10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2023

OR

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

For the transition period from         to

PAXMEDICA, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-41475	85-0870387
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(IRS Employer Identification No.)

303 South Broadway, Suite 125 Tarrytown, NY	10591
(Address Of Principal Executive Offices)	(Zip Code)

(914) 987-2876

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	PXMD	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 the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☒

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

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

As of August 9, 2023, the Registrant had 16,436,509 shares of common stock, par value $0.0001 per share, issued and outstanding.

PAXMEDICA, INC.

Form 10-Q

For the Quarter Ended June 30, 2023

Table of Contents

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Balance Sheets as of June 30, 2023 (Unaudited) and December 31, 2022	1
	Unaudited Condensed Statements of Operations for the three and six months ended June 30, 2023 and 2022	2
	Unaudited Condensed Statements of Changes in Stockholders’ Equity (Deficit) for the three and six months ended June 30, 2023 and 2022	3
	Unaudited Condensed Statements of Cash Flows for the six months ended June 30, 2023 and 2022	5
	Notes to Unaudited Condensed Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	28
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Defaults Upon Senior Securities	29
Item 4.	Mine Safety Disclosures	29
Item 5.	Other Information	29
Item 6.	Exhibits	30

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements

PAXMEDICA, INC.

CONDENSED BALANCE SHEETS

	June 30,		December 31,
	2023		2022
ASSETS		(Unaudited)
Current assets
Cash	$	3,069,894	$	1,901,887
Accounts receivable		500,000		—
Prepaid and other current assets		1,574,348		302,431
Total current assets		5,144,242		2,204,318
Total assets	$	5,144,242	$	2,204,318
LIABILITIES, AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	658,711	$	721,955
Accounts payable - related party		—		20,000
Accrued expenses		55,125		1,019,071
Note payable - fair value, current portion		1,611,336		173,543
Shares settled liability		—		160,949
Deferred revenue- current portion		100,000		—
Total current liabilities		2,425,172		2,095,518
Note payable - fair value, less current portion		53,711		—
Deferred revenue- less current portion		400,000
Total liabilities		2,878,883		2,095,518
Commitments and contingencies (Note 9)
Stockholders’ Equity
Preferred stock, par value $0.0001, 10,000,000 shares authorized:
Series X preferred shares, 500,000 shares authorized as of June 30, 2023 and December 31, 2022; 45,567 shares issued and outstanding at June 30, 2023 and December 31, 2022		5		5
Common stock, par value $0.0001; 200,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 15,369,477 and 12,035,592 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively		1,537		1,204
Additional paid-in capital		43,323,867		33,847,607
Accumulated deficit		(41,060,050)		(33,740,016)
Total stockholders’ equity		2,265,359		108,800
Total liabilities, and stockholders’ equity	$	5,144,242	$	2,204,318

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

1

PAXMEDICA, INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Operating expenses
General and administrative	$	2,768,910	$	775,963	$	6,583,094	$	1,709,780
Research and development		589,029		151,425		811,520		1,222,129
Total operating expenses		3,357,939		927,388		7,394,614		2,931,909
Loss from operations		(3,357,939)		(927,388)		(7,394,614)		(2,931,909)
Other income (expense):
Interest expense		(3,928)		—		(7,856)		—
Loss on issuance of debt		—		(303,012)		—		(303,012)
Loss on extinguishment of debt		—		—		(36,850)		—
Change in fair value of notes		(124,087)		(103,950)		211,277		(103,950)
Change in fair value of SAFE		—		1,356,545		—		2,990,762
Change in fair value warrant liability		—		(3,163)		—		2,230,603
Other expense		(333)		—		(91,991)		—
Total other income (expense)		(128,348)		946,420		74,580		4,814,403
Net income (loss)	$	(3,486,287)	$	19,032	$	(7,320,034)	$	1,882,494
Basic weighted average number of shares outstanding		14,669,439		6,913,492		13,659,168		6,913,492
Diluted weighted average number of shares outstanding		14,669,439		6,913,492		13,659,168		7,473,519
Basic net income (loss) per share	$	(0.24)	$	0.00	$	(0.54)	$	0.19
Diluted net income (loss) per share	$	(0.24)	$	0.00	$	(0.54)	$	(0.05)

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

2

PAXMEDICA, INC.

CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

For The Three Months Ended June 30, 2023

							Additional				Total
	Series X Preferred Stock			Common Stock			Paid-in		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Deficit		Equity
Balance at April 1, 2023	45,567	$	5	13,920,234	$	1,392	$	40,105,133	$	(37,573,763)	$	2,532,767
Reclassification of shares settled liability to equity	—		—	7,206		1		34,499		—		34,500
Issuance of common stock in connection with equity purchase agreement	—		—	1,380,000		138		1,965,476		—		1,965,614
Delivery of common stock underlying restricted stock units, net of tax withholding	—		—	62,037		6		(45,891)		—		(45,885)
Stock-based compensation	—		—	—		—		1,264,650		—		1,264,650
Net loss	—		—	—		—		—		(3,486,287)		(3,486,287)
Balance at June 30, 2023	45,567	$	5	15,369,477	$	1,537	$	43,323,867	$	(41,060,050)	$	2,265,359

For The Three Months Ended June 30, 2022

							Additional				Total
	Series Seed Preferred Stock			Common Stock			Paid-in		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Deficit		Deficit
Balance at April 1, 2022	2,696,439	$	270	6,913,492	$	691	$	9,009,619	$	(17,074,787)	$	(8,064,207)
Stock-based compensation	—		—	—		—		148,818		—		148,818
Net income	—		—	—		—		—		19,032		19,032
Balance at June 30, 2022	2,696,439	$	270	6,913,492	$	691	$	9,158,437	$	(17,055,755)	$	(7,896,357)

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

3

PAXMEDICA, INC.

CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

For The Six Months Ended June 30, 2023

							Additional				Total
	Series X Preferred Stock			Common Stock			Paid-in		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Deficit		Equity
Balance at January 1, 2023	45,567	$	5	12,035,592	$	1,204	$	33,847,607	$	(33,740,016)	$	108,800
Reclassification of shares settled liability to equity	—		—	31,014		3		160,946		—		160,949
Issuance of common stock in connection with equity purchase agreement	—		—	2,580,000		258		4,770,357		—		4,770,615
Issuance of common stock warrants in connection with notes payable, net of fees	—		—	—		—		1,155,642		—		1,155,642
Delivery of common stock underlying restricted stock units, net of tax withholding	—		—	62,037		6		(45,891)		—		(45,885)
Stock-based compensation	—		—	660,834		66		3,435,206		—		3,435,272
Net loss	—		—	—		—		—		(7,320,034)		(7,320,034)
Balance at June 30, 2023	45,567	$	5	15,369,477	$	1,537	$	43,323,867	$	(41,060,050)	$	2,265,359

For The Six Months Ended June 30, 2022

							Additional				Total
	Series Seed Preferred Stock			Common Stock			Paid-in		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Deficit		Deficit
Balance at January 1, 2022	2,696,439	$	270	6,913,492	$	691	$	8,828,425	$	(18,938,249)	$	(10,108,863)
Stock-based compensation	—		—	—		—		330,012		—		330,012
Net income	—		—	—		—		—		1,882,494		1,882,494
Balance at June 30, 2022	2,696,439	$	270	6,913,492	$	691	$	9,158,437	$	(17,055,755)	$	(7,896,357)

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

4

PAXMEDICA, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
	2023		2022
Cash flows from operating activities
Net income (loss)	$	(7,320,034)	$	1,882,494
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Stock-based compensation		3,435,272		330,012
Change in fair value of notes		(211,277)		103,950
Change in fair value of SAFE		—		(2,990,762)
Loss on extinguishment of debt		36,850		—
Loss of issuance of debt		—		303,012
Change in fair value warrant liability		—		(2,230,603)
Other expense		91,991		—
Deferred revenue		500,000		—
Changes in assets and liabilities:
Prepaid and other current assets		(1,271,917)		—
Accounts receivable		(500,000)		—
Accounts payable		303,203		(76,885)
Accounts payable - related party		(20,000)		161,875
Accrued expenses		(863,518)		1,084,626
Net cash used in operating activities		(5,819,430)		(1,432,281)
Cash flows from financing activities
Proceeds from issuance of convertible promissory notes and warrants		3,200,000		997,250
Payment of costs in connection with convertible promissory notes and warrants		(503,696)		—
Proceeds from the issuance of common stock in connection with equity purchase agreement		4,770,615		—
Payment of costs in connection with equity purchase agreement		(195,997)		—
Repayment of convertible promissory notes		(237,600)		—
Settlement of shares withheld for payment of employee taxes		(45,885)		—
Net cash provided by financing activities		6,987,437		997,250
Net increase (decrease) in cash		1,168,007		(435,031)
Cash, beginning of period		1,901,887		444,087
Cash, end of period	$	3,069,894	$	9,056
Non-cash financing activities:
Reclassification of shares settled liability	$	160,946	$	—
Unpaid deferred offering costs and financing fees	$	20,393	$	342,542

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

5

PAXMEDICA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 1. Organization and description of business operations

PaxMedica, Inc. (the “Company”) is a clinical stage biopharmaceutical company organized as a Delaware limited liability company on April 5, 2018 (“Inception”) to focus on the development of drug candidates for the treatment of autism spectrum disorder (ASD), Fragile X syndrome tremor-ataxia (FXTAS) and Human African Trypanosomiasis (HAT).

Initial Public Offering

On August 9, 2022, the Company entered into an underwriting agreement relating to the public offering of its common stock, par value $0.0001 per share. The Company agreed to sell 1,545,454 shares of its common stock to the underwriters, at a purchase price per share of $4.83 (the offering price to the public of $5.25 per share minus the underwriters’ discount), pursuant to the Company’s registration statement on Form S-1 (File No. 333-239676), as amended, under the Securities Act of 1933, that was filed by the Company under Rule 462(b) under the Securities Act. The Company also granted the underwriters a 45-day option to purchase up to 231,818 additional shares of common stock to cover over-allotments. On August 30, 2022, the Company received net proceeds from its public offering of approximately $6.0 million, net of underwriter fees and commissions of approximately $0.8 million, and offering costs of approximately $1.4 million. In connection with its public offering the Company issued warrants to purchase 108,181 shares of the Company’s common stock with an exercise price of $6.5625 per share.

Going concern, liquidity and capital resources

The Company has no product revenues, incurred operating losses since inception, and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. The Company had an accumulated deficit of approximately $41.1 million at June 30, 2023, a net loss of approximately $7.3 million, and approximately $5.8 million of net cash used in operating activities for the six months ended June 30, 2023.

Equity Purchase Agreement with Lincoln Park Capital

During the six months ended June 30, 2023, in connection with its equity purchase agreement with Lincoln Park Capital Fund, LLC (LPC), the Company received net proceeds of approximately $4.6 million from the issuance of 2.6 million shares of the Company’s common stock (See Note 8).

2023 Note

During the six months ended June 30, 2023, the Company issued a convertible promissory note (the “2023 Note”) with a principal balance of $3.7 million. The Company received proceeds of approximately $2.5 million, net of expenses and other costs. The 2023 Note bears no interest and matures 18 months from the issuance date. In connection with the 2023 Note, the Company issued a common stock warrant to purchase 800,000 shares of the Company’s common stock (See Note 6).

Vox Nova Exclusive Pharmacy Distribution Agreement

On June 30, 2023, the Company entered into an exclusive specialty benefit manager agreement with Vox Nova, LLC (“Vox Nova”) pursuant to which Vox Nova will act as the exclusive United States distributor for the Company’s lead pipeline asset, PAX-101 intravenous suramin. Vox Nova will provide certain distribution management, pharmacy benefit management, sales and supply monitoring services to the Company with respect to PAX-101, in the event PAX-101 receives FDA approval. The distribution agreement also provides for an exclusivity fee payable to the Company of up to $2.0 million, payable in installments based on various time and regulatory approval parameters. Vox Nova will pay $0.5 million of the exclusivity fee upfront in connection with the signing of the distribution agreement when the distribution right was transferred to Vox Nova. The remaining $1.5 million is due in four equal installments over a one-year period after PAX-101 is approved by the FDA and made available for distribution. The Company recognized the $0.5 million upfront fee in deferred revenue as of June 30, 2023.

6

PAXMEDICA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Going Concern

The accompanying condensed financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern.

The Company’s future liquidity and capital funding requirements will depend on numerous factors, including:

● its ability to raise additional funds to finance its operations;

● the outcome, costs and timing of clinical trial results for the Company’s current or future product candidates;

● the emergence and effect of competing or complementary products;

● its ability to maintain, expand and defend the scope of its intellectual property portfolio, including the amount and timing of any payments the Company may be required to make, or that it may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights;

● its ability to retain its current employees and the need and ability to hire additional management and scientific and medical personnel; and

● the terms and timing of any collaborative, licensing or other arrangements that it has or may establish.

The Company will likely need to raise substantial additional funds through one or more of the following: issuance of additional debt or equity, or the completion of a licensing transaction for one or more of the Company’s pipeline assets. If the Company is unable to maintain sufficient financial resources, its business, financial condition and results of operations will be materially and adversely affected. This could affect future development and business activities and potential future clinical studies and/or other future ventures. Failure to obtain additional equity or debt financing will have a material, adverse impact on the Company’s business operations. There can be no assurance that the Company will be able to obtain the needed financing on acceptable terms or at all. Additionally, equity or convertible debt financings will likely have a dilutive effect on the holdings of the Company’s existing stockholders. Accordingly, there are material risks and uncertainties that raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the issuance of these condensed financial statements. The accompanying condensed financial statements do not include any adjustments that result from the outcome of these uncertainties.

Note 2. Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Basis of presentation

The accompanying unaudited condensed financial statements are presented in U.S. dollars and in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected through December 31, 2023.

The accompanying unaudited condensed financial statements should be read in conjunction with the financial statements for the year ended December 31, 2022 and notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on March 30, 2023(the “2022 Annual Report”).

7

PAXMEDICA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Use of estimates

The preparation of 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 at the date of the financial statements and the reported amounts of expenses during the reporting period. The most significant estimates in the Company’s condensed financial statements relate to the valuation of convertible notes, valuation of warrants, and valuation of equity-based awards. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

Significant Accounting Policies:

For a detailed discussion about the Company’s significant accounting policies, see the Company’s December 31, 2022 financial statements included in its 2022 Annual Report.

Concentrations of cash, cash equivalents and short-term investments

The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. As of June 30, 2023 and December 31, 2022, the Company had no cash equivalents or short-term investments.

Financial instruments that potentially subject the Company to the concentration of credit risk consist primarily of cash. The Company maintains its cash at high credit quality financial institutions, which may at times, be in excess of federal insured limits. The Company believes it is not exposed to any significant losses due to credit risk on cash.

Accounts Receivable and Allowances for Doubtful Accounts

The Company records a provision for doubtful accounts, when appropriate, based on historical experience and a detailed assessment of them collectability of its accounts receivable. In estimating the allowance for doubtful accounts, the Company considers, among other factors, the aging of the accounts receivable, its historical write-offs, the credit worthiness of each customer, and economic conditions that could affect the collectability of the balances in the future. Account balances are charged off against the allowance when the Company believes that it is probable that the receivable will not be recovered. Actual write-offs may be in excess of the Company’s estimated allowance. The Company has not incurred any bad debt expense to date and no allowance for doubtful accounts has been recorded during the periods presented.

Fair value of financial instruments

The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 820 (“ASC 820”), Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 - observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

Level 3 - assets and liabilities whose significant value drivers are unobservable.

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to

8

PAXMEDICA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. During the six months ended June 30, 2023, the Company issued the 2023 Notes and warrants in connection with the 2023 Notes. The 2023 Notes were classified as liabilities and measured at fair value on the issuance date, with changes in fair value recognized as other expense on the statements of operations and disclosed in the condensed financial statements. The carrying amounts of the Company’s financial assets and liabilities, such as accounts payable, approximate fair value due to the short-term nature of these instruments.

Convertible Note

In accordance with Accounting Standards Codification 825, Financial Instruments (“ASC 825”), the Company has elected the fair value option for recognition of its 2023 Note (See Note 3). In accordance with ASC 825, the Company recognizes the 2023 Note at fair value with changes in fair value recognized in the condensed statements of operations. The fair value option may be applied instrument by instrument, but it is irrevocable. As a result of applying the fair value option, direct costs and fees related to the convertible note were recognized in general and administrative expense. The 2023 Note does not accrue interest.

Revenue Recognition

The Company follows the provisions of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. The guidance provides a five-step model to determine how revenue is recognized. In determining the appropriate amount of revenue to be recognized, the Company performs the following steps: (i) identification of the contracts with a customer; (ii) determination of the performance obligations in the contract; (iii) measurement of the transaction price, including potential constraints on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated stand-alone selling prices; and (v) recognition of revenue when (or as) the Company satisfies a performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. Significant management judgment is required to determine the level of effort required under an arrangement and the period over which the Company expects to complete its performance obligations under the arrangement. If the Company cannot reasonably estimate when its performance obligations are either completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably make such estimates. Revenue is then recognized over the remaining estimated period of performance or contract-term using the cumulative catch-up method. The Company allocates the total transaction price to each performance obligation based on the relative standalone selling prices of the promised goods or service underlying each performance obligation.

Research and Development

Research and development costs are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received.

Accrued Outsourcing Costs

Substantial portions of the Company’s preclinical studies and clinical trials are performed by third-party laboratories, medical centers, contract research organizations and other vendors (collectively “CROs”). These CROs generally bill monthly or quarterly for services performed, or bill based upon milestone achievement. For preclinical studies, the Company accrues expenses based upon estimated percentage of work completed and the contract milestones remaining. Clinical trial costs are a significant component of research and development expenses and include costs associated with third-party contractors. The Company outsources a substantial portion of its clinical trial activities, utilizing external entities such as CROs, independent clinical investigators, and other third-party service providers to assist the Company with the execution of its clinical studies. For each clinical trial that the Company conducts, certain clinical trial costs are expensed immediately, while others are expensed over time based on the number of patients in the trial, the attrition rate at which patients leave the trial, and/or the period over which clinical investigators or CROs are expected to provide services. The Company’s estimates depend on the timeliness and accuracy of the data provided by the CROs regarding the status of each program and total program spending. The Company periodically evaluates the estimates to determine if adjustments are necessary or appropriate based on information it receives.

9

PAXMEDICA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Stock-Based Compensation

The Company expenses stock-based compensation to employees, non-employees and board members over the requisite service period based on the estimated grant-date fair value of the awards and actual forfeitures. The Company accounts for forfeitures as they occur. Stock-based awards with graded vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. All stock-based compensation costs are recorded in general and administrative costs in the statements of operations.

Income (Loss) Per Share

Basic net income (loss) per share (“EPS”) of common stock is computed by dividing net income (loss) allocated to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.

Preferred Stock, unvested restricted stock units and the SAFE investment are participating securities as they participate in undistributed earnings on an as-if converted basis. The Company computes income (loss) per share of common stock using the two-class method required for participating securities.

Basic income per share includes an allocation of undistributed income to the Company’s participating securities. Diluted income (loss) per share is calculated using the more dilutive approach of (i) applying the treasury stock method, the if-converted method, or contingently issuable method and (ii) adding back the undistributed income allocated to participating securities in arriving at basic income per share, assuming that all other dilutive potential common shares have been exercised and then next reallocating the undistributed income.

For warrants that are liability-classified, during periods when the impact is dilutive, the Company assumes share settlement of the instruments as of the beginning of the reporting period and adjusts the numerator to remove the change in fair value of the warrant liability and adjusts the denominator to include the dilutive shares calculated using the treasury stock method.

Participating securities do not share in the losses of the Company, therefore, during periods of net loss, no effect is given to the Preferred Stock, unvested restricted stock units and the SAFE investment.

The net effect of common stock equivalents is based on the incremental common stock that would be issued upon the assumed conversion of convertible preferred stock, exercise of common stock warrants, the SAFE investment and the vesting of RSUs using the treasury stock method.

