Financial Position - As of June 30, 2023, the company had cash of approximately $9.2 million and an accumulated deficit of approximately $29.1 million[272]. - The company reported a working capital deficit of approximately $0.7 million as of June 30, 2023[272]. - The company has a total debt of $13,160,995 after accounting for a debt discount of $839,005[179]. Operating Performance - Total operating expenses for the three months ended June 30, 2022, were $6.65 million, compared to $4.29 million for the same period in 2021, representing a 55% increase[261]. - The net loss for the three months ended June 30, 2023, was $6.87 million, compared to a net loss of $4.26 million for the same period in 2022, indicating a 61% increase in losses[261]. - The net loss per share attributable to common stockholders for the three months ended June 30, 2023, was $0.43, compared to $0.36 for the same period in 2022[261]. - The company had a weighted average number of common shares outstanding of 15,906,725 for the three months ended June 30, 2023[261]. Capital Needs and Funding - The company anticipates the need to raise substantial additional capital to fund its operations[255]. - The company is currently ineligible to file new short form registration statements on Form S-3, which may hinder its ability to raise capital efficiently[181]. Acquisitions and Investments - The company completed an acquisition of assets requiring an initial payment of $20 million, with $6 million paid at closing and $9 million due within one year[272]. - The company wrote off a $3.5 million advance payment related to an acquisition due to uncertainties following WraSer's bankruptcy filing[272]. - The company paid $3.5 million in cash to WraSer for the purchase of WraSer Assets, but the transaction is now uncertain due to WraSer's bankruptcy filing[162]. - The total possible consideration for the ENTADFI® acquisition was $100 million, with the company assuming certain trivial liabilities[175]. Regulatory and Compliance Issues - The company is focused on obtaining necessary regulatory approvals to market and commercialize its products and product candidates[255]. - The company may be subject to civil and criminal sanctions for potential violations of Section 13(k) of the Exchange Act, which could adversely affect its business and financial position[168]. - As of June 30, 2023, the company's disclosure controls and procedures were deemed ineffective due to material weaknesses identified in internal controls over financial reporting[162]. Internal Controls and Governance - The company has not maintained an effective control environment, leading to unauthorized payments being possible due to inadequate segregation of duties[157]. - An accounting employee involved in misuse has been terminated, and their roles have been reassigned to enhance control activities[194]. - The company plans to implement a formal information security policy to strengthen its internal controls[195]. - Material weaknesses in internal controls will be considered remediated once controls operate effectively for a sufficient period and management confirms their effectiveness through testing[196]. - There are inherent limitations on the effectiveness of internal control processes that the company must address[197]. - Changes in internal control over financial reporting have been noted, indicating ongoing adjustments to improve compliance and oversight[198]. Market Challenges - Company may face challenges in expanding sales of ENTADFI® through telemedicine partnerships or its own efforts due to a mature BPH market heavily dominated by generics[191]. - The company has a limited amount of analyst coverage, which may impact market perception and investment interest[193]. - As of September 18, 2023, the company received a notice from Nasdaq regarding non-compliance with the minimum bid price requirement of $1.00 per share, with a compliance deadline of March 16, 2024[192]. Shareholder Impact - The company may face significant dilution of ownership interests for shareholders due to the issuance or conversion of securities, including Series A Preferred Stock convertible into 5,709,935 shares of common stock[166].
Blue Water Biotech(BWV) - 2023 Q2 - Quarterly Report