
PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents unaudited condensed consolidated financial statements and detailed notes for Q1 2022 and FY 2021 Condensed Consolidated Balance Sheets This section presents the company's financial position, including assets, liabilities, and equity Condensed Consolidated Balance Sheet Summary | Metric | March 31, 2022 | December 31, 2021 | Change | | :----- | :------------- | :---------------- | :----- | | Total Current Assets | $9,618,217 | $10,402,320 | -$784,103 | | Total Assets | $9,715,810 | $10,490,189 | -$774,379 | | Total Current Liabilities | $292,748 | $490,039 | -$197,291 | | Total Liabilities | $1,212,607 | $1,427,923 | -$215,316 | | Total Stockholders' Equity | $8,503,203 | $9,062,266 | -$559,063 | Condensed Consolidated Statements of Operations This section details the company's financial performance, including revenues, expenses, and net loss Condensed Consolidated Statements of Operations Summary | Metric | 3 Months Ended March 31, 2022 | 3 Months Ended March 31, 2021 | Change (YoY) | | :----- | :------------------------------ | :------------------------------ | :----------- | | License Fee Revenues | $18,026 | $17,188 | +$838 | | Gross Profit | $16,566 | $16,563 | +$3 | | Total Operating Expenses | $543,825 | $917,699 | -$373,874 | | Operating Loss from Continuing Operations | $(527,259) | $(901,136) | +$373,877 | | Net Loss | $(604,072) | $(930,702) | +$326,630 | | Net Loss Available to Common Stockholders | $(604,072) | $(2,334,699) | +$1,730,627 | | Basic and Diluted EPS (Continuing Operations) | $(0.01) | $(0.03) | +$0.02 | Condensed Consolidated Statements of Changes in Stockholders' Equity This section outlines changes in equity components, including common stock, preferred stock, and accumulated deficit - In Q1 2022, 227 Series C Convertible preferred stock shares were converted into 758,334 shares of common stock, resulting in no Series C preferred stock outstanding as of March 31, 202219101 - Stock options issued as stock-based compensation amounted to $94,915 during the three months ended March 31, 202219 - The net loss for the three months ended March 31, 2022, was $(604,072), contributing to an accumulated deficit of $(3,866,649)19 Condensed Consolidated Statements of Cash Flows This section reports cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Summary | Cash Flow Activity | 3 Months Ended March 31, 2022 | 3 Months Ended March 31, 2021 | Change (YoY) | | :----------------- | :------------------------------ | :------------------------------ | :----------- | | Net Cash Used in Operating Activities | $(789,165) | $(319,318) | $(469,847) | | Net Cash Provided by Investing Activities | $20,000 | $31,000 | $(11,000) | | Net Cash Provided by Financing Activities | $0 | $3,796,468 | $(3,796,468) | | Net Change in Cash and Cash Equivalents | $(769,165) | $3,508,150 | $(4,277,315) | | Cash and Cash Equivalents - end of period | $9,067,836 | $4,636,539 | +$4,431,297 | Notes to Condensed Consolidated Financial Statements NOTE 1 – ORGANIZATION AND BUSINESS This note describes the company's business, developmental stage, and recent significant corporate events - Silo Pharma, Inc. is a developmental stage biopharmaceutical company focused on merging traditional therapeutics with psychedelic research to treat rare diseases, including depression, PTSD, Alzheimer's, and Parkinson's25 - The company disposed of its NFID streetwear apparel brand on September 30, 2021, for a $60,000 promissory note, with its operations now reported as discontinued29 - Stockholders approved a discretionary reverse stock split (1-for-5 to 1-for-50) by February 8, 2023, though it has not yet been effected30 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines key accounting principles and methods applied in financial statement preparation - The NFID, LLC component's results of operations have been retrospectively classified as discontinued operations due to a strategic shift33 - Despite a net loss of $604,072 and cash used in operations of $789,165 for Q1 2022, the Company believes it has sufficient cash to meet its obligations for at least twelve months3435 - The Company adopted ASU 2020-06 and ASU 2021-04 during the three months ended March 31, 2022, neither of which had a no material impact on its condensed consolidated financial statements5960 NOTE 3 – FAIR VALUE OF FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS This note details valuation methodologies and classifications for financial instruments at fair value Equity Investments at Fair Value | Metric | March 31, 2022 | December 31, 2021 | | :----- | :------------- | :---------------- | | Equity investments (at fair value) | $343,930 | $419,995 | Equity Investment Activity Summary | Equity Investment Activity | 3 Months Ended March 31, 2022 | Year Ended December 31, 2021 | | :------------------------- | :------------------------------ | :--------------------------- | | Balance, beginning of period | $419,995 | $0 | | Additions | $85,733 | $531,250 | | Sales | $0 | $(359,843) | | Unrealized (loss) gain | $(161,798) | $248,588 | | Balance, end of period | $343,930 | $419,995 | - During Q1 2022, the Company received 77,939 shares of Home Bistro, Inc. common stock, valued at $85,733, in exchange for a lock-up agreement69 NOTE 4 – DISPOSAL OF THE DISCONTINUED OPERATIONS OF THE NFID BUSINESS This note details the sale of the NFID business, its financial impact, and discontinued operations - The NFID business was sold on September 30, 2021, for a $60,000 promissory note, resulting in a gain from sale of $(1,553) (loss)7678 Discontinued Operations (NFID Business) Summary | Discontinued Operations (NFID Business) | 3 Months Ended March 31, 2022 | 3 Months Ended March 31, 2021 | | :-------------------------------------- | :------------------------------ | :------------------------------ | | Product sales, net | $0 | $30,246 | | Cost of sales | $1,079 | $31,325 | | Gross profit (loss) | $(1,079) | $(1,079) | | Total operating and other non-operating expenses | $(84) | $(65,888) | | Loss from discontinued operations | $(1,163) | $(66,967) | NOTE 5 – NOTES RECEIVABLE This note presents the company's notes receivable, including principal amounts, collections, and allowances Notes Receivable Summary | Notes Receivable (Net) | March 31, 2022 | December 31, 2021 | | :--------------------- | :------------- | :---------------- | | Principal amounts | $115,500 | $220,000 | | Collections | $(20,000) | $(164,500) | | Less: allowance for doubtful accounts | $(35,500) | $(55,500) | | Total Notes receivable, net | $60,000 | $60,000 | | Less: notes receivable, net – current portion | $0 | $0 | | Notes receivable – non-current | $60,000 | $60,000 | - During Q1 2022, $20,000 was collected on a settlement agreement, with $35,500 remaining collectible but fully reserved as of March 31, 202284 - A $60,000 promissory note from the NFID, LLC asset purchase, bearing 8% interest, is classified as non-current and matures on October 1, 20238586 NOTE 6 – STOCKHOLDERS' EQUITY This note details stockholders' equity components, including common stock, preferred stock, options, and warrants - As of March 31, 2022, 99,395,304 shares of common stock were outstanding, an increase from 98,636,970 shares at December 31, 202114 - On March 31, 2022, 227 Series C Convertible preferred stock shares were converted into 758,334 shares of common stock, resulting in no Series C preferred stock outstanding101 - 800,000 incentive stock options were granted to Dr. Kou on January 31, 2022, exercisable at $0.20 per share, with a grant-date fair value of $94,914103 Stock Options Activity Summary | Stock Options Activity | Number of Options | Weighted Average Exercise Price | | :--------------------- | :---------------- | :------------------------------ | | Balance Outstanding, Dec 31, 2021 | 300,000 | $0.0001 | | Granted (Q1 2022) | 800,000 | $0.2000 | | Balance Outstanding, Mar 31, 2022 | 1,100,000 | $0.1500 | | Exercisable, Mar 31, 2022 | 600,000 | $0.1000 | Warrants Activity Summary | Warrants Activity | Number of Warrants | Weighted Average Exercise Price | | :---------------- | :----------------- | :------------------------------ | | Balance Outstanding, Dec 31, 2021 | 17,353,987 | $0.31 | | Balance Outstanding, Mar 31, 2022 | 17,353,987 | $0.31 | | Exercisable, Mar 31, 2022 | 17,353,987 | $0.31 | NOTE 7 – CONCENTRATIONS This note identifies significant concentrations in the company's revenue sources and vendor relationships - One licensee accounted for 100% of total revenues from customer license fees for the three months ended March 31, 2022 and 2021109 - One licensor accounted for 100% of the Company's vendor license agreements related to its biopharmaceutical operations for the three months ended March 31, 2022 and 2021110 NOTE 8 – COMMITMENTS AND CONTINGENCIES