Acurx Pharmaceuticals, Inc. 10-K

Item 9A. Controls and Procedures. Disclosure Controls and Procedures We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our management, including our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of December 31, 2021, the end of the period covered by this Annual Report. Based on such evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as of December 31, 2021 as a result of a material weakness in our internal control over financial reporting due to inadequate segregation of duties resulting from the size of our Company and our limited personnel. To remediate the inadequate segregation of duties, our management (i) has engaged a third-party specialist to review our current internal controls and to recommend design improvements given the limited number of employees and (ii) has hired a controller to remediate the segregation of duties issue, who will commence employment in April 2022. We can give no assurance that additional material weaknesses in our internal control over financial reporting will not be identified in the future. Our failure to implement and maintain effective internal control over financial reporting could result in errors in our financial statements that could result in a restatement of our financial statements and cause us to fail to meet our reporting obligations. Management’s Annual Report on Internal Control over Financial Reporting This Form 10-K does not include a report of management’s assessment regarding internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) or an attestation report of our independent registered public accounting firm due to a transition period established by rules of the SEC for newly public companies. Attestation Report of the Registered Public Accounting Firm This Form 10-K does not include an attestation report of our registered public accounting firm due to a transition period established by rules of the SEC for newly public companies. Additionally, our independent registered public accounting firm will not be required to opine on our internal control over financial reporting until we are no longer an emerging growth company. 66 Table of Contents Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the period covered by this filing that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. ​ 67 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance. The information required by this Item will be included in the 2022 Proxy Statement and is incorporated herein by reference. Item 11. Executive Compensation. The information required by this Item will be included in the 2022 Proxy Statement and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by this Item will be included in the 2022 Proxy Statement and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required by this Item will be included in the 2022 Proxy Statement and is incorporated herein by reference. Item 14. Principal Accounting Fees and Services. The information required by this Item will be included in the 2022 Proxy Statement and is incorporated herein by reference. ​ 68 Table of Contents PART IV Item 15. Exhibits, Financial Statement Schedules. (a) The financial statements filed as part of this Form 10-K are listed in the Index to Financial Statements. Certain schedules are omitted because they are not applicable, or not required, or because the required information is included in the financial statements or notes thereto. The Exhibits are listed in Item 15(b) below. (b) Exhibit Index. Exhibit Number Exhibit Description Filed Herewith Incorporated by Reference herein from Form or Schedule Filing Date SEC File/ Registration Number 3.1 ​ Certificate of Incorporation of Acurx Pharmaceuticals, Inc. ​ ​ ​ S-1 ​ 05/27/21 ​ 333-256516 3.2 ​ Bylaws of Acurx Pharmaceuticals, Inc. ​ ​ ​ S-1 ​ 05/27/21 ​ 333-256516 4.1 ​ Form of Common Stock Certificate. ​ ​ ​ S-1 ​ 05/27/21 ​ 333-256516 4.2 ​ Description of Securities. ​ X ​ ​ ​ ​ ​ ​ 10.1 ​ Form of Indemnification Agreement. ​ ​ ​ S-1 ​ 05/27/21 ​ 333-256516 10.2 ​ Form of Securities Purchase Agreement. ​ ​ ​ S-1 ​ 05/27/21 ​ 333-256516 10.3 ​ Form of Warrant. ​ ​ ​ S-1 ​ 05/27/21 ​ 333-256516 10.4 ​ Form of Common Stock Purchase Warrant. ​ ​ ​ S-1 ​ 05/27/21 ​ 333-256516 10.5 ​ Form of Investor Rights Agreement, by and between the Registrant and certain purchasers. ​ ​ ​ S-1 ​ 05/27/21 ​ 333-256516 10.6.1+ ​ Acurx Pharmaceuticals, Inc. 2021 Equity Incentive Plan ​ ​ ​ S-1 ​ 05/27/21 ​ 333-256516 10.6.2+ ​ Form of Stock Option Agreement under the 2021 Equity Incentive Plan. ​ ​ ​ S-8 ​ 07/19/21 ​ 333-258026 10.6.3+ ​ Form of Restricted Stock Agreement under the 2021 Equity Incentive Plan. ​ ​ ​ S-8 ​ 07/19/21 ​ 333-258026 10.6.4+ ​ Form of Recapitalization Exchange Option Agreement. ​ ​ ​ S-8 ​ 07/19/21 ​ 333-258026 10.7+ ​ Amended and Restated Employment Agreement, by and between Acurx Pharmaceuticals, Inc. and Robert J. DeLuccia, dated May 25, 2021. ​ ​ ​ S-1 ​ 05/27/21 ​ 333-256516 10.8+ ​ Amended and Restated Employment Agreement, by and between Acurx Pharmaceuticals, Inc. and David P. Luci, dated May 25, 2021. ​ ​ ​ S-1 ​ 05/27/21 ​ 333-256516 10.9+ ​ Amended and Restated Employment Agreement, by and between Acurx Pharmaceuticals, Inc. and Robert Shawah, dated May 25, 2021. ​ ​ ​ S-1 ​ 05/27/21 ​ 333-256516 69 Table of Contents