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Item 9A. Controls and Procedures

2024-03-15 compared with 2023-03-15 · 444 added, 162 removed, 509 unchanged (54% of the section changed)

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As required by Rules 13a-15(e) and 15d-15(e) of the Exchange Act, our management, including our principal executive officer and our principal financial officer, conducted an evaluation as of the end of the period covered by this Form 10-K of the effectiveness of the design and operation of our disclosure controls and procedures.

In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by this Form 10-K.

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This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm due to an exemption established by the JOBS Act for “emerging growth 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.

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.

Changes in Internal Control Over Financial Reporting

As previously reported, management recognized that the Company had material weaknesses in its internal control over financial reporting as of December 31, 2021.

We identified a material weakness as it relates to a lack of adequate segregation of accounting functions.

To remediate the inadequate segregation of duties, our management (i) engaged a third-party specialist to review our current internal controls and to recommend design improvements given the limited number of employees, (ii) hired a controller to remediate the segregation of duties issue, who commenced employment in April 2022 and (iii) implemented a quarterly financial statement close process that includes formal reviews of financial statement account balances and journal entries.

Accordingly, management believes it has remediated the material weakness related to inadequate segregation of duties.

Except as noted above, there were no additional changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) identified in connection with the evaluation of such internal control that occurred during the fourth quarter of our last fiscal year that has materially affected, or is reasonably likely to materially affect, our 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) identified in connection with the evaluation of such internal control that occurred during the fourth quarter of our last fiscal year that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Other Information.

N o n e of our directors or officers have adopted, modified, or terminated any trading plans under Rule10b5-1 of the Exchange Act or any similar arrangements during the fourth quarter of 2023.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

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Directors, Executive Officers and Corporate Governance.

Set forth below are the names of our directors and officers and each of their principal occupations and employers, as applicable.

Additional information required by this Item will be included in the 2023 Proxy Statement and is incorporated herein by reference.

Management and Corporate Governance

Our Board of Directors

Our bylaws (the “Bylaws”) and our certificate of incorporation (the “Certificate of Incorporation”), provide that our business is to be managed by or under the direction of our board of directors.

Our board of directors is divided into three classes for purposes of election.

One class is elected at each annual meeting of stockholders to serve for a three-year term.

Our board of directors currently consists of seven (7) members, classified into three (3) classes as follows:

DeLuccia, Mr.

Scodari and Mr.

James Donohue constitute Class III, with a term ending at the 2024 annual meeting;

Sailer and Mr.

Thomas Harrison constitute Class I, with a term ending at the 2025 annual meeting;

Dean constitute Class II, with a term ending at the 2026 annual meeting.

The following table provides information regarding our directors as of March 15, 2024:

Position with the Company

President and Chief Executive Officer, Director

Executive Chairman, Director

Thomas Harrison

James Donohue

Our board of directors has reviewed the materiality of any relationship that each of our directors has with us, either directly or indirectly.

Based upon this review, our Board has determined that the following members of our board of directors are “independent directors” as defined by The Nasdaq Stock Market:

Thomas Harrison, Mr.

Sailer and Mr.

James Donohue.

There are no family relationships among any of our directors or executive officers.

Set forth below are the names of our directors and each of their principal occupations and employers, as applicable.

Luci — President and Chief Executive Officer, Director

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Luci began his career with Ernst & Whinney LLP (now Ernst &Young LLP) in New York as a certified public accountant working in the Healthcare Practice Group.

He later practiced corporate law at Paul Hastings LLP in New York, where his practice encompassed all aspects of public and private mergers and acquisitions, corporate finance, restructurings and private equity transactions, with a core focus in the healthcare industry.

He later practiced corporate law at Paul Hastings LLP in New York, where his practice

encompassed all aspects of public and private mergers and acquisitions, corporate finance, restructurings and private equity transactions, with a core focus in the healthcare industry.

Luci graduated from Bucknell University with a degree as a Bachelor of Science in Business Administration with a concentration in Accounting and graduated from Albany Law School of Union University where he served as Managing Editor of the Journal of Science & Technology.

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Luci was selected to serve on our board of directors because of his extensive experience in the pharmaceutical industry.

DeLuccia — Executive Chairman

Luci also serves as Chairman of Digital Prime Technologies, a non-public technology-based company.

DeLuccia — Executive Chairman, Director

DeLuccia is our co-founder and Executive Chairman and has served as Director since February 2018.

DeLuccia previously served as our Managing Partner from February 2018 until June 2021.

February 2018.

Previously, Mr.

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With over 5000 worldwide clients, the DAS division under Mr.

Harrison had annual revenues of over $6.0 billion and became the largest business unit within Omnicom Group.

Harrison had annual revenues of over $6.0

billion and became the largest business unit within Omnicom Group.

Harrison’s leadership, the DAS division grew from Omnicom’s smallest to its largest division and accounted for over 50% of Omnicom’s total revenues.

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Harrison is focused on contributing his expertise to this dynamic industry as it continues to unfold.

Harrison is a member of the Executive Committee of the Montefiore Health System and currently sits on the board of Fifth Street Asset Management (2014 – Present) where he serves as Lead Independent Director and Chairman of the Audit Committee.

Harrison is a member of the Executive Committee of the Montefiore Health System.

He also serves on the board of Madison Logic, a digital business to business agency (2017 – Present).

Most recently, Mr.

Harrison was appointed to the board of MainStem, a cannabis-related supply company and also ACTV8me, a digital advertising attribution company.

Harrison was appointed to the board of MainStem, a cannabis-related supply company, New Frontier Data, a private market research company (2022 – Present), and also ACTV8me (2019 – Present), a digital advertising attribution company.

Harrison is a past board member at ePocrates, a publicly traded healthcare information company, where he served from 2006 until its acquisition in 2013 and he has also served as a board member for The Morgans Hotel Group (2006 – 2013).

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Scodari began his career in 1974 in sales for Winthrop Laboratories, Division of Sterling Drug.

He progressed through various management positions, eventually leading the Diagnostic Imaging Division for Winthrop and later Strategic Marketing at the corporate level for the Imaging business.

He progressed through various management positions, eventually leading the Diagnostic

Imaging Division for Winthrop and later Strategic Marketing at the corporate level for the Imaging business.

Scodari joined Rorer Pharmaceuticals (shortly thereafter, Rhône-Poulenc Rorer) in 1989 as Vice President of Marketing and Business Development.

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From 1972 to 1979, Dr.

Dean was in the Department

of Immunology at Litton Bionetics (Department Director from 1975 to 1979) conducting research in tumor immunology.

Dean was in the Department of Immunology at Litton Bionetics (Department Director from 1975 to 1979) conducting research in tumor immunology.

Dean holds a Bachelor of Science in microbiology and a Master of Science in medical microbiology from California State University at Long Beach.

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CRAI), a leading global consulting firm specializing in economic, financial, and management consulting services, since April 2004.

Donohue has nearly 30 years of experience in valuation, damages, and forensic accounting.

Donohue has more than 30 years of experience in valuation, damages, and forensic accounting.

Donohue is a Certified Public Accountant (CPA) in Maryland and has a Bachelor of Science degree in Accountancy from Villanova University.

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Donohue was selected to serve on our board of directors because of his expertise in financial accounting.

Committees of our Board of Directors and Meetings

Meeting Attendance

During the fiscal year ended December 31, 2023, there were nine meetings of our board of directors, and the various committees of our board of directors met a total of five times.

No director attended fewer than 75% of the total number of meetings of our board of directors and of committees of our board of directors on which he or she served during the

fiscal year ended December 31, 2023.

