What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2022-03-31 compared with 2020-03-31 · 20 added, 494 removed, 3 unchanged (99% of the section changed)

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

shares of common stock have been listed and traded on The Nasdaq Capital Market under the symbol “RTTR”

June 24, 2015.

Prior to that date, there was no public market for our common stock.

of March 25, 2020, there were approximately 37 registered holders of record of our common stock.

These figures do

not reflect the beneficial ownership or shares held in nominee name.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

common stock has been listed and traded on the Nasdaq Capital Market under the symbol “QLGN” since May 26, 2020.

date, there was no public market for Qualigen, Inc.

common stock.

As a matter of corporate law we are a continuation of Ritter Pharmaceuticals,

under a different name, although for purposes of securities reporting and applicable accounting principles Qualigen, Inc.

accounting acquirer in the May 22, 2020 reverse recapitalization.

Before May 26, 2020, Ritter Pharmaceuticals, Inc.

common stock traded

on the Nasdaq Capital Market under the symbol “RTTR.”

of March 25, 2022, there were 692 registered holders of record of our common stock.

This figure does not reflect the beneficial

ownership of shares held in nominee name.

Authorized for Issuance Under Equity Compensation Plans

Part III, Item 12.

“Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters”

for information relating to our equity compensation plans.

Part III, Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for information

relating to our equity compensation plans.

Sales of Unregistered Securities

On December 3,

2021, we issued a common stock warrant (the “Warrant”) to a consultant, entitling the consultant to purchase up to 600,000

of our shares of common stock at an exercise price of $1.32 per share until June 3, 2023.

We relied on the exemption from registration

provided under Section 4(a)(2) of the Securities Act regarding transactions not involving a public offering.

of Equity Securities by the Issuer and Affiliated Purchasers

Selected Financial Data

Management’s Discussion and Analysis of Financial Condition and Results of Operations

following discussion and analysis should be read together with our financial statements and the related notes appearing elsewhere

in this Annual Report.

This discussion contains forward-looking statements reflecting our current expectations that involve risks

and uncertainties.

See “Special Note Regarding Forward-Looking Statements and Industry Data”

for a discussion of the

uncertainties, risks and assumptions associated with these statements.

Actual results and the timing of events could differ materially

from those discussed in our forward-looking statements as a result of many factors, including those set forth under “Risk

Factors”

and elsewhere in this Annual Report.

our inception, we have focused on the development of therapeutic products that modulate the gut microbiome to treat

gastrointestinal diseases.

Our only product candidate, RP-G28, is an orally administered, high purity GOS, for the treatment of

LI, a condition that affects millions of people worldwide.

RP-G28 is designed to selectively stimulate the growth of lactose-metabolizing

bacteria in the colon, thereby effectively adapting the gut microbiome to assist in digesting lactose (the sugar found in milk)

that reaches the large intestine.

completed enrollment in our Phase 3 clinical trial of RP-G28 known as “Liberatus”

in March 2019 and

last patient visit in July 2019.

In September 2019, we announced that our Phase 3 clinical trial of RP-G28 for LI failed to demonstrate

statistical significance in its pre-specified primary and secondary endpoints.

No further development efforts for RP-G28 are

currently ongoing.

have devoted substantially all of our resources to development efforts relating to RP-G28, including conducting clinical trials

of RP-G28, providing general and administrative support for these operations and protecting our intellectual property.

do not have any products approved for sale and we have not generated any revenue from product sales since our inception.

We inactivated

the IND for RP-G28 on February 21, 2020 as a result of our determination not to proceed with the clinical development of RP-G28

in light of the anticipated merger.

October 2019, we announced that we had engaged AGP as financial advisor to explore and evaluate strategic alternatives to enhance

shareholder value, which could include an acquisition, merger, reverse merger, other business combination, sale of assets, licensing

or other strategic transaction.

January 15, 2020, we entered into the Merger Agreement with Qualigen, pursuant to which a wholly-owned subsidiary of Ritter

(the “Merger Sub”) will merge with and into Qualigen, with Qualigen surviving as a wholly-owned subsidiary

the merger is consummated, the combined company does not intend to continue the clinical development of RP-G28.

