASB”)FASB issued an accounting pronouncement (ASU 2020-06) related to the measurement and disclosure requirements for convertible instruments and contracts in an entity'sentity’s own equity. The pronouncement simplifies and adds disclosure requirements for the accounting and measurement of convertible instruments and the settlement assessment for contracts in an entity'sentity’s own equity. As a smaller reporting company, as defined by the SEC,U.S. Securities and Exchange Commission (the “SEC”), this pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2023. The Company is currently evaluating the impact of this ASU on the financial statements.
Note 3 -Fair Value Disclosures
Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework that prioritizes and ranks the level of observability of inputs used in measuring fair value.
The fair value of the Company'sCompany’s financial instruments are as follows:
Fair Value Measured a Reporting Date Using | |||||
Carrying Amount | Level 1 | Level 2 | Level 3 | Fair Value | |
| At September 30, 2020: | |||||
| Cash | $11,368,680 | $ | $11,368,680 | $ | $11,368,680 |
| Other receivables | $20,688 | $ | $20,688 | $20,688 | |
| At December 31, 2019: | |||||
| Cash | $175,796 | $- | $175,796 | $- | $175,796 |
| Other receivables | $2,637,303 | $- | $- | $2,637,303 | $2,637,303 |
| Note payable | $444,364 | $- | $- | $444,364 | $444,364 |
| Convertible debt | $1,076,938 | $- | $- | $1,076,938 | $1,076,938 |
|
|
|
|
| Fair Value Measured at Reporting Date Using |
|
|
|
| |||||||||||
|
| Carrying Amount |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Fair Value |
| |||||
June 30, 2021: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cash and cash equivalents |
| $ | 8,074,491 |
|
| $ | 4,072,706 |
|
| $ | 4,001,785 |
|
| $ | 0 |
|
| $ | 8,074,491 |
|
Other receivables |
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 0 |
|
Note payable |
| $ | 139,569 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 139,569 |
|
| $ | 139,569 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 6,062,141 |
|
| $ | 3,000,184 |
|
| $ | 3,061,957 |
|
| $ | 0 |
|
| $ | 6,062,141 |
|
Other receivables |
| $ | 551,489 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 551,489 |
|
| $ | 551,489 |
|
Note payable |
| $ | 552,405 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 552,405 |
|
| $ | 552,405 |
|
On June 30, 2020, the fair value of other receivables approximates carrying value as these consist primarily of refundable tax credits.
The fair value of other receivables approximates carrying value as these consist primarily of French R&Dresearch and development tax credits that are normally received the following year.
The fair value of the note payable in connection with the financing of directors and officer’s liability insurance approximates carrying value due to the terms of such instruments and applicable interest rates.
| 11 |
| Table of Contents |
AZURRX BIOPHARMA, INC.
Notes to Unaudited Consolidated Financial Statements
Note 4 - Other Receivables
Other receivables consisted of the following:
September 30, | December 31, | |
2020 | 2019 | |
| R&D tax credits | $- | $2,566,281 |
| Other | 20,688 | 71,022 |
| Total other receivables | $20,688 | $2,637,303 |
|
| June 30, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
|
|
|
|
|
|
| ||
Research and development tax credits |
| $ | 0 |
|
| $ | 493,906 |
|
Other |
|
| 0 |
|
|
| 57,583 |
|
Total other receivables |
| $ | 0 |
|
| $ | 551,489 |
|
On December 31, 2020, the R&Dresearch and development tax credits were comprised of a portion of the 20192020 refundable tax credits (CIR) for research conducted in France and Europe.
In April 2021, the Company received payment for the 2020 refundable tax credits for research conducted in France.
Note 5 - Property, Equipment and Leasehold Improvements
Property, equipment, and leasehold improvements consisted of the following:
September 30, | December 31, | |
2020 | 2019 | |
| Laboratory equipment | $193,661 | $193,661 |
| Computer equipment | 77,850 | 74,836 |
| Office equipment | 36,703 | 36,703 |
| Leasehold improvements | 29,162 | 35,711 |
| Total property, plant and equipment | 337,376 | 340,911 |
| Less accumulated depreciation | (283,306) | (263,520) |
| Property, plant and equipment, net | $54,070 | $77,391 |
|
| June 30, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
|
|
|
|
|
|
| ||
Laboratory equipment |
| $ | 0 |
|
| $ | 2,410 |
|
Computer equipment and software |
|
| 48,275 |
|
|
| 19,676 |
|
Office equipment |
|
| 42,193 |
|
|
| 5,483 |
|
Leasehold improvements |
|
| 0 |
|
|
| 29,163 |
|
Total property, plant, and equipment |
|
| 90,468 |
|
|
| 56,732 |
|
Less accumulated depreciation |
|
| (1,225 | ) |
|
| (38,403 | ) |
Property, plant and equipment, net |
| $ | 89,243 |
|
| $ | 18,329 |
|
Depreciation expense for the three months ended SeptemberJune 30, 2021 and 2020 was approximately $2,000 and 2019 was $8,188 and $17,220,$9,000, respectively. Depreciation expense for the ninesix months ended SeptemberJune 30, 2021 and 2020 was approximately $3,000 and 2019$18,000, respectively.
For the six months ended June 30, 2021, approximately $2,000 of depreciation was $26,556included in research and $51,261, respectively.
During the six months ended June 30, 2021, approximately $29,000 of leaseholds improvements were written off in connection with closing the Company’s laboratory in France.
For the three months ended SeptemberJune 30, 2020, $4,881approximately $5,000 of depreciation was included in research and development expense and approximately $4,000 of depreciation is included in R&Dgeneral and administrative expense.
For the six months ended June 30, 2020, $9,000of depreciation is included in research and development expense and $3,307$9,000 of depreciation is included in G&Ageneral and administrative expense. For the nine months ended September 30, 2020, $14,372 of depreciation is included in R&D expense and $12,184 of depreciation is included in G&A expense.
| 12 |
| Table of Contents |
AZURRX BIOPHARMA, INC.
Notes to R&D expense and $5,149 of depreciation remains in G&A expense. For the nine months ended September 30, 2019, $35,442 of depreciation is included in R&D expense and $15,343 of depreciation is included in G&A expense.
Note 6 - Intangible Assets and Goodwill
Patents
Pursuant to the Mayoly APA entered into onin March 27, 2019 (see Note 14), in which the Company purchased all remaining rights, title and interest in and to MS1819 (see Note 14),from Mayoly, the Company recorded Patents in the amount of $3,802,745approximately $3.8 million as follows:
Common stock issued at signing to Mayoly |
| $ | 1,740,959 |
|
Due to Mayoly at December 31, 2019 |
|
| 449,280 |
|
Due to Mayoly at December 31, 2020 |
|
| 393,120 |
|
Assumed Mayoly liabilities and forgiveness of Mayoly debt |
|
| 1,219,386 |
|
|
| $ | 3,802,745 |
|
Intangible assets are as follows:
September 30, | December 31, | |
2020 | 2019 | |
| Patents | $3,802,745 | $3,802,745 |
| Less accumulated amortization | (791,322) | (395,661) |
| Patents, net | $3,011,423 | $3,407,084 |
|
| June 30, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
Patents |
| $ | 3,802,745 |
|
| $ | 3,802,745 |
|
Less accumulated amortization |
|
| (1,186,983 | ) |
|
| (923,209 | ) |
Patents, net |
| $ | 2,615,762 |
|
| $ | 2,879,536 |
|
Amortization expense was approximately $132,000 and $132,000 for the three months ended September 30,June 31, 2021, and 2020, and 2019 was $131,887 and $131,887, respectively.
Amortization expense was approximately $264,000 and $264,000 for the ninesix months ended September 30,June 31, 2021, and 2020, and 2019 was $395,661 and $825,063, respectively.
As of SeptemberJune 30, 2020,2021, amortization expense related to patents is expected to be as follows for the next five years (2020(2021 through 2025)2026):
| 2020 (balance of year) | $395,661 |
| 2021 | 527,548 |
| 2022 | 527,548 |
| 2023 | 527,548 |
| 2024 | 527,548 |
| 2025 | 527,548 |
2021 (balance of year) |
| $ | 263,774 |
|
2022 |
|
| 527,548 |
|
2023 |
|
| 527,548 |
|
2024 |
|
| 527,548 |
|
2025 |
|
| 527,548 |
|
2026 |
|
| 241,796 |
|
Total |
| $ | 2,615,762 |
|
Goodwill is as follows:
Goodwill | ||||
Balance | 1,886,686 | |||
Foreign currency translation | 167,362 | |||
Balance | 2,054,048 | |||
Foreign currency translation | (62,761 | ) | ||
Balance | 1,991,287 | |||
| 13 |
| Table of Contents |
AZURRX BIOPHARMA, INC.
Notes to Unaudited Consolidated Financial Statements
Note 7 - Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consisted of the following:
September 30, | December 31, | |
2020 | 2019 | |
| Trade payables | $1,422,066 | $1,683,505 |
| Accrued expenses | 263,937 | 71,177 |
| Total accounts payable and accrued expenses | $1,686,003 | $1,754,682 |
|
| June 30, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
Trade payables |
| $ | 4,449,910 |
|
| $ | 1,558,591 |
|
Accrued expenses |
|
| 193,975 |
|
|
| 127,012 |
|
Total accounts payable and accrued expenses |
| $ | 4,643,885 |
|
| $ | 1,685,603 |
|
Note 8 - NotesNote Payable
Directors and Officer’s Liability Insurance
On November 30, 2020, the Company entered into a 9-month financing agreement for its directors and officer’s liability insurance in the amount of approximately $620,000 that bears interest at an annual rate of 4.250%. Monthly payments, including principal and interest, of approximately $70,000 per month. The balance due under this financing agreement was approximately $140,000 and $552,000 on June 30, 2021 and December 31, 2020, respectively.
On December 5, 2019, the Company entered into a 9-month financing agreement for its directors and officer’s liability insurance in the amount of $498,783approximately $500,000 that bears interest at an annual rate of 5.461%. Monthly payments, including principal and interest, are $56,689were approximately $57,000 per month. The balance due under this financing agreement at Septemberwas approximately $113,000 on June 30, 2020 was $0.
Note 9 – Convertible Notes
The ADEC Notes
On February 14, 2019, the Company entered into a Note Purchase Agreement (the “ADEC NPA”)note purchase agreement with ADEC Private Equity Investments, LLC (“ADEC”), pursuant to which the Company issued to ADEC two Senior Convertible Notes (“Note A” and “Note B,” respectively, each(each an “ADEC Note,” and together, the “ADEC Notes”), in the principal amount of $1,000,000$1.0 million per ADEC Note, resulting in gross proceeds to the Company of $2,000,000$2.0 million (the “ADEC Note Offering”). ADEC is controlled by a significant stockholder of the Company.
In December 2019, the Company repaid $1,550,000 principal amount of the ADEC Notes and onin January 2, 2020, the Company repaid the remaining principal balance of $450,000 plus outstanding accrued interest of $104,153. As of September 30, 2020, no approximately $104,000 on the ADEC Notes were outstanding.
Senior Convertible Promissory Note Offering
On December 20, 2019, the Company began an offering of (i) Senior Convertible Promissory Notes (each a “Promissory Note,” and together, the “Promissory Notes”) in the principal amount of up to $8.0 million to certain accredited investors (the “Note Investors”), and (ii) warrants (“Note Warrants”) to purchase shares of Common Stock, each pursuant to Note Purchase Agreements entered into by and between the Company and each of the Note Investors (the “Promissory NPAs”) (the “Promissory Note Offering”).
The Promissory Notes were scheduled to mature on September 20, 2020, accrue interest at a rate of 9% per annum, and were convertible, at the sole option of the holder, into shares of Common Stock (the “Promissory Note Conversion Shares”) at a price of $0.97 per share (the “Conversion Option”). The Promissory Notes could be prepaid by the Company at any time prior to the maturity date in cash without penalty or premium (the “Prepayment Option”).
On January 2, 2020, January 3, 2020, and January 9, 2020, the Company issued Promissory Notes to the Note Investors in the aggregate principal amount of $3,517,700.
As additional consideration for the execution of the Promissory NPA, each Note Investor also received Note Warrants to purchase that number of shares of Common Stock equal to one-half (50%) of the Promissory Note Conversion Shares issuable upon conversion of the Promissory Notes (the “NoteWarrant Shares”). The Note Warrants have an exercise price of $1.07 per share and expire five years from the date of issuance. In addition, all ofJuly 2020, the Note Warrants, other than those issued in the December 20, 2019 closing (covering an aggregate of 2,374,345 shares of Common Stock) contain a provision prohibiting exercise until the expiration of six months from the date of issuance. The Company and each Note Investor executed a Registration Rights Agreement (the “RRA”), pursuant to which the Company agreed to file a registration statement. The Company filed a registration statement with the SEC on February 7, 2020 covering the Promissory Note Conversion Shares and Note Warrant Shares but that registration statement was not declared effective and was subsequently withdrawn by the Company. On July 27, 2020, the Company filed a separate registration statement in connection with the Series B Private Placement and the Exchange described in Note 11, which also covers the Note Warrant Shares. That registration statement was declared effective onin September 21, 2020.
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AZURRX BIOPHARMA, INC.
Notes to Unaudited Consolidated Financial Statements
In connection with the fourthree closings in December 2019January 2020 of the PromissoryNote Offering, the Company paid aggregate placement agent fees of $338,630,approximately $277,000, which fees were based on (i) 9% of the aggregate principal amount of the Promissory Notes issued to the Note Investors introduced by the placement agent, and (ii) a non-accountable expense allowance of 1% of the gross proceeds from the Promissory Note Offering. In addition, the placement agent was issued warrants containing substantially the same terms and conditions as the Note Warrants,(the “Placement Agent Warrants”), to purchase an aggregate of 244,372199,732 shares of Common Stock (the “January Placement Agent Warrants”), representing 7% of the Promissory Note Conversion Shares issuable upon conversion of the Promissory Notes issued to the Note Investors. The January Placement Agent Warrants expire five years from the date of issuance. The January Placement Agent Warrants in connection with the December 2019 closings have an exercise price of $1.21 per share.
