UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended:
OR
For the transition period from __________ to __________
Commission
File No.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) |
(IRS Employer Identification No.) |
(Address of principal executive offices and zip code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of exchange on which registered | ||
| The
|
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange
Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | Smaller reporting company | |||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
As of August 16, 2021, there were shares outstanding of the registrant’s common stock.
EXPLANATORY NOTE
This report is the Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 of MyMD Pharmaceuticals, Inc., which was formerly known as Akers Biosciences, Inc. prior to the consummation on April 16, 2021 of the merger described below.
On April 16, 2021, pursuant to the previously announced Agreement and Plan of Merger and Reorganization, dated November 11, 2020 (the “Original Merger Agreement”), as amended by Amendment No. 1 thereto, dated March 16, 2021 (the Original Merger Agreement, as amended by Amendment No. 1, the “Merger Agreement”), by and among MyMD Pharmaceuticals, Inc., a New Jersey corporation previously known as Akers Biosciences, Inc. (the “Company”), XYZ Merger Sub Inc., a Florida corporation and a wholly owned subsidiary of the Company (“Merger Sub”), and MyMD Pharmaceuticals (Florida), Inc., a Florida corporation previously known as MyMD Pharmaceuticals, Inc. (“MyMD Florida”), Merger Sub was merged with and into MyMD Florida, with MyMD Florida continuing after the merger as the surviving entity and a wholly owned subsidiary of the Company (the “Merger”). At the effective time of the Merger, without any action on the part of any stockholder, each issued and outstanding share of pre-Merger MyMD Florida’s common stock, par value $0.001 per share (the “MyMD Florida Common Stock”), including shares underlying pre-Merger MyMD Florida’s outstanding equity awards, was converted into the right to receive (x) 0.7718 shares (the “Exchange Ratio”) of the Company’s common stock, no par value per share (the “Company Common Stock”), (y) an amount in cash, on a pro rata basis, equal to the aggregate cash proceeds received by the Company from the exercise of any options to purchase shares of MyMD Florida Common Stock outstanding at the effective time of the Merger assumed by the Company upon closing of the Merger prior to the second-year anniversary of the closing of the Merger (the “Option Exercise Period”), such payment (the “Additional Consideration”), and (z) potential milestone payments in shares of Company Common Stock up to the aggregate number of shares issued by the Company to pre-merger MyMD Florida stockholders at the closing of the Merger payable upon the achievement of certain market capitalization milestone events during the 36-month period immediately following the closing of the Merger. Immediately following the effective time of the Merger, the Company effected a 1-for-2 reverse stock split of the issued and outstanding Company Common Stock (the “Reverse Stock Split”). Upon completion of the Merger and the transactions contemplated in the Merger Agreement, (i) the former MyMD Florida equity holders owned approximately 77.05% of the outstanding equity of the Company on a fully diluted basis, assuming the exercise in full of the pre-funded warrants to purchase 986,486 shares of Company Common stock and including 4,188,315 shares of Company Common Stock underlying options to purchase shares of MyMD Florida Common Stock assumed by the company at closing and after adjustments based on the Company’s net cash at closing; and (ii) former Akers Biosciences, Inc. stockholders owned approximately 22.95% of the outstanding equity of the Company.
The Merger is being treated as a reverse recapitalization effected by a share exchange for financial accounting and reporting purposes. MyMD Florida is being treated as the accounting acquirer, as its stockholders control the Company after the Merger, even though Akers Biosciences, Inc. was the legal acquirer.
See Note 1 of the Unaudited Condensed Consolidated Financial Statements for additional information.
TABLE OF CONTENTS
| PART I – FINANCIAL INFORMATION | ||
| Item 1. | Financial Statements | 3 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 26 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 34 |
| Item 4. | Controls and Procedures | 34 |
| PART II – OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 35 |
| Item 1A. | Risk Factors | 35 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 60 |
| Item 3. | Defaults Upon Senior Securities | 60 |
| Item 4. | Mine Safety Disclosures | 60 |
| Item 5. | Other Information | 60 |
| Item 6. | Exhibits | 61 |
| Signatures | 63 | |
| 2 |
PART I - Financial Information
Item 1. Financial Statements.
MYMD PHARMACEUTICALS, INC. AND SUBSIDIARIES
previously known as Akers Biosciences, Inc.
Condensed Consolidated Balance Sheets
June 30, 2021 and December 31, 2020
| As of | ||||||||
| June 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| (unaudited) | (restated) | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Marketable Securities | - | |||||||
| Prepaid expenses | ||||||||
| Total Current Assets | ||||||||
| Non-Current Assets | ||||||||
| Operating Lease Right-of-Use Asset | ||||||||
| Goodwill | - | |||||||
| Investment in Oravax, Inc. | - | |||||||
| Total Non-Current Assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES | ||||||||
| Current Liabilities | ||||||||
| Trade and Other Payables | $ | $ | ||||||
| Notes Payable | - | |||||||
| Operating Lease Liability | ||||||||
| PPP Loan Payable | - | |||||||
| Total Current Liabilities | ||||||||
| Non-Current Liabilities | ||||||||
| Line of Credit Payable – Related Party, net of discount | $ | $ | ||||||
| Operating Lease Liability, net of current portion | ||||||||
| Total Non-Current Liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred Stock, | - | - | ||||||
| Series C Convertible Preferred Stock, shares designated, par value and a stated value of $ per share, and shares issued and outstanding as of June 30, 2021 and December 31, 2020 | ||||||||
| Series D Convertible Preferred Stock, shares designated, par value and a stated value of $ per share, and shares issued and outstanding as of June 30, 2020 and December 31, 2020 | ||||||||
| Series E Junior Participating Preferred Stock, shares designated, par value and a stated value of $ per share, shares issued and outstanding as of June 30, 2021 and December 31, 2020 | ||||||||
| Common stock, | - | |||||||
| Common stock, par $ | - | |||||||
| Additional Paid in Capital | - | |||||||
| Accumulated Deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity/(Deficit) | ( | ) | ||||||
| Total Liabilities and Stockholders’ Equity/(Deficit) | $ | $ | ||||||
See accompanying notes to the condensed consolidated financial statements
| 3 |
MYMD PHARMACEUTICALS, INC. AND SUBSIDIARIES
previously known as Akers Biosciences, Inc.