The Company’s common stock equivalents have been excluded from the computation of diluted loss per share for the three and six month months ended June 30, 2023, as the effect would be to reduce the loss per share. Therefore, the weighted average common stock outstanding used to calculate both basic and diluted loss per share is the same for the three and six months ended

10

PAXMEDICA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

June 30, 2023. The following is a reconciliation of the numerator and denominator of the diluted net income (loss) per share computations for the three and six months ended June 30, 2023 and 2022:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Numerator:
Net income (loss)	$	(3,486,287)	$	19,032	$	(7,320,034)	$	1,882,494
Amount allocated to participating common shareholders		—		(5,831)		—		(576,802)
Net income (loss) allocated to common shareholders- Basic	$	(3,486,287)	$	13,201	$	(7,320,034)	$	1,305,692
Net income (loss)		(3,486,287)		19,032		(7,320,034)		1,882,494
Less: Change in fair value of warrant liabilities		—		—		—		(2,230,603)
Net income (loss) allocated to common shareholders- Diluted	$	(3,486,287)	$	19,032	$	(7,320,034)	$	(348,109)
Denominator:
Basic weighted average number of shares outstanding		14,669,439		6,913,492		13,659,168		6,913,492
Add:
Warrants		—		—		—		560,027
Diluted weighted average number of shares outstanding		14,669,439		6,913,492		13,659,168		7,473,519
Basic net income (loss) per share	$	(0.24)	$	0.00	$	(0.54)	$	0.19
Diluted net income (loss) per share	$	(0.24)	$	0.00	$	(0.54)	$	(0.05)

The following securities were excluded from the computation of diluted net loss per share attributable to common shareholders for the six months ended June 30, 2023 and 2022, because including them would have been anti-dilutive:

	June 30,
	2023	2022
Preferred stock	—	1,557,435
Series X preferred stock	867,943	—
Unvested restricted stock units	1,915,711	1,086,500
Common stock warrants	1,387,409	—
SAFE investment (1)	—	410,169
Convertible notes	2,140,780	189,684
Total	6,311,843	3,243,788

(1) SAFE investment

As of June 30, 2022, the Company’s price per share of $12.19 was calculated by dividing the post money valuation of $150 million by 12,305,060 shares of common stock outstanding. The 12,305,060 shares of common stock outstanding was calculated in accord with the agreement and includes 6,913,492 of common shares outstanding, 2,696,439 of shares to be issued in connection with the Company’s initial public offering, 1,086,500 of restricted stock units, 1,198,460 of common stock warrants and 410,169 of SAFE shares. The SAFE investment shares of 410,169 (included in the table above) were calculated using the SAFE investment of $5.0 million divided by $12.19 per share.

Income taxes

ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s condensed financial statements. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in material changes to its financial position.

11

PAXMEDICA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Recent accounting pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Statements, or ASU 2016-13. ASU 2016-13 significantly changes the impairment model for most financial assets and certain other instruments. The new standard requires that expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. It also limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value, and requires the reversal of previously recognized credit losses if fair value increases. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset.

In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which clarifies codification and corrects unintended application of the guidance. In November 2019, the FASB issued ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which clarifies or addresses specific issues about certain aspects of ASU 2016-13. In November 2019 the FASB also issued ASU No. 2019-10, Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which delays the effective date of ASU 2016-13 by three years for certain smaller reporting companies such as the Company. The guidance in ASU 2016-13 is effective for the Company for financial statements issued for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years, with early adoption permitted. The Company adopted the standard on January 1, 2023, and the adoption did not have a material impact on the unaudited condensed financial statements.    

Note 3. Fair Value Measurements

Convertible Notes

During the six months ended June 30, 2023, the Company issued the 2023 Note. The fair value of the 2023 Note on the issuance date and as of June 30, 2023 were estimated using a Monte Carlo simulation to capture the path dependencies intrinsic to their terms. The significant unobservable inputs used in the fair value measurement of the Company’s convertible notes are the common stock price, volatility, and risk-free interest rates. Significant changes in these inputs may result in significantly lower or higher fair value measurement. The Company elected the fair value option when recording its 2023 Note (See Note 2) and its convertible notes issued in 2022 (the “2022 Notes”). The notes were classified as liabilities and measured at fair value on the issuance date, with changes in fair value recognized as other income (expense) on the statements of operations and disclosed in the condensed financial statements. During the six months ended June 30, 2023, the Company paid off the remaining balance of its 2022 Notes (approximately $0.2 million) with a portion of the proceeds received from the 2023 Note.

A summary of significant unobservable inputs (Level 3 inputs) used in measuring the 2022 Notes as of the payoff date of February 6, 2023, and the 2023 Note upon the issuance date, and as of June 30, 2023 is as follows:

	February 6, 2023		June 30, 2023
Dividend yield	—	%	—	%
Expected price volatility	30.0 - 53.7	%	30	%
Risk free interest rate	4.65 - 4.89	%	5.35	%
Expected term (in years)	0.5 - 1.4		0.1 - 1.0

The following tables classify the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of June 30, 2023 and December 31, 2022:

	Fair value measured at June 30, 2023
			Quoted prices in active		Significant other		Significant
	Total carrying value at		markets		observable inputs		unobservable inputs
	June 30, 2023		(Level 1)		(Level 2)		(Level 3)
Liabilities:
Convertible notes	$	1,665,047	$	—	$	—	$	1,665,047

12

PAXMEDICA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

	Fair value measured at December 31, 2022
			Quoted prices in active		Significant other		Significant
	Total carrying value at		markets		observable inputs		unobservable inputs
	December 31, 2022		(Level 1)		(Level 2)		(Level 3)
Liabilities:
Convertible notes	$	173,543	$	—	$	—	$	173,543

For the three and six months ended June 30, 2023, there was a change of approximately $(0.1) million and $0.2 million in Level 3 liabilities measured at fair value, respectively. For the three and six months ended June 30, 2022, there was a change of approximately $1.25 million and $5.1 million in Level 3 liabilities measured at fair value, respectively.

The fair value of the convertible notes may change significantly as additional data is obtained, impacting the Company’s assumptions used to estimate the fair value of the liabilities. In evaluating this information, considerable judgment is required to interpret the data used to develop the assumptions and estimates. The estimates of fair value may not be indicative of the amounts that could be realized in a current market exchange. Accordingly, the use of different market assumptions and/or different valuation techniques may have a material effect on the estimated fair value amounts, and such changes could materially impact the Company’s results of operations in future periods.

The following table presents changes in Level 3 liabilities measured at fair value for the six months ended June 30, 2023. Unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to unobservable (e.g., changes in unobservable long-dated volatilities) inputs.

	Convertible Notes
Balance at December 31, 2022	$	173,543
Issuance of convertible notes		1,903,531
Repayment of convertible notes		(237,600)
Loss on extinguishment of debt		36,850
Change in fair value		(211,277)
Balance at June 30, 2023	$	1,665,047

Note 4. Prepaid and other current assets

As of June 30, 2023, the Company recorded prepaid expenses and other current assets of approximately $1.6 million, primarily consisting of services to be performed for research and development activities. As of December 31, 2022, prepaid and other current assets totaled approximately $0.3 million, primarily consisting of directors and officers insurance.

Note 5. Accrued Expenses

The Company’s accrued expenses as of June 30, 2023 and December 31, 2022 consisted of the following:

	June 30,		December 31,
	2023		2022
Employee and related expenses	$	9,839	$	510,297
Directors and officers insurance		38,536		269,753
Professional fees		6,750		162,021
Research and development		-		77,000
Total accrued expenses	$	55,125	$	1,019,071

13

PAXMEDICA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 6. Convertible promissory notes

During the six months ended June 30, 2023, the Company issued the 2023 Note with a principal balance of $3.7 million. The Company received proceeds of approximately $3.2 million and incurred fees of approximately $0.5 million. The 2023 Note bears no interest and matures 18 months from the issuance date. In connection with the 2023 Note, the Company issued a common stock warrant to purchase 800,000 shares of the Company’s common stock. The 2023 Note is secured by all of the Company’s assets and personal property. The 2023 Note is convertible into shares of the Company's common stock at any time, provided that no such conversion would result in the beneficial ownership by the investor and its affiliates of more than 4.99% of the Company’s outstanding shares of common stock. The conversion price of the 2023 Note is equal to $3.50, subject to customary adjustments, however, if new securities, other than exempted securities, are issued by the Company at a price less than the conversion price, the conversion price shall be reduced to such price. The 2023 Note provides that, commencing August 6, 2023, the Company will pay the outstanding principal amount of the 2023 Note in twelve consecutive monthly payments of $306,666.66 each. At the option of the Company, the monthly payment can be made in cash, shares of the common stock of the Company at a price based on 90% of the 5 lowest VWAPs during the 20 days prior to the payment date, or a combination of cash and stock. The shares issued as monthly payments must either be eligible for immediate resale under Rule 144 or be registered. Any portion of a monthly payment being made in cash shall include a premium of 5% of such cash amount.

As of June 30, 2023, the outstanding principal balance of the 2023 Notes was approximately $3.7 million. As of December 31, 2022, the outstanding principal balance of the 2022 Notes was approximately $0.2 million, and proceeds received from the 2023 Note were used to repay the remaining balance of the 2022 Notes.

For the six months ended June 30, 2023, the Company recorded a $0.2 million change in fair value of its notes, and a loss on extinguishment of debt of approximately $37,000, which are included in the accompanying condensed statements of operations. For the six months ended June 30, 2022, the Company recorded a loss on issuance of debt of $0.3 million, and a fair value loss of $0.1 million that is included in the change in fair value of notes, in the accompanying condensed statements of operations.

Note 7. Stock-based compensation

Stock-based Compensation

The following is a summary of stock-based compensation during the three and six months ended June 30, 2023 and 2022:

	Three month Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Canceled stock options	$	44,768	$	148,818	$	110,671	$	330,012
Restricted stock units		1,219,882		—		3,324,601		—
Total	$	1,264,650	$	148,818	$	3,435,272	$	330,012

Restricted Stock Units

The following is a summary of the restricted stock units during the six months ended June 30, 2023:

		Weighted Average
		Grant-Date
	Number of Shares	Fair Value
Unvested as of December 31, 2022	1,852,582	$	4.79
Granted	812,000		1.79
Vested	(773,871)		5.05
Unvested as of June 30, 2023	1,890,711	$	3.40

During the six months ended June 30, 2023, the Company granted 812,000 time-based RSUs with a fair value of approximately $1.5 million to members of its board of directors and employees of the Company. The RSUs are subject to service conditions and vest 33.34% on the one year anniversary of the grant date, with the remaining units vesting on each three-month anniversary thereafter.

14

PAXMEDICA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

On May 15, 2022, the Company granted 35,333 restricted stock units (RSUs) with a fair value of approximately $0.2 million to a member of its board of directors. The RSUs are subject to service conditions (vesting of 33.34% on August 26, 2022, the consummation date of the Company’s initial public offering, with the remaining units vesting 66.66% over the next two calendar years on each three-month anniversary thereafter).

On January 1, 2022, the Company granted 1,342,667 RSUs with a fair value of approximately $14.6 million to employees, officers and directors of the Company. The RSUs were subject to service conditions (vesting of 33.34% on May 1, 2022, with the remaining units vesting on each three-month anniversary thereafter) and performance conditions in the form of a liquidity event. Vesting of the RSUs was subject to all grantees continuous service with the Company, and no vesting occurred if the Company had not completed a Qualified Offering or a Change of Control on or before the vesting date. In the event that neither a Qualified Offering nor a Change of Control had occurred prior to December 31, 2022, then all RSUs would be forfeited for no consideration. Because a Qualified Offering or Change of Control is not considered probable of achievement until consummation, compensation cost measured at the grant date was not recognized until the Company completed its IPO in August 2022.

During the six months ended June 30, 2022, 291,500 RSU’s (granted on January 1, 2022) were forfeited due to terminations of two of the Company’s employees and two of its board members.

During the three and six months ended June 30, 2023, the Company recorded stock-based compensation expense related to the RSUs of approximately $1.2 million and $3.3 million, respectively. No stock-based compensation expense related to the RSUs was recognized during the three  and six months ended June 30, 2022. The unamortized stock-based compensation expense related to RSUs as of June 30, 2023 is approximately $3.2 million, which is expected to be recognized over a remaining weighted average vesting period of 1.1 years.

Performance-based Restricted Stock Units

As of June 30, 2023, there were 25,000 performance-based restricted stock units with a fair value of approximately $60,000 outstanding. The RSUs are subject to a performance condition, and will vest upon the Company signing a definitive agreement with a strategic partner. No performance-based RSUs were issued during the six months ended June 30, 2023.

Canceled Stock Options

The Company previously granted options to purchase shares of the Company’s common stock and during the year ended December 31, 2020 these options were canceled in exchange for RSUs. No stock options were outstanding as of June 30, 2023 and 2022. Compensation cost related to the canceled stock options of $4.3 million will continue to be recognized over the original vesting criteria.

During the three months ended June 30, 2023 and 2022, the Company recorded stock-based compensation expense related to the canceled stock options of approximately $0.04 million and $0.1 million, respectively. During the six months ended June 30, 2023 and 2022, the Company recorded stock-based compensation expense related to the canceled stock options of approximately $0.1 million and $0.3 million, respectively. The unamortized stock-based compensation expense related to canceled stock options as of June 30, 2023 is approximately $0.05 million.

15

PAXMEDICA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Warrants

The following is a summary of the Company’s warrant activity during the six months ended June 30, 2023:

		Weighted				Weighted Average
	Shares	Average		Aggregate		Remaining
	Underlying	Exercise		Intrinsic		Contractual
	Warrants	Price		Value		Term (Years)
Outstanding as of December 31, 2022	445,409	$	4.47	$	—	3.9
Issued	942,000	$	3.27
Outstanding as of June 30, 2023	1,387,409	$	3.66	$	—	3.7
Exercisable as of June 30, 2023	1,275,409	$	3.67	$	—	4.7

On January 19, 2023, the Company issued warrants to purchase 30,000 shares of the Company’s common stock with an exercise price of $3.00 per share as consideration to waive the lock-up restriction related to its August IPO. The warrants expire 5 years from the issuance date.

On February 6, 2023, the Company issued warrants to purchase 800,000 shares of the Company’s common stock with an exercise price of $3.25 per share in connection with the issuance of its 2023 Note (See Note 6).

On March 7, 2023, the Company issued warrants to purchase 112,000 shares of the Company’s common stock with an exercise price of $3.50 per share as consideration to waive the lock-up restriction related to its August IPO. The warrants are not exercisable prior to September 7, 2023 and expire 5 years from the issuance date.

Note 8. Preferred and common stock

Series X Preferred Stock

There were no shares of Series X preferred stock issued during the three and six months ended June 30, 2023. As of June 30, 2023, there were 45,567 shares of Series X preferred stock outstanding.

Common Stock

On November 17, 2022, the Company entered into an equity purchase agreement (the “Purchase Agreement”) with LPC which provided that, upon the terms and subject to the conditions and limitations set forth therein, the Company could sell to LPC, at its discretion, up to $20.0 million of shares of its common stock over the 30-month term of the Purchase Agreement. During the six months ended June 30, 2023, the Company issued 2.6 million shares of common stock, receiving net proceeds of approximately $4.6 million.

During the six months ended June 30, 2023, the Company issued 722,871 shares of its common stock in connection with the vesting of RSUs issued to members of the Company’s board of directors and employees. The Company withheld 28,500 of these shares at a fair value of approximately $0.05 million, to cover the withholding taxes related to the settlement of these vested restricted stock units.

During the six months ended June 30, 2023, the Company issued 31,014 shares of its common stock in settlement of a shares settled liability at December 31, 2022 of approximately $161,000.

16

PAXMEDICA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 9. Commitments and contingencies

Litigation

As of June 30, 2023 and 2022, there was no litigation against the Company. The Company may be involved in legal proceedings, claims and assessments arising from the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance.

Note 10. Related party transactions

Expenses - During the three-month periods ended June 30, 2023 and 2022, the Company expensed $60,000 for management fees owed to Tardimed. During the six-month periods ended June 30, 2023 and 2022 the Company expensed $120,000 for management fees owed to Tardimed.

Accounts payable – As of June 30, 2023 there were no related party payables. As of June 30 2022, related party payables totaled $163,000, consisting of $120,000 owed to Tardimed for management fees, and $43,000 owed to members of our board of directors.

Prepaids – As of June 30, 2023, the Company paid $0.1 million for services to be performed by PoloMar, a related party due to their ownership by Tardimed.

Note 11. Subsequent events

The Company has evaluated all subsequent events through the date of filing, August 9, 2023, of this Quarterly Report on Form 10-Q with the SEC, to ensure that this filing includes appropriate disclosure of events both recognized in the condensed financial statements as of June 30, 2023, and events which occurred after June 30, 2023, but which were not recognized in the condensed financial statements.

Common Stock

Subsequent to June 30, 2023, in connection with its equity purchase agreement with LPC, the Company received proceeds of approximately $0.8 million from the issuance of 1.0 million shares of the Company’s common stock (See Note 8).

2023 Note

Subsequent to June 30, 2023, in connection with the 2023 Note with the Lind Capital Partners, the Company elected to pay the August payment in cash of approximately $0.3 million instead of issuing the Company’s common stock (see Note 6).

17

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

References to the “Company,” “Paxmedica, Inc.,” “our,” “us,” or “we” refer to Paxmedica, Inc. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited interim condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report and with our audited financial statements for the fiscal year ended December 31, 2022, as included in our 2022 Annual Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, as well as information included in oral statements or other written statements made or to be made by us, contain statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, and other future conditions. Forward-looking statements can be identified by words such as “anticipate,” “believe,” “envision,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” “ongoing,” “contemplate” and other similar expressions, although not all forward-looking statements contain these identifying words. Examples of forward-looking statements include, among others, statements we make regarding:

● our lack of operating history;

● the expectation that we will incur significant operating losses for the foreseeable future and will need significant additional capital, including through future sales and issuances of equity or equity-linked securities which could also result in substantial dilution to our stockholders;

● our current and future capital requirements to support our development and commercialization efforts for our product candidates and our ability to satisfy our capital needs;

● our dependence on our product candidates, which are still in preclinical or early stages of clinical development;

● our, or our third-party manufacturers’, ability to manufacture cGMP batches of our product candidates as required for pre-clinical and clinical trials and, subsequently, our ability to manufacture commercial quantities of our product candidates;

● whether we will be successful in obtaining a priority review voucher, or PRV, for PAX-101 and the commercial value to be realized from any such PRV, if any;

● our relationship with TardiMed, an affiliated entity that provides office space and important administrative services to us, as well as our ability to attract and retain key executives and medical and scientific personnel;

● our ability to complete required clinical trials for our product candidates and obtain approval from the FDA or other regulatory agencies in different jurisdictions;

● our lack of a sales and marketing organization and our ability to commercialize our product candidates if we obtain regulatory approval;

● our dependence on third parties to manufacture our product candidates;

● our reliance on third-party CROs to conduct our clinical trials;

● our ability to obtain, maintain or protect the validity of our intellectual property, including our granted or potential future patents;

● our ability to internally develop new inventions and intellectual property;

● interpretations of current laws and the passages of future laws;

18

● acceptance of our business model by investors;

● adverse developments affecting the financial markets;

● the accuracy of our estimates regarding expenses and capital requirements; and

● our ability to adequately support organizational and business growth.

The following discussion should be read in conjunction with our financial statements and related notes and other financial information appearing elsewhere in this report. In addition to historical information, the following discussion and other parts of this report contain forward-looking information that involves risks and uncertainties. Our actual results could differ materially from those anticipated by such forward-looking information due to the factors discussed under Item 1A— “Risk Factors” of our Annual Report on Form 10-K filed with the SEC on March 30, 2023 and under “Cautionary Note Regarding Forward-Looking Statements” of this Item 2.

Overview

We are a clinical stage biopharmaceutical company focusing on the development of anti-purinergic drug therapies (“APT”) for the treatment of disorders with intractable neurologic symptoms, ranging from neurodevelopmental disorders, including autism spectrum disorder (“ASD”), to Myalgic Encephalomyelitis/Chronic Fatigue Syndrome (“ME/CFS”), a debilitating physical and cognitive disorder believed to be viral in origin and now with rising incidence globally due to the long-term effects of SARS-CoV-2 (“COVID-19”). APTs have been shown to block the effects of excess production and extracellular receptor activity of ATP, which acts as both the main energy molecule in all living cells and a peripheral and central nervous system neurotransmitter via receptors that are found throughout the nervous system. Excess purinergic signaling can offset homeostasis and trigger immune responses that result in localized and systemic increases in inflammatory chemokines and cytokines, ultimately stimulating ATP production. APTs may also impact immunologic and inflammatory mechanisms that may be causing or exacerbating symptoms in these seemingly unrelated disorders, which may be caused in part by similar mechanisms of ATP overproduction.

One of our primary points of focus is currently the development and testing of our lead program, PAX-101, an intravenous formulation of suramin, in the treatment of ASD and the advancement of the clinical understanding of using that agent against other disorders such as ME/CFS and Long COVID-19 Syndrome (“LCS”), a clinical diagnosis in individuals who have been previously infected with COVID-19.

In February 2021, we announced positive topline data from our Phase 2 dose-ranging clinical trial evaluating PAX-101 (commonly known as intravenous suramin) for the treatment of the core symptoms of ASD, as described in more detail below. We also intend to submit data to support a New Drug Application (an “NDA”) for PAX-101 under the U.S. Food and Drug Administration’s (the “FDA”) Tropical Disease Priority Voucher Program for the treatment of Human African Trypanosomiasis, a fatal parasitic infection commonly known as African sleeping sickness (“HAT”), leveraging suramin’s historical use in treating HAT outside of the United States. We have exclusively licensed clinical data from certain academic or international government institutions to potentially accelerate PAX-101’s development plans in the United States through this regulatory program and seek approval in the United States for the treatment of East African HAT, which is caused by the parasite Trypanosome brucei rhodesiense, as early as 2024. We are also pursuing the development of next generation APT product development candidates for neurodevelopmental indications. These candidates include PAX-102, our proprietary intranasal formulation of suramin, as well as other new chemical entities that are more targeted and selective antagonists of particular purine receptor subtypes. We believe our lead drug candidate (suramin), if approved by the FDA, may be a significant advancement in the treatment of ASD and a potentially useful treatment for ME/CFS and LCS.

We have not generated any product revenue to date and, through June 30, 2023, we had an accumulated deficit of approximately $41.1 million. To date, we have financed our operations through contributions from our prior members, proceeds from our initial public offering, the issuance of our convertible notes (including the 2023 Note, as described herein), the issuance of our Simple Agreement For Equity (“SAFE”), the issuance of Series X preferred stock, par value $0.0001 per share (“Series X preferred stock”) and the sale of shares of common stock to LPC pursuant to the Lincoln Park Purchase Agreement. We expect our expenses to increase significantly in connection with our ongoing activities to develop, seek regulatory approval and commercialization of PAX-101, and our other product candidates. Furthermore, we expect to incur additional costs associated with operating as a public company. Accordingly, we will likely need substantial additional financing to support our continuing operations. We will seek to fund our operations through public or private

19

equity or debt financings or other sources. 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. We will need to generate significant revenues to achieve profitability, and we may never do so. Accordingly, there are material risks and uncertainties that raise substantial doubt about our ability to continue as a going concern.

Equity Purchase Agreement with Lincoln Park Capital

During the six months ended June 30, 2023, in connection with its equity purchase agreement with Lincoln Park Capital Fund, LLC, the Company received net proceeds of approximately $4.6 million from the issuance of 2.6 million shares of the Company’s common stock.

Convertible Notes

During the six months ended June 30, 2023, the Company issued a convertible promissory note (the “2023 Note”) with a principal balance of $3.7 million. The Company received proceeds of approximately $2.5 million, net of expenses and other costs. The 2023 Note bears no interest and matures 18 months from the issuance date. In connection with the 2023 Note, the Company issued a common stock warrant to purchase 800,000 shares of the Company’s common stock. The 2023 Note is secured by all of the Company’s assets and personal property. The 2023 Note is convertible into shares of the Company's common stock at any time, provided that no such conversion would result in the beneficial ownership by the investor and its affiliates of more than 4.99% of the Company’s outstanding shares of common stock. The conversion price of the 2023 Note is equal to $3.50, subject to customary adjustments, however, if new securities, other than exempted securities, are issued by the Company at a price less than the conversion price, the conversion price shall be reduced to such price. The 2023 Note provides that, commencing August 6, 2023, the Company will pay the outstanding principal amount of the 2023 Note in twelve consecutive monthly payments of $306,666.66 each. At the option of the Company, the monthly payment can be made in cash, shares of the common stock of the Company at a price based on 90% of the 5 lowest VWAPs during the 20 days prior to the payment date, or a combination of cash and stock. The shares issued as monthly payments must either be eligible for immediate resale under Rule 144 or be registered. Any portion of a monthly payment being made in cash shall include a premium of 5% of such cash amount.

As of June 30, 2023, the outstanding principal balance of the 2023 Note was approximately $3.7 million.

Vox Nova Exclusive Pharmacy Distribution Agreement

On June 30, 2023, the Company entered into an exclusive specialty benefit manager agreement with Vox Nova, LLC (“Vox Nova”) pursuant to which Vox Nova will act as the exclusive United States distributor for the Company’s lead pipeline asset, PAX-101 intravenous suramin. Vox Nova will provide certain distribution management, pharmacy benefit management, sales and supply monitoring services to the Company with respect to PAX-101, in the event PAX-101 receives FDA approval. The distribution agreement also provides for an exclusivity fee payable to the Company of up to $2.0 million, payable in installments based on various time and regulatory approval parameters. Vox Nova will pay $0.5 million of the exclusivity fee upfront in connection with the signing of the distribution agreement when the distribution right was transferred to Vox Nova. The remaining $1.5 million is due in four equal installments over a one-year period after PAX-101 is approved by the FDA and made available for distribution.

Financial Operations Overview

Revenue

To date, we have not generated any product revenue. Our ability to generate product revenue will depend on the successful development and eventual commercialization of our current, and any potential future, product candidates.

20

Research and Development Expenses

Research and development expenses consist of costs incurred for the development of PAX-101 and our other product candidates, which include:

● the cost of acquiring, developing and manufacturing pre-clinical trial materials;

● costs for consultants and contractors associated with chemistry, manufacturing and controls, or CMCs, pre-clinical activities and regulatory operations;

● expenses incurred under agreements with contract research organizations, or CROs, that conduct our pre-clinical trials; and

● employee-related expenses, including salaries for those employees involved in the research and development process.

Research and development costs are expensed as incurred. Costs for certain activities, such as preclinical studies and clinical trials, are generally recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and collaborators.

General and Administrative Expense

Our general and administrative expenses include costs associated with our executive, accounting, information technology and human resources functions. These expenses consist principally of payroll, employee benefits, travel, stock-based compensation and professional services fees such as consulting, audit, tax and legal fees, and general corporate costs. We expense all general and administrative expenses as incurred.

We expect our general and administrative expenses to increase primarily as a result of costs related to us operating as a public company, such as additional legal, accounting, corporate governance, and investor relations expenses, and directors’ and officers’ insurance premiums.

Results of Operations

Comparison of the Three Months Ended June 30, 2023 to the Three Months Ended June 30, 2022

	Three Months Ended June 30,
	2023		2022
Operating expenses
General and administrative	$	2,768,910	$	775,963
Research and development		589,029		151,425
Total operating expenses		3,357,939		927,388
Loss from operations		(3,357,939)		(927,388)
Other income (expense), net		(128,348)		946,420
Net income (loss)	$	(3,486,287)	$	19,032

Operating expenses

General and administrative

General and administrative expenses were approximately $2.8 million and $0.8 million for the three months ended June 30, 2023 and 2022, respectively. The $2.0 million increase in general and administrative expenses was primarily due to increases of $1.2 million of stock-based compensation recognized for our restricted stock units, $0.3 million for legal and professional fees, $0.3 million for payroll expenses and $0.2 million for other operating expenses.

21

Research and Development

Research and development expenses were approximately $0.6 million for the three months ended June 30, 2023 and approximately $0.15 million for the three months ended June 30, 2022. The $0.45 million increase  in research and development expenses was primarily attributable to additional costs incurred in connection with our research activities, including costs associated with clinical trials, consultants, clinical trial materials, regulatory filings, facilities, laboratory expenses and other supplies.

Of the $0.6 million in research and development expenses incurred during the three months ended June 30, 2023, $0.38 million was associated with activities related to the HAT indication, and $0.22 million was associated with activities related to the ASD indication. These activities included, but were not limited to, milestone payments in connection with the recently completed ASD trial.

Of the approximately $0.15 million in research and development expenses incurred during the three months ended June 30, 2022, approximately $0.13 million was associated with activities related to the HAT indication, and approximately $0.02 million was associated with activities related to the ASD indication. These activities included regulatory advisory services and IV formulation work for HAT as well as work related to our ASD clinical trial.

The estimated aggregate costs expected to be incurred for the research and development activities relating to the filing of an NDA for HAT and an IND for ASD are approximately $10.3 million, which we expect to fund with the proceeds of our initial public offering and future capital raising activities.

Other Income (expense)

Other income (expense) was approximately $(0.1) million for the three months ended June 30, 2023 compared with other income (expense) of $0.9 million for the three months ended June 30, 2022. Other income (expense) of $(0.1) million for the three months ended June 30, 2023 was primarily comprised of $(0.1) million recognized for the change in fair value of our notes. Other income (expense) of approximately $0.9 million for the three months ended June 30, 2022 was primarily comprised of $1.35 million of income recognized for the change in fair value of our SAFE investment, offset by a $0.3 million loss on issuance of debt in connection with our 2022 Notes and $0.1 million recognized for the change in fair value of our convertible notes and warrants.

Comparison of the Six Months Ended June 30, 2023 to the Six Months Ended June 30, 2022

	Six Months Ended June 30,
	2023		2022
Operating expenses
General and administrative	$	6,583,094	$	1,709,780
Research and development		811,520		1,222,129
Total operating expenses		7,394,614		2,931,909
Loss from operations		(7,394,614)		(2,931,909)
Other income, net		74,580		4,814,403
Net income (loss)	$	(7,320,034)	$	1,882,494

Operating expenses

General and administrative

General and administrative expenses were approximately $6.6 million and $1.7 million for the six months ended June 30, 2023 and 2022, respectively. The $4.9 million increase in general and administrative expenses was primarily due to increases of $3.1 million of stock-based compensation recognized for our restricted stock units, $1.0 million for legal and professional fees, $0.3 million for payroll expenses, $0.2 million for insurance expenses and $0.3 million for other operating expenses.

22

Research and Development

Research and development expenses were approximately $0.8 million for the six months ended June 30, 2023 and approximately $1.2 million for the six months ended June 30, 2022. The $0.4 million decrease in research and development expenses was primarily attributable to lower costs incurred in connection with our research activities, including lower costs associated with clinical trials, consultants, clinical trial materials, regulatory filings, facilities, laboratory expenses and other supplies.

Of the $0.8 million in research and development expenses incurred during the six months ended June 30, 2023, $0.55 million was associated with activities related to the HAT indication, and $0.25 million was associated with activities related to the ASD indication. These activities included, but were not limited to, milestone payments in connection with the recently completed ASD trial.

Of the approximately $1.2 million in research and development expenses incurred during the six months ended June 30, 2022, approximately $1.1 million was associated with activities related to the HAT indication, and approximately $0.1 million was associated with activities related to the ASD indication. These activities included regulatory advisory services and IV formulation work for HAT as well as work related to our ASD clinical trial.

The estimated aggregate costs expected to be incurred for the research and development activities relating to the filing of an NDA for HAT and an IND for ASD are approximately $10.3 million, which we expect to fund with the proceeds of our initial public offering and future capital raising activities.

Other Income, net

Other income was approximately $0.1 million for the six months ended June 30, 2023 compared with other income of $4.8 million for the six months ended June 30, 2022. Other income of $0.1 million for the six months ended June 30, 2023 was primarily comprised of $0.2 million recognized for the change in fair value of our notes, offset by $0.1 million of other expense recognized to waive the lock-up restriction related to our August IPO. Other income of $4.8 million for the six months ended June 30, 2022 was primarily comprised of $2.2 million recognized for the change in fair value of our warrants, and $3.0 million recognized for the change in fair value of our SAFE investment, offset by a $0.3 million loss on issuance of debt recorded in connection with our 2022 convertible notes and $0.1 million for the change in fair value of our convertible notes.

Liquidity and Capital Resources

We were formed as a Delaware limited liability company on April 5, 2018 and converted into a Delaware corporation on April 15, 2020. As of June 30, 2023, we had an accumulated deficit since inception of approximately $41.1 million. Since inception, we have not generated revenue from product sales and have incurred net losses and negative cash flows from our operations. From inception through June 30, 2023, we have funded our operations in large part through contributions from TardiMed Sciences, LLC (“TardiMed”), the issuance of senior secured convertible promissory notes of approximately $7.0 million, proceeds from the public common stock offering, net of fees, of approximately $6.0 million, our SAFE of $5.0 million, and the issuance of shares of our common stock in connection with our equity purchase agreement of $4.8 million.

Equity Purchase Agreement with Lincoln Park Capital

During the six months ended June 30, 2023, in connection with its equity purchase agreement with Lincoln Park Capital Fund, LLC (LPC), the Company received net proceeds of approximately $4.6 million from the issuance of 2.6 million shares of the Company’s common stock.

Convertible Notes

During the six months ended June 30, 2023, the Company issued the 2023 Note with a principal balance of $3.7 million. The Company received proceeds of approximately $3.2 million, net of fees of $0.5 million. The 2023 Note bears no interest and matures 18 months from the issuance date. In connection with the 2023 Note, the Company issued a common stock warrant to purchase 800,000 shares of the Company’s common stock. As of December 31, 2022, the outstanding principal balance of our 2022 Notes was approximately $0.2 million, and proceeds received from the 2023 Note were used to repay the remaining balance of the 2022 Notes.

23

Vox Nova Exclusive Pharmacy Distribution Agreement

On June 30, 2023, the Company entered into an exclusive specialty benefit manager agreement with Vox Nova, LLC (“Vox Nova”) pursuant to which Vox Nova will act as the exclusive United States distributor for the Company’s lead pipeline asset, PAX-101 intravenous suramin. Vox Nova will provide certain distribution management, pharmacy benefit management, sales and supply monitoring services to the Company with respect to PAX-101, in the event PAX-101 receives FDA approval. The distribution agreement also provides for an exclusivity fee payable to the Company of up to $2.0 million, payable in installments based on various time and regulatory approval parameters. Vox Nova will pay $0.5 million of the exclusivity fee upfront in connection with the signing of the distribution agreement when the distribution right was transferred to Vox Nova. The remaining $1.5 million is due in four equal installments over a one-year period after PAX-101 is approved by the FDA and made available for distribution.

Operating activities

During the six months ended June 30, 2023, net cash used in operating activities was $5.8 million, which primarily included our net loss of approximately $7.3 million, adjusted for non-cash expenses of approximately $3.8 million including stock-based compensation of approximately $3.4 million, $0.1 million of other expense and $0.5 million in deferred revenue related to the Vox Nova distribution agreement, offset by the change in fair value of our convertible notes of $0.2 million. The net change in operating assets and liabilities was approximately $2.3 million and was primarily due to decreases in accounts payable and accrued expenses of $0.6 million, increases in prepaid and other current assets of $1.2 million, and an increase in accounts receivables of $0.5 million.

During the six months ended June 30, 2022 , net cash used in operating activities was $1.4 million, which primarily included our net income of approximately $1.9 million, adjusted for non-cash expenses of approximately $4.5 million, including the change in fair value of our SAFE liability of $3.0 million and the change in fair value of our warrant liability of $2.2 million, offset by stock-based compensation of approximately $0.3 million, loss on issuance of debt of $0.3 million recorded in connection with the issuance of our 2022 Notes, and the change in fair value of our 2022 Notes of $0.1 million. The net change in operating assets and liabilities was approximately $1.2 million and was primarily due to increases in accounts payable and accrued expenses.

Investing Activities

There were no investing activities during the six months ended June 30, 2023 and 2022.

Financing activities

During the six months ended June 30, 2023, net cash provided by financing activities was approximately $7.0 million, consisting of net proceeds of $2.7 million received in connection with the issuance of our 2023 Note and warrants, net of fees paid of $0.5 million, and net proceeds of $4.6 million received from the issuance of shares of our common stock in connection with our equity purchase agreement with LPC, net of fees paid of $0.2 million, offset by the repayment of our 2022 Notes of $0.2 million and settlement of shares withheld for payment of employee taxes of $0.1 million.

During the six months ended June 30, 2022, net cash provided by financing activities was approximately $1.0 million, consisting of proceeds received from the issuance of our 2022 Notes and warrants.

Funding requirements

As of June 30, 2023, we had a cash balance of approximately $3.1 million. Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

We anticipate incurring additional losses for the foreseeable future and may never become profitable. We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research and development of product candidates. Furthermore, we expect to continue to incur additional costs as a public company. Accordingly, we will likely need to obtain substantial additional funding. If we are unable to raise capital or otherwise obtain funding when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts. These factors raise substantial

24

doubt about our ability to continue as a going concern.  The Company’s future liquidity and capital funding requirements will depend on numerous factors, including:

· the outcome, costs and timing of clinical trial results for the Company’s current or future product candidates;

· the emergence and effect of competing or complementary products;

· its ability to maintain, expand and defend the scope of its intellectual property portfolio, including the amount and timing of any payments the Company may be required to make, or that it may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights; and

· its ability to retain its current employees and the need and ability to hire additional management and scientific and medical personnel.

We will seek to obtain additional capital through the sale of debt or equity financings or other arrangements such as, collaborations, strategic alliances and licensing arrangements to fund operations; however, there can be no assurance that we will be able to raise needed capital under acceptable terms, if at all. The sale of additional equity or equity-linked securities may dilute existing stockholders and may contain senior rights and preferences compared to currently outstanding shares of common and preferred stock. Debt securities issued or other debt financing incurred may contain covenants and limit our ability to pay dividends or make other distributions to stockholders. If we are unable to obtain such additional financing, future operations would need to be scaled back or discontinued.

Contractual obligations and commitments

As of June 30, 2023, the 2023 Notes outstanding principal balance totals approximately $3.7 million. The notes bear no interest and mature 18 months from the issuance date.

Off-balance sheet arrangements

We do not have any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. We do not engage in off-balance sheet financing arrangements. In addition, we do not engage in trading activities involving non-exchange traded contracts. We therefore believe that we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.

Critical accounting policies and significant judgments and estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the balance sheet and the reported amounts of expenses during the reporting period. In accordance with U.S. GAAP, we evaluate our estimates and judgments on an ongoing basis. The most significant estimates relate to the valuation of convertible notes, valuation of warrants, and valuation of equity-based awards. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, our future results of operations will be affected.

We define our critical accounting policies as those accounting principles that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles. While our significant accounting policies are more fully described in Note 2 to our financial statements, we believe the following are the critical accounting policies used in the preparation of our financial statements that require significant estimates and judgments:

25

Stock-Based Compensation

We expense stock-based compensation to employees, non-employees and board members over the requisite service period based on the estimated grant-date fair value of the awards and actual forfeitures. We account for forfeitures as they occur. Stock-based awards with graded vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award.

The determination of the grant date fair value of options using an option pricing model is affected principally by our estimated fair value of shares of our common stock and requires management to make a number of other assumptions, including the expected term of the option, the expected volatility of the underlying shares, the risk-free interest rate and the expected dividend yield. The assumptions used in our Black-Scholes option-pricing model represent management’s best estimates at the time of measurement. These estimates are complex, involve a number of variables, uncertainties and assumptions and the application of management’s judgment, as they are inherently subjective. If any assumptions change, our stock-based compensation expense could be materially different in the future. These assumptions are estimated as follows:

●Fair Value of Common Stock. See the subsection titled “- Fair Value of Common Stock” below.

●Expected Term. The expected term represents the period that our options are expected to be outstanding. We calculated the expected term using the simplified method for options based on the average of each option’s vesting term and the contractual period during which the option can be exercised, which is typically 10 years following the date of grant.

●Expected Volatility. The expected volatility was based on the historical share volatility of several comparable publicly traded companies over a period of time equal to the expected term of the options, as we did not have any material trading history to use the volatility of our own common stock. The comparable companies were chosen based on their size, stage in life cycle and area of specialty. We will continue to apply this process until a sufficient amount of historical information regarding the volatility of our own stock price becomes available.

●Risk-Free Interest Rate. The risk-free interest rate was based on the yields of U.S. Treasury securities with maturities appropriate for the term of the award.

●Expected Dividend Yield. We have not paid dividends on our common stock nor do we expect to pay dividends in the foreseeable future. Therefore, we used an expected dividend yield of zero.

Fair Value of Common Stock

Following the Company’s initial public offering, a public trading market for our common stock has been established and it is no longer necessary for our board of directors to estimate the fair value of our common stock in connection with our accounting for granted stock options and other such awards we may grant, as the fair value of our common stock will be determined based on the closing price of our common stock as reported on the date of grant.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Convertible Notes

In accordance with Accounting Standards Codification 825, Financial Instruments (“ASC 825”), the Company has elected the fair value option for recognition of its convertible notes. In accordance with ASC 825, the Company recognizes these convertible notes at fair value with changes in fair value recognized in the condensed statements of operations. The fair value option may be applied instrument by instrument, but it is irrevocable. As a result of applying the fair value option, direct costs and fees related to the convertible notes were recognized in general and administrative expense. The 2023 Note does not accrue interest.

26

Accrued Outsourcing Costs

Substantial portions of our preclinical studies and clinical trials are performed by third-party laboratories, medical centers, CROs and other vendors. These CROs generally bill monthly or quarterly for services performed, or bill based upon milestone achievement. For preclinical studies, we accrue expenses based upon estimated percentage of work completed and the contract milestones remaining. Clinical trial costs are a significant component of research and development expenses and include costs associated with third-party contractors. We outsource a substantial portion of our clinical trial activities, utilizing external entities such as CROs, independent clinical investigators, and other third-party service providers to assist us with the execution of its clinical studies. For each clinical trial that we conduct, certain clinical trial costs are expensed immediately, while others are expensed over time based on the number of patients in the trial, the attrition rate at which patients leave the trial, and/or the period over which clinical investigators or CROs are expected to provide services. Our estimates depend on the timeliness and accuracy of the data provided by the CROs regarding the status of each program and total program spending. We periodically evaluate the estimates to determine if adjustments are necessary or appropriate based on information it receives.

Research and Development

Research and development expenses consist primarily of salaries, benefits and other related costs, including stock-based compensation, for personnel serving our development functions, and other internal operating expenses, the cost of clinical studies, and the cost of our drug candidate for clinical study. In addition, research and development expenses include payments to third parties for the development of our product candidates and the estimated fair value for the issuance of equity for the license rights to products in development (prior to marketing approval). Our expenses related to clinical trials are primarily related to activities at CROs that design, gain approval for and conduct clinical trials on our behalf. Such amounts are then recognized as an expense as the related goods are delivered or the services are performed.

Recent accounting pronouncements

See Note 2 to our financial statements for a description of recent accounting pronouncements applicable to our financial statements.

Emerging Growth Company Status

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act (“JOBS Act”), and we may remain an emerging growth company for up to five years following the completion of our initial public offering. For so long as we remain an emerging growth company, we are permitted and intend to rely on certain exemptions from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved and an exemption from compliance with the requirements regarding the communication of critical audit matters in the auditor’s report on financial statements.

Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will not be subject to the same new or revised accounting standards as public companies that are not emerging growth companies. As a result of this election, our financial statements may not be comparable to those of companies that are not emerging growth companies.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.

27

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended June 30, 2023, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial officer has concluded that during the period covered by this report, our disclosure controls and procedures were not effective as of June 30, 2023 because of a material weakness in our internal control over accounting for complex financial instruments. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Specifically, the Company’s management has concluded that our control around the interpretation and accounting for certain complex features of financial instruments was not effectively designed or maintained. As a result, our management performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with accounting principles generally accepted in the United States of America. Accordingly, management believes that the financial statements included in this Form 10-Q present fairly, in all material respects, our financial position, result of operations and cash flows of the periods presented. Management understands that the accounting standards applicable to our financial statements are complex and has since the inception of the Company benefited from the support of experienced third-party professionals with whom management has regularly consulted with respect to accounting issues. Management intends to continue to further consult with such professionals in connection with accounting matters.

Material Weaknesses in Internal Control over Financial Reporting

In the course of preparing our financial statements for the year ended December 31, 2022, and the period ended March 31, 2023, we identified material weaknesses in our internal control over financial reporting relating to the evaluation of complex financial instruments, including earnings per share. The material weaknesses have not been remediated as of June 30, 2023. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. Our management has concluded that our control around the interpretation and accounting for certain complex instruments issued by the Company was not effectively designed or maintained.

We originally prepared an accounting position paper concluding that Series Seed Preferred Stock should have been classified as mezzanine equity in accordance with ASC 480. Upon further analysis, it was determined that the Series Seed Preferred Stock should have been recorded as permanent equity because certain redemption provisions are within the Company’s control. Therefore, management has concluded that our controls around the interpretation and accounting for our Series Seed Preferred Stock issued was not effectively designed or maintained. Additionally, the original earnings per share calculation did not correctly classify the shares associated with our SAFE investment and our Series Seed Preferred Stock as a separate class of participating securities. Upon further analysis we determined the controls over the calculation of earnings per share resulted in a material weakness.

To remediate the above material weaknesses, we have developed a remediation plan with assistance from our accounting advisors and have dedicated significant resources and efforts to the remediation and improvement of our internal control over financial reporting. While we have processes to identify and appropriately apply applicable accounting requirements, we plan to enhance our system of evaluating and implementing the complex accounting standards that apply to our financial statements. Our plans at this time include providing enhanced access to accounting literature, research materials and documents, and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects. We do not believe that the remediation of these material weaknesses will result in significant incremental cost. However, another significant financial reporting failure or material weakness in internal control over financial reporting could result in substantial cost to remediate and could cause a loss of investor confidence and decline in the market price of our stock.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended June 30, 2023 covered by this report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

28

PART II-OTHER INFORMATION

Item 1. Legal Proceedings

From time to time we may be involved in legal proceedings arising in connection with our business. Based on information currently available, we believe that the amount, or range, of reasonably possible losses in connection with any pending actions against us in excess of established reserves, in the aggregate, is not material to our consolidated financial condition or cash flows. However, losses may be material to our operating results for any particular future period, depending on the level of income for such period.

Item 1A. Risk Factors

You should carefully review and consider the information regarding certain risks and uncertainties facing us that could have a material adverse effect on our business prospects, financial condition, results of operations, liquidity and available capital resources set forth in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. There have been no material changes to such matters during the quarter ended June 30, 2023.

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

Unregistered Sales of Equity Securities

On April 19, 2023 in connection with its equity purchase agreement with Lincoln Park Capital Fund, LLC (LPC), the Company issued 630,000 shares of common stock and received net proceeds of approximately $1.1 million.

In June 2023, in connection with its equity purchase agreement with Lincoln Park Capital Fund, LLC (LPC), the Company issued 750,000 shares of common stock and the Company received net proceeds of approximately $0.9 million.

The issuances under the LPC equity purchase agreement were exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act, including Regulation D and Rule 506 promulgated thereunder, as transactions by an issuer not involving a public offering.

There were no other sales of unregistered securities during the period covered by this report that have not previously been reported on Form 8-K.

Use of Proceeds from Registered Securities

On August 12, 2022, our Registration Statement on Form S-1, as amended (File No. 333-239676), was declared effective in connection with our initial public offering.

There has been no material change in the planned use of proceeds from our initial public offering as described in the Prospectus relating to that offering dated August 25, 2022.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

29

Item 6. Exhibits.

Exhibit Number	Description
10.1	Specialty Benefit Manager Agreement dated June 30, 2023 between PaxMedica, Inc. and Vox Nova, LLC. §
31.1*	Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS	Inline XBRL Instance 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 Exhibit 101)

* These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

† Indicates management contract.

§   Portions of the exhibit, marked by brackets, have been omitted because the omitted information (i) is not material and (ii) is the type of information the Company treats as private or confidential.

30

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.

Dated: August 9, 2023	PAXMEDICA, INC.
	By:	/s/ Howard J. Weisman
	Name:	Howard J. Weisman
	Title:	Chief Executive Officer

Tephen Sheldon
Dated: August 9, 2023	PAXMEDICA, INC.
	By:	/s/ Stephen D. Sheldon
	Name:	Stephen D. Sheldon
	Title:	Chief Financial Officer

31

EX-10.1

EXHIBIT 10.1

Certain identified information has been excluded because it is both not material and would

likely cause competitive harm if publicly disclosed.

SPECIALTY BENEFIT MANAGER AGREEMENT

This Agreement, effective as of June 30^th, 2023 (herein called the “Effective Date”), by and between VOX NOVA, LLC (an Ohio limited liability company), which with its successors and assigns is herein called the “Company,” and PAXMEDICA INC. (a Delaware corporation), which with its successors and assigns is herein called “PAX,” is to EVIDENCE THAT:

WHEREAS PAX is a clinical stage biopharmaceutical company focused on developing innovative treatments for unmet needs in neurodevelopment disorders, namely Autism Spectrum Disorder; and

WHEREAS PAX has developed and/or is in the process of developing the use of PAX-101 (intravenous Suramin) as an innovative treatment for certain neurodevelopment disorders; and

WHEREAS PAX desires to engage Company to provide certain distribution management, pharmacy benefit management, sales and supply monitoring services to PAX, upon the terms and conditions of this Agreement; and

WHEREAS Company possesses the requisite skill, knowledge and expertise to provide and perform distribution management, pharmacy benefit management, sales and supply monitoring services to PAX, upon the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the foregoing statements (which statements are deemed incorporated into this Agreement as if fully rewritten herein), the mutual promises and covenants set forth in this Agreement and for other valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto (herein collectively called the “Parties”) hereby agree as follows:

1.Agreement Term. Except as otherwise provided herein, the term of this Agreement (herein called the “Agreement Term”) shall commence as of the Effective Date and shall terminate upon the earlier of the following: (a) the seventh (7^th) anniversary of the Effective Date; or (b) the date three (3) years immediately following the date PAX-101 (intravenous Suramin) is approved by the United States for the treatment of Human African Trypanosomiasis; provided, however, that the Agreement Term shall be automatically renewed for successive three (3) year periods, unless either Party hereto notifies the non-terminating Party in writing at least sixty (60) days prior to the conclusion of the Agreement Term, that said Party intends to terminate this Agreement.

2.Exclusivity.

2.1During the Agreement Term, PAX agrees to utilize Company as the sole and exclusive distributor of PAX’s product PAX-101 (intravenous Suramin), with said PAX-101 (intravenous Suramin) being in such form as approved by the Federal Food and Drug

1

BUSINESS.30420405.2

EXHIBIT 10.1

Certain identified information has been excluded because it is both not material and would

likely cause competitive harm if publicly disclosed.

Administration following the completion of all requisite trial phases (herein in called the “Product”).

2.2During the Agreement Term, Company shall have the sole and exclusive right and authority to select and approve a specialty pharmacy service provider (herein called the “Specialty Pharmacy Service Provider”) to take possession of the Product.

2.3During the Agreement Term, Company shall have the sole and exclusive right and authority to approve all doctors, physicians and/or other medical representative responsible for prescribing the Product.

3.Exclusivity Fee.

3.1During the Agreement Term, PAX shall charge Company a fee in consideration for the exclusive rights granted to Company by PAX in Section 2 of this Agreement (herein called the “Exclusivity Fee”). The Exclusivity Fee shall equal Two Million Dollars ($2,000,000.00) and shall be payable as set forth in Schedule A, attached hereto and incorporated herein by reference.  

3.2PAX shall issue an invoice to Company for the Exclusivity Fee, and Company shall pay such Exclusivity Fee within [***] after Company’s receipt of said invoice; provided, however, that the initial invoice issued by PAX to Company shall be paid within [***] of Company’s receipt of said initial invoice.

4.Purchase of Product and Order Fulfillment.

4.1During the Agreement Term, Company shall purchase the Product exclusively from PAX.  Notwithstanding the foregoing, Company makes no commitment to purchase or obtain from PAX any minimum quantity of the Product.

4.2PAX agrees to maintain and store an agreed to amount of safety stock at all times during the Agreement Term (herein called the “Safety Stock”).  The Safety Stock shall be reviewed by PAX and Company on a monthly basis to determine the appropriate amount of safety stock.  PAX and Company shall agree to the amount of Safety Stock [***] in advance.  In the event PAX fails to maintain the agreed to amount of Safety Stock, PAX shall expedite the manufacturing and delivery of the Safety Stock and shall bear all costs and responsibilities associated with said expedition.  Company shall maintain the right to pursue all other appropriate legal remedies against PAX for any failure to maintain the agreed to amount of Safety Stock.

4.3Company shall purchase the Product by submitting a purchase order to PAX which sets forth the quantity and delivery dates for the Product (herein called the “Purchase Order”).  PAX shall confirm and accept all Purchase Orders within [***] of receipt of said Purchase Order.  In the event PAX fails to confirm and accept a Purchase Order, and said failure is not an immaterial breach or due to reasons outside the control of PAX (i.e., force majeure), then Company may, in Company’s sole and absolute discretion, terminate this Agreement.

2

BUSINESS.30420405.2

EXHIBIT 10.1

Certain identified information has been excluded because it is both not material and would

likely cause competitive harm if publicly disclosed.

4.4.PAX shall satisfy all requirements set forth in the approved Purchase Orders within [***] of the Purchase Order, unless otherwise agreed to by the Parties.  The Parties acknowledge and agree that, due to the nature of this Product, time, quantity and delivery is of the essence under this Agreement.

4.5PAX represents and warrants to Company that the Product shall be: (i) in strict conformity with the Federal Food and Drug Administration specifications and free and clear from any material defects.  Upon delivery of the Product, said Product shall be free and clear of all liens, claims and encumbrances of any kind.  PAX agrees to perform quality inspections of Products before delivery and shall certify inspections results in a manner as set forth by Company.

4.6The Parties acknowledge and agree that Company shall never take title to or physical possession of the Product.  PAX shall ship the Product directly to the Specialty Pharmacy Service Provider as designated by Company.

5.Purchase Price.

5.1The purchase price for the Products (herein called the “Purchase Price”) shall equal the sum set forth on Schedule B, attached hereto and incorporated herein by reference. The Parties acknowledge and agree that the Purchase Price shall remain consistent for the duration of the Agreement Term; provided, however, that the Parties acknowledge and agree that the following conditions may impact the Purchase Price:

(a) Change in materials, as the Purchase Price is based on the average wholesale price of the Product as published by known industry references (herein called the “AWP”); and

(b) Currency fluctuations, as the Purchase Price is based on the United States Dollar.

Any changes to the Purchase Price resulting from the conditions set forth in this Section 5 shall be communicated by PAX to Company [***] in advance of any proposed Purchase Price adjustment.  PAX agrees that no Purchase Price adjustment shall occur unless and until there is a price change of more than [***] of the then-current AWP.  PAX further agrees to take all reasonable steps to mitigate and pricing increases from suppliers.

5.2PAX shall periodically issue an invoice to Company for the Purchase Price and Company shall pay the Purchase Price to PAX by check or money transfer within [***] after Company’s receipt of said invoice.

6.PAX Representations and Warranties. PAX represents and warrants to Company as follows:

3

BUSINESS.30420405.2

EXHIBIT 10.1

Certain identified information has been excluded because it is both not material and would

likely cause competitive harm if publicly disclosed.

6.1PAX is a corporation duly organized, validly existing and in good standing under the laws of the state of Delaware with all requisite corporate power and authority to negotiate, execute, deliver and perform its obligations under this Agreement.

6.2Neither the execution, delivery, nor performance of this Agreement by PAX will, with or without the giving of notice or the passage of time, or both, conflict with, result in a default, right to accelerate or loss of rights under, or result in, cause or create any liability, reassessment or revaluation of assets, lien, charge, or encumbrance pursuant to, any provision of PAX’s certificate of incorporation or bylaws or any franchise, mortgage, deed of trust, lease, license, agreement, understanding, law, ordinance, rule, regulation, order, judgment, decree, or other legal or contractual requirement to which PAX is a party or by which PAX may be bound or affected.  

6.3During the Agreement Term, PAX shall not transfer, convey, assign, sell, distribute or market the Product to any person other than Company.

6.4PAX shall maintain complete and accurate books and records regarding the Product, including, but not limited to, manufacture and supply, during the Agreement Term and for a period of [***] following the termination of this Agreement.

6.5PAX shall permit one or more representatives of Company, during normal business hours and upon reasonable notice to PAX, to conduct audits (including, but not limited to, operational, quality, safety, environment and financial) of any facility which is used or proposed to be used in connection with the manufacturing of the Product.

6.6PAX shall have and maintain sufficient capacity to meet the supply requirements as demanded by Company.

7.Company Representations and Warranties. Company represents and warrants to PAX as follows:

6.1Company is a limited liability company duly organized, validly existing and in good standing under the laws of the state of Ohio, with all requisite company power and authority to negotiate, execute, deliver and perform its obligations under this Agreement.

6.2Neither the execution, delivery, nor performance of this Agreement by Company will, with or without the giving of notice or the passage of time, or both, conflict with, result in a default, right to accelerate or loss of rights under, or result in, cause or create any liability, reassessment or revaluation of assets, lien, charge, or encumbrance pursuant to, any provision of Company’s certificate of formation or operating agreement or any franchise, mortgage, deed of trust, lease, license, agreement, understanding, law, ordinance, rule, regulation, order, judgment, decree, or other legal or contractual requirement to which Company is a party or by which Company may be bound or affected.  

4

BUSINESS.30420405.2

EXHIBIT 10.1

Certain identified information has been excluded because it is both not material and would

likely cause competitive harm if publicly disclosed.

8.Indemnification.

8.1PAX hereby indemnifies and agrees to hold Company harmless from, against and in respect of and shall on demand reimburse Company for:

(a) any and all losses, liabilities, or damages suffered or incurred by Company: (i) by reason of any untrue representation, breach of warranty, or nonfulfillment of any covenant by PAX contained herein or in any certificate, document, or instrument delivered to Company pursuant hereto or in connection herewith; or (ii) which would not have been suffered or incurred if such representation were true and not breached or if such covenant were fully performed;

(b) any and all actions, suits, proceedings, claims, demands, assessments, judgments, costs, and expenses, including, without limitation, legal fees and expenses, incident to the use of the Product and any of the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof, or in enforcing this indemnity.

9.Publicity. Each Party agrees to not make, publish or distribute (whether in print, electronically or otherwise) any public announcement, press releases, advertising, marketing materials or promotional materials regarding the execution or performance of this Agreement without the prior writing consent of the other Party, except as required by law.

10.Confidentiality.

10.1Each Party acknowledges that each Party has had and will continue to have access to (and special knowledge of) certain of the following information as a result of this Agreement (all of which information is herein collectively called the “Confidential Information”):  Trade secrets, customer lists, records and other information regarding customers (whether or not evidenced in writing); price lists and pricing policies; financial plans, records, ledgers and information; purchase orders, agreements and related data; business development plans; sales and marketing plans; research and development plans; employment records, data and policies; business forms, correspondence, memoranda and other records; know-how; inventories, improvements and discoveries; processes and methods, plant operations and related data; equipment operations, designs and specifications; blueprints; scientific and technical data; computer records and related data; and any other confidential or proprietary data and information which a Party encounters as a result of this Agreement, all of which are held, possessed and/or owned by a Party.

10.2Each Party understands and agrees that:

(a) The Confidential Information shall (at all times) be and remain the exclusive property of the respective Party;

5

BUSINESS.30420405.2

EXHIBIT 10.1

Certain identified information has been excluded because it is both not material and would

likely cause competitive harm if publicly disclosed.

(b) Each Party shall hold the Confidential Information as a trustee and fiduciary for the other Party;

(c) A Party shall not directly or indirectly use for any purpose, copy, retain, or disclose or convey to any third-party any Confidential Information without the prior written approval of the other Party; and

(d) At the end of the Agreement Term, each Party shall immediately disclose to and deliver to the other Party all the Confidential Information in said Party’s possession or conveyed by a Party to any third-party and said Party shall not retain any copies or duplicates thereof.

11.Termination. This Agreement may be terminated at any time:

(a) By mutual consent of PAX and Company;

(b) By Company, if there has been a material violation or breach by PAX of any agreement, representation or warranty contained in this Agreement which has rendered the satisfaction of any condition to the obligations of Company impossible and such violation or breach has not been cured in all material respects or waived by Company; or

(c) By PAX, if there has been a material violation or breach by Company of any agreement, representation or warranty contained in this Agreement which has rendered the satisfaction of any condition to the obligations of PAX impossible and such violation or breach has not been cured in all material respects or waived by PAX.

12.Definitive Agreement and Future Changes.  THE PARTIES EXPRESSLY ACKNOWLEDGE AND AGREE THAT THE PROVISIONS OF THIS AGREEMENT ARE DEPENDENT ON THE PRODUCT BEING APPROVED FOR DISTRIBUTION IN THE UNITED STATES.  THEREFORE, THE PARTIES ACKNOWLEDGE THAT THIS AGREEMENT IS NULL AND VOID IN THE EVENT THE PRODUCT IS NOT APPROVED FOR DISTRIBUTION IN THE UNITED STATES.  THE PARTIES FURTHER ACKNOWLEDGE AND AGREE THAT THE UNITED STATES DISTRIBUTION OF PHARMACEUTICAL PROTOCOLS MAY IMPACT THE TERMS OF THIS AGREEMENT AND SUCH PROTOCOLS MAY RESULT IN SIGNIFICANT MODIFICATIONS TO THIS AGREEMENT.  THE PARTIES AGREE TO REVIEW SAID MODIFICATIONS IN AUGUST 2023 AND WILL WORK TOGETHER TO FURTHER NEGOTIATE A FUTURE CONTACT.

13.Miscellaneous.

13.1This Agreement constitutes the entire agreement among the Parties regarding the subject matter hereof and all other prior or contemporaneous written or verbal negotiations, representations, arrangements and/or agreement regarding the subject matter hereof (including, but not limited to, any prior buy-sell or similar agreement pertaining to the sale of the

6

BUSINESS.30420405.2

EXHIBIT 10.1

Certain identified information has been excluded because it is both not material and would

likely cause competitive harm if publicly disclosed.

Corporate Shares) are hereby superseded by this Agreement.  The Parties acknowledge that there are no verbal or other written understandings, arrangements and/or agreements between the Parties relating to the subject matter of this Agreement.

13.2All provisions of this Agreement are severable and no provision hereof shall be affected by the invalidity or unenforceability of any other provision of this Agreement.

13.3This Agreement may be amended, altered or changed only by a written document signed by the Parties.

13.4No course of dealing among the Parties, no waiver by Company and/or PAX to exercise any right hereunder or to enforce compliance with the terms of this Agreement shall constitute a waiver of any provision herein, unless such waiver is expressed in writing by the waiving Party.

13.5For purposes of this Agreement, the singular includes the plural and vice-versa and the feminine, masculine and neuter include each other.

13.6New York’s laws shall govern all disputes, controversies, interpretive matters and litigation arising hereunder.

13.7Parties hereby agree that the proper and exclusive venue for all disputes, controversies or litigation arising under this Agreement lies with the Courts of New York State.

13.8The Parties (jointly and separately) agree to and hereby submit to the personal jurisdiction of the Courts of New York State, for all disputes, controversies and litigation arising under this Agreement.

13.9All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by facsimile transmission or three days after being mailed by registered or certified mail (return receipt requested), postage prepaid, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice); provided that notices of a change of address shall be effective only upon receipt thereto:

(a)If to Company, to:Michael Mindala

561 Boston Mills Rd., Suite 500

Hudson, OH 44236

(b)If to PAX, to: Howard Weisman

303 S Broadway, Suite 125.

Tarrytown, NY 10591

13.10This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same

7

BUSINESS.30420405.2

EXHIBIT 10.1

Certain identified information has been excluded because it is both not material and would

likely cause competitive harm if publicly disclosed.

instrument. This Agreement shall be effective upon execution and delivery of either manually signed or facsimile signed signature pages.

[DOCUMENT CONTINUED ON NEXT PAGE]

8

BUSINESS.30420405.2

Certain identified information has been excluded because it is both not material and would

likely cause competitive harm if publicly disclosed.

This Agreement has been signed by the Parties on the dates designated in the signatory provisions below, and shall be effective as of the Effective Date.

		VOX NOVA, LLC
June 30th, 2023	By:	/s/ Michael Mindala
(Date)	Title:	Chief Executive Officer
		-Company-
		PAXMEDICA INC.
June 30th, 2023	By:	/s/ Howard Weisman
(Date)	Title:	Chief Executive Officer
		-PAX-

BUSINESS.30420405.2

EXHIBIT 10.1

Certain identified information has been excluded because it is both not material and would

likely cause competitive harm if publicly disclosed.

SCHEDULE A

Invoice	Payment Amount	Invoice Date
1	$500,000.00	[***]
2	$375,000.00	[***] days after the Product is approved and available for distribution
3	$375,000.00	[***] days after the Product is approved and available for distribution
4	$375,000.00	[***] days after the Product is approved and available for distribution
5	$375,000.00	[***] days after the Product is approved and available for distribution

10

BUSINESS.30420405.2

EXHIBIT 10.1

Certain identified information has been excluded because it is both not material and would

likely cause competitive harm if publicly disclosed.

11

BUSINESS.30420405.2

Certain identified information has been excluded because it is both not material and would

likely cause competitive harm if publicly disclosed.

SCHEDULE B

[***]

BUSINESS.30420405.2

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a)

UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Howard J. Weisman, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 of PaxMedica, 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 officers 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)) 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. [Paragraph omitted pursuant to SEC Release Nos. 33-8238/34-47986 and 33-8392/34-49313];

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 the 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 officers 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 controls over financial reporting.

Date: August 9, 2023	By:	/s/ Howard J. Weisman
		Howard J. Weisman
		Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a)

UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stephen D. Sheldon, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 of PaxMedica, 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 officers 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)) 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. [Paragraph omitted pursuant to SEC Release Nos. 33-8238/34-47986 and 33-8392/34-49313];

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 the 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 officers 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 controls over financial reporting.

Date: August 9, 2023	By:	/s/ Stephen D. Sheldon
		Stephen D. Sheldon
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION 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 PaxMedica, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Howard J. Weisman, Chief Executive Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

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

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 9, 2023	/s/ Howard J. Weisman
	Name:	Howard J. Weisman
	Title:	Chief Executive Officer
		(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION 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 PaxMedica, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stephen D. Sheldon, Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

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

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 9, 2023	/s/ Stephen D. Sheldon
	Name:	Stephen D. Sheldon
	Title:	Chief Financial Officer
		(Principal Financial and Accounting Officer)

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2023	Aug. 09, 2023
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity Registrant Name	PAXMEDICA, INC.
Entity Incorporation, State or Country Code	DE
Entity File Number	001-41475
Entity Tax Identification Number	85-0870387
Entity Address, Address Line One	303 South Broadway, Suite 125
Entity Address, City or Town	Tarrytown
Entity Address State Or Province	NY
Entity Address, Postal Zip Code	10591
City Area Code	914
Local Phone Number	987-2876
Title of 12(b) Security	Common stock, par value $0.0001 per share
Trading Symbol	PXMD
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		16,436,509
Entity Central Index Key	0001811623
Amendment Flag	false
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31

XML

CONDENSED BALANCE SHEETS - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Current assets
Cash	$ 3,069,894	$ 1,901,887
Accounts receivable	500,000
Prepaid and other current assets	1,574,348	302,431
Total current assets	5,144,242	2,204,318
Total assets	5,144,242	2,204,318
Current liabilities
Accrued expenses	55,125	1,019,071
Note payable - fair value, current portion	1,611,336	173,543
Shares settled liability		160,949
Deferred revenue- current portion	100,000
Total current liabilities	2,425,172	2,095,518
Note payable - fair value, less current portion	53,711
Deferred revenue- less current portion	400,000
Total liabilities	2,878,883	2,095,518
Commitments and contingencies (Note 9)
Stockholders' Equity
Common stock, par value $0.0001; 200,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 15,369,477 and 12,035,592 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively	1,537	1,204
Additional paid-in capital	43,323,867	33,847,607
Accumulated deficit	(41,060,050)	(33,740,016)
Total stockholders' equity	2,265,359	108,800
Total liabilities, and stockholders' equity	5,144,242	2,204,318
Series X Preferred Stock
Stockholders' Equity
Preferred stock, par value $0.0001, 10,000,000 shares authorized: Series X preferred shares, 500,000 shares authorized as of June 30, 2023 and December 31, 2022, ; 45,567 shares issued and outstanding at June 30, 2023 and December 31, 2022	5	5
Excludes related party
Current liabilities
Accounts payable	658,711	721,955
Related party
Current liabilities
Accounts payable	$ 0	$ 20,000

XML

CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
Preferred shares, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred shares, shares authorized (in shares)	10,000,000	10,000,000
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	200,000,000	200,000,000
Common stock, shares issued (in shares)	15,369,477	12,035,592
Common stock, shares outstanding (in shares)	15,369,477	12,035,592
Series X Preferred Stock
Preferred shares, shares authorized (in shares)	500,000	500,000
Preferred shares, shares issued (in shares)	45,567	45,567
Preferred shares, shares outstanding (in shares)	45,567	45,567

XML

CONDENSED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Operating expenses
General and administrative	$ 2,768,910	$ 775,963	$ 6,583,094	$ 1,709,780
Research and development	589,029	151,425	811,520	1,222,129
Total operating expenses	3,357,939	927,388	7,394,614	2,931,909
Loss from operations	(3,357,939)	(927,388)	(7,394,614)	(2,931,909)
Other income (expense):
Interest expense	(3,928)		(7,856)
Loss on issuance of debt		(303,012)		(303,012)
Loss on extinguishment of debt			(36,850)
Change in fair value of notes	(124,087)	(103,950)	211,277	(103,950)
Change in fair value of SAFE		1,356,545		2,990,762
Change in fair value warrant liability		(3,163)		2,230,603
Other expense	(333)		(91,991)
Total other income (expense)	(128,348)	946,420	74,580	4,814,403
Net income (loss)	$ (3,486,287)	$ 19,032	$ (7,320,034)	$ 1,882,494
Basic weighted average number of shares outstanding	14,669,439	6,913,492	13,659,168	6,913,492
Diluted weighted average number of shares outstanding	14,669,439	6,913,492	13,659,168	7,473,519
Basic net income (loss) per share	$ (0.24)	$ 0.00	$ (0.54)	$ 0.19
Diluted net income (loss) per share	$ (0.24)	$ 0.00	$ (0.54)	$ (0.05)

XML

CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT) - USD ($)	Preferred Stock Series Seed preferred shares	Preferred Stock Series X Preferred Stock	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Total
Beginning balance at Dec. 31, 2021	$ 270		$ 691	$ 8,828,425	$ (18,938,249)	$ (10,108,863)
Beginning balance (in shares) at Dec. 31, 2021	2,696,439		6,913,492
Increase (Decrease) in Stockholders' Equity (Deficit)
Stock-based compensation				330,012		330,012
Net Income (Loss)					1,882,494	1,882,494
Ending balance at Jun. 30, 2022	$ 270		$ 691	9,158,437	(17,055,755)	(7,896,357)
Ending balance (in shares) at Jun. 30, 2022	2,696,439		6,913,492
Beginning balance at Dec. 31, 2021	$ 270		$ 691	8,828,425	(18,938,249)	(10,108,863)
Beginning balance (in shares) at Dec. 31, 2021	2,696,439		6,913,492
Ending balance at Dec. 31, 2022		$ 5	$ 1,204	33,847,607	(33,740,016)	108,800
Ending balance (in shares) at Dec. 31, 2022		45,567	12,035,592
Beginning balance at Mar. 31, 2022	$ 270		$ 691	9,009,619	(17,074,787)	(8,064,207)
Beginning balance (in shares) at Mar. 31, 2022	2,696,439		6,913,492
Increase (Decrease) in Stockholders' Equity (Deficit)
Stock-based compensation				148,818		148,818
Net Income (Loss)					19,032	19,032
Ending balance at Jun. 30, 2022	$ 270		$ 691	9,158,437	(17,055,755)	(7,896,357)
Ending balance (in shares) at Jun. 30, 2022	2,696,439		6,913,492
Beginning balance at Dec. 31, 2022		$ 5	$ 1,204	33,847,607	(33,740,016)	108,800
Beginning balance (in shares) at Dec. 31, 2022		45,567	12,035,592
Increase (Decrease) in Stockholders' Equity (Deficit)
Reclassification of shares settled liability to equity			$ 3	160,946		160,949
Reclassification of shares settled liability to equity (in shares)			31,014
Issuance of common stock in connection with equity purchase agreement			$ 258	4,770,357		4,770,615
Issuance of common stock in connection with equity purchase agreement (in shares)			2,580,000
Issuance of common stock warrants in connection with notes payable, net of fees				1,155,642		1,155,642
Delivery of common stock underlying restricted stock units, net of tax withholding			$ 6	(45,891)		(45,885)
Delivery of common stock underlying restricted stock units, net of tax withholding (in shares)			62,037
Stock-based compensation			$ 66	3,435,206		3,435,272
Stock-based compensation (in shares)			660,834
Net Income (Loss)					(7,320,034)	(7,320,034)
Ending balance at Jun. 30, 2023		$ 5	$ 1,537	43,323,867	(41,060,050)	2,265,359
Ending balance (in shares) at Jun. 30, 2023		45,567	15,369,477
Beginning balance at Mar. 31, 2023		$ 5	$ 1,392	40,105,133	(37,573,763)	2,532,767
Beginning balance (in shares) at Mar. 31, 2023		45,567	13,920,234
Increase (Decrease) in Stockholders' Equity (Deficit)
Reclassification of shares settled liability to equity			$ 1	34,499		34,500
Reclassification of shares settled liability to equity (in shares)			7,206
Issuance of common stock in connection with equity purchase agreement			$ 138	1,965,476		1,965,614
Issuance of common stock in connection with equity purchase agreement (in shares)			1,380,000
Delivery of common stock underlying restricted stock units, net of tax withholding			$ 6	(45,891)		(45,885)
Delivery of common stock underlying restricted stock units, net of tax withholding (in shares)			62,037
Stock-based compensation				1,264,650		1,264,650
Net Income (Loss)					(3,486,287)	(3,486,287)
Ending balance at Jun. 30, 2023		$ 5	$ 1,537	$ 43,323,867	$ (41,060,050)	$ 2,265,359
Ending balance (in shares) at Jun. 30, 2023		45,567	15,369,477

XML

CONDENSED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Cash flows from operating activities
Net income (loss)		$ (7,320,034)	$ 1,882,494
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Stock-based compensation		3,435,272	330,012
Change in fair value of notes	$ 103,950	(211,277)	103,950
Change in fair value of SAFE	(1,356,545)		(2,990,762)
Loss on extinguishment of debt		36,850
Loss on issuance of debt	303,012		303,012
Change in fair value warrant liability	3,163		(2,230,603)
Other expense		91,991
Deferred revenue		500,000
Changes in assets and liabilities:
Prepaid and other current assets		(1,271,917)
Accounts receivable		(500,000)
Accounts payable		303,203	(76,885)
Accounts payable - related party		(20,000)	161,875
Accrued expenses		(863,518)	1,084,626
Net cash used in operating activities		(5,819,430)	(1,432,281)
Cash flows from financing activities
Proceeds from issuance of convertible promissory notes and warrants		3,200,000	997,250
Payment of costs in connection with convertible promissory notes and warrants		(503,696)
Proceeds from the issuance of common stock in connection with equity purchase agreement		4,770,615
Payment of costs in connection with equity purchase agreement		(195,997)
Repayment of convertible promissory notes		(237,600)
Settlement of shares withheld for payment of employee taxes		(45,885)
Net cash provided by financing activities		6,987,437	997,250
Net increase (decrease) in cash		1,168,007	(435,031)
Cash, beginning of period		1,901,887	444,087
Cash, end of period	$ 9,056	3,069,894	9,056
Non-cash financing activities:
Reclassification of shares settled liability		160,946
Unpaid deferred offering costs and financing fees		$ 20,393	$ 342,542

XML

Organization and description of business operations

6 Months Ended

Jun. 30, 2023

Organization and description of business operations

Organization and description of business operations

Note 1. Organization and description of business operations

PaxMedica, Inc. (the “Company”) is a clinical stage biopharmaceutical company organized as a Delaware limited liability company on April 5, 2018 (“Inception”) to focus on the development of drug candidates for the treatment of autism spectrum disorder (ASD), Fragile X syndrome tremor-ataxia (FXTAS) and Human African Trypanosomiasis (HAT).

Initial Public Offering

On August 9, 2022, the Company entered into an underwriting agreement relating to the public offering of its common stock, par value $0.0001 per share. The Company agreed to sell 1,545,454 shares of its common stock to the underwriters, at a purchase price per share of $4.83 (the offering price to the public of $5.25 per share minus the underwriters’ discount), pursuant to the Company’s registration statement on Form S-1 (File No. 333-239676), as amended, under the Securities Act of 1933, that was filed by the Company under Rule 462(b) under the Securities Act. The Company also granted the underwriters a 45-day option to purchase up to 231,818 additional shares of common stock to cover over-allotments. On August 30, 2022, the Company received net proceeds from its public offering of approximately $6.0 million, net of underwriter fees and commissions of approximately $0.8 million, and offering costs of approximately $1.4 million. In connection with its public offering the Company issued warrants to purchase 108,181 shares of the Company’s common stock with an exercise price of $6.5625 per share.

Going concern, liquidity and capital resources

The Company has no product revenues, incurred operating losses since inception, and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. The Company had an accumulated deficit of approximately $41.1 million at June 30, 2023, a net loss of approximately $7.3 million, and approximately $5.8 million of net cash used in operating activities for the six months ended June 30, 2023.

Equity Purchase Agreement with Lincoln Park Capital

During the six months ended June 30, 2023, in connection with its equity purchase agreement with Lincoln Park Capital Fund, LLC (LPC), the Company received net proceeds of approximately $4.6 million from the issuance of 2.6 million shares of the Company’s common stock (See Note 8).

2023 Note

During the six months ended June 30, 2023, the Company issued a convertible promissory note (the “2023 Note”) with a principal balance of $3.7 million. The Company received proceeds of approximately $2.5 million, net of expenses and other costs. The 2023 Note bears no interest and matures 18 months from the issuance date. In connection with the 2023 Note, the Company issued a common stock warrant to purchase 800,000 shares of the Company’s common stock (See Note 6).

Vox Nova Exclusive Pharmacy Distribution Agreement

On June 30, 2023, the Company entered into an exclusive specialty benefit manager agreement with Vox Nova, LLC (“Vox Nova”) pursuant to which Vox Nova will act as the exclusive United States distributor for the Company’s lead pipeline asset, PAX-101 intravenous suramin. Vox Nova will provide certain distribution management, pharmacy benefit management, sales and supply monitoring services to the Company with respect to PAX-101, in the event PAX-101 receives FDA approval. The distribution agreement also provides for an exclusivity fee payable to the Company of up to $2.0 million, payable in installments based on various time and regulatory approval parameters. Vox Nova will pay $0.5 million of the exclusivity fee upfront in connection with the signing of the distribution agreement when the distribution right was transferred to Vox Nova. The remaining $1.5 million is due in four equal installments over a one-year period after PAX-101 is approved by the FDA and made available for distribution. The Company recognized the $0.5 million upfront fee in deferred revenue as of June 30, 2023.

Going Concern

The accompanying condensed financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern.

The Company’s future liquidity and capital funding requirements will depend on numerous factors, including:

● its ability to raise additional funds to finance its operations;

● the outcome, costs and timing of clinical trial results for the Company’s current or future product candidates;

● the emergence and effect of competing or complementary products;

● its ability to maintain, expand and defend the scope of its intellectual property portfolio, including the amount and timing of any payments the Company may be required to make, or that it may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights;

● its ability to retain its current employees and the need and ability to hire additional management and scientific and medical personnel; and

● the terms and timing of any collaborative, licensing or other arrangements that it has or may establish.

The Company will likely need to raise substantial additional funds through one or more of the following: issuance of additional debt or equity, or the completion of a licensing transaction for one or more of the Company’s pipeline assets. If the Company is unable to maintain sufficient financial resources, its business, financial condition and results of operations will be materially and adversely affected. This could affect future development and business activities and potential future clinical studies and/or other future ventures. Failure to obtain additional equity or debt financing will have a material, adverse impact on the Company’s business operations. There can be no assurance that the Company will be able to obtain the needed financing on acceptable terms or at all. Additionally, equity or convertible debt financings will likely have a dilutive effect on the holdings of the Company’s existing stockholders. Accordingly, there are material risks and uncertainties that raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the issuance of these condensed financial statements. The accompanying condensed financial statements do not include any adjustments that result from the outcome of these uncertainties.

XML

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2023

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Note 2. Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Basis of presentation

The accompanying unaudited condensed financial statements are presented in U.S. dollars and in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected through December 31, 2023.

The accompanying unaudited condensed financial statements should be read in conjunction with the financial statements for the year ended December 31, 2022 and notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on March 30, 2023(the “2022 Annual Report”).

Use of estimates

The preparation of 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 at the date of the financial statements and the reported amounts of expenses during the reporting period. The most significant estimates in the Company’s condensed financial statements relate to the valuation of convertible notes, valuation of warrants, and valuation of equity-based awards. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

Significant Accounting Policies:

For a detailed discussion about the Company’s significant accounting policies, see the Company’s December 31, 2022 financial statements included in its 2022 Annual Report.

Concentrations of cash, cash equivalents and short-term investments

The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. As of June 30, 2023 and December 31, 2022, the Company had no cash equivalents or short-term investments.

Financial instruments that potentially subject the Company to the concentration of credit risk consist primarily of cash. The Company maintains its cash at high credit quality financial institutions, which may at times, be in excess of federal insured limits. The Company believes it is not exposed to any significant losses due to credit risk on cash.

Accounts Receivable and Allowances for Doubtful Accounts

The Company records a provision for doubtful accounts, when appropriate, based on historical experience and a detailed assessment of them collectability of its accounts receivable. In estimating the allowance for doubtful accounts, the Company considers, among other factors, the aging of the accounts receivable, its historical write-offs, the credit worthiness of each customer, and economic conditions that could affect the collectability of the balances in the future. Account balances are charged off against the allowance when the Company believes that it is probable that the receivable will not be recovered. Actual write-offs may be in excess of the Company’s estimated allowance. The Company has not incurred any bad debt expense to date and no allowance for doubtful accounts has been recorded during the periods presented.

Fair value of financial instruments

The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 820 (“ASC 820”), Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 - observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

Level 3 - assets and liabilities whose significant value drivers are unobservable.

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to

measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. During the six months ended June 30, 2023, the Company issued the 2023 Notes and warrants in connection with the 2023 Notes. The 2023 Notes were classified as liabilities and measured at fair value on the issuance date, with changes in fair value recognized as other expense on the statements of operations and disclosed in the condensed financial statements. The carrying amounts of the Company’s financial assets and liabilities, such as accounts payable, approximate fair value due to the short-term nature of these instruments.

Convertible Note

In accordance with Accounting Standards Codification 825, Financial Instruments (“ASC 825”), the Company has elected the fair value option for recognition of its 2023 Note (See Note 3). In accordance with ASC 825, the Company recognizes the 2023 Note at fair value with changes in fair value recognized in the condensed statements of operations. The fair value option may be applied instrument by instrument, but it is irrevocable. As a result of applying the fair value option, direct costs and fees related to the convertible note were recognized in general and administrative expense. The 2023 Note does not accrue interest.

Revenue Recognition

The Company follows the provisions of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. The guidance provides a five-step model to determine how revenue is recognized. In determining the appropriate amount of revenue to be recognized, the Company performs the following steps: (i) identification of the contracts with a customer; (ii) determination of the performance obligations in the contract; (iii) measurement of the transaction price, including potential constraints on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated stand-alone selling prices; and (v) recognition of revenue when (or as) the Company satisfies a performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. Significant management judgment is required to determine the level of effort required under an arrangement and the period over which the Company expects to complete its performance obligations under the arrangement. If the Company cannot reasonably estimate when its performance obligations are either completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably make such estimates. Revenue is then recognized over the remaining estimated period of performance or contract-term using the cumulative catch-up method. The Company allocates the total transaction price to each performance obligation based on the relative standalone selling prices of the promised goods or service underlying each performance obligation.

Research and Development

Research and development costs are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received.

Accrued Outsourcing Costs

Substantial portions of the Company’s preclinical studies and clinical trials are performed by third-party laboratories, medical centers, contract research organizations and other vendors (collectively “CROs”). These CROs generally bill monthly or quarterly for services performed, or bill based upon milestone achievement. For preclinical studies, the Company accrues expenses based upon estimated percentage of work completed and the contract milestones remaining. Clinical trial costs are a significant component of research and development expenses and include costs associated with third-party contractors. The Company outsources a substantial portion of its clinical trial activities, utilizing external entities such as CROs, independent clinical investigators, and other third-party service providers to assist the Company with the execution of its clinical studies. For each clinical trial that the Company conducts, certain clinical trial costs are expensed immediately, while others are expensed over time based on the number of patients in the trial, the attrition rate at which patients leave the trial, and/or the period over which clinical investigators or CROs are expected to provide services. The Company’s estimates depend on the timeliness and accuracy of the data provided by the CROs regarding the status of each program and total program spending. The Company periodically evaluates the estimates to determine if adjustments are necessary or appropriate based on information it receives.

Stock-Based Compensation

The Company expenses stock-based compensation to employees, non-employees and board members over the requisite service period based on the estimated grant-date fair value of the awards and actual forfeitures. The Company accounts for forfeitures as they occur. Stock-based awards with graded vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. All stock-based compensation costs are recorded in general and administrative costs in the statements of operations.

Income (Loss) Per Share

Basic net income (loss) per share (“EPS”) of common stock is computed by dividing net income (loss) allocated to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.

Preferred Stock, unvested restricted stock units and the SAFE investment are participating securities as they participate in undistributed earnings on an as-if converted basis. The Company computes income (loss) per share of common stock using the two-class method required for participating securities.

Basic income per share includes an allocation of undistributed income to the Company’s participating securities. Diluted income (loss) per share is calculated using the more dilutive approach of (i) applying the treasury stock method, the if-converted method, or contingently issuable method and (ii) adding back the undistributed income allocated to participating securities in arriving at basic income per share, assuming that all other dilutive potential common shares have been exercised and then next reallocating the undistributed income.

For warrants that are liability-classified, during periods when the impact is dilutive, the Company assumes share settlement of the instruments as of the beginning of the reporting period and adjusts the numerator to remove the change in fair value of the warrant liability and adjusts the denominator to include the dilutive shares calculated using the treasury stock method.

Participating securities do not share in the losses of the Company, therefore, during periods of net loss, no effect is given to the Preferred Stock, unvested restricted stock units and the SAFE investment.

The net effect of common stock equivalents is based on the incremental common stock that would be issued upon the assumed conversion of convertible preferred stock, exercise of common stock warrants, the SAFE investment and the vesting of RSUs using the treasury stock method.

The Company’s common stock equivalents have been excluded from the computation of diluted loss per share for the three and six month months ended June 30, 2023, as the effect would be to reduce the loss per share. Therefore, the weighted average common stock outstanding used to calculate both basic and diluted loss per share is the same for the three and six months ended

June 30, 2023. The following is a reconciliation of the numerator and denominator of the diluted net income (loss) per share computations for the three and six months ended June 30, 2023 and 2022:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Numerator:
Net income (loss)	$	(3,486,287)	$	19,032	$	(7,320,034)	$	1,882,494
Amount allocated to participating common shareholders		—		(5,831)		—		(576,802)
Net income (loss) allocated to common shareholders- Basic	$	(3,486,287)	$	13,201	$	(7,320,034)	$	1,305,692
Net income (loss)		(3,486,287)		19,032		(7,320,034)		1,882,494
Less: Change in fair value of warrant liabilities		—		—		—		(2,230,603)
Net income (loss) allocated to common shareholders- Diluted	$	(3,486,287)	$	19,032	$	(7,320,034)	$	(348,109)
Denominator:
Basic weighted average number of shares outstanding		14,669,439		6,913,492		13,659,168		6,913,492
Add:
Warrants		—		—		—		560,027
Diluted weighted average number of shares outstanding		14,669,439		6,913,492		13,659,168		7,473,519
Basic net income (loss) per share	$	(0.24)	$	0.00	$	(0.54)	$	0.19
Diluted net income (loss) per share	$	(0.24)	$	0.00	$	(0.54)	$	(0.05)

The following securities were excluded from the computation of diluted net loss per share attributable to common shareholders for the six months ended June 30, 2023 and 2022, because including them would have been anti-dilutive:

	June 30,
	2023	2022
Preferred stock	—	1,557,435
Series X preferred stock	867,943	—
Unvested restricted stock units	1,915,711	1,086,500
Common stock warrants	1,387,409	—
SAFE investment (1)	—	410,169
Convertible notes	2,140,780	189,684
Total	6,311,843	3,243,788

(1) SAFE investment

As of June 30, 2022, the Company’s price per share of $12.19 was calculated by dividing the post money valuation of $150 million by 12,305,060 shares of common stock outstanding. The 12,305,060 shares of common stock outstanding was calculated in accord with the agreement and includes 6,913,492 of common shares outstanding, 2,696,439 of shares to be issued in connection with the Company’s initial public offering, 1,086,500 of restricted stock units, 1,198,460 of common stock warrants and 410,169 of SAFE shares. The SAFE investment shares of 410,169 (included in the table above) were calculated using the SAFE investment of $5.0 million divided by $12.19 per share.

Income taxes

ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s condensed financial statements. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in material changes to its financial position.

Recent accounting pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Statements, or ASU 2016-13. ASU 2016-13 significantly changes the impairment model for most financial assets and certain other instruments. The new standard requires that expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. It also limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value, and requires the reversal of previously recognized credit losses if fair value increases. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset.

In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which clarifies codification and corrects unintended application of the guidance. In November 2019, the FASB issued ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which clarifies or addresses specific issues about certain aspects of ASU 2016-13. In November 2019 the FASB also issued ASU No. 2019-10, Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which delays the effective date of ASU 2016-13 by three years for certain smaller reporting companies such as the Company. The guidance in ASU 2016-13 is effective for the Company for financial statements issued for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years, with early adoption permitted. The Company adopted the standard on January 1, 2023, and the adoption did not have a material impact on the unaudited condensed financial statements.    

XML

Fair Value Measurements

6 Months Ended

Jun. 30, 2023

Fair Value Measurements

Fair Value Measurements

Note 3. Fair Value Measurements

Convertible Notes

During the six months ended June 30, 2023, the Company issued the 2023 Note. The fair value of the 2023 Note on the issuance date and as of June 30, 2023 were estimated using a Monte Carlo simulation to capture the path dependencies intrinsic to their terms. The significant unobservable inputs used in the fair value measurement of the Company’s convertible notes are the common stock price, volatility, and risk-free interest rates. Significant changes in these inputs may result in significantly lower or higher fair value measurement. The Company elected the fair value option when recording its 2023 Note (See Note 2) and its convertible notes issued in 2022 (the “2022 Notes”). The notes were classified as liabilities and measured at fair value on the issuance date, with changes in fair value recognized as other income (expense) on the statements of operations and disclosed in the condensed financial statements. During the six months ended June 30, 2023, the Company paid off the remaining balance of its 2022 Notes (approximately $0.2 million) with a portion of the proceeds received from the 2023 Note.

A summary of significant unobservable inputs (Level 3 inputs) used in measuring the 2022 Notes as of the payoff date of February 6, 2023, and the 2023 Note upon the issuance date, and as of June 30, 2023 is as follows:

	February 6, 2023		June 30, 2023
Dividend yield	—	%	—	%
Expected price volatility	30.0 - 53.7	%	30	%
Risk free interest rate	4.65 - 4.89	%	5.35	%
Expected term (in years)	0.5 - 1.4		0.1 - 1.0

The following tables classify the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of June 30, 2023 and December 31, 2022:

	Fair value measured at June 30, 2023
			Quoted prices in active		Significant other		Significant
	Total carrying value at		markets		observable inputs		unobservable inputs
	June 30, 2023		(Level 1)		(Level 2)		(Level 3)
Liabilities:
Convertible notes	$	1,665,047	$	—	$	—	$	1,665,047

	Fair value measured at December 31, 2022
			Quoted prices in active		Significant other		Significant
	Total carrying value at		markets		observable inputs		unobservable inputs
	December 31, 2022		(Level 1)		(Level 2)		(Level 3)
Liabilities:
Convertible notes	$	173,543	$	—	$	—	$	173,543

For the three and six months ended June 30, 2023, there was a change of approximately $(0.1) million and $0.2 million in Level 3 liabilities measured at fair value, respectively. For the three and six months ended June 30, 2022, there was a change of approximately $1.25 million and $5.1 million in Level 3 liabilities measured at fair value, respectively.

The fair value of the convertible notes may change significantly as additional data is obtained, impacting the Company’s assumptions used to estimate the fair value of the liabilities. In evaluating this information, considerable judgment is required to interpret the data used to develop the assumptions and estimates. The estimates of fair value may not be indicative of the amounts that could be realized in a current market exchange. Accordingly, the use of different market assumptions and/or different valuation techniques may have a material effect on the estimated fair value amounts, and such changes could materially impact the Company’s results of operations in future periods.

The following table presents changes in Level 3 liabilities measured at fair value for the six months ended June 30, 2023. Unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to unobservable (e.g., changes in unobservable long-dated volatilities) inputs.

	Convertible Notes
Balance at December 31, 2022	$	173,543
Issuance of convertible notes		1,903,531
Repayment of convertible notes		(237,600)
Loss on extinguishment of debt		36,850
Change in fair value		(211,277)
Balance at June 30, 2023	$	1,665,047

XML

Prepaid and other current assets

6 Months Ended

Jun. 30, 2023

Prepaid and other current assets

Prepaid and other current assets

Note 4. Prepaid and other current assets

As of June 30, 2023, the Company recorded prepaid expenses and other current assets of approximately $1.6 million, primarily consisting of services to be performed for research and development activities. As of December 31, 2022, prepaid and other current assets totaled approximately $0.3 million, primarily consisting of directors and officers insurance.

XML

Accrued Expenses

6 Months Ended

Jun. 30, 2023

Accrued Expenses

Accrued Expenses

Note 5. Accrued Expenses

The Company’s accrued expenses as of June 30, 2023 and December 31, 2022 consisted of the following:

	June 30,		December 31,
	2023		2022
Employee and related expenses	$	9,839	$	510,297
Directors and officers insurance		38,536		269,753
Professional fees		6,750		162,021
Research and development		-		77,000
Total accrued expenses	$	55,125	$	1,019,071

XML

Convertible promissory notes

6 Months Ended

Jun. 30, 2023

Convertible promissory notes

Convertible promissory notes

Note 6. Convertible promissory notes

During the six months ended June 30, 2023, the Company issued the 2023 Note with a principal balance of $3.7 million. The Company received proceeds of approximately $3.2 million and incurred fees of approximately $0.5 million. The 2023 Note bears no interest and matures 18 months from the issuance date. In connection with the 2023 Note, the Company issued a common stock warrant to purchase 800,000 shares of the Company’s common stock. The 2023 Note is secured by all of the Company’s assets and personal property. The 2023 Note is convertible into shares of the Company's common stock at any time, provided that no such conversion would result in the beneficial ownership by the investor and its affiliates of more than 4.99% of the Company’s outstanding shares of common stock. The conversion price of the 2023 Note is equal to $3.50, subject to customary adjustments, however, if new securities, other than exempted securities, are issued by the Company at a price less than the conversion price, the conversion price shall be reduced to such price. The 2023 Note provides that, commencing August 6, 2023, the Company will pay the outstanding principal amount of the 2023 Note in twelve consecutive monthly payments of $306,666.66 each. At the option of the Company, the monthly payment can be made in cash, shares of the common stock of the Company at a price based on 90% of the 5 lowest VWAPs during the 20 days prior to the payment date, or a combination of cash and stock. The shares issued as monthly payments must either be eligible for immediate resale under Rule 144 or be registered. Any portion of a monthly payment being made in cash shall include a premium of 5% of such cash amount.

As of June 30, 2023, the outstanding principal balance of the 2023 Notes was approximately $3.7 million. As of December 31, 2022, the outstanding principal balance of the 2022 Notes was approximately $0.2 million, and proceeds received from the 2023 Note were used to repay the remaining balance of the 2022 Notes.

For the six months ended June 30, 2023, the Company recorded a $0.2 million change in fair value of its notes, and a loss on extinguishment of debt of approximately $37,000, which are included in the accompanying condensed statements of operations. For the six months ended June 30, 2022, the Company recorded a loss on issuance of debt of $0.3 million, and a fair value loss of $0.1 million that is included in the change in fair value of notes, in the accompanying condensed statements of operations.

XML

Stock-based compensation

6 Months Ended

Jun. 30, 2023

Stock-based compensation

Stock-based compensation

Note 7. Stock-based compensation

Stock-based Compensation

The following is a summary of stock-based compensation during the three and six months ended June 30, 2023 and 2022:

	Three month Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Canceled stock options	$	44,768	$	148,818	$	110,671	$	330,012
Restricted stock units		1,219,882		—		3,324,601		—
Total	$	1,264,650	$	148,818	$	3,435,272	$	330,012

Restricted Stock Units

The following is a summary of the restricted stock units during the six months ended June 30, 2023:

		Weighted Average
		Grant-Date
	Number of Shares	Fair Value
Unvested as of December 31, 2022	1,852,582	$	4.79
Granted	812,000		1.79
Vested	(773,871)		5.05
Unvested as of June 30, 2023	1,890,711	$	3.40

During the six months ended June 30, 2023, the Company granted 812,000 time-based RSUs with a fair value of approximately $1.5 million to members of its board of directors and employees of the Company. The RSUs are subject to service conditions and vest 33.34% on the one year anniversary of the grant date, with the remaining units vesting on each three-month anniversary thereafter.

On May 15, 2022, the Company granted 35,333 restricted stock units (RSUs) with a fair value of approximately $0.2 million to a member of its board of directors. The RSUs are subject to service conditions (vesting of 33.34% on August 26, 2022, the consummation date of the Company’s initial public offering, with the remaining units vesting 66.66% over the next two calendar years on each three-month anniversary thereafter).

On January 1, 2022, the Company granted 1,342,667 RSUs with a fair value of approximately $14.6 million to employees, officers and directors of the Company. The RSUs were subject to service conditions (vesting of 33.34% on May 1, 2022, with the remaining units vesting on each three-month anniversary thereafter) and performance conditions in the form of a liquidity event. Vesting of the RSUs was subject to all grantees continuous service with the Company, and no vesting occurred if the Company had not completed a Qualified Offering or a Change of Control on or before the vesting date. In the event that neither a Qualified Offering nor a Change of Control had occurred prior to December 31, 2022, then all RSUs would be forfeited for no consideration. Because a Qualified Offering or Change of Control is not considered probable of achievement until consummation, compensation cost measured at the grant date was not recognized until the Company completed its IPO in August 2022.

During the six months ended June 30, 2022, 291,500 RSU’s (granted on January 1, 2022) were forfeited due to terminations of two of the Company’s employees and two of its board members.

During the three and six months ended June 30, 2023, the Company recorded stock-based compensation expense related to the RSUs of approximately $1.2 million and $3.3 million, respectively. No stock-based compensation expense related to the RSUs was recognized during the three  and six months ended June 30, 2022. The unamortized stock-based compensation expense related to RSUs as of June 30, 2023 is approximately $3.2 million, which is expected to be recognized over a remaining weighted average vesting period of 1.1 years.

Performance-based Restricted Stock Units

As of June 30, 2023, there were 25,000 performance-based restricted stock units with a fair value of approximately $60,000 outstanding. The RSUs are subject to a performance condition, and will vest upon the Company signing a definitive agreement with a strategic partner. No performance-based RSUs were issued during the six months ended June 30, 2023.

Canceled Stock Options

The Company previously granted options to purchase shares of the Company’s common stock and during the year ended December 31, 2020 these options were canceled in exchange for RSUs. No stock options were outstanding as of June 30, 2023 and 2022. Compensation cost related to the canceled stock options of $4.3 million will continue to be recognized over the original vesting criteria.

During the three months ended June 30, 2023 and 2022, the Company recorded stock-based compensation expense related to the canceled stock options of approximately $0.04 million and $0.1 million, respectively. During the six months ended June 30, 2023 and 2022, the Company recorded stock-based compensation expense related to the canceled stock options of approximately $0.1 million and $0.3 million, respectively. The unamortized stock-based compensation expense related to canceled stock options as of June 30, 2023 is approximately $0.05 million.

Warrants

The following is a summary of the Company’s warrant activity during the six months ended June 30, 2023:

		Weighted				Weighted Average
	Shares	Average		Aggregate		Remaining
	Underlying	Exercise		Intrinsic		Contractual
	Warrants	Price		Value		Term (Years)
Outstanding as of December 31, 2022	445,409	$	4.47	$	—	3.9
Issued	942,000	$	3.27
Outstanding as of June 30, 2023	1,387,409	$	3.66	$	—	3.7
Exercisable as of June 30, 2023	1,275,409	$	3.67	$	—	4.7

On January 19, 2023, the Company issued warrants to purchase 30,000 shares of the Company’s common stock with an exercise price of $3.00 per share as consideration to waive the lock-up restriction related to its August IPO. The warrants expire 5 years from the issuance date.

On February 6, 2023, the Company issued warrants to purchase 800,000 shares of the Company’s common stock with an exercise price of $3.25 per share in connection with the issuance of its 2023 Note (See Note 6).

On March 7, 2023, the Company issued warrants to purchase 112,000 shares of the Company’s common stock with an exercise price of $3.50 per share as consideration to waive the lock-up restriction related to its August IPO. The warrants are not exercisable prior to September 7, 2023 and expire 5 years from the issuance date.

XML

Preferred and common stock

6 Months Ended

Jun. 30, 2023

Preferred and common stock

Preferred and common stock

Note 8. Preferred and common stock

Series X Preferred Stock

There were no shares of Series X preferred stock issued during the three and six months ended June 30, 2023. As of June 30, 2023, there were 45,567 shares of Series X preferred stock outstanding.

Common Stock

On November 17, 2022, the Company entered into an equity purchase agreement (the “Purchase Agreement”) with LPC which provided that, upon the terms and subject to the conditions and limitations set forth therein, the Company could sell to LPC, at its discretion, up to $20.0 million of shares of its common stock over the 30-month term of the Purchase Agreement. During the six months ended June 30, 2023, the Company issued 2.6 million shares of common stock, receiving net proceeds of approximately $4.6 million.

During the six months ended June 30, 2023, the Company issued 722,871 shares of its common stock in connection with the vesting of RSUs issued to members of the Company’s board of directors and employees. The Company withheld 28,500 of these shares at a fair value of approximately $0.05 million, to cover the withholding taxes related to the settlement of these vested restricted stock units.

During the six months ended June 30, 2023, the Company issued 31,014 shares of its common stock in settlement of a shares settled liability at December 31, 2022 of approximately $161,000.

XML

Commitments and contingencies

6 Months Ended

Jun. 30, 2023

Commitments and contingencies

Commitments and contingencies

Note 9. Commitments and contingencies

Litigation

As of June 30, 2023 and 2022, there was no litigation against the Company. The Company may be involved in legal proceedings, claims and assessments arising from the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance.

XML

Related party transactions

6 Months Ended

Jun. 30, 2023

Related party transactions

Related party transactions

Note 10. Related party transactions

Expenses - During the three-month periods ended June 30, 2023 and 2022, the Company expensed $60,000 for management fees owed to Tardimed. During the six-month periods ended June 30, 2023 and 2022 the Company expensed $120,000 for management fees owed to Tardimed.

Accounts payable – As of June 30, 2023 there were no related party payables. As of June 30 2022, related party payables totaled $163,000, consisting of $120,000 owed to Tardimed for management fees, and $43,000 owed to members of our board of directors.

Prepaids – As of June 30, 2023, the Company paid $0.1 million for services to be performed by PoloMar, a related party due to their ownership by Tardimed.

XML

Subsequent events

6 Months Ended

Jun. 30, 2023

Subsequent events

Subsequent events

Note 11. Subsequent events

The Company has evaluated all subsequent events through the date of filing, August 9, 2023, of this Quarterly Report on Form 10-Q with the SEC, to ensure that this filing includes appropriate disclosure of events both recognized in the condensed financial statements as of June 30, 2023, and events which occurred after June 30, 2023, but which were not recognized in the condensed financial statements.

Common Stock

Subsequent to June 30, 2023, in connection with its equity purchase agreement with LPC, the Company received proceeds of approximately $0.8 million from the issuance of 1.0 million shares of the Company’s common stock (See Note 8).

2023 Note

Subsequent to June 30, 2023, in connection with the 2023 Note with the Lind Capital Partners, the Company elected to pay the August payment in cash of approximately $0.3 million instead of issuing the Company’s common stock (see Note 6).

XML

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Policies)

6 Months Ended

Jun. 30, 2023

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Basis of presentation

Basis of presentation

The accompanying unaudited condensed financial statements are presented in U.S. dollars and in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected through December 31, 2023.

The accompanying unaudited condensed financial statements should be read in conjunction with the financial statements for the year ended December 31, 2022 and notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on March 30, 2023(the “2022 Annual Report”).

Use of estimates

Use of estimates

The preparation of 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 at the date of the financial statements and the reported amounts of expenses during the reporting period. The most significant estimates in the Company’s condensed financial statements relate to the valuation of convertible notes, valuation of warrants, and valuation of equity-based awards. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

Concentrations of cash, cash equivalents and short-term investments

Concentrations of cash, cash equivalents and short-term investments

The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. As of June 30, 2023 and December 31, 2022, the Company had no cash equivalents or short-term investments.

Financial instruments that potentially subject the Company to the concentration of credit risk consist primarily of cash. The Company maintains its cash at high credit quality financial institutions, which may at times, be in excess of federal insured limits. The Company believes it is not exposed to any significant losses due to credit risk on cash.

Accounts Receivable and Allowances for Doubtful Accounts

Accounts Receivable and Allowances for Doubtful Accounts

The Company records a provision for doubtful accounts, when appropriate, based on historical experience and a detailed assessment of them collectability of its accounts receivable. In estimating the allowance for doubtful accounts, the Company considers, among other factors, the aging of the accounts receivable, its historical write-offs, the credit worthiness of each customer, and economic conditions that could affect the collectability of the balances in the future. Account balances are charged off against the allowance when the Company believes that it is probable that the receivable will not be recovered. Actual write-offs may be in excess of the Company’s estimated allowance. The Company has not incurred any bad debt expense to date and no allowance for doubtful accounts has been recorded during the periods presented.

Fair value of financial instruments

Fair value of financial instruments

The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 820 (“ASC 820”), Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 - observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

Level 3 - assets and liabilities whose significant value drivers are unobservable.

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to

measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. During the six months ended June 30, 2023, the Company issued the 2023 Notes and warrants in connection with the 2023 Notes. The 2023 Notes were classified as liabilities and measured at fair value on the issuance date, with changes in fair value recognized as other expense on the statements of operations and disclosed in the condensed financial statements. The carrying amounts of the Company’s financial assets and liabilities, such as accounts payable, approximate fair value due to the short-term nature of these instruments.

Convertible Note

Convertible Note

In accordance with Accounting Standards Codification 825, Financial Instruments (“ASC 825”), the Company has elected the fair value option for recognition of its 2023 Note (See Note 3). In accordance with ASC 825, the Company recognizes the 2023 Note at fair value with changes in fair value recognized in the condensed statements of operations. The fair value option may be applied instrument by instrument, but it is irrevocable. As a result of applying the fair value option, direct costs and fees related to the convertible note were recognized in general and administrative expense. The 2023 Note does not accrue interest.

Revenue Recognition

Revenue Recognition

The Company follows the provisions of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. The guidance provides a five-step model to determine how revenue is recognized. In determining the appropriate amount of revenue to be recognized, the Company performs the following steps: (i) identification of the contracts with a customer; (ii) determination of the performance obligations in the contract; (iii) measurement of the transaction price, including potential constraints on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated stand-alone selling prices; and (v) recognition of revenue when (or as) the Company satisfies a performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. Significant management judgment is required to determine the level of effort required under an arrangement and the period over which the Company expects to complete its performance obligations under the arrangement. If the Company cannot reasonably estimate when its performance obligations are either completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably make such estimates. Revenue is then recognized over the remaining estimated period of performance or contract-term using the cumulative catch-up method. The Company allocates the total transaction price to each performance obligation based on the relative standalone selling prices of the promised goods or service underlying each performance obligation.

Research and development

Research and Development

Research and development costs are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received.

Accrued Outsourcing Costs

Accrued Outsourcing Costs

Substantial portions of the Company’s preclinical studies and clinical trials are performed by third-party laboratories, medical centers, contract research organizations and other vendors (collectively “CROs”). These CROs generally bill monthly or quarterly for services performed, or bill based upon milestone achievement. For preclinical studies, the Company accrues expenses based upon estimated percentage of work completed and the contract milestones remaining. Clinical trial costs are a significant component of research and development expenses and include costs associated with third-party contractors. The Company outsources a substantial portion of its clinical trial activities, utilizing external entities such as CROs, independent clinical investigators, and other third-party service providers to assist the Company with the execution of its clinical studies. For each clinical trial that the Company conducts, certain clinical trial costs are expensed immediately, while others are expensed over time based on the number of patients in the trial, the attrition rate at which patients leave the trial, and/or the period over which clinical investigators or CROs are expected to provide services. The Company’s estimates depend on the timeliness and accuracy of the data provided by the CROs regarding the status of each program and total program spending. The Company periodically evaluates the estimates to determine if adjustments are necessary or appropriate based on information it receives.

Stock-Based Compensation

Stock-Based Compensation

The Company expenses stock-based compensation to employees, non-employees and board members over the requisite service period based on the estimated grant-date fair value of the awards and actual forfeitures. The Company accounts for forfeitures as they occur. Stock-based awards with graded vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. All stock-based compensation costs are recorded in general and administrative costs in the statements of operations.

Income (Loss) Per Share

Income (Loss) Per Share

Basic net income (loss) per share (“EPS”) of common stock is computed by dividing net income (loss) allocated to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.

Preferred Stock, unvested restricted stock units and the SAFE investment are participating securities as they participate in undistributed earnings on an as-if converted basis. The Company computes income (loss) per share of common stock using the two-class method required for participating securities.

Basic income per share includes an allocation of undistributed income to the Company’s participating securities. Diluted income (loss) per share is calculated using the more dilutive approach of (i) applying the treasury stock method, the if-converted method, or contingently issuable method and (ii) adding back the undistributed income allocated to participating securities in arriving at basic income per share, assuming that all other dilutive potential common shares have been exercised and then next reallocating the undistributed income.

For warrants that are liability-classified, during periods when the impact is dilutive, the Company assumes share settlement of the instruments as of the beginning of the reporting period and adjusts the numerator to remove the change in fair value of the warrant liability and adjusts the denominator to include the dilutive shares calculated using the treasury stock method.

Participating securities do not share in the losses of the Company, therefore, during periods of net loss, no effect is given to the Preferred Stock, unvested restricted stock units and the SAFE investment.

The net effect of common stock equivalents is based on the incremental common stock that would be issued upon the assumed conversion of convertible preferred stock, exercise of common stock warrants, the SAFE investment and the vesting of RSUs using the treasury stock method.

The Company’s common stock equivalents have been excluded from the computation of diluted loss per share for the three and six month months ended June 30, 2023, as the effect would be to reduce the loss per share. Therefore, the weighted average common stock outstanding used to calculate both basic and diluted loss per share is the same for the three and six months ended

June 30, 2023. The following is a reconciliation of the numerator and denominator of the diluted net income (loss) per share computations for the three and six months ended June 30, 2023 and 2022:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Numerator:
Net income (loss)	$	(3,486,287)	$	19,032	$	(7,320,034)	$	1,882,494
Amount allocated to participating common shareholders		—		(5,831)		—		(576,802)
Net income (loss) allocated to common shareholders- Basic	$	(3,486,287)	$	13,201	$	(7,320,034)	$	1,305,692
Net income (loss)		(3,486,287)		19,032		(7,320,034)		1,882,494
Less: Change in fair value of warrant liabilities		—		—		—		(2,230,603)
Net income (loss) allocated to common shareholders- Diluted	$	(3,486,287)	$	19,032	$	(7,320,034)	$	(348,109)
Denominator:
Basic weighted average number of shares outstanding		14,669,439		6,913,492		13,659,168		6,913,492
Add:
Warrants		—		—		—		560,027
Diluted weighted average number of shares outstanding		14,669,439		6,913,492		13,659,168		7,473,519
Basic net income (loss) per share	$	(0.24)	$	0.00	$	(0.54)	$	0.19
Diluted net income (loss) per share	$	(0.24)	$	0.00	$	(0.54)	$	(0.05)

The following securities were excluded from the computation of diluted net loss per share attributable to common shareholders for the six months ended June 30, 2023 and 2022, because including them would have been anti-dilutive:

	June 30,
	2023	2022
Preferred stock	—	1,557,435
Series X preferred stock	867,943	—
Unvested restricted stock units	1,915,711	1,086,500
Common stock warrants	1,387,409	—
SAFE investment (1)	—	410,169
Convertible notes	2,140,780	189,684
Total	6,311,843	3,243,788

(1) SAFE investment

As of June 30, 2022, the Company’s price per share of $12.19 was calculated by dividing the post money valuation of $150 million by 12,305,060 shares of common stock outstanding. The 12,305,060 shares of common stock outstanding was calculated in accord with the agreement and includes 6,913,492 of common shares outstanding, 2,696,439 of shares to be issued in connection with the Company’s initial public offering, 1,086,500 of restricted stock units, 1,198,460 of common stock warrants and 410,169 of SAFE shares. The SAFE investment shares of 410,169 (included in the table above) were calculated using the SAFE investment of $5.0 million divided by $12.19 per share.

Income taxes

Income taxes

ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s condensed financial statements. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in material changes to its financial position.

Recent accounting pronouncements

Recent accounting pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Statements, or ASU 2016-13. ASU 2016-13 significantly changes the impairment model for most financial assets and certain other instruments. The new standard requires that expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. It also limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value, and requires the reversal of previously recognized credit losses if fair value increases. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset.

In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which clarifies codification and corrects unintended application of the guidance. In November 2019, the FASB issued ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which clarifies or addresses specific issues about certain aspects of ASU 2016-13. In November 2019 the FASB also issued ASU No. 2019-10, Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which delays the effective date of ASU 2016-13 by three years for certain smaller reporting companies such as the Company. The guidance in ASU 2016-13 is effective for the Company for financial statements issued for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years, with early adoption permitted. The Company adopted the standard on January 1, 2023, and the adoption did not have a material impact on the unaudited condensed financial statements.    

XML

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Tables)

6 Months Ended

Jun. 30, 2023

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Schedule of reconciliation of the numerator and denominator of the diluted net income (loss) per share computations

The following is a reconciliation of the numerator and denominator of the diluted net income (loss) per share computations for the three and six months ended June 30, 2023 and 2022:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Numerator:
Net income (loss)	$	(3,486,287)	$	19,032	$	(7,320,034)	$	1,882,494
Amount allocated to participating common shareholders		—		(5,831)		—		(576,802)
Net income (loss) allocated to common shareholders- Basic	$	(3,486,287)	$	13,201	$	(7,320,034)	$	1,305,692
Net income (loss)		(3,486,287)		19,032		(7,320,034)		1,882,494
Less: Change in fair value of warrant liabilities		—		—		—		(2,230,603)
Net income (loss) allocated to common shareholders- Diluted	$	(3,486,287)	$	19,032	$	(7,320,034)	$	(348,109)
Denominator:
Basic weighted average number of shares outstanding		14,669,439		6,913,492		13,659,168		6,913,492
Add:
Warrants		—		—		—		560,027
Diluted weighted average number of shares outstanding		14,669,439		6,913,492		13,659,168		7,473,519
Basic net income (loss) per share	$	(0.24)	$	0.00	$	(0.54)	$	0.19
Diluted net income (loss) per share	$	(0.24)	$	0.00	$	(0.54)	$	(0.05)

Schedule of securities excluded from the computation of diluted net loss per share attributable to common shareholders

The following securities were excluded from the computation of diluted net loss per share attributable to common shareholders for the six months ended June 30, 2023 and 2022, because including them would have been anti-dilutive:

	June 30,
	2023	2022
Preferred stock	—	1,557,435
Series X preferred stock	867,943	—
Unvested restricted stock units	1,915,711	1,086,500
Common stock warrants	1,387,409	—
SAFE investment (1)	—	410,169
Convertible notes	2,140,780	189,684
Total	6,311,843	3,243,788

XML

Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Measurements

Summary of significant unobservable inputs (Level 3 inputs) used in measurement upon issuance dates

A summary of significant unobservable inputs (Level 3 inputs) used in measuring the 2022 Notes as of the payoff date of February 6, 2023, and the 2023 Note upon the issuance date, and as of June 30, 2023 is as follows:

	February 6, 2023		June 30, 2023
Dividend yield	—	%	—	%
Expected price volatility	30.0 - 53.7	%	30	%
Risk free interest rate	4.65 - 4.89	%	5.35	%
Expected term (in years)	0.5 - 1.4		0.1 - 1.0

Schedule of fair value hierarchy of liabilities measured at fair value on a recurring basis

The following tables classify the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of June 30, 2023 and December 31, 2022:

	Fair value measured at June 30, 2023
			Quoted prices in active		Significant other		Significant
	Total carrying value at		markets		observable inputs		unobservable inputs
	June 30, 2023		(Level 1)		(Level 2)		(Level 3)
Liabilities:
Convertible notes	$	1,665,047	$	—	$	—	$	1,665,047

	Fair value measured at December 31, 2022
			Quoted prices in active		Significant other		Significant
	Total carrying value at		markets		observable inputs		unobservable inputs
	December 31, 2022		(Level 1)		(Level 2)		(Level 3)
Liabilities:
Convertible notes	$	173,543	$	—	$	—	$	173,543

Summary of changes in Level 3 liabilities measured at fair value

The following table presents changes in Level 3 liabilities measured at fair value for the six months ended June 30, 2023. Unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to unobservable (e.g., changes in unobservable long-dated volatilities) inputs.

	Convertible Notes
Balance at December 31, 2022	$	173,543
Issuance of convertible notes		1,903,531
Repayment of convertible notes		(237,600)
Loss on extinguishment of debt		36,850
Change in fair value		(211,277)
Balance at June 30, 2023	$	1,665,047

XML

Accrued Expenses (Tables)

6 Months Ended

Jun. 30, 2023

Accrued Expenses

Schedule of Company's accrued expenses

The Company’s accrued expenses as of June 30, 2023 and December 31, 2022 consisted of the following:

	June 30,		December 31,
	2023		2022
Employee and related expenses	$	9,839	$	510,297
Directors and officers insurance		38,536		269,753
Professional fees		6,750		162,021
Research and development		-		77,000
Total accrued expenses	$	55,125	$	1,019,071

XML

Stock-based compensation (Tables)

6 Months Ended

Jun. 30, 2023

Stock-based compensation

Schedule of share-based compensation

The following is a summary of stock-based compensation during the three and six months ended June 30, 2023 and 2022:

	Three month Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Canceled stock options	$	44,768	$	148,818	$	110,671	$	330,012
Restricted stock units		1,219,882		—		3,324,601		—
Total	$	1,264,650	$	148,818	$	3,435,272	$	330,012

Summary of changes in restricted stock units

The following is a summary of the restricted stock units during the six months ended June 30, 2023:

		Weighted Average
		Grant-Date
	Number of Shares	Fair Value
Unvested as of December 31, 2022	1,852,582	$	4.79
Granted	812,000		1.79
Vested	(773,871)		5.05
Unvested as of June 30, 2023	1,890,711	$	3.40

Summary of warrant activity

The following is a summary of the Company’s warrant activity during the six months ended June 30, 2023:

		Weighted				Weighted Average
	Shares	Average		Aggregate		Remaining
	Underlying	Exercise		Intrinsic		Contractual
	Warrants	Price		Value		Term (Years)
Outstanding as of December 31, 2022	445,409	$	4.47	$	—	3.9
Issued	942,000	$	3.27
Outstanding as of June 30, 2023	1,387,409	$	3.66	$	—	3.7
Exercisable as of June 30, 2023	1,275,409	$	3.67	$	—	4.7

XML

Organization and description of business operations - Initial Public Offering (Details) - USD ($) $ / shares in Units, $ in Millions	Aug. 30, 2022	Aug. 09, 2022	Jun. 30, 2023	Dec. 31, 2022
Organization and description of business operations
Common stock, par value (in dollars per share)			$ 0.0001	$ 0.0001
Initial public offering
Organization and description of business operations
Common stock, par value (in dollars per share)		$ 0.0001
Issuance of stock		1,545,454
Price per share		$ 5.25
Net proceeds from issuance of shares	$ 6.0
Underwriter fees and commissions	0.8
Offering costs	$ 1.4
Number of warrants issued	108,181
Exercise price of warrants	$ 6.5625
Overallotment option
Organization and description of business operations
Price per share		$ 4.83
Underwriters' option term		45 days
Additional shares which may be purchased during the option period		231,818

XML

Organization and description of business operations - Going concern, liquidity and capital resources (Details)		3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($) installment shares	Jun. 30, 2023 USD ($) shares	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) shares	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Organization and description of business operations
Product revenues				$ 0
Accumulated deficit	$ (41,060,050)	$ (41,060,050)		(41,060,050)		$ (33,740,016)
Net Income (Loss)		(3,486,287)	$ 19,032	(7,320,034)	$ 1,882,494
Net cash used in operating activities				(5,819,430)	$ (1,432,281)
Vox Nova Exclusive Pharmacy Distribution Agreement
Organization and description of business operations
Exclusivity fee payable to the Company	2,000,000.0	2,000,000.0		2,000,000.0
Exclusivity fee due up front in connection with signing	500,000	500,000		500,000
Portion of exclusivity fees to be paid in installments	$ 1,500,000	1,500,000		1,500,000
Number of installments | installment	4
Term of agreement	1 year
Deferred revenue	$ 500,000	500,000		500,000
Equity Purchase Agreement with Lincoln Park Capital Fund, LLC
Organization and description of business operations
Net proceeds from the issuance of common stock in connection with an equity purchase agreement				$ 4,600,000
Number of common stock shares issued in connection with an equity purchase agreement | shares				2,600,000
Convertible Promissory Note ("2023 Note")
Organization and description of business operations
Face amount of debt	$ 3,700,000	$ 3,700,000		$ 3,700,000
Proceeds from issuance of convertible notes, net of expenses and other costs				$ 2,500,000
Interest rate	0.00%	0.00%		0.00%
Maturity period				18 months
Number of shares which may be purchased from issued warrants | shares	800,000	800,000		800,000

XML

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements - Cash, cash equivalents and short-term investments (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Cash equivalents	$ 0	$ 0
Short-term investments	$ 0	$ 0

XML

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements - Earnings (Loss) Per Share (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Numerator, Basic:
Net Income (Loss)	$ (3,486,287)	$ 19,032	$ (7,320,034)	$ 1,882,494
Amount allocated to participating common shareholders		(5,831)		(576,802)
Net income (loss) allocated to common shareholders - Basic	(3,486,287)	13,201	(7,320,034)	1,305,692
Numerator, Diluted:
Net Income (Loss)	(3,486,287)	19,032	(7,320,034)	1,882,494
Less: Change in fair value of warrant liabilities				(2,230,603)
Net income (loss) allocated to common shareholders - Diluted	$ (3,486,287)	$ 19,032	$ (7,320,034)	$ (348,109)
Denominator:
Basic weighted average number of shares outstanding	14,669,439	6,913,492	13,659,168	6,913,492
Add:
Warrants				560,027
Diluted weighted average number of shares outstanding	14,669,439	6,913,492	13,659,168	7,473,519
Basic net income (loss) per share	$ (0.24)	$ 0.00	$ (0.54)	$ 0.19
Diluted net income (loss) per share	$ (0.24)	$ 0.00	$ (0.54)	$ (0.05)

XML

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements - Anti-dilutive securities (Details) - USD ($) $ / shares in Units, $ in Millions	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders	6,311,843	3,243,788
Share price		$ 12.19
Post money valuation		$ 150
Common stock, shares outstanding considered for determination of post money valuation		12,305,060
Common stock, shares outstanding	15,369,477	6,913,492	12,035,592
IPO shares		2,696,439
Restricted stock units		1,086,500
Common stock warrants		1,198,460
SAFE shares		410,169
SAFE investment		5,000,000.0
Preferred stock
Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders		1,557,435
Series X Preferred Stock
Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders	867,943
Unvested restricted stock units
Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders	1,915,711	1,086,500
Common stock warrants
Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders	1,387,409
SAFE investment
Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders		410,169
Convertible notes
Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders	2,140,780	189,684

XML

Fair Value Measurements - Convertible Notes (Details)	6 Months Ended
	Jun. 30, 2023 USD ($)	Feb. 06, 2023
Fair Value Measurements
Paydown of convertible promissory notes	$ 237,600
Convertible Notes
Fair Value Measurements
Paydown of convertible promissory notes	$ 200,000
Convertible Notes | Dividend yield
Fair Value Measurements
Debt instrument, measurement input	0	0
Convertible Notes | Expected price volatility
Fair Value Measurements
Debt instrument, measurement input	0.30
Convertible Notes | Expected price volatility | Minimum
Fair Value Measurements
Debt instrument, measurement input		0.300
Convertible Notes | Expected price volatility | Maximum
Fair Value Measurements
Debt instrument, measurement input		0.537
Convertible Notes | Risk free interest rate
Fair Value Measurements
Debt instrument, measurement input	0.0535
Convertible Notes | Risk free interest rate | Minimum
Fair Value Measurements
Debt instrument, measurement input		0.0465
Convertible Notes | Risk free interest rate | Maximum
Fair Value Measurements
Debt instrument, measurement input		0.0489
Convertible Notes | Expected term (in years) | Minimum
Fair Value Measurements
Debt instrument, measurement input	0.1	0.5
Convertible Notes | Expected term (in years) | Maximum
Fair Value Measurements
Debt instrument, measurement input	1.0	1.4

XML

Fair Value Measurements - Hierarchy (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Significant unobservable inputs (Level 3)
Liabilities
Change in fair value of Level 3 liabilities	$ (100,000)	$ 1,250,000	$ 200,000	$ 5,100,000
Recurring | Carrying Value
Liabilities
Convertible notes	1,665,047		1,665,047		$ 173,543
Recurring | Fair Value | Significant unobservable inputs (Level 3)
Liabilities
Convertible notes	$ 1,665,047		$ 1,665,047		$ 173,543

XML

Fair Value Measurements - Changes in Level 3 Liabilities (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Fair Value Measurements
Beginning Balance			$ 173,543
Issuance of convertible notes			1,903,531
Repayment of convertible notes			(237,600)
Loss on extinguishment of debt			36,850
Change in fair value	$ 124,087	$ 103,950	(211,277)	$ 103,950
Ending Balance	$ 1,665,047		$ 1,665,047

XML

Prepaid and other current assets (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Prepaid and other current assets
Prepaid and other current assets	$ 1,574,348	$ 302,431

XML

Accrued Expenses (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Accrued Expenses
Employee and related expenses	$ 9,839	$ 510,297
Directors and officers insurance	38,536	269,753
Professional fees	6,750	162,021
Research and development		77,000
Total accrued expenses	$ 55,125	$ 1,019,071

XML

Convertible promissory notes (Details)		3 Months Ended		6 Months Ended
	Aug. 06, 2023 USD ($) item	Jun. 30, 2023 USD ($) $ / shares shares	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) $ / shares shares	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Convertible promissory notes
Change in fair value of notes		$ (124,087)	$ (103,950)	$ 211,277	$ (103,950)
Loss on extinguishment of debt				36,850
Loss on issuance of debt			$ 303,012		303,012
Change in fair value of notes					$ 100,000
2023 Note
Convertible promissory notes
Face amount of debt		$ 3,700,000		3,700,000
Net proceeds from issuance of convertible promissory notes				3,200,000
Fees incurred				$ 500,000
Annual interest rate		0.00%		0.00%
Maturity period				18 months
Number of shares which may be purchased from issued warrants | shares		800,000		800,000
Percent of beneficial ownership limitation				4.99%
Conversion price (per share) | $ / shares		$ 3.50		$ 3.50
Percentage of share price used to calculate shares issued as payment of debt				90.00%
Monthly payment cash premium percentage		5.00%		5.00%
Convertible notes outstanding		$ 3,700,000		$ 3,700,000
Change in fair value of notes				200,000
Loss on extinguishment of debt				$ 37,000
2023 Note | Forecast
Convertible promissory notes
Number of periodic payments | item	12
Frequency of periodic payment	monthly
Amount of periodic payment	$ 306,666.66
2022 Notes
Convertible promissory notes
Convertible notes outstanding						$ 200,000

XML

Stock-based compensation - Compensation expense (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Share based compensation
Stock-based compensation	$ 1,264,650	$ 148,818	$ 3,435,272	$ 330,012
Canceled stock options
Share based compensation
Stock-based compensation	44,768	148,818	110,671	330,012
Restricted stock units
Share based compensation
Stock-based compensation	$ 1,219,882	$ 0	$ 3,324,601	$ 0

XML

Stock-based compensation - Restricted Stock Units (Details)			3 Months Ended		6 Months Ended
	May 15, 2022 USD ($) shares	Jan. 01, 2022 USD ($) shares	Jun. 30, 2023 USD ($) $ / shares shares	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) $ / shares shares	Jun. 30, 2022 USD ($) director employee shares
Additional disclosures
Number of employees terminated | employee						2
Number of board members terminated | director						2
Stock-based compensation | $			$ 1,264,650	$ 148,818	$ 3,435,272	$ 330,012
Restricted stock units
Number of Shares
Beginning balance					1,852,582
Granted					812,000
Vested					(773,871)
Ending balance			1,890,711		1,890,711
Weighted Average Grant-Date Fair Value
Beginning balance (in dollars per share) | $ / shares					$ 4.79
Granted (in dollars per share) | $ / shares					1.79
Vested (in dollars per share) | $ / shares					5.05
Ending balance (in dollars per share) | $ / shares			$ 3.40		$ 3.40
Additional disclosures
Number of units granted					812,000
Stock-based compensation | $			$ 1,219,882	$ 0	$ 3,324,601	$ 0
Unamortized stock-based compensation expense, RSUs | $			$ 3,200,000		$ 3,200,000
Recognition period for remaining unamortized stock-based compensation expense					1 year 1 month 6 days
Restricted stock units | Directors and employees
Additional disclosures
Number of shares forfeited						291,500
Restricted stock units | Director
Number of Shares
Granted	35,333
Additional disclosures
Number of units granted	35,333
Aggregate fair value of awards granted | $	$ 200,000
Description of vesting terms	The RSUs are subject to service conditions (vesting of 33.34% on August 26, 2022, the consummation date of the Company’s initial public offering, with the remaining units vesting 66.66% over the next two calendar years on each three-month anniversary thereafter).
Restricted stock units | Director | Vesting period 1
Additional disclosures
Vesting percentage	33.34%
Restricted stock units | Director | Vesting period 2
Additional disclosures
Vesting percentage	66.66%
Restricted stock units | Employees, officers and directors
Number of Shares
Granted		1,342,667
Additional disclosures
Number of units granted		1,342,667
Aggregate fair value of awards granted | $		$ 14,600,000
Description of vesting terms		The RSUs were subject to service conditions (vesting of 33.34% on May 1, 2022, with the remaining units vesting on each three-month anniversary thereafter) and performance conditions in the form of a liquidity event.
Restricted stock units | Employees, officers and directors | Vesting period 1
Additional disclosures
Vesting percentage		33.34%
Time-based Restricted Stock Units | Directors and employees
Number of Shares
Granted					812,000
Additional disclosures
Number of units granted					812,000
Aggregate fair value of awards granted | $					$ 1,500,000
Description of vesting terms					The RSUs are subject to service conditions and vest 33.34% on the one year anniversary of the grant date, with the remaining units vesting on each three-month anniversary thereafter.
Vesting percentage					33.34%

XML

Stock-based compensation - Performance-based Restricted Stock Units (Details) - Performance-based Restricted Stock Units	6 Months Ended
	Jun. 30, 2023 USD ($) shares
Stock-based compensation
Restricted stock units outstanding	25,000
Fair value of restricted stock units outstanding | $	$ 60,000
Number of units granted	0

XML

Stock-based compensation - Canceled Stock Options (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Stock-based compensation
Stock-based compensation	$ 1,264,650	$ 148,818	$ 3,435,272	$ 330,012
Employee Stock Option
Stock-based compensation
Stock options outstanding	0	0	0	0
Canceled stock options
Stock-based compensation
Compensation costs to be recognized over the original vesting criteria			$ 4,300,000
Stock-based compensation	$ 44,768	$ 148,818	110,671	$ 330,012
Unamortized stock-based compensation expense	$ 50,000.00		$ 50,000.00

XML

Stock-based compensation - Warrants (Details) - $ / shares				6 Months Ended	12 Months Ended
	Mar. 07, 2023	Feb. 06, 2023	Jan. 19, 2023	Jun. 30, 2023	Dec. 31, 2022
Shares Underlying Warrants
Outstanding, beginning of period				445,409
Issued				942,000
Outstanding, end of period				1,387,409	445,409
Exercisable, end of period				1,275,409
Weighted Average Exercise Price
Outstanding, beginning of period				$ 4.47
Issued				3.27
Outstanding, end of period				3.66	$ 4.47
Exercisable, end of period				$ 3.67
Weighted Average Remaining Contractual Term (Years)
Outstanding, Weighted Average Remaining Contractual Term				3 years 8 months 12 days	3 years 10 months 24 days
Exercisable, Weighted Average Remaining Contractual Term				4 years 8 months 12 days
Warrants issued in January 2023 related to the IPO
Shares Underlying Warrants
Issued			30,000
Weighted Average Exercise Price
Issued			$ 3.00
Weighted Average Remaining Contractual Term (Years)
Term of warrants			5 years
Warrants related to the 2023 Note
Shares Underlying Warrants
Issued		800,000
Weighted Average Exercise Price
Issued		$ 3.25
Warrants issued in March 2023 related to IPO
Shares Underlying Warrants
Issued	112,000
Weighted Average Exercise Price
Issued	$ 3.50
Weighted Average Remaining Contractual Term (Years)
Term of warrants	5 years

XML

Preferred and common stock (Details) - USD ($)		3 Months Ended	6 Months Ended	12 Months Ended
	Nov. 17, 2022	Jun. 30, 2023	Jun. 30, 2023	Dec. 31, 2022
Preferred and common stock
Restricted stock, shares withheld for tax withholdings			28,500
Restricted stock, value of shares withheld for tax withholdings			$ 50,000.00
Value of shares issued in settlement of shares settled liability		$ 34,500	$ 160,949
Equity Purchase Agreement with Lincoln Park Capital Fund, LLC
Preferred and common stock
Value of shares authorized for issuance under the terms of an equity purchase agreement	$ 20,000,000.0
Term of agreement	30 months
Number of common stock shares issued in connection with an equity purchase agreement			2,600,000
Net proceeds from the issuance of common stock in connection with an equity purchase agreement			$ 4,600,000
Shares settled liability
Preferred and common stock
Shares issued in settlement of shares settled liability			31,014
Value of shares issued in settlement of shares settled liability				$ 161,000
Series X Preferred Stock
Preferred and common stock
Number of shares issued		0	0
Preferred stock outstanding		45,567	45,567	45,567
Common Stock
Preferred and common stock
Number of common stock shares issued in connection with an equity purchase agreement		1,380,000	2,580,000
Shares issued in connection with vesting of RSUs			722,871
Shares issued in settlement of shares settled liability		7,206	31,014
Value of shares issued in settlement of shares settled liability		$ 1	$ 3

XML

Commitments and contingencies (Details) - USD ($)	Jun. 30, 2023	Jun. 30, 2022
Commitments and contingencies
Litigation reserve	$ 0	$ 0

XML

Related party transactions (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Related party transactions
Allocated expenses	$ 2,768,910	$ 775,963	$ 6,583,094	$ 1,709,780
Related party
Related party transactions
Accounts payable	0	163,000	0	163,000	$ 20,000
Related party | Polo Mar
Related party transactions
Prepaid expense	100,000		100,000
Directors
Related party transactions
Accounts payable		43,000		43,000
Management fees | Affiliated Entity | Tardimed
Related party transactions
Allocated expenses	$ 60,000	60,000	$ 120,000	120,000
Accounts payable		$ 120,000		$ 120,000

XML

Subsequent events (Details) - USD ($) shares in Millions	1 Months Ended	6 Months Ended
	Aug. 09, 2023	Jun. 30, 2023
Subsequent events
Cash payment, convertible promissory note		$ 237,600
Equity Purchase Agreement with Lincoln Park Capital Fund, LLC
Subsequent events
Net proceeds from the issuance of common stock in connection with an equity purchase agreement		$ 4,600,000
Number of common stock shares issued in connection with an equity purchase agreement		2.6
Subsequent Event | Equity Purchase Agreement with Lincoln Park Capital Fund, LLC
Subsequent events
Net proceeds from the issuance of common stock in connection with an equity purchase agreement	$ 800,000
Number of common stock shares issued in connection with an equity purchase agreement	1.0
Subsequent Event | 2023 Note
Subsequent events
Cash payment, convertible promissory note	$ 300,000

XML

Pay vs Performance Disclosure - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Pay vs Performance Disclosure
Net Income (Loss)	$ (3,486,287)	$ 19,032	$ (7,320,034)	$ 1,882,494

XML

Insider Trading Arrangements	3 Months Ended
	Jun. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false