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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 September 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

(I.R.S. Employer

organization)

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 November 10, 2021, there were 6,674,472 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 September 30, 2021 and December 31, 2020

3

 

Condensed and Combined Statements of Operations for the three and nine months ended September 30, 2021 and 2020

4

 

Condensed and Combined Statements of Changes in Stockholders’ Equity and Parent Company Investment for the three and nine months ended September 30, 2021 and 2020

5

 

Condensed and Combined Statements of Cash Flows for the three and nine months ended September 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)

    

September 30, 

    

December 31, 

 

2021

 

2020

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

31,294,645

$

5,795,055

Grant receivable

 

127,445

Prepaid expenses and other current assets

 

1,045,512

806,289

TOTAL CURRENT ASSETS

 

32,340,157

 

6,728,789

 

 

Fixed assets, net of accumulated depreciation

 

18,485

 

22,212

 

 

TOTAL ASSETS

$

32,358,642

$

6,751,001

 

  

 

  

 

  

 

  

LIABILITIES AND SHAREHOLDERS' EQUITY

 

  

 

  

 

  

 

  

CURRENT LIABILITIES

 

  

 

  

Accounts payable

$

935,376

$

1,260,335

Accrued expenses

 

71,953

 

352,154

 

 

TOTAL CURRENT LIABILITIES

 

1,007,329

 

1,612,489

 

  

 

  

Commitments and contingencies

 

  

 

  

 

  

 

  

SHAREHOLDERS' EQUITY

Preferred stock - 1,000,000 shares authorized as of September 30, 2021, $0.0001 par value; 0 shares issued and outstanding as of September 30, 2021 and December 31, 2020

Common stock - 150,000,000 shares authorized as of September 30, 2021, $0.0001 par value; 6,136,967 shares issued and outstanding as of September 30, 2021 and 1,257,579 shares as of December 31, 2020.

615

126

Additional paid-in capital

41,256,323

6,668,859

Accumulated deficit

(9,905,625)

(1,530,473)

TOTAL SHAREHOLDERS' EQUITY

 

31,351,313

 

5,138,512

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

32,358,642

$

6,751,001

See accompanying notes to condensed financial statements.

3

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Synaptogenix, Inc.

Condensed Statements of Operations

(Unaudited)

    

Three Months Ended

    

Three Months Ended

    

Nine Months Ended

    

Nine Months Ended

September 30, 

September 30, 

September 30, 

September 30, 

2021

2020

2021

2020

OPERATING EXPENSES:

Research and development

 

$

836,716

$

563,317

$

2,974,776

$

1,556,627

General and administrative

 

2,092,662

 

2,013,089

 

5,404,968

 

6,635,757

 

  

 

 

  

 

TOTAL OPERATING EXPENSES

 

2,929,378

 

2,576,406

 

8,379,744

 

8,192,384

 

  

 

 

  

 

OTHER INCOME (EXPENSE):

 

Warrant amendment expense

 

  

 

(1,700,000)

 

  

 

(1,700,000)

Interest income

 

2,445

 

6,797

 

4,592

 

153,305

 

  

 

 

  

 

Net loss before income taxes

 

2,926,933

 

4,269,609

 

8,375,152

 

9,739,079

 

 

 

  

 

Provision for income taxes

 

 

 

 

 

 

 

  

 

Net loss

$

2,926,933

$

4,269,609

$

8,375,152

$

9,739,079

 

 

 

 

PER SHARE DATA:

 

 

 

 

 

 

 

 

Basic and diluted loss per common share

$

0.47

$

0.90

$

1.89

$

2.28

 

 

 

 

Basic and diluted weighted average common shares outstanding

 

6,196,600

 

4,755,100

 

4,420,200

 

4,274,200

See accompanying notes to condensed financial statements.

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Synaptogenix, Inc.

Condensed Statements of Changes in Stockholders’ Equity

 

(Unaudited)

    

Three Months Ended September 30, 2020

Additional

Parent

Common Stock

Preferred Stock

Paid-In

Company

Accumulated

    

Shares

    

Amount

    

Shares

    

Amount

    

Capital

    

Investment

    

Deficit

    

Total

Balance July 1, 2020

 

$

$

$

$

$

29,797,838

$

$

29,797,838

Net change in Parent company investment

 

 

 

 

 

 

 

 

Parent company stock based compensation

 

 

 

 

 

 

387,927

 

 

387,927

Consulting services paid by issuance of Parant company common stock

120,000

120,000

Consulting services paid by issuance of Parant company common stock warrants

 

 

 

 

 

 

113,281

 

 

113,281

Warrant amendment expense

1,700,000

1,700,000

Net loss

 

 

 

 

 

 

(4,269,609)

 

 

(4,269,609)

Balance September 30, 2020

$

$

$

$

$

27,849,337

$

$

27,849,337

    

Nine Months Ended September 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

 

 

 

 

 

1,449,023

 

 

1,449,023

 

  

 

  

  

 

  

 

  

 

 

  

 

Consulting services paid by issuance of Parant company common stock

120,000

120,000

Consulting services paid by issuance of Parant company common stock warrants

 

 

 

 

 

380,740

 

 

380,740

Warrant amendment expense

1,700,000

1,700,000

Net loss

 

 

 

 

 

(9,739,079)

 

 

(9,739,079)

 

  

 

  

  

 

  

 

  

 

 

  

 

Balance September 30, 2020

 

$

$

$

$

27,849,437

$

$

27,849,437

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Three Months Ended September 30, 2021

Additional

Parent

Common Stock

Preferred Stock

Paid-In

Company

Accumulated

    

