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What changed in Silo Pharma, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Silo Pharma, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+229 added−194 removedSource: 10-K (2024-03-25) vs 10-K (2023-03-24)

Top changes in Silo Pharma, Inc.'s 2023 10-K

229 paragraphs added · 194 removed · 122 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

32 edited+35 added−15 removed90 unchanged
Biggest changeOn April 6, 2021 (“Effective Date”), we entered into a sublicense agreement (the “Sublicense Agreement”) with Aikido pursuant to which we granted Aikido an exclusive worldwide sublicense to (i) make, have made, use, sell, offer to sell and import the Licensed Products (as defined below) and (ii) in connection therewith to (A) use the Invention that was sublicensed to us pursuant to the UMB License Agreement and (B) practice certain patent rights as set forth in the Sublicense Agreement (the “Patent Rights”) for the therapeutic treatment of neuroinflammatory disease in cancer patients.
Biggest changeSPU-16 On February 12, 2021, we entered into a Master License Agreement (the “UMB License Agreement”) with the University of Maryland, Baltimore (“UMB”) pursuant to which UMB granted us an exclusive, worldwide, sublicensable, royalty-bearing license to certain intellectual property (i) to make, have made, use, sell, offer to sell, and import certain licensed products and (ii) to use the invention titled “Central nervous system-homing peptides in vivo and their use for the investigation and treatment of multiple sclerosis and other neuroinflammatory pathology,” or SPU-16.
The License Agreement also granted the Company an exclusive option to negotiate and obtain an exclusive, sublicensable, royalty-bearing license (“Exclusive Option”) to with respect to the subject technology. The License Agreement had a term of six months from the effective date. Both parties could have terminated the License Agreement within thirty days by giving a written notice.
The License Agreement also granted the Company an exclusive option to negotiate and obtain an exclusive, sublicensable, royalty-bearing license (“Exclusive Option”) with respect to the subject technology. The License Agreement had a term of six months from the effective date. Both parties could have terminated the License Agreement within thirty days by giving a written notice.
At March 31, 2017, we failed the diversification test since our investment in Ipsidy Inc. accounted for over 25% of our total assets. We did not cure our failure to retain our status as a RIC and we will not seek to obtain RIC status again. Accordingly, beginning in 2017, we became subject to income taxes at corporate tax rates.
On March 31, 2017, we failed the diversification test since our investment in Ipsidy Inc. accounted for over 25% of our total assets. We did not cure our failure to retain our status as a RIC and we will not seek to obtain RIC status again. Accordingly, beginning in 2017, we became subject to income taxes at corporate tax rates.
Rare Disease Therapeutics We seek to acquire and/or develop intellectual property or technology rights from leading universities and researchers to treat rare diseases, including the use of psychedelic drugs, such as psilocybin, and the potential benefits they may have in certain cases involving depression, mental health issues and neurological disorders.
Rare Disease Therapeutics We seek to acquire and/or develop intellectual property or technology rights from leading universities and researchers to treat rare diseases, including the use of psychedelic drugs, such as psilocybin, ketamine, and the potential benefits they may have in certain cases involving depression, mental health issues and neurological disorders.
The process of obtaining regulatory approvals of drugs and ensuring subsequent compliance with appropriate federal, state, local and foreign statutes and regulations requires the expenditure of substantial time and financial resources. In the United States, the US Food and Drug Administration (FDA) regulates drug products under the Federal Food, Drug, and Cosmetic Act (FDCA), its implementing regulations and other laws.
The process of obtaining regulatory approvals of drugs and ensuring subsequent compliance with appropriate federal, state, local and foreign statutes and regulations requires the expenditure of substantial time and financial resources. 6 In the United States, the US Food and Drug Administration (FDA) regulates drug products under the Federal Food, Drug, and Cosmetic Act (FDCA), its implementing regulations and other laws.
Facilities that manufacture, distribute, import or export any controlled substance must register annually with the DEA. The DEA registration is specific to the particular location, activity(ies) and controlled substance schedule(s). The DEA inspects all manufacturing facilities to review security, recordkeeping, reporting and handling prior to issuing a controlled substance registration.
Facilities that manufacture, distribute, import or export any controlled substance must register annually with the DEA. The DEA registration is specific to the particular location, activity(ies) and controlled substance schedule(s). 7 The DEA inspects all manufacturing facilities to review security, recordkeeping, reporting and handling prior to issuing a controlled substance registration.
Additionally, the SEC maintains an internet site that contains reports, proxy and information statements and other information. The address of the SEC’s website is www.sec.gov . The information contained in the SEC’s website is not intended to be a part of this filing.
