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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


FORM 10-Q


 

(Mark One)

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

 

For the quarterly period ended March 31, 2023

 

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: 001-38634

 


Reviva Pharmaceuticals Holdings, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 


 

Delaware

 

85-4306526

(State or Other Jurisdiction of

 

(I.R.S. Employer Identification No.)

Incorporation or Organization)

   
     

19925 Stevens Creek Blvd., Suite 100

   

Cupertino, CA

 

95014

(Address of Principal Executive Offices)  

(Zip Code)

 

(408) 501-8881

(Registrant’s Telephone Number, Including Area Code)

 

Not applicable

(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, par value $0.0001 per share

RVPH

The Nasdaq Capital Market

Warrants to purchase one share of Common Stock

RVPHW

The Nasdaq Capital Market


 

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 definition 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 Act). Yes No ☒

 

As of May 11, 2023 the number of outstanding shares of the registrant’s common stock, par value $0.0001 per share, was 20,634,782.

 

 

 

 

REVIVA PHARMACEUTICALS HOLDINGS, INC.

FORM 10-Q TABLE OF CONTENTS

 

 

   

Page

Part I Financial Information

 

Item 1.

Financial Statements (unaudited)

F-1

 

Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022 (unaudited)

F-1

     
 

Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022 (unaudited)

F-2

 

Condensed Consolidated Statement of Stockholders’ Equity for the three months ended March 31, 2023 and 2022 (unaudited)

F-3

 

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022 (unaudited)

F-4

 

Notes to Condensed Consolidated Financial Statements (unaudited)

F-5

     

Item 2.

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

2

     

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

10

     

Item 4.

Controls and Procedures

10

     
     

Part II Other Information

 
     

Item 1.

Legal Proceedings

11

     

Item 1A.

Risk Factors

11

     

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

11

     

Item 3.

Defaults Upon Senior Securities

11

     

Item 4.

Mine Safety Disclosures

11

     

Item 5.

Other Information

11

     

Item 6.

Exhibits

12

   

Signatures

13

 

 

 

 

PART 1. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS (Unaudited).

 

 

REVIVA PHARMACEUTICALS HOLDINGS, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

March 31, 2023 and December 31, 2022

 

   

March 31,

   

December 31,

 
   

2023

   

2022

 
Assets                

Cash and cash equivalents

  $ 11,255,552     $ 18,519,856  

Prepaid expenses and other current assets

    1,645,971       403,819  
                 

Total Assets

  $ 12,901,523     $ 18,923,675  
                 
Liabilities and Stockholders' Equity                
                 
Liabilities                
Current liabilities:                
Short-term debt   $ 667,500     $  

Accounts payable

    2,860,578       3,520,271  

Accrued expenses and other current liabilities

    3,032,159       2,519,569  

Total current liabilities

    6,560,237       6,039,840  
Non-current liabilities:                

Warrant liabilities

    556,313       567,439  

Total Liabilities

    7,116,550       6,607,279  
                 
Commitments and contingencies (Note 8)                
                 
Stockholders' equity                

Common stock, par value of $0.0001; 115,000,000 shares authorized; 20,452,121 and 20,447,371 shares issued and outstanding as of March 31, 2023, and December 31, 2022, respectively

    2,045       2,045  

Additional paid-in capital

    103,556,732       103,485,612  

Accumulated deficit

    (97,773,804 )     (91,171,261 )

Total stockholders' equity

    5,784,973       12,316,396  
                 

Total Liabilities and Stockholders' Equity

  $ 12,901,523     $ 18,923,675  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

F-1

 

 

REVIVA PHARMACEUTICALS HOLDINGS, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

For the Three Months Ended March 31, 2023 and 2022

 

 

   

Three Months Ended March

31,

 
   

2023

   

2022

 
Operating expenses                

Research and development

  $ 5,234,999     $ 5,830,018  

General and administrative

    1,500,554       1,620,139  

Total operating expenses

    6,735,553       7,450,157  

Loss from operations

    (6,735,553 )     (7,450,157 )
Other income (expense)                

Gain on remeasurement of warrant liabilities

    11,126       89,010  
Interest expense     (7,655 )      

Interest income

    147,011       1,735  
Other expense     (14,494 )     (1,967 )

Total other (expense) income, net

    135,988       88,778  

Loss before provision for income taxes

    (6,599,565 )     (7,361,379 )

Provision for income taxes

    2,978       3,629  

Net loss

  $ (6,602,543 )   $ (7,365,008 )
                 
Net loss per share:                

Basic and diluted

  $ (0.30 )   $ (0.40 )
                 
Weighted average shares outstanding                

Basic and diluted

    21,833,598       18,466,586  

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

F-2

 

 

REVIVA PHARMACEUTICALS HOLDINGS, INC.

 

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (UNAUDITED)

 

For the Three Months Ended March 31, 2023 and 2022

 

                   

Additional

           

Total

 
   

Common Stock

   

Paid-In

   

Accumulated

   

Stockholders'

 

For the Three Months Ended March 31, 2023

 

Shares

   

Amount

   

Capital

   

Deficit

   

Equity

 

Balance at December 31, 2022

    20,447,371     $ 2,045     $ 103,485,612     $ (91,171,261 )   $ 12,316,396  

Common stock issued in connection with warrant exercises

    4,750             19,593             19,593  

Stock-based compensation expense

                51,527             51,527  

Net loss

                      (6,602,543 )     (6,602,543 )

Balance at March 31, 2023

    20,452,121     $ 2,045     $ 103,556,732     $ (97,773,804 )   $ 5,784,973  

 

                   

Additional

           

Total

 
   

Common Stock

   

Paid-In

   

Accumulated

   

Stockholders'

 

For the Three Months Ended March 31, 2022

 

Shares

   

Amount

   

Capital

   

Deficit

   

Equity

 

Balance at December 31, 2021

    14,433,286     $ 1,443     $ 95,516,986     $ (66,831,969 )   $ 28,686,460  

Common stock issued in connection with warrant exercises

    700,000       70                   70  

Stock-based compensation expense

                39,686             39,686  

Net loss

                      (7,365,008 )     (7,365,008 )

Balance at March 31, 2022

    15,133,286     $ 1,513     $ 95,556,672     $ (74,196,977 )   $ 21,361,208  

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

F-3

 

 

REVIVA PHARMACEUTICALS HOLDINGS, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the Three Months Ended March 31, 2023 and 2022

 

   

Three Months Ended March 31,

 
   

2023

   

2022

 
Cash flows from operating activities                

Net loss

  $ (6,602,543 )   $ (7,365,008 )
Adjustments to reconcile net loss to net cash used in operating activities                

Gain on remeasurement of warrant liabilities

    (11,126 )     (89,010 )

Stock-based compensation expense

    51,527       39,686  
Changes in operating assets and liabilities:                

Prepaid expenses and other current assets

    (1,242,152 )     110,213  

Accounts payable

    (659,693 )     674,930  

Accrued expenses and other current liabilities

    512,590       362,412  

Net cash used in operating activities

    (7,951,397 )     (6,266,777 )
Cash flows from financing activities                
Proceeds from issuance of short-term debt     667,500        

Proceeds from exercise of warrants

    19,593       70  

Net cash provided by financing activities

    687,093       70  

Net decrease in cash and cash equivalents

    (7,264,304 )     (6,266,707 )

Cash and cash equivalents, beginning of period

    18,519,856       29,687,944  

Cash and cash equivalents, end of period

  $ 11,255,552     $ 23,421,237  
                 
Supplemental disclosures of cash flow information:                

Cash paid for taxes

  $ 2,241     $ 675  

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

F-4

 

 

REVIVA PHARMACEUTICALS HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

 
 

1.

