ADIAL PHARMACEUTICALS INC
For the period ended Dec 31, 2024. Filed Mar 4, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 4, 2025
ADIL$5.05+36.1%Stored close · as of Oct 28, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-04-01.
0001213900-24-028701
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-04.
0001213900-25-019771
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 77 previous paragraphs and 79 current paragraphs.
49 unchanged; 11 reworded; 19 added; 15 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 14 previous and 14 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
On April 18, 2024, we entered into an At the Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (the “Sales Agent” or “Wainwright”) providing for sale of our shares of common stock, from time to time, through the Sales Agent, with certain limitations on the number of shares of common stock that may be offered and sold by us as set forth in the ATM Agreement. The aggregate market value of the shares of Common Stock eligible for sale under the ATM prospectus supplement filed in connection with the ATM Agreement was $4,283,650 which is based on the limitations of such offerings under SEC regulations. The ATM Agreement provides that we will pay the Sales Agent commissions for its services in acting as agent in the sale of shares of common stock pursuant to the ATM Agreement. The Sales Agent will be entitled to compensation at a fixed commission rate of 3.0% of the gross proceeds from the sale of shares of common stock pursuant to the ATM Agreement. The offering of shares of common stock pursuant to the ATM Agreement will terminate upon the earlier of (i) the sale of all shares of common stock subject to the ATM Agreement; or (ii) termination of the ATM Agreement by us as permitted therein. During the year ended December 31, 2024, we used this ATM Agreement to sell 2,348,520 shares of common stock for net proceeds of approximately $4 million, after fees and expenses.
Current report
On March 1, 2024, warrants to purchase 268,440 warrants to purchase shares for common stock for an exercise price of $2.82 per share were exercised for gross proceeds of approximately $757 thousand.
Current report
Research and development expenses increased by approximately $1,962,000 (155%) during the year ended December 31, 2024 compared to the year ended December 31, 2023. The key drivers of this increase were an increase of approximately $1,397,000 of direct clinical trial expenses associated with the Phase 1b trial initiated in 2024 and an increase of approximately $813,000 of chemistry, manufacturing, and controls (CMC) expenses, which increased by approximately $813,000, as stability testing took place to support the Phase 1b trial in 2024 and drug product manufacturing were initiated to support the upcoming Phase 3 trials. These increases were offset by an approximately $182,000 decrease in compensation, including equity-based compensation of R&D personnel.
Current report
General and administrative expenses (“G&A”) expenses
Current report
General and administrative expenses decreased by approximately $491,000 (9%) during the year ended December 31, 2024 compared to the year ended December 31, 2023. This decrease was the result of lower corporate legal expense of approximately $269,000 and a decrease in compensation of approximately $215,000, including equity based compensation of G&A personnel.
Current report
The expense recognized to the change in the value of our equity method investment in Adovate, LLC increased by approximately $358,000 in the year ended December 31, 2024 compared to the year ended December 31, 2023. This increase is due to the timing of investment. This investment was made on June 30 of 2023, with changes to the value of our Adovate equity being recognized on a three-month lag. Therefore, the loss recognized for the year ended December 31, 2023 reflects only 3 months of Adovate’s operations while the loss recognized for the year ended December 31, 2024 reflects a full year of Adovate’s operations.
Current report
Inducement Expense
Current report
The inducement expense of approximately $4,464,000 which was a one time, noncash expense associated with the issuance of new warrants to induce the exercise of outstanding warrants which occurred during the year ended December 31, 2024.
Current report
Total Other income (expenses)
Current report
Total other income, excluding losses from the equity method investment and inducement expense, increased by approximately $98,000 (123%) in the year ended December 31, 2024 compared to year ended December 31, 2023. This increase was due to the increase of approximately $109,000 in interest income that resulted from a higher cash balance held in the period.
Current report
The gain from discontinued operations, net of tax, decreased by approximately $1,894,000 (100%) in the year ended December 31, 2024 compared to the year ended December 31, 2023. This decrease is wholly due to the fact that the business of Purnovate, Inc., the activities of which are now classified as discontinued, was sold in June of 2023 and all associated activities ceased.
Current report
During the year ended December 31, 2024, our primary sources of funding were the exercise of previously issued warrants and the use of our ATM Agreement.
Current report
On March 1, 2024, warrants to purchase 268,440 shares of common stock at an exercise price of $2.82 per share were exercised for gross proceeds of approximately $757 thousand.
Current report
In the year ended December 31, 2024, we sold 2,348,520 shares of common stock through our ATM agreement, for net proceeds of approximately $4 million after placement fees and expenses.