Additionally, the SEC maintains an internet site that contains reports, proxy and information statements and other information. The address of the SEC’s website is www.sec.gov . The information contained in the SEC’s website is not intended to be a part of this filing. 9
The Company paid the first payment of $430,825 in November 2021 and the second payment of $430,825 in July 2022. 3 Sponsored Research Agreement with University of Maryland, Baltimore for the Study of Targeted liposomal drug delivery for rheumatoid arthritis On July 6, 2021, we entered into a sponsored research agreement (the “July 2021 Sponsored Research Agreement”) with UMB pursuant to which UMB shall evaluate the pharmacokinetics of dexamethasone delivered to arthritic rats via liposome.
The Company paid the first payment of $430,825 in November 2021 and the second payment of $430,825 in July 2022. 4 Sponsored Research Agreement with University of Maryland, Baltimore for the Study of Targeted liposomal drug delivery for rheumatoid arthritis On July 6, 2021, we entered into a sponsored research agreement (the “July 2021 Sponsored Research Agreement”) with UMB pursuant to which UMB shall evaluate the pharmacokinetics of dexamethasone delivered to arthritic rats via liposome.
The purpose of this is to show what effect psilocybin has on inflammation in the blood. The Company believe that this study will help support the UMB homing peptide study. Pursuant to the Agreement, we shall pay UCSF a total fee of $342,850 to conduct the research over the two-year period.
The purpose of this is to show what effect psilocybin has on inflammation in the blood. The Company believes that this study will help support the UMB homing peptide study. Pursuant to the Agreement, we shall pay UCSF a total fee of $342,850 to conduct the research over the two-year period.
In addition, the presentation of the financial statements are that of a commercial company rather than that of an investment company. In accordance with ASC 946, we made this change to our financial reporting prospectively, and did not restate periods prior to our change in status to a non-investment company effective September 29, 2018.
In addition, the presentation of the financial statements is that of a commercial company rather than that of an investment company. In accordance with ASC 946, we made this change to our financial reporting prospectively, and did not restate periods prior to our change in status to a non-investment company effective September 29, 2018.
The process required by the FDA before any product candidates are approved as drugs for therapeutic indications and may be marketed in the United States generally involves the following: ● Completion of extensive preclinical studies in accordance with applicable regulations, including studies conducted in accordance with good laboratory practice requirements; ● Completion of the manufacture, under current good manufacturing practice (cGMP) requirements, of the drug substance and drug product that the sponsor intends to use in human clinical trials along with required analytical and stability testing; ● Submission to the FDA of an investigational new drug application (“IND”) which must become effective before clinical trials may begin; ● Approval by an institutional review board or independent ethics committee at each clinical trial site before each trial may be initiated; ● Performance of adequate and well-controlled clinical trials in accordance with applicable IND regulations, good clinical practice (GCP) requirements and other clinical trial-related regulations to establish the safety and efficacy of the investigational product for each proposed indication; ● Submission to the FDA of a New Drug Application (“NDA”); ● Payment of user fees for FDA review of the NDA; ● A determination by the FDA within 60 days of its receipt of an NDA, to accept the filing for review; ● Satisfactory completion of one or more FDA pre-approval inspections of the manufacturing facility or facilities where the drug will be produced to assess compliance with cGMP requirements to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; ● Potentially, satisfactory completion of FDA audit of the clinical trial sites that generated the data in support of the NDA; and ● FDA review and approval of the NDA, including consideration of the views of any FDA advisory committee, prior to any commercial marketing or sale of the drug in the United States. 7 Controlled Substances The federal Controlled Substances Act (CSA) and its implementing regulations establish a “closed system” of regulations for controlled substances.
The process required by the FDA before any product candidates are approved as drugs for therapeutic indications and may be marketed in the United States generally involves the following: ● Completion of extensive preclinical studies in accordance with applicable regulations, including studies conducted in accordance with good laboratory practice requirements; ● Completion of the manufacture, under current good manufacturing practice (cGMP) requirements, of the drug substance and drug product that the sponsor intends to use in human clinical trials along with required analytical and stability testing; ● Submission to the FDA of an investigational new drug application (“IND”) which must become effective before clinical trials may begin; ● Approval by an institutional review board or independent ethics committee at each clinical trial site before each trial may be initiated; ● Performance of adequate and well-controlled clinical trials in accordance with applicable IND regulations, good clinical practice (GCP) requirements and other clinical trial-related regulations to establish the safety and efficacy of the investigational product for each proposed indication; ● Submission to the FDA of a New Drug Application (“NDA”); ● Payment of user fees for FDA review of the NDA; ● A determination by the FDA within 60 days of its receipt of an NDA, to accept the filing for review; ● Satisfactory completion of one or more FDA pre-approval inspections of the manufacturing facility or facilities where the drug will be produced to assess compliance with cGMP requirements to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; ● Potentially, satisfactory completion of FDA audit of the clinical trial sites that generated the data in support of the NDA; and ● FDA review and approval of the NDA, including consideration of the views of any FDA advisory committee, prior to any commercial marketing or sale of the drug in the United States.
In certain circumstances, violations could lead to criminal prosecution. 8 Employees As of March 23, 2023, we employed a total of three full-time employees. We are not a party to any collective bargaining agreements. We believe that we maintain good relations with our employees. Corporate History We were incorporated as Gold Swap, Inc.