Pursuant to the

terms of the Merger Agreement, at the Effective Time, Ritter and John Beck, as the initial CVR Holders’

representative

and in his capacity as a consultant to Ritter, will enter into the CVR Agreement, pursuant to which, each stockholder

of record as of immediately prior to the Effective Time (after giving effect to the exercise of any outstanding stock options

or warrants and the conversion of any outstanding preferred stock, but not to be adjusted for any reverse split to be effected

in connection with the merger) will receive one CVR for each share of our capital stock held by such stockholder, entitling the

holder to receive the net proceeds, if any, from a Legacy Monetization that is entered into during the period beginning on the

date the Merger Agreement was signed and ending on the third anniversary of the closing date of the Merger.

Under the CVR Agreement,

the combined company agreed to commit up to $350,000 (subject to reduction pursuant to the terms of the Merger Agreement) for

certain expenses to be incurred by us in pursuing and closing any Legacy Monetization.

The CVRs will not be transferable by the

CVR Holders, except in certain limited circumstances, will not be certificated or evidenced by any instrument, will not accrue

interest and will not be registered with the SEC or listed for trading on any exchange.

The CVRs will terminate on the CVR Termination

No payments with respect to the CVRs will be payable in respect of any Legacy Monetization proceeds actually received after

the CVR Termination Date by us.

From and after the CVR Termination Date, any further proceeds received by us arising from any

Legacy Monetization will be retained and will not be distributed to the CVR Holders.

may not be successful in completing the merger.

If the merger is not completed, we may seek to pursue the development and commercialization

of RP-G28 as either a prescription drug, OTC product or dietary supplement for the consumer healthcare industry, which would,

in any case, require significant additional funding.

If we are unable to obtain funding for the development of RP-G28, whether

through potential collaborative, partnering or other strategic arrangements or otherwise, we will likely be required to cease

Risk Factors—Our business has been entirely dependent on the success of RP-G28, our only product

The failure of RP-G28 to demonstrate statistical significance in its pre-specified primary and secondary endpoints

in our Liberatus Phase 3 clinical trial has severely diminished our prospects to continue as a going concern.

If the merger is

not completed, we may seek to recommence the development and commercialization of RP-G28 as a prescription drug (which may require

the filing of a new IND) or explore its potential development as an OTC product or a dietary supplement for the consumer healthcare

industry, which would, in any case, require significant additional funding.

If we are unable to obtain funding for and to advance

the development of RP-G28, we would likely be required to cease operations.

Even if we are able to obtain funding for and to advance

the development of RP-G28 (as either a prescription drug or OTC product), we may never receive marketing approval for, or successfully

commercialize, RP-G28 for any indication.”

have incurred net losses in each year since our inception, including net losses of approximately $10.1 million for the

year ended December 31, 2019.

We had an accumulated deficit of approximately $80.3 million as of December 31, 2019.

Substantially

all our net losses resulted from costs incurred in connection with our research and development programs, stock-based compensation,

and from general and administrative costs associated with our operations.

operating expenses have decreased significantly since the completion

of our Phase 3 clinical trial of RP-G28 and we have made additional operating expense reductions following the announcement

of our Phase 3 clinical trial results, including reductions to executive and board compensation.

future development activities, clinical and pre-clinical testing, and commercialization of any product candidates, that have obtained

the necessary regulatory approvals, will require significant financing.

do not expect to generate revenue from product sales unless and until we successfully complete development and obtain marketing

approval for one or more product candidates, which we expect could take a number of years and is subject to significant uncertainty.

Accordingly, we will need to raise additional capital to pursue any future development activities, clinical and pre-clinical testing

and commercialization activities.

Until such time, if ever, as we can generate substantial revenue from product sales, we expect

to finance our operating activities through a combination of equity offerings, debt financings, government or other third-party

funding, commercialization, marketing and distribution arrangements and other collaborations, strategic alliances and licensing

arrangements.

However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable

terms or at all.