Our board of directors has adopted a policy under which each member of our board of directors makes every effort to attend each annual meeting of our stockholders.

Audit Committee

Our Audit Committee met four times during the year ended December 31, 2023.

This committee currently has three members, James Donohue (Chair), Joseph C.

Scodari and Thomas Harrison.

Our Audit Committee’s role and responsibilities are set forth in the Audit Committee’s written charter and include the authority to retain and terminate the services of our independent registered public accounting firm.

In addition, the Audit Committee reviews annual financial statements, considers matters relating to accounting policy and internal controls and reviews the scope of annual audits.

All members of the Audit Committee satisfy the current independence standards promulgated by the SEC and by The Nasdaq Stock Market, as such standards apply specifically to members of audit committees.

Our board of directors has determined that each of James Donohue, Joseph C.

Scodari and Thomas Harrison is an “audit committee financial expert,” as the SEC has defined that term in Item 407 of Regulation S-K.

A copy of the Audit Committee’s written charter is publicly available on our website at www.acurxpharma.com.

Compensation Committee

Our Compensation Committee met one time during the year ended December 31, 2023.

This committee currently has three members, Joseph C.

Scodari (Chair), Thomas Harrison and Carl V.

Our Compensation Committee’s role and responsibilities are set forth in the Compensation Committee’s written charter and includes reviewing, approving and making recommendations regarding our compensation policies, practices and procedures to ensure that legal and fiduciary responsibilities of our board of directors are carried out and that such policies, practices and procedures contribute to our success.

Our Compensation Committee also administers our 2021 Equity Incentive Plan.

The Compensation Committee is responsible for the determination of the compensation of our chief executive officer and shall conduct its decision making process with respect to that issue without the chief executive officer present.

All members of the Compensation Committee qualify as independent under the definition promulgated by The Nasdaq Stock Market.

Our Compensation Committee has adopted processes and procedures for determining executive and director compensation.

Generally, our Compensation Committee evaluates and approves our compensation practices for the current year and determines compensation levels.

The Compensation Committee annually evaluates the Chief Executive Officer’s performance in light of relevant corporate goals and objectives, and approves, or recommends to the board of directors for approval, the Chief Executive Officer’s compensation.

For executives other than the Chief Executive Officer, our Compensation Committee annually reviews and approves, or recommends to the board of directors for approval, the compensation of such executive officers.

Additionally, our Compensation Committee annually reviews and approves, or recommends to the board of directors for approval, the compensation of our directors, including with respect to any equity-based plans.

The enumerated processes and procedures of our Compensation Committee are included in our Compensation Committee’s written charter, which is publicly available on our website at www.acurxpharma.com.

The Compensation Committee’s independent compensation consultant during fiscal year 2023 was Pearl Meyer & Partners, LLC (“Pearl Meyer”).

Pearl Meyer was engaged by, and reported directly to, the Compensation Committee, which has the sole authority to hire or fire Pearl Meyer and to approve fee arrangements for work performed.

Pearl Meyer assisted the Compensation Committee in fulfilling its responsibilities under its charter, including advising on proposed compensation packages for executive officers, compensation program design and market practices generally.

The Compensation Committee has authorized Pearl Meyer to interact with management on behalf of the Compensation Committee, as needed in connection with advising the Compensation Committee, and Pearl Meyer is included in discussions with management and, when applicable, the Compensation Committee’s outside legal counsel on matters being brought to the Compensation Committee for consideration.

The Compensation Committee consulted with Pearl Meyer in connection with its evaluation of 2023 year-end compensation.

A copy of the Compensation Committee’s written charter is publicly available on our website at www.acurxpharma.com.

Director Nominations

We do not have a standing nominating committee.

In accordance with Rule 5605(e)(2) of the Nasdaq rules, a majority of the independent directors may recommend a director nominee for selection by the board of directors.

The board of directors believes that the independent directors can satisfactorily carry out the responsibility of properly selecting or approving director nominees without the formation of a standing nominating committee.

As there is no standing nominating committee, we do not have a nominating committee charter in place.

The board of directors will also consider director candidates recommended for nomination by our stockholders during such times as they are seeking proposed nominees to stand for election at the next annual meeting of stockholders (or, if applicable, a special meeting of stockholders).

We have not formally established any specific, minimum qualifications that must be met or skills that are necessary for directors to possess.

In general, in identifying and evaluating nominees for director, the board of directors considers educational background, diversity of professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom and the ability to represent the best interests of our stockholders.

Board Leadership Structure

The positions of our executive chairman of the board and chief executive officer are separated, with Mr.

Luci serving as our Chief Executive Officer and Mr.

DeLuccia serving as the executive chairman of our board of directors.

Separating these positions allows Mr.

Luci, as our Chief Executive Officer, to focus on our day-to-day business, while allowing the chairman of the board to lead the board of directors in its fundamental role of providing advice to and independent oversight of management.

Our board of directors believes that this structure ensures a greater role for the independent directors in the oversight of our company and active participation of the independent directors in setting agendas and establishing priorities and procedures for the work of our board of directors.

Our board of directors believes its administration of its risk oversight function has not affected its leadership structure.

Our board of directors believes that having separate positions is the appropriate leadership structure for us at this time and demonstrates our commitment to good corporate governance.

Role in Risk Oversight

Our board of directors oversees the management of risks inherent in the operation of our business and the implementation of our business strategies.

Our board of directors performs this oversight role by using several different levels of review.

In connection with its reviews of our operations and corporate functions, our board of directors addresses the primary risks associated with those operations and corporate functions.

In addition, our board of directors reviews the risks associated with our business strategies periodically throughout the year as part of its consideration of undertaking any such business strategies.

Each of our board committees also oversees the management of our risks that fall within the committee’s areas of responsibility.

In performing this function, each committee has full access to management, as well as the ability to engage advisors.

Our Chief Executive Officer reports risk management controls and methodologies to the Audit Committee and is responsible for identifying, evaluating and implementing risk management controls and methodologies to address any identified risks.

In connection with its risk management role, our Audit Committee meets privately with representatives from our independent registered public accounting firm and our Chief Executive Officer.

The Audit Committee oversees the operation of our risk management program, including the identification of the primary risks associated with our business and periodic updates to such risks, and reports to our board of directors regarding these activities.

Executive Officers

Set forth below are the names, ages and positions of each of our executive officers.

Luci — President and Chief Executive Officer, Director

For biographical information for David P.

Luci, age 57, see “Our Board of Directors — David P.

DeLuccia — Executive Chairman, Director

For biographical information for Robert J.

DeLuccia, age 78, see “Our Board of Directors — Robert J.

DeLuccia” above.

Robert Shawah — Chief Financial Officer

Shawah has served as our Chief Financial Officer since June 2021.

Shawah, age 57, has served as our Chief Financial Officer since June 2021.

Shawah previously served as our Chief Accounting Officer and Vice President of Finance from February 2018 to June 2021.

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Shawah graduated from Bucknell University with a degree as a Bachelor of Science in Business Administration with a concentration in Accounting.

Code of Conduct and Ethics

We have adopted a code of conduct and ethics that applies to all of our employees, including our chief executive officer and chief financial officer.

The text of the code of conduct and ethics is posted on our website at www.acurxpharma.com and will be made available to stockholders without charge, upon request, in writing to the Corporate Secretary at 259 Liberty Avenue, Staten Island, NY 10305.

Disclosure regarding any amendments to, or waivers from, provisions of the code of conduct and ethics that apply to our directors, principal executive officer and principal financial officer will be included in a Current Report on Form 8-K within four business days following the date of the amendment or waiver, unless website posting or the issuance of a press release of such amendments or waivers is then permitted by the rules of The Nasdaq Stock Market.

