Full Press Release Details
INTERIM CONDENSED FINANCIAL STATEMENTS AS OF
JUNE 30, 2023 AND DECEMBER 31, 2022
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2023 AND 2022
INTERIM CONDENSED FINANCIAL STATEMENTS
| Page | |
| Unaudited Interim Condensed Balance Sheets as of June 30, 2023 and December 31, 2022 | 1 |
| Unaudited Interim Condensed Statements of Operating and Comprehensive Loss for the Six Months Ended June 30, 2023 and 2022 | 2 |
| Unaudited Interim Condensed Statements of Changes in Equity for the Six Months Ended June 30, 2023 and 2022 | 3 |
| Unaudited Interim Condensed Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022 | 4 |
| Notes to the Unaudited Interim Condensed Financial Statements | 5 |
INTERIM CONDENSED BALANCE SHEETS
| June 30, 2023 | December 31, 2022 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,651,452 | $ | 8,948,400 | ||||
| Prepaid expenses and other current assets (Note 3) | 593,738 | 297,998 | ||||||
| Total current assets | 2,245,190 | 9,246,398 | ||||||
| Property and equipment (Note 4) | 12,398 | 18,102 | ||||||
| Other assets | 12,558 | 12,143 | ||||||
| Total assets | $ | 2,270,146 | $ | 9,276,643 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable, including related party of $ 660 and $ 53,365 , as of June 30, 2023 and December 31, 2022, respectively | $ | 3,113,025 | $ | 2,373,276 | ||||
| Other accrued liabilities, including related party of $ 19,325 and $ 4,107 as of June 30, 2023 and December 31, 2022, respectively (Note 5) | 779,349 | 986,437 | ||||||
| Total current liabilities | 3,892,374 | 3,359,713 | ||||||
| Deferred revenues (Note 6) | 2,499,969 | 2,499,969 | ||||||
| Accrued pension liability | 164,620 | 136,122 | ||||||
| Total liabilities | 6,556,963 | 5,995,804 | ||||||
| Commitments and contingencies (Note 7) | ||||||||
| Shareholders' equity (deficit) | ||||||||
| Common shares, CHF 0.02 ($ 0.02 ) par value; 35,671,780 authorized; 35,671,780 and 32,428,893 shares outstanding at June 30, 2023 and December 31, 2022, respectively | 733,413 | 668,555 | ||||||
| Treasury shares | ( 64,858 | ) | - | |||||
| Additional paid-in capital | 60,925,046 | 60,864,530 | ||||||
| Accumulated deficit | ( 65,814,193 ) | ( 58,201,455 | ) | |||||
| Accumulated other comprehensive loss | ( 66,225 ) | ( 50,791 | ) | |||||
| Total shareholders' equity (deficit) | ( 4,286,817 ) | 3,280,839 | ||||||
| Total liabilities and shareholders' equity (deficit) | $ | 2,270,146 | $ | 9,276,643 |
accompanying notes are an integral part of these unaudited interim condensed financial statements.
INTERIM CONDENSED STATEMENTS OF OPERATING AND COMPREHENSIVE LOSS
| For the Six Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Operating expenses: | ||||||||
| Research and development | $ | 4,383,625 | $ | 5,544,093 | ||||
| General and administrative | 3,165,858 | 3,143,933 | ||||||
| Total operating expenses | 7,549,483 | 8,688,026 | ||||||
| Operating loss | ( 7,549,483 ) | ( 8,688,026 | ) | |||||
| Other income (expense), net | ( 63,127 | ) | 56,397 | |||||
| Interest expense | ( 129 | ) | ( 9,180 | ) | ||||
| Net loss | ( 7,612,739 | ) | ( 8,640,809 | ) | ||||
| Other comprehensive loss: | ||||||||
| Defined pension plan adjustments | ( 15,434 | ) | 119,027 | |||||
| Comprehensive loss | $ | ( 7,628,173 ) | $ | ( 8,521,782 | ) | |||
| Basic and diluted net loss per common share | $ | ( 0.20 | ) | $ | ( 0.54 | ) | ||
| Weighted average common shares used for computing basic and diluted net loss per common share | 38,176,020 | 15,892,327 |
accompanying notes are an integral part of these unaudited interim condensed financial statements.