Our failure to raise capital or enter into such other arrangements as and when needed would have a negative impact

on its financial condition and its ability to develop product candidates.

and Development Expenses

our inception, we have focused our resources on our research and development activities, including conducting nonclinical studies

and clinical trials, manufacturing development efforts and activities related to regulatory filings for RP-G28.

Our research and

development expenses consist primarily of:

paid to consultants and CROs, including in connection with our nonclinical and clinical trials, and other related clinical

trial fees, such as for investigator grants, patient screening, laboratory work, clinical trial database management, clinical

trial material management and statistical compilation and analysis;

related to acquiring and manufacturing clinical trial materials;

of equipment, computers and furniture and fixtures;

related to compliance with regulatory requirements;

expenses for personnel in research and development functions.

inception through December 31, 2019, we have incurred approximately $39.6 million in research and development expenses.

Research and development expenses have been significantly reduced with the completion of our Phase 3 clinical trial of RP-G28

in early July 2019 and its decision to suspend development efforts of RP-G28 in September 2019.

expect that its research and development expenses will increase

in connection with any future development activities and clinical and pre-clinical testing.

costs consist primarily of professional fees for legal services to prosecute patents and maintain patent rights.

and Administrative Expenses

and administrative expenses include facilities costs, salaries, benefits, and stock-based compensation for employees, professional

fees for directors, fees for independent contractors, insurance and accounting and legal services.

expects that its general and administrative expenses will increase in connection with the proposed merger.

These increases may

relate to increased fees for outside consultants, lawyers and accountants, among other expenses.

Income and Interest Expense

income consists of interest earned on our cash, cash equivalents and short-term investments in marketable debt securities.

Accounting Policies and Estimates

discussion and analysis is based on our financial statements, which have been prepared in accordance with generally accepted accounting

principles in the United States (“GAAP”).

The preparation of these financial statements requires us to make estimates

and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent

assets and liabilities in our financial statements.

On an ongoing basis, we evaluate our estimates and judgments, including those

related to fair value of financial instruments, research and development costs, accrued expenses and stock-based compensation.

We base our estimates on historical experience, known trends and events and various other factors we believe to be reasonable

under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities

that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or

our significant accounting policies are more fully described in Note 3 to our financial statements appearing in “Item 8.

Financial Statements and Supplementary Data,”

we believe that the following accounting policies are the most critical to

aid you in fully understanding and evaluating our financial condition and results of operations.

Value of Financial Instruments

fair value of our financial instruments reflects the amounts that we estimate we would receive in connection with the sale of

an asset or pay in connection with the transfer of a liability in an orderly transaction between market participants at the measurement

date (exit price).

We disclose and recognize the fair value of its assets and liabilities using a hierarchy that prioritizes the

inputs to valuation techniques used to measure fair value.

The hierarchy gives the highest priority to valuations based upon unadjusted

quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations

based upon unobservable inputs that are significant to the valuation (Level 3 measurements).

The guidance establishes three levels

of the fair value hierarchy as follows:

1 - Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability

to access at the measurement date;

2 - Inputs other than quoted prices that are observable for the assets or liability either directly or indirectly, including inputs

in markets that are not considered to be active;

3 - Inputs that are unobservable.

and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant

to the fair value measurement.

Our assessment of the significance of a particular input to the fair value measurement in its entirety

requires management to make judgments and consider factors specific to the asset or liability.

recognize transfers between levels of the fair value hierarchy as of the end of the reporting period.

There were no transfers

within the hierarchy during the year ended December 31, 2019.

summary of the assets and liabilities carried at fair value in accordance with the hierarchy defined above is as follows:

Value Measurements Using

December 31, 2019

Value Measurements Using

December 31, 2018

and money market fund

debt securities

$ 12,241,74 8

use a market approach for determining the fair value of all its Level 1 money market funds and marketable securities.

To value our money market funds, we value the funds at $1 stable net asset value, which is the market pricing convention for identical

assets that we have the ability to access.

investments were classified as available-for-sale debt securities.

