Full Press Release Details
NLS PHARMACEUTICS LTD.
UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2024 AND DECEMBER 31, 2023
AND FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND
NLS PHARMACEUTICS LTD.
UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
| Page | ||
| Interim Condensed Balance Sheets as of June 30, 2024 (unaudited) and December 31, 2023 | 1 | |
| Unaudited Interim Condensed Statements of Operations and Comprehensive Loss for the Six Months Ended June 30, 2024 and 2023 | 2 | |
| Unaudited Interim Condensed Statements of Changes in Shareholders' Deficit for the Six Months Ended June 30, 2024 and 2023 | 3 | |
| Unaudited Interim Condensed Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023 | 4 | |
| Notes to the Unaudited Interim Condensed Financial Statements | 5 |
NLS PHARMACEUTICS LTD.
INTERIM CONDENSED BALANCE SHEETS
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 552,758 | $ | 897,680 | ||||
| Prepaid expenses and other current assets | 639,710 | 925,382 | ||||||
| Total current assets | 1,192,468 | 1,823,062 | ||||||
| Property and equipment, net | 990 | 6,694 | ||||||
| Other assets | - | 16,885 | ||||||
| Total assets | $ | 1,193,458 | $ | 1,846,641 | ||||
| LIABILITIES AND SHAREHOLDERS' DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable, including related party of $ 411,806 and $ 265,864 , as of June 30, 2024 and December 31, 2023, respectively | $ | 4,584,284 | $ | 4,633,534 | ||||
| Related party short-term loan | 1,512,319 | 1,633,746 | ||||||
| Other accrued liabilities | 1,420,229 | 1,652,270 | ||||||
| Note payable short-term | 201,285 | - | ||||||
| Total current liabilities | 7,718,117 | 7,919,550 | ||||||
| Deferred revenue | 2,499,969 | 2,499,969 | ||||||
| Accrued pension liability | 243,630 | 260,685 | ||||||
| Total liabilities | 10,461,716 | 10,680,204 | ||||||
| Commitments and contingencies (Note 8) | ||||||||
| Shareholders' deficit | ||||||||
| Common shares, CHF 0.80 ($ 0.80 ) par value, 985,723 and 810,723 registered shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively | 808,555 | 668,555 | ||||||
| Additional paid-in capital | 62,328,298 | 61,029,437 | ||||||
| Accumulated deficit | ( 72,409,318 | ) | ( 70,373,484 | ) | ||||
| Accumulated other comprehensive loss | 4,207 | ( 158,071 | ) | |||||
| Total shareholders' deficit | ( 9,268,258 | ) | ( 8,833,563 | ) | ||||
| Total liabilities and shareholders' deficit | $ | 1,193,458 | $ | 1,846,641 |
The accompanying notes are an integral part of
these unaudited interim condensed financial statements.
NLS PHARMACEUTICS LTD.
UNAUDITED INTERIM CONDENSED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
| For the Six Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| OPERATIONS | ||||||||
| Operating expenses: | ||||||||
| Research and development | $ | 271,350 | $ | 4,383,625 | ||||
| General and administrative | 1,782,142 | 3,165,857 | ||||||
| Total operating expenses | 2,053,492 | 7,549,482 | ||||||
| Operating loss | ( 2,053,492 | ) | ( 7,549,482 | ) | ||||
| Other income (expense): | ||||||||
| Other income (expense), net | 104,643 | ( 63,127 | ) | |||||
| Interest expense | ( 11,012 | ) | ( 129 | ) | ||||
| Interest expense on related party loans | ( 75,973 | ) | - | |||||
| Total other income (expense) | 17,658 | ( 63,256 | ) | |||||
| Net loss | ( 2,035,834 | ) | ( 7,612,738 | ) | ||||
| COMPREHENSIVE LOSS | ||||||||
| Other comprehensive loss: | ||||||||
| Effect of exchange rate changes | 121,428 | - | ||||||
| Defined pension plan adjustments | 40,850 | ( 15,434 | ) | |||||
| Total other comprehensive profit | 162,278 | ( 15,434 | ) | |||||
| Comprehensive loss | $ | ( 1,873,556 | ) | $ | ( 7,628,123 | ) | ||
| Basic and diluted net loss per common share | $ | ( 1.94 | ) | $ | ( 8.00 | ) | ||
| Weighted average common shares used in computing basic and diluted net loss per common share | 1,048,632 | 954,401 |
The accompanying notes are an integral part of
these unaudited interim condensed financial statements.