In certain circumstances, violations could lead to criminal prosecution. Employees As of March 23, 2024, we employed a total of three full-time employees. We are not a party to any collective bargaining agreements. We believe that we maintain good relations with our employees. Corporate History We were incorporated as Gold Swap, Inc.
The loss of our status as a RIC did not have any impact on our financial position or results of operations. 9 Currently, we are not making any new equity investments.
The loss of our status as an RIC did not have any impact on our financial position or results of operations. Currently, we are not making any new equity investments.
In addition, the parties agreed in the Fourth Amendment to allow the Company to extend the term of the License Agreement to June 30, 2023 by paying UMB a fee of $1,000 on or before February 28, 2023.
In addition, the parties agreed in the Fourth Amendment to allow the Company to extend the term of the License Agreement to June 30, 2023 by paying UMB a fee of $1,000 on or before February 28, 2023. This fee was paid and thus the term of the License Agreement was extended to June 30, 2023.
Investigator-Sponsored Study Agreement with UMB for CNS Homing Peptide On January 5, 2021, we entered into an investigator-sponsored study agreement with UMB. The research project is a clinical study to examine a novel peptide-guided drug delivery approach for the treatment of Multiple Sclerosis (“MS”).
We have notified UCSF we do not plan to continue this study. Investigator-Sponsored Study Agreement with UMB for CNS Homing Peptide On January 5, 2021, we entered into an investigator-sponsored study agreement with UMB. The research project is a clinical study to examine a novel peptide-guided drug delivery approach for the treatment of Multiple Sclerosis (“MS”).
We plan to actively pursue the acquisition and/or development of intellectual property or technology rights to treat rare diseases, and to ultimately expand our business to focus on this new line of business. 1 License Agreements between the Company and Vendor Vendor License Agreement with the University of Maryland, Baltimore for CNS Homing Peptide On February 12, 2021, we entered into a Master License Agreement (the “UMB License Agreement”) with the University of Maryland, Baltimore (“UMB”) pursuant to which UMB granted us an exclusive, worldwide, sublicensable, royalty-bearing license to certain intellectual property (i) to make, have made, use, sell, offer to sell, and import certain licensed products and (ii) to use the invention titled, “Central nervous system-homing peptides in vivo and their use for the investigation and treatment of multiple sclerosis and other neuroinflammatory pathology” (the “Invention”) and UMB’s confidential information to develop and perform certain licensed processes for the therapeutic treatment of neuroinflammatory disease.
License Agreements between the Company and Vendor Vendor License Agreement with the University of Maryland, Baltimore for CNS Homing Peptide On February 12, 2021, we entered into a Master License Agreement (the “UMB License Agreement”) with the University of Maryland, Baltimore (“UMB”) pursuant to which UMB granted us an exclusive, worldwide, sublicensable, royalty-bearing license to certain intellectual property (i) to make, have made, use, sell, offer to sell, and import certain licensed products and (ii) to use the invention titled, “Central nervous system-homing peptides in vivo and their use for the investigation and treatment of multiple sclerosis and other neuroinflammatory pathology” (the “Invention”) and UMB’s confidential information to develop and perform certain licensed processes for the therapeutic treatment of neuroinflammatory disease.
An increasing number of companies are increasing their efforts in discovery of new psychedelic compounds. 6 Government Regulation The FDA and other regulatory authorities at federal, state and local levels, as well as in foreign countries, extensively regulate, among other things, the research, development, testing, manufacture, quality control, import, export, safety, effectiveness, labeling, packaging, storage, distribution, recordkeeping, approval, advertising, promotion, marketing, post-approval monitoring and post-approval reporting of drugs.
Government Regulation The FDA and other regulatory authorities at federal, state and local levels, as well as in foreign countries, extensively regulate, among other things, the research, development, testing, manufacture, quality control, import, export, safety, effectiveness, labeling, packaging, storage, distribution, recordkeeping, approval, advertising, promotion, marketing, post-approval monitoring and post-approval reporting of drugs.
On June 22, 2022, the Company and UMB entered into a third amendment to the License Agreement dated February 26, 2021 under which UMB agreed, to expand the scope of the license granted in the CELA to add additional Patent Rights with respect to an invention generally known as “Peptide-Targeted Liposomal Delivery for Treatment Diagnosis, and Imaging of Diseases and Disorders.” On December 16, 2022, the Company and UMB entered into a fourth amendment to License Agreement (the “Fourth Amendment”) dated February 26, 2021 to extend the term of the License Agreement until March 31, 2023.