Current report
At December 31, 2024, we had cash and cash equivalents of $3,750,525. We have completed a Phase 1 pharmacokinetic study of AD04 with a total cost of approximately $1.4 million, which has been fully paid. In addition, we plan to begin a Phase III study of AD04 in the second half of 2025, to complete production of sufficient drug product to carry out the study, and to begin the process of revalidation for our companion diagnostic to be included in our Phase III study. We have signed a contract with a vendor for approximately $2.3 million, which is cancellable by either party, to produce sufficient drug product to carry out the study, validate the manufacturing process, and manufacture registration batches for commercial usage. Our cash on hand is sufficient to fund our operations and meet our existing commitments into the second half of 2025, based on our current commitments.
Current report
Net cash used in operating activities increased by approximately $1,119,000 during the year ended December 31, 2024 compared to the year ended December 31, 2023. The increase was primarily due to higher research and development expenses, partially offset by the favorable increase in the net change in operating assets and liabilities when comparing the same two periods.
Current report
Net cash used in discontinued operations decreased by approximately $1,003,000 during the year ended December 31, 2024 compared to the year ended December 31, 2023. This was entirely due to the completion of the sale of the discontinued operations in June of 2023, after which these operations ceased requiring the use of cash.
Current report
Net cash provided by investing activities decreased by approximately $1,500,000 in the year ended December 31, 2024 compared to the year ended December 31, 2023. The decrease was driven by payments received in the prior year period related to the sale of Purnovate.
Current report
Net cash provided by financing activities increased by approximately $3,714,000 in the year ended December 31, 2024 compared to the year ended December 31, 2023. In the year ended December 31, 2023, we engaged in two financings: a limited sale of common stock to a single individual investor for net proceeds of approximately $750,000 and a sale of pre-funded warrants to an institutional investor for net proceeds of approximately $3,383,000. In the year ended December 31, 2024, we sold 2,348,520 shares of common stock through an ATM agreement for net proceeds of approximately $4,021,000 and realized additional funds from the induced and uninduced exercise of additional warrants for net proceeds of approximately $3,824,000.
Removed paragraphs (15)
Previous report
On February 10, 2022, we entered into a securities purchase agreement (the “2022 Purchase Agreement”) with an accredited institutional investor providing for the issuance of (i) 92,890 shares of Common Stock, (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 74,600 shares of Common Stock (the “Pre-Funded Warrant Shares”) with an exercise price of $0.025 per share, which Pre-Funded Warrants are to be issued in lieu of shares of Common Stock to ensure that the investor does not exceed certain beneficial ownership limitations, and (iii) warrants (the “2022 Warrants”), with a term of five years and six months from the date of issuance, to purchase an aggregate of up to 159,115 shares of Common Stock (the “2022 Warrant Shares”) at an exercise price of $63.00 per share, subject to customary adjustments thereunder. The total net proceeds, after expenses, to us were approximately $9.1 million. All 74,600 Pre-Funded Warrants were exercised on June 8, 2022, resulting in the issue of 74,600 shares of common stock for proceeds of $1,865.
Previous report
Research and development expenses decreased by approximately $683,000 (35%) in the year ended December 31, 2023 compared to the year ended December 31, 2022. This decrease was led by a significant decrease in the use of clinical and statistical consultants of approximately $303,000 and clinical materials manufacturing expenses of $231,000 with the completion of the AD04 trial. Compensation costs for R&D directed employees also decreased, salaries by approximately $189,000 and equity-based compensation by approximately $25,000, due to reduced use of employee time for R&D activities. Finally, the cost of our license of AD04 decreased by approximately $145,000, due to a one-time milestone payment in 2022 due on the completion of the trial. These decreases were somewhat offset by increased CRO fees and expenses of approximately $207,000, with due to occurrence in 2023 of final milestone payments and windup costs occurring after trial completion and by the cost of access to patient diagnosis information of approximately $52,000 needed for development planning at the end of 2023.
Previous report
General and administrative expenses
Previous report
General and administrative expenses decreased by approximately $3,288,000 (37%) in the year ended December 31, 2023 compared to the year ended December 31, 2022. The single largest component of this decrease was the reduction in equity-based compensation of G&A directed employees and consultants of approximately $1,605,000, resulting from reduced issuances of options and share grants and the completion of the vesting periods of grants made in prior years. The cost of salaries and other cash compensation of G&A directed employees decreased by approximately $905,000, primarily due to the reassignment of executives away from management of the Company to management of Purnovate. The year ended December 31, 2023 also saw substantial decreases in the investor/public relations costs of approximately $358,000, the cost of strategic consultants of approximately $319,000, and IT and web development costs of approximately $102,000.