At December 31, 2019, the balance in our accumulated

other comprehensive comprised primarily of temporary unrealized gains related to our available-for-sale debt securities.

were no realized gains or losses recognized on the sale or maturity of available-for-sale debt securities for the year ended December

31, 2019 and as a result, we did not reclassify any amounts out of accumulated other comprehensive loss for the period.

no available-for-sale debt securities as of December 31, 2019.

and Development Costs

expense the cost of research and development as incurred.

Research and development expenses comprise costs incurred in performing

research and development activities, including clinical study costs, contracted services, and other external costs.

Nonrefundable

advance payments for goods and services that will be used in future research and development activities are expensed when the

activity is performed or when the goods have been received, rather than when payment is made, in accordance with ASC 730, Research

and Development .

part of the process of preparing our financial statements, we are required to estimate our accrued expenses.

This process involves

reviewing quotations and contracts, identifying services that have been performed on our behalf and estimating the level of service

performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual

The majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones

We make estimates of our accrued expenses as of each balance sheet date in our financial statements based on facts and

circumstances known to us at that time.

We periodically confirm the accuracy of our estimates with the service providers and make

adjustments if necessary.

The significant estimates in our accrued research and development expenses include fees due to service

base our expenses on our estimates of the services received and efforts expended pursuant to quotes and contracts with our service

providers that conduct research and development on our behalf.

The financial terms of these agreements are subject to negotiation,

vary from contract to contract and may result in uneven payment flows.

There may be instances in which payments made to our vendors

will exceed the level of services provided and result in a prepayment of the research and development expense.

In accruing service

fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period.

If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual accordingly.

Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status

and timing of services performed relative to the actual status and timing of services performed may vary and could result in us

reporting amounts that are too high or too low in any particular period.

compensation cost for equity awards granted to employees and nonemployees is measured at the grant date based on the calculated

fair value of the award using the Black-Scholes option-pricing model, and is recognized as an expense, under the straight-line

method, over the requisite service period (generally the vesting period of the equity grant).

If we determine that other methods

are more reasonable, or other methods for calculating these assumptions are prescribed by regulators, the fair value calculated

for our stock options could change significantly.

Higher volatility and longer expected lives would result in an increase to stock-based

compensation expense to non-employees determined at the date of grant.

addition to the assumptions used in the Black-Scholes option-pricing model, we also estimate a forfeiture rate to calculate the

stock-based compensation for our equity awards.

We will continue to use judgment in evaluating the expected volatility, expected

terms and forfeiture rates utilized for our stock-based compensation calculations on a prospective basis.

Growth Company Status

April 5, 2012, the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) was enacted.

Section 107 of the JOBS Act

provides that an “emerging growth company”

can take advantage of the extended transition period provided in Section

7(a)(2)(B) of the Securities Act of 1933, as amended (the Securities Act), for complying with new or revised accounting standards.

In other words, an “emerging growth company”

can delay the adoption of certain accounting standards until those standards

would otherwise apply to private companies.

We have elected to use the extended transition period for complying with new or revised

accounting standards under Section 102(b)(1) of the JOBS Act.

This election allows us to delay the adoption of new or revised

accounting standards that have different effective dates for public and private companies until those standards apply to private

As a result of this election, our financial statements may not be comparable to companies that comply with public company

effective dates.

an “emerging growth company,”

we are entitled to rely on certain exemptions and reduced reporting requirements, including

without limitation, (i) not having to provide an auditor’s attestation report on its system of internal controls over financial

reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (ii) not having to comply with any requirement that may be

adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional

information about the audit and the financial statements, known as the auditor discussion and analysis.

We will remain an emerging

growth company until December 31, 2020.

of Operations

of the years ended December 31, 2019 and 2018

following table summarizes the results of our operations for the years ended December 31, 2019 and 2018, together with the changes

in those items in dollars and as a percentage:

For the Years Ended

Statements of Operations Data:

Operating costs and expenses

Research and development (a)

$ (6,132,968 )

General and administrative

Total operating costs and expenses

Loss from operations

(10,844,185 )

(17,889,369 )

Other income:

Interest income

Settlement of accounts payable (a)

Total other income

$ (10,133,019 )

$ (16,868,711 )

For comparative presentation purposes, settlement of accounts payable of $893,823 for the

year ended December 31, 2018 was reclassified out of research and development and into settlement of accounts payable under

other income.

and Development Expenses

Research and development

expenses decreased by approximately $6.1 million, or 50%, for the year ended December 31, 2019 as compared to the

year ended December 31, 2018.