However, if the Company exercises the Exclusive Option, the License Agreement shall expire at the end of the negotiation period (as defined in the License Agreement) or upon execution of a master license agreement, whichever occurs first. 3 On June 22, 2022, the Company and UMB entered into a third amendment to the License Agreement dated February 26, 2021 under which UMB agreed, to expand the scope of the license granted in the CELA to add additional Patent Rights with respect to an invention generally known as “Peptide-Targeted Liposomal Delivery for Treatment Diagnosis, and Imaging of Diseases and Disorders.” On December 16, 2022, the Company and UMB entered into a fourth amendment to License Agreement (the “Fourth Amendment”) dated February 26, 2021 to extend the term of the License Agreement until March 31, 2023.
Psilocybin is considered a serotonergic hallucinogen and is an active ingredient in some species of mushrooms. Recent industry studies using psychedelics, such as psilocybin, have been promising, and we believe there is a large unmet need with many people suffering from depression, mental health issues and neurological disorders.
Recent industry studies using psychedelics, such as psilocybin, have been promising, and we believe there is a large unmet need with many people suffering from depression, mental health issues and neurological disorders.
To date, we filed three pending U.S. patent applications, one pending PCT application and one pending provisions application related to the use of the central nervous system-homing peptides covered by the UMB Option Agreement to deliver certain compounds, including a nonsteroidal anti-inflammatory drug and/or psilocybin, for the treatment of arthritis, central nervous system diseases, neurological diseases as well as cancer.
Our owned intellectual property includes six pending U.S. patent applications related to the use of the central nervous system-homing peptides covered by the UMB License Agreement to deliver certain compounds, including a nonsteroidal anti-inflammatory drug and/or psilocybin, for the treatment of arthritis, central nervous system diseases, neurological diseases as well as cancer.
In addition, many competitors have greater name recognition and more extensive collaborative relationships. Smaller and earlier-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies.
In addition, many competitors have greater name recognition and more extensive collaborative relationships. Smaller and earlier-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies. An increasing number of companies are increasing their efforts in the discovery of new psychedelic compounds.
As a result, the total issued and outstanding number of our common stock was reduced by 28,734,901 shares. On April 8, 2020, we incorporated a wholly-owned subsidiary, Silo Pharma Inc., in the State of Florida. Our Corporate Information We were incorporated as in the State of New York on July 13, 2010.
As a result, the total issued and outstanding number of our common stock was reduced by 28,734,901 shares. On April 8, 2020, we incorporated a wholly-owned subsidiary, Silo Pharma Inc., in the State of Florida. On December 19, 2023, we changed our state of incorporation from Delaware to Nevada.
In order to maintain our status as a non-investment company, we will continue to operate so as to fall outside the definition of an “investment company” or within an applicable exception. We expect to continue to operate outside the definition of an “investment company” as a developmental stage company primarily engaged in merging traditional therapeutics with psychedelic research.
We expect to continue to operate outside the definition of an “investment company” as a developmental stage company primarily engaged in merging traditional therapeutics with psychedelic research.
In addition, we have established business procedures designed to maintain the confidentiality of our proprietary information, including the use of confidentiality agreements with employees, independent contractors, consultants and entities with which we conduct business.
In addition, we have established business procedures designed to maintain the confidentiality of our proprietary information, including the use of confidentiality agreements with employees, independent contractors, consultants and entities with which we conduct business. To date, our owned and licensed intellectual property includes 4 issued patents and 19 pending patent applications in the U.S. and abroad.
We determined that there is no cumulative effect of the change from Investment Company Accounting to Corporation Accounting on periods prior to those presented, and that there is no effect on our financial position or results of operations as a result of this change.
We determined that there is no cumulative effect of the change from Investment Company Accounting to Corporation Accounting on periods prior to those presented, and that there is no effect on our financial position or results of operations as a result of this change. 8 In order to maintain our status as a non-investment company, we will continue to operate so as to fall outside the definition of an “investment company” or within an applicable exception.
The CSA imposes registration, security, recordkeeping and reporting, storage, manufacturing, distribution, importation and other requirements under the oversight of the DEA.
Controlled Substances The federal Controlled Substances Act (CSA) and its implementing regulations establish a “closed system” of regulations for controlled substances. The CSA imposes registration, security, recordkeeping and reporting, storage, manufacturing, distribution, importation and other requirements under the oversight of the DEA.
If the Company elects to exercise the option, both parties will commence negotiation of a license agreement and will execute a license agreement no later than 3 months after the dated of the exercise of the option. Columbia University and the Company will work towards developing a therapeutic treatment for patients suffering from Alzheimer’s disease to posttraumatic stress disorder.
If the Company elects to exercise the option, both parties will commence negotiation of a license agreement and will execute a license agreement no later than 3 months after the date of the exercise of the option.
This fee was paid and thus the term of the License Agreement was extended to June 30, 2023. 2 Joint Venture Agreement with Zylö Therapeutics, Inc. for Z-pod™ Technology On April 22, 2021, the Company entered into a Joint Venture Agreement with Zylö Therapeutics, Inc.
We let this license expire by its terms on December 31, 2023. Joint Venture Agreement with Zylö Therapeutics, Inc. for Z-pod™ Technology On April 22, 2021, the Company entered into a Joint Venture Agreement with Zylö Therapeutics, Inc.
