UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission file number 000-05576 | --- | --- | |----------------------------------------------------------------------------|------- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark one) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file number 000-05576 SPHERIX INCORPORATED (Exact name of Registrant as specified in its Charter) Delaware 52-0849320 (State or ot ...

Business Focus and Strategy - The company has transitioned to a technology development focus since 2017, emphasizing biotechnology and blockchain research[85] - The company is focusing on monetizing intellectual property through licensing and litigation strategies[83] - The company has been acquiring existing rights to intellectual property, including patents related to cancer treatments and other technologies[84] Investments and Acquisitions - The company invested $350,000 to acquire a 20% interest in CBM BioPharma, Inc. and certain rights in DatChat, including a senior convertible note of $300,000[86] - The company agreed to pay $8,000,000 for the acquisition of CBM's assets, including $7,000,000 in stock and $1,000,000 in cash[91] - The stock consideration for the CBM acquisition is based on a per-share price of $3.61, limiting CBM's voting control to 9.9%[91] - The proposed merger with CBM was restructured into an Asset Purchase Agreement, terminating the previous merger agreement[92] Financial Performance - The Company incurred a loss from operations of approximately $0.9 million for the three months ended September 30, 2019, a decrease from a loss of $2.0 million in the same period of 2018[103] - For the nine months ended September 30, 2019, the Company reported a loss from operations of approximately $2.5 million, down from $4.8 million in the prior year[105] - The Company recorded a $2.4 million unrealized loss on its investment in Hoth, with the stock price decreasing from $5.82 to $4.41 during the three months ended September 30, 2019[104] Cash Flow and Liquidity - Cash used in operating activities for the nine months ended September 30, 2019 was approximately $2.2 million, compared to $2.3 million in the same period of 2018[111] - The Company generated net cash provided by investing activities of approximately $1.2 million for the nine months ended September 30, 2019, compared to a net cash used of $0.5 million in the prior year[112] - Cash provided by financing activities for the nine months ended September 30, 2019 was $1.3 million, reflecting net proceeds of $0.8 million from the issuance of common stock and warrants[113] - The Company sold 221,000 shares of Common Stock at a purchase price of $2.60 per share, resulting in aggregate gross proceeds of approximately $799,991[101] - The Company has a working capital of approximately $0.5 million as of September 30, 2019, indicating potential liquidity challenges[109] - The Company plans to finance its activities through managing current cash, seeking additional funds, and increasing revenue from patent portfolios and new ventures[108] - There is substantial doubt about the Company's ability to continue as a going concern within one year from the date of this filing due to recurring operating losses and cash flow deficits[110] Shareholder Agreements - The company will retain the first $2,000,000 of gross proceeds from any future equity financing after the acquisition, with CBM receiving the excess[91] - The company has entered into a Leak-Out Agreement with CBM, restricting share sales to no more than 5% of the issued shares per month during a 21-month period[97] IPO and Market Activity - Hoth Therapeutics Inc. completed its IPO with 1,250,000 shares at $5.60 per share, with the company owning approximately 19% of Hoth[87]

Part I. Financial Information [Item 1. Financial Statements (Unaudited)](index=2&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited condensed consolidated financial statements detail the company's financial position, operational results, equity changes, and cash flows for the reported periods [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and stockholders' equity decreased from December 2018 to June 2019, driven by lower marketable securities and a larger accumulated deficit Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Cash and cash equivalents | $564 | $17 | | Marketable securities | $817 | $2,700 | | Total current assets | $1,487 | $2,905 | | Investments | $10,565 | $10,345 | | Total assets | $12,052 | $13,251 | | Total current liabilities | $845 | $1,153 | | Total liabilities | $845 | $1,153 | | Total stockholders' equity | $11,207 | $12,098 | | Accumulated deficit | $(141,876) | $(140,083) | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a net loss for the three and six-month periods, with lower operating expenses offset by a significant reduction in other income Condensed Consolidated Statements of Operations Highlights (in thousands, except per share) | Metric | 3 Months Ended June 30, 2019 | 3 Months Ended June 30, 2018 | 6 Months Ended June 30, 2019 | 6 Months Ended June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Total operating expenses | $888 | $1,262 | $1,601 | $2,839 | | Loss from operations | $(888) | $(1,262) | $(1,601) | $(2,839) | | Total other income (expense) | $244 | $864 | $(192) | $955 | | Net income (loss) | $(644) | $(398) | $(1,793) | $(1,884) | | Net income (loss) per share, basic & diluted | $(0.30) | $(0.20) | $(0.87) | $(1.06) | | Weighted average shares outstanding | 2,124,631 | 2,008,382 | 2,067,645 | 1,780,199 | - **Operating expenses decreased** for both the three-month and six-month periods ended June 30, 2019, primarily due to reduced amortization of patent portfolio and compensation expenses[14](index=14&type=chunk) - **Other income significantly decreased** for both periods, mainly due to a decrease in the change in fair value of investments and warrant liabilities[14](index=14&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Stockholders' equity decreased to $11.207 million at June 30, 2019, primarily due to the net loss incurred, partially offset by new capital from stock issuance Changes in Stockholders' Equity Highlights (in thousands) | Metric | December 31, 2018 | June 30, 2019 | | :--- | :--- | :--- | | Balance at period start | $12,098 | $12,098 | | Issuance of common stock | - | $787 | | Stock-based compensation | - | $109 | | Net income (loss) | - | $(644) | | Balance at period end | $12,098 | $11,207 | - The company issued 221,000 shares of common stock and prefunded common stock warrants, generating **$787 thousand in additional paid-in capital** during the six months ended June 30, 2019[18](index=18&type=chunk)[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The company saw a net increase in cash, driven by proceeds from marketable securities sales