Executive Compensation.

The information required by this Item will be included in the 2023 Proxy Statement and is incorporated herein by reference.

Summary Compensation Table

The following table contains information concerning the compensation during each of the two years ended December 31, 2023 and 2022 to persons covered by Item 402(m)(2) of Regulation S-K (the “named executive officers”).

Name and principal position

President and Chief Executive Officer

Executive Chairman

Chief Financial Officer

(1) Other compensation represents health care insurance.

Luci’s base annual salary was $475,000 for the years ended December 31, 2023 and 2022.

Luci received a stock option grant in 2023 with an exercise price of $3.41.

The options were valued using the Black Scholes option valuation model.

The options had no intrinsic value at March 14, 2024.

DeLuccia’s base salary was $485,000 for the year ended December 31, 2023 and $475,000 for the year ended December 31, 2022.

DeLuccia received a stock option grant in 2023 with an exercise price of $3.41.

The options were valued using the Black Scholes option valuation model.

The options had no intrinsic value at March 14, 2024.

Shawah’s base salary was $375,000 for the year ended December 31, 2023 and $300,000 for the year ended December 31, 2022.

Shawah received a stock option grant in 2023 with an exercise price of $3.41.

The options were valued using the Black Scholes option valuation model.

The options had no intrinsic value at March 14, 2024.

Narrative Disclosure to Summary Compensation Table

Executive Employment Agreements

The following summaries set forth the material terms of the employment agreements entered into with our named executive officers.

Each such agreement provides generally that, in the event the named executive officer’s role is terminated by the Board without cause or the named executive officer resigns for “good reason,” they will be entitled to receive an amount equal to two times the sum of their annual base salary and target bonus (DeLuccia and Luci) and one times the sum of annual base salary and target bonus (Shawah), in each case, plus any other incentive compensation earned but unpaid as of the date of termination, and their stock option grant(s) will become fully vested as of the date of termination.

DeLuccia, Executive Chairman of the Board and Director

DeLuccia entered into an employment agreement with us, dated February 5, 2018, and an amended employment agreement dated January 12, 2021.

DeLuccia entered into an Amended and Restated Employment Agreement, dated May 25, 2021, and effective June 29, 2021 (the “DeLuccia Amended and Restated Employment Agreement”).

The DeLuccia Amended and Restated Employment Agreement provides for a base salary of $450,000 per year and a potential incentive award bonus of up to 40% (or a higher or lower amount if so determined by the Board) of his base salary on an annualized basis (which amount shall be fixed for the first 12 months of the term).

Effective January 13, 2022, Mr.

DeLuccia’s base salary was increased to $475,000 and his annual performance bonus increased to up to 45% percent of his base salary.

Effective February 13, 2023, Mr.

DeLuccia’s salary was increased to $485,000 and his annual bonus target was increased to up to 50% percent of his salary.

Effective March 1, 2024, Mr.

DeLuccia’s salary was increased to $550,000.

DeLuccia’s employment agreement provides for the grant of an initial stock option award equal to 500,000 shares of common stock, 25% of which vested on the closing date of our IPO and 75% of which vest pro rata on a monthly basis for 36 months thereafter, subject to accelerated vesting under certain circumstances.

The options will have an exercise price equal to the fair market value of our common stock on the date of grant with a term of ten years from the date of grant.

DeLuccia also earned a one-time bonus of $60,000 upon the closing of our IPO.

Luci, President and Chief Executive Officer, Director

Luci entered into an employment agreement with us, dated February 5, 2018, and an amended employment agreement dated January 12, 2021.

Luci entered into an Amended and Restated Employment Agreement, dated as of May 25, 2021, and effective June 29, 2021 (the “Luci Amended and Restated Employment Agreement”).

Amended and Restated Employment Agreement provides for a base salary of $450,000 per year and a potential incentive award bonus of up to 40% (or a higher or lower amount if so determined by the Board) of his base salary on an annualized basis (which amount shall be fixed for the first 12 months of the term).

Effective January 13, 2022, Mr.

Luci’s base salary was increased to $475,000 and his annual performance bonus increased to up to 45% percent of his base salary.

Effective February 13, 2023, the annual bonus target was increased to up to 50% percent of his salary.

Effective March 1, 2024, Mr.

Luci’s salary was increased to $550,000.

Luci’s employment agreement provides for the grant of an initial stock option award equal to 500,000 shares of common stock, 25% of which vested on the closing date of our IPO and 75% of which vest pro rata on a monthly basis for 36 months thereafter, subject to accelerated vesting under certain circumstances.

The options will have an exercise price equal to the fair market value of our common stock on the date of grant with a term of ten years from the date of grant.

Luci also earned a one-time bonus of $60,000 upon the closing of our IPO.

Robert Shawah, Chief Financial Officer

Shawah entered into an employee offer letter with us, dated June 1, 2018, and an amended offer letter, dated January 2, 2019, and the second amended offer letter dated January 12, 2021.

In addition, we and Mr.

Shawah entered into the Amended and Restated Employment Agreement, dated May 25, 2021, and effective June 29, 2021 (the “Shawah Amended and Restated Employment Agreement”).

The Shawah Amended and Restated Employment Agreement provides for a base salary of $250,000 per year and a potential incentive award bonus of up to 30% (or a higher or lower amount if so determined by the Board) of his base salary on an annualized basis.

Effective January 13, 2022, Mr.

Shawah’s base salary was increased to $300,000 and his annual performance bonus increased to up to 35% percent of his base salary.

Effective February 13, 2023, Mr.

Shawah’s salary was increased to $375,000.

Effective March 1, 2024, Mr.

Shawah’s salary was increased to $400,000 with a 40% bonus target.

Shawah’s employment agreement provides for the grant of an initial stock option award equal to 200,000 shares of common stock, 25% of which vested on the closing date of our IPO and 75% of which vest pro rata on a monthly basis for 36 months thereafter, subject to accelerated vesting under certain circumstances.

The options will have an exercise price equal to the fair market value of our common stock on the date of grant with a term of ten years from the date of grant.

Shawah also earned a one-time bonus of $25,000 upon the closing of our IPO.

Other Compensation Policies and Practices

Insider Trading Policy

Our Insider Trading Policy prohibits directors, executive officers and other “designated insiders” from engaging in most transactions involving our common stock during periods, determined by us, that those individuals are most likely to be aware of material, non-public information.

Directors, executive officers and other designated insiders subject to stock ownership guidelines must clear all their transactions in our common stock with the Chief Financial Officer in advance.

Additionally, it is our policy that directors, executive officers and designated insiders are not permitted to hedge their ownership of Company securities, including (a) trading in publicly-traded options, (b) selling any security of the Company “short” and (c) purchasing any financial instruments (including straddles, collars or other similar risk reduction or hedging devices) or otherwise engaging in transactions that are designed to or have the effect of offsetting any decrease in the market value of our securities.

Outstanding Equity Awards at 2023 Fiscal Year-End

The following table shows grants of stock options and grants of unvested stock awards outstanding on the last day of the fiscal year ended December 31, 2023, to each of the executive officers named in the Summary Compensation Table.

Outstanding Equity Awards at Fiscal Year-End

Option Awards

Unexercisable

Name and Principal Position

President and Chief Executive Officer (1)

Executive Chairman (2)

Chief Financial Officer (3)

(1) On June 29, 2021 (the “June Grant Date”), Mr.

Luci was granted stock options to purchase 350,000 shares of common stock.

40% of the stock options granted became vested and exercisable on the June Grant Date, and 60% of the stock options shall become vested and exercisable as of each monthly anniversary from the June Grant Date, such that all stock options shall be fully vested and exercisable by June 29, 2024.