ORGANIZATION AND NATURE OF OPERATIONS

 

On December 14, 2020, Reviva Pharmaceuticals Holdings, Inc. (the “Company”), a Delaware corporation and the successor by re-domiciliation to Tenzing Acquisition Corp. (“Tenzing”), a British Virgin Islands exempted company, Tenzing Merger Subsidiary Inc., a Delaware corporation and wholly-owned subsidiary of Tenzing (“Merger Sub”), and Reviva Pharmaceuticals, Inc., a Delaware corporation (together with its consolidated subsidiary), consummated a business combination (the “Business Combination”) through the merger of Merger Sub with and into Reviva Pharmaceuticals, Inc., in accordance with the Agreement and Plan of Merger, dated as of July 20, 2020 (the “Merger Agreement”), by and among Tenzing, Merger Sub, Reviva Pharmaceuticals, Inc., and the other parties thereto. Pursuant to the Merger Agreement, at the effective time of the Merger (the “Effective Time”), Merger Sub merged with and into Reviva Pharmaceuticals, Inc., with Reviva Pharmaceuticals, Inc. as the surviving company in the Merger and, after giving effect to such Merger, Reviva Pharmaceuticals, Inc. becoming a wholly-owned subsidiary of Reviva Pharmaceuticals Holdings, Inc. In these notes to the condensed consolidated financial statements, unless otherwise specified or the context indicates otherwise, references to the “Company,” “Reviva,” “we,” “us” and “our” refer to Reviva Pharmaceuticals Holdings, Inc. and its consolidated subsidiaries.

 

Reviva Pharmaceuticals, Inc. was originally incorporated in the state of Delaware and commenced operations on May 1, 2006 and its Indian subsidiary, Reviva Pharmaceuticals India Pvt. Ltd. was incorporated in 2014. The Company is an emerging research based pharmaceutical company focused on developing a portfolio of internally discovered next generation safe and effective therapeutic drugs by using an integrated chemical genomics technology platform and proprietary chemistries. The Company’s current pipeline focuses on the central nervous system (CNS), respiratory and metabolic diseases.

 

 

 
 

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. Certain footnotes and other financial information normally required by accounting principles generally accepted in the United States of America, or GAAP, have been condensed or omitted in accordance with such rules and regulations. In management’s opinion, these condensed consolidated financial statements have been prepared on the same basis as our annual consolidated financial statements and notes thereto and include all adjustments, consisting of normal recurring items, considered necessary for the fair presentation. The operating results for the three months ended March 31, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

 

The condensed consolidated balance sheet as of December 31, 2022, has been derived from our audited financial statements at that date but does not include all disclosures and financial information required by GAAP for complete financial statements. The information included in the quarterly report on Form 10-Q should be read in conjunction with our consolidated financial statements and notes thereto for the year ended December 31, 2022, which were included in our annual report on Form 10-K, as filed with the Securities and Exchange Commission on March 30, 2023.

 

Liquidity and Going Concern

 

The Company has incurred losses since inception and as of March 31, 2023, the Company had working capital of approximately $6.3 million, an accumulated deficit of $97.8 million and cash and cash equivalents on hand of approximately $11.3 million. The Company’s net loss for the three months ended March 31, 2023 was approximately $6.6 million. The Company expects to incur significant expenses and increased operating losses for the next several years. The Company expects its expenses to increase in connection with its ongoing activities to research, develop and commercialize its product candidates. The Company will need to generate significant revenues to achieve profitability, and it may never do so.

 

The Company’s current cash on hand is not sufficient to satisfy its operating cash needs for the 12 months from the filing of this Quarterly Report on Form 10-Q. The Company believes that it has adequate cash on hand to cover anticipated outlays through the majority of fiscal year 2023, but will need additional fundraising activities and cash on hand during the fourth quarter of fiscal year 2023. These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year after the date the financial statements are issued. Management’s plan to alleviate the conditions that raise substantial doubt include raising additional working capital through public or private equity or debt financings or other sources, which may include collaborations with third parties as well as disciplined cash spending. Adequate additional financing may not be available to the Company on acceptable terms, or at all. Should the Company be unable to raise sufficient additional capital, the Company may be required to undertake cost-cutting measures including delaying or discontinuing certain clinical activities. These factors among others create a substantial doubt about the Company’s ability to continue as a going concern.

 

F-5

 

Use of estimates

 

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of expenses during the reporting periods covered by the financial statements and accompanying notes. Significant areas requiring the use of management estimates include, but are not limited to, depreciative and amortization useful lives, assumptions used to calculate the fair value of stock-based compensation, warrant liabilities, deferred tax assets, and related valuation allowances. Actual results could differ materially from such estimates under different assumptions or circumstances.

 

Concentration of credit risk and other risks and uncertainties

 

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash. Currently, the Company’s cash and cash equivalents are (and as of March 31, 2023 and December 31, 2022, all of the Company’s cash and cash equivalents were) held in demand deposit form at two financial institutions. Deposits in financial institutions may, from time to time, exceed federally insured limits. The Company has not experienced any losses on its deposits of cash.

 

The Company is subject to all of the risks inherent in an early-stage company developing new pharmaceutical products. These risks include, but are not limited to, limited management resources, dependence upon medical acceptance of products in development, regulatory approvals, successful clinical trials, availability and willingness of patients to participate in human trials, and competition in the pharmaceutical industry. The Company’s operating results may be materially affected by the foregoing factors.

 

Impact of COVID-19

 

In response to the spread of COVID-19, the Company has taken temporary precautionary measures intended to help minimize the risk of the virus to its employees and community, including temporarily requiring employees to work remotely and suspending all non-essential travel for the Company’s employees.

 

As a result of the COVID-19 pandemic, the Company may experience disruptions that could adversely impact the Company’s business. The COVID-19 pandemic may negatively affect clinical site initiation, patient recruitment and enrollment, patient dosing, distribution of drug to clinical sites and clinical trial monitoring for our clinical trials. The COVID-19 pandemic may also negatively affect the operations of the third-party contract research organizations that the Company intends to rely upon to assist it in conducting its clinical trials and the contract manufacturers who manufacture the Company’s drug candidates.

 

The Company is continuing to assess the potential impact of the COVID-19 pandemic on its business and operations as of March 31, 2023.

 

 

 
 

3.

EMPLOYEE BENEFIT PLAN

 

In 2014, Reviva Pharmaceuticals, Inc. implemented a tax deferred savings plan, commonly referred to as a 401(k) plan. Employee’s contributions are withheld from standard payroll checks and are automatically withdrawn from the Company checking account and deposited into individual employee retirement accounts a few days following each payroll period. Employees can defer or contribute the statutory legal limits. There has been no Company matching of employee contributions to the plan through March 31, 2023.

 

 

 
 

4.

LOSS PER SHARE

 

Basic and diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share includes potentially dilutive securities such as stock options, warrants to purchase common stock, and other convertible instruments unless the result of inclusion would be anti-dilutive. These securities have been excluded from the calculation of diluted net loss per shares for the three months ended March 31, 2023 and 2022, because all such securities are anti-dilutive for all periods presented.

