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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to __________________

Commission File Number: 001-40458

SYNAPTOGENIX, INC.

(Exact name of registrant as specified in its charter)

Delaware

46-1585656

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer

Identification No.)

1185 Avenue of the Americas, 3rd Floor

New York, New York

10036

(Address of principal executive offices)

(Zip code)

(973) 242-0005

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

    

Trading Symbol(s)

    

Name of each exchange on
which registered

Common Stock, $0.0001 par value per share

    

SNPX

    

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

¨

Accelerated filer

¨

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ¨ No 

As of August 10, 2021, there were 6,136,302 shares of the registrant’s common stock, $0.0001 par value per share, issued and outstanding.

Table of Contents

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain statements in this report contain or may contain forward-looking statements. These statements, identified by words such as “plan,” “anticipate,” “believe,” “estimate,” “should,” “expect” and similar expressions, include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, the significant length of time associated with drug development and related insufficient cash flows and resulting illiquidity, our patent portfolio, our inability to expand our business, significant government regulation of pharmaceuticals and the healthcare industry, lack of product diversification, availability of our raw materials, existing or increased competition, stock volatility and illiquidity, and the our failure to implement our business plans or strategies. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this report in its entirety, including but not limited to our financial statements and the notes thereto and the risks described in Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the Securities and Exchange Commission (the “SEC”) on March 30, 2021. We advise you to carefully review the reports and documents we file from time to time with the SEC including our current reports on Form 8-K. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to publicly release any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

1

Table of Contents

TABLE OF CONTENTS

Page

Part I – FINANCIAL INFORMATION

3

 

Item 1. Financial Statements (Unaudited)

3

 

Condensed Balance Sheets as of June, 2021 and December 31, 2020

3

 

Condensed and Combined Statements of Operations for the three and six months ended June 30, 2021 and 2020

4

 

Condensed and Combined Statements of Changes in Shareholders’ Equity and Parent Company Investment for the three and six months ended June 30, 2021 and 2020

5

 

Condensed and Combined Statements of Cash Flows for the three and six months ended June 30, 2021 and 2020

7

 

Notes to Condensed Financial Statements

8

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

24

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

33

 

Item 4. Controls and Procedures

33

 

Part II – OTHER INFORMATION

34

 

Item 1. Legal Proceedings

34

 

Item 1A. Risk Factors

34

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

34

 

Item 3. Defaults upon Senior Securities

34

 

Item 4. Mine Safety Disclosures

34

 

Item 5. Other Information

34

 

Item 6. Exhibits

35

 

Signatures

36

2

Table of Contents

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

Synaptogenix, Inc.

Condensed Balance Sheets

(Unaudited)

    

June 30, 

    

December 31, 

 

2021

 

2020

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

31,702,086

$

5,795,055

Grant receivable

 

127,445

Prepaid expenses and other current assets

 

1,238,158

806,289

TOTAL CURRENT ASSETS

 

32,940,244

 

6,728,789

 

 

Fixed assets, net of accumulated depreciation

 

19,725

 

22,212

 

 

TOTAL ASSETS

$

32,959,969

$

6,751,001

 

  

 

  

 

  

 

  

LIABILITIES AND SHAREHOLDERS' EQUITY

 

  

 

  

 

  

 

  

CURRENT LIABILITIES

 

  

 

  

Accounts payable

$

648,164

$

1,260,335

Accrued expenses

 

121,809

 

352,154

 

 

TOTAL CURRENT LIABILITIES

 

769,973

 

1,612,489

 

  

 

  

Commitments and contingencies

 

  

 

  

 

  

 

  

SHAREHOLDERS' EQUITY

Preferred stock - 1,000,000 shares authorized as of June 30, 2021, $0.0001 par value;

0 shares issued and outstanding as of June 30, 2021 and December 31, 2020

Common stock - 150,000,000 shares authorized as of June 30, 2021, $0.0001 par value;

6,038,798 shares issued and outstanding as of June 30, 2021 and

1,257,579 shares as of December 31, 2020.

604

126

Additional paid-in capital

39,168,084

6,668,859

Accumulated deficit

(6,978,692)

(1,530,473)

TOTAL SHAREHOLDERS' EQUITY

 

32,189,996

 

5,138,512

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

32,959,969

$

6,751,001

See accompanying notes to condensed financial statements.

3

Table of Contents

Synaptogenix, Inc.

Condensed Statements of Operations

(Unaudited)

    

Three Months Ended

    

Three Months Ended

    

Six Months Ended

    

Six Months Ended

June 30, 

June 30, 

June 30, 

June 30, 

2021

2020

2021

2020

OPERATING EXPENSES:

Research and development

 

$

986,280

$

600,065

$

2,138,060

$

993,310

General and administrative

 

1,308,893

 

2,407,702

 

3,312,306

 

4,622,668

 

  

 

 

  

 

TOTAL OPERATING EXPENSES

 

2,295,173

 

3,007,767

 

5,450,366

 

5,615,978

 

  

 

 

  

 

OTHER INCOME (EXPENSE):

 

  

 

 

  

 

Interest income

 

1,331

 

75,641

 

2,147

 

146,508

 

  

 

 

  

 

Net loss before income taxes

 

2,293,842

 

2,932,126

 

5,448,219

 

5,469,470

 

  

 

 

  

 

Provision for income taxes

 

 

 

 

 

  

 

 

  

 

Net loss

$

2,293,842

$

2,932,126

$

5,448,219

$

5,469,470

 

  

 

  

 

  

 

  

PER SHARE DATA:

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Basic and diluted loss per common share

$

0.58

$

2.33

$

1.53

$

4.35

 

  

 

  

 

  

 

  

Basic and diluted weighted average common shares outstanding

 

3,971,200

 

1,257,579

 

3,551,600

 

1,257,579

See accompanying notes to condensed financial statements.

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Synaptogenix, Inc.