Condensed Consolidated Statements of Comprehensive Loss
(unaudited)
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Product Revenue | $ | $ | $ | $ | ||||||||||||
| Product Cost of Sales | - | - | - | - | ||||||||||||
| Gross Income | - | - | - | - | ||||||||||||
| Administrative Expenses | ||||||||||||||||
| Research and Development Expenses | ||||||||||||||||
| Interest Expense and Debt Discount | ||||||||||||||||
| Amortization of Intangible Assets | - | - | ||||||||||||||
| Stock Option Modification Expenses | ||||||||||||||||
| Loss from Operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (Income) Expenses | ||||||||||||||||
| Interest and Dividend Income | ( | ) | - | ( | ) | ( | ) | |||||||||
| Gain on Sale of Marketable Securities | ( | ) | - | ( | ) | - | ||||||||||
| Unrealized Loss on Marketable Securities | - | - | ||||||||||||||
| Gain on Debt Forgiveness | ( | ) | - | ( | ) | - | ||||||||||
| Total Other Income | ( | ) | - | ( | ) | ( | ) | |||||||||
| Loss Before Income Tax | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income Tax Benefit | - | - | - | - | ||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and Diluted loss per common share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average basic and diluted common shares outstanding | ||||||||||||||||
See accompanying notes to the condensed consolidated financial statements
| 4 |
MYMD PHARMACEUTICALS, INC. AND SUBSIDIARIES
previously known as Akers Biosciences, Inc.
Condensed Consolidated Statement of Changes in Stockholders’ Equity
For the Six Months Ended June 30, 2021 and 2020
| Series D | Common Stock | |||||||||||||||||||||||||||||||
| Convertible | Common | Common | Additional | |||||||||||||||||||||||||||||
| Preferred Stock | Stock | Stock | Paid-In | Accumulated | Total | |||||||||||||||||||||||||||
| Shares | Series D | Shares | Par $ | Capital | Deficit | Equity | ||||||||||||||||||||||||||
| Balance at December 31, 2020 (restated) | $ | $ | | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance at March 31, 2021 (unaudited) | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
| Reverse merger with Akers Biosciences Inc effective April 16, 2021 | ( | ) | ( | ) | - | |||||||||||||||||||||||||||
| Modification
of the terms of | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Exercise of prepaid equity forward contracts for common stock | - | - | - | - | - | - | - | |||||||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance at June 30, 2021 (unaudited) | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Series D | Common Stock | |||||||||||||||||||||||||||||||
| Convertible | Common | Common | Additional | |||||||||||||||||||||||||||||
| Preferred Stock | Stock | Stock | Paid-In | Accumulated | Total | |||||||||||||||||||||||||||
| Shares | Series D | Shares | Par $ | Capital | Deficit | Equity | ||||||||||||||||||||||||||
| Balance at December 31, 2019 (restated) | $ | $ | $ | | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
| Common shares issued for the acquisition of Supera Pharmaceuticals, Inc. a company under common control | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||
| Effect of the adoption of Topic 842 effective as of January 1, 2019 | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance at December 31, 2019 (restated) | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
| Private placement of common shares | - | - | - | |||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance at March 31, 2020 (unaudited) | $ | - | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||
| Stock based compensation for services | - | - | - | |||||||||||||||||||||||||||||
| Stock options issued for debt issuance | - | - | - | - | ||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance at June 30, 2020 (unaudited) | $ | - | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||
See accompanying notes to the condensed consolidated financial statements
| 5 |
MYMD PHARMACEUTICALS, INC. AND SUBSIDIARIES
previously known as Akers Biosciences, Inc.
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2021 and 2020
(unaudited)
| For the Six Months Ended | ||||||||
| June 30, | ||||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Accrued interest/dividends | ||||||||
| Amortization of debt discount | ||||||||
| Amortization of intangible assets | - | |||||||
| Gain on sale of marketable securities | ( | ) | - | |||||
| Unrealized loss on marketable securities | - | |||||||
| Gain on forgiveness of debt | ( | ) | - | |||||
| Stock based compensation | ||||||||
| Options modification expense | - | |||||||
| Options issued for debt issuance | - | |||||||
| Shares issued for services | - | |||||||
| Change in assets and liabilities | ||||||||
| Prepaid Expenses | ( | ) | ||||||
| Trade and Other Payables | ( | ) | ( | ) | ||||
| Operating Leases | ||||||||
| Net cash used by operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of marketable securities | ( | ) | - | |||||
| Proceeds from sale of marketable securities | ||||||||
| Net cash received in business combination | - | |||||||
| Net cash provided by investing activities | - | |||||||
| Cash flows from financing activities | ||||||||
| Consumed by the payoff of the line of credit – related party | ( | ) | - | |||||
| Net proceeds from line of credit - related party | ||||||||
| Net proceeds from note payable | - | |||||||
| Net proceeds from the Payroll Protection Program | - | |||||||
| Net proceeds from issuance of common stock | - | |||||||
| Net cash provided by financing activities | ( | ) | ||||||
| Net increase/(decrease) in cash | ( | ) | ||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| Supplemental cash flow information | ||||||||
| Cash paid for: | ||||||||
| Interest | $ | $ | ||||||
| Income Taxes | $ | $ | ||||||
| Supplemental Schedule of Non-Cash Financing and Investing Activities | ||||||||
| Operating lease right-of-use asset obtained in exchange for lease obligation | $ | $ | ||||||
| Investment in Oravax, Inc. included in trade and other payables. | $ | $ | ||||||
See accompanying notes to the condensed consolidated financial statements
| 6 |
MYMD PHARMACEUTICALS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 – Organization and Description of Business
MyMD Pharmaceuticals, Inc., previously known as Akers Biosciences, Inc., is a New Jersey corporation (“MyMD”). These consolidated financial statements include four wholly owned subsidiaries as of June 30, 2021, MyMD Pharmaceuticals (Florida), Inc. (“MyMD Florida”), XYZ Merger Sub, Inc. (“Merger Sub”), Akers Acquisition Sub, Inc. and Bout Time Marketing Corporation, (together, the “Company”). All material intercompany transactions have been eliminated in consolidation.