and financing activities, which offset cash used in operations Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | 6 Months Ended June 30, 2019 | 6 Months Ended June 30, 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,614) | $(1,750) | | Net cash provided by (used in) investing activities | $1,374 | $(969) | | Net cash provided by financing activities | $787 | $2,700 | | Net increase (decrease) in cash | $547 | $(19) | | Cash and cash equivalents, end of period | $564 | $178 | - Cash from investing activities shifted from a net use of $969 thousand in 2018 to a **net provision of $1,374 thousand in 2019**, primarily due to increased sales of marketable securities[24](index=24&type=chunk) - Cash from financing activities **decreased from $2,700 thousand in 2018 to $787 thousand in 2019**[24](index=24&type=chunk) [Notes to the Condensed Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) These notes detail the company's business transition, corporate actions, accounting policies, and financial instrument valuations [Note 1. Organization and Description of Business](index=8&type=section&id=Note%201.%20Organization%20and%20Description%20of%20Business) Spherix has transitioned from patent monetization to technology development, focusing on biotechnology and blockchain investments and acquisitions - The company, incorporated in 1967, has transitioned from drug development and patent monetization to a **technology development focus since Q4 2017**[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk) - Current efforts are concentrated on biotechnology research (investments in Hoth Therapeutics Inc and proposed CBM BioPharma, Inc acquisition) and blockchain technology research[29](index=29&type=chunk) [Reverse Stock Split](index=8&type=section&id=Reverse%20Stock%20Split) The company executed a one-for-4.25 reverse stock split on May 10, 2019, with all share and price data adjusted accordingly - A **one-for-4.25 reverse stock split** was effective on May 10, 2019, with fractional shares rounded up[30](index=30&type=chunk) [CBM Asset Acquisition](index=8&type=section&id=CBM%20Asset%20Acquisition) The company restructured its proposed merger with CBM into an $8.0 million Asset Purchase Agreement, funded by stock and contingent cash - On May 15, 2019, Spherix purchased 50,000 shares of CBM for $350,000 and entered into an **Asset Purchase Agreement (APA)** with CBM, terminating the previous merger agreement[31](index=31&type=chunk) - The aggregate consideration for the APA is **$8.0 million**, consisting of $7.0 million in common stock (based on $3.61 per share) and $1.0 million in cash[32](index=32&type=chunk) - The **$1.0 million cash consideration** is payable to CBM upon the company's first qualified financing exceeding $2.0 million, with CBM receiving proceeds in excess of the first $2.0 million[32](index=32&type=chunk) - The transaction is subject to governmental and third-party approvals, as well as shareholder approval, and may be terminated if conditions are not met by September 30, 2019[33](index=33&type=chunk) [Note 2. Liquidity and Financial Condition](index=8&type=section&id=Note%202.%20Liquidity%20and%20Financial%20Condition) Recurring operating losses and cash deficits raise substantial doubt about the company's ability to continue as a going concern - The company continues to incur operating losses and net operating cash flow deficits, raising **substantial doubt about its ability to continue as a going concern** within one year[38](index=38&type=chunk) - Financing strategies include managing current cash, seeking additional funds through security sales, credit facilities, and increasing revenue from patent portfolios and new ventures[34](index=34&type=chunk)[35](index=35&type=chunk) - Working capital was approximately **$0.6 million** at June 30, 2019[37](index=37&type=chunk) [Note 3. Summary of Significant Accounting Policies](index=10&type=section&id=Note%203.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the basis of presentation, use of estimates, and impact of recently adopted accounting standards on the financial statements [Basis of Presentation and Principles of Consolidation](index=10&type=section&id=Basis%20of%20Presentation%20and%20Principles%20of%20Consolidation) The unaudited interim financial statements are prepared in accordance with U.S. GAAP and SEC instructions, including all subsidiaries - Financial statements are prepared in accordance with **U.S. GAAP** for interim information and SEC Form 10-Q instructions[40](index=40&type=chunk) - All material intercompany balances and transactions have been eliminated[39](index=39&type=chunk) [Use of Estimates](index=10&type=section&id=Use%20of%20Estimates) Financial statement preparation requires management to make significant estimates, particularly for valuing investments and deferred tax assets - Significant estimates include the **valuation of investments** and the valuation allowance related to deferred tax assets[41](index=41&type=chunk) [Significant Accounting Policies](index=10&type=section&id=Significant%20Accounting%20Policies) No material changes have been made to the company's significant accounting policies since its last annual report on Form 10-K - No material changes to significant accounting policies other than those described in the notes, compared to the annual report on Form 10-K filed March 12, 2019[42](index=42&type=chunk) [Net Income Loss per Share](index=11&type=section&id=Net%20Income%20Loss%20per%20Share) Basic loss per share is based on weighted average shares, while diluted loss per share excludes anti-dilutive securities - Diluted loss per share excludes shares from convertible preferred stock, warrants, and stock options if their effect is **anti-dilutive**[45](index=45&type=chunk) Securities Potentially Diluting Loss Per Share (Shares) | Security Type | June 30, 2019 | June 30, 2018 | | :--- | :--- | :--- | | Convertible preferred stock | 688 | 688 | | Warrants to purchase common stock | 285,273 | 294,072 | | Options to purchase common stock | 100,407 | 124,396 | | Total | 386,368 | 419,156 | [Recently Issued Accounting Standards](index=12&type=section&id=Recently%20Issued%20Accounting%20Standards) The upcoming accounting standard on fair value measurement is not expected to have a material impact on the company's financial statements - ASU 2018-13 (Fair Value Measurement) is effective for fiscal years beginning after December 15, 2019, and is **not expected to have a material impact**[49](index=49&type=chunk) [Recently Adopted Accounting Standards](index=12&type=section&id=Recently%20Adopted%20Accounting%20Standards) The adoption of new standards for leases, earnings per share, and stock compensation on January 1, 2019, had no material impact - ASU No. 2016-02 (Leases) adopted on January 1, 2019, had **no material impact** due to the absence of long-term leases[50](index=50&type=chunk) - ASU 2017-11 (Earnings Per Share, Distinguishing Liabilities from Equity, and Derivatives and Hedging) adopted on January 1, 2019, had **no impact**[51](index=51&type=chunk) - ASU 2018-07 (Compensation-Stock Compensation) adopted on January 1, 2019, had **no impact**[52](index=52&type=chunk) [Note 4. Investments in Marketable Securities](index=14&type=section&id=Note%204.