On July 1, 2021 (the “July Grant Date”), Mr.

Luci was granted stock options to purchase 500,000 shares of common stock in connection with his service as President and Chief Executive Officer pursuant to his employment agreement.

25% of the stock options granted became vested and exercisable on the July Grant Date, and 75% of the stock options shall become vested and exercisable as of each monthly anniversary from the July Grant Date, such that all stock options shall be fully vested and exercisable by July 1, 2024.

On February 13, 2023, (the “February Grant Date”), Mr.

Luci was granted stock options to purchase 130,000 shares of common stock in connection with his service as President and Chief Executive Officer pursuant to his employment agreement, and such stock options shall become vested and exercisable pro-rata on a monthly basis over 36 months, such that all stock options shall be fully vested and exercisable by February 13, 2026.

(2) On the June Grant Date, Mr.

DeLuccia was granted stock options to purchase 350,000 shares of common stock.

On the July Grant Date, the Mr.

DeLuccia was granted stock options to purchase 500,000 shares of common stock in connection with his service as the Executive Chairman pursuant to his employment agreement.

On February 13, 2023, (the “February Grant Date”), Mr.

DeLuccia was granted stock options to purchase 130,000 shares of common stock in connection with his service as Executive Chairman pursuant to his employment agreement, and such stock options shall become vested and exercisable pro-rata on a monthly basis over 36 months, such that all stock options shall be fully vested and exercisable by February 13, 2026.

(3) On the June Grant Date, Mr.

Shawah was granted stock options to purchase 70,000 shares of common stock.

On the July Grant Date, Mr.

Shawah was granted stock options to purchase 200,000 shares of common stock in connection with his service as Chief Financial Officer pursuant to his employment agreement.

On February 13, 2023, (the “February Grant Date”), Mr.

Shawah was granted stock options to purchase 75,000 shares of common stock in connection with his service as Chief Financial Officer pursuant to his employment agreement, and such stock options shall become vested and exercisable pro-rata on a monthly basis over 36 months, such that all stock options shall be fully vested and exercisable by February 13, 2026.

Director Compensation

The following table shows the total compensation paid or accrued during the fiscal year ended December 31, 2023, to each of our non-employee directors.

Directors who are employed by us are not compensated for their service on our board of directors.

Incentive Plan

Thomas Harrison (5)

James Donohue (6)

(1) These amounts represent the aggregate grant date fair value of options granted to each director on June 15, 2023 computed in accordance with FASB ASC Topic 718.

A discussion of the assumptions used in determining grant date fair value may be found in Note 5 to our financial statements included in this Form 10-K.

Such options vest on the one-year anniversary of the grant date.

Sailer had 60,000 option awards outstanding at December 31, 2023.

Dean had 60,000 option awards outstanding at December 31, 2023.

Scodari had 60,000 option awards outstanding at December 31, 2023.

Harrison had 60,000 option awards outstanding at December 31, 2023.

Donohue had 60,000 option awards outstanding at December 31, 2023.

During the fiscal year ended December 31, 2023, we paid an annual cash retainer of $40,000 to each independent director for their service on our board of directors.

In addition to the annual retainer, the chairpersons of the Audit Committee and Compensation Committee are entitled to an additional cash retainer of $15,000 and $10,000 per year, respectively.

Non-chair members of the Audit Committee and Compensation Committee are entitled to an additional cash retainer of $7,500 and $5,000 per year, respectively.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this Item will be included in the 2023 Proxy Statement and is incorporated herein by reference.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information with respect to the beneficial ownership of our common stock as of March 15, 2024, for (a) the executive officers named herein, (b) each of our directors, (c) all of our current directors and executive officers as a group and (d) each stockholder known by us to own beneficially more than 5% of our common stock.

Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities.

We deem shares of common stock that may be acquired by an individual or group within 60 days of March 15, 2024, pursuant to the exercise of options or warrants to be outstanding for the purpose of computing the percentage ownership of such individual or group, but those shares are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table.

Except as indicated in footnotes to this table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned by them based on information provided to us by these stockholders.

Percentage of ownership is based on 15,757,102 shares of common stock outstanding on March 15, 2024.

Shares Beneficially Owned

Name of Beneficial Owner

Named Executive Officers and Directors

Thomas Harrison (6)

Carl Sailer (7)

James Donohue (8)

All directors and current executive officers as a group (eight (8) persons)

* Represents beneficial ownership of less than 1% of the outstanding shares of our common stock.

(1) Consists of 1,098,280 shares of our common stock, 36,612 shares of our common stock underlying warrants to purchase shares of our common stock and 885,556 shares of our common stock issuable upon exercise of stock options within 60 days of March 15, 2024, held of record by Mr.

(2) Consists of 189,200 shares of our common stock, 625 shares of our common stock underlying warrants to purchase shares of our common stock and 298,639 shares of our common stock issuable upon exercise of stock options within 60 days of March 15, 2024, held of record by Mr.

(3) Consists of 964,782 shares of our common stock, 43,696 shares of our common stock underlying warrants to purchase shares of our common stock and 885,556 shares of our common stock issuable upon exercise of stock options within 60 days of March 15, 2024, held of record by Mr.

(4) Consists of 3,077 shares of our common stock and 47,222 shares of our common stock issuable upon exercise of stock options within 60 days of March 15, 2024.

(5) Consists of 17,693 shares of our common stock, 5,000 shares of our common stock underlying warrants to purchase shares of our common stock and 47,222 shares of our common stock issuable upon exercise of stock options within 60 days of March 15, 2024, held by Dr.

Dean and the Dean Family Trust.

(6) Consists of 1,539 shares of our common stock and 47,222 shares of our common stock issuable upon exercise of stock options within 60 days of March 15, 2024, held of record by Mr.

(7) Consists of 117,552 shares of our common stock, and 36,404 shares of our common stock underlying warrants to purchase shares of our common stock and 47,222 shares of our common stock issuable upon exercise of stock options within 60 days of March 15, 2024, held of record by Mr.

(8) Consists of 12,500 shares of our common stock, 6,250 shares of our common stock underlying warrants to purchase shares of our common stock and 47,222 shares of our common stock issuable upon exercise of stock options within 60 days of March 15, 2024.

Equity Compensation Plan Information

The following table provides certain aggregate information with respect to all of the Company’s equity compensation plans in effect as of December 31, 2023.

available for

securities to

column (a) (2)

Equity compensation plan approved by security holders (1)(3)

Equity compensation plan not approved by security holders

(1) This plan consists of the 2021 Equity Incentive Plan (the “2021 Plan”).

For a description of this plan, see Note 5 to the financial statements in this Form 10-K.

(2) Consists only of securities remaining available for future issuance under the 2021 Plan.

(3) The 2021 Plan provides that the total number of shares of our common stock reserved for issuance thereunder will automatically increase on January 2nd of each year for a period of ten years commencing on January 2, 2022, and ending on January 2, 2031, in an amount equal to the lesser of (i) 4% of the outstanding shares of our common stock on such date and (ii) such number of shares determined by the plan administrator.

Certain Relationships and Related Transactions, and Director Independence.

The information required by this Item will be included in the 2023 Proxy Statement and is incorporated herein by reference.

Certain Relationships and Related Person Transactions

Our Audit Committee Charter requires all future transactions between us and any director, executive officer, holder of 5% or more of any class of our capital stock or any member of the immediate family of, or entities affiliated with, any of them, or any other related persons, as defined in Item 404 of Regulation S-K, or their affiliates, in which the amount involved is equal to or greater than $120,000, be approved in advance by our Audit Committee.