MyMD Florida was formed in 2014 and is a Florida-based clinical development stage biopharmaceutical company that is developing its product candidate, MyMD-1, as an immunometabolic regulator to treat autoimmune diseases, ageing-related diseases. Substantive operations began in 2016 and the Company’s Investigative New Drug application was filed with the U.S. Food and Drug Administration in December 2018. MyMD Florida completed its first-in-human Phase 1 clinical trial in December 2019. Phase 2 clinical trials for autoimmune diseases are planned. MyMD Florida’s intellectual property portfolio consists of 12 granted patents (11 US and 1 foreign), 34 pending applications (6 US, 28 foreign, and 1 international application).
Supera Pharmaceuticals, Inc. (“Supera”) was formed in September 2018 and is a Florida based development company that is developing its product candidate “Supera-CBD” as an FDA-approved synthetic derivative of naturally grown cannabidiols. Substantially all of Supera’s research and development activities in 2019 and 2020 were related to intellectual property development and securing patents, along with product manufacturing and planning initial pre-clinical development activities. Ongoing pre-clinical work is expected to accelerate in second half of 2021.
On
April 16, 2021, pursuant to the previously announced Agreement and Plan of Merger and Reorganization, dated November 11, 2020 (the
“Original Merger Agreement”), as amended by Amendment No. 1 thereto, dated March 16, 2021 (the Original Merger
Agreement, as amended by Amendment No. 1, the “Merger Agreement”), by and among MyMD, Merger Sub and MyMD Florida),
Merger Sub was merged with and into MyMD Florida, with MyMD Florida continuing after the merger as the surviving entity and a wholly
owned subsidiary of the MyMD (the “Merger”). At the effective time of the Merger, without any action on the part
of any stockholder, each issued and outstanding share of pre-Merger MyMD Florida’s common stock, par value $per
share (the “MyMD Florida Common Stock”), including shares underlying pre-Merger MyMD Florida’s outstanding equity
awards, was converted into the right to receive (x) shares
(the “Exchange Ratio”) of MyMD’s common stock, no par value per share (the “Company Common
Stock”), (y) an amount in cash, on a pro rata basis, equal to the aggregate cash proceeds received by the Company from the
exercise of any options to purchase shares of MyMD Florida Common Stock outstanding at the effective time of the Merger assumed by
the Company upon closing of the Merger prior to the second-year anniversary of the closing of the Merger (the “Option Exercise
Period”), such payment (the “Additional Consideration”), and (z) potential milestone payment in shares of Company
Common Stock up to the aggregate number of shares issued by the Company to pre-Merger MyMD Florida stockholders at the closing of
the Merger (the “Milestone Payments”) payable upon the achievement of certain market capitalization milestone events
during the 36-month period immediately following the closing of the Merger (the “Milestone Period”). Immediately
following the effective time of the Merger, the Company effected a
On April 16, 2021, MyMD Florida entered into an Asset Purchase Agreement with Supera, a related company through common control, in which Supera was acquired by MyMD Florida through the issuance of shares of pre-Merger MyMD Florida’s common stock. The Supera entity was dissolved pursuant to this transaction.
In connection with the closing of the Merger, the Company changed its name to MyMD Pharmaceuticals, Inc. and the Company Common Stock listed on The Nasdaq Capital Market, previously trading through the close of business on April 16, 2021 under the trading symbol “AKER”, commenced trading on The Nasdaq Capital Market, on a post-Reverse Stock Split adjusted basis, under the trading symbol “MYMD” on April 19, 2021.
| 7 |
Note 2 – Significant Accounting Policies
(a) Basis of Presentation
The Condensed Consolidated Financial Statements of the Company are prepared in U.S. Dollars and in accordance with accounting principles generally accepted in the United States of America (US GAAP).
Certain information and note disclosures normally included in the financial statements prepared in accordance with US GAAP have been condensed. As such, the information included in these financial statements should be read in conjunction with the audited financial statements as of and for the years ended December 31, 2020 and 2019 included in the Company’s 2020 Form 10-K, as filed on March 1, 2021. In the opinion of the Company’s management, these condensed consolidated financial statements include all adjustments, which are only of a normal and recurring nature, necessary for a fair statement of the financial position of the Company as of June 30, 2021 and its results of operations for the three and six months ended June 30, 2021 and 2020 and cash flows for the six months ended June 30, 2021 and 2020. The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2021.
The unaudited condensed combined balance sheet as of December 31, 2020 combines the audited balance sheets of pre-Merger MyMD Florida and Supera as of December 31, 2020, giving effect to the Supera Purchase and the adoption of ASU No. 2016-02, Leases, as if they were consummated on January 1, 2020.