The primary reason for the decrease is the completion of our Phase 3 clinical trial in early July

costs were approximately $146,000 and $204,000 for the years ended December 31, 2019 and 2018, respectively, representing

a decrease of approximately $58,000, or (28%).

The primary reason for the decrease is that our costs and expenses related to the

maintenance of patent rights, the prosecution of patents, the application for the issuance of patents, as well as the preparation

to file national patent applications in certain foreign countries was lower in 2019 than 2018.

and Administrative Expenses

and administrative expenses decreased by approximately $0.9 million, or 16%, for the year ended December 31, 2019

as compared to the year ended December 31, 2018.

The decrease in general and administrative expenses was mainly due to a decrease

in payroll and related expenses of approximately $0.6 million, a decrease in stock-based compensation expense of approximately

$0.2 million, a decrease of approximately $0.2 million in state taxes, a decrease of approximately $0.2 million in business

development expenses and a decrease of approximately $0.1 million in recruitment expenses, partially offset

by an increase in professional fees of approximately $0.4 million during the year ended December 31, 2019.

Other income decreased

by approximately $0.3 million, or 34%, during the year ended December 31, 2019 as compared to the year ended

December 31, 2018.

The decrease was due to the smaller gain on settlement of accounts payable of approximately $0.6

million during the year ended December 31, 2019 as compared to approximately $0.9 million during the year ended December 31,

and Capital Resources

our inception, we have incurred net losses and negative cash flows from operations, and, as of December 31, 2019, we had an accumulated

deficit of approximately $80.3 million.

Substantially all our net losses resulted from costs incurred in connection with

our research and development programs, stock-based compensation, and from general and administrative costs associated with our

December 31, 2019, we had net working capital of approximately $0.5 million and cash and cash equivalents of approximately

$1.7 million.

We have not generated any product revenues and have not achieved profitable operations.

Capital Common Stock Purchase Agreement

On May 4, 2017, we entered into a common stock purchase agreement

with Aspire Capital Fund, LLC (“Aspire Capital”), which was amended and restated on March 29, 2019 and on July 23,

2019 (as amended and restated, the “Aspire Purchase Agreement”).

The Aspire Purchase Agreement provided access to us of up to an aggregate of $6.5 million in proceeds through

the sale of shares of our common stock through March 31, 2021.

As of December 31, 2019,

we had not sold any shares of our common stock under this agreement.

Subsequent to December 31, 2019 we sold approximately

1.8 million shares of our common stock under this agreement resulting in proceeds to us of approximately $0.5 million.

2018 Private Placement Financing

November 5, 2018, we closed a PIPE financing with certain institutional investors, a key vendor and a member of our board of directors.

Net proceeds from the PIPE financing were approximately $5.5 million, after deducting placement agent fees and other offering

The securities sold by us consisted of 6,000 shares of a newly designated class of our Series B convertible preferred

stock, with a stated value of $1,000 per share and an initial conversion price per share of $1.30 (subject to customary adjustment

for stock dividends and stock splits) and warrants to purchase an aggregate of 2,307,685 shares of our common stock.

Each investor

received a warrant to purchase a number of shares of common stock equal to one half the number of shares of common stock into

which their Series B convertible preferred stock is initially convertible.

The warrants are exercisable immediately for a five-year

period and have an exercise price of $1.30 per share (subject to customary adjustment for stock dividends and stock splits but

without the down-round protective provisions of previously issued warrants).

The proceeds received in the PIPE financing were

allocated to each instrument on a relative fair value basis.

Total proceeds of $6.0 million were allocated as follows:

to warrants issued and $4.6 million to Series B convertible preferred stock.

investors in the PIPE financing who at the time of closing of the PIPE financing owned shares of our Series A convertible preferred

stock, exchanged, on a 1 for 1 share basis, their shares of Series A convertible preferred stock for shares of our newly designated

class of Series C convertible preferred stock, with a stated value of $1,000 per share and convertible into shares of our common

stock at an initial conversion price per share of $1.64 (subject to customary adjustment for stock dividends and stock splits).