INTERIM CONDENSED STATEMENTS OF CHANGES IN EQUITY
THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022
| Common Shares | Treasury | Additional Paid in | Accumulated | Accumulated Other Comprehensive | ||||||||||||||||||||||||
| Shares | Amount | Shares | Capital | Deficit | Loss | Total | ||||||||||||||||||||||
| BALANCE, JANUARY 1, 2023 | 32,428,893 | $ | 668,555 | $ | - | $ | 60,864,530 | $ | ( 58,201,455 | ) | $ | ( 50,791 | ) | $ | 3,280,839 | |||||||||||||
| Issuance of treasury shares | 3,242,887 | 64,858 | ( 64,858 | ) | - | - | - | - | ||||||||||||||||||||
| Stock-based compensation | - | - | - | 60,516 | - | - | 60,516 | |||||||||||||||||||||
| Defined pension plan adjustments | - | - | - | - | - | ( 15,434 | ) | ( 15,434 | ) | |||||||||||||||||||
| Net loss | - | - | - | - | ( 7,612,739 | ) | - | ( 7,612,739 | ) | |||||||||||||||||||
| BALANCE, JUNE 30, 2023 | 35,671,780 | $ | 733,413 | $ | ( 64,858 | ) | $ | 60,925,046 | $ | ( 65,814,193 | ) | ( 66,225 | ) | ( 4,286,817 | ) |
| Common Shares | Treasury | Additional Paid-in | Accumulated | Accumulated Other Comprehensive | ||||||||||||||||||||||||
| Shares | Amount | Shares | Capital | Deficit | Loss | Total | ||||||||||||||||||||||
| BALANCE, JANUARY 1, 2022 | 16,223,389 | $ | 344,445 | $ | ( 29,497 | ) | $ | 42,084,954 | $ | ( 41,705,775 | ) | $ | ( 151,739 | ) | $ | 542,388 | ||||||||||||
| Issuance of common shares registered direct offering, net | 1,562,531 | 31,251 | 29,057 | 1,851,205 | - | - | 1,911,513 | |||||||||||||||||||||
| Issuance of warrants, net | - | - | - | 900,798 | - | - | 900,798 | |||||||||||||||||||||
| Issuance of pre-funded warrants, net | - | - | - | 1,094,616 | - | - | 1,094,616 | |||||||||||||||||||||
| Issuance of common shares in At-The-Market (ATM) financing | - | - | 440 | 30,553 | - | - | 30,993 | |||||||||||||||||||||
| Issuance of treasury shares | 1,778,592 | 35,572 | ( 35,572 | ) | - | - | - | - | ||||||||||||||||||||
| Defined pension plan adjustments | - | - | - | - | 119,027 | 119,027 | ||||||||||||||||||||||
| Net loss | - | - | - | ( 8,640,809 | ) | - | ( 8,640,809 | ) | ||||||||||||||||||||
| BALANCE, JUNE 30, 2022 | 19,564,512 | $ | 411,268 | $ | ( 35,572 | ) | $ | 45,962,126 | $ | ( 50,346,584 | ) | ( 32,712 | ) | $ | ( 4,041,474 | ) |
accompanying notes are an integral part of these unaudited interim condensed financial statements.