Exhibit Number Exhibit Description Filed Herewith Incorporated by Reference herein from Form or Schedule Filing Date SEC File/ Registration Number 10.10 ​ Master Clinical Services Agreement, dated October 11, 2019, by and between Acurx Pharmaceuticals, Inc. and Syneos Health, LLC. ​ ​ ​ S-1 ​ 05/27/21 ​ 333-256516 10.11# ​ Asset Purchase Agreement, dated February 5, 2018, by and between Acurx Pharmaceuticals, Inc. and GLSynthesis Inc. ​ ​ ​ S-1 ​ 05/27/21 ​ 333-256516 21.1 ​ Subsidiaries ​ X ​ ​ ​ ​ ​ ​ 23.1 ​ Consent of CohnReznick LLP. ​ X ​ ​ ​ ​ ​ ​ 31.1 ​ Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. ​ X ​ ​ ​ ​ ​ ​ 31.2 ​ Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. ​ X ​ ​ ​ ​ ​ ​ 32.1 ​ Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ​ X ​ ​ ​ ​ ​ ​ 32.2 ​ Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ​ X ​ ​ ​ ​ ​ ​ 101.INS ​ Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document ​ X ​ ​ ​ ​ ​ ​ 101.SCH ​ Inline XBRL Taxonomy Extension Schema Document ​ X ​ ​ ​ ​ ​ ​ 101.CAL ​ Inline XBRL Taxonomy Extension Calculation Linkbase Document ​ X ​ ​ ​ ​ ​ ​ 101.DEF ​ Inline XBRL Taxonomy Extension Definition Linkbase Document ​ X ​ ​ ​ ​ ​ ​ 101.LAB ​ Inline XBRL Taxonomy Extension Labels Linkbase Document ​ X ​ ​ ​ ​ ​ ​ 101.PRE ​ Inline XBRL Taxonomy Extension Presentation Linkbase Document ​ X ​ ​ ​ ​ ​ ​ 104 ​ Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit) ​ X ​ ​ ​ ​ ​ ​ 70 Table of Contents # Certain confidential portions of this Exhibit were omitted by means of marking such portions with brackets (“[***]”) because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed. + Denotes management compensation plan or contract. Item 16. Form 10-K Summary. Not applicable. ​ ​ 71 Table of Contents ​ SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized . ​ ACURX PHARMACEUTICALS, INC. Date: March 16, 2022 By: /s/ David P. Luci ​ ​ David P. Luci ​ ​ President and Chief Executive Officer ​ Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. Signature Title Date ​ ​ ​ ​ ​ /s/ David P. Luci ​ President, Chief Executive Officer and Director ​ March 16, 2022 David P. Luci (Principal Executive Officer) ​ ​ ​ ​ ​ /s/ Robert G. Shawah ​ Chief Financial Officer ​ March 16, 2022 Robert G. Shawah ( Principal Accounting Officer and Principal Financial Officer ) ​ ​ ​ ​ ​ /s/ Robert J. DeLuccia ​ Executive Chairman ​ March 16, 2022 Robert J. DeLuccia ​ ​ ​ ​ ​ ​ ​ ​ /s/ Carl V. Sailer ​ Director ​ March 16, 2022 Carl V. Sailer ​ ​ ​ ​ ​ ​ ​ ​ /s/ Joseph C. Scodari ​ Director ​ March 16, 2022 Joseph C. Scodari ​ ​ ​ ​ ​ ​ ​ ​ /s/ Thomas Harrison ​ Director ​ March 16, 2022 Thomas Harrison ​ ​ ​ ​ ​ ​ ​ ​ /s/ Jack H. Dean ​ Director ​ March 16, 2022 Jack H. Dean ​ ​ ​ ​ ​ ​ ​ ​ /s/ James Donohue ​ Director ​ March 16, 2022 James Donohue ​ ​ ​ ​ ​ ​ ​ Table of Contents INDEX TO FINANCIAL STATEMENTS Years Ended December 31, 2021 and 2020 Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 596) ​ F-2 Balance Sheets ​ F-3 Statements of Operations ​ F-4 Statements of Changes in Shareholders’ and Members’ Equity ​ F-5 Statements of Cash Flows ​ F-6 Notes to the Financial Statements ​ F-7 ​ ​ ​ F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Acurx Pharmaceuticals, Inc. Opinion on the Financial Statements We have audited the accompanying balance sheets of Acurx Pharmaceuticals, Inc. (formerly Acurx Pharmaceuticals, LLC) (the “Company”) as of December 31, 2021 and 2020, and the related statements of operations, changes in shareholders’ and members’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020 and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. We have served as the Company’s auditor since 2018. /s/ CohnReznick LLP Parsippany, New Jersey March 16, 2022 ​ F-2 Table of Contents ACURX PHARMACEUTICALS, INC. BALANCE SHEETS AS OF DECEMBER 31, 2021 and 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ 2021 2020 ASSETS ​ ​ CURRENT ASSETS ​ ​ Cash ​ $ 12,958,846 ​ $ 3,175,411 Prepaid Expenses ​ 295,304 ​ 48,609 TOTAL ASSETS ​ $ 13,254,150 ​ $ 3,224,020 LIABILITIES AND SHAREHOLDERS’ AND MEMBERS’ EQUITY ​ ​ CURRENT LIABILITIES ​ ​ Accounts Payable and Accrued Expenses ​ $ 843,909 ​ $ 455,931 Paycheck Protection Program Loan ​ — ​ 16,625 TOTAL CURRENT LIABILITIES ​ 843,909 ​ 472,556 NONCURRENT LIABILITIES ​ ​ Paycheck Protection Program Loan ​ — ​ 49,878 TOTAL LIABILITIES ​ 843,909 ​ 522,434 COMMITMENTS AND CONTINGENCIES ​ ​ SHAREHOLDERS’ AND MEMBERS’ EQUITY ​ ​ Members’ Equity, Class A ​ — ​ 16,402,198 Members’ Equity, Class B ​ — ​ 100,000 Common Stock; $ .001 par value, 200,000,000 shares authorized, 10,215,792 shares issued and outstanding at December 31, 2021 ​ 10,216 ​ — Additional Paid-In Capital ​ 38,948,334 ​ — Accumulated Deficit ​ ( 26,548,309 ) ​ ( 13,800,612 ) ​ ​ ​ ​ ​ ​ TOTAL SHAREHOLDERS’ AND MEMBERS’ EQUITY ​ 12,410,241 ​ 2,701,586 TOTAL LIABILITIES AND SHAREHOLDERS’ AND MEMBERS’ EQUITY ​ $ 13,254,150 ​ $ 3,224,020 ​ See accompanying notes to the financial statements. ​ F-3 Table of Contents ACURX PHARMACEUTICALS, INC. STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 2021 AND 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 2020 OPERATING EXPENSES ​ ​ Research and Development ​ $ 2,030,177 ​ $ 2,202,979 General and Administrative ​ 10,784,023 ​ 2,397,059 TOTAL OPERATING