Any request for such a transaction must first be presented to our Audit Committee for review, consideration and approval.

In approving or rejecting any such proposal, our Audit Committee is to consider all available information deemed relevant by the Audit Committee, including, but not limited to, the extent of the related person’s interest in the transaction and whether the transaction is on terms no less favorable to us than terms we could have generally obtained from an unaffiliated third party under the same or similar circumstances.

During the fiscal years ended December 31, 2023 and 2022, we have engaged in the following transactions:

Investor Rights Agreements

We have entered into investor rights agreements with the investors who participated in our private placement financings between March 2018 and October 2019, including Messrs.

DeLuccia, Luci, Sailer, Scodari, Harrison and Dean.

Each such investor rights agreement imposes certain affirmative obligations on us and also grants certain rights to such investors, including certain registration rights with respect to the securities held by them and certain additional rights.

Indemnification Agreements

We have entered into indemnification agreements with each of our directors and executive officers (the “Indemnification Agreements”).

Such Indemnification Agreements provide for indemnification against expenses, judgments, fines and penalties actually and reasonably incurred by an indemnitee in connection with threatened, pending or completed actions, suits or other proceedings, subject to certain limitations.

The Indemnification Agreements also provide for the advancement of expenses in connection with a proceeding prior to a final, non-appealable judgment or other adjudication, provided that the indemnitee provides an undertaking to repay to us any amounts advanced if the indemnitee is ultimately found not to be entitled to indemnification by us.

The Indemnification Agreements set forth procedures for making and responding to requests for indemnification or advancement of expenses, as well as dispute resolution procedures that will apply to any dispute between us and an indemnitee arising under the Indemnification Agreements.

Participation in Our July 2022 Registered Direct Offering and Concurrent Private Placement

In July 2022, we issued and sold in a registered direct offering (i) an aggregate of 1,159,211 shares of our common stock (“Shares”) (consisting of 1,100,000 shares for single healthcare-focused U.S.

institutional investor (the “Investor”) and an aggregate of 59,211 for David P.

Luci, our President and Chief Executive Officer, Robert J.

DeLuccia, our Executive Chairman and Carl V.

Sailer, a member of our board of directors (collectively, the “Affiliate Investors”)) at an offering price of $3.25 per share for the Investor and $3.80 per share for the Affiliate Investors and (ii) an aggregate of 130,769 pre-funded warrants exercisable for shares of common stock (the “Pre-Funded Warrants”) to the Investor at an offering price of $3.2499 per Pre-Funded Warrant, for aggregate gross proceeds from the Registered Offering of approximately $4.225 million before deducting the placement agent fee and related offering expenses.

In a concurrent private placement (the “Private Placement” and together with the Registered Offering, the “Offerings”), we issued to the Investor and to the Affiliate Investors (i) series A warrants (the “Series A Warrants”) exercisable for an aggregate of 1,289,980 shares of common stock (consisting of Series A Warrants (the “Investor Series A Warrants”) to purchase up to 1,230,769 shares of common stock for the Investor and Series A Warrants (the “Affiliate Series A Warrants”) to purchase up to 59,211 shares of common stock for the Affiliate Investors) at an exercise price of $3.25 per share for the Investor Series A Warrants and $3.55 per share for the Affiliate Series A Warrants and (ii) series B warrants (the “Series B Warrants” and together with the Series A Warrants, the “Warrants” and collectively with the Shares and the Pre-Funded Warrants, the “Securities”) exercisable for an aggregate of 1,289,980 shares of common stock (consisting of Series B Warrants (the “Investor Series B Warrants”) to purchase up to 1,230,769 shares of common stock for the Investor and Series B Warrants (the “Affiliate Series B Warrants”) to purchase up to an aggregate of 59,211 shares of common stock for the Affiliate Investors) at an exercise price of $3.25 per share for the Investor Series B Warrants and $3.55 per share for the Affiliate Series B Warrants.

The table below sets forth the aggregate number of Securities issued to our directors, executive officers or holders of more than 5% of our capital stock, or an affiliate or immediate family member thereof, at the time of the Offerings:

Purchase Price

Director Independence

Please see “Management and Corporate Governance” under Item 10 above.

Principal Accounting Fees and Services.

The information required by this Item will be included in the 2023 Proxy Statement and is incorporated herein by reference.

The following table presents fees for professional audit services rendered by CohnReznick LLP for the audit of the Company’s annual financial statements for the years ended December 31, 2023, and December 31, 2022 and fees billed for other services rendered by CohnReznick LLP during those periods.

Audit related fees:

(1) Audit fees consisted of audit work performed in the preparation of financial statements and the review of interim financial statements, as well as work generally only the independent registered public accounting firm can reasonably be expected to provide.

(2) Audit related fees consisted principally of work associated with the procedures for filing with the SEC in conjunction with financing transactions.

All fees described above were pre-approved by our Audit Committee.

We have furnished the foregoing disclosure to CohnReznick LLP.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Public Accountant

Consistent with SEC policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of our independent registered public accounting firm.

In recognition of this responsibility, the Audit Committee has established a policy to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm.

Prior to engagement of an independent registered public accounting firm for the next year’s audit, management will submit an aggregate of services expected to be rendered during that year for each of four categories of services to the Audit Committee for approval.

Audit services include audit work performed in the preparation of financial statements, as well as work that generally only an independent registered public accounting firm can reasonably be expected to provide, including comfort letters, statutory audits and attest services and consultation regarding financial accounting and/or reporting standards.

Audit-Related services are for assurance and related services that are traditionally performed by an independent registered public accounting firm, including due diligence related to mergers and acquisitions, employee benefit plan audits and special procedures required to meet certain regulatory requirements.

Tax services include all services performed by an independent registered public accounting firm’s tax personnel except those services specifically related to the audit of the financial statements, and includes fees in the areas of tax compliance, tax planning and tax advice.

Other Fees are those associated with services not captured in the other categories.

The Company generally does not request such services from our independent registered public accounting firm.

Prior to engagement, the Audit Committee pre-approves these services by category of service.

The fees are budgeted and the Audit Committee requires our independent registered public accounting firm and management to report actual fees versus the budget periodically throughout the year by category of service.

During the year, circumstances may arise when it may become necessary to engage our independent registered public accounting firm for additional services not contemplated in the original pre-approval.

In those instances, the Audit Committee requires specific pre-approval before engaging our independent registered public accounting firm.

The Audit Committee may delegate pre-approval authority to one or more of its members.

The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting.

Exhibits, Financial Statement Schedules.

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Form of Series B Warrant .

Form of Pre-Funded Warrant.

Form of Placement Agent Warrant.

Form of Series C Warrant .

Form of Series D Warrant .

Form of 2023 Pre-Funded Warrant.

Description of Securities.

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Luci, dated May 25, 2021.

Amended and Restated Employment Agreement, by and between Acurx

Exhibit Description

Pharmaceuticals, Inc.

Amended and Restated Employment Agreement, by and between Acurx Pharmaceuticals, Inc.

and Robert Shawah, dated May 25, 2021.

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and GLSynthesis Inc.

Form of Securities Purchase Agreement, dated as of May 16, 2023, by and between Acurx.

Pharmaceuticals, Inc.

and the investor

Form of Warrant Amendment Agreement, dated as of May 16, 2023, by and between Acurx.

Pharmaceuticals, Inc.

and the investor

Sales Agreement, dated as of November 15, 2023, between Acurx Pharmaceuticals, Inc.

and A.G.P/Alliance Global Partners .

Subsidiaries .

Consent of CohnReznick LLP.

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Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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

Acurx Pharmaceuticals, Inc.

Clawback Policy.