INTERIM CONDENSED STATEMENTS OF CASH FLOWS
| For the Six Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Operating Activities: | ||||||||
| Net loss | $ | ( 7,612,739 | ) | $ | ( 8,640,809 | ) | ||
| Adjustments to reconcile net loss to net cash used in in operating activities: | ||||||||
| Depreciation expense | 5,704 | 5,704 | ||||||
| Stock-based compensation expense | 60,516 | - | ||||||
| Periodic pension costs | ( 15,434 | ) | ( 11,103 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other current assets | ( 295,739 | ) | 327,792 | |||||
| Accounts payable | 739,749 | 784,844 | ||||||
| Other accrued liabilities | ( 178,590 | ) | ( 131,848 | ) | ||||
| Net cash used in operating activities | ( 7,296,532 | ) | ( 7,665,420 | ) | ||||
| Financing Activities: | ||||||||
| Proceeds from the issuance of common shares in ATM financing | - | 30,993 | ||||||
| Proceeds from the issuance of common shares in registered direct offering, net | - | 1,911,513 | ||||||
| Proceeds from the issuance of pre-funded warrants, net | - | 1,094,616 | ||||||
| Proceeds from the issuance of warrants, net | - | 900,798 | ||||||
| Payments on notes payable | - | ( 349,824 | ) | |||||
| Net cash provided by financing activities | - | 3,588,096 | ||||||
| Effect of exchange rate on cash and cash equivalents | ( 416 | ) | 309 | |||||
| Change in cash and cash equivalents | ( 7,296,948 | ) | ( 4,077,015 | ) | ||||
| Cash and cash equivalents at the beginning of period | 8,948,400 | 5,431,202 | ||||||
| Cash and cash equivalents at the end of period | $ | 1,651,452 | $ | 1,354,187 | ||||
| Supplemental disclosure of non-cash and financing activities: | ||||||||
| Issuance of note payable for prepaid insurance | $ | - | $ | 704,160 |
accompanying notes are an integral part of these unaudited interim condensed financial statements.
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
NLS Pharmaceutics Ltd.
(Nasdaq: NLSP, NLSPW) (the "Company") is an emerging biopharmaceutical company engaged in the discovery and development of
life-improving drug therapies to treat rare and complex central nervous system disorders, including narcolepsy, idiopathic hypersomnia
and other rare sleep disorders, and of neurodevelopmental disorders, such as attention deficit hyperactivity disorder ("ADHD").
The Company's lead product candidates are Quilience, to treat narcolepsy (type 1 and type 2), and Nolazol, to treat ADHD.
2, 2021, the Company completed the closing of its initial public offering (the "Initial Public Offering") of 4,819,277
units at a price of $4.15 per unit. Each unit consisted of one common share and one warrant to purchase one common share (the "Warrants").
The common shares and Warrants were immediately separable from the units and were issued separately. The common shares and Warrants began
trading on the Nasdaq Capital Market on January 29, 2021, under the symbols "NLSP" and "NLSPW," respectively.
The Company received net proceeds of $17 million, after deducting underwriting discounts and commissions and other estimated offering
expenses. The Warrants are exercisable immediately, expire five years from the date of issuance and have an exercise price of $4.15 per
share. In addition, the Company granted the underwriters a 45-day option to purchase up to an additional 722,891 common shares and/or
warrants to purchase 722,891 common shares at the public offering price of $0.01 per Warrant, of which the underwriter exercised its option
to purchase Warrants to purchase up to 722,891 common shares. These Warrants were issued in the Company's Initial Public Offering
and therefore have the same exercise price of $4.15 per share.
As of June 30, 2023, the Company had an accumulated
deficit of approximately $65.8 million and the Company incurred an operating loss for the six months ended June 30, 2023, of approximately
$7.5 million. To date, the Company has dedicated most of its financial resources to research and development, clinical studies associated
with its ongoing biopharmaceutical business and general and administrative expenses.
As of June 30, 2023, the Company's cash
and cash equivalents were $1.6 million. The Company expects that its existing cash and cash equivalents, including the funds raised as
outlined in the subsequent event note, will be sufficient to fund operations until the second quarter of 2024. The Company expects to
continue to generate operating losses and negative operating cash flows for the next few years and will need additional funding to support
its planned operating activities through profitability. These conditions raise substantial doubt about the Company's ability to
continue as a going concern for one year from the issuance of these financial statements.
In response to the ever-evolving biotech and pharmaceutical
landscape, NLS has initiated exploration of new strategic opportunities. As part of this process, the Company plans to consider a range
of options, including strategic partnerships, out-licensing assets of the Company, and other future strategic actions.