Previous report
Total other income (expense)
Previous report
In the year ended December 31, 2023, total other income (expense) decreased by approximately $177,000 (281%), when compared to the year ended December 31, 2022. The change was almost entirely due to recognition of a portion of the operating loss of Adovate, LLC, equity of which we acquired in 2023 as part of the sale of the Company’s discontinued operations.
Previous report
Our loss from discontinued operations, net of taxes, decreased by approximately $3,814,000 in the year ended December 31, 2023, compared to the year ended December 31, 2022. The primary driver of this change was the one time gain on sale of these operations of approximately $2,625,000. Since these operations were sold in the middle of 2023, essentially every component of their operating costs decreased substantially compared to the prior year: direct research and development project costs by approximately $1,548,000, salaries by approximately $51,000, accounting costs by approximately $52,000, and rent by approximately $45,000. These decreases were somewhat offset by the absence in 2023 of non-cash gains in 2022 of approximately $536,000 due to changes in the value of a contingent liability associated with these operations.
Previous report
During the year ended December 31, 2023, our primary sources of funding were sales of common stock, pre-funded warrants, and warrants, and option exercises.
Previous report
On February 10, 2022, we entered into a securities purchase agreement with an accredited institutional investor providing for the issuance of (i) 92,890 shares of our common stock, par value $0.001, (ii) pre-funded warrants to purchase up to 74,600 shares of Common Stock with an exercise price of $0.025 per share, which Pre-Funded Warrants were to be issued in lieu of shares of Common Stock to ensure that the Investor does not exceed certain beneficial ownership limitations, and (iii) warrants, with a term of five years and six months from the date of issuance, to purchase an aggregate of up to 159,115 shares of Common Stock at an exercise price of $63.00 per share. We realized net proceeds from the offering of approximately $9.1 million after deducting fees due to the placement agent and our transaction expenses.
Previous report
On February 23, 2023, we entered into an equity purchase agreement with an accredited investor for the purchase of 73,144 shares of Common Stock at at-the-market price of $10.25 per share in a registered direct offering. We realized net proceeds from the offering of approximately $610,000 after deducting fees due to the placement agent and our transaction expenses. We also issued the placement agent warrant to purchase 7,317 shares of Common Stock at an exercise price of $10.25 per share.
Previous report
Though we have received net proceeds of approximately $3.8 from these recent warrant exercises, we intend to use this additional funding to accelerate the development of AD04. Therefore, our current cash and cash equivalents are not expected to be sufficient to fund operations for the twelve months from the date of filing this Annual Report on Form 10-K, based our current projections.
Previous report
Under our accelerated development plans, we expect to have used approximately $6.5 million in cash during the twelve months ended December 31, 2024 for both AD04 development costs, other R&D project costs and general corporate expenses, by which time we expect to have nearly exhausted our cash on hand. There is no assurance that funds could be raised in that period on acceptable terms to continue our operations and AD04 development projects.
Previous report
Net cash used in discontinued operations decreased by approximately $1,589,000 in the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease is primarily due to the gain on sale of these operations of approximately $2,625,000, which is classified as part of the loss, was either non-cash, or was classified as cash provided by investing activities (see below).
Previous report
In the year ended December 31, 2023, net cash provided by investing activities increased by approximately $1,500,000 over the year ended December 31, 2022. This difference was entirely due to the cash provided by the sale of our now discontinued operations in 2023. No such activity took place in 2022.
Previous report
Cash provided by financing activities decreased by approximately $4,994,000 in the year ended December 31, 2023 compared to the year ended December 31, 2022. This is due to our reduced fundraising activities, as we have taken a conservative approach to raising funds with our operational cash needs reduced, cash being provided through the sale of our discontinued operations, and our equity valuation lower that it has been historically.
Reworded paragraphs (11)
Previous wording
We have incurred net losses in each year since our inception, including net losses of approximately $5.1 million and $12.7 million for the years ended December 31, 2023 and 2022. We had accumulated deficits of approximately $68.8 and $63.7 million as of December 31, 2023 and 2022, respectively. Most, about 90%, of our operating losses resulted from costs incurred in continuing operations, including costs in connection with our continuing research and development programs, from general and administrative costs associated with our operations, and from financing costs.