Inline XBRL Instance Document - the instance document does not appear in

Exhibit Description

the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

Inline XBRL Taxonomy Extension Schema Document.

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Statements of Operations

Statements of Changes in Members’ and Shareholders’ Equity

Statements of Changes in Shareholders’ Equity

Statements of Cash Flows

Notes to the Financial Statements

Notes to Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

To the Board of Directors and Shareholders

Acurx Pharmaceuticals, Inc.

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We have audited the accompanying balance sheets of Acurx Pharmaceuticals, Inc.

(the “Company”) as of December 31, 2022 and 2021, and the related statements of operations, changes in members’ and shareholders’ equity and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”).

(the “Company”) as of December 31, 2023 and 2022, and the related statements of operations, changes in shareholders’ 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, 2023 and 2022 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.

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CURRENT ASSETS

Other Receivable

Prepaid Expenses

LIABILITIES AND MEMBERS' AND SHAREHOLDERS’ EQUITY

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES

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COMMITMENTS AND CONTINGENCIES

MEMBERS' AND SHAREHOLDERS' EQUITY

Members’ Equity, Class A

Members’ Equity, Class B

SHAREHOLDERS' EQUITY

Common Stock;

$ .001 par value, 200,000,000 shares authorized, 11,627,609 and 10,215,792 shares issued and outstanding at December 31, 2022 and 2021, respectively

$ .001 par value, 200,000,000 shares authorized, 14,468,229 and 11,627,609 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively

Additional Paid-In Capital

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( 38,641,085 )

TOTAL MEMBERS' AND SHAREHOLDERS’ EQUITY

TOTAL LIABILITIES AND MEMBERS' AND SHAREHOLDERS’ EQUITY

See accompanying notes to the financial statements.

TOTAL SHAREHOLDERS’ EQUITY

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

See accompanying notes to financial statements.

ACURX PHARMACEUTICALS, INC.

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TOTAL OPERATING EXPENSES

Gain on Forgiveness of Paycheck Protection Program Loan

( 14,577,768 )

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Weighted average common shares outstanding, basic and diluted

See accompanying notes to the financial statements.

See accompanying notes to financial statements.

ACURX PHARMACEUTICALS, INC.

STATEMENTS OF CHANGES IN MEMBERS’ AND SHAREHOLDERS’ EQUITY

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

YEARS ENDED DECEMBER 31, 2023 AND 2022

Class A Membership

Class B Membership

and Shareholders’

Shareholders’

Balance at January 1, 2022

( 26,548,309 )

Executive Compensation Settled with Membership Interests

Cancellation of Class B Issuance

Share-Based Compensation

Share-Based Payments to Vendors

Corporate Conversion

( 13,982,318 )

( 17,517,375 )

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

Issuance of shares of common stock and pre-funded warrants in registered direct offering, net of $ 529,805 cash issuance costs

Cashless Warrant Exercise

Pre-funded Warrant Exercise

( 12,092,776 )

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Issuance of shares of common stock and pre-funded warrants in registered direct offering, net of $ 456,314 cash issuance costs

Issuance of shares of common stock in At-the-Market sales agreement, net of $ 222,161 cash issuance costs

Warrant Exercise

Cashless Warrant Exercise

4 unchanged sentences

( 53,218,853 )

See accompanying notes to the financial statements.

See accompanying notes to financial statements.

ACURX PHARMACEUTICALS, INC.

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Share-Based Payments to Vendors

Executive Compensation Settled with Membership Interests

Gain on Forgiveness of Paycheck Protection Program Loan

(Increase)/Decrease in:

Other Receivable

Prepaid Expenses

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Cash Flow from Financing Activities:

Proceeds from Initial Public Offering, net of issuance costs

Proceeds from Registered Direct Offering, net of issuance costs

Pre-funded Warrant Exercise

Warrant Exercise

Proceeds from At-the-Market Offering, net of issuance costs

Net Cash Provided by Financing Activities

Net (Decrease) Increase in Cash

Net Decrease in Cash

( 1,637,563 )

( 3,847,095 )

Cash at Beginning of Year

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SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES

Warrants issued in connection with offerings

See accompanying notes to the financial statements.

2023 Registered Direct offering costs (Note 4)

Warrants issued in connection with 2022 offerings (Note 4)

See accompanying notes to financial statements.

ACURX PHARMACEUTICALS, INC.

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On July 27, 2022, the Company completed a registered direct offering and a concurrent private placement, issuing 1,159,211 shares of common stock and 130,769 pre-funded warrants and series A warrants to purchase 1,289,980 shares of common stock and series B warrants to purchase 1,289,980 shares of common stock for gross proceeds of approximately $ 4.2 million.

As of December 31, 2022, the Company had a cash balance of approximately $ 9.1 million, which based on current estimates will not 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, 2022.

On May 18, 2023, the Company completed a registered direct offering and a concurrent private placement, issuing 601,851 shares of common stock, 731,482 pre-funded warrants, series C warrants to purchase 1,333,333 shares of common stock and series D warrants to purchase 1,333,333 shares of common stock for gross proceeds of approximately $ 4.0 million.

On November 15, 2023, the Company entered into a Sales Agreement and established an “At-the-Market” offering (the “ATM Program”), pursuant to which the Company may offer and sell, from time to time through A.G.P/Alliance Global Partners, as sales agent, shares of its common stock having an aggregate offering price of up to $ 17.0 million.

Under the ATM Program, the Company sold 698,121 shares of common stock for gross proceeds of approximately $ 2.6 million.

As of December 31, 2023, the Company had a cash balance of approximately $ 7.5 million, which based on current estimates will not 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, 2023.

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.

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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.

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 .

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Actual results could differ from those estimates.

The Company estimates an annual effective tax rate of 0 % as the Company incurred net losses for the year ended December 31, 2022 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 net losses for the years ended December 31, 2023 and 2022, 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.

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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.

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 Company maintains the majority of its cash balance in one financial institution.

The balance is insured up to the maximum allowable by the Federal Deposit Insurance Corporation (“FDIC”).

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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.

The Company expenses research and development costs as 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.

These amounts are deferred and expensed in the period the services are provided.

The Company incurred research and development expenses in the amount of $ 6,043,597 and $ 4,754,271 , for the years ended December 31, 2023 and 2022, respectively.

Costs for certain research and development activities, such as the provision of services for clinical trial activity, are estimated based on an evaluation of the progress to completion of specific tasks which may use data such as subject enrollment, clinical site activations or information provided to the Company by its vendors with respect to their actual costs incurred.

Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the financial statements as prepaid or accrued research and development expense, as the case may be.

Payments for these activities are based on the terms of the individual arrangements, which may differ

from the pattern of costs incurred, and are reflected in the financial statements as prepaid or accrued research and development expense, as the case may be.

The estimates are adjusted to reflect the best information available at the time of the financial statement issuance.

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The same vendor also accounted for approximately 53 % and 56 % of the total accounts payable and accrued expenses as of December 31, 2023 and 2022, 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 that accounted for approximately 4 % and 15 % of the research and development expenditures for the years ended December 31, 2022 and 2021.

The same vendor did not account for any material portion of the total accounts payable and accrued expenses.

The Company will continue to maintain this vendor relationship over the next 12 months.

NOTE 3 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

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Other accounts payable and accrued expenses

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 a maturity date 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 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

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 and a controller hired in April 2022.

NOTE 4 – ISSUANCE OF EQUITY INTERESTS

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 11,627,609 were outstanding as of December 31, 2022.

The Company’s certificate of incorporation authorizes 200,000,000 shares of common stock, of which 14,468,229 were issued and outstanding as of December 31, 2023.

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 .