Condensed Statements of Changes in Shareholders’ Equity

 

(Unaudited)

    

Three Months Ended June 30, 2020

Additional

Parent

Common Stock

Preferred Stock

Paid-In

Company

Accumulated

    

Shares

    

Amount

    

Shares

    

Amount

    

Capital

    

Investment

    

Deficit

    

Total

Balance April 1, 2020

 

$

$

$

$

$

32,175,155

$

$

32,175,155

Net change in Parent company investment

 

 

 

 

 

 

 

 

Parent company stock based compensation

 

 

 

 

 

 

404,280

 

 

404,280

Consulting services paid by issuance of Parant company common stock warrants

 

 

 

 

  

 

  

 

150,529

 

 

150,529

Net loss

 

 

 

 

 

 

(2,932,126)

 

 

(2,932,126)

Balance June 30, 2020

$

$

$

$

$

29,797,838

$

$

29,797,838

    

Six Months Ended June 30, 2020

Additional

Parent

Common Stock

Preferred Stock

Paid-In

Company

Accumulated

    

Shares

    

Amount

    

Shares

    

Amount

    

Capital

    

Investment

    

Deficit

    

Total

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Balance January 1, 2020

 

$

$

$

$

17,418,765

$

$

17,418,765

 

  

 

  

  

 

  

 

  

 

  

 

  

 

  

Net change in Parent company investment

 

 

 

 

 

16,519,988

 

 

16,519,988

 

  

 

  

  

 

  

 

  

 

  

 

  

 

  

Parent company stock based compensation

 

 

 

 

 

1,061,096

 

 

1,061,096

 

  

 

  

  

 

  

 

  

 

  

 

  

 

  

 Consulting services paid by issuance of Parant company common stock warrants

 

 

 

 

 

267,459

 

 

267,459

Net loss

 

 

 

 

 

(5,469,470)

 

 

(5,469,470)

 

  

 

  

  

 

  

 

  

 

  

 

  

 

  

Balance June 30, 2020

 

$

$

$

$

29,797,838

$

$

29,797,838

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Three Months Ended June 30, 2021

Additional

Parent

Common Stock

Preferred Stock

Paid-In

Company

Accumulated

    

Shares

    

Amount

    

Shares

    

Amount

    

Capital

    

Investment

    

Deficit

    

Total

Balance April 1, 2021

 

3,508,129

$

351

 

$

$

20,093,707

$

$

(4,684,850)

$

15,409,208

Reverse stock split rounding

 

(345)

 

 

 

 

(1,529)

 

 

 

(1,529)

Stock based compensation

 

 

 

 

 

151,552

 

 

 

151,552

Issuance of warrants for consulting fees

 

 

 

 

 

52,681

 

 

 

52,681

Issuance of common stock for consulting fees

 

2,590

 

 

 

 

18,156

 

 

 

18,156

Private placement of common stock and warrants

 

1,587,030

 

159

 

 

 

11,271,335

 

 

 

11,271,494

Exercise of common stock warrants

 

941,394

 

94

 

 

 

7,582,182

 

 

 

7,582,276

Net loss

 

 

 

 

 

 

 

(2,293,842)

 

(2,293,842)

Balance June 30, 2021

6,038,798

$

604

$

$

39,168,084

$

$

(6,978,692)

$

32,189,996

    

Six Months Ended June 30, 2021

Additional

Parent

Common Stock

Preferred Stock

Paid-In

Company

Accumulated

    

Shares

    

Amount

    

Shares

    

Amount

    

Capital

    

Investment

    

Deficit

    

Total

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Balance January 1, 2021

 

1,257,579

$

126

 

$

$

6,668,859

$

$

(1,530,473)

$

5,138,512

Reverse stock split rounding

(345)

(1,529)

(1,529)

Stock based compensation

 

 

 

 

 

719,791

 

 

 

719,791

Issuance of warrants for consulting fees

 

 

 

 

 

396,848

 

 

 

396,848

Issuance of common stock for consulting fees

2,590

18,156

18,156

Private placements of common stock and warrants

 

3,837,580

384

 

 

 

23,783,777

 

  

 

  

 

23,784,161

Exercise of common stock warrants

941,394

94

7,582,182

7,582,276

Net loss

 

 

 

 

 

 

 

(5,448,219)

 

(5,448,219)

Balance June 30, 2021

 

6,038,798

$

604

 

$

$

39,168,084

$

$

(6,978,692)

$

32,189,996

See accompanying notes to condensed financial statements.

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Synaptogenix, Inc.

Condensed Statements of Cash Flows

(Unaudited)

    

Six Months Ended

    

Six Months Ended

June 30, 2021

June 30, 2020

CASH FLOW USED IN OPERATING ACTIVITIES

Net loss

$

(5,448,219)

$

(5,469,470)

Adjustments to reconcile net loss to net cash used by operating activities

Parent company stock based compensation

1,061,096

Stock based compensation

 

719,791

 

Consulting services paid by issuance of common stock

18,156

Consulting services paid by issuance of common stock warrants

 

396,848

 

Consulting services paid by issuance of Parent company common stock warrants

 

 

267,459

Depreciation expense

 

2,487

 

2,407

Change in assets and liabilities

 

  

 

  

Increase in prepaid expenses

 

(431,869)

 

(95,447)

(Decrease) increase in accounts payable

 

(612,171)

 

554,551

(Decrease) increase in accrued expenses

 

(230,345)

 

33,971

Total adjustments

 

(137,103)

 

1,824,037

 

  

 

  

Net Cash Used in Operating Activities

 

(5,585,322)

 

(3,645,433)

 

  

 

  

CASH FLOWS USED IN INVESTING ACTIVITIES

 

  

 

  

Purchase of fixed assets

 

 

(5,413)

 

  

 

  

Net Cash Used in Investing Activities

 

 

(5,413)

 

  

 

  

CASH FLOWS FROM FINANCING ACTIVITIES

 

  

 

  

Private placements of common stock and warrants

 

23,784,161

 

Proceeds from exercise of investor warrants

 

7,582,276

 

Grant funding received

127,445

Cash in lieu of shares for reverse stock split

 

(1,529)

 

Net transfer from parent

16,519,988

 

  

 

  

Net Cash Provided by Financing Activities

 

31,492,353

 

16,519,988

 

  

 

  

NET INCREASE IN CASH AND EQUIVALENTS

 

25,907,031

 

12,869,142

 

  

 

  

CASH AND EQUIVALENTS AT BEGINNING OF PERIOD

 

5,795,055

 

17,382,038

 

  

 

  

CASH AND EQUIVALENTS AT END OF PERIOD

$

31,702,086

$

30,251,180

See accompanying notes to condensed financial statements.

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SYNAPTOGENIX, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

Unless the context otherwise indicates, references in these Notes to the accompanying financial statements to “we,” “us,” “our” and “the Company” refer to Synaptogenix, Inc. (formerly known as Neurotrope Bioscience, Inc.), a Delaware corporation. References to “Neurotrope”, “Parent Company” or “Parent” refer to Neurotrope, Inc., a Nevada corporation.