NLS PHARMACEUTICS LTD.
UNAUDITED INTERIM CONDENSED STATEMENTS OF CHANGES
IN SHAREHOLDERS' DEFICIT
FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023
| Common Shares | Additional Paid in | (Accumulated | Accumulated Other Comprehensive | |||||||||||||||||||||
| Shares | Amount | Capital | Deficit) | Loss | Total | |||||||||||||||||||
| BALANCE, JANUARY 1, 2024 | 810,723 | $ | 668,555 | $ | 61,029,437 | $ | ( 70,373,484 | ) | $ | ( 158,071 | ) | $ | ( 8,833,563 | ) | ||||||||||
| Issuance of common shares in private placement offerings, net | 175,000 | 140,000 | 1,240,291 | - | - | 1,380,291 | ||||||||||||||||||
| Stock-based compensation | - | - | 58,570 | - | - | 58,570 | ||||||||||||||||||
| Defined pension plan adjustments | - | - | - | - | 40,850 | 40,850 | ||||||||||||||||||
| Effect of exchange rate changes on short-term loans | - | - | - | - | 121,428 | 121,428 | ||||||||||||||||||
| Net loss | - | - | - | ( 2,035,834 | ) | - | ( 2,035,834 | ) | ||||||||||||||||
| BALANCE, JUNE 30, 2024 | 985,723 | $ | 808,555 | $ | 62,328,298 | $ | ( 72,409,318 | ) | $ | 4,207 | $ | ( 9,268,258 | ) |
| Common Shares | Additional Paid in | (Accumulated | Accumulated Other Comprehensive | |||||||||||||||||||||
| Shares | Amount | Capital | Deficit) | Loss | Total | |||||||||||||||||||
| BALANCE, JANUARY 1, 2023 | 810,723 | $ | 668,555 | $ | 60,864,530 | $ | ( 58,201,455 | ) | $ | ( 50,791 | ) | $ | 3,280,839 | |||||||||||
| Stock-based compensation | - | - | 60,516 | - | - | 60,516 | ||||||||||||||||||
| Defined pension plan adjustments | - | - | - | - | ( 15,434 | ) | ( 15,434 | ) | ||||||||||||||||
| Net loss | - | - | - | ( 7,612,738 | ) | - | ( 7,612,738 | ) | ||||||||||||||||
| BALANCE, JUNE 30, 2023 | 810,723 | $ | 668,555 | $ | 60,925,046 | $ | ( 65,814,193 | ) | $ | ( 66,225 | ) | $ | ( 4,286,817 | ) |
The accompanying notes are an integral part of
these unaudited interim condensed financial statements.
NLS PHARMACEUTICS LTD.
UNAUDITED INTERIM CONDENSED STATEMENTS OF CASH
| For the Six Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Operating Activities: | ||||||||
| Net loss | $ | ( 2,035,834 | ) | $ | ( 7,612,738 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation expense | 5,704 | 5,704 | ||||||
| Stock-based compensation expense | 58,570 | 60,516 | ||||||
| Periodic pension costs | 40,850 | ( 15,434 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other current assets | 687,545 | ( 295,739 | ) | |||||
| Accounts payable | ( 49,249 | ) | 739,749 | |||||
| Interest payable | 86,985 | - | ||||||
| Other accrued liabilities | ( 325,069 | ) | ( 178,590 | ) | ||||
| Net cash used in operating activities | ( 1,530,498 | ) | ( 7,296,532 | ) | ||||
| Financing Activities: | ||||||||
| Proceeds from the issuance of common shares in private placement, net | 1,380,291 | - | ||||||
| Payments on notes payable | ( 194,715 | ) | - | |||||
| Net cash provided by financing activities | 1,185,576 | - | ||||||
| Effect of exchange rate on cash and cash equivalents | - | ( 416 | ) | |||||
| Change in cash and cash equivalents | ( 344,922 | ) | ( 7,296,948 | ) | ||||
| Cash and cash equivalents at the beginning of period | 897,680 | 8,948,400 | ||||||
| Cash and cash equivalents at the end of period | $ | 552,758 | $ | 1,651,452 | ||||
| Supplemental disclosure of non-cash and financing activities: | ||||||||
| Issuance of note payable for prepaid insurance | $ | 396,000 | $ | - |
The accompanying notes are an integral part of
these unaudited interim condensed financial statements.