The Company determined the Prepayment Option feature represents a contingent call option. The Company evaluated the Prepayment Option in accordance with ASC 815-15-25. The Company determined that the Prepayment Option feature is clearly and closely related to the debt host instrument and is not an embedded derivative requiring bifurcation. Additionally, the Company determined the Conversion Option represents an embedded call option. The Company evaluated the Conversion Option in accordance with ASC 815-15-25. The Company determined that the Conversion Option feature meets the scope exception from ASC 815 and is not an embedded derivative requiring bifurcation.
The Company evaluated the Promissory Notes for a beneficial conversion feature in accordance with ASC 470-20. The Company determined that at each commitment date the effective conversion price was below the closing stock price (market value), and the Convertible Notes contained a beneficial conversion feature.
Pursuant to the December 2019January 2020 closings of the Promissory Note Offering, the principal amount of $3,386,300approximately $3.5 million was first allocated based on the relative fair value of the Promissory Notes and the Note Warrants. The fair value of the Note Warrants amounted to $912,648.approximately $2.4 million. Then the beneficial conversion feature was calculated, which amounted to $1,359,284.approximately $1.8 million. The Company incurred debt issuance costs of $588,017approximately $0.5 million related to the offering. The initial carrying value of the Promissory Notes issued amounted to $526,351.
On June 1, 2020, the Company entered into an amendment to a certain Promissory Note in the principal amount of $100,000 issued on December 20, 2019, to Edward J. Borkowski, the chairman of the Board, to increase the Conversion Price to $1.07 per share (the “Note Amendment”). The Company evaluated the Note Amendment transaction in accordance with ASC 470-50 and determined the Note Amendment did not constitute a substantive modification of the Promissory Note and that the transaction should be accounted for as a debt modification with no accounting treatment required.
During the three months ended SeptemberJune 30, 2020, the Company recognized $404,222approximately $2.3 million of interest expense related to these Promissory Notes, including amortization of debt discount related to the value of the Note Warrants of $120,165,approximately $0.7 million, amortization of the beneficial conversion feature of $193,555,approximately $1.1 million, amortization of debt discount related to debt issuance costs of $63,264,approximately $0.3 million, and accrued interest expense of $27,238.
During the ninesix months ended SeptemberJune 30, 2020, the Company recognized $4,912,396approximately $4.5 million of interest expense related to these Promissory Notes, including amortization of debt discount related to the value of the Note Warrants of $1,461,728,approximately $1.3 million, amortization of the beneficial conversion feature of $2,347,763,approximately $2.2 million, amortization of debt discount related to debt issuance costs of $771,675,approximately $0.7 million and accrued interest expense of $332,230.
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AZURRX BIOPHARMA, INC.
Notes together with accrued and unpaid interest thereon through the prepayment date of $1,307, held by those holders who did not participate in the Exchange. Following these transactions, no Promissory Notes remain outstanding.
Total | Promissory Notes | ADEC Notes | Total | |
September 30, | September 30, | September 30, | December 31, | |
2020 | 2020 | 2020 | 2019 | |
| Convertible debt | $- | $- | $- | $3,836,300 |
| Unamortized debt discount - revalued warrants | - | - | - | (118,356) |
| Unamortized debt discount - warrants | - | - | - | (878,979) |
| Unamortized debt discount - BCF | - | - | - | (1,307,755) |
| Unamortized debt discount - debt issuance costs | - | - | - | (566,815) |
| Accrued interest | - | - | - | 112,543 |
| Total convertible debt | $- | $- | $- | $1,076,938 |
Note 10 – Other Liabilities
Other liabilities consisted of the following:
September 30, | December 31, | |
| Current | 2020 | 2019 |
| Due to Mayoly | $410,026 | $392,989 |
| Lease liabilities | 74,156 | 83,235 |
| Other liabilities | 8,633 | - |
$492,815 | $476,224 | |
September 30, | December 31, | |
| Long-term | 2020 | 2019 |
| Lease liabilities | 31,469 | - |
$31,469 | $- |
|
| June 30, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
Current |
|
|
|
|
|
| ||
Lease liabilities |
| $ | 118,486 |
|
| $ | 57,417 |
|
Other liabilities |
|
| 71,139 |
|
|
| 0 |
|
|
| $ | 189,625 |
|
| $ | 57,417 |
|
Long-term |
|
|
|
|
|
|
|
|
Lease liabilities |
| $ | 285,753 |
|
| $ | 19,123 |
|
|
| $ | 285,753 |
|
| $ | 19,123 |
|
Note 11 –Equity
Our certificate of incorporation, as amended and restated on December 20, 2019 and February 24, 2021 (the “Charter”) authorizes the issuance of up to 150,000,000250,000,000 shares of Common Stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share.
On December 19, 2019,February 24, 2021 the Company held its Annuala Special Meeting of Stockholders (the “2019 Annual2021 Special Meeting”), whereby, the shareholders approved, among others, the following proposals: (i) amending the Company’s Certificate of Incorporation to increase the authorized shares of its Common Stock to 250,000,000 shares from 150,000,000 shares, and (ii) amending the Company’s Charter to authorize the Board to effect a reverse stock split of both the issued and outstanding and authorized shares of Common Stock, at a specific ratio, ranging from one-for-two (1:2) to one-for-five (1:5) to one-for-ten (1:10), any time prior to the one-year anniversary date of the 2019 Annual2021 Special Meeting, with the exact ratio to be determined by the Board (the “Reverse Split”). As of September 30, 2020,the date hereof, the Board had not elected to effect a Reverse Split. The authorization for the Reverse Split will expire on December 19, 2020.
Common Stock
The Company had 28,881,98482,585,075 and 26,800,51931,150,309 shares of its Common Stock issued and outstanding at Septemberon June 30, 20202021, and December 31, 2019,2020, respectively.
Each holder of Common Stock is entitled to one vote for each share of Common Stock held on all matters submitted to a vote of the stockholders. OurThe Company’s Charter and Amended and Restated Bylaws (the “
In addition, the holders of our Common Stock will be entitled to receive ratably such dividends, if any, as may be declared by the Board out of legally available funds; however, the current policy of ourthe Board is to retain earnings, if any, for operations and growth. Upon liquidation, dissolution or winding-up, the holders of our Common Stock will be entitled to share ratably in all assets that are legally available for distribution.
Holders of our Common Stock have no preemptive, conversion or subscription rights, and there are no redemption or sinking fund provisions applicable to the Common Stock. The rights, preferences, and privileges of the holders of Common Stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of ourthe Company’s preferred stock that wethe Company may designate and issue in the future.
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AZURRX BIOPHARMA, INC.
Notes to Unaudited Consolidated Financial Statements
Preferred Stock
We have 10,000,000 shares of preferred stock, par value $0.0001 per share, authorized and available for issuance in one or more series. The Board is authorized to divide the preferred stock into any number of series, fix the designation and number of each such series, and determine or change the designation, relative rights, preferences, and limitations of any series of preferred stock. The Board of may increase or decrease the number of shares initially fixed for any series, but no decrease may reduce the number below the shares then outstanding and duly reserved for issuance.
On July 16, 2020, we authorized 5,194.805195 shares as Series B Preferred Stock. Shares of Series B Preferred Stock that are converted into shares of Common Stock shall be retired and issued 2,912.583005may not be reissued as Series B Preferred Stock but may be reissued as all or part of another series of Preferred Stock. On June 30, 2021, 676.05 shares of Series B Preferred Stock were issued and outstanding, with 2,282.222190approximately 2,168.14 shares of Series B Preferred Stock remaining authorized but unissued. Following such transactions,
On January 5, 2021, we currently have 2,912.583005authorized 75,000 shares as Series C Preferred Stock. Shares of Series C Preferred Stock converted into Common Stock (or Prefunded Warrants, as applicable) or redeemed shall be canceled and shall not be reissued. On June 30, 2021, 0 shares of Series C Preferred Stock were issued and outstanding, with approximately 41,902.90 shares of Series C Preferred Stock remaining authorized but unissued.
On June 30, 2021, the Company had approximately 676.05 shares of preferred stock issued and outstanding with 9,997,087.416995approximately 9,919,805.19 shares of preferred stock remaining authorized but unissued.
Series B Convertible Preferred Stock
Pursuant to the Certificate of Designation of Rights and Preferences of the Series B Preferred Stock (the “
Series B Certificate of Designation”), the terms of the Series B Preferred Stock are as follows:Ranking
The Series B Preferred Stock will rank senior to the Common Stock with respect to distributions of assets upon the liquidation, dissolution or winding up of the Company.
Stated Value
Each share of Series B Preferred Stock has a stated value of $7,700, subject to adjustment for stock splits, combinations, and similar events (the “
Series B Stated Value”).Dividends
Each holder of shares of Series B Preferred Stock, in preference and priority to the holders of all other classes or series of stock of the Company, is entitled to receive dividends, commencing from the date of issuance. Such dividends may be paid by the Company only when, as and if declared by the Board, out of assets legally available therefor, semiannually in arrears on the last day of June and December in each year, commencing December 31, 2020, at the dividend rate of 9.0% per year, which is cumulative and continues to accrue on a daily basis whether or not declared and whether or not the Company has assets legally available therefor. The Company may pay such dividends at its option either in cash or in kind in additional shares of Series B Preferred Stock (rounded down to the nearest whole share), provided the Company must pay in cash the fair value of any such fractional shares in excess of $100.00. At SeptemberOn June 30, 2020 the dividend2021, aggregate dividends payable to the holders of the Series B Preferred Stock aggregatedamounted to approximately $408,043.
Liquidation Preference; Liquidation Rights
Under the Certificate of Designations, each share of Series B Preferred Stock carries a liquidation preference equal to the Series B Stated Value (as adjusted thereunder) plus accrued and unpaid dividends thereon (the “
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If the Company voluntarily or involuntarily liquidates, dissolves or winds up its affairs, each holder of the Series B Preferred Stock will be entitled to receive out of the Company’s assets available for distribution to stockholders, after satisfaction of liabilities to creditors, if any, but before any distribution of assets is made on the Common Stock or any of the Company’s shares of stock ranking junior as to such a distribution to the Series B Preferred Stock, a liquidating distribution in the amount of the Stated Value of all such holder’s Series B Preferred Stock plus all accrued and unpaid dividends thereon. At SeptemberOn June 30, 2020,2021, the value of the liquidation preference of the Series B Preferred stocksStock aggregated to approximately $22.6$5.4 million.
Conversion
Each share of Series B Preferred Stock will be convertible at the holder’s option at any time, into Common Stock at a conversion rate equal to the quotient of (i) the Series B Stated Value divided by (ii) the initial conversion price of $0.77, subject to specified adjustments for stock splits, cash or stock dividends, reorganizations, reclassifications other similar events as set forth in the Series B Certificate of Designations. In addition, at any time after the six month anniversary of the Series B Closing Date, if the closing sale price per share of Common Stock exceeds 250% of the initial conversion price, or $1.925, for 20 consecutive trading days, then all of the outstanding shares of Series B Preferred Stock will automatically convert (the “
Automatic Conversion”) into such number of shares of Common Stock as is obtained by multiplying the number of shares of Series B Preferred Stock to be so converted, plus the amount of any accrued and unpaid dividends thereon, by the Series B Stated Value per share and dividing the result by the then applicable conversion price. The Series B Preferred Stock contains limitations that prevent the holder thereof from acquiring shares of Common Stock upon conversion (including pursuant to the Automatic Conversion) that would result in the number of shares beneficially owned by such holder and its affiliatesMost Favored Nations (MFN) Exchange Right
In the event the Company effects any issuance by the Company or any of its subsidiaries of Common Stock or Common Stock equivalents for cash consideration, or a combination of units thereof (a “
Subsequent Financing”), each holder of the Series B Preferred Stock has the right, subject to certain exceptions set forth in the Series B Certificate of Designations, at its option, to exchange (in lieu of cash subscription payments) all or some of the Series B Preferred Stock then held (with a value per share of Series B Preferred Stock equal to theAs of June 30, 2021, holders of approximately 1,839.76 shares of Series B Preferred Stock with an aggregate Series B Exchange Amount of approximately $14.4 million had previously elected to exercise their Series B Exchange Rights into Series C Preferred Stock, convertible into an aggregate of 19,140,240 shares of Common Stock (which conversion the Company elected to make in full), and additional January 2021 Investor Warrants exercisable for up to an aggregate of 19,140,140 shares of Common Stock.
As a result, as of June 30, 2021, any holders of Series B Preferred Stock who elect to exercise their Series B Exchange Right in connection with up to 676.05 shares of Series B Preferred Stock plus accrued dividends of approximately $231,000 may require the Company to issue up to 7,248.85 additional shares of Series C Preferred Stock that are currently convertible up to7,248,846 underlying shares of Common Stock, together with January 2021 Investor Warrants to purchase up to an additional 7,248,846 shares of Common Stock, to any holders of Series B Preferred Stock who elect to exercise their Series B Exchange Right into the January 2021 Offerings. Any shares of Series C Preferred Stock to be issued pursuant to the Series B Exchange Right into the January 2021 Offerings would, upon issuance, be immediately converted into underlying shares of Common Stock.
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AZURRX BIOPHARMA, INC.
Notes to Unaudited Consolidated Financial Statements
Voting
The holders of the Series B Preferred Stock, voting as a separate class, will have customary consent rights with respect to certain corporate actions of the Company. The Company may not take the following actions without the prior consent of the holders of at least a majority of the Series B Preferred Stock then outstanding: (a) authorize, create, designate, establish, issue or sell an increased number of shares of Series B Preferred Stock or any other class or series of capital stock ranking senior to or on parity with the Series B Preferred Stock as to dividends or upon liquidation; (b) reclassify any shares of Common Stock or any other class or series of capital stock into shares having any preference or priority as to dividends or upon liquidation superior to or on parity with any such preference or priority of Series B Preferred Stock; (c) amend, alter or repeal the Certificate of Incorporation or Bylaws of the Company and the powers, preferences, privileges, relative, participating, optional and other special rights and qualifications, limitations and restrictions thereof, which would adversely affect any right, preference, privilege or voting power of the Series B Preferred Stock; (d) issue any indebtedness or debt security, other than trade accounts payable, insurance premium financings and/or letters of credit, performance bonds or other similar credit support incurred in the ordinary course of business, or amend, renew, increase, or otherwise alter in any material respect the terms of any such indebtedness existing as of the date of first issuance of shares of Series B Preferred Stock; (e) redeem, purchase, or otherwise acquire or pay or declare any dividend or other distribution on (or pay into or set aside for a sinking fund for any such purpose) any capital stock of the Company; (f) declare bankruptcy, dissolve, liquidate, or wind up the affairs of the Company; (g) effect, or enter into any agreement to effect, a Change of Control (as defined in the Certificate of Designations); or (h) materially modify or change the nature of the Company’s business.