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.

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These warrants included 59,211 series A warrants and an aggregate of 59,211 series B warrants to the Affiliate Investors with an exercise price per share of $ 3.55 and an aggregate of 1,230,769 series A warrants and an aggregate of 1,230,769 series B warrants to the Investor with an exercise price per share of $ 3.25 .

The series A warrants will be exercisable commencing on January 27, 2023 and will expire on January 27, 2028.

The series B warrants will be exercisable commencing on January 27, 2023 and will expire on January 27, 2024.

The series A warrants were exercisable commencing on January 27, 2023 and will expire on May 18, 2029 for the Investor and January 27, 2028 for the Affiliates.

The series B warrants were exercisable commencing on January 27, 2023 and will expire on May 18, 2029 for the Investor and January 27, 2024 for the Affiliates.

The registered direct offering closed on July 27, 2022.

As of December 31, 2023, 682,769 of series B warrants were exercised and the Company received approximately $ 2.2 million in proceeds from these warrant exercises.

The gross proceeds to the Company from the registered direct offering were $ 4.2 million and net proceeds after deducting the placement agents’ fees and other offering expenses payable by the Company were approximately $ 3.7 million.

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The inputs utilized in the calculation were as follows:

five year term, 2.82 % risk free rate, stock price at grant date of $ 3.70 and a 95 % volatility utilizing comparable companies.

five -year term, 2.82 % risk free rate, stock price at grant date of $ 3.70 and a 95 % 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.

On May 16, 2023, the Company entered into a securities purchase agreement with a single healthcare-focused U.S.

institutional investor named therein (the “2023 Investor”), pursuant to which the Company issued and sold, in a registered direct offering by the Company directly to the 2023 Investor (the “2023 Registered Offering”), an aggregate of 601,851 shares of common stock at an offering price of $ 3.00 per share and an aggregate of 731,482 pre-funded warrants exercisable for shares of common stock at an offering price of $ 2.9999 per pre-funded warrant.

The pre-funded warrants sold to the Investor have an exercise price of $ 0.0001 and were immediately exercisable.

As of December 31, 2023, all of the pre-funded warrants were exercised.

The gross proceeds to the Company from the registered direct offering were approximately $ 4.0 million and net proceeds after deducting the placements agent’s fees and other offering expenses payable by the Company were approximately $ 3.5 million.

In a concurrent private placement (the “2023 Private Placement” and together with the 2023 Registered Offering, the “2023 Offerings”), the Company issued to the Investor series C warrants exercisable for an aggregate of 1,333,333 shares of common stock at an exercise price of $ 3.26 per share and series D warrants exercisable for an aggregate of 1,333,333 shares of common stock at an exercise price of $ 3.26 per share.

The Series C Warrants were exercisable commencing on November 18, 2023 and will expire on November 18, 2025.

The Series D Warrants were exercisable commencing on November 18, 2023 and will expire on November 19, 2029.

In connection with the 2023 Offerings, the Company also entered into a Warrant Amendment Agreement with the 2023 Investor.

Under the Warrant Amendment Agreement, the Company amended its existing series A warrants to purchase up to an aggregate of 1,230,769 shares of the Company's common stock and series B warrants to purchase up to an aggregate of 1,230,769 shares of the Company's common stock (collectively, the “Existing Warrants”) that were previously issued in July 2022, such that effective upon the closing of the offering, the amended Existing Warrants have a termination date of May 18, 2029.

The Company used the Black-Scholes model to calculate the change in the value of the aforementioned series A and series B warrants attributable to the change in the termination date, with an estimated increase in fair value of approximately $ 2.0 million.

This amount was recorded as both an increase to additional paid-in capital and as a non-cash issuance cost of the offerings.

On November 15, 2023, the Company entered into a Sales Agreement and established the ATM Program, pursuant to which the Company may offer and sell, from time to time through A.G.P./Alliance Global Partners, as sales agent, shares of its common stock having an aggregate offering price of up to $ 17.0 million.

Under the sales agreement, the sales agent is entitled to compensation of 3 % of the gross offering proceeds of all shares sold through it pursuant to the Sales Agreement.

During the year ended December 31, 2023, the Company sold 698,121 shares of its common stock under the ATM Program at a weighted-average price of $ 3.76 per share, raising $ 2.6 million of gross proceeds and net proceeds of $ 2.4 million, after deducting commissions to the sales agent and other ATM Program related expenses.

The Company recorded a receivable of $ 129,159 for 34,116 shares sold under the ATM Program yet to settle as of December 31, 2023, of which 17,869 shares had yet to be issued by the transfer agent as of year-end.

The receivable for the unsettled shares as of December 31, 2023 is included within the “Other Receivable” balance in the accompanying balance sheets.

The receivables were collected on January 3, 2024 and 17,869 shares were settled and transferred on January 2, 2024.

As of December 31, 2023, the Company has $ 14.4 million available under the ATM Program.

The following table summarizes information with respect to outstanding warrants to purchase common stock of the Company at December 31, 2023:

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Exercise Price

Balance, December 31, 2021

Balance, December 31, 2022

Balance at December 31, 2022

( 1,420,501 )

Balance at December 31, 2023

The weighted average contractual life of the outstanding warrants is 4.46 years.

NOTE 5 – 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 $ 0 and $ 755,556 for the years ended December 31, 2022 and 2021, 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:

Membership Interests

Converted to common stock at one-for-two ratio

Unvested at December 31, 2020

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 originally reserved an aggregate of 2,000,000 shares of common stock, subject to annual adjustments as provided in the Plan, which was 408,632 shares for 2022, of which 537,937 shares are currently still available for issuance as of December 31, 2022.

The Plan originally reserved an aggregate of 2,000,000 shares of common stock, subject to annual adjustments as provided in the Plan, which was 465,432 shares for the year ended December 31, 2023.

The Plan currently has 485,868 shares available for issuance as of December 31, 2023.

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

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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 $ 726,880 and $ 2,019,325 for the years ended December 31, 2022 and 2021, respectively, related to compensation expense for these options.

The Company recorded general and administrative expenses of $ 726,880 for each of the years ended December 31, 2023 and 2022, related to compensation expenses 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 $ 1,963,667 and $ 2,379,833 for the years ended December 31, 2022 and 2021, respectively, related to compensation expense for these options.

The Company recorded general and administrative expenses of $ 1,963,667 for each of the years ended December 31, 2023 and 2022, related to compensation expenses for these options.

In January 2022, the Company granted stock options to purchase a total of 80,000 shares of common stock to seven consultants pursuant to the Plan.

The options were issued at an exercise price of $ 4.44 , the grant date fair value, with one -quarter of the options vesting upon issuance and the balance over 36 months .

The Company recorded general and administrative expenses of $ 145,283 for the year ended December 31, 2022 related to compensation expense for these options.

The Company recorded general and administrative expenses of $ 75,800 and $ 145,283 for the years ended December 31, 2023 and 2022, respectively, related to compensation expenses for these options.

In April 2022, the Company granted stock options to purchase a total of 30,000 shares of common stock to a new employee pursuant to the Plan.

The options were issued at an exercise price of $ 3.79 , the grant date fair value, with one -

quarter of the options vesting upon issuance and the balance over 36 months .

The options were issued at an exercise price of $ 3.79 , the grant date fair value, with one -quarter of the options vesting upon issuance and the balance over 36 months .

The Company recorded general and administrative expenses of $ 21,510 and $ 35,850 for the years ended December 31, 2023 and 2022, respectively, related to compensation expenses for these options.

In February 2023, the Company granted stock options to purchase a total of 467,500 shares of common stock to its four employees and seven consultants pursuant to the Plan.