 

The following table summarizes the Company’s potentially dilutive securities, in common share equivalents, which have been excluded from the calculation of dilutive loss per share as their effect would be anti-dilutive:

 

   

Three Months Ended March

31,

 
   

2023

   

2022

 

Shares issuable upon exercise of stock options

    244,774       192,898  

Shares issuable upon exercise of warrants to purchase common stock

    17,228,354       13,883,732  

Shares contingently issuable for earnout

    1,000,000       1,000,000  
      18,473,128       15,076,630  

 

The diluted loss per share computation equals basic loss per share for the three months ended March 31, 2023 and 2022 because the Company had a net loss and the impact of the assumed exercise of stock options and warrants would have been anti-dilutive.

 

F-6

 

 
 

5.

WARRANTS

 

As of March 31, 2023, there were public warrants outstanding to purchase an aggregate of 6,325,000 shares of common stock, private warrants outstanding to purchase an aggregate of 3,915,997 shares of common stock, investor warrants outstanding to purchase an aggregate of 6,866,901 shares of common stock, private pre-funded warrants to purchase an aggregate of 1,383,399 shares of common stock, and assumed warrants outstanding to purchase an aggregate of 120,456 shares of common stock.

 

2020 Business Combination

 

In connection with the closing of our Business Combination in 2020, our predecessor company, Tenzing, issued public warrants to purchase 6,325,000 shares and private placement warrants to purchase 556,313 shares.

 

Further, there were assumed warrants to purchase an aggregate of 126,268 shares of common stock, of which 5,812 expired during fiscal year 2022. These warrants were classified as equity as of March 31, 2023 and March 31, 2022. The fair value of these warrants on the date of issuance was $1,279,182.

 

Each public warrant entitles the holder thereof to purchase one share of common stock at a price of $11.50 per share, subject to adjustment. No public warrants will be exercisable for cash unless we have an effective and current registration statement covering the issuance of the shares of common stock issuable upon exercise of the public warrants and a current prospectus relating to such shares of common stock.

 

We may call the public warrants for redemption, in whole and not in part, at a price of $0.01 per warrant;

 

 

if, and only if, the reported last sale price of the common stock equals or exceeds $21.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30 trading day period ending on the third trading business day prior to the notice of redemption to holders of the public warrants, and

 

 

if, and only if, there is a current registration statement in effect with respect to the issuance of the shares of common stock underlying such Public Warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption

 

 

at any time while the public warrants are exercisable

 

 

upon not less than 30 days’ prior written notice of redemption to each warrant holder

 

The private warrants are substantially similar to the public warrants except such private warrants;

 

 

are exercisable for cash or on a cashless basis, at the holder’s option

 

 

cannot be redeemed by us, so long as they are still held by the initial purchasers or their affiliates.

 

 

The redemption price is to be calculated as the 10-day average trading price ending one trading business day prior to the notice of redemption.

 

In no event will the Company be required to net cash settle either the public or the private warrants.

 

The exercise price and number of shares of common stock issuable on exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or a recapitalization, reorganization, merger or consolidation. The private warrants were classified as derivative liabilities pursuant to ASC 815 (see to Note 9).

 

2021 Public Offering

 

In connection with the Offering of Units, the Company issued Pre-Funded Warrants exercisable for 5,066,600 shares of common stock, and Investor Warrants exercisable for 6,900,000 shares of common stock.

 

During fiscal year 2021, 1,033,300 of Pre-Funded Warrants were exercised for $103 in proceeds, resulting in the issuance of 1,033,300 common shares. During fiscal year 2022, 4,033,300 Pre-Funded Warrants were exercised for $403 in proceeds, resulting in the issuance of 4,033,300 common shares. There were no 2021-issued Pre-Funded Warrants outstanding as of March 31, 2023.

 

During fiscal year 2022, 6,000 Investor Warrants were exercised for $18,563 in proceeds, resulting in the issuance of 4,500 shares of common shares. During the three months ended March 31, 2023, 6,334 Investor Warrants were exercised for $19,593 in proceeds, resulting in the issuance of 4,750 shares of common shares. As of March 31, 2023, there are Investor Warrants outstanding to purchase an aggregate of 6,866,901 shares of common stock.

 

F-7

 

2022 Registered Direct Offering and Private Placement

 

In connection with the September 2022 Offering, the Company issued to investors Private Placement Warrants to purchase up to 3,359,684 shares of common stock. The Private Placement Warrants were immediately exercisable upon issuance.

 

In a concurrent private placement, the Company issued Private Pre-Funded Warrants to purchase up to an aggregate of 1,383,399 shares of common stock. The Private Pre-Funded Warrants were immediately exercisable.

 

No 2022 Private Pre-Funded Warrants or 2022 Private Placement Warrants issued during the September 2022 Offering have been exercised as of March 31, 2023.

 

The Company has determined that as the Pre-Funded Warrants and Investor Warrants were issued at fair value in a public offering of Units with no debt funding included in the offering, the Pre-Funded Warrants and Investor Warrants should be classified as equity.

 

The fair value of the Private Placement Warrants and Private Pre-Funded Warrants was determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., Company share price of $2.20, exercise price of $2.40 for the Private Placement Warrants and $0.0001 for the Private Pre-Funded Warrants, term of 5 years, volatility of 111%, risk-free rate of 3.4%, and expected dividend rate of 0%). The grant date relative fair value of these warrants was estimated to be $5,712,592 on September 8, 2022 and are classified as equity.

 

The Company evaluated the Private Placement Warrants and the Private Pre-Funded Warrants in accordance with the guidance at ASC 480, Distinguishing Liabilities from Equity and ASC 815-40, Derivatives and Hedging, and determined that they should be classified as equity instruments, with no recurring fair value measurement required. The warrants are indexed to the Company’s common stock and are required to be settled through physical settlement or net share settlement, if exercised. Accordingly, the warrants were recorded at their grant date fair value with no subsequent remeasurement.

 

 

 
 

6.

STOCK-BASED COMPENSATION

 

Stock-Based Compensation Expense

 

The Company records stock-based compensation expense in connection with the amortization of the fair value of stock options granted to employees, non-employee consultants and non-employee directors. During the three months ended March 31, 2023 and 2022, the Company recorded stock-based compensation of $51,527 and $39,686 respectively. As of March 31, 2023, the Company had unrecognized stock-based compensation expense of $422,646, which is expected to be recognized over a weighted-average period of 2.7 years. As of March 31, 2023, there are 0 and 2,600,063 shares of common stock available for issuance under the 2006 Equity Incentive Plan and 2020 Equity Incentive Plan, respectively.

 

Determining Fair Value

 

Valuation and Recognition – The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes pricing model utilizes the following assumptions:

 

Expected Term – Expected life of an option award is the average length of time over which the Company expects employees will exercise their options, which is based on historical experience with similar grants.

 

Expected Volatility - Expected volatility is based on the Company’s historical stock volatility data over the expected term of the awards.

 

Risk-Free Interest Rate - The Company bases the risk-free interest rate on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent expected term.

 

Dividend Yield – The Company has not paid a dividend and does not anticipate paying a dividend in the foreseeable future.

 

F-8

 

There were no options granted during the three months ended March 31, 2023 and 2022.