At-the-Market

Offering Agreement

November 6, 2019, we entered into an ATM Agreement with AGP, pursuant to which we may offer and sell, from time to time

through AGP, shares of our common stock (the “Placement Shares”) having an aggregate offering price of up to

$3,673,159 (which was subsequently increased to $8,030,917), subject to the terms and conditions of the ATM Agreement.

earlier terminated pursuant to the terms of the ATM Agreement, the ATM Agreement will automatically terminate upon the

earlier to occur of (i) issuance and sale of all of the Placement Shares to or through AGP and (ii) August 1, 2022.

of December 31, 2019, we sold approximately 8.1 million shares of our common stock under the ATM Agreement resulting in net

proceeds to us of approximately $1.4 million after commissions and expenses of approximately $50,000 .

Subsequent to

December 31, 2019 we sold approximately 16.8 million shares of our common stock under this agreement resulting in net

proceeds to us of approximately $4.4 million after commissions and expenses of approximately $0.2 million.

following table sets forth the significant sources and uses of cash for the periods set forth below:

the Year Ended

Net cash (used in) provided by:

$ (14,516,690 )

$ (13,332,927 )

Investing activities

Net (decrease)

increase in cash

$ (6,112,288 )

$ (14,819,712 )

use of cash in both periods resulted primarily from our net losses adjusted for non-cash charges and changes in components of

working capital.

Net cash used in operating activities was approximately $14.5 million during the year ended December 31,

2019 compared to $13.3 million during the year ended December 31, 2018.

The increase in cash used in operating activities was

driven primarily by the initiation in June 2018, of our Phase 3 clinical trial of RP-G28 and increasing activity in that trial

through its completion in September 2019.

cash provided by investing activities was approximately $7.0 million during the year ended December 31, 2019 as compared to net

cash used in investing activities was approximately $7.0 during the year ended December 31, 2018.

These receipt and expenditures

were mostly related to our investment in marketable debt securities and for purchase of property and equipment

used in our business.

cash provided by financing activities was $1.4 million during the year ended December 31, 2019 as compared to approximately $5.5

million during the year ended December 31, 2018.

Cash provided by financing activities in 2019 came from ATM Agreement and cash

provided by financing activities in 2018 came from proceeds from the November 2018 private placement financing.

Funding Requirements

date, we have not generated any revenue.

We do not know when, or if, we will generate any revenue from product sales.

expect to generate revenue from product sales unless and until we successfully complete development and obtain marketing approval

for one or more product candidates, which we expects could take a number of years and is subject to significant uncertainty.

Obligations and Commitments

Services Agreement

May 2018, Ritter entered into an Amended and Restated Master Services Agreement (“Service Agreement”) with a CRO,

pursuant to which the CRO agreed to perform certain services related to the management and execution of certain clinical trials

involving RP-G28.

The Services Agreement supersedes the Master Service Agreement, dated August 30, 2016, that Ritter entered into

with the CRO.

The precise services to be performed by the CRO under the Services Agreement will be mutually agreed upon by the

parties in writing and set forth in one or more task orders.

Ritter is not obligated to purchase any minimum or specific volume

or dollar amount of services under the Services Agreement.

term of the Services Agreement is four years from the effective date of the Service Agreement unless earlier terminated.

may terminate the Services Agreement or any task without cause immediately upon giving the CRO notice of such termination.

CRO may, with advance notice to Ritter, terminate a task order if Ritter has materially defaulted on its obligations under the

Services Agreement or any task order and has not cured such material default, as described in the Services Agreement.

Clinical Supply and Cooperation Agreement

with Ricerche Sperimentali Montale SpA (“RSM”)

Under the terms of

the Supply Agreement with RSM on July 22, 2015, Ritter is required to pay RSM $400,000 within 10 days following FDA approval of

an NDA for the first product owned or controlled by Ritter using Improved GOS as its active pharmaceutical ingredient.