EXPENSES ​ 12,814,200 ​ 4,600,038 Gain on Forgiveness of Paycheck Protection Program Loan ​ 66,503 ​ — NET LOSS ​ $ ( 12,747,697 ) ​ $ ( 4,600,038 ) LOSS PER SHARE ​ ​ Basic and diluted net loss per common share/units ​ $ ( 1.49 ) ​ $ ( 0.74 ) Weighted average common shares/units outstanding basic and diluted ​ 8,535,873 ​ 6,190,875 ​ See accompanying notes to the financial statements. ​ F-4 Table of Contents ACURX PHARMACEUTICALS, INC. STATEMENTS OF CHANGES IN SHAREHOLDERS’ AND MEMBERS’ EQUITY YEARS ENDED DECEMBER 31, 2021 AND 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Class B Membership ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Class A Membership Interests ​ Interests ​ Common Stock ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ Shareholders’ ​ Number of ​ ​ Number ​ ​ ​ ​ Paid-In Accumulated and Members’ ​ ​ Units ​ Amount ​ of Units ​ Amount ​ Shares ​ ​ Amount ​ ​ Capital ​ ​ Deficit ​ ​ Equity Balance at January 1, 2020 ​ 11,058,666 ​ $ 9,920,428 ​ 100,000 ​ $ 100,000 ​ — ​ $ — ​ $ — ​ $ ( 9,200,574 ) ​ $ 819,854 Private Placement Offerings, net of issuance costs of $ 51,409 ​ 1,421,629 ​ ​ 4,432,124 ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 4,432,124 Executive Compensation Settled with Membership Interests 312,680 ​ 781,700 — ​ — — ​ — ​ — ​ — ​ 781,700 Share-Based Compensation 553,419 ​ 695,833 — ​ — — ​ — ​ — ​ — ​ 695,833 Share-Based Payments to Vendors 147,413 ​ 572,113 — ​ — — ​ — ​ — ​ — ​ 572,113 Net Loss — ​ — — ​ — — ​ — ​ — ​ ( 4,600,038 ) ​ ( 4,600,038 ) Balance at December 31, 2020 13,493,807 ​ 16,402,198 100,000 ​ 100,000 — ​ — ​ — ​ ( 13,800,612 ) ​ 2,701,586 Executive Compensation Settled with Membership Interests 57,430 ​ 186,650 471,042 ​ 730,115 — ​ — ​ — ​ — ​ 916,765 Cancellation of Class B Issuance — ​ — ( 471,042 ) ​ — ​ ​ ​ — ​ — ​ — ​ — Share-Based Compensation 400,936 ​ 755,556 — ​ — — ​ — ​ 4,399,158 ​ — ​ 5,154,714 Share-Based Payments to Vendors 30,145 ​ 172,971 — ​ — 299,584 ​ 300 ​ 1,414,470 ​ — ​ 1,587,741 Corporate Conversion ( 13,982,318 ) ​ ( 17,517,375 ) ( 100,000 ) ​ ( 830,115 ) 7,041,208 ​ 7,041 ​ 18,340,449 ​ — ​ — Initial Public Offering and underwriter warrants, net of $ 2,452,868 cash issuance costs — ​ — — ​ — 2,875,000 ​ 2,875 ​ 14,794,257 ​ — ​ 14,797,132 Net Loss — ​ — — ​ — — ​ — ​ — ​ ( 12,747,697 ) ​ ( 12,747,697 ) Balance at December 31, 2021 — ​ $ — — ​ $ — 10,215,792 ​ $ 10,216 ​ $ 38,948,334 ​ $ ( 26,548,309 ) ​ $ 12,410,241 ​ See accompanying notes to the financial statements. ​ F-5 Table of Contents ​ ACURX PHARMACEUTICALS, INC. STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2021 AND 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ December 31, ​ 2021 2020 Cash Flow from Operating Activities: ​ ​ Net Loss ​ $ ( 12,747,697 ) ​ $ ( 4,600,038 ) Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: ​ ​ Share-Based Compensation ​ 5,154,714 ​ 695,833 Share-Based Payments to Vendors ​ 1,587,741 ​ 572,113 Executive Compensation Settled with Membership Interests ​ 916,765 ​ 781,700 Gain on Forgiveness of Paycheck Protection Program Loan ​ ( 66,503 ) ​ — (Increase) / Decrease in: ​ ​ Prepaid Expenses ​ ( 246,695 ) ​ ( 506 ) Accounts Payable and Accrued Expenses ​ ​ 387,978 ​ ​ ( 800,660 ) Net Cash Used in Operating Activities ​ ​ ( 5,013,697 ) ​ ​ ( 3,351,558 ) Cash Flow from Financing Activities: ​ ​ Proceeds from Paycheck Protection Program Loan ​ — ​ 66,503 Proceeds from Initial Public Offering, net of issuance costs ​ 14,797,132 ​ — Proceeds from Private Placement Offerings, net of issuance costs ​ ​ — ​ ​ 3,977,144 Net Cash Provided by Financing Activities ​ ​ 14,797,132 ​ ​ 4,043,647 Net Increase in Cash ​ 9,783,435 ​ 692,089 Cash at Beginning of Year ​ ​ 3,175,411 ​ ​ 2,483,322 Cash at End of Year ​ $ 12,958,846 ​ $ 3,175,411 SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES ​ ​ Warrants issued in connection with offerings ​ $ 618,000 ​ $ 23,177 ​ See accompanying notes to the financial statements. ​ F-6 Table of Contents ACURX PHARMACEUTICALS, INC. NOTES TO THE FINANCIAL STATEMENTS NOTE 1 – NATURE OF OPERATIONS Business: Acurx Pharmaceuticals, Inc., a Delaware corporation, formerly Acurx Pharmaceuticals, LLC (the “Company”) is a publicly held, clinical stage biopharmaceutical company formed in July 2017, with operations commencing in February 2018. The Company is focused on developing a novel class of antibiotics that address serious or life threatening bacterial infections. In March 2020, the World Health Organization declared the outbreak of COVID-19, a novel strain of coronavirus, a global pandemic. This outbreak caused major disruptions to businesses and markets worldwide as the virus continued to spread. The COVID-19 pandemic has disrupted, and the Company expects it will continue to disrupt, its operations. The extent of the effect on the Company’s operational and financial performance will depend on future developments, including the duration, spread and intensity of the pandemic, and governmental, regulatory and private sector responses, all of which are uncertain and difficult to predict. Although the Company is unable to estimate the financial effect of the pandemic, at this time, if the pandemic continues over a long period of time, it could have a material adverse effect on the Company’s business, results of