Note 1 – Organization, Business, Risks and Uncertainties:

Organization and Business

On May 17, 2020, Neurotrope, Inc. (“Neurotrope” or “the Parent”) announced plans for the complete legal and structural separation of its wholly owned subsidiary, Neurotrope Bioscience, Inc. from Neurotrope (the “Spin-Off”). Under the Separation and Distribution Agreement, Neurotrope planned to distribute all of its equity interest in this wholly owned subsidiary to Neurotrope’s stockholders. Following the Spin-Off, Neurotrope would not own any equity interest in the Company, and we would operate independently from Neurotrope. On December 7, 2020 we became an independent company, Synaptogenix, Inc., a Delaware corporation (formerly known as Neurotrope Bioscience, Inc.) (the “Company” or “Synaptogenix”). Our shares of common stock are listed on The Nasdaq Capital Market under the symbol “SNPX.”

 

On December 6, 2020, Neurotrope approved the final distribution ratio and holders of record of Neurotrope common stock, Neurotrope preferred stock and certain warrant holders as of November 30, 2020 (the “Spin-Off Record Date”) and received a pro rata distribution at the rate of (i) one share of Synaptogenix, Inc. common stock for every five shares of Neurotrope common stock held, (ii) one share of Synaptogenix, Inc. common stock for every five shares of Neurotrope common stock issuable upon conversion of Neurotrope preferred stock held and (iii) one share of Synaptogenix, Inc. common stock for every five shares of Neurotrope common stock issuable upon exercise of certain Neurotrope warrants held that were entitled to participate in the Spin-Off pursuant to the terms thereof (collectively, the “Distribution”).

Neurotrope Bioscience, Inc. was incorporated in Delaware on October 31, 2012 to advance new therapeutic and diagnostic technologies in the field of neurodegenerative disease, primarily Alzheimer’s disease (“AD”). The Company is collaborating with Cognitive Research Enterprises, Inc. (formerly known as the Blanchette Rockefeller Neurosciences Institute, or BRNI) (“CRE”), a related party, in this process. The exclusive rights to certain technology were licensed by CRE to the Company on February 28, 2013 (see Note 4 - Related Party Transactions and Licensing / Research Agreements).

 

Spin-Off

 

On December 1, 2020, Neurotrope, Petros Pharmaceuticals, Inc., a Delaware corporation (“Petros”), PM Merger Sub 1, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Petros (“Merger Sub 1”), PN Merger Sub 2, Inc., a Delaware corporation and a wholly-owned subsidiary of Petros (“Merger Sub 2”), and Metuchen Pharmaceuticals LLC, a Delaware limited liability company (“Metuchen”), consummated the transactions (the “Mergers”) contemplated by that certain Agreement and Plan of Merger by and among the Company, Petros, Merger Sub 1, Merger Sub 2 and Metuchen, dated as of May 17, 2020 (the “ Merger Agreement”), as amended (the “Mergers”).

 

As a condition to the Mergers, Neurotrope approved a transaction (the “Spin-Off”), which became effective on December 7, 2020, whereby (i) any cash in excess of $20,000,000, subject to adjustment as provided in the Merger Agreement, and all of the operating assets and liabilities of Neurotrope not retained by Neurotrope in connection with the Mergers were contributed to Neurotrope Bioscience, Inc., and (ii) holders of record of Neurotrope common stock, Neurotrope preferred stock and certain warrants that were not amended and restated as of the Spin-Off Record Date received a pro rata distribution at the rate of (i) one share of Synaptogenix, Inc. common stock for every five shares of Neurotrope common stock held, (ii) one share of Synaptogenix common stock for every five shares of Neurotrope common stock issuable upon conversion of Neurotrope preferred stock held and (iii) one share of Synaptogenix, Inc. common stock for every five shares of Neurotrope common stock issuable upon exercise of certain Neurotrope warrants held that were entitled to participate in the Spin-Off pursuant to the terms thereof (collectively, the “Distribution”). Any fractional shares were paid in cash.

 

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The holders of Neurotrope’s amended and restated warrants to purchase 4,889,158 shares of Neurotrope common stock (the “A&R Warrants”) received 977,831 warrants to purchase shares of Synaptogenix common stock upon the exercise of such A&R Warrants held as of the Spin-Off Record Date (collectively, the “Spin-Off Warrants”). All the warrants have five year terms from December 2, 2020. See Note 8 – Common Stock Warrants.

 

On December 7, 2020, the Company filed an amended and restated certificate of incorporation which, among other things, changed its name to Synaptogenix, Inc.

 

In connection with the separation from Neurotrope, we entered into a Separation and Distribution Agreement and several other ancillary agreements. These agreements govern the relationship between the parties after the separation and allocate between the parties various assets, liabilities, rights and obligations following the separation, including employee benefits, intellectual property, information technology, insurance and tax-related liabilities. 

 

Liquidity Uncertainties

 

As of June 30, 2021, the Company had approximately $31.7 million in cash and cash equivalents as compared to $5.8 million at December 31, 2020. The Company expects that its current cash and cash equivalents, $32.1 million as of the date of this quarterly report, which includes cash received during July and August of approximately $1.3 million consisting of cash received from exercise of investor warrants of approximately $800,000 plus reimbursement of trial expenses of approximately $500,000 from the NIH, will be sufficient to support its projected operating requirements for at least the next 12 months from this date. The operating requirements include the current development plan for Bryostatin-1, our novel drug targeting the activation of PKC epsilon.

 

The Company expects to need additional capital in order to initiate and pursue potential additional development projects, including the continuing development beyond the current 2020 Phase 2 trial. Any additional equity financing, if available, may not be on favorable terms and would likely be significantly dilutive to the Company’s current stockholders and debt financing, if available, may involve restrictive covenants. If the Company is able to access funds through collaborative or licensing arrangements, it may be required to relinquish rights to some of its technologies or product candidates that the Company would otherwise seek to develop or commercialize on its own, on terms that are not favorable to the Company. The Company’s ability to access capital when needed is not assured and, if not achieved on a timely basis, will likely have a materially adverse effect on our business, financial condition and results of operations.

 

Other Risks and Uncertainties

 

The Company operates in an industry that is subject to rapid technological change, intense competition, and significant government regulation. The Company’s operations are subject to significant risk and uncertainties including financial, operational, technological, regulatory and other risk. Such factors include, but are not necessarily limited to, the results of clinical testing and trial activities, the ability to obtain regulatory approval, the limited supply of raw materials, the ability to obtain favorable licensing, manufacturing or other agreements, including risk associated with our CRE licensing agreement,  and the ability to raise capital to achieve strategic objectives.

