Financial Performance - Revenues for the six months ended June 30, 2024, were $284,000, compared to $0 in the same period of 2023, indicating a significant increase in revenue generation [6]. - Net loss for the six months ended June 30, 2024, was $4,481,000, down from $7,277,000 in the same period of 2023, reflecting a 38% improvement [6]. - The company reported a gross loss of $164,000 for the six months ended June 30, 2024, with a cost of revenues of $448,000 [6]. - For the six months ended June 30, 2024, the company reported an operating loss of $3,955,000 and negative cash flows from operating activities of $3,221,000 [18]. - The total share-based compensation expense for the six months ended June 30, 2024, was $333,000, down from $452,000 in the same period of 2023 [34]. Assets and Liabilities - Total assets decreased from $17,472,000 in December 2023 to $14,851,000 in June 2024, a decline of approximately 15% [2]. - Cash and cash equivalents decreased from $4,870,000 to $3,076,000, representing a reduction of about 37% [2]. - Total liabilities increased slightly from $20,261,000 in December 2023 to $20,463,000 in June 2024, an increase of about 1% [4]. - As of June 30, 2024, the company's cash and cash equivalents totaled $3,076,000, a decrease from $7,506,000 at the end of the previous year [18]. - As of June 30, 2024, the outstanding principal amount related to the EIB loan is $25,668,000, with finance expenses recorded at $594,000 for the six months ended June 30, 2024 [29]. Shareholder Information - The number of ordinary shares outstanding increased from 1,857,169,984 as of December 31, 2023, to 3,349,431,584 as of June 30, 2024, indicating a significant increase in share issuance [5]. - The weighted average number of shares used in computing net loss per share increased from 1,322,019,241 in 2023 to 2,288,278,248 in 2024, reflecting a dilution effect due to increased share issuance [6]. - The Company announced a reverse split of its ADSs from 400 ordinary shares per ADS to 4,000 ordinary shares per ADS to regain compliance with Nasdaq listing requirements [32]. - The Company regained compliance with Nasdaq's Minimum Shareholders' Equity Rule, maintaining stockholders' equity of at least $2.5 million [41]. Research and Development - Research and development expenses decreased from $3,449,000 in 2023 to $2,788,000 in 2024, a reduction of approximately 19% [6]. - The company has received approximately $6,431,000 in grants from the Israeli Innovation Authority, with $5,979,000 allocated for R&D of M-001 and $589,000 for the new CDMO business [26]. - The Company received a non-dilutive grant covering 66% of the costs of a $975,000 project to support its new CDMO business, which is not subject to repayment or royalty payments [28]. Business Operations - The company launched a new business named Scinai Bioservices to provide CDMO services and signed its first contract in October 2023 [15]. - The company is in advanced contract discussions with additional potential clients for its CDMO services [15]. - The Company recognized revenues from CDMO services, which include manufacturing, quality assurance, and method development [39]. Financial Commitments and Concerns - The company has substantial doubt about its ability to continue as a going concern due to insufficient cash to fund operations for at least a year [18]. - The maximum royalty amounts payable by the company as of June 30, 2024, is approximately $6,431,000, which includes accrued interest on grants received [27]. - The company has not paid any royalties to the Israeli Innovation Authority as of June 30, 2024 [27]. - The Company issued new warrants to purchase up to 5,213,104 ADSs at a reduced exercise price of $0.65 per ADS, generating gross proceeds of approximately $1,696,000 [30]. - The Company entered into a $2 million Investment Commitment Agreement with RK Stone Miami LLC, allowing for the issuance of ADSs through December 31, 2024 [48]. - The Company will pay a commitment fee of $100,000 if an advance notice is provided during the Commitment Period, payable at the closing of the first advance [49]. - If no advance notice is given during the Commitment Period, the commitment fee will be $40,000, payable promptly after the Commitment Period ends [49]. - The number of ADSs for the commitment fee will be based on the market price determined for the advance or as of December 31, 2024, depending on the payment method chosen by the Company [49]. Currency and Financial Adjustments - The company changed its functional currency to the U.S. dollar effective July 1, 2023, to align with its operational environment [16]. - On August 21, 2024, the Company amended its financing contract with the EIB, reducing the outstanding principal and accrued interest to approximately €250,000, with no interest accruing [41].
Scinai Immunotherapeutics .(SCNI) - 2024 Q2 - Quarterly Report