2014 Equity Incentive Plan
The Company’s Board and stockholders adopted and approved the Amended and Restated 2014 Omnibus Equity Incentive Plan (the “2014 Plan”), which took effect on May 12, 2014. From theUpon adoption and approval of the 2020 Plan on September 11, 2020, no new awards have been or will be madethe Company ceased making grants under the 2014 Plan.
The Company issued an aggregate of 795,006 and 0 stock options, during the ninesix months ended SeptemberJune 30, 2020, and 2019, respectively, under the 2014 Plan (see Note 13). Upon adoption
As of the 2020 Omnibus Equity Incentive Plan on September 11, 2020, the Company will no longer make grantsJune 30, 2021, there were 2,720,500 shares issued and outstanding under the 2014 Plan.
2020 Equity Incentive Plan
The Company’s Board and stockholders adopted and approved the 2020 Omnibus Equity Incentive Plan (the “2020 Plan”), which took effect on September 11, ,2020.2020. The 2020 Plan allows for the issuance of securities, including stock options to employees, Board members and consultants. The initial number of shares of Common Stock available for issuance under the 2020 Plan is 10,000,000 shares, which will, on January 1 of each calendar year, unless the Board decides otherwise, automatically increase to equal ten percent (10%) of the total number of shares of Common Stock outstanding on December 31 of the immediately preceding calendar year, calculated on an As Converted Basis. As Converted Shares include all outstanding shares of Common Stock and all shares of Common Stock issuable upon the conversion of outstanding preferred stock, warrants and other convertible securities, but will not include any shares of Common Stock issuable upon the exercise of options and other convertible securities issued pursuant to either the 2014 Plan or the 2020 Plan. The number of shares permitted to be issued as “incentive stock options” (“ISOsISOs”) from is 15,000,000 under the 2020 Plan.
The Company issued an aggregate of September1,564,691 stock options during the six months ended June 30, 2020, no grants were issued2021, under the 2020 Plan and an aggregate(see Note 13).
As of June 30, 2021, 10,000,000 total shares arewere available under the 2020 Plan.
Equity Line with Lincoln Park
In November 13, 2019, the Company entered into a purchase agreement (the “Equity Line Agreement”), together with a registration rights agreement (the “Lincoln Park Registration Rights Agreement”), with Lincoln Park. Under the terms of the Equity Line Agreement, Lincoln Park has committed to purchase up to $15,000,000 of our Common Stock (the “Equity Line”). Upon execution of the Equity Line Agreement, the Company issued Lincoln Park 487,168 shares of Common Stock (the “Commitment Shares”) as a fee for its commitment to purchase shares of our Common Stock under the Equity Line Agreement. Agreement, which had a grant date fair value of approximately $297,000 and had no effect on expenses or stockholders’ equity.
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AZURRX BIOPHARMA, INC.
Notes to Unaudited Consolidated Financial Statements
The remaining shares of our Common Stock that may be issued under the Equity Line Agreement may be sold by the Company to Lincoln Park at ourthe Company’s discretion from time-to-time over a 30-month period commencing after the satisfaction of certain conditions set forth in the Equity Line Agreement, subject to the continued effectiveness of a registration statement covering such shares of Common Stock sold to Lincoln Park by the Company. The registration statement was filed with the SEC on December 31, 2019 and was declared effective on January 14, 2020.
There is approximately $14.0 million of availability left for issuance pursuant to the Equity Line Agreement, on any business day over the term of the Equity Line Agreement, the Company has the right, in its sole discretion, to present Lincoln Park with a purchase notice (each, a “
At The Market Agreement with H.C. Wainwright
On May 26, 2021, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”), as sales agent, pursuant to which the termsCompany may issue and sell, from time to time, through Wainwright, shares of its Common Stock, and pursuant to which Wainwright may sell its Common Stock by any method permitted by law deemed to be an “at the market offering” as defined by Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended. The Company will pay Wainwright a commission of 3.0% of the Equity Line Agreement, without first obtaining stockholder approval, the aggregate numbergross proceeds from each sale of shares thatCommon Stock. As of May 26, 2021, the Company is permittedwas authorized to offer and sell up to Lincoln Park thereunder, when aggregated with certain other private offerings of Common Stock, as applicable, may not exceed 19.99% of the Common Stock outstanding immediately prior to the execution of the Equity Line Agreement on November 13, 2019, unless the average price of all applicable sales thereunder exceeds $0.70 per share calculated by reference to the “Minimum Price” under Nasdaq Listing Rule 5635(d). On September 11, 2020, the Company received stockholder approval for the issuances of the full $15 million available under the Equity Line Agreement. Generally, there is approximately $14$50 million of availability left for issuanceits Common Stock pursuant to the Equity LineATM Agreement.
Common Stock Issuances
2021 Issuances
During the three months ended June 30, 2021, the Company issued an aggregate of 195,000 shares of its Common Stock to consultants with a grant date fair value of approximately $147,000 for investor relations services provided, which was recorded as stock-based compensation and included as part of general and administrative expense.
During the three months ended June 30, 2021, the Company issued an aggregate of 5,639,153 shares of Common Stock upon the conversion of an aggregate of 5,639.15 shares of Series C Preferred Stock with a stated value of approximately $4.1 million plus accrued dividends of approximately $122,000.
During the three months ended June 30, 2021, the Company issued an aggregate of 328,375 shares of Common Stock upon the exercise of an aggregate of 328,375 investor warrants (See Note 12).
During the six months ended June 30, 2021, the Company issued an aggregate of 770,301 shares of its Common Stock to consultants with a grant date fair value of approximately $1.1 million for investor relations services provided, which was recorded as stock-based compensation and included as part of general and administrative expense.
During the six months ended June 30, 2021, the Company issued an aggregate 75,000 shares of its Common Stock with a grant date fair value of approximately $94,000 in connection with the settlement with the Company’s former investment bank, which was recorded as stock-based compensation and included as part of general and administrative expense.
During the six months ended June 30, 2021, the Company issued an aggregate of 31,254,595 shares of Common Stock upon the conversion of an aggregate of 33,097.10 shares of Series C Preferred Stock with a stated value of approximately $24.7 million plus accrued dividends of approximately $198,000.
During the six months ended June 30, 2021, the Company issued an aggregate of 9,456,443 shares of Common Stock upon the exercise of an aggregate of 9,526,209 investor warrants, including an aggregate of 3,991,882 pre-funded warrants (See Note 12).
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AZURRX BIOPHARMA, INC.
Notes to Unaudited Consolidated Financial Statements
During the six months ended June 30, 2021, the Company issued an aggregate of 2,582,782 shares of Common Stock upon the conversion of an aggregate of 258.08 shares of Series B Preferred Stock converted 34.127448 shareswith a stated value of Series B Preferred Stock intoapproximately $2.0 million plus accrued dividends of approximately $3,000.
During the six months ended June 30, 2021, the Company issued an aggregate of 341,2745,800,000 shares of Common Stock atin connection with the stated conversion price of $0.77 per share, plus the issuance of 4,610 shares of Common Stock for accrued dividends of $3,551 through such conversion dates.
2020 Issuances
During the three months ended SeptemberJune 30, 2020, the Company did not issue any shares of its Common Stock to consultants or outside Board members.
During the six months ended June 30, 2020, the Company issued an aggregate of 31,646101,195 shares of its Common Stock to consultants with a total grant date fair value of approximately $25,000 $87,000 for investor relations services provided, which that was recorded was recorded as stock-based compensation, and included as part of general and administrative expense.
During the ninesix months ended September June 30, 2020,, the Company issued an aggregate of 132,841 shares of its Common Stock to consultants with a total grant date fair value of approximately $112,105 for investor relations services provided, which was recorded was recorded as stock-based compensation and included as part of general and administrative expense.
Restricted Stock and Restricted Stock Units
Restricted stock refers to shares of Common Stock subject to vesting based on certain service, performance, and market conditions. Restricted stock unit awards (“RSUs”) refer to an award under the 2014 Plan or 2020 Plan, which constitutes a promise to grant shares of Common Stock at the end of a specified restriction period.
During the three and six months ended June 30, 2021, there was no vesting of restricted shares of Common Stock or RSUs.
During the three months ended
During the ninesix months ended
As of
As of June 30, 2020, the Company had unrecognized restricted common stock expense of approximately $400,000. Approximately $6,000 of this unrecognized expense will be recognized over the average remaining vesting term of 0.15 years. Approximately $197,000 of this unrecognized expense vests upon the first commercial sale in the United States of MS1819 and approximately $197,000 of this unrecognized expense vests upon the total market capitalization of the Company exceeding $1.0 billion for 20 consecutive trading days. These milestones were not considered probable at SeptemberJune 30, 2020.
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AZURRX BIOPHARMA, INC.
Notes to Unaudited Consolidated Financial Statements
The Series B Private Placement and the Exchange
On July 16, 2020 (the “
Series B Closing Date”), the Company consummated a private placement offering (the “Series B Private Placement”) whereby the Company entered into a Convertible Preferred Stock and Warrant Securities Purchase Agreement (the “Series B Purchase Agreement”) with certain accredited and institutional investors (the “Series B Investors”). Pursuant to the Series B Purchase Agreement, the Company issued an aggregate of 2,912.583005 shares of Series B Convertible Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”), at a price of $7,700.00 per share, initially convertible into an aggregate of 29,125,756 shares of Common Stock at $0.77 per share, together with warrants (the “Series B Warrants”) to purchase an aggregate of 14,562,826 shares of Common Stock at an exercise price of $0.85 per share. The amount of the Series B Warrants is equal to 50% of the shares of Common Stock into which the Series B Preferred Stock is initially convertible.In connection with the Series B Private Placement, an aggregate of 1,975.578828approximately 1,975.58 shares of Series B Preferred Stock initially convertible into 19,755,748 shares of Common Stock and related 9,877,835 Series B Warrants were issued for cash consideration, resulting in
An aggregate of 937.004177approximately 937.00 shares of Series B Preferred Stock initially convertible into 9,370,008 shares of Common Stock and related Series B Warrants to purchase 4,684,991 shares of Common Stock were issued to certain Series B Investors (the “
Pursuant to the Series B Private Placement and the Series B Purchase Agreement, for purposes of complying with Nasdaq Listing Rule 5635(c) and 5635(d), the Company was required to hold a meeting of its stockholders not later than 60 days following the Series B Closing Date to seek approval (the “
2020 Stockholder Approval”) for, among other things, the issuance of shares of Common Stock upon (i) full conversion of the Series B Preferred Stock; and (ii) full exercise of the Series B Warrants and the Exchange Warrants. In the event the 2020 Stockholder Approval was not received on or prior to the 90th day following the Series B Closing Date, subject to extension upon the prior written approval of the holders of at least a majority of the Series B Preferred Stock then outstanding, the Company would have been required to repurchase all of the then outstanding shares of Series B Preferred Stock at a price equal to 150% of the stated value thereof plus accrued and unpaid dividends thereon, in cash. On September 11, 2020, the Company received the 2020 Stockholder Approval.The Company prepaid the remaining outstanding balance of $25,000 aggregate principal amount of Promissory Notes, together with accrued and unpaid interest thereon through the prepayment date of $1,307,approximately $1,000, held by those holders who did not participate in the Exchange. Following these transactions, no Promissory Notes remain outstanding.
January 2021 Offerings
On December 31, 2020, the Company entered into a securities purchase agreement (the “Series C Purchase Agreement”), pursuant to which the Company agreed to sell in a registered direct offering 5,333.333 shares of Series C Preferred Stock, at a price of $750.00 per share, initially convertible into an aggregate of 5,333,334 shares of Common Stock, at an initial stated value of $750.00 per share and a conversion price of $0.75 per share (the “January 2021Registered Direct Offering”).
Concurrently with the Registered Direct Offering, in a private placement offering pursuant to the Series C Purchase Agreement (the “January 2021Private Placement,” and together with the January 2021 Registered Direct Offering, the “January 2021 Offerings”), the Company agreed to sell an additional 5,333.3333 shares of Series C Preferred Stock at the same price as the Series C Preferred Stock offered in the January 2021 Registered Direct Offering and convertible on the same terms and warrants (the “January 2021 Investor Warrants”) to purchase up to an aggregate of 10,666,668 shares of Common Stock, with an exercise price of $0.80 per share and a maturity date of July 6, 2026.
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AZURRX BIOPHARMA, INC.
Notes to Unaudited Consolidated Financial Statements
In connection with the Series BJanuary 2021 Private Placement, we entered into a registration rights agreement, dated as of December 31, 2020, pursuant to which we filed a registration statement on Form S-1 (File No. 333-252087) to register the shares of Common Stock issuable upon the conversion of the Series C Preferred Stock sold in the January 2021 Private Placement and the exercise of the January 2021 Investor Warrants. The registration statement was declared effective by the SEC on January 21, 2021.
On January 6, 2021, the January 2021 Offerings closed, and the Company received aggregate gross proceeds of approximately $8.0 million, excluding the net proceeds. The net proceeds to the Company from the January 2021 Offerings, after deducting the placement agent’s fees and expenses, was approximately $7.1 million. The Company used the net proceeds to fund the payment of cash consideration to First Wave under the First Wave License Agreement, and for other general corporate purposes.