The unaudited combined consolidated statement of comprehensive loss for the three and six months ended June 30, 2020 combines the unaudited condensed statements of comprehensive loss for the three and six months ended June 30, 2020 of MyMD Florida and Supera giving effect to the Supera Purchase and the adoption of ASU no. 2016-02, Leases, as if they were consummated on January 1, 2020.
The unaudited condensed consolidated balance sheet as of June 30, 2021 comprises the unaudited balance sheets of MyMD Florida, Supera and MyMD as of June 30, 2021, giving effect to the Supera Purchase as if they were consummated on January 1, 2020 and the reverse merger with MyMD on April 16, 2021 with all material intercompany balances eliminated and recording a goodwill upon consolidation.
The unaudited condensed consolidated statement of comprehensive loss for the three and six months ended June 30, 2021 comprises the unaudited statements of comprehensive loss of MyMD Florida and Supera for the three and six months ended June 30, 2021 and the statement of comprehensive loss for MyMD for the post-acquisition period April 17, 2021 through June 30, 2021.
The
Company effected a
(b) Use of Estimates and Judgments
The preparation of financial statements in conformity with US GAAP requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements is included in the following notes related to business combinations, loss contingencies and the valuation of share-based payments.
(c) Functional and Presentation Currency
These condensed consolidated financial statements are presented in U.S. Dollars, which is the Company’s functional currency. All financial information has been rounded to the nearest dollar.
| 8 |
(d) Comprehensive Loss
The Company follows Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 220 in reporting comprehensive loss. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income. Since the Company has no items of comprehensive income, comprehensive loss is equal to net loss.
(e) Cash and Cash Equivalents
The Company considers all highly liquid investments, which include short-term bank deposits (up to three months from date of deposit) that are not restricted as to withdrawal date or use, to be cash equivalents.
(f) Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents, marketable securities, receivables and trade and other payables. The carrying value of cash and cash equivalents, receivables and trade and other payables approximate their fair value because of their short maturities.
The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under FASB ASC 820 are described as follows:
| Level 1 | Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access. |
| Level 2 | Inputs to the valuation methodology include: |
| ● | quoted prices for similar assets or liabilities in active markets; | |
| ● | quoted prices for identical or similar assets or liabilities in inactive markets; | |
| ● | inputs other than quoted prices that are observable for the asset or liability; | |
| ● | inputs that are derived principally from or corroborated by observable market data by correlation or other means |
| If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. |
| Level 3 | Inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Valuation techniques maximize the use of relevant observable inputs and minimize the use of unobservable inputs.
| 9 |
(f) Fair Value of Financial Instruments, continued
The following is a description of the valuation methodologies used for assets measured at fair value as of June 30, 2021 and December 31, 2020.
Marketable Securities: Valued using quoted prices in active markets for identical assets.
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) | Quoted Prices for Similar Assets or Liabilities in Active Markets (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||
| Marketable securities at June 30, 2021 | $ | $ | $ | |||||||||
| Marketable securities at December 31, 2020 | $ | $ | $ | |||||||||
Marketable securities are classified as available for sale and are valued at fair market value. Maturities of the securities are less than one year.
As of June 30, 2021, the Company held certain mutual funds, which, under FASB ASC 321-10, were considered equity investments.
Gains
and losses resulting from the sales of marketable securities were a realized gain of $
Proceeds
from the sales of marketable securities in the three and six months ended June 30, 2021 were $
(g) Prepaid Expenses
Expenses paid prior to the date that the related services are rendered or used are recorded as prepaid expenses which are comprised principally of various insurance expenses.
(h) Concentrations
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash on deposit with financial institutions. At times, the Company’s cash in banks is in excess of the Federal Despot Insurance Corporation (“FDIC”) insurance limit. The Company has not experienced any loss as a result of these cash deposits. These cash balances are maintained with three banks.
(i) Risk Management of Cash and Investments
It is the Company’s policy to minimize the Company’s capital resources to investment risks, prioritizing the preservation of capital over investment returns. Investments are maintained in securities, primarily publicly traded, short-term money market funds based on highly rated federal, state and corporate bonds, that minimize the risk to the Company’s capital resources and provide ready access to funds.
The Company’s investment portfolios are regularly monitored for risk and are held with a brokerage firm.
| 10 |
(j) Investments
Investments recorded using the cost method will be assessed for any decrease in value that has occurred that is other than temporary and the other than temporary decrease in value shall be recognized. As and when circumstances and facts change, the Company will evaluate the Company’s ability to significantly influence operational and financial policy to establish a basis for converting the investment accounted for using the cost method to the equity method of valuation in accordance with FASB ASC 323.
(k) Research and Development Costs
In accordance with FASB ASC 730, research and development costs are expensed as incurred and consist of fees paid to third parties that conduct certain research and development activities on the Company’s behalf.
(l) Income Taxes
The Company utilizes an asset and liability approach for financial accounting and reporting for income taxes. The provision for income taxes is based upon income or loss after adjustment for those permanent items that are not considered in the determination of taxable income. Deferred income taxes represent the tax effects of differences between the financial reporting and tax basis of the Company’s assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected to reverse.
The Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance when it is more likely than not that some portion or all the deferred tax assets will not be realized. Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In management’s opinion, adequate provisions for income taxes have been made. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.
Tax
benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities.
| 11 |
There is no income tax benefit for the losses for the three and six months ended June 30, 2021 and 2020 since management has determined that the realization of the net deferred assets is not assured and has created a valuation allowance for the entire amount of such tax benefits.
The
Company’s policy for recording interest and penalties associated with tax audits is to record such items as a component of general
and administrative expense. There were
Tax years from 2017 through 2020 remain subject to examination by federal and state jurisdictions.
