What changed in this filing

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Item 1. Financial Statements

2021-11-12 compared with 2021-08-13 · 84 added, 62 removed, 289 unchanged (34% of the section changed)

2 unchanged sentences

CONDENSED INTERIM BALANCE SHEETS

September 30,

CURRENT ASSETS

5 unchanged sentences

TOTAL CURRENT LIABILITIES

NON CURRENT LIABILITIES

NONCURRENT LIABILITIES

Paycheck Protection Program Loan

5 unchanged sentences

Common Stock;

$ .001 par value, 200,000,000 shares authorized, 9,916,208 shares issued and outstanding at June 30, 2021

$ .001 par value, 200,000,000 shares authorized, 10,126,903 shares issued and outstanding at September 30, 2021

Additional Paid-In capital

8 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

OPERATING EXPENSES

6 unchanged sentences

( 10,120,611 )

( 3,507,007 )

LOSS PER SHARE

9 unchanged sentences

Paid-In Capital

Members’ and Shareholders’ Equity

Members' Equity

Balance at January 1,2020

12 unchanged sentences

( 11,393,035 )

Private Placement Offerings

Share-Based Compensation

Share-Based Payments to Vendors

( 1,314,546 )

Balance at September 30, 2020

( 12,707,581 )

Balance at January 1,2021

13 unchanged sentences

( 17,517,375 )

Initial Public Offering, net of $ 2,452,868 issuance costs

Initial Public Offering, net of $ 2,452,868 cash issuance costs

( 4,004,059 )

2 unchanged sentences

( 19,279,001 )

Share-Based Compensation

Share-Based Payments to Vendors

( 4,642,222 )

Balance at September 30, 2021

( 23,921,223 )

See accompanying notes to the condensed interim financial statements.

1 unchanged sentence

CONDENSED INTERIM STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

Cash Flow from Operating Activities:

11 unchanged sentences

( 3,513,497 )

( 2,391,804 )

Cash Flow from Financing Activities:

4 unchanged sentences

Net Cash Provided by Financing Activities

Net Increase (Decrease) In Cash

Net Increase in Cash

Cash at Beginning of Period

Cash at End of Period

SUPPLEMNTAL DISCLOSURE

NON CASH FINANCING ACTIVITY

Initial Public Offering Issuance Costs yet to be paid

See accompanying notes to the condensed interim financial statements.

21 unchanged sentences

On June 29, 2021, the Company completed the IPO issuing 2,875,000 shares of common stock at a price of $ 6.00 per share, with gross proceeds of approximately $ 17.3 million.

As of June 30, 2021, the Company had a cash balance of approximately $ 17.1 million.

As of September 30, 2021, the Company had a cash balance of approximately $ 14.5 million.

Management believes that the Company will continue to incur losses for the foreseeable future and will need additional resources to sustain its operations until it can achieve profitability and positive cash flows, if ever.

7 unchanged sentences

Basis of Presentation

The accompanying unaudited condensed interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) and in accordance with the rules and regulations of the United States Securities Exchange Commission for interim reporting.

The accompanying unaudited condensed interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in accordance with the rules and regulations of the United States Securities Exchange Commission for interim reporting.

In the opinion of management, these unaudited interim financial statements include all adjustments, consisting only of normal, recurring adjustments, necessary for a fair statement of the Company’s financial position, results of operations, and cash flows.

The unaudited interim results of operations are not necessarily indicative of the results that may occur for the full fiscal year.

The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S.

The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP.

Management believes that the disclosures provided herein are adequate when these unaudited interim financial statements are read in conjunction with the audited financial statements and notes thereto as of December 31, 2020.

Use of Estimates

The preparation of financial statements in conformity with accounting standards generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period.

Actual results could differ from those estimates.

Federal Income Taxes

The Company estimates an annual effective tax rate of 0 % as the Company incurred losses for the six months ended June 30, 2021 and is forecasting additional losses through year-end, resulting in an estimated net loss for both financial statement and tax purposes.