The Company paid the placement agent 9.0% of the grossa cash proceeds received by the Company from investors introduced by the placement agentfee equal to 8.0% and 4.0% of the gross cash proceeds received by the Company for all other investors, or approximately $1.3 million. The Company also paid the placement agent a non-accountable cashmanagement fee equal to 1.0% of the aggregate gross cash proceeds and a cash financial advisory fee equal to 3.0% ofreceived by the outstanding principal balance of the Promissory Notes that were submittedCompany in the Exchange,January 2021 Offerings, or approximately $0.3 million in additional cash fees in the aggregate. In addition, the$700,000. The Company issuedalso agreed to issue to the placement agent or its designees warrants to purchase(the “January 2021 Placement Agent Warrants”) exercisable for up to 1,377,458746,667 shares of Common Stock, (the “July Placement Agent Warrants”).which is equal to 7.0% of the amount determined by dividing the gross proceeds of the January 2021 Offerings by the offering price per share of Common Stock, or $0.75. The JulyJanuary 2021 Placement Agent Warrants have substantially the same terms as the Series BJanuary 2021 Investor Warrants, except the July Placement Agent Warrants have an exercise price of $0.96they are exercisable at $0.9375 per share, are not callable, provide for cashless exercise and are not exercisable untilor 125% of the earlier of stockholder approvaleffective purchase price per share of the Series BC Preferred Stock issued. The Company also reimbursed the placement agent $35,000 for non-accountable expenses, $125,000 for legal fees and expenses and other out-of-pocket expenses and $12,900 for clearing fees.
Pursuant to the January 2021 Private Placement and the date that is six months followingSeries C Purchase Agreement, the Company was required to hold a meeting of its stockholders not later than March 31, 2021 to seek approval (the “2021 Stockholder Approval”) for, among other things, the issuance thereof.
On February 24, 2021, the Company received the 2021 Stockholder Approval, and all outstanding shares of Series C Preferred Stock were converted to Common Stock.
Accounting for the Series B Private Placement
Upon receiving Shareholderthe 2021 Stockholder Approval on September 11, 2020,February 24, 2021, the Company classified the Series BC Preferred Stock as permanent equity because no features provide for redemption by the holders of the Series BC Preferred Stock or conditional redemption, which is not solely within the Company’s control, and there are no unconditional obligations in that (1) the Company must or may settle in a variable number of its equity shares and (2) the monetary value is predominantly fixed, varying with something other than the fair value of the Company’s equity shares or varying inversely in relation to the Company’s equity shares.
Because the Series BC Preferred Stock containcontains certain embedded features that could affect the ultimate settlement of the Series BC Preferred Stock, the Company analyzed the instrument for embedded derivatives that require bifurcation. The Company’s analysis began with determining whether the Series BC Preferred Stock is more akin to equity or debt. The Company evaluated the following criteria/features in this determination: redemption, voting rights, collateral requirements, covenant provisions, creditor and liquidation rights, dividends, conversion rights and exchangeconversion rights. The Company determined that the Series BC Preferred Stock was more akin to equity than to debt when evaluating the economic characteristics and risks of the entire Series BC Preferred Stock, including the embedded features. The Company then evaluated the embedded features to determine whether their economic characteristics and risks were clearly and closely related to the economic characteristics and risks of the Series BC Preferred Stock. Since the Series BC Preferred Stock was determined to be more akin to equity than debt, and the underlying that causes the value of the embedded features to fluctuate would be the value of the Company’s common stock, the embedded features were considered clearly and closely related to the Series BC Preferred Stock. As a result, the embedded features would not need to be bifurcated from the Series BC Preferred Stock.
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AZURRX BIOPHARMA, INC.
Notes to the exercise of the Most Favored Nation exchange right or the application of the Mandatory Conversion provision will be recognized upon the occurrence of the contingent events based on its intrinsic value at the commitment date.
The Company concluded the freestanding Series BJanuary 2021 Investor Warrants did not contain any provision that would require liability classification and therefore should be classified in stockholder’s equity, based on their relative fair value.
The proceeds from the Series B Private PlacementJanuary 2021 Offerings were allocated to the Series BC Preferred Stock and Series Bthe January 2021 Investor Warrants based on their relative fair values. The
During the three months ended June 30, 2021, holders of approximately 533.47 shares of Series B Preferred Stock with an aggregate Exchange Amount of approximately $4.2 million had elected to exercise their Series B Exchange Rights into 5,639.15 shares of Series C Preferred Stock, convertible into an aggregate of 5,639,153 shares of Common Stock and additional January 2021 Investor Warrants exercisable for up to an aggregate of 5,639,153 shares of Common Stock. Immediately upon issuance of the Series C Preferred Stock pursuant to the Series B Exchange Right, all shares of Series C Preferred Stock were converted into 5,639,153 shares of Common Stock.
During the six months ended June 30, 2021, holders of approximately 1,839.76 shares of Series B Preferred Stock with an aggregate Exchange Amount of approximately $14.4 million had elected to exercise their Series B Exchange Rights into 19,140.14 shares of Series C Preferred Stock, convertible into an aggregate of 19,140,240 shares of Common Stock and additional January 2021 Investor Warrants exercisable for up to an aggregate of 19,140,240 shares of Common Stock. Immediately upon issuance of the Series C Preferred Stock pursuant to the Series B Exchange Right prior to February 24, 2021, an aggregate of 13,166.62 shares of Series C Preferred Stock were converted into 13,166,624 shares of Common Stock, at an effective conversion price of $0.77 per share, and an aggregate of 334.46 shares of Series C Preferred Stock, convertible into 334,463 shares of Common Stock, remained unconverted pending stockholder approval. Upon receiving the 2021 Stockholder Approval on February 24, 2021, the Company elected to convert all 334.46 remaining shares of Series C Preferred Stock issued pursuant to the Series B Exchange Right, plus accrued dividends thereon of approximately $2,000 into 336,994 shares of Common Stock.
As a result, as of June 30, 2021, the Company may be required to issue up to 7,248.85 additional shares of Series C Preferred Stock that are currently convertible up to 7,248,846 underlying shares of Common Stock, together with January 2021 Investor Warrants to purchase up to an additional 7,248,846 shares of Common Stock, to any holders of Series B Preferred Stock who elect to exercise their Series B Exchange Right into the January 2021 Offerings. Any shares of Series C Preferred Stock to be issued pursuant to the Series B Exchange Right would, upon issuance, be immediately converted into underlying shares of Common Stock.
Accounting for the Series B Exchanges into the January 2021 Offerings
During the three months ended June 30, 2021, pursuant to the Series B Exchange Right, the Company issued an aggregate of 5,639.15 shares of Series C Preferred Stock and warrants to purchase an aggregate of 5,639,153 shares of Common Stock in connection with the exchange of approximately 533.47 shares of Series B Preferred Stock. The Company analyzed the exchanges pursuant to the Series B Exchange Right from preferred stock to preferred stock qualitatively and determined that the exchanges result in a substantive change and should be accounted for as an extinguishment. As such, for the three months ended June 30, 2021, the Company recognized an aggregate deemed dividend of approximately $3.4 million as calculated by the difference in the carrying value of the Series B Preferred Stock exchanged and the fair value of the Series C Preferred Stock and January 2021 Investor Warrants issued on each exchange date.
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AZURRX BIOPHARMA, INC.
Notes to Unaudited Consolidated Financial Statements
During the six months ended June 30, 2021, pursuant to the Series B Exchange Right, the Company issued an aggregate of 19,140.14 shares of Series C Preferred Stock and warrants to purchase an aggregate of 19,140,140 shares of Common Stock in connection with the exchange of approximately 1,839.76 shares of Series B Preferred Stock. The exercise of all of these warrants and the conversion of a portion of these shares of Series C Preferred Stock were prohibited until the Company received stockholder approval on February 24, 2021. The Company analyzed the exchanges pursuant to the Series B Exchange Right from preferred stock to preferred stock qualitatively and determined that the exchanges result in a substantive change and should be accounted for as an extinguishment. As such, for the six months ended June 30, 2021, the Company recognized an aggregate deemed dividend of approximately $21.0 million as calculated by the difference in the carrying value of the Series B Preferred Stock exchanged and the fair value of the Series C Preferred Stock and January 2021 Investor Warrants issued on each exchange date.
March 2021 Offering
On March 7, 2021, the Company entered into a securities purchase agreement (the “March 2021 Purchase Agreement”), pursuant to which the Company agreed to sell, in a registered direct offering (the “March 2021 Offering”) priced at the market under Nasdaq rules, (i) 5,800,000 shares of Common Stock, (ii) pre-funded warrants (the “March 2021Pre-Funded Warrants”) to purchase up to 2,058,548 shares of Common Stock, with an exercise price of $0.01 per share and no expiration term and (iii) warrants (the “March 2021Warrants”) to purchase an aggregate of 3,929,274 shares of Common Stock with an exercise price of $1.21 per share and an expiration term of five years from the date of issuance. The price per share of March 2021 Offering was $1.2725.
On March 10, 2021, the March 2021 Offering closed and the Company received aggregate gross proceeds of approximately $10.0 million, excluding the net proceeds, if any, from the exercise of the March 2021 Warrants. The net proceeds to the Company from the March 2021 Offering were approximately $9.1 million, after deducting the placement agent’s fees and expenses.
The Company paid the placement agent a cash fee equal to 8.0% of the aggregate gross proceeds received by the Company, or approximately $800,000. The Company also agreed to issue the placement agent or its designees warrants (the “March 2021 Placement Agent Warrants”) exercisable for up to 550,099 shares of Common Stock, which is equal to 7.0% of the amount determined by dividing the gross proceeds of the March 2021 Offering by the offering price per share of Common Stock, or $1.2725. The March 2021 Placement Agent Warrants have substantially the same terms as the March 2021 Warrants, except they are exercisable at $1.5906 per share, or 125% of the effective purchase price per share of Common Stock issued. The Company also reimbursed the placement agent $35,000 for non-accountable expenses, $50,000 for legal fees and expenses and other out-of-pocket expenses and approximately $16,000 for clearing fees.
The March 2021 Offering was made pursuant to the Company’s effective shelf registration statement on Form S-3 (Registration No. 333-231954) originally filed with the SEC on June 21, 2019, and declared effective on June 25, 2019. The Company filed a prospectus supplement with the SEC in connection with the sale of such securities in the March 2021 Offering.
The Company concluded the freestanding March 2021 Warrants and the March 2021 Placement Agent Warrants did not contain any provisions that would require liability classification and therefore should be classified in stockholder’s equity.
Note 12 –- Warrants
During the
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AZURRX BIOPHARMA, INC.
Notes to Unaudited Consolidated Financial Statements
During the six months ended June 30, 2021, in connection with the January 2021 Offerings, the Company issued January 2021 Investor Warrants to the investor to purchase an aggregate of 10,666,668 shares of Common Stock, as referenced in Note 11. These January 2021 Investor Warrants were issued on January 6, 2021, are exercisable at $0.80 per share and expire on July 6, 2026. The exercise of the January 2021 Investor Warrants was prohibited until the Company received stockholder approval on February 24, 2021. The total grant date fair value of these warrants was determined to be approximately $6.0 million, as calculated using the Black-Scholes model, and were recorded as additional paid in capital based on their relative fair value of approximately $3.4 million (See Note 11).
During the six months ended June 30, 2021, in connection with the conversion of the Series C Preferred Stock issued in the January 2021 Offerings, the Company issued pre-funded warrants to the investor to purchase an aggregate of 1,933,334 shares of Common Stock as referenced in Note 11. These pre-funded warrants were issued on January 6, 2021, are exercisable at $0.001 per share and do not expire. The total grant date fair value of these pre-funded was determined to be approximately $1.6 million and was recorded as additional paid in capital (See Note 11).
During the six months ended June 30, 2021, in connection with the January 2021 Offerings, the Company issued January 2021 Placement Agent Warrants to the placement agent and/or their designees to purchase an aggregate of 746,667 shares of Common Stock, as referenced in Note 11. These January 2021 Placement Agent Warrants were issued on January 6, 2021, are exercisable at $0.9375 per share and expire on July 6, 2026. The total grant date fair value of these warrants was determined to be approximately $392,000, as calculated using the Black-Scholes model, and had no effect on shareholders’ equity (See Note 11).
During the six months ended June 30, 2021, the Company issued January 2021 Investor Warrants to purchase an aggregate of 19,140,240 shares of Common Stock to holders of Series B Preferred Stock elected to exercise their Series B Exchange Rights into Series C Preferred Stock and related warrants, as referenced in Note 11. These January 2021 Investor Warrants were issued between January 13, 2021 and June 9, 2021, are exercisable at $0.80 per share and expire on July 6, 2026. The exercise of 13,501,087 of these warrants was prohibited until the Company received stockholder approval on February 24, 2021. The total grant date fair value of these warrants was determined to be approximately $21.0 million, as calculated using the Black-Scholes model, and were recorded as a deemed dividend and recognized on the exchange date and recorded as a reduction of income available to common stockholders in computing basic and diluted loss per share.
During the six months ended June 30, 2021, in connection with the March 2021 Offering, the Company issued March 2021 Warrants to the investor to purchase an aggregate of3,929,274 shares of Common Stock, as referenced in Note 11. These March 2021 Warrants were issued on March 10, 2021, are exercisable at $1.21 per share and expire five years from the date of issuance. The total grant date fair value of these warrants was determined to be approximately $3.5 million, as calculated using the Black-Scholes model, and were recorded as additional paid in capital (See Note 11).
During the six months ended June 30, 2021, in connection with March 2021 Offering, the Company issued pre-funded warrants to the investor to purchase an aggregate of 2,058,548 shares of Common Stock, as referenced in Note 11. These pre-funded warrants were issued on March 10, 2021, are exercisable at $0.01 per share and do not expire. The total grant date fair value of these pre-funded was determined to be approximately $2.6 million and was recorded as additional paid in capital (See Note 11).