%20Investments%20in%20Marketable%20Securities) The company reported net losses from marketable securities for the three and six months ended June 30, 2019, driven by realized losses Marketable Securities Performance (in thousands) | Metric | 3 Months Ended June 30, 2019 | 3 Months Ended June 30, 2018 | 6 Months Ended June 30, 2019 | 6 Months Ended June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Realized gain (loss) | $(25) | $(177) | $(98) | $(275) | | Unrealized gain (loss) | $(10) | $41 | $138 | $(17) | | Dividend income | $7 | $44 | $24 | $78 | | Total | $(28) | $(92) | $64 | $(214) | [Note 5. Investment in Hoth Therapeutics, Inc.](index=14&type=section&id=Note%205.%20Investment%20in%20Hoth%20Therapeutics%2C%20Inc.) The company's investment in Hoth Therapeutics, Inc. is recorded at a fair value of $10.084 million as of June 30, 2019 - The company's investment in Hoth Therapeutics, Inc. is valued at **fair value**[56](index=56&type=chunk) - Hoth closed its IPO on February 20, 2019, at **$5.60 per share**[56](index=56&type=chunk) Investment in Hoth Therapeutics, Inc. (June 30, 2019) | Security Name | Shares Owned | Fair Value per Share | Fair Value (in thousands) | | :--- | :--- | :--- | :--- | | HOTH | 1,735,714 | $5.81 | $10,084 | [Note 6. Fair Value of Financial Assets and Liabilities](index=14&type=section&id=Note%206.%20Fair%20Value%20of%20Financial%20Assets%20and%20Liabilities) Financial assets and liabilities are measured at fair value using a three-level hierarchy, with most assets classified as Level 1 - Financial instruments are measured at fair value using a three-level hierarchy (**Level 1**: quoted prices in active markets; **Level 2**: observable inputs; **Level 3**: unobservable inputs)[57](index=57&type=chunk)[58](index=58&type=chunk) - Due to Hoth's IPO in February 2019, the investment in Hoth was **transferred from Level 3 to Level 1** during the six months ended June 30, 2019[63](index=63&type=chunk) Fair Value of Financial Assets and Liabilities (in thousands) | Asset/Liability | Total at June 30, 2019 | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | :--- | | Marketable securities - mutual and exchange traded funds | $817 | $817 | $- | $- | | Investments in Hoth | $10,084 | $10,084 | $- | $- | | Fair value of warrant liabilities | $8 | $- | $- | $8 | | Asset/Liability | Total at Dec 31, 2018 | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | :--- | | Marketable securities - mutual and exchange traded funds | $2,700 | $2,700 | $- | $- | | Investments in Hoth | $9,214 | $- | $- | $9,214 | | Fair value of warrant liabilities | $82 | $- | $- | $82 | [Level 3 Valuation Techniques - Liabilities](index=16&type=section&id=Level%203%20Valuation%20Techniques%20-%20Liabilities) Level 3 warrant liabilities are valued using the Black-Scholes model, which incorporates significant unobservable inputs like volatility - Warrant liabilities are categorized as **Level 3** and valued using the **Black-Scholes model**[64](index=64&type=chunk)[66](index=66&type=chunk) - Key unobservable inputs include risk-free interest rate (**1.75%-1.92%** at June 30, 2019), expected volatility (**67.11%-100.00%**), and contractual life (**1.44-2.00 years**)[67](index=67&type=chunk) Changes in Fair Value of Level 3 Financial Liabilities (in thousands) | Metric | June 30, 2019 | June 30, 2018 | | :--- | :--- | :--- | | Beginning balance | $82 | $822 | | Fair value adjustment of warrant liabilities | $(74) | $(465) | | Ending balance | $8 | $357 | [Note 7. Stockholders' Equity and Convertible Preferred Stock](index=18&type=section&id=Note%207.%20Stockholders'%20Equity%20and%20Convertible%20Preferred%20Stock) This note details changes in common stock, warrants, and stock options, including a financing that generated $787 thousand in net proceeds [Common Stock](index=18&type=section&id=Common%20Stock) The company completed a registered common stock and warrant financing in May 2019, raising approximately $787 thousand in net proceeds - On May 29, 2019, the company sold 221,000 shares of common stock and pre-funded warrants for 86,692 shares, raising approximately **$787 thousand in net proceeds**[72](index=72&type=chunk) - An amendment on June 6, 2019, involved the exchange of 115,269 shares for an equal number of Penny Warrants to limit a purchaser's beneficial ownership[73](index=73&type=chunk) [Warrants](index=18&type=section&id=Warrants) Warrant activity included issuances, exercises, and expirations, resulting in 318,606 warrants outstanding as of June 30, 2019 Warrant Activity (Six Months Ended June 30, 2019) | Metric | Warrants | Weighted Average Exercise Price | | :--- | :--- | :--- | | Outstanding as of December 31, 2018 | 294,072 | $38.15 | | Issued | 235,294 | - | | Exercised | (201,961) | - | | Expired | (8,799) | $476.66 | | Outstanding as of June 30, 2019 | 318,606 | $22.05 | - The company issued three warrants, each exercisable for 33,333 common shares at a $0.01 strike price, to a consultant, resulting in **$0.1 million in stock-based compensation**[75](index=75&type=chunk) [Stock Options](index=20&type=section&id=Stock%20Options) As of June 30, 2019, 100,407 stock options were outstanding and exercisable following the expiration of employee and non-employee options Stock Option Activity (Six Months Ended June 30, 2019) | Metric | Number of Shares | Weighted Average Exercise Price | | :--- | :--- | :--- | | Outstanding as of December 31, 2018 | 124,381 | $209.22 | | Employee options expired | (23,664) | $378.67 | | Non-employee options expired | (310) | $571.71 | | Outstanding as of June 30, 2019 | 100,407 | $169.21 | | Options vested and expected to vest | 100,407 | $169.21 | | Options vested and exercisable | 100,407 | $169.21 | [Stock-based Compensation](index=20&type=section&id=Stock-based%20Compensation) Total stock-based compensation expense was $109 thousand for the three months and $115 thousand for the six months ended June 30, 2019 Stock-based Compensation Expense (in thousands) | Component | 3 Months Ended June 30, 2019 | 3 Months Ended June 30, 2018 | 6 Months Ended June 30, 2019 | 6 Months Ended June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Employee restricted stock awards | $- | $27 | $- | $107 | | Employee stock option awards | $2 | $71 | $8 | $179 | | Non-employee warrant awards | $107 | $- | $107 | $- | | Total compensation expense | $109 | $98 | $115 | $286 | [Note 8. Commitments and Contingencies](index=20&type=section&id=Note%208.