| Summary of Significant Accounting Policies | Note
3 — Summary of Significant Accounting Policies: Use
of Estimates The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America (“GAAP”) Basis
of Consolidation The
consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation. Financial
Instruments Financial
instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and
short-term investments. The Company maintains its cash and cash equivalents in bank deposit and other interest-bearing accounts, the
balances of which, at times, may exceed federally insured limits. The
following table is the reconciliation of the accounting standard that modifies certain aspects of the recognition, measurement, presentation
and disclosure of financial instruments as shown on the Company’s consolidated statement of cash flows:
December
31,
2023 2022
Cash and cash equivalents $ 43,642,684 $ 43,148,323
Restricted cash, short-term
and long-term 180,508 226,422
Total cash, cash equivalents
and restricted cash $ 43,823,192 $ 43,374,745 The
appropriate classification of marketable securities is determined at the time of purchase and reevaluated as of each balance sheet date.
Investments in marketable debt and equity securities classified as available-for-sale are reported at fair value. Fair value is determined
using quoted market prices in active markets for identical assets or liabilities or quoted prices for similar assets or liabilities or
other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Changes in fair value that are considered temporary are reported net of tax in other comprehensive income (loss). Realized gains and
losses, amortization of premiums and discounts and interest and dividends earned are included in income (expense). For declines in the
fair value of equity securities that are considered other-than-temporary, impairment losses are charged to other (income) expense, net.
The Company considers available evidence in evaluating potential impairments of its investments, including the duration and extent to
which fair value is less than cost. There were no deemed permanent impairments at December 31, 2023 or 2022. The
Company’s marketable securities are highly liquid and consist of U.S. government agency securities, high-grade corporate obligations
and commercial paper with original maturities of more than 90 days. As of December 31, 2023 and 2022, all of the Company’s investments
had contractual maturities which were less than one year. The following table summarizes the amortized cost, unrealized gains and losses
and the fair value at December 31, 2023 and 2022:
December
31, 2023: Amortized Gross Gross Fair
Value
Money
Market Funds and Cash Equivalents $ 32,541,862 $ - $ - $ 32,541,862
U.S. Government
Agency
Securities 29,701,677 - 10,506 29,712,183
Commercial
Paper 2,676,740 (1,425 ) - 2,675,315
Subtotal 32,378,417 (1,425 ) 10,506 32,387,498
Total
December 31, 2023 $ 64,920,279 $ (1,425 ) $ 10,506 $ 64,929,360
December 31,
2022:
Money
Market Funds and Cash Equivalents $ 7,311,327 $ - $ 572 $ 7,311,899
U.S. Government
Agency
Securities 12,072,127 (3,184 ) 2,056 12,070,999
Corporate Securities 2,684,235 (183 ) 909 2,684,961
Commercial
Paper 888,875 (773 ) - 888,102
Subtotal 15,645,237 (4,140 ) 2,965 15,644,062
Total
December 31, 2022 $ 22,956,564 $ (4,140 ) $ 3,537 $ 22,955,961 Fair
Value Measurements The
Company’s financial instruments recorded in the consolidated balance sheets include cash and cash equivalents, accounts receivable,
investment securities, accounts payable and accrued expenses. The carrying value of certain financial instruments, primarily cash
and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate their estimated fair values based upon
the short-term nature of their maturity dates. The
Company categorizes its financial instruments into a three-level fair value hierarchy that prioritizes the inputs to valuation techniques
used to measure fair value, which is set out below. The fair value hierarchy gives the highest priority to quoted prices in active markets
for identical assets (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall
within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair
value measurement of the instrument.
● Level
1 inputs—Observable
inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active
markets.
● Level
2 inputs—
Significant other observable inputs (e.g., quoted prices for similar items in active markets,
quoted prices for identical or similar items in markets that are not active, inputs other
than quoted prices that are observable such as interest rate and yield curves, and market-corroborated
inputs).