operations, financial condition, and cash flows. The financial statements do not reflect any adjustments as a result of the pandemic. In February 2018, the Company purchased the active pharmaceutical ingredient, the intellectual property and other rights to an antibiotic product candidate known as GLS362E (renamed ACX-362E and now approved for non-proprietary name, ibezapolstat) (the “Asset”) from GLSynthesis, Inc. The Company paid $ 110,174 in cash, along with granting 100,000 Class B Membership Interests, profits interests as defined in the operating agreement, with an exercise price of $ 0.10 per share. The Company was also required to make certain milestone payments totaling $ 700,000 in aggregate if certain milestones are achieved, $ 50,000 of which has already been paid by the Company and royalty payments equal to 4 % of net sales for a period of time equal to the last to expire of any applicable patents, as defined in the asset purchase agreement. The purchase of the Asset has resulted in our lead antibiotic product candidate, ibezapolstat, which targets the treatment of CDI. The Company’s primary activities since inception aside from organizational activities have included performing research and development activities relating to the development of its two antibiotic candidates and raising funds through equity offerings including its initial public offering (“IPO”) consummated in June 2021. The Company has not generated any revenues since inception. The Company has experienced net losses and negative cash flows from operations since inception and expects these conditions to continue for the foreseeable future. The Company has needed to raise capital from sales of its securities to sustain operations. 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 December 31, 2021, the Company had a cash balance of approximately $ 13.0 million, which based on current estimates will be sufficient to meet our anticipated cash requirements for at least 12 months from the issuance of the financial statements for the year ended December 31, 2021. 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. Management plans to seek additional equity financing and grant funding, but cannot assure that such financing and funding will be available at acceptable terms, or at all. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. There can be no assurance that the Company’s research and development will be successfully completed or that any Company product candidate will be approved by the Food and Drug Administration (“FDA”) or any other worldwide regulatory authority or become commercially viable. The Company is subject to risks common to companies in the biopharmaceutical industry including, but not limited to, dependence on collaborative arrangements, development by the Company or its competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, and compliance with FDA and other governmental regulations and approval requirements. F-7 Table of Contents NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of financial statements in conformity with accounting standards generally accepted in the Unites 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. Actual results could differ from those estimates. Income Taxes The Company estimates an annual effective tax rate of 0 % as the Company incurred net losses for the year ended December 31, 2021 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. Based on the Company’s history of generating operating losses and its anticipation of operating losses for the foreseeable future, the Company has determined that it is more likely than not that the tax benefits from those net operating losses would not be realized and a full valuation allowance against all deferred tax assets has been recorded. Should the Company’s assessment change, tax benefits associated with the historic net operating loss carryforwards could be limited due to future ownership changes. Prior to the Company’s corporate conversion in June 2021, the Company was organized as a limited liability company. As such, the Company was not a tax paying entity for federal income tax purposes and, therefore, no income tax expense has been recorded in the financial statements for the year ended December 31, 2020. Income or losses of the Company was passed through to the members for inclusion in their respective income tax returns. Concentration of Credit Risk The Company maintains its cash balance in one financial institution. The balance is insured up to the maximum allowable by the Federal Deposit Insurance Corporation (“FDIC”). The Company has not experienced any losses in such accounts and does not believe it is exposed to any significant risk of loss on cash. At times, the cash balance may exceed the maximum insured limit of the FDIC. As of December 31, 2021, the Company had cash of approximately $ 13.0 million in U.S. bank accounts which was not fully insured by the FDIC. Guaranteed Payments to Members Prior to the corporate conversion, guaranteed payments to members of the Company that were designated to represent reasonable compensation for services rendered were accounted for as Company expenses rather than an allocation of the Company’s net income. Research and Development The Company expenses research and development costs when incurred. At