The Company estimates an annual effective tax rate of 0 % as the Company incurred losses for the nine months ended September 30, 2021 and is forecasting additional losses through year-end, resulting in an estimated net loss for both financial statement and tax purposes.

Therefore, no current federal or state income tax expense has been recorded in the financial statements.

9 unchanged sentences

At times, the cash balance may exceed the maximum insured limit of the FDIC.

As of June 30, 2021, the Company had cash of $ 17.1 million in U.S.

As of September 30, 2021, the Company had cash of $ 14.5 million in U.S.

bank accounts which were not fully insured by the FDIC.

17 unchanged sentences

Foreign Currency Transactions

The financial statements are presented in in U.S.

The financial statements are presented in U.S.

dollars (“USD”), the reporting currency of the Company.

3 unchanged sentences

Nonmonetary assets and liabilities are translated at appropriate historical rates.

The Company had a major vendor that accounted for approximately 49 % of the research and development expenditures for the three months ended June 30, 2020, and 1 % and 29 % for the six-month period ended June 30, 2021 and 2020, respectively.

The same vendor also accounted for approximately 6 % of the total accounts payable and accrued expenses at December 31, 2020.

Although there has been a pause in activity recently, the Company has maintained this vendor relationship and anticipates incurring significant expenses with this vendor over the next 12 months.

The Company had a major vendor that accounted for approximately 52 % and 59 % of the research and development expenditures for the three months ended September 30,2021 and 2020, and 45 % and 40 % for the nine months ended September 30, 2021 and 2020, respectively.

The same vendor also accounted for approximately 11 % and 6 % of the total accounts payable and accrued expenses at September 30, 2021, and December 31, 2020, respectively.

The Company continues to maintain this vendor relationship and anticipates incurring significant expenses with this vendor over the next 12 months.

NOTE 3 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses as of June 30, 2021 and December 31, 2020 were as follows:

June 30, 2021

Accounts payable and accrued expenses as of September 30, 2021 and December 31, 2020 were as follows:

September 30, 2021

December 31, 2020

12 unchanged sentences

NOTE 5 – EXECUTIVE COMPENSATION

The Company’s co-founders and original two executives received compensation pursuant to employment agreements effective commencing January 2018 (the “Original Agreements”).

The Company’s co-founders and original two executives received compensation pursuant to employment agreements effective January 2018 (the “Original Agreements”).

The Original Agreements stipulated that the executives would receive a base salary of $ 277,000 per annum, of which a portion was payable with the issuance of Class A Membership Interests of the Company at the most recent offering price when the service was rendered.

2 unchanged sentences

In 2019, the three executives executed waiver letters, deferring any unpaid compensation per their Original Agreements until the later to occur of (1) the date upon which the Company has raised $ 2.5 million from equity/debt offerings and/or grants equal to $ 2.5 million, and (2) January 15, 2020.

Accrued deferred compensation per their Original Agreements was recorded in the amount of $ 0 and $ 104,000 as of June 30, 2021 and December 31, 2020, respectively.

Accrued deferred compensation per their Original Agreements was recorded in the amount of $ 0 and $ 104,000 as of September 30, 2021 and December 31, 2020, respectively.

In January 2020, the Company issued 312,680 Class A Membership Interests at $ 2.50 per unit to its three executives to settle unpaid year-end compensation for 2019 and a year-end bonus award, which was approved by the board of directors.

8 unchanged sentences

The Company is currently managed by three executives, in each case pursuant to new employment agreements effective June 29, 2021.

ACURX PHARMACEUTICALS, INC

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

NOTE 6 – ISSUANCE OF EQUITY INTERESTS

2 unchanged sentences

Thereafter, on March 29, 2019, the Company entered into a securities purchase agreement for the private placement of the Company’s Class A Membership Interests and warrants to purchase its Class A Membership Interests, at a purchase price of $ 2.00 per unit.

Each unit is comprised of

ACURX PHARMACEUTICALS, INC

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

one Class A Membership Interest and a warrant to purchase one -half of the total Class A Membership Interests purchased.