 

CRE has entered into a material transfer agreement with the National Cancer Institute of the National Institutes of Health (“NCI”), pursuant to which the NCI has agreed to supply bryostatin required for the Company’s pre-clinical research and clinical trials. This agreement does not provide for a sufficient amount of bryostatin to support the completion of all of the clinical trials that the Company is required to conduct in order to seek U.S. Food and Drug Administration (“FDA”). Therefore, CRE or the Company would have to enter into one or more subsequent agreements with the NCI for the supply of additional amounts of bryostatin. If CRE or the Company were unable to secure such additional agreements, or if the NCI otherwise discontinues the supply, the Company would have to either secure another source of bryostatin or discontinue its efforts to develop and commercialize bryostatin for the treatment of AD. In June 2020, the Company entered into a supply agreement (the "Supply Agreement") with BryoLogyx Inc. ("BryoLogyx"), pursuant to which BryoLogyx agreed to be the Company's exclusive supplier of synthetic Bryostatin-1. Pursuant to the terms of the Supply Agreement, the Company received its initial order of one gram synthetic Bryostatin-1.

 

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The Company also faces the ongoing risk that the coronavirus pandemic may slow, for an unforeseeable period, the conduct of the Company’s trial. In order to prioritize patient health and that of the investigators at clinical trial sites, we will monitor enrollment of new patients in our 2020 Phase 2 clinical trial. In addition, some patients may be unwilling to enroll in our trials or be unable to comply with clinical trial protocols if quarantines or travel restrictions impede patient movement or interrupt healthcare services. These and other factors outside of our control could delay our ability to conduct clinical trials or release clinical trial results. In addition, the effects of a pandemic resurgence may also increase non-trial costs such as insurance premiums, increase the demand for and cost of capital, increase loss of work time from key personnel, and negatively impact our key clinical trial vendors and suppliers.

Note 2 – Summary of Significant Accounting Policies:

Basis of Presentation

Subsequent to the Spin-Off, the Company’s financial statements as of December 31, 2020 and for the period December 7, 2020 to December 31, 2020 are presented on a consolidated basis as the Company became a standalone public company on December 7, 2020. The Company’s combined financial statements for the period from January 1, 2020 through December 6, 2020 that is included in the results of operations for the six months ending June 30, 2020 and the year ended December 31, 2020 were derived from the consolidated financial statements and accounting records of Neurotrope, the former Parent. These combined financial statements reflect the historical results of operations, financial position and cash flows of the former Parent’s Spin-Off business which was a wholly owned subsidiary of Neurotrope, Neurotrope Bioscience, Inc., and represented substantially all the business of Neurotrope. These financial statements reflect our financial position, results of operations and cash flows as we were historically managed, in conformity with accounting principles generally accepted in the United States (“GAAP”).

 

All intercompany transactions between the Company and Neurotrope have been included in our financial statements and are considered to be effectively settled for cash at the time the Spin-Off was recorded. The total net effect of the settlement of these intercompany transactions is reflected in our statements of cash flow as a financing activity and in the balance sheets as “Parent company investment”. See Note 9.

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, the unaudited condensed financial statements included herein contain all adjustments necessary to present fairly the Company's financial position and the results of its operations and cash flows for the interim periods presented. Such adjustments are of a normal recurring nature. The results of operations for the six months ended June 30, 2021 may not be indicative of results for the full year. These unaudited condensed financial statements should be read in conjunction with the audited condensed financial statements and the notes to those statements for the year ended December 31, 2020 included in our Annual Report on Form 10-K.

Use of Estimates:

The preparation of financial statements in conformity with GAAP requires management to make significant estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Management evaluates its estimates on an ongoing basis using historical experience and other factors, including the general economic environment and actions it may take in the future. The Company adjusts such estimates when facts and circumstances dictate. However, these estimates may involve significant uncertainties and judgments and cannot be determined with precision. In addition, these estimates are based on management’s best judgment at a point in time and as such these estimates may ultimately differ from actual results. Changes in estimates resulting from weakness in the economic environment or other factors beyond the Company’s control could be material and would be reflected in the Company’s financial statements in future periods.

Cash and Cash Equivalents and Concentration of Credit Risk:

The Company considers all highly liquid cash investments with an original maturity of three months or less when purchased to be cash equivalents. At June 30, 2021, the Company’s cash balances that exceed the current insured amounts under the Federal Deposit Insurance Corporation (“FDIC”) were approximately $9.0 million. In addition, approximately $22.7 million included in cash and cash equivalents were invested in a money market fund, which is not insured under the FDIC.

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Fixed Assets and Leases:

 

All leases with a lease term greater than 12 months, regardless of lease type classification, are recorded as an obligation on the balance sheet with a corresponding right-of-use asset. The Company does not have any leases greater than 12 months in duration during the respective reporting periods.

 

Fixed assets are stated at cost less accumulated depreciation. Depreciation is computed on a straight line basis over the estimated useful life of the asset, which is deemed to be between three and ten years.

Research and Development Costs:

All research and development costs, including costs to maintain or expand the Company’s patent portfolio licensed from CRE are expensed when incurred. Non-refundable advance payments for research and development are capitalized because the right to receive those services represents an economic benefit. Such capitalized advances will be expensed when the services occur and the economic benefit is realized. There were no capitalized research and development services at June 30, 2021 and December 31, 2020.

Loss Per Common Share:

 

On the Spin Off date, 1,257,579 shares of the Company’s Common Stock were distributed to Neurotrope stockholders as of November 30, 2020 (the Record Date). This share amount was being utilized for the calculation of basic earnings (loss) per share (“EPS”) for the periods prior to the Spin-Off because the Company was a wholly-owned subsidiary of Neurotrope prior to the Spin Off date. For the periods after the Spin-Off Date, EPS attributable to the Company’s common stockholders is based upon net income (loss) attributable to the Company’s common stockholders divided by the weighted-average number of common shares outstanding during the period. Penny warrants were included in the calculation of outstanding shares for purposes of basic loss per share. For the periods when a net loss is reported, the computation of diluted EPS equals the basic EPS calculation since common stock equivalents were antidilutive due to losses from continuing operations.

Income Taxes:

The Company accounts for income taxes using the asset and liability approach which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts reportable for income tax purposes under the “Separate return method.” Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized.

The Company applies the provisions of FASB ASC 740-10, Accounting for Uncertain Tax Positions, which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The standard also provides guidance on de-recognition, classification, interest and penalties, and accounting in interim periods, disclosure and transitions. The Company has determined that there are no significant uncertain tax positions requiring recognition in the accompanying financial statements. The tax period that is subject to examination by major tax jurisdictions is generally three years from the date of filing.

The Company had federal and state net operating loss carryforwards for income tax purposes of approximately $77.8 million through June 30, 2021. The net operating loss carryforwards resulted in a deferred tax asset of approximately $19.4 million at June 30, 2021. Income tax effects of share-based payments are recognized in the financial statements for those awards that will normally result in tax deductions under existing tax law. The deferred tax asset is offset by a full valuation allowance.