times, the Company may make cash advances for future research and development services. These amounts are deferred and expensed in the period the service is provided. The Company incurred research and development expenses in the amount of $ 2,030,177 and $ 2,202,979 for the years ended December 31, 2021 and 2020, respectively. Share-Based Compensation The Company accounts for the cost of services performed by officers and directors received in exchange for an award of Company membership interests, common stock or stock options, based on the grant-date fair value of the award. The Company recognizes compensation expense based on the requisite service period. F-8 Table of Contents Compensation expense associated with stock option awards is recognized over the requisite service period based on the fair value of the option at the grant date determined based on the Black-Scholes option pricing model. Option valuation models require the input of highly subjective assumptions including the expected price volatility. The Company’s employee stock options have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can materially affect the fair value computation using the Black-Scholes option pricing model. 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 Share-Based Payments to Vendors The Company accounts for the cost of services performed by vendors in exchange for an award of Company membership interests, common stock, or stock options, based on the grant-date fair value of the award or the fair value of the services rendered; whichever is more readily determinable. Such fair value is measured as of the date the services or the date performance by the other party is complete. The Company recognizes the expense in the same period and in the same manner as if the Company had paid cash for the services. Major Vendor The Company had a major vendor that accounted for approximately 42 % and 40 % of the research and development expenditures for the years ended December 31, 2021 and 2020, respectively. The same vendor also accounted for approximately 5 % and 6 % of the total accounts payable and accrued expenses as of December 31, 2021 and 2020, respectively. The Company continues to maintain this vendor relationship and anticipates incurring significant expenses with this vendor over the next 12 months. The Company had an additional major vendor in 2021 that accounted for approximately 15 % of the research and development expenditures for the year ended December 31, 2021. The same vendor did not account for any portion of accounts payable and accrued expenses. 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 December 31, 2021 and 2020 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 December 31, 2020 Accrued compensation expenses ​ $ 508,343 ​ $ 317,068 Accrued research and development ​ 229,090 ​ 89,156 Accrued professional fees ​ 43,102 ​ 49,707 Other accounts payable and accrued expenses ​ 63,374 ​ — Total ​ $ 843,909 ​ $ 455,931 ​ ​ NOTE 4 – PAYCHECK PROTECTION PROGRAM LOAN In May 2020, the Company received a Paycheck Protection Program loan (“PPP Loan”) under the CARES Act, as administered by the U.S. Small Business Administration (”SBA”) in the amount of $ 66,503 . The Company did not provide any collateral or guarantees in connection with the PPP loan, nor did the Company pay any facility charge to obtain the PPP Loan. The note and agreement provided for customary events of default, including those relating to failure to make payment, bankruptcy, breaches of representations and material adverse effects. The Company was permitted to prepay the principal of the PPP Loan at any time without incurring any prepayment charges. The PPP Loan carried an annual interest rate of 0.98 % and matures two (2) years from issuance. The Company was not obligated to make any payments of principal or interest before the date on which the SBA remits the loan forgiveness amount to the lender or notifies the lender that no loan forgiveness is allowed. On April 13, 2021, the SBA authorized the full forgiveness of the PPP Loan. Accordingly, the Company reduced the full amount of the liability and recorded a gain in F-9 Table of Contents the amount of $ 66,503 on the forgiveness of the PPP loan in the statements of operations for the year ended December 31, 2021. NOTE 5 – EXECUTIVE COMPENSATION 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. The Company also employed a third executive on a part-time basis for $ 7,500 per month, of which a portion was payable with the issuance of Class A Membership Interests during 2018. The Company did no t issue any Class A Membership Interests to executives in 2019. 