Current wording
We have incurred net losses in each year since our inception, including net losses of approximately $13.2 million and $5.1 million for the years ended December 31, 2024 and 2023. We had accumulated deficits of approximately $82.0 and $68.8 million as of December 31, 2024 and 2023, respectively. Our operating losses resulted from costs incurred in continuing operations, including costs in connection with our continuing research and development programs, from general and administrative costs associated with our operations, and from financing costs.
Previous wording
In consideration of the Holder’s immediate exercise of the Existing Warrants and the payment of $0.125 per New Warrant (as such term is defined below) in accordance with the Inducement Agreement, we issued unregistered Series C Warrants (the “New Warrants”) to purchase 2,300,000 shares of common stock (200% of the number of shares of common stock issued upon exercise of the Existing Warrants) (the “New Warrant Shares”) to the Holder of Existing Warrants.
Current wording
In consideration of the Holder’s immediate exercise of the Existing Warrants and the payment of $0.125 per New Warrant (as such term is defined below) in accordance with the Inducement Agreement, we issued unregistered Series C Warrants (the “New Warrants”) to purchase 2,300,000 shares of common stock (200% of the number of shares of common stock issued upon exercise of the Existing Warrants) (the “New Warrant Shares”) to the Holder of Existing Warrants, recognizing a non-cash inducement expense of approximately $4.5 million.
Previous wording
On May 31, 2023, we entered into an Equity Purchase Agreement with Alumni Capital, LLC (“Alumni”). This agreement constituted a standby equity purchase agreement (a “SEPA”). Pursuant to the SEPA, we have the right, but not the obligation, to sell to Alumni up to $3,000,000 of newly issued shares, subject to increase to $10,000,000 at our option, at our request at any time during the commitment period, which commenced on May 31, 2023 and will end on the earlier of (i) December 31, 2024, or (ii) the date on which Alumni shall have made payment of advances requested by the Company totaling up to the commitment amount of $3,000,000. Each sale we request under the SEPA (a “Purchase Notice”) may be for a number of shares of common stock with an aggregate value of up to $500,000, and up to $2,000,000 provided certain conditions concerning the average daily trading value are met. The SEPA provides for shares to be sold to Alumni at 95% of the lowest daily volume weighted average price during the three days after a Purchase Notice is issued to Alumni. Upon our entry into and subject to the terms and conditions set forth in the SEPA, we issued 7,983 shares of common stock to Alumni as consideration for its irrevocable commitment to purchase shares of common stock, pursuant to the SEPA. On August 3, 2023, 20,550 shares of common stock were sold under the terms of the SEPA for cash proceeds $140,330.
Current wording
On May 31, 2023, we entered into an Equity Purchase Agreement with Alumni Capital, LLC (“Alumni”). This agreement constituted a standby equity purchase agreement (a “SEPA”). Pursuant to the SEPA, we have the right, but not the obligation, to sell to Alumni up to $3,000,000 of newly issued shares, subject to increase to $10,000,000 at our option, at our request at any time during the commitment period, which commenced on May 31, 2023 and will end on the earlier of (i) December 31, 2024, or (ii) the date on which Alumni shall have made payment of advances requested by the Company totaling up to the commitment amount of $3,000,000. Each sale we request under the SEPA (a “Purchase Notice”) may be for a number of shares of common stock with an aggregate value of up to $500,000, and up to $2,000,000 provided certain conditions concerning the average daily trading value are met. The SEPA provides for shares to be sold to Alumni at 95% of the lowest daily volume weighted average price during the three days after a Purchase Notice is issued to Alumni. Upon our entry into and subject to the terms and conditions set forth in the SEPA, we issued 7,983 shares of common stock to Alumni as consideration for its irrevocable commitment to purchase shares of common stock, pursuant to the SEPA. On August 3, 2023, 20,550 shares of common stock were sold under the terms of the SEPA for cash proceeds $140,330. On December 13, 2024, this SEPA was terminated by mutual agreement in favor of a new equity purchase agreement (seeRecent Developmentsabove).
Previous wording
In parallel with the Phase 3 trials, we expect to conduct any standard Phase 1 studies required by the regulatory agencies. Studies that have been discussed with the FDA as potentially being required might assess food effects, potentiation of the central nervous system effects of alcohol, and pharmacodynamic impact of certain cytochrome P450 enzyme variants. We also expect to conduct a 12-month open-label Phase 1 safety study in at least 100 subjects to evaluate the 12-month safety of AD04.
