NLS Pharmaceutics .(NLSP) - 2024 Q2 - Quarterly Report

Financial Performance - Operating expenses for the six months ended June 30, 2024, were $2,053,492, down 72.7% from $7,549,482 in the same period of 2023[5] - Net loss for the six months ended June 30, 2024, was $2,035,834, significantly improved from a net loss of $7,612,738 in the prior year, reflecting a reduction of approximately 73.3%[5] - The company reported a comprehensive loss of $1,873,556 for the six months ended June 30, 2024, compared to a comprehensive loss of $7,628,123 in the same period of 2023, indicating a significant improvement[5] Assets and Liabilities - Total current assets decreased from $1,823,062 as of December 31, 2023, to $1,192,468 as of June 30, 2024, representing a decline of approximately 34.6%[3] - Total liabilities decreased from $10,680,204 as of December 31, 2023, to $10,461,716 as of June 30, 2024, a reduction of about 2.1%[3] - Cash and cash equivalents decreased from $897,680 at the end of 2023 to $552,758 by June 30, 2024, a decline of about 38.4%[7] - Total shareholders' deficit increased from $8,833,563 as of December 31, 2023, to $9,268,258 as of June 30, 2024, reflecting a decline in equity[3] - As of June 30, 2024, the Company reported total prepaid expenses and other current assets of $639,710, a decrease from $925,382 as of December 31, 2023[47] Funding and Capital Structure - The company issued 175,000 common shares in private placement offerings, raising net proceeds of $1,380,291 during the first half of 2024[6] - The Company raised gross proceeds of $1,750,000 from a registered direct offering of 175,000 common shares at $10.00 per share, with expenses of approximately $321,000[72] - The Company entered into short-term loan agreements totaling CHF 875,000 (approximately $1,000,000) with existing shareholders, bearing interest at 10% per annum[48] - The Company converted $2,788,650 of debt into 493,986 common shares through an ordinary capital increase on October 10, 2024[111] Research and Development - Research and development expenses were $271,350 for the six months ended June 30, 2024, compared to $4,383,625 in the same period of 2023, a decrease of approximately 93.8%[5] - The EF License Agreement for Nolazol, which was terminated after June 30, 2024, has not generated any recognized revenue to date[18] - The company has not recognized any revenue from sales-based royalties or milestone payments related to its license agreements[26] - Research and development costs are expensed as incurred, with no revenue recognized from development or regulatory milestone payments to date[28] Future Outlook - NLS Pharmaceutics expects to continue generating operating losses and negative operating cash flows for the next few years, necessitating additional funding to support operations[10] - Future viability is uncertain, with substantial doubt about the company's ability to continue as a going concern beyond one year from the issuance of the financial statements[10] Legal and Disputes - The Company settled an outstanding claim with Clinilabs for unpaid invoices totaling $886,412.46, plus interest at 6%, through a debt purchase agreement on October 10, 2024[67] - The Company resolved a claim from CoreRX, Inc. regarding unpaid services through a debt purchase agreement on October 10, 2024[68] - The Company is involved in a dispute with Université de Lausanne over an unpaid invoice for research services amounting to $110,179, plus interest at 5%, with a hearing held on October 9, 2024[70] Shareholder Information - The weighted average common shares used in computing basic and diluted net loss per common share increased from 954,401 in 2023 to 1,048,632 in 2024, an increase of about 9.9%[5] - As of June 30, 2024, the Company had issued 985,723 common shares[71] - The balance of common share warrants increased to 575,878 as of June 30, 2024, with an intrinsic value of $1,132,183 for exercisable but unexercised warrants[73] Accounting and Compliance - A full valuation allowance has been recorded against deferred tax assets due to the company's history of generating losses[35] - The Company has implemented all new accounting pronouncements that may impact its consolidated financial statements and does not foresee any material impact from new pronouncements[46] - As of October 10, 2024, the company believes it has regained compliance with Nasdaq's minimum bid price requirement, with shares trading above $1.00 for ten consecutive trading days[112]