Each unit is comprised of one Class A Membership Interest and a warrant to purchase one -half of the total Class A Membership Interests purchased.

The Company issued and sold an aggregate of 277,000 units, comprised of 277,000 Class A Membership Interests and warrants to purchase up to 138,500 additional Class A Membership Interests for gross proceeds of $ 554,000 .

20 unchanged sentences

On June 23, 2021, Acurx Pharmaceuticals, LLC was converted into a corporation and renamed Acurx Pharmaceuticals, Inc.

The Company’s certificate of incorporation authorized 200,000,000 common shares of which 9,916,208 were outstanding as of June 30, 2021.

On June 29, 2021, the Company completed an IPO issuing 2,875,000 shares of common stock at a price of $ 6 per share, resulting in net proceeds of approximately $ 14.8 million, with issuance costs of approximately $ 2.4 million.

The outstanding Class A and Class B Membership Interests were converted to shares of common stock using a ratio of 1 for 2 of the Membership Interests outstanding, resulting in the conversion of 14,082,318 Class A and Class B Membership Interests into 7,041,208 shares of common stock.

The Company’s certificate of incorporation authorizes 200,000,000 shares of common stock of which 10,126,903 were outstanding as of September 30, 2021.

On June 29, 2021, the Company completed an IPO issuing 2,875,000 shares of common stock at a price of $ 6.00 per share, resulting in net proceeds of approximately $ 14.8 million, with cash issuance costs of approximately $ 2.4 million.

The outstanding Class A and Class B Membership Interests were converted to shares of common stock pursuant to a conversion ratio of one-for-two of the Membership Interests outstanding, resulting in the conversion of 14,082,318 Class A and Class B Membership Interests into 7,041,208 shares of common stock.

Warrants to purchase Class A Membership Interests were converted to warrants to purchase common stock at the same ratio, resulting in 1,437,577 warrants to purchase common stock.

5 unchanged sentences

The fair value of the membership interests granted during 2020 and 2019 was equal to the per-membership interest value of the most recent private placement ($ 3.25 per membership interest and $ 2.50 per membership interest, respectively, with a weighted average of $ 2.14 per membership interest).

Total share-based compensation expense has been recorded in the amount of $ 563,889 and $ 166,666 for the three months ended June 30, 2021 and 2020, respectively, and $ 755,556 and $ 333,333 for the six months ended June 30, 2021 and 2020, respectively.

The following table summarizes the unvested Class A Membership Interests converted to common stock at a 1 for 2 ratio, and associated activity for the six months ended June 30, 2021:

Total share-based compensation expense associated with these awards has been recorded in the amount of $ 0 and $ 175,000 for the three months ended September 30, 2021 and 2020, respectively, and $ 755,556 and $ 508,333 for the nine months ended September 30, 2021 and 2020, respectively.

The following table summarizes the unvested Class A Membership Interests converted to common stock pursuant to a conversion ratio of one-for-two, and associated activity for the nine months ended September 30, 2021:

Membership Interests

Converted to common stock 1 for 2 ratio

Converted to common stock at one-for-two ratio

Unvested at December 31, 2020

Unvested at June 30, 2021

Unvested at September 30, 2021

In April 2021, the board of directors approved the creation of the 2021 Equity Incentive Plan (the “Plan”).

The Plan became effective as of the completion of the corporate conversion.

The Plan reserves an aggregate of 2,000,000 common shares, subject to adjustments as provided in the Plan.

The Plan currently reserves an aggregate of 2,000,000 shares of common stock, subject to adjustments as provided in the Plan, of which 239,305 are currently still available for issuance.

The purpose of the Plan is to attract, retain and incentivize directors, officers, employees, and consultants.

In June 2021, the Company granted stock options to purchase 807,500 common shares, to replace the Class B Membership Interests that were cancelled in March 2021.

In June 2021, the Company granted stock options to purchase a total of 807,500 shares of common stock to its three executives and three non-employee management team members, to replace the Class B Membership Interests that were cancelled in March 2021.