Basic earnings per common share is based on the weighted average number of shares outstanding during the periods presented. Diluted earnings per share is computed using the weighted average number of common shares plus dilutive common share equivalents outstanding during the period. Potential common shares that would have the effect of increasing diluted earnings per share are considered anti-dilutive.
Diluted net loss per share is computed using the weighted average number of shares of common and dilutive potential common stock outstanding during the period.
As the Company reported a net loss for the three and six months ended June 30, 2021 and 2020, common stock equivalents were anti-dilutive.
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Stock Options | ||||||||||||||||
| Warrants to purchase common stock | ||||||||||||||||
| Pre-funded Warrants to purchase common stock | ||||||||||||||||
| Series D Preferred Convertible Stock | ||||||||||||||||
| Warrants to purchase Series C Preferred stock | ||||||||||||||||
| Total potentially dilutive shares | ||||||||||||||||
The Company accounts for stock-based compensation under the provisions of FASB ASC 718, “Compensation - Stock Compensation”, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method. Consistent with the accounting requirement for employee share-based payment awards, nonemployee share-based payment awards within the scope of Topic 718 are measured at grant-date fair value of the equity instruments that an entity is obligated to issue when the good has been delivered or the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied.
| 12 |
The Company has elected to account for forfeiture of stock-based awards as they occur.
(o) Reclassifications
Certain prior year amounts have been reclassified to conform to the current year’s presentation.
(p) Right-of-Use Assets
The
Company leases a facility in Tampa, Florida (the “Hyde Park”) under an operating lease (“Hyde Park Lease”)
with annual rentals of $
The
Company leased an aircraft under an operating lease (“Supera Aviation”) with annual rentals of $
The
Company leases a facility in Baltimore, Maryland (the “N Wolfe St.”) under an operating lease (“Baltimore Lease”)
with annual rentals of $
On January 1, 2019 (“Effective Date”), the Company adopted FASB ASC, Topic 842, Leases (“ASC 842”), which increases transparency and comparability by recognizing a lessee’s rights and obligations resulting from leases by recording them on the balance sheet as lease assets and lease liabilities. The new guidance requires the recognition of the right-of-use (“ROU”) assets and related operating and finance lease liabilities on the balance sheet. The Company adopted the new guidance using the modified retrospective approach on January 1, 2019.
The
adoption of ASC 842 resulted in the recognition of operating lease ROU assets of $
The Company elected the package of practical expedients permitted within the standard, which allows an entity to forgo reassessing (i) whether a contract contains a lease, (ii) classification of leases, and (iii) whether capitalized costs associated with a lease meet the definition of initial direct costs. Also, the Company elected the expedient allowing an entity to use hindsight to determine the lease term and impairment of ROU assets and the expedient to allow the Company to not have to separate lease and non-lease components. The Company has also elected the short-term lease accounting policy under which the Company would not recognize a lease liability or ROU asset for any lease that at the commencement date has a lease term of twelve months or less and does not include a purchase option that the Company is more than reasonably certain to exercise.
For contracts entered into on or after the Effective Date, at the inception of a contract, the Company will assess whether the contract is, or contains, a lease. The Company’s assessment is based on: (i) whether the contract involves the use of a distinct identified asset, (ii) whether the Company obtained the right to substantially all the economic benefit from the use of the asset throughout the period, and (iii) whether the Company has the right to direct the use of the asset. Leases entered into prior to January 1, 2020, which were accounted for under ASC 840, were not reassessed for classification.
For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments. The Company generally uses its incremental borrowing rate as the discount rate for leases, unless an interest rate is implicitly stated in the lease. The present value of the lease payments is calculated using the incremental borrowing rate for operating leases, which was determined using a portfolio approach based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. The lease term for all of the Company’s leases includes the non-cancellable period of the lease plus any additional periods covered by either a Company option to extend the lease that the Company is reasonably certain to exercise, or an option to extend the lease controlled by the lessor. All ROU assets are reviewed for impairment.
Lease expense for operating leases consists of the lease payments plus any initial direct costs and is recognized on a straight-line basis over the lease term.
| 13 |
The Company’s operating leases are comprised of the Supera Aviation, the Hyde Park and the N Wolfe St. Condensed Consolidated Balance Sheet information related to its leases are presented below:
| As of June 30, 2021 | As of December 31, 2020 | |||||||||||||||||||||||||||||||
| Supera | Hyde | N Wolfe | Supera | Hyde | N Wolfe | |||||||||||||||||||||||||||
| Balance Sheet Location | Aviation | Park | Street | Total | Aviation | Park | Street | Total | ||||||||||||||||||||||||
| Operating Leases | ||||||||||||||||||||||||||||||||
| Lease Right of Use | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Lease Payable, current | - | |||||||||||||||||||||||||||||||
| Lease Payable - net of current | - | - | - | |||||||||||||||||||||||||||||
The following provides details of the Company’s lease expense:
| Three Months Ended June 30, 2021 | Six Months Ended June 30, 2021 | |||||||||||||||||||||||||||||||
| Supera | Hyde | N Wolfe | Supera | Hyde | N Wolfe | |||||||||||||||||||||||||||
| Lease Expenses | Aviation | Park | Street | Total | Aviation | Park | Street | Total | ||||||||||||||||||||||||
| Operating Leases | ||||||||||||||||||||||||||||||||
| Lease Costs | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Other information related to leases is presented below:
| As of June 30, 2021 | ||||||||||||||||
| Supera | Hyde | N Wolfe | ||||||||||||||
| Other Information | Aviation | Park | Street | Total | ||||||||||||
| Operating Leases | ||||||||||||||||
| Operating cash used | $ | $ | $ | $ | ||||||||||||
| Weighted-average remaining lease term | - | |||||||||||||||
| Weighted-average discount rate | % | % | % | % | ||||||||||||
As of June 30, 2021, the annual minimum lease payments of the Company’s operating lease liabilities were as follows:
| As of June 30, 2021 | ||||||||||||||||
| Supera | Hyde | N Wolfe | ||||||||||||||
| Aviation | Park | Street | Total | |||||||||||||
| For Years Ending June 30, | ||||||||||||||||
| 2022 | $ | $ | $ | $ | ||||||||||||
| 2023 | - | - | ||||||||||||||
| 2024 | - | - | ||||||||||||||
| Total future minimum lease payments, undiscounted | $ | $ | $ | $ | ||||||||||||
| Less: Imputed interest | - | |||||||||||||||
| Present value of future minimum lease payments | $ | $ | $ | $ | ||||||||||||
| 14 |
(q) Recently Issued Accounting Pronouncements
Recently Issued Accounting Pronouncements Adopted
In February 2016, the FASB issued ASU 2016-02—Leases (Topic 842) (“ASU-2016-02”), which requires an entity to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU 2016-02 offers specific accounting guidance for a lessee, a lessor, and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The Company has adopted ASU-2016-02, effective January 1, 2019, and, as a result of this implementation, has recorded an operating lease right-of-use asset and an operating lease liability as of December 31, 2019.