During the six months ended June 30, 2021, in connection with the March 2021 Offering, the Company issued March 2021 Placement Agent Warrants to the placement agent and/or their designees to purchase an aggregate of 550,099 shares of Common Stock, as referenced in Note 11. These March 2021 Placement Agent Warrants were issued on March 10, 2021, are exercisable at $1.5906 per share and expire five years from the date of issuance. The total grant date fair value of these warrants was determined to be approximately $453,000, as calculated using the Black-Scholes model, and had no effect on shareholders’ equity (See Note 11).
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AZURRX BIOPHARMA, INC.
Notes to Unaudited Consolidated Financial Statements
During the six months ended June 30, 2021, the Company issued warrants to a consultant to purchase an aggregate of 200,000 shares of Common Stock that are subject to service-based milestone vesting conditions for investor relations services. These warrants were issued on February 8, 2021, are exercisable at $1.69 per share and expire four years from the date of issuance. The total grant date fair value of these warrants was determined to be approximately $214,000, as calculated using the Black-Scholes model. For the three months ended June 30, 2021, warrants to purchase a total of 150,000 shares of Common Stock vested, with a grant date fair value of approximately $161,000, which was recorded as stock-based compensation and was included as part of general and administrative expense. For the six months ended June 30, 2021, warrants to purchase a total of 200,000 shares of Common Stock vested, with a grant date fair value of approximately $214,000, which was recorded as stock-based compensation and was included as part of general and administrative expense.
During the three months ended June 30, 2021, warrants to purchase an aggregate of 328,375 shares of Common Stock were exercised for cash proceeds of approximately $264,000.
During the six months ended June 30, 2021, warrants to purchase an aggregate of 9,526,209 shares of Common Stock, including the pre-funded warrants issued in January 2021 and March 2021, were exercised for 9,456,443 shares of Common Stock resulting in cash proceeds of approximately $4.9 million.
During the six months ended June 30, 2020,, in connection with the January 2020 closings of the Promissory Note Offering, the Company issued Note Warrants to investors to purchase an aggregate of 1,813,257 shares of Common Stock with the issuance of the Promissory Notes as referenced in Note 9. These Note Warrants were issued between January 2, 2020 and January 9, 2020, areand became exercisable commencing six (6) months following the issuance date at $1.07 per$1.07per share and expire five years from issuance. The total grant date fair value of these warrants was determined to be approximately $1,574,886,$1.6 million, as calculated using the Black-Scholes model, and were recorded as a debt discount based on their relative fair value.
During the
Warrant transactions for the ninesix months ended SeptemberJune 30, 20202021 and 20192020 were as follows:
Exercise | Weighted | ||
Price Per | Average | ||
Warrants | Share | Exercise Price | |
| Warrants outstanding and exercisable at January 1, 2019 | 3,112,715 | $2.55 - 7.37 | $4.83 |
| Granted during the period | 275,663 | $2.55 – 2.82 | $2.68 |
| Expired during the period | - | - | - |
| Exercised during the period | - | - | - |
| Warrants outstanding and exercisable at September 30, 2019 | 3,388,378 | $1.50 - 7.37 | $3.51 |
| Warrants outstanding and exercisable at January 1, 2020 | 5,378,288 | $1.07 - 7.37 | $2.53 |
| Granted during the period | 19,881,654 | $0.85 - 1.42 | $0.88 |
| Expired during the period | (59,774) | $3.25 - 7.37 | $5.15 |
| Exercised during the period | - | - | - |
| Warrants outstanding and exercisable at September 30, 2020 | 25,200,168 | $0.85 - 7.37 | $1.22 |
Number of | Weighted Average | Weighted | ||
Shares Under | Remaining Contract | Average | ||
Exercise Price | Warrants | Life in Years | Exercise Price | |
$0.00 - 0.99 | 17,718,665 | 4.79 | ||
$1.00 - 1.99 | 5,362,464 | 3.65 | ||
$2.00 - 2.99 | 320,063 | 2.82 | ||
$3.00 - 3.99 | 635,019 | 1.57 | ||
$4.00 - 4.99 | 164,256 | 1.53 | ||
$5.00 - 5.99 | 783,132 | 1.42 | ||
$6.00 - 6.99 | 187,750 | 1.01 | ||
$7.00 - 7.37 | 28,819 | 0.28 | ||
| Totals | 25,200,168 | 4.28 | $1.22 |
|
|
|
|
| Exercise |
|
| Weighted |
| |||
|
|
|
| Price Per |
|
| Average |
| ||||
|
| Warrants |
|
| Share |
|
| Price |
| |||
|
|
|
|
|
|
|
|
|
| |||
Warrants outstanding and exercisable on January 1, 2020 |
|
| 5,378,288 |
|
| $ | 1.07- 7.37 |
|
| $ | 2.53 |
|
Granted during the period |
|
| 2,012,989 |
|
| 1.07- 1.42 |
|
| $ | 1.10 |
| |
Expired during the period |
|
| (30,096 | ) |
| 4.76 - 7.37 |
|
| $ | 4.92 |
| |
Exercised during the period |
|
| - |
|
|
| - |
|
|
| - |
|
Warrants outstanding and exercisable on June 30, 2020 |
|
| 7,361,181 |
|
| $ | 1.07- 7.37 |
|
| $ | 2.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants outstanding and exercisable on January 1, 2021 |
|
| 25,179,192 |
|
| $ | 0.85- 7.37 |
|
| $ | 1.22 |
|
Granted during the period |
|
| 39,224,830 |
|
| $ | 0.001-1.69 |
|
| $ | 0.78 |
|
Expired during the period |
|
| (321,193 | ) |
|
| - |
|
|
| - |
|
Exercised during the period |
|
| (9,526,209 | ) |
|
| - |
|
|
| - |
|
Warrants outstanding and exercisable on June 30, 2021 |
|
| 54,556,620 |
|
| $ | 0.80– 6.60 |
|
| $ | 1.02 |
|
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AZURRX BIOPHARMA, INC.
Notes to Unaudited Consolidated Financial Statements
Warrants exercisable on June 30, 2021, were as follows:
|
| Exercise Price |
| Number of Shares Under Warrants |
|
| Weighted Average Remaining Contract Life in Years |
|
| Weighted Average Exercise Price |
| ||||
|
| $ | 0.00 - 0.99 |
|
| 44,098,268 |
|
|
| 4.64 |
|
|
|
| |
|
| $ | 1.00 - 1.99 |
|
| 8,407,884 |
|
|
| 3.88 |
|
|
|
| |
|
| $ | 2.00 - 2.99 |
|
| 320,063 |
|
|
| 2.07 |
|
|
|
| |
|
| $ | 3.00 - 3.99 |
|
| 611,683 |
|
|
| 0.86 |
|
|
|
| |
|
| $ | 4.00 - 4.99 |
|
| 164,256 |
|
|
| 0.78 |
|
|
|
| |
|
| $ | 5.00 - 5.99 |
|
| 766,716 |
|
|
| 0.70 |
|
|
|
| |
|
| $ | 6.00 - 6.99 |
|
| 187,750 |
|
|
| 0.26 |
|
|
|
| |
Totals |
|
|
|
|
| 54,556,620 |
|
|
| 4.38 |
|
| $ | 1.02 |
|
The weighted average fair value of warrants granted during the ninesix months ended
June 30, | ||||
2021 | ||||
Expected life (in years) | 4.38 | |||
Volatility | 83.8- 90.8 | % | ||
Risk-free interest rate | 0.36- 0.90 | % | ||
Dividend yield | - | % | ||
Note 13 - Stock Options
Under the 2014 Plan and the 2020 Plan, the fair value of options granted is estimated on the grant date using the Black-Scholes option valuation model. This valuation model for stock-based compensation expense requires the Company to make assumptions and judgments about the variables used in the calculation, including the expected term (weighted-average period of time that the options granted are expected to be outstanding), the volatility of the common stock price and the assumed risk-free interest rate. The Company recognizes stock-based compensation expense for only those shares expected to vest over the requisite service period of the award. No compensation cost is recorded for options that do not vest and the compensation cost from vested options, whether forfeited or not, is not reversed.
On June 30, 2021, the three months ended September 30,Board rescinded and cancelled certain stock option awards previously made under the 2014 Plan (the “Prior Awards”) to James Sapirstein, the Company’s President, Chief Executive Officer and Chairman of the Board, and Daniel Schneiderman, the Company’s Chief Financial Officer, and issued new stock options awards (the “New Awards”) under the 2020 Plan in an equivalent amount and with equivalent exercise price, vesting and expiration terms to the Prior Awards. This action was approved by the Board following the recommendation of a special committee of the Board upon review of certain matters raised in a stockholder litigation demand letter received by the Company issued stock optionson or about July 27, 2020, as previously disclosed in the Company’s definitive proxy statement, dated August 11, 2020, in connection with stockholder approval of the 2020 Plan.
The terms of the New Awards to purchase an aggregate of 2,040,000Mr. Sapirstein (the “New Sapirstein Awards”) covering 900,000 shares of the Common Stock with a strikeat an exercise price of $0.85 per share and a termcomprised of ten years(i) stock options to its employees. These options had a total grant date fair value of approximately $1,449,130, as calculated using the Black-Scholes model.
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AZURRX BIOPHARMA, INC.
Notes to Unaudited Consolidated Financial Statements
The terms of the New Awards to Mr. Schneiderman (the “New Schneiderman Awards”) covering an aggregate of 285,006 shares of Common Stock at an exercise price of $0.85 per share comprised of (i) stock options to purchase 250,000 shares of Common Stock, of which stock options to purchase 79,860 shares of Common Stock vested immediately upon the grant of such stock options and the remaining stock options to purchase 170,140 shares of Common Stock will vest over a term of 2 years and 1 2023.
During the ninethree months ended SeptemberJune 30, 2020,2021, the Company issued stock options under the 2020 Plan to new employees to purchase an aggregate of
During the ninethree months ended SeptemberJune 30, 2020,2021, excluding the Company issuedPrior Awards described above, stock options to purchase an aggregate of 460,00019,264 shares of Common Stock under the 2014 Plan were cancelled with strike prices ranging between $0.85 and $3.60 per share.
During the six months ended June 30, 2021, the Company issued stock options under the 2020 Plan to new employees to purchase an aggregate of 379,685 shares of Common Stock with a strike price of $0.97prices ranging from $0.78 to $1.54 per share and a term of ten years to its non-executive directors.that vest in equal monthly installments over three years. These options had a total fair value of approximately $300,000, as calculated using the Black-Scholes model.
During the six months ended June 30, 2021, excluding the Prior Awards described above, stock options to purchase an aggregate of 154,778 shares of Common Stock under the 2014 Plan were cancelled with strike prices ranging between $0.85 and $3.60 per share.
During the six months ended June 30, 2021, stock options to purchase an aggregate of 416,142 shares of Common Stock, subject to service-based milestone vesting conditions, vested with a total grant date fair value of approximately $210,284,305,000 which was recorded as calculated using the Black-Scholes model.
During the ninesix months ended SeptemberJune 30, 2021, stock options to purchase an aggregate of 755,000 shares of Common Stock, subject to performance-based milestone vesting conditions, vested due to the Company achieving certain clinical milestones, with a total grant date fair value of approximately $623,000 which was recorded as stock-based compensation, of which approximately $253,000 was included as part of general and administrative expense and approximately $370,000 was included as part of research and development expense. Stock options to purchase an aggregate of 437,500 shares of Common Stock, with a total grant date fair value of approximately $427,000, vested due to the Company completing enrollment of the Phase 2 OPTION 2 clinical trial. Stock options to purchase an aggregate of 210,000 shares of Common Stock, with a total grant date fair value of approximately $148,000, vested due to the Company’s public announcement of topline data for the Phase 2 OPTION 2 clinical trial. Stock options to purchase an aggregate of 7,500 shares of Common Stock, with a total grant date fair value of approximately $8,000, vested due to the Company completing enrollment of the Phase 2 Combination Trial in Europe. Stock options to purchase an aggregate of 100,000 shares of Common Stock, with a total grant date fair value of approximately $40,000, vested due to the Company determining that initiating a U.S. Phase 1 clinical trial for any product other than MS1819 became probable in connection with the initiation of the COVID-19 niclosamide trial.
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AZURRX BIOPHARMA, INC.
Notes to Unaudited Consolidated Financial Statements
During the six months ended June 30, 2020, stock options to purchase an aggregate of 235,006200,000 shares of Common Stock were cancelled with strike prices ranging between $0.97 and $3.60 per share.
During the threesix months ended SeptemberJune 30, 2020, stock options to purchase an aggregate of 234,252315,834 shares of Common Stock, subject to
During the ninethree and six months ended September 30, 2020, stock options to purchase an aggregate of 600,086 shares of Common Stock, subject to
The fair values were estimated on the grant dates using the Black-Scholes option-pricing model with the following weighted-average assumptions:
June 30, | ||||
2021 | ||||
Contractual term (in years) | 10 | |||
Volatility | 83.8 - 90.6 | % | ||
Risk-free interest rate | 0.93 - 1.69 | % | ||
Dividend yield | - | % | ||
The expected term of the options is based on expected future employee exercise behavior. Volatility is based on the historical volatility of the Company’s Common Stock if available or of several public entities that are similar to the Company. The Company bases volatility this way because it may not have sufficient historical transactions in its own shares on which to solely base expected volatility. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected term at the grant date. The Company has not historically declared any dividends and does not expect to in the future.