 

Activity under the stock plans for the three months ended March 31, 2023, is as follows:

 

   

Shares

Available for

Grant

   

Number of

Options

Outstanding

   

Weighted

Average

Exercise price

per share

   

Weighted

Average

Remaining

Contractual

Term in Years

   

Aggregate

Intrinsic Value

 

Balance, December 31, 2022

    2,600,063       244,774     $ 6.32       8.62     $  

Balance, March 31, 2023

    2,600,063       244,774     $ 6.32       8.37     $  
                                         

Options exercisable at March 31, 2023

            111,844     $ 8.06       7.39     $  

 

 
 

7.

SHORT-TERM DEBT

 

Insurance Funding

 

The Company obtained financing for certain Director & Officer liability insurance policy premiums. The governing agreement assigns First Insurance Funding (Lender) a first priority lien on and security interest in the financed policies and any additional premium required in the financed policies.

 

The total premiums, taxes and fees financed is $667,500 with an annual interest rate of 8.735%. In consideration of the premium payment by Lender to the insurance companies or the agent or broker, the Company unconditionally promises to pay Lender the amount financed plus interest and other charges permitted under the governing agreement. At March 31, 2023 the Company recorded $667,500 as insurance financing short-term debt in its consolidated balance sheet. The Company will pay the insurance financing through three quarterly installment payments with the last payment being on October 1, 2023.

 

 

 
 

8.

COMMITMENTS AND CONTINGENCIES

 

Clinical trials

 

Since 2010, the Company has entered into multiple clinical trial agreements with medical institutions in the United States, Europe and Asia for the purpose of enrolling patients into various clinical trials. The agreements are substantially similar by trial and include a detailed listing of the clinical trial services for which the Company will pay, the amount to be paid for each service, a set-up charge (if any), Investigational Review Board fees, contractual term, and other provisions. The clinical trial services provided by each site generally include the screening of prospective patients and, for those patients to be enrolled in the study, administration of the Company’s investigation drug according to the trial protocol, any required hospitalization, ancillary medical supplies, and 2-week patient follow-up. Further, each agreement requires the Company to indemnify each respective clinical site against any and all liability, loss, or damage it may suffer as a result of third-party claims; the Company maintains product liability insurance of not less than $10 million in conjunction with this indemnification. The agreements may be terminated upon 30 days’ written notice, subject to conditions of paying all liabilities incurred through the date of termination. Additionally, with each screened patient, the Company incurs expense with other entities engaged to provide independent review of patient medical records.

 

As part of the Company's agreement with one of its clinical research organizations, the Company is required to maintain a 7% upfront float for fees related to expenses incurred in clinical studies. When the float has depleted to 15% (i.e. 85% of the float has been used) the Company will receive an invoice to replenish the float up to 7% of the remaining estimated budget for the studies. During the three months ended March 31, 2023, the Company paid approximately $0.9 million to replenish the float and expensed approximately $0.3 million. As of March 31, 2023, the Company has a remaining prepaid float balance of approximately $0.7 million.

 

Indemnification

 

From time to time, in its normal course of business, the Company may indemnify other parties, with whom it enters into contractual relationships, including lessors and parties to other transactions with the Company. The Company may agree to hold other parties harmless against specific losses, such as those that could arise from a breach of representation, covenant or third-party infringement claims. It may not be possible to determine the maximum potential amount of liability under such indemnification obligations due to the unique facts and circumstances that are likely to be involved in each particular claim and indemnification provision. Historically, there have been no such indemnification claims. The Company has also indemnified its directors and executive officers, to the extent legally permissible, against all liabilities reasonably incurred in connection with any action in which such individual may be involved by reason of such individual being or having been a director or executive officer.

 

Operating Leases

 

The Company adopted ASC 842, Leases, on January 1, 2019. The Company has elected to apply the short-term lease exception to leases of one year or less. Presently, the Company has a single twelve-month lease on its Corporate Office located at 19925 Stevens Creek Blvd., Suite 100, Cupertino, CA 95014. The monthly lease payment is approximately $1,447 and the lease was renewed in February 2022 and again on February 1, 2023, for another 12-month term.

 

F-9

 

 
 

9.

FAIR VALUE MEASUREMENTS

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

 

 

Level 1 — Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

 

 

Level 2 — Directly or indirectly observable inputs as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active. Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full term of the financial instrument.

 

 

Level 3 — Unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

 

The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

 

The following is a listing of the Company’s warrant liabilities required to be measured at fair value on a recurring basis and where they are classified within the fair value hierarchy as of March 31, 2023 and December 31, 2022:

 

   

March 31, 2023

 
   

Level 1

   

Level 2

   

Level 3

   

Total

 
   

(unaudited)

 
Liabilities:                                

Warrant liability

              $ 556,313     $ 556,313  

Total

  $     $     $ 556,313     $ 556,313  

 

 

   

December 31, 2022

 
   

Level 1

   

Level 2

   

Level 3

   

Total

 

Liabilities:

                               

Warrant liability

  $     $     $ 567,439     $ 567,439  

Total

  $     $     $ 567,439     $ 567,439  

 

The following table summarizes the changes in the fair value of the warrant liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

 

   

Three Months Ended March 31,

 
   

2023

   

2022

 
   

(unaudited)

 

Balance, beginning of period

  $ 567,439     $ 372,730  

Change in fair value of warrant liability

    (11,126 )     (89,010 )

Balance, end of period

  $ 556,313     $ 283,720  

 

F-10

 

The Company classified the private warrants pursuant to ASC 815 as derivative liabilities, as the warrants have terms which are modified upon any future transfer of ownership, with subsequent changes in their fair values to be recognized in the consolidated financial statements at each reporting date. The Company calculated the fair value of the private warrants as of March 31, 2023 as $556,313 using a Black-Scholes model. The key inputs used in the Black-Scholes calculation were the risk-free interest rate, expected volatility, expected life, exercise price and stock price. The risk-free interest rate was estimated to be 3.88%, the expected volatility was estimated to be 75.70%, and the expected life was estimated to be 2.71 years. The exercise price was $11.50, and the stock price $4.19.

 

The Company recorded a gain on remeasurement of warrant liabilities of $11,126 and $89,010 for the three months ended March 31, 2023 and 2022, respectively.

 

 
 

10.

SUBSEQUENT EVENTS

 

On April 25, 2023, the Compensation Committee of the Company’s Board of Directors approved the grant of option awards to certain of the Company's officers and employees in accordance with the terms of our 2020 Equity Incentive Plan ("2020 Plan"). The Compensation Committee’s approval included the following options granted to the Company's named executive officers: option to purchase 443,000 shares of common stock to the President and Chief Executive Officer; and an option to purchase 170,000 shares of common stock to the Chief Financial Officer. The Company's Vice President for Program & Portfolio Management was awarded an option to purchase 150,000 shares of common stock. In addition, the Compensation Committee awarded options covering an aggregate of 540,000 shares of common stock to other employees of the Company. All of the options were granted pursuant to the 2020 Plan and have an exercise price of $6.74 per share, based on the closing price of the common stock on the grant date in accordance with the terms of the 2020 Plan. The options granted to the named executive officers and Vice President for Program & Portfolio Management were immediately vested as to 50% of the shares subject thereto on the grant date, and will vest as to an additional 1.389% of the shares subject thereto on the last day of each month thereafter and have a ten-year expiration date. The options granted to the other employees have varying vesting terms between three and four years.