Shares

    

Amount

    

Shares

    

Amount

    

Capital

    

Investment

    

Deficit

    

Total

Balance July 1, 2021

 

6,038,798

$

604

 

$

$

39,168,084

$

$

(6,978,692)

$

32,189,996

Stock based compensation

 

 

 

 

 

1,198,860

 

 

 

1,198,860

Issuance of warrants for consulting fees

 

 

 

 

 

84,648

 

 

 

84,648

Issuance of common stock for consulting fees

 

665

 

1

 

 

 

4,501

 

 

 

4,502

Exercise of common stock warrants

 

97,504

 

10

 

 

 

800,230

 

 

 

800,240

Net loss

 

 

 

 

 

 

 

(2,926,933)

 

(2,926,933)

Balance September 30, 2021

6,136,967

$

615

$

$

41,256,323

$

$

(9,905,625)

$

31,351,313

    

Nine Months Ended September 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

 

 

 

 

 

1,918,651

 

 

 

1,918,651

Issuance of warrants for consulting fees

 

 

 

 

 

481,496

 

 

 

481,496

Issuance of common stock for consulting fees

3,255

1

22,657

22,658

Private placements of common stock and warrants

 

3,837,580

384

 

 

 

23,783,777

 

 

 

23,784,161

Exercise of common stock warrants

1,038,898

104

8,382,412

8,382,516

Net loss

 

 

 

 

 

 

 

(8,375,152)

 

(8,375,152)

Balance September 30, 2021

 

6,136,967

$

615

 

$

$

41,256,323

$

$

(9,905,625)

$

31,351,313

See accompanying notes to condensed financial statements.

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Synaptogenix, Inc.

Condensed Statements of Cash Flows

(Unaudited)

    

Nine Months Ended

    

Nine Months Ended

September 30, 2021

September 30, 2020

CASH FLOW USED IN OPERATING ACTIVITIES

Net loss

$

(8,375,152)

$

(9,739,079)

Adjustments to reconcile net loss to net

cash used by operating activities

Parent company stock based compensation

 

 

1,449,023

Stock based compensation

1,918,651

Consulting services paid by issuance of common stock

 

22,657

 

Consulting services paid by issuance of common stock warrants

481,496

Consulting services paid by issuance of Parent company common stock

 

 

120,000

Consulting services paid by issuance of Parent company common stock warrants

380,740

Warrant amendment expense

 

 

1,700,000

Depreciation expense

 

3,727

 

3,638

Change in assets and liabilities

Decrease (Increase) in grant receivable

 

127,445

 

(861,852)

Increase in prepaid expenses

 

(239,223)

 

(770,609)

(Decrease) increase in accounts payable

 

(324,959)

 

777,204

(Decrease) increase in accrued expenses

 

(280,200)

 

44,184

Total adjustments

 

1,709,594

 

2,842,328

 

 

Net Cash Used in Operating Activities

 

(6,665,558)

 

(6,896,751)

 

 

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

8,382,516

Cash in lieu of shares for reverse stock split

 

(1,529)

 

Net transfer from parent

16,519,988

 

 

Net Cash Provided by Financing Activities

 

32,165,148

 

16,519,988

 

 

NET INCREASE IN CASH AND EQUIVALENTS

 

25,499,590

 

9,617,824

 

 

CASH AND EQUIVALENTS AT BEGINNING OF PERIOD

 

5,795,055

 

17,382,038

 

 

CASH AND EQUIVALENTS AT END OF PERIOD

$

31,294,645

$

26,999,862

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 does not own any equity interest in the Company, and we 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”) as the Company amended and restated their certificate of incorporation which, among other things, changed its name to Synaptogenix, Inc. Our shares of common stock are listed on The Nasdaq Capital Market under the symbol “SNPX.”

 

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).

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

Spin-Off

 

On December 1, 2020, Neurotrope, and Petros Pharmaceuticals, Inc., a Delaware corporation (“Petros”) and formerly Metuchen Pharmaceuticals LLC, consummated their reverse merger transactions (the “Mergers”) contemplated by a certain Agreement and Plan of Merger dated as of May 17, 2020 (the “ Merger Agreement”), as amended.

 

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.

 

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.

 

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Liquidity Uncertainties

 

As of September 30, 2021, the Company had approximately $31.3 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, approximately $35 million as of the date of this quarterly report, which includes cash received during October and November, 2021 of approximately $5 million from the exercise of investor warrants of approximately $4.5 million plus reimbursement of trial expenses of approximately $530,000 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 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”) approval. 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. See Note 3.

 

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 current 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.

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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 three and nine months ending September 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 three and nine months ended September 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.

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 September 30, 2021, the Company’s cash balances that exceed the current insured amounts under the Federal Deposit Insurance Corporation (“FDIC”) were approximately $3.6 million. In addition, approximately $27.7 million included in cash and cash equivalents were invested in a money market fund, which is not insured under the FDIC.

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.

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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 September 30, 2021 and December 31, 2020.

Loss Per Share of Common Stock:

 

On the Spin Off date, 1,257,579 shares of the Company’s common stock, par value $0.0001 per share (the 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 Stock 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 (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. Pursuant to the Separation and Distribution Agreement and the Tax Matters Agreement, 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.

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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.

Expense Reimbursement for Grant Award:

The Company reduces its research and development expenses by funding received or receivable from an NIH grant during the period that the expenses are incurred. The Company recognized grant related expense reductions during the three and nine months ended September 30, 2021 of approximately $1.1 million. See Note 5, “Clinical Trial Services Agreements.”

Of the total $2.7 million available from the NIH grant, approximately $