During the ninesix months ended SeptemberJune 30, 20202021 and 2019,2020, stock option activity under the 2014 Plan and 2020 Plan was as follows:
Number | Average | Remaining Contract | Intrinsic | |
of Shares | Exercise Price | Life in Years | Value | |
| Stock options outstanding at January 1, 2019 | 994,000 | $3.58 | 5.42 | $- |
| Granted during the period | 893,500 | $1.70 | 4.96 | - |
| Expired during the period | - | - | - | - |
| Canceled during the period | - | - | - | - |
| Exercised during the period | - | - | - | - |
| Stock options outstanding at September 30, 2019 | 1,887,500 | $2.58 | 4.69 | $- |
| Exercisable at September 30, 2019 | 994,000 | $3.58 | 5.17 | $- |
| Non-vested stock options outstanding at January 1, 2019 | 244,500 | $3.05 | 4.53 | $- |
| Granted during the period | 893,500 | $1.70 | 4.96 | - |
| Vested during the period | (274,500) | $2.91 | 3.88 | - |
| Expired during the period | - | - | - | - |
| Canceled during the period | - | - | - | - |
| Exercised during the period | - | - | - | - |
| Non-vested stock options outstanding at September 30, 2019 | 863,500 | $1.70 | 4.77 | $- |
| Stock options outstanding at January 1, 2020 | 1,677,5000 | $2.17 | 5.37 | $- |
| Granted during the period | 2,870,012 | $0.89 | 9.79 | $- |
| Expired during the period | - | - | ||
| Canceled during the period | (235,006) | $1.94 | 3.28 | $- |
| Exercised during the period | - | - | ||
| Stock options outstanding at September 30, 2020 | 4,312,506 | $1.38 | 7.94 | $- |
| Exercisable at September 30, 2020 | 1,084,834 | $2.59 | 5.60 | $- |
| Non-vested stock options outstanding at January 1, 2020 | 883,500 | $1.33 | 6.26 | $- |
| Granted during the period | 2,870,012 | $0.98 | 10.00 | $- |
| Vested during the period | (593,750) | $2.59 | 6.88 | $- |
| Expired during the period | - | - | - | |
| Canceled during the period | (160,006) | $1.30 | 7.10 | $- |
| Exercised during the period | - | - | - | |
| Non-vested stock options outstanding at September 30, 2020 | 2,999,756 | $0.98 | 8.75 | $- |
|
|
|
| Average |
|
| Remaining |
|
|
| ||||||
|
| Number |
|
| Exercise |
|
| Contract |
|
| Intrinsic |
| ||||
|
| of Shares |
|
| Price |
|
| Life (Years) |
|
| Value |
| ||||
Stock options outstanding on January 1, 2020 |
|
| 1,677,500 |
|
| $ | 2.17 |
|
|
| 5.37 |
|
| $ | - |
|
Granted during the period |
|
| 795,006 |
|
| $ | 1.00 |
|
|
| 10.00 |
|
|
| - |
|
Canceled during the period |
|
| (200,000 | ) |
| $ | 2.10 |
|
|
| 3.28 |
|
|
| - |
|
Stock options outstanding on June 30, 2020 |
|
| 2,272,506 |
|
| $ | 1.86 |
|
|
| 6.52 |
|
| $ | - |
|
Exercisable on June 30, 2020 |
|
| 1,084,834 |
|
| $ | 2.59 |
|
|
| 5.6 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-vested stock options outstanding on January 1, 2020 |
|
| 883,500 |
|
| $ | 1.33 |
|
|
| 6.26 |
|
| $ | - |
|
Granted during the period |
|
| 795,006 |
|
| $ | 1.03 |
|
|
| 10.00 |
|
|
| - |
|
Vested during the period |
|
| (365,834 | ) |
| $ | 2.59 |
|
|
| 6.88 |
|
|
| - |
|
Canceled during the period |
|
| (125,000 | ) |
| $ | 2.10 |
|
|
| 2.82 |
|
|
| - |
|
Non-vested stock options outstanding on June 30, 2020 |
|
| 1,187,672 |
|
| $ | 1.24 |
|
|
| 7.06 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average |
|
| Remaining |
|
|
|
|
| ||
|
| Number |
|
| Exercise |
|
| Contract |
|
| Intrinsic |
| ||||
|
| of Shares |
|
| Price |
|
| Life (Years) |
|
| Value |
| ||||
Stock options outstanding on January 1, 2021 |
|
| 4,070,284 |
|
| $ | 1.38 |
|
|
| 7.94 |
|
| $ | - |
|
Granted during the period |
|
| 1,564,691 |
|
| $ | 0.88 |
|
|
| 10.00 |
|
|
| - |
|
Canceled during the period |
|
| (1,339,784 | ) |
| $ | 1.05 |
|
|
| 2.87 |
|
|
| - |
|
Stock options outstanding on June 30, 2021 |
|
| 4,295,191 |
|
| $ | 1.18 |
|
|
| 7.72 |
|
| $ | 79,440 |
|
Exercisable on June 30, 2021 |
|
| 2,413,727 |
|
| $ | 1.41 |
|
|
| 6.70 |
|
| $ | 52,120 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-vested stock options outstanding on January 1, 2021 |
|
| 2,740,657 |
|
| $ | 0.99 |
|
|
| 8.42 |
|
|
| - |
|
Granted during the period |
|
| 1,564,691 |
|
| $ | 0.88 |
|
|
| 10.00 |
|
|
| - |
|
Vested during the period |
|
| (1,468,504 | ) |
| $ | - |
|
|
| - |
|
|
| - |
|
Canceled during the period |
|
| (955,380 | ) |
| $ | - |
|
|
| - |
|
|
| - |
|
Non-vested stock options outstanding on June 30, 2021 |
|
| 1,881,464 |
|
| $ | 0.87 |
|
|
| 9.04 |
|
| $ | - |
|
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| Table of Contents |
AZURRX BIOPHARMA, INC.
Notes to Unaudited Consolidated Financial Statements
As of SeptemberJune 30, 2020,2021, the Company had unrecognized stock-based compensation expense of approximately $2,190,131.$1.1 million. Approximately $1,189,036$0.8 million of this unrecognized expense will be recognized over the average remaining vesting term of the stock options of.8.75of 1.93 years. Approximately $440,213$40,000 of this unrecognized expense will vest upon enrollment completion
Note 14 - Agreements
License Agreement with First Wave Bio, Inc.
On December 31, 2020, we entered into the First Wave License Agreement, pursuant to which First Wave granted us a worldwide, exclusive right to develop, manufacture, and commercialize First Wave’s proprietary immediate release and enema formulations of niclosamide (the “Niclosamide Product”) for the fields of treating ICI-AC and COVID-19 in humans.
In consideration of the license and other rights granted by First Wave, we agreed to pay First Wave a $9.0 million upfront cash payment due within 10 days, which was paid in January 2021 and are obligated to make an additional payment of $1.25 million due on June 30, 2021. In addition, we are obligated to pay potential milestone payments to First Wave totaling up to $37.0 million for each indication, based upon the achievement of specified development and regulatory milestones. As of June 30, 2021, the Company achieved a milestone related to clinical development of niclosamide in the COVID-19 field and has expensed $1.0 million in research and development and accrued $1.0 million in accounts payable. Under the First Wave License Agreement we are obligated to pay First Wave royalties as a mid-single digit percentage of net sales of the Niclosamide Product, subject to specified reductions. We were also obligated to issue to First Wave junior convertible preferred stock, initially convertible into $3.0 million worth of Common Stock based upon the volume weighted average price of the Common Stock for the five-day period immediately preceding the date of the First Wave License Agreement, or $0.9118 per share, convertible into an aggregate of 3,290,196 shares of Common Stock. As of December 31, 2020, this was initially classified as a liability in the consolidated balance sheet because of certain NASDAQ restrictions and the requirement to obtain stockholder approval.
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AZURRX BIOPHARMA, INC.
Notes to Unaudited Consolidated Financial Statements
On January 8, 2021, in connection with the securities purchase agreement with First Wave (the “First Wave Purchase Agreement”) pursuant to which we issued to First Wave 3,290.1960 shares of Series C Preferred Stock, which were convertible into an aggregate of 3,290,196 shares of Common Stock based on a conversion price of $0.75 per share, and with a grant date fair value of approximately $2.5 million. The First Wave Purchase Agreement contains demand and piggyback registration rights with respect to the Common Stock issuable upon conversion of the Series C Preferred Stock.
The conversion price of the Series C Preferred Stock was determined to be beneficial and, as a result, the Company recorded a deemed dividend of approximately $230,000 equal to the intrinsic value of the beneficial conversion feature and recognized on the issuance date and recorded as a reduction of income available to common stockholders in computing basic and diluted loss per share.
Upon the 2021 Stockholder Approval on February 24, 2021, the Company recognized a change in fair value of approximately $0.5 million based on the difference in fair value of the $3.0 million liability initially recorded pursuant to the First Wave License Agreement as of December 31, 2020 and the fair value of approximately $2.5 million of Series C Preferred Stock issued pursuant to the First Wave Purchase Agreement to settle the liability.
Following the 2021 Stockholder Approval, the shares of Series C Preferred Stock were automatically converted into Common Stock.
The Company is solely responsible, and has agreed to use commercially reasonable efforts, for all development, regulatory and commercial activities related to the Niclosamide Products in the ICI-AC and COVID-19 fields. The Company may sublicense its rights under the First Wave License Agreement and, if it does so, will be obligated to pay milestone payments and royalties to First Wave based on the sublicensee’s development and commercialization of the licensed Niclosamide Products.
Pursuant to the First Wave License Agreement, First Wave retains rights to develop and commercialize the licensed niclosamide formulations outside the ICI-AC and COVID-19 fields, and to develop and commercialize other niclosamide formulations that are not licensed to Company. Pursuant to the First Wave License Agreement, the Company grants First Wave a worldwide, non-exclusive, royalty-free, perpetual, irrevocable license for use outside the ICI-AC and COVID-19 fields, with the right to grant sublicenses, under any Program IP and other intellectual property owned by the Company and incorporated into the Niclosamide Product.
The First Wave License Agreement terminates on a country-by-country basis and product-by-product basis upon the expiration of the royalty term for such product in such country. Each royalty term begins on the date of the first commercial sale of the licensed product in the applicable country and ends on date of expiration of the last to expire royalty term with respect to the country. The First Wave License Agreement may be terminated earlier in specified situations, including termination for uncured material breach of the First Wave License Agreement by either party, termination by the Company in specified circumstances, termination by First Wave in specified circumstances, termination by the Company for convenience with advance notice, and termination upon a party’s insolvency or bankruptcy. After expiration of the royalty term, the Company shall have a non-exclusive, fully-paid, perpetual, royalty-free right and irrevocable license with respect to any Product in any country within the territory.
The First Wave License Agreement also contains customary representations, warranties, and covenants by both parties, as well as customary provisions relating to indemnification, confidentiality, and other matters.
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AZURRX BIOPHARMA, INC.
Notes to Unaudited Consolidated Financial Statements
Mayoly Agreement
In March 27, 2019, the Company and
TransChem Sublicense
In August 7, 2017, the Company and TransChem entered into thea sublicense agreement with TransChem, Sublicense Agreement pursuant to which TransChem granted to usthe Company an exclusive license to certain patents (the
Note 15 - Leases
The Company leases its officeoffices and research facilities under operating leases which are subject to various rent provisions and escalation clauses.
Effective June 1, 2021, the Company entered intocommenced a month-to-monthsixty-three-month lease agreement for its corporate headquarters located in approximately 3,472 square feet of office space in Delray Beach,at 777 Yamato Road, Suite 502, Boca Raton, FL and one-year residential lease in Delray Beach, FL.
The Company’s leases expire at various dates through 2022.2026. The escalation clauses are indeterminable and considered not material and have been excluded from minimum future annual rental payments.
Lease expense amounted to $55,418approximately $57,000 and $52,057,$40,000, respectively, infor the three months ended SeptemberJune 30, 20202021, and 2019.
Lease expense amounted to $128,663approximately $110,000 and $153,723,$77,000, respectively, infor the ninesix months ended SeptemberJune 30, 20202021, and 2019.
The weighted-average remaining lease term and weighted-average discount rate under operating leases at Septemberon June 30, 20202021, are:
June 30, | ||||
2021 | ||||
Lease term and discount rate | ||||
Weighted-average remaining lease term | 4.5 years | |||
Weighted-average discount rate | 6.86 | % | ||
Approximately $118,000 of short-term lease liability is included in other current liabilities and approximately $286,000 of long-term lease liability is included in other liabilities (See Note 10).
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| Table of Contents |
AZURRX BIOPHARMA, INC.
Notes to Unaudited Consolidated Financial Statements
Maturities of operating lease liabilities at Septemberon June 30, 2020 are2021, were as follows:
| 2020 | $30,565 |
| 2021 | 55,420 |
| 2022 | 23,375 |
| Total lease payments | 109,360 |
| Less imputed interest | (3,736) |
| Present value of lease liabilities | $105,624 |
2021 |
| $ | 61,642 |
|
2022 |
|
| 104,629 |
|
2023 |
|
| 83,691 |
|
2024 |
|
| 86,202 |
|
2025 |
|
| 88,788 |
|
Thereafter |
|
| 60,593 |
|
Total lease payments |
|
| 485,545 |
|
Less imputed interest |
|
| (81,306 | ) |
Present value of lease liabilities |
| $ | 404,239 |
|
Note 16 - Income Taxes
The Company is subject to taxation at the federal level in both the United States and France and at the state level in the United States. At SeptemberOn June 30, 20202021, and December 31, 2019,2020, the Company had no tax provision for either jurisdiction.
On June 30, 20202021, and December 31, 2019,2020, the Company had gross deferred tax assets of approximately $20,059,000$27.3 million and $16,372,000,$26.1 million, respectively. As the Company cannot determine that it is more likely than not that the Company will realize the benefit of the deferred tax asset, a valuation allowance of approximately $20,059,000$27.3 million and $16,372,000,$26.1 million, respectively, has been established at Septemberon June 30, 20202021, and December 31, 2019.2020. The change in the valuation allowance in the ninesix months ended SeptemberJune 30, 2021 and 2020 was approximately $(1.2) million and 2019 was $3,687,000 and $2,108,000,$(0.4) million, respectively.
On June 30, 2020,2021, the Company has gross net operating loss (“NOL”) carryforwards for U.S. federal and state income tax purposes of approximately $35,077,000$65.1 million and $26,572,000,$22.6 million, respectively. The NOL’s expire between the years 2034 and 2039. The Company’s ability to use its NOL carryforwards may be limited if it experiences an “ownership change” as defined in Section 382 (“Section 382”) of the Internal Revenue Code of 1986, as amended. An ownership change generally occurs if certain stockholders increase their aggregate percentage ownership of a corporation’s stock by more than 50 percentage points over their lowest percentage ownership at any time during the testing period, which is generally the three-year period preceding any potential ownership change.