  

The Company (collectively with Neurotrope, Inc. / Petros Pharmaceuticals, Inc.) may be subject to significant U.S. federal income tax-related liabilities with respect to our prior distribution of all of the issued and outstanding shares of the common stock of Neurotrope Bioscience, Inc., the former subsidiary of Neurotrope, to our stockholders as of and on November 30, 2020 (the “Spin-Off”), if there is a determination that the Spin-Off is taxable for U.S. federal income tax purposes. In connection with the Spin-Off, the Company believes substantially to the effect that, among other things, the Spin-Off should qualify as a tax-free transaction for U.S. federal income tax purposes under Section 355 and Section 368(a)(1)(D) of the Code. If the conclusions of the tax opinions are not correct, or if the Spin-Off is otherwise ultimately determined to be a taxable transaction, the Company would be liable for U.S. federal income tax related liabilities.

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Under Section 382 of the Internal Revenue Code of 1986, as amended, changes in the Company’s ownership may limit the amount of its net operating loss carryforwards that could be utilized annually to offset future taxable income, if any. This limitation would generally apply in the event of a cumulative change in ownership of the Company of more than 50% within a three-year period. In addition, the significant historical operating losses incurred by the Company may limit the amount of its net operating loss carryforwards that could be utilized annually to offset future taxable income, if any. The Company believes that operating loss carryforwards are limited under Section 382 limitations although Section 382 studies have not been conducted to determine the actual limitations. 

 

Pursuant to the Separation Agreement (the “Separation Agreement”) and the Tax Matters Agreement (the “Tax Matters Agreement”) with Neurotrope, both dated December 6, 2020, Neurotrope agreed to indemnify Synaptogenix for certain liabilities, and Synaptogenix agreed to indemnify Neurotrope for certain liabilities, in each case for uncapped amounts. Indemnities that Synaptogenix may be required to provide Neurotrope are not subject to any cap, may be significant and could negatively impact Synaptogenix’s business, particularly with respect to indemnities provided in the Tax Matters Agreement. Third parties could also seek to hold Synaptogenix responsible for any of the liabilities that Neurotrope has agreed to retain. Further, the indemnity from Neurotrope may not be sufficient to protect Synaptogenix against the full amount of such liabilities, and Neurotrope may not be able to fully satisfy its indemnification obligations. Moreover, even if Synaptogenix ultimately succeeds in recovering from Neurotrope any amounts for which Synaptogenix is held liable, Synaptogenix may be temporarily required to bear these losses.

Expense reimbursement for grant award

The Company reduces its research and development expenses by funding received or receivable from a National Institutes of Health (“NIH”) grant during the period that the expenses are incurred. The Company did not recognize any grant related expense reductions in the three and six months ended June 30, 2021. See Note 5, “Clinical Trial Services Agreements.”

Of the total $2.7 million available from the NIH grant, approximately $1 million was received for trial-related expenses incurred since grant inception to June 2021 with the remaining $1.7 million available for reimbursement during the period April 2021 to March 2022.  During July and thru August 10, 2021, the Company received approximately $500,000 of the remaining $1.7 million NIH grant.  The Company believes it will receive the maximum reimbursements under the grant.

Recent Accounting Pronouncements

Accounting Pronouncements Adopted During the Period:

 In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06, which reduces the number of accounting models for convertible instruments, amends diluted earnings per share calculations for convertible instruments and allows more contracts to qualify for equity classification. ASU 2020-06 will be effective for interim and annual periods beginning after December 15, 2021. Early adoption is permitted. The Company is evaluating the adoption of ASU 2020-06.

Note 3– Collaborative Agreements and Commitments:

Stanford License Agreements

On May 12, 2014, the Company entered into a license agreement (the “Stanford Agreement”) with The Board of Trustees of The Leland Stanford Junior University (“Stanford”), pursuant to which Stanford has granted to the Company a revenue-bearing, world-wide right and exclusive license, with the right to grant sublicenses (on certain conditions), under certain patent rights and related technology for the use of bryostatin structural derivatives, known as “bryologs,” for use in the treatment of central nervous system disorders, lysosomal storage diseases, stroke, cardio protection and traumatic brain injury, for the life of the licensed patents. The Company is required to use commercially reasonable efforts to develop, manufacture and sell products (“Licensed Products”) in the Licensed Field of Use (as defined) during the term of the licensing agreement which expires upon the termination of the last valid claim of any licensed patent under this agreement. In addition, the Company must meet specific diligence milestones, and upon meeting such milestones, make specific milestone payments to Stanford. The Company must also pay Stanford royalties of 3% of net sales, if any, of Licensed Products (as defined) and milestone payments of up to $3.7 million dependent upon stage of product development. As of June 30, 2021, no royalties nor milestone payments have been required.

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On January 19, 2017, the Company entered into an additional, second license agreement with Stanford, pursuant to which Stanford has granted to the Company a revenue-bearing, world-wide right and exclusive license, with the right to grant sublicenses (on certain conditions), under certain patent rights and related technology for the use of “Bryostatin Compounds and Methods of Preparing the Same,” or synthesized bryostatin, for use in the treatment of neurological diseases, cognitive dysfunction and psychiatric disorders, for the life of the licensed patents. The Company paid Stanford $70,000 upon executing the license and is obligated to pay an additional $10,000 annually as a license maintenance fee. In addition, based upon certain milestones which include product development and commercialization, the Company is required to pay up to an additional $2.1 million and between 1.5% and 4.5% royalty payments on certain revenues generated by the Company relating to the licensed technology. The Company has made all required annual maintenance payments. As of June 30, 2021, no royalties nor milestone payments have been required.

Mt. Sinai License Agreement

On July 14, 2014, the Company entered into an Exclusive License Agreement (the “Mount Sinai Agreement”) with the Icahn School of Medicine at Mount Sinai (“Mount Sinai”). Pursuant to the Mount Sinai Agreement, Mount Sinai granted the Company (a) a revenue-bearing, world-wide right and exclusive license, with the right to grant sublicenses (on certain conditions), under Mount Sinai’s interest in certain joint patents held by the Company and Mount Sinai (the “Joint Patents”) as well as in certain results and data (the “Data Package”) and (b) a non-exclusive license, with the right to grant sublicenses on certain conditions, to certain technical information, both relating to the diagnostic, prophylactic or therapeutic use for treating diseases or disorders in humans relying on activation of Protein Kinase C Epsilon (“PKCε”), which includes Niemann-Pick Disease (the “Mount Sinai Field of Use”). The Mount Sinai Agreement allows the Company to research, discover, develop, make, have made, use, have used, import, lease, sell, have sold and offer certain products, processes or methods that are covered by valid claims of Mount Sinai’s interest in the Joint Patents or an Orphan Drug Designation Application covering the Data Package (“Mount Sinai Licensed Products”) in the Mount Sinai Field of Use (as such terms are defined in the Mount Sinai Agreement).