Current wording
In parallel with the Phase 3 trials, we expect to conduct any standard Phase 1 studies required by the regulatory agencies. Studies that have been discussed with the FDA as potentially being required might assess potentiation of the central nervous system effects of alcohol and pharmacodynamic impact of certain cytochrome P450 enzyme variants.
Previous wording
Cash used in operating activities decreased by approximately $2,791,000 in the year ended December 31, 2023 compared to the year ended December 31, 2022. This decrease was driven by a lower loss from operations of approximately $3,794,000, an increase in loss due to the non-cash change in value of our equity method investment of $193,884 and a lower change in net operating liabilities of $379,000, partially offset by lower non-cash equity compensation expense of approximately $1,628,000.
Current wording
Change in Value of Equity Method Investment
Previous wording
Loss from discontinued operations, net of taxes
Current wording
Gain (loss) from discontinued operations, net of tax
Previous wording
Our principal liquidity needs have historically been working capital, R&D, patent costs and personnel costs. We expect these needs to continue to increase in the near term as we develop and eventually commercialize our compound, if approved. Over the next several years, we expect to increase our R&D expenses as we undergo clinical trials to demonstrate the safety and efficacy of our lead product candidate. To date, we have funded our operations primarily with the proceeds from our initial and secondary public offerings, private placements and our equity line, as well as other equity financings and the issuance of debt securities prior to that. On July 31, 2018, we closed our initial public offering.
Current wording
Our principal liquidity needs have historically been working capital, R&D costs including clinical trials, patent costs and personnel costs. We expect these needs to continue to increase in the near term as we engage in clinical trials and develop and eventually commercialize our compound, if approved by regulatory authorities. Over the next several years, we expect to increase our R&D expenses as we undergo clinical trials to demonstrate the safety and efficacy of our lead product candidate. To date, we have funded our operations primarily with the proceeds from our initial and secondary public offerings, sales pursuant to out ATM Agreement, private placements, use of our equity line, as well as other equity financings, warrant exercises, and the issuance of debt securities.
Previous wording
On March 1, 2024, we entered into a warrant inducement agreement (the “Inducement Agreement”) with a certain holder (the “Holder”) of the Company’s warrants to purchase shares of our common stock, par value $0.001 per share (the “common stock”), issued in a private placement offering that closed on October 24, 2023 (the “Existing Warrants”). Pursuant to the Inducement Agreement, the Holder of the Existing Warrants agreed to exercise for cash the Existing Warrants to purchase up to approximately 1,150,000 shares of common stock, at an exercise price of $2.82 per share. The transactions contemplated by the Inducement Agreement closed on March 6, 2024. The Company received aggregate gross proceeds of approximately $3.5 million, before deducting placement agent fees and other expenses payable by the Company. Net proceeds of this transaction were estimated to be approximately $3.1 million.
Current wording
On March 1, 2024, we entered into the Inducement Agreement pursuant to which the Holder of the Existing Warrants exercised for cash the Existing Warrants to purchase up to approximately 1,150,000 shares of common stock, at an exercise price of $2.82 per share. The transactions contemplated by the Inducement Agreement closed on March 6, 2024 and we received aggregate gross proceeds of approximately $3.5 million, before deducting placement agent fees and other expenses payable by us. Net proceeds of this transaction were approximately $3.1 million.
Previous wording
We will also require additional financing as we continue to execute our overall business strategy, including two additional Phase 3 trials for AD04 that are currently expected to require $8-12 million each in direct expenses, and up to $5 million in additional other development expenses. These estimates may change based on upcoming discussions with regulatory authorities and final trial designs. Our liquidity may be negatively impacted as a result of research and development cost increases in addition to general economic and industry factors. Our continued operations will depend on our ability to raise additional capital through various potential sources, such as equity and/or debt financings, grant funding, strategic relationships, or out-licensing in order to complete its subsequent clinical trial requirements for AD04. Management is actively pursuing financing and other strategic plans but can provide no assurances that such financing or other strategic plans will be available on acceptable terms, or at all. Without additional funding, we will be required to delay, scale back or eliminate some or all of its research and development programs, which would likely have a material adverse effect on us and our financial statements.