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 $ 104,000 as of December 31, 2020. In January 2020, the Company issued 312,680 Class A Membership Interests at $ 2.50 per unit, equal to the value of the most recent private placement, 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. The year-end bonus component was equal to 244,860 Class A Membership Interests. In January 2021, the Company issued 57,430 Class A Membership Interests at $ 3.25 per unit, equal to the value of the most recent private placement, to two of its executives to settle unpaid year-end bonus award and deferred compensation, which was approved by the board of directors. The year-end bonus component was equal to 38,353 Class A Membership Interests, which was included as accrued compensation. In January 2021, the Company also amended the employment agreements for the three executives. The board of directors also approved certain grants to members of management as a component of their 2020 year-end compensation, authorizing the issuance of 1,540,000 Class B Membership Interests to its three executives, as well as 75,000 Class B Membership Interests which were granted to non-employee management team members. The Class B Membership Interests are profits interests with a defined exercise price of $ 3.25 per interest, the Company’s most recent financing offering price. In March 2021, the Company along with its three executives and non-employee management team agreed voluntarily to cancel the aforementioned equity grants. The Company granted options to purchase 770,000 shares of the Company’s common stock in June 2021 to the three -member management team in replacement of the cancelled year-end grants described above. The Company is currently managed by three executives, in each case pursuant to new employment agreements effective June 29, 2021. NOTE 6 – ISSUANCE OF EQUITY INTERESTS The Company consummated two private placement equity offerings in 2018 in a total of four closings. These offerings were consummated at $ 1.00 per share and $ 1.50 per share, respectively, and both included 50 % warrant coverage. 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 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 . Each warrant, exercisable for 10 years from March 29, 2019, has an exercise price of $ 2.00 per Class A Membership Interest. On August 8, 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 F-10 Table of Contents price of $ 2.00 per unit. 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 1,248,750 units, comprised of 1,248,750 Class A Membership Interests and warrants to purchase up to 624,375 additional Class A Membership Interests for gross proceeds of $ 2,497,500 . Each warrant, exercisable for 10 years from August 8, 2019, has an exercise price of $ 2.00 per Class A Membership Interest. On October 18, 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 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 483,501 units, comprised of 483,501 Class A Membership Interests and warrants to purchase up to 241,751 additional Class A Membership Interests for gross proceeds of $ 967,000 . Each warrant, exercisable for 10 years from October 18, 2019, has an exercise price of $ 2.00 per Class A Membership Interest. On January 6, 2020, 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 $ 2.50 per unit. Each unit is comprised of one Class A Membership Interest and a warrant to purchase one -fourth of the total Class A Membership Interests purchased. The Company issued and sold an aggregate of 182,002 units, comprised of 182,002 Class A Membership Interests and warrants to purchase up to 45,501 additional Class A Membership Interests for gross proceeds of $ 455,005 . The proceeds were received in 2019 and were recorded as advanced receipts of equity subscriptions. Each warrant, exercisable for 10 years from January 6, 2020, has an exercise price of $ 2.50 per Class A Membership Interest. On July 20, 2020, the Company entered into a securities purchase agreement for the private placement of the Company’s Class A Membership Interests at a purchase price of $ 3.25 per unit. The Company issued and sold an aggregate of 533,900 Class A Membership Interests for gross proceeds of $ 1,735,175 . There were no warrants included in this private placement. On October 16, 2020, the Company entered into a securities purchase agreement for the private placement of the Company’s Class A Membership Interests at a purchase price of $ 3.25 per unit. The Company issued and sold an aggregate of 705,727 Class A Membership Interests for gross proceeds of $ 2,293,613 . There were no warrants included in this private placement. On June 23, 2021, Acurx Pharmaceuticals, LLC was converted into a corporation and renamed Acurx Pharmaceuticals, Inc. The Company’s certificate of incorporation authorizes 200,000,000 shares of common stock of which 10,215,792 were outstanding as of December 31, 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 cash 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 one-for two conversion ratio, resulting in 1,437,577 warrants to purchase common stock with a weighted average exercise price of $ 2.88 . In connection with the IPO, the Company issued 150,000 warrants to the underwriter. Each warrant is exercisable for 4.5 years from December 21, 2021 at an exercise price of $ 7.50 per share. The Company used the Black-Scholes model to calculate the value of the warrants with an estimated fair value of $ 618,000 . The inputs utilized in the calculation were as follows: four and a half-year term, 0.79 % risk-free rate, stock price at grant date of $ 6.26 , and a 94 % volatility utilizing comparable companies. This amount was recorded as both an increase to additional paid-in capital and as a non-cash issuance cost of the offering. F-11 Table of Contents NOTE 7 – SHARE-BASED COMPENSATION While the Company was a limited liability company in its pre-IPO phase of corporate development, the Company granted performance-based awards of restricted Class A Membership Interests to board members and corporate advisory council members in exchange for services. All of these awards of membership interests became fully vested upon consummation of the Company’s corporate conversion from Delaware limited liability company to a Delaware corporation immediately prior to the Company’s IPO, with the Company recognizing all previously unrecognized compensation expense. 