On June 30, 20202021, and December 31, 2019,2020, the Company had approximately $22,120,000$27.0 million and $19,425,000,$23.0 million, respectively, in net operating losses which it can carryforward indefinitely to offset against future French income.
On June 30, 20202021, and December 31, 2019,2020, the Company had taken no uncertain tax positions that would require disclosure under ASC 740, Accounting for Income Taxes.
Note 17 - Net Loss per Common Share
Basic net loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect, in periods in which they have a dilutive effect, the impact of common shares issuable upon exercise of stock options and warrants and conversion of convertible debt that are not deemed to be anti-dilutive. The dilutive effect of the outstanding stock options and warrants is computed using the treasury stock method.
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AZURRX BIOPHARMA, INC.
Notes to Unaudited Consolidated Financial Statements
At SeptemberJune 30, 2020, diluted net loss per share did not include the effect of 29,314,4087,427,032 shares of Common Stock issuable upon the conversion of Series B Preferred Stock including accrued and unpaid dividends, 25,200,168convertible debt, 7,361,181 shares of Common Stock issuable upon the exercise of outstanding warrants, 387,000 shares of Common Stock pursuant to unearned and unissued restricted stock and RSUs, and 4,312,5062,272,506 shares of Common Stock issuable upon the exercise of outstanding options as their effect would be antidilutive during the periods prior to conversion.
Note 18 - Employee Benefit Plans
401(k) Plan
Since 2015, the Company has sponsored a multiple employer defined contribution benefit plan, which complies with Section 401(k) of the Internal Revenue Code covering substantially all employees of the Company.
All employees are eligible to participate in the plan. Employees may contribute from 1% to 100% of their compensation and the Company matches an amount equal to 100% on the first 6% of the employee contribution and may also make discretionary profit-sharing contributions.
Employer contributions under this 401(k) plan amounted to approximately $23,000 and $40,000 for the three months ended June 30, 2019, diluted net loss per share did not include2021 and 2020, respectively.
Employer contributions under this 401(k) plan amounted to approximately $55,000 and $62,000 for the effect of 3,388,378six months ended June 30, 2021 and 2020, respectively.
Note 19 – Subsequent Events
July 2021 Offering
On July 22, 2021, the Company entered into an underwriting agreement with Wainwright pursuant to which the Company agreed to sell, in an upsized firm commitment offering, 9,090,910 shares of Common Stock issuable uponto Wainwright at an offering price to the exercisepublic of outstanding warrants, 416,000 shares$0.55 per share, less underwriting discounts and commissions. On July 27, 2021, pursuant to the terms of restricted Common Stock not yet issued, and 1,887,500the underwriting agreement, Wainwright exercised its 30-day over-allotment option in full to purchase an additional 1,363,636 shares of Common Stock issuable uponat the exercisesame offering price to the public, less underwriting discounts and commissions. The offering closed on July 27, 2021.
The Company received net proceeds from the offering of outstanding optionsapproximately $5.1 million. The Company intends to use the net proceeds from the offering for milestone payments due under the Company’s license agreements and for other general corporate purposes.
The Company paid Wainwright an underwriting discount equal to 8.0% of the gross proceeds of the offering, and reimbursed Wainwright for a non-accountable expense allowance of $35,000, $125,000 in legal fees and $15,950 for clearing expenses. Additionally, as their effect would be antidilutive duringpartial compensation for Wainwright’s services as underwriter in the periods prior to conversion.
Most Favored Nations (MFN) Exchange Right
As of August 13, 2021, any holders of Series B Preferred Stock who elect to exercise their Series B Exchange Right in connection with up to 676.05 shares of Series B Preferred Stock plus accrued dividends of approximately $288,000 may require the Company other than as specifiedto issue either: (i) up to 7,324,125 additional shares of Series C Preferred Stock that are currently convertible up to 7,324,125 underlying shares of Common Stock, together with January 2021 Investor Warrants to purchase up to an additional 7,324,125 shares of Common Stock, to any holders of Series B Preferred Stock who elect to exercise their Series B Exchange Right into the January 2021 Offerings, or (ii) up to 9,987,571 additional shares of Common Stock at a price of $0.55 per share, with no warrants, to any holders of Series B Preferred Stock who elect to exercise their Series B Exchange Right into the July 2021 Offering. Any shares of Series C Preferred Stock to be issued pursuant to the Series B Exchange Right into the January 2021 Offerings would, upon issuance, be immediately converted into underlying shares of Common Stock.
Appointment of New Director
On August 11, 2021, the Board approved, effective immediately, an increase in his employment agreement. On October 8, 2019, Mr. Spoor resigned as Chief Executive Officer and Presidentthe size of the Company. In addition, Mr. Spoor resignedBoard from six directors to seven directors and appointed Terry Coelho, age 60, to serve as a member of the Board on April 29, 2020.
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| Table of Contents |
ITEM 2.
References in this report to “AzurRx,” “Company,” “we,” “us,” “our,” or similar references mean AzurRx BioPharma, Inc. and its subsidiaries on a consolidated basis. References to “AzurRx BioPharma” refer to AzurRx BioPharma, Inc. on an unconsolidated basis. References to “AzurRx SAS” refer to AzurRx BioPharma’s wholly owned subsidiary through which we conduct our European operations. References to the “SEC” refer to the U.S. Securities and Exchange Commission.
Forward-Looking Statements
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this interim report. Our consolidated financial statements have been prepared in accordance with U.S. GAAP. The following discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including, without limitation, statements regarding our expectations, beliefs, intentions or future strategies that are signified by the words “expect,” “anticipate,” “intend,” “believe,” or similar language. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Our business and financial performance are subject to substantial risks and uncertainties. Actual results performance or achievements of the company and its clinical trials maycould differ materially from those indicated by such forward-looking statements as a result of various important factors, including whether the Company’s cash resources will be sufficient to fund its continuing operations for the periods and/or trials anticipated; whether results obtained in preclinical and nonclinical studies and clinical trials will be indicative of results obtained in future clinical trials; whether preliminary or interim results from a clinical trial such as the interim results presented will be indicative of the final results of the trial; whether the Company’s product candidates will advance through the clinical trial process on a timely basis, or at all; whether the results of such trials will warrant submission for approval from the United States Food and Drug Administration or equivalent foreign regulatory agencies; whether the Company’s product candidates will receive approval from regulatory agencies on a timely basis or at all; whether, if product candidates obtain approval, they will be successfully distributed and marketed; whether the coronavirus pandemic will have an impact on the timing of our clinical development, clinical supply and our operations; and other factors discussedprojected in the forward-looking statements. In evaluating our business, you should carefully consider the information set forth under the heading “Risk Factors” section of the Company’s annual reportincluded in our Annual Report filed on Form 10-K for the periodyear ended December 31, 2019, and risks described in other filings that the Company may make2020 filed with the Securities and Exchange Commission.SEC on March 31, 2021. Readers are cautioned not to place undue reliance on these forward-looking statements. Any forward-looking statements contained in this report speak only as of the date hereof, and the Company specifically disclaims any obligation to update any forward-looking statement, whether because of new information, future events or otherwise.
Overview
We are collectively referred to as the “
MS1819, our lead drug candidate, MS1819.
In 2021, we are launching two new clinical programs using proprietary formulations of niclosamide, a small molecule with anthelminthic, anti-viral and anti-inflammatory properties. The first, FW-1022, is for Severe Acute Respiratory Syndrome Coronavirus 2 (“COVID-19”) gastrointestinal infections. In April 2021, we launched the Cystic Fibrosis Foundation Data Safety Monitoring Board (the “CFF DSMBPhase 2 RESERVOIR COVID-19 GI clinical trial using a proprietary oral immediate-release tablet formulation of micronized niclosamide. The second, FW-420, is for Grade 1 and Grade 2 Immune Checkpoint Inhibitor-Associated Colitis (“ICI-AC”) completed its reviewand diarrhea in advanced stage oncology patients. We are preparing to initiate our Phase 1b/2a PASSPORT ICI-AC trial using both an oral immediate-release tablet and a topical rectal enema foam formulations of niclosamide in the second half of 2021.
COVID-19 Update
In March 2020, the World Health Organization declared the novel coronavirus disease, or COVID-19, outbreak a global pandemic. To limit the spread of COVID-19, governments have taken various actions including the issuance of stay-at-home orders and physical distancing guidelines. Accordingly, businesses have adjusted, reduced or suspended operating activities. Beginning in March 2020, the majority of our workforce began working from home. Disruptions caused by the COVID-19 pandemic, including the effects of the Company’s final resultsstay-at-home orders and work-from-home policies, have impacted productivity, including delayed enrollment of the OPTION Cross-Over Study and had found no safety concerns for MS1819, and that the CFF DSMB supported the Company’s plan to proceed to a higher 4.4 gram dosenew patients at certain of MS1819 with enteric capsules in the multi-center dose escalation Phase 2b OPTION clinical trial (the “OPTION 2 Trial”). In December 2019, the Company submitted the clinical trial protocol to the existing IND at the FDA. The clinical trial protocol has been reviewed by the FDA with no comments. In April 2020, the Company received approval to conduct the OPTION 2 Trial in Therapeutics Development Network (“TDN”) clinical sites in the U.S. as well as Institutional Review Board (“IRB”) approval to commence the OPTION 2 Trial.
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We have implemented business continuity plans designed to address and mitigate the European armimpact of the OPTION 2 Trial. Topline data is anticipated inongoing COVID-19 pandemic on our employees and our business. We continue to operate normally with the first quarterexception of 2021; however, this timeline may be further delayed dueenabling all of our employees to work productively at home and abiding by travel restrictions issued by federal, state and local governments. Our current plans to return to the COVID-19 pandemic.
Liquidity and Capital Resources
To date, we have not generated any revenues and have experienced net losses and negative cash flows from operations since our inception. activities.
As of SeptemberJune 30, 2020,2021, we had cash and cash equivalents of approximately $11.4$8.1 million, and had sustained cumulative losses attributable to common stockholders of approximately $78.0$112.3 million. We have not yet achieved profitability and anticipate that we will continue to incur net losses for the foreseeable future. We expect that our expenses will continue to grow and, as a result, we will need to generate significant product revenues to achieve profitability. We may never achieve profitability. As such, we are dependent on obtaining, and are continuing to pursue, the necessary funding from outside sources, including obtaining additional funding from the sale of securities in order to continue our operations. Without adequate funding, we may not be able to meet our obligations. TheseWe believe these conditions may raise substantial doubt about our ability to continue as a going concern.
Our primary sources of liquidity come from
capital raises through additional equity and/or debt financings. This may be impacted by the COVID-19 pandemic, which is evolving and could negatively impact our ability to raise additional capital in theWe have funded our operations to date primarily through the issuance of debt, and convertible debt securities, preferred stock, as well as the issuance of our common stock, par value $0.0001 per share (the “
Although, we are primarily focused on the development of our drug candidates, including MS1819 and niclosamide, we are also opportunely focused on expanding our product pipeline of clinical assets through collaborations, and also through acquisitions of products and companies. We are continually evaluating potential asset acquisitions business combinations, and business combinations.other partnership opportunities. To finance such acquisitions, we might raise additional equity capital, incur additional debt, or both.
Currently, we have approximately $94.3 million of securities available to be sold under the shelf registration statement filed on May 26, 2021, which was declared effective on June 2, 2021 and Exchange
Additionally, we have approximately $30.0 million of securities available to be sold under the shelf registration statement filed on June 5, 2019, which was declared effective on June 25, 2019 and will expire on June 25, 2022, and
approximately $14.0 million of our public offeringsCommon Stock available for issuance pursuant to a purchase agreement with Lincoln Park Capital Fund, LLC. We may sell the remaining shares of Common Stock that occurred in April 2019may be issued under the purchase agreement at our discretion from time to time until July 2022, subject to the continued effectiveness of a registration statement covering such shares of Common Stock sold to Lincoln Park Capital Fund, LLC by us.
Our ability to issue securities is subject to market conditions. Each issuance under the shelf registration statements will require the filing of a prospectus supplement identifying the amount and in May 2019, $2,000,000 from the issuanceterms of the ADEC Notes, and $61,590 received from a stockholder in relationsecurities to a warrant modification offset by repayment of a note payable of $255,032.
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Consolidated Results of Operations for the Three Months Ended SeptemberJune 30, 20202021 and 2019
The following table summarizes our consolidated results of operations for the periods indicated:
|
| Three Months Ended |
|
|
|
| ||||||
|
| June 30, |
|
| Increase |
| ||||||
|
| 2021 |
|
| 2020 |
|
| (decrease) |
| |||
Operating expenses: |
|
|
|
|
|
|
|
|
| |||
Research and development expenses |
| $ | 5,647,798 |
|
| $ | 1,089,177 |
|
| $ | 4,558,621 |
|
General and administrative expenses |
|
| 3,629,090 |
|
|
| 1,304,527 |
|
|
| 2,324,563 |
|
Total operating expenses |
|
| 9,276,888 |
|
|
| 2,393,704 |
|
|
| 6,883,184 |
|
Other expenses (income) |
|
| 2,056 |
|
|
| 2,302,174 |
|
|
| (2,300,118 | ) |
Net loss |
| $ | 9,278,944 |
|
| $ | 4,695,878 |
|
| $ | 4,583,066 |
|
Research and Development Expense
Research and development expenses include cash and non-cash expenses primarily relating to the development of our productlead drug candidate, MS1819 and our in-licensed niclosamide drug candidates. Since inception, we have devoted substantially all
Non-cash research and development expenses, including stock-based compensation, and depreciation and amortization totaled approximately $0.2 million for the three months ended June 30, 2021 and approximately $0.1 million recorded for the three months ended June 30, 2020. Cash research and development expenses for the three months ended June 30, 2021 totaled approximately $4.5 million, an increase of our timeapproximately $3.6 million, or 414% over the approximately $0.9 million recorded for the three months ended June 30, 2020.
The increase in total research and efforts to developing MS1819. As a result, we did not have any revenuedevelopment expenses was primarily attributable increases of approximately $2.7 million in clinical related expenses in connection with conducting two Phase 2 clinical trials for MS1819, and one clinical trial for niclosamide during the three months ended SeptemberJune 30, 2020 and 2019, respectively.