%20Commitments%20and%20Contingencies) The company currently has no pending material claims or legal matters against it - The company has **no pending material claims or legal matters** as of the report date[80](index=80&type=chunk) [Legal Proceedings](index=20&type=section&id=Legal%20Proceedings) As of the report date, there are no pending material legal proceedings against the company - **No pending material claims or legal matters** against the company as of the report date[80](index=80&type=chunk) [Note 9. Subsequent Events](index=20&type=section&id=Note%209.%20Subsequent%20Events) The company entered into an At The Market Offering Agreement to sell up to $1.2 million of common stock subsequent to the quarter end - On August 9, 2019, the company entered an **At The Market Offering Agreement** to sell up to **$1.2 million** in common stock through H.C. Wainwright & Co., LLC[81](index=81&type=chunk) - H.C. Wainwright & Co., LLC will receive a **3.0% commission** on gross proceeds from each sale[81](index=81&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's strategic shift, financial performance, operating results, and liquidity challenges, including recurring losses and financing needs [Overview](index=21&type=section&id=Overview) Spherix has transitioned to a technology development company focused on biotechnology and blockchain, highlighted by its investments and a key asset acquisition - The company has transitioned from patent monetization to a **technology development focus since Q4 2017**, concentrating on biotechnology and blockchain research[86](index=86&type=chunk) - Investments include Hoth Therapeutics Inc (**19% ownership post-IPO**), DatChat, Inc (encrypted communication), and a proposed asset acquisition of CBM BioPharma, Inc (cancer treatments)[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) - The CBM asset acquisition involves **$8.0 million in consideration** ($7.0 million in stock, $1.0 million cash contingent on future financing) for patent rights related to AML, ALL, and pancreatic cancer treatments[89](index=89&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Operating losses narrowed due to lower expenses, but a significant drop in other income resulted in a mixed net loss performance compared to the prior year [Three months ended June 30, 2019 compared to three months ended June 30, 2018](index=26&type=section&id=Three%20months%20ended%20June%2030%2C%202019%20compared%20to%20three%20months%20ended%20June%2030%2C%202018) The operating loss decreased to $0.9 million, but a sharp decline in other income led to a higher net loss of $0.6 million for the quarter - **Loss from operations decreased by $0.4 million** (from $1.3 million to $0.9 million) for the three months ended June 30, 2019, primarily due to a $0.3 million decrease in patent amortization and a $0.2 million decrease in compensation expenses[104](index=104&type=chunk) - **Other income decreased by $0.7 million** (from $0.9 million to $0.2 million), mainly due to a $0.5 million decrease in the change in fair value of investments, partially offset by a $0.2 million decrease in warrant liabilities[105](index=105&type=chunk) - **Net loss increased to $0.6 million** in 2019 from $0.4 million in 2018 for the three-month period[14](index=14&type=chunk) [Six months ended June 30, 2019 compared to six months ended June 30, 2018](index=26&type=section&id=Six%20months%20ended%20June%2030%2C%202019%20compared%20to%20six%20months%20ended%20June%2030%2C%202018) The operating loss decreased to $1.6 million, and despite a shift to other expense from other income, the net loss slightly improved to $1.8 million - **Loss from operations decreased by $1.2 million** (from $2.8 million to $1.6 million) for the six months ended June 30, 2019, due to reduced patent amortization ($0.7 million), compensation ($0.3 million), professional fees ($0.1 million), and acquisition costs ($0.1 million)[106](index=106&type=chunk) - **Other income (expense) decreased by $1.2 million** (from $1.0 million income to $(0.2) million expense), primarily due to a $1.0 million decrease in the change in fair value of investments and a $0.4 million decrease in warrant liabilities, partially offset by a $0.3 million decrease in other expenses[107](index=107&type=chunk) - **Net loss for the six-month period was $1.8 million** in 2019, a slight improvement from $1.9 million in 2018[14](index=14&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) Recurring operating losses raise substantial doubt about the company's ability to continue, necessitating future financing through equity or debt offerings - The company has recurring operating losses and net operating cash flow deficits, leading to **substantial doubt about its ability to continue as a going concern**[110](index=110&type=chunk) - Working capital was approximately **$0.6 million** at June 30, 2019[109](index=109&type=chunk) - Financing plans include managing current cash, seeking additional funds through security sales or debt, and increasing revenue from patent portfolios and new business ventures[108](index=108&type=chunk) Cash Flow Summary (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net cash used in operating | $(1,614) | $(1,750) | | Net cash provided by (used in) investing | $1,374 | $(969) | | Net cash provided by financing | $787 | $2,700 | | Net increase (decrease) in cash | $547 | $(19) | | Cash and cash equivalents, end of period | $564 | $178 | [Off-balance sheet arrangements](index=28&type=section&id=Off-balance%20sheet%20arrangements) The company has no off-balance sheet arrangements - The company has **no off-balance sheet arrangements**[116](index=116&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Spherix Incorporated is not required to provide these disclosures - **Not required** for smaller reporting companies[117](index=117&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed ineffective due to material weaknesses in internal controls, including a lack of segregation of duties - Disclosure controls and procedures were **not effective** as of June 30, 2019, due to material weaknesses in internal controls over financial reporting[120](index=120&type=chunk) - Material weaknesses include a **lack of segregation of duties** and insufficient controls to ensure all material transactions are reflected in financial statements[120](index=120&type=chunk) - **No material changes** in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2019[121](index=121&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) The company has no pending material legal claims or counterclaims against it as of the report date - The company has **no pending material claims or legal matters** against it as of the report date[123](index=123&type=chunk) - **No counterclaims** are currently pending against the company[124](index=124&type=chunk) [Item 1A. Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) Investing in the company's stock involves significant risks related to strategic alternatives, acquisition integration, and the CBM Asset Acquisition [Strategic Alternatives and Acquisitions](index=29&type=section&id=Strategic%20Alternatives%20and%20Acquisitions) The company's exploration of strategic alternatives and future acquisitions carries significant uncertainty and integration risks - The company is exploring strategic alternatives (e.g., sale, merger, asset divestiture), with **no assurance of success or value creation** for shareholders[126](index=126&type=chunk)[127](index=127&type=chunk) - Future acquisitions, like the stake in Hoth Therapeutics, Inc and the proposed CBM asset acquisition, may lead to **unforeseen operating difficulties**, significant expenditures, and diversion of management attention[128](index=128&type=chunk)[130](index=130&type=chunk) - There is **no guarantee of identifying suitable acquisition opportunities**, consummating pending or future acquisitions, or realizing anticipated benefits[130](index=130&type=chunk) [CBM Asset Acquisition Risks](index=31&type=section&id=CBM%20Asset%20Acquisition%20Risks) The CBM Asset Acquisition poses risks including integration challenges, shareholder dilution, and the potential for the transaction to be delayed or terminated - **Successful integration of CBM's business** and operations is crucial for realizing anticipated benefits, and failure could adversely affect business and financial performance[131](index=131&type=chunk) - Current stockholders will have a **reduced ownership and voting interest** in the post-acquisition company due to the issuance of shares to CBM shareholders[132](index=132&type=chunk)[133](index=133&type=chunk) - Completion of the Asset Acquisition is subject to customary conditions, including stockholder approval, and **failure to satisfy these conditions could lead to termination or delay**, negatively impacting the stock price and future business[134](index=134&type=chunk)[135](index=135&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company purchased CBM and DatChat securities for $350,000 and restructured the CBM merger into an Asset Purchase Agreement - On May 15, 2019, the company purchased 50,000 shares of CBM common stock and certain securities/rights of DatChat for an aggregate of **$350,000**[137](index=137&type=chunk) - The investment represents a **20% interest in CBM** and includes a $300,000 senior convertible note, a warrant for 2,250,000 DatChat common shares, and various options related to DatChat[137](index=137&type=chunk)[138](index=138&type=chunk) - The proposed merger with CBM was restructured into an **Asset Purchase Agreement**, where the company agreed to purchase CBM's assets, including license agreements and contracts[139](index=139&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate amendments, purchase agreements, and required certifications - Exhibits include Certificate of Amendment to the Certificate of Incorporation, Asset Purchase Agreements with CBM BioPharma, Inc, Share Purchase Agreement, Securities Purchase Agreements, and certifications (302 and 906) under the Sarbanes-Oxley Act[141](index=141&type=chunk) - XBRL Instance, Schema, Calculation, and Definition Linkbase Documents are also included[141](index=141&type=chunk) [Signatures](index=34&type=section&id=Signatures) The report was duly signed on August 14, 2019, by the company's Chief Executive Officer on behalf of Spherix Incorporated - The report was signed by **Anthony Hayes, Chief Executive Officer**, Principal Financial Officer, and Principal Accounting Officer, on August 14, 2019[143](index=143&type=chunk)[144](index=144&type=chunk)

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q) This section provides details on the Spherix Incorporated Form 10-Q filing for the period ended March 31, 2019, including registrant information and filer status [Filing Details](index=1&type=section&id=Filing%20Details) This chapter details the Spherix Incorporated Form 10-Q filing for Q1 2019, including registrant, filer status, and outstanding common stock - Filing Type: Quarterly Report (Form 10-Q) for the period ended March 31, 2019[2](index=2&type=chunk) - Registrant: SPHERIX INCORPORATED, incorporated in Delaware[2](index=2&type=chunk) Filer Status | Filer Status | Status | | :-------------------- | :----- | | Large Accelerated Filer | ☐ | | Accelerated Filer | ☐ | | Non-accelerated Filer | ☒ | | Smaller Reporting Company | ☒ | | Emerging Growth Company | ☐ | - As of May 13, 2019, there were **2,010,074 shares of common stock outstanding**[5](index=5&type=chunk) [Part I. Financial Information](index=2&type=section&id=Part%20I.%20Financial%20Information) This part presents the unaudited condensed consolidated financial statements and management's discussion and analysis for Spherix Incorporated [Item 1. Financial Statements (Unaudited)](index=2&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Spherix Incorporated's unaudited condensed consolidated financial statements for Q1 2019, including balance sheets, statements of operations, equity, and cash flows [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and stockholders' equity decreased from December 31, 2018, to March 31, 2019, mainly due to reduced marketable securities and an accumulated deficit Condensed Consolidated Balance Sheet Highlights ($ in thousands) | Item | March 31, 2019 | December 31, 2018 | | :------------------------ | :------------- | :---------------- | | Cash and cash equivalents | $446 | $22 | | Marketable securities | $1,256 | $2,700 | | Investments | $10,070 | $10,345 | | Total current assets | $1,867 | $2,905 | | Total assets | $11,937 | $13,251 | | Total current liabilities | $982 | $1,153 | | Total liabilities | $982 | $1,153 | | Total stockholders' equity | $10,955 | $12,098 | | Accumulated deficit | $(141,232) | $(140,083) | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a net loss of **$1.149 million** for Q1 2019, an improvement from the prior year, driven by reduced operating expenses Condensed Consolidated Statements of Operations Highlights ($ in thousands) | Item | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | | Amortization of patent portfolio | $0 | $338 | | Compensation and related expenses | $181 | $355 | | Professional fees | $399 | $597 | | Acquisition costs | $11 | $145 | | Other selling, general and administrative | $122 | $142 | | Total operating expenses | $713 | $1,577 | | Loss from operations | $(713) | $(1,577) | | Other income (expenses), net | $92 | $(97) | | Change in fair value of investment | $(475) | $0 | | Change in fair value of warrant liabilities | $(53) | $188 | | Total other (expenses) income | $(436) | $91 | | Net loss | $(1,149) | $(1,486) | | Net loss per share, basic and diluted | $(0.57) | $(0.96) | | Weighted average shares outstanding | 2,010,025 | 1,549,481 | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Stockholders' equity decreased from December 31, 2018, to March 31, 2019, primarily due to the net loss incurred during the period Condensed Consolidated Statements of Changes in Stockholders' Equity Highlights ($ in thousands) | Item | Balance at Dec 31, 2018 | Stock-based compensation | Net loss | Balance at Mar 31, 2019 | | :--------------------------------- | :---------------------- | :----------------------- | :---------- | :---------------------- | | Additional paid-in-capital | $152,445 | $6 | $0 | $152,451 | | Accumulated deficit | $(140,083) | $0 | $(1,149) | $(141,232) | | Total stockholders' equity | $12,098 | $6 | $(1,149) | $10,955 | | Item | Balance at Dec 31, 2017 | Issuance common stock | Stock-based compensation | Cumulative effect of ASC 606 | Net loss | Balance at Mar 31, 2018 | | :--------------------------------- | :---------------------- | :-------------------- | :----------------------- | :--------------------------- | :---------- | :---------------------- | | Additional paid-in-capital | $149,425 | $2,700 | $188 | $0 | $0 | $152,313 | | Accumulated deficit | $(145,055) | $0 | $0 | $3,245 | $(1,486) | $(143,296) | | Total stockholders' equity | $4,106 | $2,700 | $188 | $3,245 | $(1,486) | $8,753 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash increased in Q1 2019, primarily from investing activities, despite ongoing cash usage in operating activities Condensed Consolidated Statements of Cash Flows Highlights ($ in thousands) | Item | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :---------------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(896) | $(1,076) | | Net cash provided by (used in) investing activities | $1,320 | $(1,758) | | Net cash provided by financing activities | $0 | $2,700 | | Net increase (decrease) in cash and cash equivalents | $424 | $(134) | | Cash and cash equivalents, beginning of period | $22 | $197 | | Cash and cash equivalents, end of period | $446 | $63 | [Notes to the Condensed Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) These notes provide detailed information on Spherix's organization, accounting policies, liquidity, investments, and subsequent events, contextualizing the financial statements [Note 1. Organization and Description of Business](index=7&type=section&id=Note%201.%20Organization%20and%20Description%20of%20Business) Spherix transitioned to technology development, focusing on biotech and blockchain, with recent events including a reverse stock split and a restructured CBM merger - Company's business focus has transitioned from scientific research and IP monetization to technology development, specifically in biotechnology and blockchain research, since Q4 2017[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk) - On May 10, 2019, the Company effected a reverse stock split of its common stock at a ratio of **one-for-4.25**[26](index=26&type=chunk) - The proposed merger with CBM BioPharma, Inc. (CBM) from October 2018 was restructured on May 15, 2019, into an Asset Purchase Agreement, terminating the original merger agreement[27](index=27&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk) [Note 2. Liquidity and Financial Condition](index=9&type=section&id=Note%202.%20Liquidity%20and%20Financial%20Condition) Spherix faces substantial doubt about its going concern ability due to recurring losses, planning to finance operations through existing cash, future sales, and new ventures - The Company continues to incur ongoing administrative and other expenses in excess of revenue[34](index=34&type=chunk) - Financing strategies include managing current cash, seeking additional funds through security sales, credit facilities, and increasing revenue from patent portfolios and new business ventures[34](index=34&type=chunk) - Working capital amounted to approximately **$0.9 million** at March 31, 2019[35](index=35&type=chunk) - Due to recurring operating losses, net operating cash flow deficits, and an accumulated deficit, there is **substantial doubt about the Company's ability to continue as a going concern** within one year[36](index=36&type=chunk) [Note 3. Summary of Significant Accounting Policies](index=9&type=section&id=Note%203.%20Summary%20of%20Significant%20Accounting%20Policies) Financial statements adhere to US GAAP, with key policies covering estimates, net loss per share, and new accounting standards, none materially impacting the financials - Unaudited condensed consolidated financial statements are prepared in accordance with US GAAP for interim financial information and SEC regulations[38](index=38&type=chunk) - Significant estimates and assumptions include the valuation of investments and the valuation allowance related to deferred tax assets[39](index=39&type=chunk) - The adoption of ASU No. 2016-02 (Leases), ASU 2017-11 (Earnings Per Share), and ASU 2018-07 (Compensation-Stock Compensation) on January 1, 2019, did not have a material impact on the Company's condensed consolidated financial statements[46](index=46&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk) Securities Potentially Diluting Loss Per Share (in thousands) | Item | As of March 31, 2019 | As of March 31, 2018 | | :--------------------------------- | :------------------- | :------------------- | | Convertible preferred stock | 688 | 688 | | Warrants to purchase common stock | 285,273 | 294,072 | | Options to purchase common stock | 109,387 | 112,630 | | Total | 395,348 | 407,390 | [Note 4. Investments in Marketable Securities](index=12&type=section&id=Note%204.%20Investments%20in%20Marketable%20Securities) The company reported a net gain from marketable securities in Q1 2019, driven by unrealized gains, contrasting with a prior-year net loss Marketable Securities Performance ($ in thousands) | Item | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :------------------------- | :-------------------------------- | :-------------------------------- | | Realized gain (loss) | $(73) | $(99) | | Unrealized gain (loss) | $148 | $(58) | | Dividend income | $17 | $33 | | Total | $92 | $(124) | [Note 5. Investment in Hoth Therapeutics, Inc.](index=12&type=section&id=Note%205.%20Investment%20in%20Hoth%20Therapeutics%2C%20Inc.) Spherix's investment in Hoth Therapeutics was valued at **$8.9 million** as of March 31, 2019, following Hoth's IPO and additional share purchases - Hoth Therapeutics, Inc. (Hoth) closed its initial public offering (IPO) on February 20, 2019, with shares offered at **$5.60 per share**[52](index=52&type=chunk) - The Company purchased **35,714 shares** of Hoth's common stock for **$0.2 million** in February 2019[53](index=53&type=chunk) - As of March 31, 2019, the Company owned **1,735,714 shares** of Hoth common stock with a fair value of **$8.9 million** (based on a closing price of $5.15)[54](index=54&type=chunk) [Note 6. Fair Value of Financial Assets and Liabilities](index=12&type=section&id=Note%206.