Letter Amendments

October 15, 2019, Ritter entered into amendments to the respective employment offer letters of Andrew J.

Ritter, its Chief Executive

Officer, John W.

Beck, its Chief Financial Officer, and Ira E.

Ritter, its Chief Strategic Officer (the “Offer Letter Amendments”).

Pursuant to the terms of the Offer Letter Amendments, each of Ritter’s executive officers agreed to defer a portion of his

annual base salary (the “Deferred Amounts”), as set forth below, until such time as the board of directors, in its

sole discretion, decides to pay the Deferred Amounts (or any portion of the Deferred Amounts) to the executive officers, if ever.

of Executive Officer

Deferred Amount

We lease office space

for our headquarters in California.

The lease provides for a term of sixty-one (61) months, commencing on October 1, 2015.

paid no rent for the first month of the term and paid base rent of $9,174 per month for months 2 through 13 of the term, with

increasing base rent for each twelve-month period thereafter under the term of the lease to a maximum of $10,325 per month

for months 50 through 61.

The base rent payments do not include our proportionate share of any operating expenses, including

real estate taxes.

We paid $9,733 per month in base rent with normal escalations until November 2018, after which our monthly

payment increased to $10,023 per month until November 2019 and will increase to $10,325 per month from November 2019 to

October 2020.

The base rent payments do not include our proportionate share of any operating expenses, including real estate

We have the option to extend the term of the lease for one five-year term, provided that the rent would be

subject to market adjustment at the beginning of the renewal term.

We will recognize rent expense on a straight-line basis

over the lease term.

expense, recognized on a straight-line basis, was approximately $117,000 and $118,000 for the years ended December 31, 2019 and

2018, respectively, and is recorded in general and administrative expenses in the accompanying statements of operations.

determine if a contract contains a lease at inception.

Our material operating lease relates to a single office space.

lease assets and liabilities are recognized at the lease commencement date.

Operating lease liabilities represent the present

value of lease payments not yet paid.

Operating lease assets represent our right to use an underlying asset and are based upon

the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and

impairment of operating lease assets.

To determine the present value of lease payments not yet paid, we estimate incremental secured

borrowing rates corresponding to the maturities of the leases.

As we have no outstanding debt or committed credit facilities,

secured or otherwise, we estimate this rate based on prevailing financial market conditions, comparable company and credit analysis,

and management judgment.

leases typically contain rent escalations over the lease term.

We recognize expense for these leases on a straight-line basis

over the lease term.

Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce

our right-of-use (“ROU”) asset related to the lease.

These are amortized through the ROU asset as reductions of expense

over the lease term.

Our lease agreement does not contain any material residual value guarantees or material restrictive covenants.

We have no lease agreements with lease and non-lease components.

to the adoption of Topic 842, the Company’s policy elections were as follows:

of lease and non-lease components

we do not currently have any lease agreement with lease and non-lease components, we elected this expedient to account for

lease and non-lease components as separate components.

have elected the short-term lease recognition exemption for all applicable classes of underlying assets.

Short-term disclosures

include only those leases with a term greater than one month and 12 months or less, and expense is recognized on a straight-line

basis over the lease term.

Leases with an initial term of 12 months or less, that do not include an option to purchase the

underlying asset that we are reasonably certain to exercise, are not recorded on the balance sheet.

information related to our leases is provided below.

December 31, 2019

Supplemental Cash

Flows Information

Cash paid for amounts included in

the measurement of lease liability:

cash flows from operating lease

Operating lease asset obtained in

exchange for lease obligation:

Operating lease

Remaining lease

Operating lease

Discount rate

Operating lease

payments under non-cancelable extended operating leases having initial or remaining terms of one year or more are as follows for

the remaining fiscal year and thereafter:

minimum lease payments year ending December 31,

2020 (10 months)

minimum lease payments, undiscounted

imputed interest

value of lease liabilities

Operating lease liabilities reported

as of December 31, 2019:

Operating lease

liabilities-current

lease liabilities-non-current

Sheet Arrangements

did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements as defined under SEC

Quantitative and Qualitative Disclosures about Market Risk

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 5. Market for Registrant’s Common Equity