 

F-11

 

 

 

 

 

ITEM 2.    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

All statements other than statements of historical fact included in this section regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward- looking statements. When used in this section, words such anticipate, believe,” “estimate,” “expect,” “intend and similar expressions, as they relate to our management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those contemplated by the forward- looking statements as a result of certain factors detailed herein. All such forward-looking statements, and all subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph and the Cautionary Note Regarding Forward-Looking Statements below.

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This report on Form 10-Q contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as “may,” “can,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “seek,” “estimate,” “continue,” “plan,” “point to,” “project,” “predict,” “could,” “intend,” “target,” “potential” and other similar words and expressions of the future.

 

There are a number of important factors that could cause the actual results to differ materially from those expressed in any forward-looking statement made by us. These factors include, but are not limited to:

 

 

our ability to grow and manage growth economically;

 

 

our ability to retain key executives and medical and science personnel;

 

 

the possibility that our products in development succeed in or fail clinical trials or are not approved by the U.S. Food and Drug Administration or other applicable authorities;

 

 

the possibility that we could be forced to delay, reduce or eliminate our planned clinical trials or development programs;

 

 

our ability to obtain approval from regulatory agencies in different jurisdictions for our current or future product candidates;

 

 

changes in applicable laws or regulations;

 

 

changes to our relationships within the pharmaceutical ecosystem;

 

  the performance of third-party suppliers and manufacturers and our ability to find additional suppliers and manufacturers and obtain alternative sources of raw materials;

 

  our ability and the potential to successfully manufacture our product candidates for pre-clinical use, for clinical trials and, if approved, on a larger scale for commercial use;

 

 

our current and future capital requirements to support our development and commercialization efforts and our ability to satisfy our capital needs;

 

  our ability to access capital on acceptable terms in a rising interest rate and tighter credit environment;

 

 

expectations regarding our ability to continue as a going concern;

 

 

the accuracy of our estimates regarding expenses and capital requirements, including estimated costs of our clinical studies.

 

 

our limited operating history;

 

2

 

 

our history of operating losses in each year since inception and expectation that we will continue to incur operating losses for the foreseeable future;

 

 

changes in the markets that we target;

     
  the impact and uncertain effect of COVID-19 or other future pandemics or events, and related responses of businesses and governments to COVID-19 or other future pandemics or events, on our operations including our clinical trials and on our personnel and those of any third party service providers upon which we rely, on commercial activity in the markets in which we operate and on our results of operations;

 

 

our ability to meet the continued listing requirements for the listing of our common stock and listed warrants on Nasdaq;

 

 

our ability to maintain or protect the validity of our patents and other intellectual property;

 

 

our exposure to any liability, protracted and costly litigation or reputational damage relating to data security;

 

 

our ability to maintain effective internal controls; and

 

 

the possibility that we may be adversely affected by other economic, business, and/or competitive factors.

 

The foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we are faced with that may cause our actual results to differ from those anticipated in such forward-looking statements. Please see “Risk Factors” for additional risks which could adversely impact our business and financial performance.

 

All forward-looking statements are expressly qualified in their entirety by this cautionary notice. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this report or the date of the document incorporated by reference into this report. We have no obligation, and expressly disclaims any obligation, to update, revise or correct any of the forward-looking statements, whether as a result of new information, future events or otherwise. We have expressed our expectations, beliefs and projections in good faith and believe they have a reasonable basis. However, we cannot assure you that our expectations, beliefs or projections will result or be achieved or accomplished.

 

Company Overview

 

We are a clinical-stage pharmaceutical company that discovers, develops, and seeks to commercialize next-generation therapeutics for diseases representing significant unmet medical needs and burdens to society, patients, and their families. Our current pipeline focuses on the central nervous system, respiratory, and metabolic diseases. We use a chemical genomics driven technology platform and proprietary chemistry to develop new medicines. Our pipeline currently has two drug candidates, brilaroxazine (RP5063) and RP1208. Both are new chemical entities discovered in-house. We have been granted composition of matter patents for both brilaroxazine and RP1208 in the United States (U.S.), Europe, and several other countries.

 

Our lead drug candidate, brilaroxazine, is in clinical development and is intended to treat multiple neuropsychiatric indications. These include schizophrenia, bipolar disorder (BD), major depressive disorder (MDD), attention–deficit/hyperactivity disorder (ADHD), behavioral and psychotic symptoms of dementia or Alzheimer’s disease (BPSD), and Parkinson’s disease psychosis. Furthermore, brilaroxazine is also ready for clinical development for two respiratory indications —  pulmonary arterial hypertension (PAH) and idiopathic pulmonary fibrosis (IPF). The U.S. Food and Drug Administration (FDA) granted Orphan Drug designation to brilaroxazine for the treatment of PAH in November 2016 and IPF in April 2018.

 

On January 10, 2022, the FDA notified us that we could proceed with our Phase 3 RECOVER trial, which is a study of brilaroxazine in patients with an acute exacerbation of schizophrenia. On February 1, 2022, we announced that the first patients in the RECOVER trial had been dosed. On July 27, 2022, we announced that we had enrolled patients in 15 geographically diverse sites across the U.S. The RECOVER trial is a global Phase 3, randomized, double-blind, placebo-controlled, multicenter study designed to assess the safety and efficacy of brilaroxazine in approximately 400 patients with acute schizophrenia compared to placebo. On October 31, 2022, we announced over 30% enrollment in our Phase 3 RECOVER trial in the United States and the initiation and ongoing enrollment across sites in Europe, and we finished 2022 with about 40% enrollment. The Company has received regulatory approval for initiating the study in Asia (India) on October 11, 2022 and multiple sites were initiated in India in November and December 2022.

 

Our primary focus is to complete the clinical development of brilaroxazine for the treatment of acute and maintenance schizophrenia.

 

We are currently developing Phase 2 trial protocols for studies of brilaroxazine in ADHD and PAH and anticipate submitting the protocols to regulatory agencies in the second half of 2023 and initiating the Phase 2 studies in the second half of 2023.

 

Subject to the receipt of additional financing, we may also continue the clinical development of brilaroxazine for the treatment of BD, MDD, BPSD, PDP, and IPF. Moreover, subject to the receipt of additional financing, we may also advance the development of our second drug candidate, RP1208, for the treatment of depression and obesity.

 

3

 

Impact of COVID-19

 

In response to the spread of COVID-19, we have taken temporary precautionary measures intended to help minimize the risk of the virus to our employees and community, including temporarily requiring employees to work remotely and suspending all non-essential travel for our employees.

 

As a result of the COVID-19 pandemic, we may experience disruptions that could adversely impact our business. The COVID-19 pandemic may negatively affect clinical site initiation, patient recruitment and enrollment, patient dosing, distribution of drug to clinical sites and clinical trial monitoring for our clinical trials. The COVID-19 pandemic may also negatively affect the operations of the third-party contract research organizations that we intend to continue to rely upon to assist us in conducting our clinical trials and the contract manufacturers who manufacture our drug candidates.

 

We are continuing to assess the potential impact of the COVID-19 pandemic on our business and operations. For additional information on the various risks posed by the COVID-19 pandemic, refer to Part I—Item 1A—Risk Factors of our Annual Report on Form 10-K, as filed with the Securities and Exchange Commission (the “SEC”) on March 30, 2023.