%20Fair%20Value%20of%20Financial%20Assets%20and%20Liabilities) Spherix measures financial assets and liabilities using a three-level hierarchy, reclassifying Hoth investment to Level 1 post-IPO, while warrant liabilities remain Level 3 - The Company uses a three-level hierarchy (Level 1, 2, 3) for fair value measurements, prioritizing observable inputs[55](index=55&type=chunk)[56](index=56&type=chunk)[59](index=59&type=chunk) - Due to Hoth's IPO in February 2019, the Company's investment in Hoth was transferred from Level 3 to Level 1 during the three months ended March 31, 2019[60](index=60&type=chunk) - Warrant liabilities are classified as Level 3 financial liabilities and are valued using the Black-Scholes valuation model, incorporating factors like stock price, contractual terms, maturity, risk-free rates, and volatility[61](index=61&type=chunk)[63](index=63&type=chunk) Fair Value of Assets and Liabilities ($ in thousands) | Item | Total at Mar 31, 2019 | Level 1 | Level 2 | Level 3 | | :---------------------------------------- | :-------------------- | :------ | :------ | :------ | | Marketable securities | $1,256 | $1,256 | $0 | $0 | | Investments in Hoth | $8,939 | $8,939 | $0 | $0 | | Fair value of warrant liabilities | $135 | $0 | $0 | $135 | | Item | Total at Dec 31, 2018 | Level 1 | Level 2 | Level 3 | | :---------------------------------------- | :-------------------- | :------ | :------ | :------ | | Marketable securities | $2,700 | $2,700 | $0 | $0 | | Investments in Hoth | $9,214 | $0 | $0 | $9,214 | | Fair value of warrant liabilities | $82 | $0 | $0 | $82 | Changes in Fair Value of Level 3 Financial Liabilities ($ in thousands) | Item | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :---------------------------------------- | :-------------------------------- | :-------------------------------- | | Beginning balance | $82 | $822 | | Fair value adjustment of warrant liabilities | $53 | $(188) | | Ending balance | $135 | $634 | [Note 7. Stockholders' Equity and Convertible Preferred Stock](index=15&type=section&id=Note%207.%20Stockholders'%20Equity%20and%20Convertible%20Preferred%20Stock) This note details changes in outstanding warrants and stock options, and a significant year-over-year decline in stock-based compensation expense Warrant Activity (Three Months Ended March 31, 2019) | Item | Warrants | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (in years) | | :--------------------------------- | :------- | :------------------------------ | :----------------------------------------------------- | | Outstanding as of December 31, 2018 | 294,072 | $38.15 | 1.92 | | Expired | (8,799) | — | — | | Outstanding as of March 31, 2019 | 285,273 | $24.63 | 1.67 | Stock Option Activity (Three Months Ended March 31, 2019) | Item | Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (in years) | | :--------------------------------- | :--------------- | :------------------------------ | :----------------------------------------------------- | | Outstanding as of December 31, 2018 | 124,381 | $209.22 | 4.8 | | Employee options expired | (14,994) | — | — | | Outstanding as of March 31, 2019 | 109,387 | $173.51 | 5.2 | Stock-based Compensation Expense ($ in thousands) | Item | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Non-employee restricted stock awards | $0 | $80 | | Employee stock option awards | $6 | $108 | | Total compensation expense | $6 | $188 | [Note 8. Commitments and Contingencies](index=17&type=section&id=Note%208.%20Commitments%20and%20Contingencies) Spherix has short-term office lease commitments and no pending material legal claims or counterclaims as of the report date - The Company leases office space on a month-to-month basis in New York, NY, and Longview, TX, and terminated a lease in Williamsburg, VA, on April 30, 2019[72](index=72&type=chunk) - Rent expense for the three months ended March 31, 2019 and 2018 was approximately **$21,000** and **$22,000**, respectively[72](index=72&type=chunk) - The Company knows of no pending material claims or legal matters against it as of the date of this report, nor are there any counterclaims pending[73](index=73&type=chunk)[74](index=74&type=chunk) [Note 9. Subsequent Events](index=17&type=section&id=Note%209.%20Subsequent%20Events) Subsequent events include a reverse stock split, a share purchase agreement for CBM and DatChat securities, and the restructuring of the CBM merger into an **$8 million** asset purchase agreement - On May 10, 2019, the Company effected a reverse stock split (**one-for-4.25**) of its outstanding common stock[76](index=76&type=chunk) - On May 15, 2019, the Company entered into a Share Purchase Agreement to acquire **50,000 shares of CBM** and various securities/rights of DatChat for an aggregate of **$350,000**[77](index=77&type=chunk) - On May 15, 2019, the proposed merger with CBM was restructured into an Asset Purchase Agreement (APA), where the Company agreed to purchase CBM's assets for an aggregate consideration of **$8,000,000** (comprising **$7,000,000 in stock** and **$1,000,000 in cash**)[78](index=78&type=chunk)[82](index=82&type=chunk) - The CBM Merger Agreement was terminated, and all termination fees were waived in connection with the APA[79](index=79&type=chunk)[83](index=83&type=chunk) - The Asset Acquisition is subject to various closing conditions, including governmental, third-party, and shareholder approvals, and the absence of adverse legal actions or material adverse effects[85](index=85&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Spherix's financial condition and operations, highlighting its strategic shift, investment activities, Q1 2019 performance, and liquidity challenges [Overview](index=20&type=section&id=Overview) Spherix transitioned to technology development, focusing on biotech and blockchain, with recent investments in Hoth and DatChat, and a restructured CBM merger - The Company is a technology development company, having shifted focus from IP monetization since Q4 2017[89](index=89&type=chunk)[91](index=91&type=chunk) - Key investments include Hoth Therapeutics, Inc. (**19% ownership** post-IPO) and a recent Share Purchase Agreement for CBM BioPharma, Inc. and DatChat securities[91](index=91&type=chunk)[92](index=92&type=chunk)[95](index=95&type=chunk) - The proposed merger with CBM BioPharma was restructured into an Asset Purchase Agreement on May 15, 2019, for **$8 million** consideration (stock and cash), terminating the original merger agreement[96](index=96&type=chunk)[97](index=97&type=chunk) - A reverse