In addition, as more fully described below, we have entered into a license agreement with the University of Maryland, Baltimore, and have entered into a joint venture with Zylö Therapeutics, Inc., with respect to certain intellectual property and technology that may be used for targeted delivery of potential novel treatments.
In addition, as more fully described below, we have entered into a license agreement with the University of Maryland, Baltimore, and are developing a Ketamine polymer implant.
The Company collected the upfront license fee of $50,000 in April 2021. COVID-19 The outbreak of the novel Coronavirus (COVID-19) evolved into a global pandemic. The Coronavirus has spread to many regions of the world.
This project has been postponed until further notice and the second payment is not due. COVID-19 The outbreak of the novel Coronavirus (COVID-19) evolved into a global pandemic. The Coronavirus has spread to many regions of the world.
We are focused on merging traditional therapeutics with psychedelic research for people suffering from indications such as depression, post-traumatic stress disorder (“PTSD”), Parkinson’s, and other rare neurological disorders. Our mission is to identify assets to license and fund the research which we believe will be transformative to the well-being of patients and the health care industry.
We are focused on developing traditional therapeutics and psychedelic medicine. The company concentrates on the development and commercialization of therapies for unmet needs from indications such as depression, post-traumatic stress disorder (“PTSD”), and other rare neurological disorders.
On January 24, 2013, the Company changed its state of incorporation from New York to Delaware. Our principal executive offices are located at 560 Sylvan Avenue, Suite 3160, Englewood Cliffs, NJ 07632 and our telephone number is (718) 400-9031. Available Information Our website address is www.silopharma.com .
Our principal executive offices are located at 677 N Washington Blvd Sarasota Fl 34236 and our telephone number is (718) 400-9031. Available Information Our website address is www.silopharma.com .
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ITEM 1. BUSINESS Overview We are a developmental stage biopharmaceutical company focused on merging traditional therapeutics with psychedelic research. We are committed to developing innovative solutions to address a variety of underserved conditions. In these uncertain times, the mental health of the nation and beyond is being put to the test.
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ITEM 1. BUSINESS Overview We are a developmental stage biopharmaceutical company developing novel therapeutics that address underserved conditions including PTSD, stress-induced anxiety disorders, fibromyalgia, and central nervous system (CNS) diseases. We are focused on developing novel therapies that include conventional drugs and psychedelic formulations. The Company’s lead program, SPC-15, is an intranasal drug targeting PTSD and stress-induced anxiety disorders.
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More than ever, creative new therapies are needed to address the health challenges of today. Combining our resources with world-class medical research partners, we hope to make significant advances in the medical and psychedelic space.
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SP-26 is a time-release ketamine-based loaded implant for fibromyalgia and chronic pain relief. Silo’s two preclinical programs are SPC-14, an intranasal compound for the treatment of Alzheimer’s disease, and SPU-16, a CNS-homing peptide targeting the central nervous system with initial research indication in multiple sclerosis (MS).
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However, if the Company exercises the Exclusive Option, the License Agreement shall expire at the end of the negotiation period (as defined in the License Agreement) or upon execution of a master license agreement, whichever occurs first.
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Our mission is to identify assets to license and fund the research which we believe will be transformative to the well-being of patients and the health care industry. Psilocybin is considered a serotonergic hallucinogen and is an active ingredient in some species of mushrooms.
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This project was postponed until further notice and the second payment is not due. Investigator-Sponsored Study Agreement with Maastricht University of the Netherlands On November 1, 2020, we entered into an investigator-sponsored study agreement with Maastricht University of the Netherlands.
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We plan to actively pursue the acquisition and/or development of intellectual property or technology rights to treat rare diseases, and to ultimately expand our business to focus on this new line of business.
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The research project is a clinical study to examine the effects of repeated low doses of psilocybin and lysergic acid diethylamide on cognitive and emotional dysfunctions in Parkinson’s disease and to understand its mechanism of action. The agreement shall terminate on October 31, 2024, unless earlier terminated pursuant to the terms thereof.
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Product Candidates We are currently focusing on four product candidates: (i) SPC-15 for treatment of depression disorders; (ii) SP-26 for treatments of chronic pain; (iii)SPC-14 for the treatment of Alzheimer’s disease and (iv) SPU-16 for the treatment of CNS disorders with an initial indication for multiple sclerosis.
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We shall pay a total fee of 433,885 Euros ($507,602 USD) exclusive of value added tax based on a payment schedule set forth in the agreement. In December 2020, the Company paid the first payment of $101,520. In September 2021, we notified Maastricht University of Netherlands for an early termination of this agreement.
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SPC-15 On October 1, 2021, the Company entered into a sponsored research agreement with Columbia University pursuant to which the Company has been granted an option to license certain assets currently under development, including assets related to SPC-15 for the treatment of depression disorders.