The Company is required to pay Mt. Sinai milestone payments of $2 million upon approval of a new drug approval (“NDA”) in the United States and an additional $1.5 million for an NDA approval in the European Union or Japan. In addition, the Company is required to pay Mt. Sinai royalties on net sales of licensed product of 2.0% for up to $250 million of net sales and 3.0% of net sales over $250 million. Since inception, the Company has paid Mt. Sinai approximately $170,000 consisting of licensing fees of $95,000 plus development costs and patent fees of approximately $75,000. As of June 30, 2021, no royalties nor milestone payments have been required.

Agreements with BryoLogyx

On June 9, 2020, the Company entered into a supply agreement (the “Supply Agreement”) with BryoLogyx Inc. (“BryoLogyx”), pursuant to which BryoLogyx agreed to serve as the Company’s exclusive supplier of synthetic Bryostatin-1. Pursuant to the terms of the Supply Agreement, the Company placed an initial order and subsequently received one gram of current good manufacturing practice (“cGMP”) synthetic Bryostatin-1 as an active pharmaceutical ingredient to be used in a drug product (“API”). The Company may place additional orders for API beyond the initial order by making a written request to BryoLogyx no later than six months prior to the requested delivery date.  The Company is not currently using synthetic Bryostatin-1 for its current Phase 2 clinical trial and will determine when to incorporate the synthetic into the clinical trial process.

In connection with the Supply Agreement, on June 9, 2020, the Company entered into a transfer agreement (the “Transfer Agreement”) with BryoLogyx. Pursuant to the terms of the Transfer Agreement, the Company agreed to assign and transfer to BryoLogyx all of the Company’s right, title and interest in and to that certain Cooperative Research and Development Agreement, dated as of January 29, 2019 (the “CRADA”), by and between the Company and the U.S. Department of Health and Human Services, as represented by the NCI, under which Bryostatin-1’s ability to modulate CD22 in patients with relapsed/refractory CD22+ disease has been evaluated to date. The transfer is subject to the receipt of NCI’s consent. Pursuant to guidance provided by NCI, the Company CRADA has been cancelled and BryoLogyx has initiated a request for a new CRADA in its name. BryoLogyx will be filing its own investigational new drug application (“IND”) for CD22 with the FDA. As consideration for the transfer of rights to the CRADA, BryoLogyx has agreed to pay to the Company 2% of the gross revenue received in connection with the sale of bryostatin products, up to an aggregate payment amount of $1 million. No such revenues have been earned as of June 30, 2021.

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Nemours Agreement

On September 5, 2018, we announced a collaboration with Nemours A.I. DuPont Hospital (“Nemours”), a premier U.S. children’s hospital, to initiate a clinical trial in children with Fragile X. In addition to the primary objective of safety and tolerability, measurements will be made of working memory, language and other functional aspects such as anxiety, repetitive behavior, executive functioning, and social behavior. On August 5, 2021, the Company announced its memorandum of understanding with Nemours to initiate a clinical trial using bryostatin, under Orphan Drug Status, to treat Fragile X.  The Company intends to provide the bryostatin drug product and obtain the investigational new drug documentation (“IND”) and Nemours intends to provide the clinical site and attendant support for the trial.  The Company and Nemours, jointly, will develop the trial protocol. The Company estimates its total trial and IND cost to be approximately $700,000.

Note 4– Related Party Transactions and Licensing / Research Agreements:

Cognitive Research Enterprises, Inc. (“CRE”)

Effective October 31, 2012, the Company executed a Technology License and Services Agreement (the “TLSA”) with CRE, a related party, and NRV II, LLC (“NRV II”), another affiliate of CRE, which was amended by Amendment No. 1 to the TLSA as of August 21, 2013. As of February 4, 2015, the parties entered into an Amended and Restated Technology License and Services Agreement (the “CRE License Agreement”). The CRE License Agreement provides research services and has granted the Company the exclusive and nontransferable world-wide, royalty-bearing right, with a right to sublicense (in accordance with the terms and conditions described below), under CRE’s and NRV II’s respective right, title and interest in and to certain patents and technology owned by CRE or licensed to NRV II by CRE as of or subsequent to October 31, 2012, to develop, use, manufacture, market, offer for sale, sell, distribute, import and export certain products or services for therapeutic applications for AD and other cognitive dysfunctions in humans or animals (the “Field of Use”). Additionally, the CRE License Agreement specifies that all patents that issue from a certain patent application shall constitute licensed patents and all trade secrets, know-how and other confidential information claimed by such patents constitute licensed technology under the CRE License. The CRE License Agreement terminates on the later of the date (a) the last of the licensed patent expires, is abandoned, or is declared unenforceable or invalid or (b) the last of the intellectual property enters the public domain.

After Neurotrope’s initial Series A Stock financing, the CRE License Agreement required the Company to enter into scope of work agreements with CRE as the preferred service provider for any research and development services or other related scientific assistance and support services. There were no such statements of work agreements required to be entered into during the three and six months ended June 30, 2021 and 2020, respectively.

In addition, on November 10, 2018, the Company and CRE entered into a second amendment (the “Second Amendment”) to the TLSA pursuant to which CRE granted certain patent prosecution and maintenance rights to the Company. Under the Second Amendment, the Company will have the sole and exclusive right and the obligation, to apply for, file, prosecute and maintain patents and applications for the intellectual property licensed to the Company, and pay all fees, costs and expenses related to the licensed intellectual property.

Note 5 – Commitments and Contingencies:

Clinical Trial Services Agreements

On July 23, 2020, the Company entered into the 2020 Services Agreement with WCT. The 2020 Services Agreement relates to services for the current Phase 2 clinical trial assessing the safety, tolerability and long-term efficacy of bryostatin in the treatment of moderately severe AD subjects not receiving memantine treatment (the 2020 Study).

Pursuant to the terms of the 2020 Services Agreement, WCT is providing services to enroll approximately one hundred (100) 2020 Study subjects, which enrollment is currently underway. The first 2020 Study site was initiated during the third quarter of 2020. The total estimated budget for the services, including pass-through costs, is currently approximately $9.6 million. As previously disclosed, the Company was awarded a $2.7 million grant from the NIH, which award will be used to support the 2020 Study, resulting in an estimated net budgeted cost of the 2020 Study to the Company of $6.9 million. The NIH grant provides for funds in the first year, which began in April 2020, of approximately $1.0 million and funding in year two, which begins April 2021, of approximately $1.7 million.