In August 2020, the FASB issued ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (the “2020 Update”). The amendments in the 2020 Update affect entities that issue convertible instruments and/or contracts in an entity’s own equity. For convertible instruments, the instruments primarily affected are those issued with beneficial conversion features or cash conversion features because the accounting models for those specific features are removed. However, all entities that issue convertible instruments are affected by the amendments to the disclosure requirements in the 2020 Update. For contracts in an entity’s own equity, the contracts primarily affected are freestanding instruments and embedded features that are accounted for as derivatives under the current guidance because of failure to meet the settlement conditions of the derivatives scope exception related to certain requirements of the settlement assessment. The settlement assessment was simplified by removing the requirements (1) to consider whether the contract would be settled in registered shares, (2) to consider whether collateral is required to be posted, and (3) to assess shareholder rights. Those amendments also affect the assessment of whether an embedded conversion feature in a convertible instrument qualifies for the derivatives scope exception. Additionally, the amendments in this Update affect the diluted EPS calculation for instruments that may be settled in cash or shares and for convertible instruments. The amendments in the 2020 Update are effective for public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. An entity should adopt the guidance as of the beginning of its annual fiscal year. Entities are allowed to adopt the guidance through either a modified retrospective method of transition or a fully retrospective method of transition. The Company adopted this standard as of January 1, 2021 and the adoption did not have a material impact on its financial statements.
Recently Issued Accounting Pronouncements Not Adopted
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (“ASU-2016-13”). ASU 2016-13 affects loans, debt securities, trade receivables, and any other financial assets that have the contractual right to receive cash. The ASU requires an entity to recognize expected credit losses rather than incurred losses for financial assets. ASU 2016-13 is effective for the fiscal year beginning after December 15, 2022, including interim periods within that fiscal year. The Company expects that there would be no material impact on the Company’s condensed consolidated financial statements upon the adoption of this ASU.
In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt - Modifications and Extinguishments (Subtopic 470-50), Compensation - Stock Compensation (Topic 718), and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40), Issuer’s Accounting for Certain Modifications or Exchanges or Freestanding Equity - Classified Written Call Options. The amendments in this Update clarify an issuer’s accounting for modifications or exchanges of freestanding equity - classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted for all entities, including adoption in an interim period. If an entity elects to early adopt the amendments in this Update in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes the interim period. The Company is assessing the impact of this ASU on its financial statements and related disclosure.
Note 3 – Recent Developments, Liquidity and Management’s Plans
Acquisition and Disposition of Cystron
The
Company acquired
On March 18, 2021, the Company and the Cystron Sellers, which are also shareholders of Oravax, entered into a Termination and Release Agreement terminating the MIPA effective upon consummation of the Contribution Agreement. In addition, the Cystron Sellers agreed to waive any change of control payment triggered under the MIPA as a result of the Merger.
On April 16, 2021, pursuant to the Contribution and Assignment Agreement, dated March 18, 2021 (the “Contribution Agreement”) by and among the Company, Cystron, Oravax Medical, Inc. (“Oravax”) and, for the limited purpose set forth therein, Premas, the parties consummated the transactions contemplated therein. Pursuant to the Contribution Agreement, among other things, the Company caused Cystron to contribute substantially all of the assets associated with its business of developing and manufacturing Cystron’s COVID-19 vaccine candidate to Oravax (the “Contribution Transaction”).
| 15 |
On
April 16, 2021, the parties consummated the Contribution Transaction. Pursuant to the Contribution Agreement, effective upon the
closing of the Merger, the Company agreed (i) to contribute an amount in cash equal to $
As
of June 30, 2021, $
Agreement and Plan of Merger and Reorganization
On November 11, 2020, MyMD, Merger Sub, and MyMD Florida entered into the Merger Agreement (Note 1).