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Maastricht University of Netherlands has not reached the second phase which is to obtain approval from ethical committee. We have no further obligation after the termination. 4 Other License Agreements between the Company and a Customer Customer Patent License Agreement with Aikido Pharma Inc.
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On September 22, 2022, we entered into a First Amendment to Sponsored Research Agreement with Columbia to extend the term of the Columbia Agreement to conduct further research studies, which extension runs through March 31, 2024.
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On January 5, 2021, we entered into a Patent License Agreement (the “Aikido License Agreement”) with our wholly-owned subsidiary, Silo Pharma, Inc., and Aikido Pharma Inc.
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On April 11, 2023, the assets under development for which we have the option to license as described above were issued a patent from the U.S. Patent & Trademark Office (USPTO) for “Biomarkers for Efficacy of Prophylactic Treatments Against Stress-Induced Affective Disorders” (US 11,622,948, B2).
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(“Aikido”) pursuant to which we granted Aikido an exclusive, worldwide, sublicensable, royalty-bearing license to certain intellectual property (i) to make, have made, use, provide, import, export, lease, distribute, sell, offer for sale, develop and advertise certain licensed products and (ii) to develop and perform certain licensed processes for the treatment of cancer and symptoms caused by cancer.
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The Company exercised its option for an exclusive license agreement for SPC-15, a prophylactic treatment for stress-induced affective disorders including anxiety and PTSD pursuant to which the Company will be granted an exclusive license to further develop, manufacture, and commercialize SPC-15 worldwide.
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The Aikido License Agreement relates to the rights which we had obtained under the UMB Option Agreement. Pursuant to the Aikido License Agreement, we agreed that if we exercised the UMB Option, we would grant Aikido a non-exclusive sublicense to certain UMB patent rights in the field of neuroinflammatory diseases occurring in patients diagnosed with cancer.
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The Company expects to have the complete license agreement with Columbia completed in the first half of 2024. 1 SPC-15 is a targeted prophylactic therapeutic composition for the treatment and prevention for stress-induced affective disorders including PTSD. The treatment predicts levels of severity or progression of such disorders and their metabolomic biomarkers’ response to pharmacological treatments.
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The UMB Option was exercised on January 13, 2021. Accordingly, on April 6, 2021, we entered into a sublicense agreement with Aikido pursuant to which we granted Aikido a worldwide exclusive sublicense to our licensed patents under the UMB License Agreement. (See “ Sublicense with Aikido Pharma Inc. ”). Customer Sublicense Agreement with Aikido Pharma Inc.
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We intend to develop SPC-15 under the Section 505(b)(2) regulatory pathway of the FDA rules.
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“Licensed Products” means any product, service, or process, the development, making, use, offer for sale, sale, importation, or providing of which: (i) is covered by one or more claims of the Patent Rights; or (ii) contains, comprises, utilizes, incorporates, or is derived from the Invention or any technology disclosed in the Patent Rights.
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Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act (“FDCA”) was enacted to enable sponsors to seek New Drug Application (“NDA”) approval for novel repurposed drugs without the need for such sponsors to undertake time consuming and expensive pre-clinical safety studies and Phase 1 safety studies.
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Pursuant to the Sublicense Agreement, Aikido shall agree to pay the Company (i) an upfront license fee of $50,000, (ii) the same sales-based royalty payments that we are subject to under the UMB License Agreement and (iii) total milestone payments of up to $1.9 million.
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Proceeding under this regulatory pathway, we will be able to rely upon publicly available data with respect to our active ingredient in our NDA submission to the FDA for marketing approval.
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The Sublicense Agreement shall continue on a Licensed Product-by-Licensed Product and country-by-country basis until the later of (i) the date of expiration of the last to expire claim of the Patent Rights covering such Licensed Product in such country, (ii) the expiration of data protection, new chemical entity, orphan drug exclusivity, regulatory exclusivity or other legally enforceable market exclusivity, if applicable and (iii) 10 years after the first commercial sale of a Licensed Product in that country, unless terminated earlier pursuant to the terms of the Sublicense Agreement.
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On November 15, 2023, the Company entered an exclusive license agreement with Medspray Pharma BV for its proprietary patented soft mist nasal spray technology, as the delivery mechanism for SPC-15, which agreement has an effective date of October 31, 2023.
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Furthermore, the Sublicense Agreement shall expire 15 years after the Effective Date with respect to any country in which (i) there were never any Patent Rights, (ii) there was never any data protection, new chemical entity, orphan drug exclusivity, regulatory exclusivity or other legally enforceable market exclusivity with respect to a Licensed Product and (ii) there was never a commercial sale of a Licensed Product, unless such agreement is earlier terminated pursuant to its terms.
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Preclinical and formulation studies are expected to be completed in the first quarter of 2024 and the Company intends to submit a pre-IND meeting request to FDA in the first half of 2024. SP-26 In March 2023, the Company filed a provisional patent application with the USPTO to use SP-26 for treatment of chronic pain, including fibromyalgia.