We expect cash R&D expense to increase during the remainder of the fiscal year as we advance both the OPTION 2 Trialresearch and the Combination Trial and increase chemistry, manufacturing, and controls (“CMC”) activities in connection with the continued development of MS1819.
General and Administrative Expense
General and administrative expenses include cash and non-cash expenses primarily relating to our overall operations and being a public company, including personnel, legal and financial professional services, insurance, corporate communication and investor relations, listing and compliance related costs, rent, and expenses associated with obtaining and maintaining intellectual property and patents, among others.
Non-cash general and administrative expenses, including stock-based compensation, stock expense and depreciation and amortization totaled approximately $0.5 million for the three months ended June 30, 2021, and approximately $0.2 million recorded for the three months ended June 30, 2020. Cash general and administrative expenses for the three months ended June 30, 2021 totaled approximately $3.2 million, an increase of approximately $2.0 million, or 183% over the approximately $1.1 million recorded for the three months ended June 30, 2020.
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The increase in total general and administrative was due primarily to increases of approximately $1.4 million in public company and corporate communications expenses,costs, including investor relations, corporate communications in connection with market awareness campaigns and compliance related fees, approximately $0.4 million of legal expenses feesprimarily related to businessincreased financing activity and corporate governance, approximately, approximately $0.1 million in personnel costs, approximately $0.1 million in director fees, and approximately $0.1 million in insurance costs, offset by aggregate decreases of approximately $0.1 million in consulting costs and travel and entertainment.
We expect cash general and administrative expenses to increase during the remainder of this fiscal year to support our research and development efforts and information technology security expenses, among others.
Other Expense
Other expense for the three months ended SeptemberJune 30, 20202021 was $1,601,972 asabout $2,000, a decrease of approximately $2.3 million, or 100% compared to $110,398the approximately $2.3 million of other expense recorded for the three months ended SeptemberJune 30, 2019. This represents an increase of $1,491,5742020. Interest expense was approximately $0 and $2.3 million for the three months ended SeptemberJune 30, 2021 and 2020, as compared to the three months ended September 30, 2019. This increase is primarily due to increasedrespectively. The decreased interest expense of $1,203,404was primarily due to amortization of debt discount and accrued interest related to the convertible debt issued in between December 2019 and January 2020 for the three months ended June 30, 2020, which was not present infor the prior period, and a loss on debt extinguishment of $609,998, which was not present in the prior period, offset by gain on settlement of $211,430, which was not present in the prior period.
Net Loss
As a result of the factors above, our net loss increased by $1,121,434 to $5,313,906 for the three months ended SeptemberJune 30, 2020 as compared to $4,192,4722021 totaled approximately $9.3 million, an increase of approximately $4.6 million, or 98% over the approximately $4.7 million recorded for the three months ended SeptemberJune 30, 2019.
Consolidated Results of Operations for the NineSix Months Ended SeptemberJune 30, 20202021 and 2019
The following table summarizes our consolidated results of our product candidates. Since inception, we have devoted substantially all of our time and efforts to developing MS1819. As a result, we did not have any revenue duringoperations for the three months ended September 30, 2020 and 2019, respectively.
|
| Six Months Ended |
|
|
|
| ||||||
|
| June 30, |
|
| Increase |
| ||||||
|
| 2021 |
|
| 2020 |
|
| (decrease) |
| |||
Operating expenses: |
|
|
|
|
|
|
|
|
| |||
Research and development expenses |
| $ | 8,163,825 |
|
| $ | 2,642,537 |
|
| $ | 5,521,288 |
|
General and administrative expenses |
|
| 9,326,604 |
|
|
| 2,679,618 |
|
|
| 6,646,986 |
|
Total operating expenses |
|
| 17,490,429 |
|
|
| 5,322,155 |
|
|
| 12,168,274 |
|
Other expenses (income) |
|
| (525,856 | ) |
|
| 4,635,013 |
|
|
| (5,160,869 | ) |
Net loss |
| $ | 16,964,573 |
|
| $ | 9,957,168 |
|
| $ | 7,007,405 |
|
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| Table of Contents |
Research and Development Expense.
Research and development expenses include cash and non-cash expenses primarily relating to the development of our lead drug candidate, MS1819 and our in-licensed niclosamide drug candidates.
Non-cash research and development expenses, including stock-based compensation, and depreciation and amortization totaled approximately $0.7 million for the ninesix months ended SeptemberJune 30, 2020,2021 and approximately $0.3 million recorded for the six months ended June 30, 2020. Cash research and development expenses for the six months ended June 30, 2021 totaled approximately $7.5 million, an increase of approximately $5.2 million, or 228% over the approximately $2.3 million recorded for the six months ended June 30, 2020.
The increase in total research and development expenses was primarily attributable increases of approximately $3.0 million in clinical related expenses in connection with conducting two Phase 2 clinical trials for MS1819, and one clinical trial for niclosamide during the six months ended June 30, 2021, as compared to $7,927,907one Phase 2 clinical trial for MS1819 during the ninesix months ended September 30, 2019. This represents a decrease of $3,489,678, or approximately 49% for the nine months ended SeptemberJune 30, 2020, as comparedapproximately $1.0 million in CMC related activates primarily for MS1819, approximately $1.0 million milestone payment pursuant to the nine months ended September 30, 2019.
We expect cash R&D expense to increase during the remainder of the fiscal year as we advance both the OPTION 2 Trialresearch and the Combination Trial and increase CMC activities in connection with the continued development of MS1819.
General and Administrative Expense
General and administrative expenses include cash and non-cash expenses primarily relating to our overall operations and being a public company, including personnel, legal and financial professional services, insurance, corporate communication and investor relations, listing and compliance related costs, rent, and expenses associated with obtaining and maintaining intellectual property and patents, among others.
Non-cash expenses, including stock-based compensation, stock expense and depreciation and amortization totaled approximately $1.9 million for the six months ended June 30, 2021, and approximately $0.3 million recorded for the six months ended June 30, 2020. Cash general and administrative expenses for the six months ended June 30, 2021 totaled approximately $7.5 million, an increase of approximately $5.2 million, or 223% over the approximately $2.3 million recorded for the six months ended June 30, 2020.
The increase in total general and administrative was due primarily to increases of approximately $3.3 million in public company and corporate communications expenses,costs, including investor relations, corporate communications, in connection with market awareness campaigns, including a special meeting of the shareholders, and compliance related fees, approximately $0.8 million of legal expenses feesprimarily related to increased financing activity and corporate governance, approximately $0.3 million of business development costs primarily related to fees for the First Wave License Agreement, approximately $0.3 million of other costs related to the settlement with our former investment bank, approximately $0.2 million in personnel costs, and approximately $0.1 million in insurance costs, offset by aggregate decreases of approximately $0.1 million in consulting costs and travel and entertainment.
We expect cash general and administrative expenses to increase during the remainder of this fiscal year to support our research and development efforts and information technology security expenses, among others.
Other Expense.
Other expenseincome for the ninesix months ended SeptemberJune 30, 2020 was $6,236,985 as compared to $278,1552021 totaled approximately $0.5 million, a decrease in expense of approximately $5.2 million, or 111% over the approximately $4.6 million of other expense recorded for the threesix months ended SeptemberJune 30, 2019. This represents an increase of $5,958,8302020. Interest expense was approximately $0 and $4.6 million for the threesix months ended SeptemberJune 30, 2021 and 2020, as compared to the three months ended September 30, 2019. This increase is primarily due to increasedrespectively. The decreased interest expense of $5,838,417was primarily due to amortization of debt discount and accrued interest related to the convertible debt issued in between December 2019 and January 2020 as compared to $278,155 infor the prior period, and a loss on debt extinguishment of $609,998,six months ended June 30, 2020, which was not present for the six months ended June 30, 2021. The change in fair value was approximately $0.5 million and $0 for the prior period, offset by gain on settlementsix months ended June 30, 2021 and 2020, respectively. The increased change in fair value related to the extinguishment of $211,430,the $3.0 million liability in connection with First Wave License Agreement pursuant to the issuance of Series C Preferred Stock with a fair value of approximately $0.5 million for the six months ended June 30, 2021, which was not present infor the prior period.
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Net Loss
As a result of the factors above, our net loss increased by $1,375,011 to $15,271,074 for the ninesix months ended SeptemberJune 30, 2021 totaled approximately $17.0 million, an increase of approximately $7.0 million, or 71% over the approximately $10.0 million recorded for the six months ended June 30, 2020.
Cash Flows for the Six Months Ended June 30, 2021 and 2020
The following table summarizes our cash flows for the periods indicated:
|
| Six Months Ended |
| |||||
|
| June 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Net cash and cash equivalents provided by (used in): |
|
|
|
|
|
| ||
Operating activities |
| $ | (10,696,128 | ) |
| $ | (2,634,733 | ) |
Investing activities |
|
| (9,073,928 | ) |
|
| (2,808 | ) |
Financing activities |
|
| 21,832,600 |
|
|
| 3,433,595 |
|
Net increase (decrease) in cash and cash equivalents |
| $ | 2,062,544 |
|
| $ | 796,054 |
|
Operating Activities
Net cash used in operating activities during the six months ended June 30, 2021 of approximately $10.7 million was primarily attributable to our net loss of approximately $17.0 million adjusted for addbacks of non-cash expenses of approximately $2.0 million, mostly related to common stock and warrants issued to consultants of approximately $1.2 million, depreciation and amortization of approximately $0.3 million, and stock-based compensation of approximately $1.0 million partially offset by a change in the fair value of liability $0.5 million and a net increase of working capital of approximately $4.3 million.
Net cash used in operating activities during the six months ended June 30, 2020 as comparedof approximately $2.6 million was primarily attributable to $13,896,063our net loss of approximately $10.0 million adjusted for addbacks of non-cash expenses of approximately $5.3 million, which includes depreciation and amortization of approximately $0.3 million, stock-based compensation of approximately $0.2 million, accretion of debt discount of approximately $4.2 million, interest on convertible debt of approximately $0.3 million and stock expense to settle accounts payable of approximately $0.1 million and a net decrease of working capital of approximately $1.3 million.
Investing Activities
Net cash used in investing activities during the six months ended June 30, 2021 was approximately $9.1 million, consisting of $9.0 million in cash payments related to the First Wave License Agreement and approximately $74,000 related to the purchase of office furniture and equipment.
Net cash used in investing activities for the ninesix months ended SeptemberJune 30, 2019.
Financing Activities
Net cash provided by financing activities of approximately $21.8 million for the six months ended June 30, 2021 was primarily due to the issuance of the Series C Preferred Stock and warrants of approximately $7.1 million from the January 2021 Offerings, the issuance of the Common Stock and warrants of approximately $9.1 million from the March 2021 Offering, the issuance of the Common Stock of approximately $1.2 million from ATM Agreement sales and the cash proceeds from warrant exercises of approximately $4.9 million, offset by repayments of approximately $0.4 million related to the note payable.
Net cash provided by financing activities of approximately $3.4 million for the six months ended June 31, 2020 was primarily due to the issuance of the convertible debt of approximately $3.2 million from the Promissory Note Offering, approximately $1.0 million from the proceeds of the Equity Line Agreement, and approximately $0.2 million from the issuance of a note payable in connection with the Payment Protection Program (“PPP”) loan offset by repayments of convertible debt and interest of approximately $0.5 million related to the ADEC Notes and approximately $0.5 million related to the repayment of notes payable, which included the repayment of the PPP loan.
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Critical Accounting Policies and Estimates
Our accounting policies are essential to understanding and interpreting the financial results reported on the consolidated financial statements. The significant accounting policies used in the preparation of our consolidated financial statements are summarized in Note 2 to the consolidated financial statements and notes thereto found in our Annual Report on Form 10-K for the year ended December 31, 2020. Certain of those policies are considered to be particularly important to the presentation of our financial results because they require us to make difficult, complex or subjective judgments, often as a result of matters that are inherently uncertain.
During the six months ended June 30, 2021, there were no material changes to matters discussed under the heading “Critical Accounting Policies and Estimates” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
ITEM 3. QU
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended, (the “
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
OTHER INFORMATION
ITEM 1. |
None.
ITEM 1A.RISKFACTORS |
Our results of operations and financial condition are subject to numerous risks and uncertainties described in our Annual Report on Form 10-K for our fiscal year ended December 31, 2019,2020, filed on March 30, 2020 as supplemented by our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020, as filed on August 14, 2020.31, 2021. You should carefully consider these risk factors in conjunction with the other information contained in this Quarterly Report. Should any of these risks materialize our business, financial condition and future prospects could be negatively impacted. As of November 16, 2020,August 13, 2021, there have been no material changes to the disclosures made in the above referenced Form 10-K, as supplemented by our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020, as filed on August 14, 2020.
During the three months ended June 30, 2021, we issued to a non-executive employee stock options to purchase an aggregate of 36,000 shares of Common Stock with a strike price of $0.78 per share, subject to time-based vesting, under the AzurRx BioPharma, Inc. 2020 Omnibus Equity Incentive Plan, as amended and restated, as payment for services rendered. Such issuance was exempt from registration under 4(a)(2) of the Securities Act of 1933, as amended.
ITEM 3.DEFAULTS UPON SENIORSECURITIES |
None.
ITEM 4.MINESAFETYDISCLOSURES |
Not applicable.
ITEM 5.OTHERINFORMATION |
None.
ITEM 6.EXHIBITS |
(b) | Exhibits |
Exhibit No. | Description | |
| Certification of the Principal Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase | |
104* | The cover page from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021 is formatted in iXBRL. |
_________________
* filed herewith
** furnished, not filed
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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.
AZURRX BIOPHARMA, INC. | |||
By | /s/ James Sapirstein | ||
James Sapirstein President, Chief Executive Officer and Chairman (Principal Executive Officer) | |||
By | |||
/s/ Daniel Schneiderman | |||
Date: | Daniel Schneiderman Chief Financial Officer (Principal Financial and Accounting Officer) |
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