NLS PHARMACEUTICS LTD.
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL
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.
As of June 30, 2024, the Company had an accumulated
deficit of approximately $72.4 million and the Company incurred an operating loss for the six months ended June 30, 2024, of approximately
$2.1 million. To date, the Company has dedicated most of its financial resources to achieve and maintain Phase 3 readiness, research and
development, clinical studies associated with its ongoing biopharmaceutical business and general and administrative expenses.
As of June 30, 2024, the Company's cash
and cash equivalents were $0.6 million. The Company's existing cash and cash equivalents and access to existing financing arrangements
will not be sufficient to fund operations for a period of one year from the issuance of these unaudited interim condensed financial statements.
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. The Company is actively exploring a range of options to raise
funds, including strategic partnerships, out-licensing, or divestment of assets of the Company, and other future strategic actions. Subsequent
to June 30, 2024, the Company completed a private financing round, debt conversions and forgiveness, vendor buy-out, and identified a
merger opportunity see Note 12: Subsequent Events). The future viability of the Company is dependent on its ability to extend payment
terms with third party creditors until funds are raised in addition to what has already been raised subsequent to June 30, 2024. There
can be no assurance that such capital will be available within a sufficient period of time, in sufficient amounts or on terms acceptable
to the Company. These conditions raise substantial doubt about the Company's ability to continue as a going concern beyond one year
from the issuance of these unaudited interim condensed financial statements.
Accordingly, the accompanying 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 Presentation
The accompanying financial statements have been
prepared in accordance with U.S. GAAP. Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S.
GAAP as found in the Accounting Standards Codification ("ASC") and Accounting Standards Updates ("ASU") of the
Financial Accounting Standards Board ("FASB").
In the opinion of management, the unaudited condensed
financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the
balances and results for the periods presented. The interim results for the six months ended June 30, 2024 are not necessarily indicative
of the results to be expected for the year ending December 31, 2024 or for any future interim periods.
The accompanying unaudited condensed consolidated
financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's
Annual Report on Form 20-F as of and for the year ended December 31, 2023.
The preparation of the 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 amounts of expenses during the reporting periods. Actual results could differ
from those estimates and be based on events different from those assumptions. As part of these unaudited interim condensed financial statements,
the Company's significant estimates include the valuation allowance related to the Company's deferred tax assets, the pension
benefit obligation, and stock compensation.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentration of credit risk include cash. At June 30, 2024 and 2023, substantially all of the cash balances are deposited
in one banking institution. At various times, the Company has deposits in financial institutions which are in excess of federally insured
The Company has operations in Switzerland
and the United States. The Company's functional currency is the U.S. dollar ("USD"). The results of its non-USD
based operations are translated to USD at the average exchange rates during the year. The Company's assets and liabilities are
translated using the current exchange rate as of the balance sheet date and shareholders' equity is translated using
historical rates. Foreign exchange transaction gains and losses are included in other income/expense in the Company's results
of operations and comprehensive loss.
As of June 30, 2024, the Company has not recognized
any revenue from its exclusive license agreement (the "EF License Agreement"), as the upfront payment the Company received
has been deferred. The EF License Agreement is to develop and commercialize its product candidate, Nolazol, in Latin American countries
with Eurofarma Laboratorios S.A ("Eurofarma"), a Brazilian pharmaceutical company. The EF License Agreement which was terminated
subsequent to June 30, 2024, was accounted for within the scope of ASC 606, "Revenue from Contract with Customers"
("ASC 606"). For more information regarding termination of the ED License Agreement and recognition of the deferred revenue
to income see Note 12: Subsequent Events.
Under ASC 606, an entity recognizes revenue when
its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive
in exchange for those goods or services. To determine the appropriate amount of revenue to be recognized for arrangements determined to