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Fibromyalgia is a chronic condition causing pain to the connective tissues through the body including muscles, ligaments, and tendons. Musculoskeletal pain is often accompanied by sleep difficulties, fatigue, mood disorders, and problems with memory and concentration. Fibromyalgia affects about 4 million American adults, or about 2% of the adult population.
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We intend to develop SP-26 following the Section 505(b)(2) regulatory pathway of the FDA rules. Section 505(b)(2) of the FDCA was enacted to enable sponsors to seek NDA approval for novel repurposed drugs without the need for such sponsors to undertake time consuming and expensive pre-clinical safety studies and Phase 1 safety studies.
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Proceeding under this regulatory pathway, we will be able to rely upon publicly available data with respect to our active ingredient in our NDA submission to the FDA for marketing approval.
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SPC-14 On October 1, 2021, the Company entered into a sponsored research agreement with Columbia University (“Columbia”) pursuant to which Columbia shall conduct two different studies related to the use of SPC-14 for the treatment of Alzheimer’s.
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See “Investigator-Sponsored Study Agreements between the Company and Vendors---Sponsored Research Agreement with Columbia University for the Study of Ketamine in Combination with Other Drugs for Treatment of Alzheimer’s and Depression Disorders.” for additional details. In addition, Company has been granted an option to license certain assets currently under development, including SPC-14 for the treatment of Alzheimer’s disease.
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SPC-14 is a novel drug combining two approved therapeutics, so we intend to develop SPC-14 following the Section 505(b)(2) regulatory pathway of the FDA rules.
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Section 505(b)(2) of the FDCA was enacted to enable sponsors to seek NDA approval for novel repurposed drugs without the need for such sponsors to undertake time consuming and expensive pre-clinical safety studies and Phase 1 safety studies.
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Proceeding under this regulatory pathway, we will be able to rely upon publicly available data with respect to our active ingredient in our NDA submission to the FDA for marketing approval.
Added
On October 13, 2022, the Company extended the term of the sponsored research agreement with Columbia to conduct further research studies into the mechanism of action of SPC-14 in the treatment of Alzheimer’s disease. We expect the results from further preclinical studies in 2024.
Added
See “License Agreements between the Company and Vendors--Vendor License Agreement with the University of Maryland, Baltimore for CNS Homing Peptide” for additional details. On April 11, 2023 certain intellectual property under the UMB License Agreement described above were issued a patent from the U.S.
Added
Patent & Trademark Office (USPTO) for “Peptide-Targeted Liposomal Delivery For Treatment, Diagnosis, and Imaging of Diseases and Disorders” (US 11,766,403, B2). SPU-16 is a novel peptide homing specifically to inflamed CNS areas. It may be used to diagnose neuroinflammation in patients, and target delivery of drugs into the spinal cord. The initial indication is for multiple sclerosis (MS).
Added
The peptides have been tested in the EAE mouse model of human MS, where they show homing specifically to inflamed CNS areas. 2 Product Development Pipeline The following table summarizes our product development pipeline.
Added
We do not intend to continue with Zylo and have entered into an agreement to develop a polymer implant for dosage and time release of Ketamine for chronic pain and Fibromyalgia Exclusive License Agreement between Medspray Pharma BV and the Company On November 15, 2023, we entered into an Exclusive License Agreement (the “Medspray License Agreement”) with Medspray Pharma BV (“Medspray”) pursuant to which Medspray granted us an exclusive, non-revocable, worldwide royalty bearing license for Medspray’s proprietary patented soft mist nasal spray technology for marketing, promotion, sale and distribution of the products licensed by Medspray to us under the Medspray License Agreement.
Added
The Medspray License Agreement has an effective date of October 31, 2023 and expires on the earlier of (i) termination of the Medspray License Agreement or expiry of all Medspray license rights in the United States, Germany, United Kingdom, Spain, Italy and France.
Added
In consideration of the exclusive rights granted by Medspray to us, we agreed to pay Medspray a royalty on a quarterly basis equal to 5% of net sales.
Added
The term of the agreement commences on the effective date and continues until the earlier of (i) expiration of the last to expire of Medspray’s patent rights or (ii) December 31, 2023 (the “Initial Term”) at which time, the Medspray License Agreement will automatically renew for a successive period of three (3) years, unless terminated by either party upon one year prior written notice prior to the end of any term; provided, however, the Medspray may terminate the Medspray License Agreement immediately if fail to have any licensed product under the Medspray License Agreement registered with the FDA or EMA by July 1, 2028 or has filed to reach the point of first sale of any licensed product under the Medspray License Agreement by July 1, 2028.
Added
The Company exercised its option for an exclusive license agreement for SPC-15, a prophylactic treatment for stress-induced affective disorders including anxiety and PTSD pursuant to which the Company will be granted an exclusive license to further develop, manufacture, and commercialize SPC-15 worldwide. The Company expects to have the complete license agreement with Columbia completed in the first half of 2024.