In accordance with ASC 805, the Company accounted
for the transaction as a reverse merger with Akers Biosciences, Inc. (“Akers”) as the legal acquirer and pre-Merger MyMD
Florida as the accounting acquirer. As a result of the transaction, the Company recognized Goodwill totaling $
| Valuation Analysis | ||||
| Total Consideration | $ | |||
| Cash and Cash Equivalents | ||||
| Marketable Securities | ||||
| Other Receivables | ||||
| Prepaid Expenses | ||||
| Investment in Oravax, Inc. | ||||
| Trade and Other Payables | ( | ) | ||
| Net Tangible Assets Acquired | $ | |||
| Excess of Purchase Price Over Net Assets Acquired to be Allocated to Goodwill | $ | |||
The
holders of approximately
Pursuant to the terms and conditions of the Merger Agreement, not later than 30 days after the Option Exercise Period, the Company will pay stockholders of MyMD Florida the Additional Consideration from the exercise of any MyMD Florida options assumed by the Company prior to the second-year anniversary of the Merger; provided, however, the amount of such payment will not exceed the maximum amount of cash consideration that may be received by stockholders of MyMD Florida without affecting the intended tax consequences of the Merger. As of the date of this report, there have been no exercises of the MyMD Florida options assumed by the Company.
| 16 |
Under the terms of the Merger Agreement, the Company has agreed to pay contingent consideration to MyMD Florida stockholders in the form of the Milestone Payments. The Milestone Payments are payable in the dollar amounts set forth in the chart below upon the achievement of the milestone events set forth opposite such dollar amount during the Milestone Period as follows:
| Milestone Event | Milestone Payment | |
Each
milestone payment will be payable in shares of Company Common Stock (the “Milestone Shares”), with the number of Milestone
Shares to be issued determined by dividing the applicable Milestone Payment amount by the volume-weighted average price of a share of
the Company’s common stock during the
Liquidity
As
of June 30, 2021, the Company’s cash on hand was $
The Company evaluated the current cash requirements for operations in conjunction with management’s strategic plan and believes that the Company’s current financial resources as of the date of the issuance of these condensed consolidated financial statements, are sufficient to fund its current operating budget and contractual obligations as of June 30, 2021 as they fall due within the next twelve-month period, alleviating any substantial doubt raised by the Company’s historical operating results and satisfying its estimated liquidity needs for twelve months from the issuance of these condensed consolidated financial statements.
| 17 |
Note 4 – Unaudited Condensed Combined Balance Sheet as of December 31, 2020
The acquisition of Supera by pre-Merger MyMD Florida was accounted for as a business combination under common control in accordance with ASC 805 and is being presented as if the acquisition had been consummated and ASC 842 had been adopted on January 1, 2020.
The audited Balance Sheets as of December 31, 2020 of pre-Merger MyMD Florida and Supera is presented below with the adjustments required to eliminate inter-company transactions, implement ASC 842 for reporting leasing transactions and reclassify certain balances to conform with the classification in the Condensed Consolidated Balance Sheet as of June 30, 2021.
| MyMD | Supera | ||||||||||||||||||
| Pharmaceuticals | Pharmaceuticals | Restated | |||||||||||||||||
| Inc. | Inc. | AJE | Total | ||||||||||||||||
| (audited) | (audited) | Adjustments | # | (unaudited) | |||||||||||||||
| ASSETS | |||||||||||||||||||
| Current Assets | |||||||||||||||||||
| Cash | $ | $ | - | $ | |||||||||||||||
| Prepaid expenses | - | - | |||||||||||||||||
| Due from affiliate | - | ( | ) | 1 | - | ||||||||||||||
| Total Current Assets | ( | ) | |||||||||||||||||
| Non-Current Assets | |||||||||||||||||||
| Operating Lease Right-of-Use Assets | - | - | 3 | ||||||||||||||||
| Intangible Assets, net | - | - | - | - | |||||||||||||||
| Total Non-Current Assets | - | - | |||||||||||||||||
| Total Assets | $ | $ | $ | $ | |||||||||||||||
| LIABILITIES | |||||||||||||||||||
| Current Liabilities | |||||||||||||||||||
| Trade and Other Payables | $ | $ | $ | 1,2 | $ | ||||||||||||||
| Due to Related Party | - | ( | ) | 2 | - | ||||||||||||||
| Interest Payable, related party | - | ( | ) | 2 | - | ||||||||||||||
| Loan Payable | - | - | |||||||||||||||||
Operating Lease Payable | - | - | 3 | ||||||||||||||||
| Paycheck Protection Program Loan | - | ||||||||||||||||||
| Total Current Liabilities | |||||||||||||||||||
| Non-Current Liabilities | - | ||||||||||||||||||
| Line of Credit Payable – related party, net of discount | - | ||||||||||||||||||
| Interest Payable, related party | - | ( | ) | 2 | - | ||||||||||||||
| Operating Lease Liability, net of current | - | - | 3 | ||||||||||||||||
| Total Non-Current Liabilities | |||||||||||||||||||
| Total Liabilities | $ | $ | $ | $ | |||||||||||||||
| Commitments and Contingencies | |||||||||||||||||||
| STOCKHOLDERS’ DEFICIT | |||||||||||||||||||
| Common stock, par $ | - | - | |||||||||||||||||
| Additional Paid in Capital | - | ( | ) | 2 | |||||||||||||||
| Accumulated Deficit | ( | ) | ( | ) | ( | ) | 3 | ( | ) | ||||||||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | $ | $ |
| ||||||||||||||
| 18 |
The following is an explanation of the adjusting entries that were recorded to arrive at the restated Condensed Consolidated Balance Sheet as of December 31, 2020:
| AJE # | Account | Debit | Credit | |||||||||
| 1 | Trade and Other Payables | |||||||||||
| Due from Affiliate | ||||||||||||
| To eliminate inter-company transactions | ||||||||||||
| 2 | Due to Related Party | |||||||||||
| Interest Payable, related party | ||||||||||||
| Interest Payable, related party | ||||||||||||
| Additional Paid-In Capital | ||||||||||||
| Trade and Other Payables | ||||||||||||
| To reclassify account balances to conform with the classification on the June 30, 2021 Condensed Consolidated Balance Sheet | ||||||||||||
| 3 | Operating Lease Right-of-Use | |||||||||||
| Accumulated Deficit | ||||||||||||
| Operating Lease Payable | ||||||||||||
| Operating Lease Payable, net of current portion | ||||||||||||
| To implement ASC 842 for the accounting of operating leases | ||||||||||||
Note 5 - Trade and Other Payables
Trade and other payables consist of the following:
June 30, 2021 | December 31, 2020 | |||||||
| Accounts Payable – Trade | $ | $ | ||||||
Accounts Payable – Trade – related party | - | |||||||
| Accrued Expenses | ||||||||
| Accounts Payable – Other - related party | - | |||||||
| $ | $ | |||||||
Accounts Payable – Trade as of June 30,
2021 includes $
See also Note 10 for related party information.