 

Business Combination and Domestication

 

On December 14, 2020, our predecessor company, formerly known as Tenzing Acquisition Corp., a British Virgin Islands exempted company (“Tenzing”), and Reviva Pharmaceuticals, Inc., a Delaware corporation (together with its consolidated subsidiaries, “Old Reviva”), consummated the transactions (the “Business Combination”) contemplated by the Agreement and Plan of Merger, dated as of July 20, 2020 (as amended, the “Merger Agreement”), by and among Tenzing, Tenzing Merger Subsidiary Inc., a Delaware corporation and wholly-owned subsidiary of Tenzing (“Merger Sub”), Old Reviva, and the other parties thereto. Pursuant to the Merger Agreement, Merger Sub merged with and into Old Reviva, with Old Reviva surviving as our wholly owned subsidiary. We refer to this transaction as the Business Combination. In connection with and one day prior to the completion of the Business Combination, Tenzing re-domiciled out of the British Virgin Islands and continued as a company incorporated in the State of Delaware, and changed its name to Reviva Pharmaceuticals Holdings, Inc. Prior to the completion of the Business Combination, the Company was a shell company. Following the Business Combination, the business of Old Reviva is the business of the Company.

 

Old Reviva was incorporated in the state of Delaware on May 1, 2006 and its subsidiary, Reviva Pharmaceuticals India Pvt. Ltd., was incorporated on December 23, 2014. Tenzing was formed pursuant to the laws of the British Virgin Islands on March 20, 2018.

 

Financial Overview

 

We are a clinical-stage biopharmaceutical company and have not generated any revenues from the sale of products. We have never been profitable, and our accumulated deficit as of March 31, 2023, was $97.8 million. Our net loss for the three months ended March 31, 2023 and 2022, was approximately $6.6 million and $7.4 million, respectively. We expect to incur significant expenses and increased operating losses for the next several years. We expect our expenses to increase in connection with our ongoing activities to research, develop and commercialize our product candidates. Furthermore, we expect to incur additional costs associated with operating as a public company. We will need to generate significant revenues to achieve profitability, and we may never do so.

 

We expect our expenses will increase substantially in connection with our ongoing activities, as we:

 

 

invest significantly to further research and develop, through clinical trials for RP5063 (Brilaroxazine) and pre-clinical research for RP1208, and seek regulatory approval for our product candidates RP5063 (Brilaroxazine) and RP1208;

 

 

identify and develop additional product candidates;

 

 

hire additional clinical, scientific and management personnel;

 

 

seek regulatory and marketing approvals for any product candidates that we may develop;

 

 

ultimately establish a sales, marketing and distribution infrastructure to commercialize any drugs for which we may obtain marketing approval;

 

 

maintain, expand and protect our intellectual property portfolio;

 

4

 

 

acquire or in-license other drugs and technologies; and

 

 

add operational, financial and management information systems and personnel, including personnel to support our product candidate development, any future commercialization efforts, and our ongoing compliance with and maintenance of public company controls, procedures and regulatory requirements and standards.

 

We have funded our operations to date primarily from the issuance and sale of our equity and convertible equity securities. As of March 31, 2023, we had cash and cash equivalents of approximately $11.3 million. To fund our current operating plans, we will need to raise additional capital. Our existing cash and cash equivalents will not be sufficient for us to complete development of our product candidates and, if applicable, to prepare for commercializing any product candidate that may receive approval. Accordingly, we will continue to require substantial additional capital beyond our existing cash to continue our clinical development and potential commercialization activities. We believe that we have adequate cash on hand to cover anticipated outlays through the majority of fiscal year 2023, but will need additional fundraising activities and cash on hand during the fourth quarter of fiscal year 2023. These conditions raise substantial doubt regarding our ability to continue as a going concern for a period of one year after the date the financial statements are issued. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our clinical development efforts. We will seek to fund our operations through public or private equity or debt financings or other sources, which may include collaborations with third parties. Adequate additional financing may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a negative impact on our financial condition, and our ability to pursue our business strategy, and our ability to continue as a going concern. We cannot assure you that we will ever be profitable or generate positive cash flow from operating activities.

 

Research and Development Expenses

 

We focus our resources on research and development activities, including the conduct of preclinical and clinical studies and product development and expense such costs as they are incurred. We have not historically tracked or recorded research and development expenses on a project-by-project basis, primarily because we use our employee and infrastructure resources across multiple research and development projects, and it is not practical for us to allocate such costs on a project-by-project basis. Our research and development expenses primarily consist of contract research organization expenses, scientific research vendor expenses, and employee-related expenses, including salaries, benefits and taxes for personnel in research and development functions.

 

The largest recurring component of our total operating expenses has historically been research and development activities. We expect our research and development expenses will increase for the next several years as we advance our development programs, pursues regulatory approval of our product candidates in the U.S. and other jurisdictions and prepare for potential commercialization, which would require a significant investment in costs related to contract manufacturing, inventory buildup and sales and marketing activities.

 

Our primary product candidates and their current status is as follows:

 

Drug Candidate

 

Indication

 

Status

 

Brilaroxazine (RP5063)

 

Schizophrenia

 

Initiated pivotal Phase 3 and long-term safety studies. Topline data for the pivotal Phase 3 study is anticipated in mid-2023

 

Brilaroxazine

 

Bipolar Disorder

 

Phase 1 complete**

 

Brilaroxazine

 

Depression-MDD

 

Phase 1 complete**

 

Brilaroxazine

 

Alzheimer’s (AD-Psychosis/Behavior)

 

Phase 1 complete**

 

Brilaroxazine

 

Parkinson’s

 

Phase 1 complete**

 

Brilaroxazine

 

ADHD/ADD

 

Phase 1 complete**

 

Brilaroxazine

 

PAH

 

Phase 1 complete**

 

Brilaroxazine

 

IPF

 

Phase 1 complete**

 

RP1208

 

Depression

 

Completed pre-clinical development studies, including in vitro receptor binding studies, animal efficacy studies, and PK studies. Compound ready for IND enabling studies.

 

RP1208

 

Obesity

 

Completed pre-clinical development studies, including in vitro receptor binding studies and PK studies. Compound ready for animal efficacy studies.

 

 

** We completed the Phase 1 clinical study for brilaroxazine prior to starting the Phase 2 study in schizophrenia and schizoaffective disorder. We collected safety data for brilaroxazine in over 200 patients, including healthy subjects and patients with stable schizophrenia, acute schizophrenia and schizoaffective disorder. Generally, no separate Phase 1 study is required for conducting a Phase 2 study for an additional indication, provided the treatment doses in the Phase 2 study for an additional indication are within the range of doses tested in the previously completed Phase 1 study.

 

5

 

The successful development of our platform and product candidates is highly uncertain, and we may never succeed in achieving marketing approval for our product candidates RP5063 (Brilaroxazine), RP1208, or any future product candidates. We expect the remaining costs in connection with our ongoing Phase 3 clinical study for brilaroxazine to be approximately $14.5 million, with approximately $10.8 million payable during calendar 2023, and approximately $3.7 million payable during calendar 2024. At this time, other than our estimates for conducting our Phase 3 clinical study for brilaroxazine, we cannot reasonably estimate the nature, timing, or costs of the efforts necessary to finish developing any of our product candidates or the period in which material net cash, if any, from these product candidates may commence. This is due to the numerous risks and uncertainties associated with developing therapeutics, including the uncertainty of:

 

 

the scope, rate of progress, expense, and results of clinical trials;

 

 

the scope, rate of progress, and expense of process development and manufacturing;

 

 

preclinical and other research activities; and

 

 

the timing of regulatory approvals.