This note describes material contractual commitments, license agreements, and contingent liabilities - Eric Weisblum's annual base salary as CEO and CFO was increased to $180,000, effective January 1, 2021113 - Dr. James Kuo was hired as VP of Research & Development with an annual base salary of $30,000 and granted 800,000 incentive stock options114 - The Company holds an exclusive, worldwide, sublicensable, royalty-bearing Master License Agreement with the University of Maryland, Baltimore (UMB) for CNS-homing peptides for neuroinflammatory disease treatment118 UMB Master License Agreement Milestone Payments | UMB Master License Agreement Milestone Payments | Amount | | :---------------------------------------------- | :----- | | Filing of an Investigational New Drug (or foreign equivalent) | $50,000 | | Dosing of first patient in a Phase 1 Clinical Trial | $100,000 | | Dosing of first patient in a Phase 2 Clinical Trial | $250,000 | | Receipt of New Drug Application (or foreign equivalent) approval | $500,000 | | Achievement of First Commercial Sale | $1,000,000 | - A Patent License Agreement with Aikido Pharma Inc. includes a $500,000 upfront cash payment and 625,000 restricted shares of Aikido's common stock (valued at $531,250) for cancer treatment and neuroinflammatory diseases in cancer patients130135 - A Sponsored Research Agreement with Columbia University for studies on Ketamine in combination with other drugs for Alzheimer's and depression disorders involves total payments of $1,436,082 over a one-year period146 - The Company entered into a Joint Venture Agreement with Zylö Therapeutics, Inc. (ZTI) to form Ketamine Joint Venture, LLC, focusing on clinical development of ketamine using ZTI's Z-pod™ technology, with Silo Pharma contributing $225,000 and holding 51% initial interest148 NOTE 9 – SUBSEQUENT EVENTS This note discloses significant events occurring after the balance sheet date but before statement issuance - On April 19, 2022, the Company entered into a research and development service agreement for a total of $58,548, payable in two equal installments151 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition, operations, biopharmaceutical strategy, research, and COVID-19 impact Overview Silo Pharma is a developmental biopharmaceutical company merging traditional therapeutics with psychedelic research - Silo Pharma, Inc. is a developmental stage biopharmaceutical company focused on merging traditional therapeutics with psychedelic research to address underserved conditions, particularly mental health and neurological disorders155 Rare Disease Therapeutics The company develops IP for rare diseases, using psychedelics for mental health and neurological disorders - The company focuses on acquiring and developing intellectual property for rare diseases, including the use of psychedelic drugs like psilocybin for depression, PTSD, Alzheimer's, and Parkinson's, citing promising academic studies156158 - Silo Pharma has engaged with world-renowned educational institutions and advisors, forming a scientific advisory board to guide product acquisition and development159 - The company has entered into license agreements with the University of Maryland, Baltimore, a joint venture with Zylo Therapeutics, Inc., and a sponsored research agreement with Columbia University for various therapeutic developments160 License Agreements between the Company and a Vendor The UMB Master License grants an exclusive, worldwide, royalty-bearing license for CNS-homing peptides for neuroinflammatory disease - The Master License Agreement with the University of Maryland, Baltimore (UMB) grants an exclusive, worldwide, sublicensable, royalty-bearing license for CNS-homing peptides for neuroinflammatory disease treatment, with a term of up to 15 years or longer based on patent/market exclusivity162 - A commercial evaluation license with UMB for joint-homing peptides for arthritogenic processes was extended until December 31, 2022167 Joint Venture Agreement with Zylö Therapeutics, Inc. for Z-pod™ Technology The company formed a joint venture with Zylö Therapeutics (ZTI) for clinical development of ketamine using Z-pod™ technology - The company entered into a Joint Venture Agreement with Zylö Therapeutics, Inc. (ZTI) to form Ketamine Joint Venture, LLC, focusing on the clinical development of ketamine using ZTI's Z-pod™ technology168 - Silo Pharma will contribute $225,000 and expertise, holding an initial 51% interest, while ZTI will contribute patented technology, know-how, ketamine, and facilities169 - ZTI granted Silo Pharma an exclusive option to enter into a separate joint venture for the clinical development of psilocybin using ZTI's Z-pod™ technology, expiring in 24 months170 Investigator-Sponsored Study Agreements between the Company and Vendors Sponsored research agreements with universities focus on Ketamine, dexamethasone, and psilocybin for neurological conditions - A sponsored research agreement with Columbia University focuses on studies related to Ketamine or its metabolites in combination with Prucalopride for Alzheimer's, Depression, PTSD, and Stress Projects, with an option to license assets171 - A sponsored research agreement with UMB evaluates the pharmacokinetics of dexamethasone delivered to arthritic rats via liposome, with an option for an exclusive license to UMB Arising IP173 - A sponsored research agreement with UCSF examines psilocybin's effect on inflammatory activity in humans to accelerate its implementation as a potential treatment for Parkinson's Disease, chronic pain, and bipolar disorder175 - An investigator-sponsored study agreement with UMB for a clinical study on MS-1-displaying liposomes for Multiple Sclerosis treatment has been delayed due to the COVID-19 pandemic176 Other License Agreements between the Company and a Customer License agreements with Aikido Pharma grant exclusive rights for cancer and neuroinflammatory disease treatment - The Patent License Agreement with Aikido Pharma Inc. grants an exclusive, worldwide, sublicensable, royalty-bearing license for the treatment of cancer and its symptoms177 - A Sublicense Agreement with Aikido grants an exclusive worldwide sublicense for neuroinflammatory disease in cancer patients, including an upfront license fee of $50,000 and total milestone payments of up to $1.9 million178 COVID-19 The COVID-19 pandemic may cause delays in R&D, clinical trials, and regulatory processes - The COVID-19 pandemic may cause delays or interruptions in the company's R&D activities, clinical trials, site initiation, participant recruitment, and regulatory review processes180181182 - The spread of COVID-19 could negatively impact the company's ability to access capital and the value of its common stock due to significant disruption of global financial markets183 Results of Operations This section provides a comparative analysis of the company's revenues, expenses, and net loss for Q1 2022 and 2021 Results of Operations Summary | Metric | 3 Months Ended March 31, 2022 | 3 Months Ended March 31, 2021 | Change (YoY) | | :----- | :------------------------------ | :------------------------------ | :----------- | | Revenues | $18,026 | $17,188 | +$838 | | Cost of sales | $1,460 | $625 | +$835 | | Gross profit | $16,566 | $16,563 | +$3 | | Operating expenses | $543,825 | $917,699 | -$373,874 | | Operating loss from continuing Operations | $(527,259) | $(901,136) | +$373,877 | | Other income (expense), net | $(75,650) | $37,401 | $(113,051) | | Loss from discontinued operations, net of tax | $(1,163) | $(66,967) | +$65,804 | | Net (loss) | $(604,072) | $(930,702) | +$326,630 | - Revenues from licensing fees increased by $838 (4.9%) year-over-year, primarily due to the Aikido License and Sublicense Agreement187 - Total operating expenses decreased by $373,874 (40.7%) year-over-year, mainly driven by a $475,322 decrease in professional fees, partially offset by a $121,677 increase in research and development costs189191 - Net loss available to common stockholders decreased by $1,730,627 (74%) year-over-year, primarily due to lower operating expenses and the absence of deemed dividends from preferred stock issuance in 2021198 Liquidity and Capital Resources This section analyzes the company's working capital, cash flows, and ability to meet obligations Liquidity and Capital Resources Summary | Metric | March 31, 2022 | December 31, 2021 | Change | Percentage Change | | :----- | :------------- | :---------------- | :----- | :---------------- | | Total current assets | $9,618,217 | $10,402,320 | $(784,103) | -8% | | Total current liabilities | $(292,748) | $(490,039) | $197,291 | -40% | | Working capital | $9,325,469 | $9,912,281 | $(586,812) | -6% | | Cash and cash equivalents | $9,067,836 | $9,837,001 | $(769,165) | -7.8% | - Net cash used in operating activities