Note 6 – Notes Payable
Secured Promissory Note
On
November 11, 2020, concurrently with the execution of the Merger Agreement, the Company agreed to provide a bridge loan up to an aggregate
principal amount of $
As
of June 30, 2021 and December 31, 2020, MyMD had advanced MyMD Florida $
| 19 |
| Weighted | Average | |||||||||||||||
| Average | Remaining | Aggregate | ||||||||||||||
| Number of | Exercise | Contractual | Intrinsic | |||||||||||||
| Options | Price | Term (years) | Value | |||||||||||||
| Balance as of December 31, 2020 | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ||||||||||||||||
| Forfeited | ||||||||||||||||
| Canceled/Expired | ||||||||||||||||
| Balance as of June 30, 2021 | $ | $ | ||||||||||||||
| Exercisable as of June 30, 2021 | $ | $ | ||||||||||||||
The aggregate intrinsic value is calculated as
the difference between the exercise price of the underlying awards and the closing stock price of $
All stock options outstanding are fully vested and exercisable.
Assumption of MyMD Florida Stock Options
In 2016, pre-Merger MyMD Florida adopted the MyMD Pharmaceuticals, Inc. Amended and Restated 2016 Equity Incentive Plan (the “2016 Plan”). The 2016 Plan provided for the issuance of up to shares of pre-Merger MyMD Florida common stock. As of June 30, 2021, options to purchase shares of common stock have been issued pursuant to the plan and shares of common stock remain available for issuance.
Pursuant to the Merger Agreement, effective as of the effective time of the Merger, the Company assumed pre-Merger MyMD Florida’s Second Amendment to Amended and Restated 2016 Stock Incentive Plan (the “2016 Plan”), assuming all of pre-Merger MyMD Florida’s rights and obligations with respect to the options issued thereunder. As of the effective date of the Merger, no additional awards could be issued under the 2016 Plan.
In addition, under the terms of the Merger Agreement, the Company assumed all of pre-Merger MyMD Florida’s rights and obligations under pre-Merger MyMD Florida’s stock options that were outstanding immediately prior to the effective time of the Merger, and each such stock option, whether or not vested, was converted into a stock option representing the right to purchase shares of Company Common Stock, on terms substantially the same as those in effect immediately prior to the effective time, except that the number of shares of Company Common Stock issuable and the exercise price per share of such stock options was adjusted by the Exchange Ratio. Additionally, the number of shares and exercise price per share of Company Common Stock under the assumed pre-Merger MyMD Florida stock options was further adjusted by the Reverse Stock Split.
The Company assumed MyMD Florida stock options subject to certain terms contained in the Merger Agreement (including, but not limited to, the amendment of such stock option to change the term of such stock option for a period expiring on April 16, 2023, the second-year anniversary of the Merger). The Company recorded expenses of $ for the assumption of the options and the modification of the terms which is included on the Consolidated Statement of Comprehensive Loss for the three and six months ended June 30, 2021. The Company utilized Black-Scholes using an exercise price of $, an issue date fair value of $, a volatility index of and a discount rate of to determine the fair value of the modification. The pre-Merger MyMD options were valued at $ on April 16, 2021, as there was no reliable method of determining the fair value given the material events that had occurred since the last arms-length trade of common shares.
Adoption of 2021 Equity Incentive Plan
Pursuant to the Merger Agreement, at the effective time of the Merger, the Company adopted the 2021 Equity Incentive Plan (the “2021 Plan”), which was approved by the Company’s stockholders on April 15, 2021. The 2021 Plan provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, and other awards which may be granted singly, in combination or in tandem, and which may be paid in cash or shares of Company Common Stock. At the effective time of the Merger, the number of shares of Company Common Stock that are reserved for issuance pursuant to awards under the 2021 Plan is shares (post-Reverse Stock Split). As of June 30, 2021, shares remain available for issuance.
The 2021 Plan will terminate on April 16, 2031, the tenth anniversary of its effective date. No award may be made under the 2021 Plan after its expiration date. In connection with the 2021 Plan, the Board adopted forms of (i) a Nonqualified Stock Option Agreement, (ii) an Incentive Stock Option Agreement and (iii) a Restricted Stock Award Agreement.
Pursuant to the Incentive Stock Option Agreement, participants will be granted options to purchase shares of Company Common Stock at a price equal to the fair market value per share of the Company Common Stock on the date of grant or 110% of such fair market value, in the case of a ten percent (10%) or more stockholder as provided in Section 422 of the United States Internal Revenue Code of 1986. Options granted pursuant to the Incentive Stock Option Agreement will expire on the date immediately preceding the tenth anniversary of the date of grant (or the date immediately preceding the fifth anniversary of the date of grant, in the case of a ten percent (10%) or more stockholder, as provided in Section 422 of the Code), unless terminated earlier.
Pursuant to the Nonqualified Stock Option Agreement, participants will be granted options to purchase shares of Company Common Stock at a price equal to the fair market value per share of the Company Common Stock on the date of grant. The options issued pursuant to the Nonqualified Stock Option Agreement will expire on the date immediately preceding the tenth anniversary of the date of grant, unless terminated earlier.