● Level
3 inputs—Unobservable
inputs for the asset or liability, which are supported by little or no market activity and
are valued based on management’s estimates of assumptions that market participants
would use in pricing the asset or liability. The
following table provides the carrying value and fair value of the Company’s financial assets measured at fair value as of December
31, 2023 and 2022:
December 31, 2023: Carrying Value Level
1 Level
2 Level
3
Money Market
Funds and Cash Equivalents $ 32,541,230 $ 32,541,230 $ - $ -
U.S. Government Agency
Securities 29,712,183 29,712,183 - -
Commercial Paper 2,675,947 - 2,675,947 -
Subtotal 32,388,130 29,712,183 2,675,947 -
Total December 31, 2023 $ 64,929,360 $ 62,253,413 $ 2,675,947 $ -
December 31, 2022:
Money Market Funds and
Cash Equivalents $ 7,311,899 $ 7,311,899 $ - $ -
U.S. Government Agency
Securities 12,070,999 12,070,999 - -
Corporate Securities 2,684,961 - 2,684,961 -
Commercial Paper 888,102 - 888,102 -
Subtotal 15,644,062 12,070,999 3,573,063 -
Total
December 31, 2022 $ 22,955,961 $ 19,382,898 $ 3,573,063 $ - Foreign
Currency Translation and Transactions The
consolidated financial statements are presented in U.S. Dollars (USD), the reporting currency of the Company. For the financial statements
of the Company’s foreign subsidiaries, whose functional currency is the EURO, foreign currency asset and liability amounts, if
any, are translated into USD at end-of-period exchange rates. Foreign currency income and expenses are translated at average exchange
rates in effect during the year. Translation gains and losses are included in other comprehensive income (loss). The Company had a foreign
currency translation gain of $1,682 and a loss of $9,442 for the year ended December 31, 2023 and 2022, respectively. Foreign
currency exchange transaction gain (loss) is the result of re-measuring transactions denominated in a currency other than the functional
currency of the entity recording the transaction. Restricted
Cash As of December 31, 2023, and 2022 the Company has restricted cash in
connection with the patent and utility model infringement proceedings against TauroPharm (see Note 6). The Company was required
by the District Courts of Mannheim to provide security deposit to cover legal fees in the event TauroPharm is entitled to reimbursement
of these costs. The Company furthermore had to provide a deposit for the first and second instances, respectively, in connection with
the unfair competition proceedings in Cologne. During the year ended December 31, 2023, approximately a total of $47,000 was released
by the court for the reimbursement of legal fees and other costs which was removed from restricted cash. As of December 31, 2023 and 2022,
restricted cash in connection with the patent and utility model infringement proceedings were approximately approximately As of December 31, 2023 and 2022, the Company had $103,000 in long-term
restricted cash for a lease security deposit. Prepaid
Research and Development and Other Prepaid Expenses Prepaid
expenses consist of payments made in advance to vendors relating to service contracts for clinical trial development, manufacturing,
pre-clinical development and insurance policies. These advanced payments are amortized to expense either as services are performed or
over the relevant service period using the straight-line method. Inventories,
net The Company engages third parties to manufacture and package inventory
held for sale and warehouse such goods until packaged for final distribution and sale. Costs related to the manufacturing of the product
incurred prior to FDA approval in order to support the preparation for commercial launch of its product were expensed as R&D as incurred.
Upon FDA approval, costs related to the manufacturing of inventory are stated at the lower of cost or net realizable value with cost determined
on a first-in, first-out basis. Inventories previously expensed as R&D prior to FDA approval amounted to $6,407,266. Inventories
consist of raw materials (including labeling and packaging), work-in-process, and finished goods, if any, for the DefenCath product.
Inventories consist of the following:
December
31,
2023 2022
Raw materials $ 1,525,420 $ -
Work in progress 580,925 -
Total $ 2,106,345 $ - Property
and Equipment Property
and equipment consist primarily of furnishings, fixtures, leasehold improvements, office equipment and computer equipment all of
which are recorded at cost. Depreciation is provided for by the straight-line method over the estimated useful lives of the related
assets. Leasehold improvements are amortized using the straight-line method over the remaining lease term or the life of
the asset, whichever is shorter. Property and equipment, as of December 31, 2023 and 2022 were $1,866,224 and $1,609,679,
respectively, net of accumulated depreciation of $520,542 and $449,787, respectively. Depreciation and amortization of property and
equipment is included in selling, general and administrative expenses.