increased by $469,847 (147%) year-over-year, reaching $789,165 for the three months ended March 31, 2022201 - No cash was provided by financing activities in Q1 2022, a significant decrease compared to $3,796,468 in Q1 2021 from preferred stock sales203 - The company believes its current cash and cash equivalents balance of $9,067,836 is sufficient to meet its obligations for at least twelve months from the filing date204207 Off-Balance Sheet Arrangements The Company has no off-balance sheet arrangements - The Company has no off-balance sheet arrangements208 Critical Accounting Policies This section describes key accounting policies for revenue, stock-based compensation, and fair value - Revenue from license and royalty income is recognized when performance obligations are satisfied, with payments for future periods recorded as deferred revenue210 - Stock-based compensation is recognized over the vesting period based on the grant-date fair value of equity instruments, with forfeitures recognized as they occur212 - Fair value measurements for financial instruments are classified into Level 1, 2, or 3 based on input observability, with cash, prepaid expenses, and accounts payable approximating fair value due to their short-term maturity214216 New Accounting Pronouncements This section discusses the adoption and impact of new accounting pronouncements on financial statements - The Company adopted ASU 2020-06 (simplifying accounting for convertible instruments) and ASU 2021-04 (addressing equity-classified written call options) during the three months ended March 31, 2022222223 - Neither ASU 2020-06 nor ASU 2021-04 had a no material impact on the Company's condensed consolidated financial statements222223 Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Silo Pharma, Inc. is exempt from market risk disclosures - As a smaller reporting company, Silo Pharma, Inc. is exempt from providing quantitative and qualitative disclosures about market risk224 Item 4. Controls and Procedures Disclosure controls were ineffective as of March 31, 2022, due to material weaknesses in segregation of duties - Management concluded that disclosure controls and procedures were not effective as of March 31, 2022, due to material weaknesses225 - Identified material weaknesses include a lack of segregation of duties within accounting functions and inadequate system and manual controls, attributed to limited financial resources228 - There have been no changes in internal control over financial reporting that materially affected or are reasonably likely to materially affect internal control during the period227 PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is not involved in any material legal proceedings or aware of any significant pending actions - The Company is not currently a party to any material legal proceedings and is unaware of any pending or threatened legal actions that could materially adversely affect its business230 Item 1A. Risk Factors No material changes to risk factors have occurred since the Annual Report on Form 10-K for FY 2021 - No material changes in risk factors from those previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021231 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds On March 31, 2022, Series C preferred stock was converted into common stock, with no proceeds received - On March 31, 2022, 227 Series C Convertible preferred stock shares were converted into 758,334 common stock shares under Section 3(a)(9) and/or Rule 144, with no proceeds received by the company232 Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities during the reporting period - No defaults upon senior securities233 Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - Mine Safety Disclosures are not applicable to the Company234 Item 5. Other Information The company has no other information to report under this item - No other information to report235 Item 6. Exhibits This section lists all exhibits filed, including officer certifications and Inline XBRL documents - Exhibits include certifications from the Principal Executive Officer and Principal Financial Officer (31.1, 32.1) and various Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)239 SIGNATURES The report was signed on May 13, 2022, by Eric Weisblum as Chairman, CEO, and CFO - The report was signed on May 13, 2022, by Eric Weisblum, Chairman, Chief Executive Officer, and Chief Financial Officer243