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 with a weighted average of $ 2.14 per membership interest. Total share-based compensation associated with these awards has been recorded as general and administrative expenses in the amount of $ 755,556 and $ 695,833 for the years ended December 31, 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 12 months ended December 31, 2021: ​ ​ ​ ​ ​ ​ Class A ​ ​ Membership Interests ​ Converted to common stock at one-for-two ratio ​ ​ ​ Unvested at December 31, 2020 200,463 Vested ( 200,463 ) Unvested at December 31, 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 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 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 $ 2,019,325 for the year ended December 31, 2021 related to compensation expense for these options. In July 2021, the Company granted stock options to purchase a total of 1,550,000 shares of common stock to its three executives pursuant to their respective employment agreements, the independent directors, and one consultant, pursuant to the Plan. The options were issued at an exercise price of $ 6.18 , the grant date fair value, 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 $ 2,379,833 for the year ended December 31, 2021 related to compensation expense for these options. 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. Option valuation models require the input of highly subjective assumptions including the expected price volatility. The Company’s employee stock options have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can materially affect the fair value computation using the Black-Scholes option pricing model. 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. F-12 Table of Contents The Company determined the fair value of the option awards using the Black-Scholes option pricing model using the following weighted average assumptions: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, 2021 Expected term ​ 6.2 years ​ Volatility ​ 93 % Dividend yield ​ — % Risk-free interest rate ​ 1.09 % Weighted average grant date fair value ​ $ 4.72 ​ ​ A summary of the Company’s stock option activity is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended Weighted Average ​ December 31, 2021 Exercise Price Outstanding at the beginning of the period — ​ Granted 2,357,500 ​ $ 6.21 Vested ( 930,833 ) ​ $ 6.22 Exercised — ​ Forfeited — ​ Outstanding and expected to vest 1,426,667 ​ $ 6.20 ​ The total compensation expense not yet recognized as of December 31, 2021 was $ 6,726,367 . The weighted average vesting period for the unvested options is 2.50 years. The intrinsic value of the stock options as of December 31, 2021 was $ 0 , with a remaining weighted average contractual life of 9.5 years. The weighted average grant date fair value is $ 4.72 as of December 31, 2021. The Company records the impact of any forfeitures of options as they occur. NOTE 8 – SHARE-BASED PAYMENTS TO VENDORS 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 30,145 and 147,413 Class A Membership Interests for the years ended December 31, 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 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 $ 201,375 and $ 21,596 for the year ended December 31, 2021, respectively, and $ 338,802 and $ 233,311 for the year ended December 31, 2020, respectively. In October 2019, the Company granted a total of 150,000 restricted Class A Membership Interests to three consultants for investor relations consulting services performed in 2019 through October 2021. These Class A Membership Interests vested on the second anniversary of the grant date, and were subject to accelerated vesting provisions upon a change of control of the Company. The fair value of the Class A Membership Interests granted was equal to the value of the most recent private placement, $ 2.00 per Class A Membership Interest. The Company recognized the expense on a straight-line basis over the vesting period. The Company recorded general and administrative expenses of $ 125,000 and $ 150,000 for the years ended December 31, 2021 and 2020, respectively. The conversion adjusted shares of common stock were issued in October 2021. During 2020, the Company issued 10,077 warrants to an investment banker for services relating to the October 2020 private placement. Each warrant vested upon issuance, is exercisable for 10 years from the date of issuance and has an exercise price of $ 3.25 per Class A Membership Interest. The Company used the Black-Scholes model to calculate the fair value of the warrants. The inputs utilized in the calculation were as follows: 10 -year term, 0.32 % risk-free rate, stock price at grant date of $ 3.25 , and a 94 % volatility utilizing comparable companies. The Company reduced the amount of the respective equity issuance by $ 23,177 relating to the warrant issuance. F-13 Table of Contents In the second quarter of 2021, the Company entered into a number of agreements with vendors pursuant to which the Company will make grants of a total of 175,000 shares of common stock, cash payments in the amount of $ 343,500 , and 100,000 options which were included as a part of the July 2021 grant. These contracts have terms which range from six months to three years . The common stock was valued based on the grant date fair value and the options valued utilizing Black-Scholes option pricing model. 