The options were issued at an exercise price of $ 6.26 , with the employee options vesting 40 % upon issuance and the balance over 36 months, and the non-employee options vesting at grant date.

The Company recorded general and administrative expense of $ 181,720 and $ 1,837,605 for the three and nine months ended September 30, 2021.

In July 2021, the Company granted stock options to purchase a total 1,550,000 to its three executives pursuant to their respective employment agreements, the independent directors, and a consultants, all pursuant to the Plan.

The options were issued at an exercise price of $ 6.18 , with one-quarter of the executive’s options vesting upon issuance and the balance over 36 months, and the options granted to the directors and consultants vesting over 36 months.

The Company recorded general and administrative expenses of $ 1,888,917 for the three and nine months ended September 30, 2021, respectively.

Compensation expense associated with these awards is recognized over the vesting period based on the fair value of the option at the grant date determined based on the Black-Scholes model.

2 unchanged sentences

Because there is no public market for the Company’s stock options and very little historical experience with the Company’s stock, similar public companies were used for the comparison of volatility and the dividend yield.

The risk-free rate of return was derived from U.S Treasury notes with comparable maturities.

The Company recorded general and administrative expense of $ 1,655,885 for the three and six months ended June 30, 2021.

The risk-free rate of return was derived from U.S.

Treasury notes with comparable maturities

ACURX PHARMACEUTICALS, INC

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

The Company determined the fair value of the option awards using the Black-Scholes option pricing model using the following weighted average assumptions:

Three Months Ended

June 30, 2021

Nine Months Ended

September 30, 2021

Expected term

2 unchanged sentences

Weighted average grant date fair value

ACURX PHARMACEUTICALS, INC

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

A summary of the Company’s stock option activity is as follows:

Three Months Ended

Nine Months Ended

Weighted Average

June 30, 2021

Excersice Price

September 30, 2021

Exercise Price

Outstanding at the beginning of the period

Outstanding and expected to vest

The total compensation expense not yet recognized as of June 30, 2021 was $ 2,180,640 .

The total compensation expense not yet recognized as of September 30, 2021 was $ 7,399,003 .

The weighted average vesting period for the unvested options is 2.75 years.

The intrinsic value of the of the stock options as of June 30, 2021 was $ 0 , with a weighted average contractual life of 10 years and an exercise price of $ 6.26 .

The intrinsic value of the stock options as of September 30, 2021 was $ 0 , with a remaining weighted average contractual life of 9.75 years.

The weighted average grant date fair value is $ 4.72 as of September 30, 2021.

The Company records the impact of any forfeitures of options as they occur.

1 unchanged sentence

While the Company was a limited liability company in its pre-IPO phase of corporate development, the Company granted Class A Membership Interests to certain vendors in the ordinary course of business in exchange for consulting services relating to research and development activities and investor relations.

The Company granted 0 and 49,438 Class A Membership Interests for the three months ended June 30, 2021 and 2020, respectively, and 30,145 and 106,878 Class A Membership Interests for the six months ended June 30, 2021 and 2020, respectively.

The Company granted 0 and 28,967 Class A Membership Interests for the three months ended September 30, 2021 and 2020, respectively, and 30,145 and 135,845 Class A Membership Interests for the nine months ended September 30, 2021 and 2020, respectively.

The fair value of the Class A Membership Interests granted was equal to the value of the most recent private placement, the fair value at grant date.

The Company recognized the expense in the same period and in the same manner as if the Company had paid cash for the services.

The Company recorded general and administrative expenses and research and development expenses for vendor equity grants in the amounts of $ 37,500 and $ 0 for the three months ended June 30, 2021 and $ 100,000 and $ 61,095 for the three months ended June 30, 2020, respectively, $ 151,375 and $ 21,596 for the six months ended June 30, 2021 and $ 200,000 and $ 142,196 for the six months ended June 30, 2020.

The Company recorded general and administrative expenses and research and development expenses for vendor equity grants in the amounts of $ 37,500 and $ 0 for the three months ended September 30, 2021 and $ 78,125 and $ 53,520 for the three months ended September 30, 2020, respectively;

$ 188,875 and $ 21,596 for the nine months ended September 30, 2021 and $ 278,000 and $ 195,716 for the nine months ended September 30, 2020.