Current wording
We will require additional financing as we continue to execute our overall business strategy, including two additional Phase 3 trials for AD04 (one of which is included in our accelerated plans) that are currently expected to require an average of $8-12 million each in direct expenses, and up to $5 million in additional other development expenses. These estimates may change based on upcoming discussions with regulatory authorities and final trial designs. Our liquidity may be negatively impacted as a result of research and development cost increases in addition to general economic and industry factors. Our continued operations will depend on our ability to raise additional capital through various potential sources, such as equity and/or debt financings, grant funding, strategic relationships, or out-licensing in order to complete its subsequent clinical trial requirements for AD04. At this time, we have no committed sources of funding and our ability to use our ATM are restricted by certain SEC rules and our ability to use our equity line is restricted by certain Nasdaq rules. Management is actively pursuing financing and other strategic plans but can provide no assurances that such financing or other strategic plans will be available on acceptable terms, or at all. Without additional funding, we will be required to delay, scale back or eliminate some or all of our research and development programs, which would likely have a material adverse effect on us and our financial statements.
Previous wording
If we raise additional funds by issuing equity securities or convertible debt, our shareholders will experience dilution. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish valuable rights to our products, future revenue streams or product candidates or to grant licenses on terms that may not be favorable to us. We cannot be certain that additional funding will be available on acceptable terms, or at all. Any failure to raise capital in the future could have a negative impact on our financial condition and our ability to pursue our business strategies.
Current wording
If we raise additional funds by issuing equity securities or convertible debt, our shareholders will experience dilution. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish valuable rights to our products, future revenue streams or product candidates or to grant licenses on terms that may not be favorable to us. There can be no assurance that grant funding will be available. We cannot be certain that additional funding will be available on acceptable terms, or at all. Any failure to raise capital in the future could have a negative impact on our financial condition and our ability to pursue our business strategies.
Previous wording
Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements. These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results and experiences may differ materially from these estimates. We did not identify any critical accounting estimates. Our significant accounting policies are more fully described in Note 3 to our financial statements included with this report.
Current wording
Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements. These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results and experiences may differ materially from these estimates. We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are items within our financial statements that require estimation but are not deemed critical, as defined above. Our significant accounting policies are more fully described in Note 3 to our financial statements included with this report.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
On May 31, 2023, we entered into an Equity Purchase Agreement with Alumni Capital, LLC (“Alumni”). This agreement constituted a standby equity purchase agreement (a “SEPA”). Pursuant to the SEPA, we have the right, but not the obligation, to sell to Alumni up to $3,000,000 of newly issued shares, subject to increase to $10,000,000 at our option, at our request at any time during the commitment period, which commenced on May 31, 2023 and will end on the earlier of (i) December 31, 2024, or (ii) the date on which Alumni shall have made payment of advances requested by the Company totaling up to the commitment amount of $3,000,000. Each sale we request under the SEPA (a “Purchase Notice”) may be for a number of shares of common stock with an aggregate value of up to $500,000, and up to $2,000,000 provided certain conditions concerning the average daily trading value are met. The SEPA provides for shares to be sold to Alumni at 95% of the lowest daily volume weighted average price during the three days after a Purchase Notice is issued to Alumni. Upon our entry into and subject to the terms and conditions set forth in the SEPA, we issued 7,983 shares of common stock to Alumni as consideration for its irrevocable commitment to purchase shares of common stock, pursuant to the SEPA. On August 3, 2023, 20,550 shares of common stock were sold under the terms of the SEPA for cash proceeds $140,330.
Previous report — wording carried elsewhere
On October 19, 2023, we entered into a securities purchase agreement (the “Purchase Agreement”) with an institutional investor (the “Purchaser”) for the issuance and sale in a private placement (the “Private Placement”) of (i) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 1,418,440 shares of our common stock, par value $0.001 (the “Common Stock”), at an exercise price of $0.001 per share, (ii) series A warrants (the “Series A Warrants”) to purchase up to 1,418,440 shares of our Common Stock at an exercise price of $2.82 per share, and (iii) series B warrants (the “Series B Warrants” and together with the Series A Warrants, the “Warrants”) to purchase up to 1,418,440 shares of our Common Stock at an exercise price of $2.82 per share. The Series A Warrants are exercisable at any time on or after the earlier of (i) if permitted by the rules and regulations of the Nasdaq Stock Market, upon the payment by the Purchaser of $0.125 per share in addition to the exercise price of $2.82 per share, and (ii) the Stockholder Approval Date (as defined in the Purchase Agreement) (the “Initial Exercise Date”), and have a term of exercise equal to five and one-half years from the date of issuance. The Series B Warrants are exercisable at any time on or after the Initial Exercise Date and have a term of exercise equal to eighteen months from the date of issuance. The net proceeds to us from the Private Placement were approximately $3.4 million, after deducting placement agent fees and expenses and estimated offering expenses payable by us.