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 general, and administrative expense of $ 208,270 , based on the respective grant date fair values, for the year ended December 31, 2021. In October 2021, the Company entered into an agreement with a consultant to provide financial advisory services for a six-month term. Pursuant to the agreement, the Company will grant $ 150,000 of common stock over the term of service. The Company granted 13,889 shares of common stock at grant date fair value and recorded general and administrative expenses of $ 75,000 for the year ended December 31, 2021. NOTE 9 – INCOME TAXES The Company has $ 6.1 million of net operating loss carryforwards and $ 0.1 million of research tax credit carryforwards as of December 31, 2021. The net operating loss carryforwards are indefinite lived and research tax credit carryforwards will expire in 2041. Net operating loss and tax credit carryforwards may become subject to annual limitations in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50%, as defined by Sections 382 and 383 of the Internal Revenue Code as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The components of the net deferred income tax asset at December 31, 2021 are as follows: ​ ​ ​ ​ ​ 2021 Deferred tax assets: ​ Net operating loss carryforwards ​ $ 1,594,650 Share‑based compensation ​ 1,149,720 Research and development credit carryforwards ​ 105,881 Gross deferred tax assets ​ 2,850,251 Less valuation allowance ​ ( 2,850,251 ) Net deferred tax asset ​ $ — ​ In assessing the realizability of deferred tax assets, the Company considers whether it is more-likely-than-not that some portion or all the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences representing net future deductible amounts become deductible. After consideration of all the evidence, both positive and negative, the Company has recorded a full valuation allowance against their net deferred tax assets at December 31, 2021 because the Company has concluded that it is more-likely-than-not that these assets will not be realized. A reconciliation of income tax expense (benefit) at the statutory Federal income tax rate and income taxes as reflected in the financial statements for both years ended December 31, 2021 is as follows: ​ ​ ​ ​ Federal income tax expense at statutory rate 21.0 % State income tax, net of federal benefit 5.1 ​ Permanent differences — ​ Research and development tax credit 1.0 ​ Change in valuation allowance ( 27.1 ) ​ Effective income tax rate — % ​ F-14 Table of Contents The Company files income tax returns in the U.S. and the State of New York. The tax year 2021 is open and potentially subject to examination by the federal and state taxing authorities. The Company is currently not under examination by the Internal Revenue Service or any other jurisdictions for any tax years. To the extent the Company utilizes any tax attributes from a tax period that may otherwise be closed due to statute expiration, the Internal Revenue Service, state tax authorities, or other governing parties may still adjust the tax attributes upon their examination of the future period in which the attribute was utilized. There are no uncertain tax positions recorded for any federal or state positions. The Company’s policy is to record interest and penalties related to tax matters in income tax expense NOTE 10 – NET LOSS PER SHARE On June 23, 2021, the Company completed a corporate conversion from a limited liability company to a corporation. Accordingly, the outstanding Class A and Class B Membership Interests were converted to shares of common stock using a conversion ratio of one-half of one share of common stock for each Class A membership interest or Class B membership interest, resulting in the conversion of 14,082,318 Class A and Class B Membership Interests into 7,041,208 shares of common stock. Basic and diluted net loss per share of common stock for the 12 months ended December 31, 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, consisting of 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 the 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 11 – RELATED PARTY TRANSACTIONS 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 12 – COMMITMENTS AND CONTINGENCIES In conjunction with the Asset purchase in February 2018, the Company is required to make certain milestone payments related to the ongoing development of ACX-362E totaling $ 700,000 in the aggregate if certain milestones are achieved (which includes $ 50,000 already paid after the acquisition in February 2018). The Company is also obligated to make royalty payments equal to 4 % of net sales of ACX-362E for a period of time equal to the last to expire of any applicable patents, as defined in the purchase agreement. ​ ​ ​ F-15