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In connection with their entry into the 2020 Services Agreement and letter of intent, WCT invoiced the Company for the following advance payments: (i) services fees of approximately $943,000; (ii) pass-through expenses of approximately $266,000; and (iii) investigator/institute fees of approximately $314,000, which were paid as of December 31, 2020. Remaining amounts due to WCT will be paid as services and related expenses are incurred. The Company may terminate the 2020 Services Agreement without cause upon sixty (60) days prior written notice.

As of June 30, 2021, approximately $3.9 million has been funded against the total trial cost. Of this total, approximately $1.0 million has been received from the NIH. The Company incurred approximately $4.0 million of cumulative expenses associated with the current Phase 2 clinical trial as of June 30, 2021. Of the total $4.0 million incurred for the trial to-date, approximately $745,000 and $1.6 million is reflected in the statement of operations for the three and six months ended June 30, 2021, respectively. As of June 30, 2021, approximately $500,000 of WCT prepayments is included as a prepaid expense and other current assets and approximately $468,000 which is included in accounts payable in the accompanying balance sheet.

Related Party and Other Consulting Agreements

On August 4, 2016, Neurotrope, Inc. entered into a consulting agreement with SM Capital Management, LLC (“SMCM”), a limited liability company owned and controlled by the Company’s Chairman of the Board, Mr. Joshua N. Silverman (the “Consulting Agreement”). Pursuant to the Consulting Agreement, SMCM shall provide consulting services which shall include, but not be limited to, providing business development, financial communications and management transition services, for a one-year period, subject to annual review thereafter. SMCM’s annual consulting fee is $120,000, payable by the Company in monthly installments of $10,000. In addition, SMCM shall be reimbursed for (i) all pre-approved travel in connection with the consulting services to the Company, (ii) upon submission to the Company of appropriate vouchers and receipts, for all other out-of-pocket expenses reasonably incurred by SMCM in furtherance of the Company’s business. This contract has been assigned to Synaptogenix, Inc. as of December 1, 2020.  For the three and six months ended June 30, 2021, $30,000 and $60,000 is reflected in the Company’s statements of operations, respectively, pursuant to the Consulting Agreement.

Effective as of June 1, 2019, the Company entered into a consulting agreement with Katalyst Securities LLC (“Katalyst”), pursuant to which Katalyst provided investment banking consulting services to the Company and Neurotrope (the “Katalyst Agreement”). As consideration for its services under the Katalyst Agreement, the Company paid Katalyst $25,000 per month thru December 1, 2020, plus five-year warrants to purchase 4,500 shares of Neurotrope’s common stock on the effective date of the Katalyst Agreement and on each of the three-month anniversaries following the effective date with the last issuance on December 1, 2020. The warrants have an exercise price equal to the closing price of Neurotrope’s stock on the dates of issuances. Katalyst’s cash and stock-based compensation is included as general and administrative expenses in the Company’s statement of operations.

Effective as of January 1, 2021, the Company entered into an amended consulting agreement with Katalyst reducing the cash payment to $20,000 per month. In addition, on February 16, 2021, Katalyst was granted warrants to purchase 25,000 shares of the Company’s common stock at $11.46 per share, on April 1, 2021, was granted warrants to purchase an additional 4,500 shares of the Company’s common stock at $8.80 per share, and, on July 1, 2021, was granted warrants to purchase an additional 4,500 shares of the Company’s common stock at $9.76 per share. All other terms and conditions of the Katalyst Agreement remain unchanged. For the three and six months ended June 30, 2021, $153,867 and $459,700 is reflected in the Company’s statements of operations, respectively, pursuant to the Katalyst Agreement.

Effective as of June 5, 2019, the Company entered into a consulting agreement with GP Nurmenkari, Inc. (“GPN”) (the “GPN Agreement”), pursuant to which GPN agreed to provide investment banking consulting services to the Company and Neurotrope. The term of the agreement continued until December 1, 2020. As consideration for its services under the GPN Agreement, the Company agreed to pay to GPN $8,000 per month, plus five-year warrants to purchase 1,200 shares of Neurotrope’s common stock on the effective date and on each of the three-month anniversaries following the effective date. The warrants have an exercise price equal to the closing price of Neurotrope’s stock on the dates of issuances. On February 1, 2020, the Company amended the GPN Agreement, increasing the cash compensation to $17,500 per month thru November 30, 2020 and increasing the number of warrants issued each three-month period to 2,500, with the  last  issuance on December 1, 2020. GPN’s cash and stock-based compensation is included as general and administrative expenses in the Company’s statement of operations.

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Effective as of January 1, 2021, the Company entered into an amended consulting agreement with GPN reducing the cash payment to $12,000 per month.  Effective as of July 1, 2021, the Company entered into a second amended consulting agreement with GPN increasing the cash payment to $20,000 per month and increasing warrant issued for each three-month period beginning July 1, 2021 to 5,800, with the last issuance on October 1, 2021. In addition, on February 16, 2021, GPN was granted warrants to purchase 10,000 shares of the Company’s common stock at $11.46 per share, on April 1, 2021, was granted warrants to purchase an additional 2,500 shares of the Company’s common stock at $8.80 per share, and, on July 1, 2021, was granted warrants to purchase an additional 5,800 shares of the Company’s common stock at $9.76 per share. All other terms and conditions of the GPN Agreement remain unchanged. For the three and six months ended June 30, 2021, $54,815 and $189,148 is reflected in the Company’s statements of operations, respectively, pursuant to the GPN Agreement.

 

Employment Agreements

 

On December 7, 2020, the Company entered into an offer letter (the “Offer Letter”) with Alan J. Tuchman, M.D., pursuant to which Dr. Tuchman agreed to serve as the Company’s Chief Executive Officer, commencing on December 7, 2020. In addition, in connection with his appointment as the Company’s Chief Executive Officer, Dr. Tuchman was appointed to the board of directors of the Company. Dr. Tuchman will receive an initial annual base salary of $222,000, with an annual discretionary bonus of up to 50% of his base salary then in effect. Dr. Tuchman also received an initial equity grant (subject to Board approval which was received in January 2021) of options to purchase a number of shares of common stock equal to at least 1% of the Company’s outstanding shares of common stock immediately following the Spin-Off. The option will vest with respect to 25% on each of the first, second, third and fourth quarterly anniversaries from the Start Date, subject to Dr. Tuchman’s continued employment with the Company.