Additionally, the Company's operating plans
may change as a result of many factors that may currently be unknown to the Company including:
| the progress and costs of the Company's pre-clinical studies, clinical trials and other research and development activities; | ||
| the scope, prioritization and number of the Company's clinical trials and other research and development programs; | ||
| any cost that the Company may incur under in- and out-licensing arrangements relating to its product candidate that it may enter into in the future; | ||
| the costs and timing of obtaining regulatory approval for the Company's product candidates; | ||
| the costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights; | ||
| the costs of, and timing for, strengthening the Company's manufacturing agreements for production of sufficient clinical and commercial quantities of its product candidates; |
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
| the potential costs of contracting with third parties to provide marketing and distribution services for the Company or for building such capacities internally; and | ||
| the costs of acquiring or undertaking the development and commercialization efforts for additional therapeutic applications of the Company's product candidates and the magnitude of the Company's general and administrative expenses. |
As a result, the Company will require additional
capital to finance expenditures related to the manufacture of the Company's product candidates for use in clinical trials, conducting
clinical trials and general and administrative expenses. There can be no assurance that funds
will be available, or if they are available, that their availability will be on terms acceptable to the Company or in an amount sufficient
to enable the Company to fully complete its development activities or sustain operations. If the Company is unable to raise sufficient
additional funds, it will have to develop and implement a plan to further extend payables and indebtedness, reduce overhead, or scale
back its current business plan until sufficient additional capital is raised to support further operations or force the Company to grant
rights to develop and commercialize product candidates that it would otherwise prefer to develop and commercialize on its own.
Accordingly, the accompanying unaudited interim
condensed financial statements have been prepared in conformity with accounting principles generally accepted in the United States of
America ("U.S. GAAP"), which contemplate continuation of the Company as a going concern for a period within one year from
the issuance of these unaudited interim condensed financial statements and the realization of assets and satisfaction of liabilities in
the normal course of business. The carrying amounts of assets and liabilities presented in these unaudited interim condensed financial
statements do not necessarily purport to represent realizable or settlement values. These unaudited interim condensed financial statements
do not include any adjustment that might result from the outcome of this uncertainty.
Summary of Significant Accounting Policies:
Basis of Preparation
The unaudited interim condensed financial statements
have been prepared in accordance with U.S. GAAP for interim financial information and accordingly do not include all information and disclosures
as required by U.S. GAAP for complete financial statements. The year-end unaudited interim condensed balance sheet was derived from audited
financial statements but does not include all disclosures required by U.S. GAAP. These unaudited interim condensed financial statements
should be read in conjunction with the audited financial statements included in the Company's Annual Report on Form 20-F for the
year ended December 31, 2022, and any public announcements made by the Company during the interim reporting period.
In the opinion of management, these unaudited
interim condensed financial statements reflect all adjustments necessary, which are of a normal recurring nature, to fairly state the
balance sheets, statements of operating and comprehensive loss, changes in equity and cash flows for the interim reporting periods presented.
The preparation of the unaudited interim condensed
financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect amounts reported of
assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the interim reporting
periods. Actual results could differ from those estimates and be based on events different from those assumptions. As part of these financial
statements, the more significant estimates include the valuation allowance related to the Company's deferred tax assets.
Property and equipment
Property and equipment are recorded at cost, net
of accumulated depreciation and any accumulated impairment losses. Depreciation is computed using the straight-line method over the estimated
useful lives of the assets. The useful lives of property and equipment are five years for furniture and fixtures and three years for software.
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
Upon retirement or sale, the cost of disposed
assets and their related accumulated depreciation are removed from the balance sheet. Any resulting net gains or losses on dispositions
of property and equipment are included as a component of operating expenses within the Company's statements of operating and comprehensive
loss. Repair and maintenance costs that do not significantly add value to the property and equipment, or prolong its life, are charged
to operating expense as incurred.
Stock-Based Compensation
The Company measures all stock-based awards granted
based on the fair value on the date of the grant and recognizes compensation expense with respect to those awards over the requisite service
period, which is generally the vesting period of the respective award. Generally, the Company issues awards with only service-based vesting
conditions and records the expense for these awards using the straight-line method. The Company recognizes forfeitures related to stock-based
compensation awards as they occur and reverses any previously recognized compensation cost associated with forfeited awards in the period