 

General Administrative Expenses

 

General and administrative expenses primarily consist of payroll and related costs for employees in executive, business development, finance, and administrative functions. Other significant general and administrative expenses include professional fees for accounting and legal services.

 

We expect general and administrative expenses to increase as we expand infrastructure and continue the development of our clinical programs. Other increases could potentially include increased costs for director and officer liability insurance, costs related to the hiring of additional personnel, and increased fees for directors, outside consultants, lawyers, and accountants. We expect to incur significant costs to comply with corporate governance, internal controls, and similar requirements applicable to public companies.

 

Interest Income and Other Income

 

Interest income and other, net consists largely of interest earned on our cash & cash equivalents.

 

Critical Accounting Policies and Use of Estimates

 

Our critical accounting policies are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 30, 2023. Since the date of the Annual Report, there have been no material changes in our critical accounting policies.

 

6

 

Results of Operations

 

Comparison of the three months ended March 31, 2023 and 2022:

 

The following table summarizes our results of operations for three months ended March 31, 2023 and 2022:

 

   

Three Months Ended March 31,

   

Change

   

Change

 
   

2023

   

2022

   

$

   

%

 

Operating expenses

                               

Research and development

  $ 5,234,999     $ 5,830,018       (595,019

)

    (10

)%

General and administrative

    1,500,554       1,620,139       (119,585

)

    (7

)%

Total operating expenses

    6,735,553       7,450,157                  

Loss from operations

    (6,735,553

)

    (7,450,157

)

               

Gain on remeasurement of warrant liabilities

    11,126       89,010       (77,884

)

    (88

)%

Interest expense

    (7,655 )           (7,655 )     10000

%

Interest income

    147,011       1,735       132,749       57219

%

Other expense

    (14,494 )     (1,967

)

    132,749       57219

%

Total other (expense) income, net

    135,988       88,778                  

Loss before provision for income taxes

    (6,599,565

)

    (7,361,379

)

               

Provision for income taxes

    2,978       3,629       (651

)

    (18

)%

Net loss

  $ (6,602,543

)

  $ (7,365,008

)

               

 

Research and Development Expenses

 

We incurred approximately $5.2 million and $5.8 million in research and development expenses for the three months ended March 31, 2023 and 2022, respectively. The primary reason for the decrease of $0.6 million, or (10)%, was attributable to a decrease in Phase 3 clinical trial expenses and lower drug development costs of approximately $1.4 million for our product candidate brilaroxazine. This is coupled with a decrease of approximately $0.1 million related to preclinical expenditures. This is slightly offset by an increase of approximately $0.4 million related to safety and toxicology studies, an increase in salaries of approximately $0.3 million, an increase in stock-based compensation and payroll taxes of approximately $0.1 million, and an increase in consulting expenses of approximately $0.1 million. Our research and development expenses are expected to increase for the foreseeable future as we continue to advance our platform and product candidates.

 

General and Administrative Expenses

 

We incurred approximately $1.5 million and $1.6 million in general and administrative expenses for the three months ended March 31, 2023 and 2022, respectively. Total general and administrative expenses have remained relatively consistent year over year. The modest period-over-period decrease was primarily attributable to decreases in health and commercial insurance of approximately $0.1 million, legal expenses of approximately $0.1 million, payroll related expenses of approximately $0.1 million. This is slightly offset by increases in consultant and professional expenses of approximately $0.1 million and board of director compensation expenses of approximately $0.1 million.

 

Gain on Remeasurement of Warrant Liabilities

 

The gain on remeasurement of warrant liabilities of $0 million and $0.1 million for the three months ended March 31, 2023 and 2022, respectively, resulted from the slight decrease in calculated fair value principally as a result of the slight decrease in our stock price during the three months ended March 31, 2023. The gain on remeasurement of warrant liabilities $0.1 million for the three months ended March 31, 2022, resulted from the decrease in calculated fair value principally as a result of the decline in stock price during the three months ended March 31, 2022.

 

7

 

Interest Income

 

Interest Income increased primarily due to the Company moving funds to an interest-bearing account in the final months of fiscal year 2022, coupled with an increase in market interest rates in 2023 as compared to 2022.

 

Liquidity and Capital Resources

 

   

March 31,

   

December 31,

   

Change

 
   

2023

   

2022

   

Dollars

   

Percentage

 

Balance Sheet Data:

                               

Cash and cash equivalents

  $ 11,255,552     $ 18,519,856       (7,264,304

)

    (39.2

)%

Working capital

  $ 6,341,286     $ 12,883,835       (6,542,549

)

    (50.8

)%

Total assets

  $ 12,901,523     $ 18,923,675       (6,022,152

)

    (31.8

)%

Total stockholders' equity

  $ 5,784,973     $ 12,316,396       (6,531,423

)

    (53.0

)%

 

   

Three Months Ended March 31,

   

Change

 

Statement of Cash Flow Data:

 

2023

   

2022

   

Dollars

   

Percentage

 

Net cash used in operating activities

  $ (7,951,397 )   $ (6,266,777 )     (1,684,620 )     26.9 %

Net cash provided by financing activities

    687,093       70       687,023       981461.4 %

Net decrease in cash and cash equivalents

  $ (7,264,304 )   $ (6,266,707 )     (997,597 )     15.9 %

 

Capital Resources

 

As of March 31, 2023, we had cash and cash equivalents of approximately $11.3 million. We believe that we have adequate cash on hand to cover anticipated outlays through the majority of fiscal year 2023, but will need additional fundraising activities and cash on hand during the fourth quarter of fiscal year 2023. These conditions raise substantial doubt regarding our ability to continue as a going concern for a period of one year after the date the financial statements are issued. We expect to continue to incur significant expenses and operating losses for the foreseeable future as we continue our research and preclinical and clinical development of our product candidates; expand the scope of our current studies for our product candidates; initiate additional preclinical, clinical or other studies for our product candidates; change or add additional manufacturers or suppliers; seek regulatory and marketing approvals for any of our product candidates that successfully complete clinical studies; seek to identify, evaluate and validate additional product candidates; acquire or in-license other product candidates and technologies; maintain, protect and expand our intellectual property portfolio; attract and retain skilled personnel; and experience any delays or encounter issues with any of the above.

 

On September 8, 2022, we completed a registered direct offering and concurrent private placement (together, the “September 2022 Offering”). In the registered direct offering, we issued 1,976,285 shares of common stock at a purchase price per share of $2.53, for aggregate gross proceeds to us of approximately $5.0 million, before deducting certain transaction expenses payable by us of approximately $0.7 million. The transaction expenses were net against the proceeds received and were included in additional paid-in capital.

 

We issued to the investors in the September 2022 Offering warrants to purchase up to 3,359,684 shares of common stock (the “Private Placement Warrants”). The Private Placement Warrants were immediately exercisable upon issuance at an exercise price of $2.40 per share and will expire on September 8, 2027.