 

The term of Dr. Tuchman’s employment pursuant to the Offer Letter is one year, which shall be extended automatically for six month periods unless either party gives timely written notice. Pursuant to the Offer Letter, if Dr. Tuchman is terminated during the period that is within six months from the Start Date, Dr. Tuchman will receive compensation totaling a minimum of 50% of his annualized salary. If Dr. Tuchman is terminated within the period which is after six months from the Start Date and before the one year anniversary of the Start Date, Dr. Tuchman will receive severance equal to one (1) month of his base salary. If Dr. Tuchman is terminated within the period which is after the one year anniversary of the Start Date, Dr. Tuchman will receive severance equal to two (2) months of his base salary.

  

In connection with Dr. Ryan’s termination on December 1, 2020, Synaptogenix and Dr. Ryan entered into a Separation Agreement, dated as of December 7, 2020 (the “Charles Ryan Separation Agreement”). Pursuant to the Charles Ryan Separation Agreement, Dr. Ryan is entitled to receive the following separation benefits in consideration of, and subject to, Dr. Ryan’s compliance with his continuing obligations under the Charles Ryan Separation Agreement and all other agreements between Dr. Ryan and the Company, and provided that Dr. Ryan does not revoke the Charles Ryan Separation Agreement: (i) payment of twelve (12) months of Dr. Ryan’s base salary as of the Separation Date of $425,000; (ii) a cash bonus in an amount equal to $225,000; and (iii) payment of Dr. Ryan’s COBRA premiums for the period starting on the Charles Ryan Separation Date and ending on the earliest to occur of (x) 12 months following the Separation Date; (y) the date Dr. Ryan is no longer eligible under COBRA and (z) the date that Dr. Ryan obtains employment that offers group health benefits. Total commitment pursuant to the Charles Ryan Separation Agreement is approximately $660,000. Pursuant to the employee leasing agreement as part of the Merger Agreement, 50% of any payments to Dr. Ryan will be reimbursed by Metuchen.

As of August 10, 2021, approximately $427,400 has been paid of which approximately $213,700 has been reimbursed by Metuchen. As of December 31, 2020 and June 30, 2021, the severance obligation included in accrued expenses on the Company’s balance sheet was approximately $332,000 and $99,000, respectively.

 

See Notes 3 and 4 for Collaboration and License Agreement related commitments. 

 

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Contingencies

 

Pursuant to the Separation Agreement and Tax Matters Agreement with Neurotrope, Neurotrope agreed to indemnify Synaptogenix for certain liabilities, and Synaptogenix agreed to indemnify Neurotrope for certain liabilities, in each case for uncapped amounts. Indemnities that Synaptogenix may be required to provide Neurotrope are not subject to any cap, may be significant and could negatively impact Synaptogenix’s business, particularly with respect to indemnities provided in the Tax Matters Agreement. Third parties could also seek to hold Synaptogenix responsible for any of the liabilities that Neurotrope has agreed to retain. Further, the indemnity from Neurotrope may not be sufficient to protect Synaptogenix against the full amount of such liabilities, and Neurotrope may not be able to fully satisfy its indemnification obligations. Moreover, even if Synaptogenix ultimately succeeds in recovering from Neurotrope any amounts for which Synaptogenix is held liable, Synaptogenix may be temporarily required to bear these losses ourselves. As of the reporting date, there are no claims relating to the indemnification agreement. 

Note 6 – Stockholders’ Equity

 

On December 7, 2020, the Company completed its Spin-Off from Neurotrope and issued 1,257,579 of common stock to stakeholders of Neurotrope. The shares issues were determined by the number of Neurotrope shares held by each shareholder multiplied by the exchange rate of .20 shares of Synaptogenix for each share of Neurotrope, held on November 30, 2020, the record date of the Spin-Off. In addition, common shares were issued to Neurotrope. warrant holders that chose not to amend their warrants pursuant to the amendments offered to all Series E, F, G and H warrant holders.

 

The Company’s certificate of incorporation authorizes it to issue 150,000,000 shares of common stock, par value $0.0001 per share and 1,000,000 shares of preferred stock, par value $0.0001 per share.

 

The holders of the Company’s common stock are entitled to receive dividends out of assets or funds legally available for the payment of dividends at such times and in such amounts as the Board from time to time may determine. To date, the Company has not paid dividends on its common stock. Holders of the Company’s common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders. There is no cumulative voting of the election of directors then standing for election. The Company’s common stock is not entitled to pre-emptive rights and is not subject to conversion or redemption. Upon liquidation, dissolution or winding up of the Company, the assets legally available for distribution to stockholders are distributable ratably among the holders of the Company’s common stock after payment of liabilities, accrued dividends and liquidation preferences, if any. Each outstanding share of the Company’s common stock is duly and validly issued, fully paid and non-assessable.

  

January 2021 Private Placement

 

On January 21, 2021, the Company entered into Securities Purchase Agreements (the “Purchase Agreement”) with certain accredited investors (the “Purchasers”) to issue (a) an aggregate of 2,417,242 shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) and/or prefunded warrants to purchase shares of Common Stock at an exercise price of $0.01 per share (the “Pre-Funded Warrants”), (b) Series E warrants to purchase 2,333,908 shares of Common Stock, with an exercise price of $8.51 per share (subject to adjustment), for a period of twelve months from the date of an effective registration statement (the “Series E Warrants”) and (c) Series F warrants to purchase up to an aggregate of 2,333,908 shares of Common stock, with an exercise price of $6.90 per share (subject to adjustment), for a period of five years from the date of issuance (the “Series F Warrants” and together with the Series E Warrants, the “Warrants”) at a combined purchase price of $6.00 per share of Common Stock and Warrants (the “Offering”). The Company received total gross proceeds of approximately $14,000,000 and net proceeds of approximately $12.5 million.

 

In connection with the Purchase Agreement, the Company and the Purchasers entered into a Registration Rights Agreement (the “Registration Rights Agreement”) on January 21, 2021. Under the terms of the Registration Rights Agreement, the Company agreed to register the shares of Common Stock and the shares of Common Stock issuable upon exercise of the Warrants and the Pre-Funded Warrants sold to the Buyers pursuant to the Purchase Agreement. The Company filed a registration statement on Form S-1 in connection with the Registration Rights Agreement on February 8, 2021. The Company also agreed to other customary obligations regarding registration, including indemnification and maintenance of the effectiveness of the registration statement. The Company’s registration statement on Form S-1 to register the shares of Common Stock and the shares of Common Stock issuable upon exercise of the Warrants and Pre-Funded Warrants went effective on April 29, 2021.

 

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In connection with the Offering, we paid our placement agents Katalyst and GPN (i) a cash fee equal to ten percent (10%) of the gross proceeds from any sale of securities in the Offering sold to Purchasers introduced by the Placement Agent and (ii) warrants to purchase shares of