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Organization and Description of Business Operations
12 Months Ended
Dec. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and description of business operations

Note 1—Organization and description of business operations

 

Hoth Therapeutics, Inc. (together with its wholly-owned subsidiary, Hoth Therapeutics Australia Pty Ltd., the "Company") was incorporated under the laws of the State of Nevada on May 16, 2017. The Company's primary asset is a sublicense agreement with Chelexa Biosciences, Inc. ("Chelexa") pursuant to which Chelexa has granted the Company an exclusive sublicense to use its BioLexa Platform (as defined herein), a proprietary, patented, drug compound platform developed at the University of Cincinnati. The license enables the Company to develop the platform for all indications in humans. The Company's initial focus will be on the treatment of eczema. The BioLexa Platform combines a U.S. Food and Drug Administration ("FDA") approved zinc chelator with one or more approved antibiotics in a topical dosage form to address unchecked eczema flare-ups by preventing the formation of infectious biofilms and the resulting clogging of sweat ducts which trigger symptoms. To the Company's knowledge, it is the first product candidate intended to prevent the symptom triggering flare-ups rather than simply treating symptoms when they occur.

 

During the year ended December 31, 2019, the Company also entered into agreements with the George Washington University, the University of Maryland Baltimore and Isoprene Pharmaceuticals, Inc., North Carolina State University and Zylö Therapeutics, Inc.. These agreements are further described in Note 3 of these financial statements.

 

Amendment to Articles of Incorporation

 

In December 2018, the Company's board of directors and stockholders approved a 1-for-4 reverse stock split of the Company's issued and outstanding shares of common stock and a proportional adjustment to the existing conversion ratios for each series of the Company's convertible preferred stock (see Note 5). Accordingly, all share and per share amounts for all periods presented in the accompanying consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect this reverse stock split and adjustment of the convertible preferred stock conversion ratios.

 

Initial Public Offering

 

On February 15, 2019, the Company announced the pricing of its initial public offering (the "IPO") of 1,250,000 shares of its common stock at an initial offering price to the public of $5.60 per share.  In addition, the Company granted the underwriters a 45-day option to purchase up to an additional 187,500 shares of common stock at the initial public offering price, less the underwriting discount, to cover over-allotments (the "Green-shoe"), if any. The underwriters did not exercise any portion of the Green-shoe. Therefore, the Company issued 1,250,000 shares of common stock and received net proceeds of $5.8 million from the IPO.

 

The Company's common stock commenced trading on The Nasdaq Capital Market, on February 15, 2019 under the ticker symbol "HOTH." The IPO closed on February 20, 2019.

 

On February 14, 2019, the Company entered into an underwriting agreement with Laidlaw & Co. (UK) Ltd. ("Laidlaw") pursuant to which the Company paid Laidlaw a fee in the amount of 7% of the gross proceeds of the IPO, or $490,000. The Company also reimbursed Laidlaw for certain out-of-pocket expenses, including the fees and disbursements of their counsel, up to an aggregate of $0.2 million. In addition, Laidlaw received five-year warrants to purchase 50,000 shares of common stock of the Company at an exercise price of $7.00 per share.

 

Liquidity and capital resources

 

Accounting Standards Update, or ("ASU"), No. 2014-15, Presentation of Financial Statements - Going Concern, requires management to evaluate the Company's ability to continue as a going concern one year beyond the filing date of the given financial statements. This evaluation requires management to perform two steps. First, management must evaluate whether there are conditions and events that raise substantial doubt about the entity's ability to continue as a going concern. Second, if management concludes that substantial doubt is raised, management is required to consider whether it has plans in place to alleviate that doubt. Disclosures in the notes to the consolidated financial statements are required if management concludes that substantial doubt exists or that its plans alleviate the substantial doubt that was raised.

 

The Company's ultimate success is dependent on its ability to obtain additional financing and generate sufficient cash flow to meet its obligations on a timely basis.  The Company's business will require significant amounts of capital to sustain operations and the Company will need to make the investments it needs to execute its longer-term business plan to support new technologies and help advance innovation.  Absent generation of sufficient revenue from the execution of the Company's long-term business plan, the Company will need to obtain debt or equity financing, especially if the Company experiences downturns in its business that are more severe or longer than anticipated, or if the Company experiences significant increases in expense levels resulting from being a publicly-traded company or operations. Such additional debt or equity financing may not be available to the Company on favorable terms, if at all. 

 

The Company plans to pursue its plans regarding research and development which will require resources beyond those currently available, including third party capital. During this time, the Company does not expect to generate revenue as such there is substantial doubt about the Company's ability to continue as a going concern within one year from the date of this filing. The consolidated financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets, or the amounts and classification of liabilities that may result from the outcome of this uncertainty.