The options were issued at an exercise price of $ 3.41 , the grant

date fair value, with the options vesting monthly over 36 months .

The Company recorded general and administrative expenses of $ 365,070 for the year ended December 31, 2023, related to compensation expense for these options.

In June 2023, the Company granted stock options to purchase a total of 50,000 shares of common stock to its five independent board of directors pursuant to the Plan.

The options were issued at an exercise price of $ 2.75 , the grant date fair value, with the options vesting on the one -year anniversary of the grant date.

The Company recorded general and administrative expenses of $ 53,600 for the year ended December 31, 2023, related to compensation expenses 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 option pricing model.

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Treasury notes with comparable maturities.

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

December 31, 2022

The Company determined the fair value of the option awards during the years ended December 31, 2023 and 2022, using the Black-Scholes option pricing model using the following weighted average assumptions:

Expected term

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

Weighted Average

December 31, 2022

Contractual Term

Exercise Price

Outstanding at the beginning of the period

Outstanding at the end of the period

Outstanding, vested and expected to vest at December 31, 2022

Outstanding, vested and expected to vest at December 31, 2023

The total compensation expense not yet recognized as of December 31, 2023 was $ 2,458,851 .

The weighted average vesting period for the unvested options is 1.30 years.

The intrinsic value of the stock options as of December 31, 2022 was $ 5,700 , with a remaining weighted average contractual life of 8.53 years.

The weighted average grant date fair value of all options granted is $ 4.33 as of December 31, 2023.

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NOTE 6 – 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 Class A Membership Interests for the year ended December 31, 2021.

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 $ 0 for the year ended December 31, 2022 and $ 201,375 and $ 21,596 for the year ended December 31, 2021, 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.

In the fourth quarter of 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 granted $ 150,000 of common stock over the term

The Company granted total of 27,778 shares of common stock at grant date fair value and recorded general and administrative expenses of $ 0 and $ 75,000 for the years ended December 31, 2023 and 2022, respectively.

In the first quarter of 2022, the Company entered into an agreement with a consultant to provide investor relation services for a six-month term.

Pursuant to the agreement, the Company granted 30,000 shares of common stock with a grant date fair value of $ 3.77 and paid $ 25,000 of cash compensation.

The cash component was expensed over the service period and the equity component was expensed consistent with the contractual vesting.

The Company recorded general and administrative expenses of $ 0 and $ 113,100 for the years ended December 31, 2023 and 2022, respectively.

The conversion adjusted shares of common stock were issued in October 2021.

In the second quarter of 2021, the Company entered into a number of agreements with vendors pursuant to which the Company made grants of a total of 175,000 shares of common stock with a grant date fair value of $ 6.26 , 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 were 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 of 2021 pursuant to the Plan.

In the third quarter of 2021, the Company granted vendors a total of 35,695 shares of common stock, which fully vested in 2021, 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 granted $ 150,000 of common stock over the term of service.

The Company granted total of 27,778 shares of common stock at grant date fair value and recorded general and administrative expenses of $ 75,000 for each of the years ended December 31, 2022, and 2021, respectively.

In March 2022, the Company entered into an agreement with a consultant to provide investor relation services for a six-month term.

Pursuant to the agreement, the Company granted 30,000 shares of common stock with a grant date fair value of $ 3.77 and paid $ 25,000 of cash compensation The cash component was expensed over the service period and the equity component was expensed consistent with the contractual vesting.

The Company recorded general and administrative expenses of $ 113,100 for the year ended December 31, 2022.

In September 2022, the Company entered into an agreement with a company to provide consulting services for a six-month term.

In the third quarter of 2022, the Company entered into an agreement with a company to provide consulting services for a six-month term.

Pursuant to the agreement, the Company granted 36,000 shares of common stock with a grant date fair value of $ 3.53 , which was expensed consistent with the contractual vesting.

The Company recorded general and administrative expenses of $ 127,080 for the year ended December 31, 2022.

In the fourth quarter of 2022, the Company entered into a number of agreements with vendors pursuant to which the Company will make grants of a total of 43,186 share of common stock with a grant date fair values ranging from $ 3.30 to $ 3.67 , up to 10,096 of warrants, and cash payments.

The Company recorded general and administrative expenses of $ 0 and $ 127,080 for the years ended December 31, 2023 and 2022, respectively.

In the fourth quarter of 2022, the Company entered into a number of agreements with vendors pursuant to which the Company made grants of a total of 43,186 share of common stock with a grant date fair values ranging from $ 3.30 to $ 3.67 , up to 10,096 of warrants, and cash payments.

These contracts have six-months terms with various contractual vesting periods.

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

The cash payments were expensed over the service period and the equity component was expensed consistent with the various contractual vesting periods.

The Company recorded general and administrative expenses of $ 46,742 and $ 115,500 for the years ended December 31, 2023 and 2022, respectively.

In the first quarter of 2023, the Company entered into an agreement with a consultant to provide investor relation services for a six-month term.

The Company granted 36,000 shares of common stock at a grant date fair value of $ 3.31 , pursuant to the agreement and recorded general and administrative expenses of $ 119,160 for the year ended December 31, 2023.

In the fourth quarter of 2023, the Company entered into a number of agreements with vendors pursuant to which the Company will make grants of a total of 116,000 share of common stock and cash payments, of which 96,000 shares of common stock were issued as of December 31, 2023 with grant date fair values ranging from $ 1.50 to $ 5.07 .

These contracts have four to six-months terms with various contractual vesting periods.

The cash payments are expensed over the service period and the equity components are expensed consistent with the various contractual vesting periods.

The Company recorded general and administrative expenses of $ 393,681 for the year ended December 31, 2023.

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These costs are required to be amortized over five years if the R&D activities are performed in the U.S., or over 15 years if the activities were performed outside the U.S.

The Company capitalized approximately $ 4.3 million of R&D expenses incurred as of December 31, 2022.

The Company capitalized approximately $ 6.1 million and $ 4.8 million of R&D expenses for the years ended December 31, 2023 and 2022, respectively.

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.

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and the State of New York.

The tax years 2022 and 2021 are open and potentially subject to examination by the federal and state taxing authorities.

The tax years 2021 and thereafter are 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 (“IRS”) or any other jurisdictions for any tax years and has no knowledge of any pending examinations by the IRS or any other jurisdictions.

To the extent the Company utilizes any tax attributes from a tax period that may otherwise be closed due to statute expiration, the IRS, 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.

There are no uncertain tax positions recorded for any federal or state positions at December 31, 2023 and 2022.

The Company’s policy is to record interest and penalties related to tax matters in income tax expense.

NOTE 8 – 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 year ended December 31, 2022 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 4,217,809 warrants, and 2,467,500 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.

Basic and diluted net loss per share of common stock for the year ended December 31, 2023 and 2022 was determined by dividing net loss by the weighted average shares of common stock outstanding during the period.

The Company’s potentially dilutive securities, consisting of 6,195,456 warrants, and 2,985,000 stock options, have not been included in the computation of diluted net loss per share for all periods as the result would be antidilutive.

NOTE 9 – 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).

There were no milestones reached during 2022 and 2021.

During the fourth quarter of 2023, the Company achieved the Phase 2 clinical trial milestone and included $ 150,000 as a part of accounts payable and accrued expenses as of December 31, 2023.

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.

NOTE 10 – SUBSEQUENT EVENTS

As a part of the ATM Program, the Company sold a total of 1,819,914 shares of its common stock pursuant to the Sales Agreement at an average price of $ 3.88 for aggregate net proceeds of approximately $ 6.7 million as of March 15, 2024.

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-K

Item 9A. Controls and Procedures