stock split (**one-for-4.25**) was effected on May 10, 2019[104](index=104&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Spherix significantly reduced its operating loss in Q1 2019 due to lower operating expenses, though total other expenses increased from changes in fair value - Loss from operations decreased to approximately **$0.7 million** for the three months ended March 31, 2019, from **$1.6 million** in the prior-year period[105](index=105&type=chunk) - The decrease in operating loss was primarily attributed to reductions in amortization of patent portfolio (**$0.3 million**), professional fees (**$0.2 million**), acquisition costs (**$0.1 million**), and compensation expenses (**$0.2 million**)[105](index=105&type=chunk) - Other expenses increased to approximately **$0.4 million** in Q1 2019, compared to **$91,000** of other income in Q1 2018, mainly due to a **$0.5 million** decrease in the change in fair value of warrant liabilities and investments[106](index=106&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) Spherix faces going concern doubt due to recurring losses, planning to fund operations via existing cash, future financings, and revenue growth, with positive investing cash flow in Q1 2019 - The Company's working capital was approximately **$0.9 million** at March 31, 2019[108](index=108&type=chunk) - **Substantial doubt exists about the Company's ability to continue as a going concern** due to recurring operating losses, net operating cash flow deficits, and an accumulated deficit[110](index=110&type=chunk) Cash Flow Summary ($ in thousands) | Cash Flow Type | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(896) | $(1,076) | | Net cash provided by (used in) investing activities | $1,320 | $(1,758) | | Net cash provided by financing activities | $0 | $2,700 | - Cash provided by investing activities in Q1 2019 was primarily from the sale of marketable securities (**$4.4 million**), partially offset by purchases (**$2.8 million**)[112](index=112&type=chunk) [Off-balance sheet arrangements.](index=24&type=section&id=Off-balance%20sheet%20arrangements.) The company reported no off-balance sheet arrangements - The Company has no off-balance sheet arrangements[115](index=115&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Spherix Incorporated is not required to provide market risk disclosures - Not required for smaller reporting companies[116](index=116&type=chunk) [Item 4. Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were ineffective as of March 31, 2019, due to material weaknesses in internal controls, with no material changes during the quarter - Management concluded that disclosure controls and procedures were **not effective** as of March 31, 2019[119](index=119&type=chunk) - Material weaknesses identified include a **lack of segregation of duties** and **insufficient controls** to ensure all material transactions and developments impacting financial statements are reflected[119](index=119&type=chunk) - No changes in internal control over financial reporting occurred during the fiscal quarter ended March 31, 2019, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[120](index=120&type=chunk) [Part II. Other Information](index=25&type=section&id=Part%20II.%20Other%20Information) This part covers legal proceedings, risk factors, equity sales, other information, and exhibits for Spherix Incorporated [Item 1. Legal Proceedings](index=25&type=section&id=Item%201.%20Legal%20Proceedings) Spherix has no pending material claims or legal matters against it, nor any pending counterclaims, as of the report date - The Company knows of no pending material claims or legal matters against it as of the date of this report[122](index=122&type=chunk) - Currently, there are no counterclaims pending against the Company[123](index=123&type=chunk) [Item 1A. Risk Factors](index=25&type=section&id=Item%201A.%20Risk%20Factors) Investing in Spherix common stock involves significant risks, including strategic alternative uncertainties, acquisition integration challenges, and potential dilution - The Company is exploring strategic alternatives, but there is **no assurance of success** in identifying or completing any transaction, or that it will yield additional shareholder value[125](index=125&type=chunk)[126](index=126&type=chunk) - Risks associated with integrating future acquisitions, such as Hoth Therapeutics and the CBM Asset Acquisition, include unforeseen operating difficulties, failure to realize expected synergies, and diversion of management attention[127](index=127&type=chunk)[128](index=128&type=chunk)[132](index=132&type=chunk) - Current stockholders will experience **reduced ownership and voting interest** after the CBM Asset Acquisition due to the issuance of common stock to CBM shareholders[133](index=133&type=chunk)[134](index=134&type=chunk) - The CBM Asset Acquisition is subject to various closing conditions, and **failure to complete or delays in consummation could negatively impact the stock price** and future business operations[135](index=135&type=chunk)[136](index=136&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - None[137](index=137&type=chunk) [Item 5. Other Information](index=27&type=section&id=Item%205.%20Other%20Information) This section reiterates details of the Share Purchase Agreement and the restructured CBM merger into an Asset Purchase Agreement - On May 15, 2019, the Company agreed to purchase **50,000 shares of CBM** and certain securities/rights of DatChat for an aggregate of **$350,000** via a Share Purchase Agreement[138](index=138&type=chunk) - On May 15, 2019, the proposed merger with CBM was restructured into an Asset Purchase Agreement, involving the purchase of CBM's assets, including license agreements and contracts[139](index=139&type=chunk) [Item 6. Exhibits](index=28&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including key agreements, certifications, and XBRL documents - Exhibits include the Asset Purchase Agreement (May 15, 2019), Form of Share Purchase Agreement (May 15, 2019), Certifications of Principal Executive and Financial Officers (Sections 302 and 906 of Sarbanes-Oxley Act), and XBRL Instance, Schema, Calculation, Definition, and Label Linkbase Documents[141](index=141&type=chunk) [Signatures](index=29&type=section&id=Signatures) The report was duly signed on behalf of Spherix Incorporated by its Chief Executive Officer, Anthony Hayes, on May 15, 2019 - The report was signed by Anthony Hayes, Chief Executive Officer (also Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer) on May 15, 2019[144](index=144&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark one) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file number 0-5576 SPHERIX INCORPORATED (Exact name of Registrant as specified in its Charter) Delaware 52-0849320 (State or other ...