 

In a concurrent private placement we issued pre-funded warrants (the “Private Pre-Funded Warrants”) to purchase up to an aggregate of 1,383,399 shares of common stock at a purchase price of $2.5299 per share, for aggregate gross proceeds to us of approximately $3.5 million, before deducting transaction expenses payable by us, which were net against the proceeds received and were included in additional paid-in capital. The Private Pre-Funded Warrants were immediately exercisable at an exercise price of $0.0001 per share and will expire when the Private Pre-Funded Warrants are fully exercised.

 

8

 

No Private Pre-Funded Warrants or Private Placement Warrants have been exercised as of March 31, 2023.

 

The September 2022 Offering resulted in aggregate gross proceeds of approximately $8.5 million before deducting transaction expenses. Net proceeds totaled approximately $7.8 million after deducting transaction costs of $0.7 million.

 

We obtained financing for certain Director & Officer liability insurance policy premiums from First Insurance Funding. The total premiums, taxes, and fees financed is $667,500 with an annual percentage interest rate of 8.735%. At March 31, 2023 the balance of insurance financing debt payable was $667,500 in the condensed consolidated balance sheet.

 

Until such time as we can generate substantial product revenue, if ever, we expect to finance our cash needs through a combination of equity or debt financings and collaboration agreements. We do not currently have any committed external sources of capital.

 

To the extent that we raise additional capital through the future sale of equity or debt, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing stockholders.

 

If we raise additional funds through collaboration agreements in the future, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates or grant licenses on terms that may not be favorable to us.

 

If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. 

 

Cash Flows

 

Net Cash Used in Operating Activities

 

Net cash used in operating activities for the three months ended March 31, 2023, was approximately $8.0 million, consisting primarily of a net loss of $6.6 million, coupled with a change in our operating assets and liabilities totaling $1.4 million. The increase in net operating assets was primarily due to a decrease in accounts payable and accrued expenses and other current liabilities coupled with an increase in prepaid expenses and other current assets.

 

Net cash used in operating activities for the three months ended March 31, 2022, was $6.3 million, consisting primarily of a net loss of approximately $7.4 million, a noncash gain related to the remeasurement of warrant liabilities of approximately $0.1 million, and a decrease in net operating assets of approximately $1.1 million. The decrease in net operating assets was primarily due to increases in accounts payable and accrued expenses and other current liabilities, coupled with a decrease in prepaid expenses and other current assets.

 

Net Cash Provided by Financing Activities

 

Net cash provided by financing activities for the three months ended March 31, 2023 consists of approximately $667.5 thousand related to proceeds from the issuance of short-term debt and approximately $19.6 thousand related to proceeds from the exercise of warrants for common stock. Net cash provided by financing activities for the three months ended March 31, 2022, of $70 related to proceeds from the exercise of warrants for common stock.

 

Off-Balance Sheet Arrangements

 

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

 

JOBS Act Accounting Election

 

As an emerging growth company under the JOBS Act, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. We have elected not to opt out of such extended transition period. Accordingly, when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, will adopt the new or revised standard at the time private companies adopt the new or revised standard, unless early adoption is permitted by the standard, and we elect early adoption. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

 

9

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

As a smaller reporting company, we are not required to provide the information called for by this item.

 

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the rules and regulations thereunder, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

 

As required by Rule 13a-15(b) under the Exchange Act, our management, under the supervision and with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2023. Based on such evaluation, our principal executive officer and principal financial officer have concluded that, as of March 31, 2023, our disclosure controls and procedures were effective at the reasonable assurance level. 

 

Changes in Internal Control Over Financial Reporting

 

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.  

 

Inherent Limitations on Effectiveness of Controls

 

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

 

10

 

PART II Other Information

 

 

ITEM 1.

LEGAL PROCEEDINGS.

 

We may, from time to time, become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that may be, individually or in the aggregate, material to us.

 

 

ITEM 1A.

RISK FACTORS.

 

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 30, 2023, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K, for the year ended December 31, 2022, as filed with the SEC on March 30, 2023, may not be the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition and/or operating results.

 

There were no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 30, 2023.

 

 

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

There were no unregistered sales of equity securities during the period covered by this report.

 

 

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

 

ITEM 4.

MINE SAFETY DISCLOSURES.

 

Not applicable.

 

 

ITEM 5.

OTHER INFORMATION.

 

None.

 

11

 

ITEM 6.

EXHIBITS

Exhibit No.

 

Exhibit

 

 

     

31.1*

 

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a)

     

31.2*

 

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a)

     

32.1**

 

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350

     

101.INS*

 

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

     

101.SCH*

 

Inline XBRL Taxonomy Extension Schema Document

     

101.CAL*

 

Inline XBRL Taxonomy Extension Calculation Linkbase Document

     

101.DEF*

 

Inline XBRL Taxonomy Extension Definition Linkbase Document

     

101.LAB*

 

Inline XBRL Taxonomy Extension Label Linkbase Document

     

101.PRE*

 

Inline XBRL Taxonomy Extension Presentation Linkbase Document

     

104

 

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibits 101)

 

*

Filed herewith.

 

**

The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be deemed to be incorporated by reference into any filing under such Act or the Securities Act of 1933, as amended, except to the extent that the registrant specifically incorporates such certifications by reference.

 

12

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

Reviva Pharmaceuticals Holdings, Inc.

(Registrant)

   
   
   

Date: May 15, 2023

/s/ Laxminarayan Bhat

 

Laxminarayan Bhat

 

Chief Executive Officer

 

(Principal Executive Officer)

   

Date: May 15, 2023

/s/ Narayan Prabhu

 

Narayan Prabhu

 

Chief Financial Officer

 

(Principal Financial and Accounting Officer)

 

13
EX-31.1 2 ex_512586.htm EXHIBIT 31.1

Exhibit 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

Pursuant to

Securities Exchange Act Rules 13a-14(a) and 15d-14(a),

As Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

 

I, Laxminarayan Bhat, hereby certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of Reviva Pharmaceuticals Holdings, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

 

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

 

 

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Dated: May 15, 2023

 

/s/ Laxminarayan Bhat

Laxminarayan Bhat

Chief Executive Officer

(Principal Executive Officer)

 

 
EX-31.2 3 ex_512585.htm EXHIBIT 31.2

 

 

Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

Pursuant to

Securities Exchange Act Rules 13a-14(a) and 15d-14(a),

As Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

 

I, Narayan Prabhu, hereby certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of Reviva Pharmaceuticals Holdings, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

 

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

 

 

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Dated: May 15, 2023

 

/s/ Narayan Prabhu

Narayan Prabhu

Chief Financial Officer

(Principal Financial and Accounting Officer)

 

 
EX-32.1 4 ex_512587.htm EXHIBIT 32.1

 

 

Exhibit 32.1

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER

AND CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Reviva Pharmaceuticals Holdings, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), Laxminarayan Bhat, as Chief Executive Officer of the Company, and Narayan Prabhu, Chief Financial Officer of the Company, each hereby certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), to his knowledge:

 

 

1.

The Quarterly Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

 

 

2.

The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

IN WITNESS WHEREOF, the undersigned have set their hands hereto as of the 15th day of May, 2023.

 

/s/ Laxminarayan Bhat

 

/s/ Narayan Prabhu

Laxminarayan Bhat

 

Narayan Prabhu

Chief Executive Officer

 

Chief Financial Officer

(Principal Executive Officer)

 

(Principal Financial and Accounting Officer)

 

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

 

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

 
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