Description Estimated
Useful Life
Office equipment and furniture 5 years
Leasehold improvements 7 years or remaining
Computer equipment 5 years
Computer software 3 years Leases The
Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”)
assets, current portion of operating lease liabilities (included in accrued expenses), and operating lease liabilities, net of current
portion, on the consolidated balance sheet (see Note 8). Operating
lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over
the lease term at commencement date. As the Company’s leases do not provide an implicit rate, the Company uses its incremental
borrowing rate based on the information available at commencement date in determining the present value of future payments. 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 for minimum lease payments is recognized on a straight-line basis over the lease term. The
Company has elected, as an accounting policy, not to apply the recognition requirements in ASC 842 to short-term leases. Short-term leases
are leases that have a term of 12 months or less and do not include an option to purchase the underlying asset that the
Company is reasonably certain to exercise. The Company recognizes the lease payments for short-term leases on a straight-line basis
over the lease term. The
Company has also elected, as a practical expedient, by underlying class of asset, not to separate lease components from non-lease components
and, instead, account for them as a single component. Revenue
Recognition The
Company uses Accounting Standards Codification (“ASC”) 606, “ Revenue from Contracts with Customers,” The
Company recognizes net sales upon shipment of product to the dialysis centers and upon meeting the five-step model prescribed by ASC
606 outlined above. Loss
Per Common Share Basic
loss per common share excludes dilution and is computed by dividing net loss by the weighted average number of common shares outstanding
during the period. The weighted average number of common shares outstanding during the period included 2,500,625 shares underlying outstanding
pre-funded warrants. Diluted loss per common share reflects the potential dilution that could occur if securities or other contracts
to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the
earnings of the Company. The
Company’s outstanding shares of Series E preferred stock entitle the holders to receive dividends on a basis equivalent to the
dividends paid to holders of common stock. As a result, the Series E preferred stock meet the definition of participating securities
requiring the application of the two-class method. Under the two-class method, earnings available to common shareholders, including both
distributed and undistributed earnings, are allocated to each class of common stock and participating securities according to dividends
declared and participating rights in undistributed earnings, which may cause diluted earnings per share to be more dilutive than the
calculation using the treasury stock method. No loss has been allocated to these participating securities since they do not have contractual
obligations that require participation in the Company’s losses. Since
the Company has only incurred losses, basic and diluted loss per share are the same as potentially dilutive shares have been excluded
from the calculation of diluted net loss per share as their effect would be anti-dilutive. The shares outstanding at the end of the respective
periods presented below were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect:
Number
of Shares of
December
31,
2023 2022
Series C non-voting preferred stock 4,000 4,000
Series E voting preferred stock 391,953 391,953
Series G voting preferred stock 5,004,069 5,004,069
Shares issuable for payment of deferred board
compensation 48,909 48,909
Shares underlying outstanding stock options 6,211,508 4,454,369
Restricted stock units 153,735 207,469
Total potentially dilutive
shares 11,814,174 10,110,769 Stock-Based
Compensation Share-based
compensation cost is measured at grant date, based on the estimated fair value of the award using the Black-Scholes option pricing model
for options with service or performance-based conditions. Stock-based compensation is recognized as expense over the requisite service
period on a straight-line basis or when the achievement of the performance condition is probable. For options with market-based vesting,
share-based compensation cost is measured at grant date using the Monte Carlo option pricing model and the expense is recognized over
the derived service period. Research
and Development Research
and development costs are charged to expense as incurred. Research and development include fees associated with operational consultants,
contract clinical research organizations, contract manufacturing organizations, clinical site fees, contract laboratory research organizations,
contract central testing laboratories, licensing activities, and allocated executive, human resources and facilities expenses. The Company
accrues for costs incurred as the services are being provided by monitoring the status of the trial and the invoices received from its
external service providers. As actual costs become known, the Company adjusts its accruals in the period when actual costs become known.
Costs related to the acquisition of technology rights and patents for which development work is still in process are charged to operations
as incurred and considered a component of research and development expense. Income
Taxes Deferred
tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date. Valuation allowances are established when it is more likely than not that some or all of the deferred
tax assets will not be realized. Legal
Costs The
Company records legal costs associated with loss contingencies when they are probable and reasonably estimable. Recent
Authoritative Pronouncements In
October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-06,
“ Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative In November 2023, the FASB
issued ASU 2023-07, “ Improvements to Reportable Segment Disclosures In December 2023, the FASB issued ASU
2023-09, “ Improvements to Income Tax Disclosures |