In October 2019, the Company granted a total of 150,000 restricted Class A Membership Interests to three consultants for investor related consulting services performed in 2019 and for services which are ongoing.

2 unchanged sentences

The Company is recognizing the expense on a straight-line basis over the vesting period.

The Company recorded general and administrative expenses of $ 37,500 for each of the three months ended June 30, 2021 and 2020, and $ 75,000 for each of the six months ended June 30, 2021 and 2020 with an unrecognized expense of $ 50,000 at June 30, 2021.

The Company recorded general and administrative expenses of $ 37,500 for each of the three months ended September 30, 2021 and 2020, and $ 112,500 for each of the nine months ended September 30, 2021 and 2020 with an unrecognized expense of $ 12,500 at September 30, 2021.

During 2020, the Company issued 10,077 warrants to an investment banker for services relating to the October 2020 private placement.

4 unchanged sentences

The Company reduced the proceeds of the respective equity issuance by $ 23,177 relating to the warrant issuance.

In the second quarter of 2021, the Company entered into a number of agreements with vendors pursuant to which the Company will make future grants of a total of 175,000 shares of common stock, 100,000 options and included cash payments in the amount of $ 343,500 .

These contracts have terms which range from six months to three years .

The cash payments will be expensed over the service period and the equity component expensed consistent with the contractual vesting.

ACURX PHARMACEUTICALS, INC

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

These contracts have terms which range from six months to three years .

The cash payments will be expensed over the service period and the equity component expensed consistent with the contractual vesting.

These shares and options were granted in the third quarter pursuant to the Plan.

In the third quarter of 2021, the Company granted vendors a total of 35,695 shares of common stock pursuant to the Plan.

The Company recorded selling, general, and administrative expense of $ 208,270 for the nine months ended September 30, 2021.

NOTE 9 – NET LOSS PER SHARE

Basic and diluted net loss per common share for the three months and six months ended June 30, 2021 was determined by dividing net loss by the weighted average common shares outstanding during the period.

The Company’s potentially dilutive shares, which include 75,000 unvested common shares, and 1,588,477 warrants, and 807,500 stock options, have not been included in the computation of diluted net loss per share for all periods as the result would be antidilutive.

The effects of this corporate conversion on the Company’s weighted average common shares outstanding and net loss per share have been reflected for all periods presented retroactively.

Basic and diluted net loss per common share for the three months and nine months ended September 30, 2021 was determined by dividing net loss by the weighted average shares of common stock outstanding during the period.

The Company’s potentially dilutive shares, which include 75,000 unvested shares of common stock, and 1,588,477 warrants, and 2,357,500 stock options, have not been included in the computation of diluted net loss per share for all periods as the result would be antidilutive.

The effects of this corporate conversion on the Company’s weighted average shares of common stock outstanding and net loss per share have been reflected for all periods presented retroactively.

NOTE 10 – RELATED PARTY TRANSACTIONS

During 2020, the Company engaged a member of the Board of Directors to provide administrative services for a 12-month period for a total of $ 15,000 .

The Company paid and expensed $ 0 for these services for the three and six months ended June 30, 2021 and 2020, respectively, and will expense the balance of $ 7,500 during 2021 consistent with the services provided per the agreement.

During 2020, the Company engaged a former member of the Board of Directors to provide administrative services for a 12-month period for a total of $ 15,000 , $ 7,500 of which was expensed in 2020.

The Company paid and expensed $ 7,500 for these services during the third quarter of 2021, representing the balance of the services per the agreement.

NOTE 11 – RECENT ACCOUNTING PRONOUNCEMENTS

11 unchanged sentences

NOTE 13 – SUBSEQUENT EVENTS

In July 2021, the Company granted its three executives a total of 1,200,000 stock options in accordance with their employment agreements, as well as 50,000 stock options to each of the Company’s five independent board members.

The options have vesting terms over a 36 month period.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements