Business

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Business

2. Business

The mission of the Company is to develop innovative and revolutionary treatments to combat disorders caused by disruption of neuronal signaling. We are developing treatment options that address conditions affecting millions of people, but for which there are limited or poor treatment options, including OSA, attention deficit hyperactivity disorder (“ADHD”), epilepsy, acute and chronic pain, including inflammatory and neuropathic pain, recovery from spinal cord injury (“SCI”) and certain orphan disorders. We are also considering developing treatment options for other conditions based on results of preclinical and clinical studies to date. To achieve these goals, the Company has determined that some or all of these opportunities should be contributed to what could be, wholly-owned subsidiaries, joint ventures, licenses or sub-licenses, or even sold and has initiated efforts to do so.

In order to facilitate our business activities and product development and to set up our programs for development by subsidiaries, partnering or sale, we have implemented an internal restructuring plan based upon our two research platforms: pharmaceutical cannabinoids and neuromodulators. As of January 11, 2023, RespireRx had formed ResolutionRx, initially a wholly-owned subsidiary focused on pharmaceutical cannabinoids and previously, EndeavourRx, as a business unit focused on our neuromodulators. The Company will use, at least initially, its management personnel to provide management, research and development, operational and oversight services to these two lines of business.

(i) ResolutionRx, our pharmaceutical cannabinoids subsidiary is developing compounds that target the body’s endocannabinoid system, and in particular, the re-purposing of dronabinol, an endocannabinoid CB1 and CB2 receptor agonist, for the treatment of OSA. Dronabinol is already approved by the FDA for other indications.

(ii) EndeavourRx, our neuromodulators platform is made up of two programs: (a) our AMPAkines program, which is developing proprietary compounds that act as positive allosteric modulators (“PAMs”) of AMPA-type glutamate receptors to promote neuronal function and (b) our GABAkines program, which is developing proprietary compounds that act as PAMs of GABA_A receptors, and which was established pursuant to our entry into a patent license agreement (the “UWMRF Patent License Agreement”) with the University of Wisconsin-Milwaukee Research Foundation, Inc., an affiliate of the University of Wisconsin-Milwaukee (“UWMRF”).

Like ResolutionRx, which as of January 11, 2023, was organized as a wholly-owned subsidiary, of RespireRx, management also intends to organize our EndeavourRx business unit, in part or in whole, into one or more subsidiaries that would conduct research and development of our neuromodulator platform, including either or both of the AMPAkine and GABAkine programs and their related tangible and intangible assets and certain of their liabilities.

The Company’s business development efforts (licensing, sub-licensing, joint venture and other commercial structures), if successful, would represent strategic and operational infrastructure additions, as well as cash and in-kind funding opportunities. These efforts have focused on, but have not been limited to, seeking transactions with brand and generic pharmaceutical and biopharmaceutical companies as well as companies with potentially useful clinical development, formulation or manufacturing capabilities, significant subject matter expertise and financial resources. No assurance can be given that any transaction will come to fruition and that, if it does, the terms will be favorable to the Company.

Financing our Platforms

Our major challenge has been to raise substantial equity or equity-linked financing to support research and development plans for our cannabinoid and neuromodulator platforms, while minimizing the dilutive effect to pre-existing stockholders. At present, we believe that we are hindered primarily by our public corporate structure, our OTC Pink Market listing and our low market capitalization as a result of our low stock price as well as the weakness of our balance sheet.

For this reason, the Company has affected an internal restructuring plan described above that we believe will further the aims of RespireRx, ResolutionRx and EndeavourRx, and may make it possible, through separate finance channels, to unlock the unrealized asset values of each and set up its programs for partnering or sale.

The Company is also engaged in business development efforts (licensing/sublicensing, joint venture and other commercial structures) with a view to securing strategic partnerships that represent strategic and operational infrastructure additions, as well as cash and in-kind funding opportunities. We believe that some or all of our assets should be licensed, sublicensed, joint ventured or even sold and have initiated efforts to do so. No assurance can be given that any transaction will come to fruition and that if it does, that the terms will be favorable to the Company.

On May 18, 2023, ResolutionRx entered into a Letter of Intent with Cantheon Capital (“Cantheon” and “Cantheon LOI”) that describes an intended investment of US$3,125,000 by Cantheon in Australian Series A Preference Shares to be issued by ResolutionRx to support clinical trial research and development over the R&D period equal to 25% of the clinical trial costs of the cannabinoid program that are the subject of the Australian CRO Agreement with iNGENu.

On May 11, 2023, RespireRx entered into a Letter Agreement (“Letter Agreement”) with Viridian Capital Advisors (“VCA”) pursuant to which, VCA would perform the following services (“Valuation Services”): (i) review the Company’s intellectual property assets and licensing agreements as they relate to Company’s cannabinoid program, net of any associated liabilities, (ii) review the Company’s financial models and forecasts as they relate to the Company’s cannabinoid program and (iii) prepare the data, analytics and Company valuation analysis (“Valuation Analysis”) specifically with respect to the Company’s cannabinoid program. The Letter Agreement became effective on May 22, 2023. The Company entered this Letter Agreement as part of the process that began with the establishment of ResolutionRx, into which the net assets of the Company’s cannabinoid program have been contributed via license and sublicense in exchange for 25,000,000 Ordinary Shares of ResolutionRx, all as of August 3, 2023. RespireRx received the final Valuation Analysis on August 7, 2023. See Note 9. Subsequent Events.

On August 3, 2023, Respirerx entered into a License Agreement with ResolutionRx See Note 9. Subsequent Events - Entry into License Agreement with ResolutionRx Ltd

On August 3, 2023, RespireRx entered into a Sublicense Agreement with ResolutionRx - See Note 9. Subsequent Events - Entry into Sublicense Agreement with ResolutionRx Ltd

On August 3, 2023, RespireRx entered into a Stock Transfer Agreement with ResolutionRx - See Note 9. Subsequent Events – Entry into Stock Transfer Agreement with ResolutionRx Ltd

On August 3, 2023, RespireRx entered into a Master Intercompany Services Agreement with ResolutionRx - See Note 9. Subsequent Events – Entry into Master Intercompany Services Agreement with ResolutionRx Ltd

Going Concern

The Company’s condensed consolidated financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has incurred net losses and net losses attributable to common stockholders of $681,030 and $691,791 for the three-months ended June 30, 2023, respectively, and net losses and net losses attributable to common stockholders of $1,111,093 and $1,121,854 for the and six-months ended June 30, 2023, respectively. The 2023 net losses attributable to common stockholders was after accounting for dividends on the Series I Preferred Stock and Series J Preferred Stock. The Company incurred a net a loss of $480,288 and $1,340,451 for the three-months and six-months ended June 30, 2022, respectively and a net loss attributable to common stockholders of $832,026 and $1,692,189 for the three-months and six-months ended June 30, 2022 after accounting for deemed dividends associated with most-favored nation provisions of convertible notes, and a total net loss of $3,972,993 for the fiscal year ended December 31, 2022, as well as negative operating cash flows of $157,767 for the six-months ended June 30, 2023 and $143,905 for the fiscal year ended December 31, 2022. The Company also had a stockholders’ deficiency of $12,142,352 at June 30, 2023 and expects to continue to incur net losses and negative operating cash flows for at least the next few years. Additionally, as of June 30, 2023, the Company has, with respect to fourteen similar convertible notes outstanding after eight partial conversions of principal or interest during the three-months and six-months ended June 30, 2023, $1,289,854 maturity amount inclusive of accrued interest which have matured, but for which no notices of default have been received, which must be paid or converted. See Note 4. Notes Payable. The Company will seek to have maturity dates extended in order to avoid a default on such convertible notes, which the Company has achieved in the past, but with respect to which, the Company can provide no assurance. The Company has also not met its payment obligations to the UWM Research Foundation (“UWMRF”) of the University of Wisconsin-Milwaukee but has not received a notice of default and is in regular communication with the UWMRF regarding the establishment of a payment schedule. As a result, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern, and the Company’s independent registered public accounting firm, in its report on the Company’s consolidated financial statements for the year ended December 31, 2022, expressed substantial doubt about the Company’s ability to continue as a going concern.

The Company is currently, and has for some time, been in significant financial distress. It has extremely limited cash resources and current assets and has no ongoing source of sustainable revenue. Management is continuing to address various aspects of the Company’s operations and obligations, including, without limitation, debt obligations, financing requirements, intellectual property, licensing agreements, legal and patent matters and regulatory compliance, and has taken steps to continue to raise new debt and equity capital to fund the Company’s business activities from both related and unrelated parties.

The Company is continuing its efforts to raise additional capital in order to be able to pay its liabilities and fund its business activities on a going forward basis, including the pursuit of the Company’s planned research and development activities. The Company regularly evaluates various measures to satisfy the Company’s liquidity needs, including development and other agreements with collaborative partners and, when necessary, seeking to exchange or restructure the Company’s outstanding securities and liabilities. The Company is evaluating certain changes to its operations and structure to facilitate raising capital from sources that may be interested in financing only discrete aspects of the Company’s development programs and, in that regard, has formed an Australian subsidiary, ResolutionRx. In addition to the formation of ResolutionRx, such changes could include additional significant reorganizations, which may include the formation of one or more additional subsidiaries into which one or more programs may be contributed. As a result of the Company’s current financial situation, the Company has limited access to external sources of debt and equity financing. Accordingly, there can be no assurances that the Company will be able to secure additional financing in the amounts necessary to fully fund its operating and debt service requirements. If the Company is unable to access sufficient cash resources, the Company may be forced to discontinue its operations entirely and liquidate.