Added
Columbia University and the Company will work towards developing a therapeutic treatment for patients suffering from Alzheimer’s disease to posttraumatic stress disorder.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeLater discovery of previously unknown problems with any approved therapeutic candidate, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things: ● restrictions on the labeling, distribution, marketing or manufacturing of our future therapeutic candidates, withdrawal of the product from the market or product recalls; ● untitled and warning letters or holds on clinical trials; ● refusal by the FDA, the EMA, the MHRA or other foreign regulatory body to approve pending applications or supplements to approved applications we filed or suspension or revocation of license approvals; ● requirements to conduct post-marketing studies or clinical trials; ● restrictions on coverage by third-party payors; ● fines, restitution or disgorgement of profits or revenue; ● suspension or withdrawal of marketing approvals; ● product seizure or detention or refusal to permit the import or export of the product; and ● injunctions or the imposition of civil or criminal penalties. 15 In addition, any regulatory approvals that we receive for our future therapeutic candidates may also be subject to limitations on the approved indicated uses for which the therapy may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase IV clinical trials, and surveillance to monitor the safety and efficacy of such therapeutic candidates.
Biggest changeLater discovery of previously unknown problems with any approved therapeutic candidate, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things: ● restrictions on the labeling, distribution, marketing or manufacturing of our future therapeutic candidates, withdrawal of the product from the market or product recalls; ● untitled and warning letters or holds on clinical trials; ● refusal by the FDA, the EMA, the MHRA or other foreign regulatory body to approve pending applications or supplements to approved applications we filed or suspension or revocation of license approvals; 13 ● requirements to conduct post-marketing studies or clinical trials; ● restrictions on coverage by third-party payors; ● fines, restitution or disgorgement of profits or revenue; ● suspension or withdrawal of marketing approvals; ● product seizure or detention or refusal to permit the import or export of the product; and ● injunctions or the imposition of civil or criminal penalties.
Market acceptance of our future therapies by healthcare professionals, patients, healthcare payors and health technology assessment bodies will depend on a number of factors, many of which are beyond our control, including, but not limited to, the following: ● acceptance by healthcare professionals, patients and healthcare payors of each therapy as safe, effective and cost-effective; ● changes in the standard of care for the targeted indications for any therapeutic candidate; ● the strength of sales, marketing and distribution support; ● potential product liability claims; ● the therapeutic candidate’s relative convenience, ease of use, ease of administration and other perceived advantages over alternative therapies; ● the prevalence and severity of adverse events or publicity; ● limitations, precautions or warnings listed in the summary of therapeutic characteristics, patient information leaflet, package labeling or instructions for use; ● the cost of treatment with our therapy in relation to alternative treatments; ● the ability to manufacture our product in sufficient quantities and yields; ● the availability and amount of coverage and reimbursement from healthcare payors, and the willingness of patients to pay out of pocket in the absence of healthcare payor coverage or adequate reimbursement; ● the willingness of the target patient population to try, and of healthcare professionals to prescribe, the therapy; ● any potential unfavorable publicity, including negative publicity associated with recreational use or abuse of psilocybin; ● the extent to which therapies are approved for inclusion and reimbursed on formularies of hospitals and managed care organizations; and ● whether our therapies are designated under physician treatment guidelines or under reimbursement guidelines as a first-line, second-line, third-line or last-line therapy.
Market acceptance of our future therapies by healthcare professionals, patients, healthcare payors and health technology assessment bodies will depend on a number of factors, many of which are beyond our control, including, but not limited to, the following: ● acceptance by healthcare professionals, patients and healthcare payors of each therapy as safe, effective and cost-effective; ● changes in the standard of care for the targeted indications for any therapeutic candidate; ● the strength of sales, marketing and distribution support; 15 ● potential product liability claims; ● the therapeutic candidate’s relative convenience, ease of use, ease of administration and other perceived advantages over alternative therapies; ● the prevalence and severity of adverse events or publicity; ● limitations, precautions or warnings listed in the summary of therapeutic characteristics, patient information leaflet, package labeling or instructions for use; ● the cost of treatment with our therapy in relation to alternative treatments; ● the ability to manufacture our product in sufficient quantities and yields; ● the availability and amount of coverage and reimbursement from healthcare payors, and the willingness of patients to pay out of pocket in the absence of healthcare payor coverage or adequate reimbursement; ● the willingness of the target patient population to try, and of healthcare professionals to prescribe, the therapy; ● any potential unfavorable publicity, including negative publicity associated with recreational use or abuse of psilocybin; ● the extent to which therapies are approved for inclusion and reimbursed on formularies of hospitals and managed care organizations; and ● whether our therapies are designated under physician treatment guidelines or under reimbursement guidelines as a first-line, second-line, third-line or last-line therapy.
Among the provisions of the ACA of importance to our potential therapeutic candidates are the following: ● an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs, apportioned among these entities according to their market share in certain government healthcare programs, although this fee would not apply to sales of certain products approved exclusively for orphan indications; ● expansion of eligibility criteria for Medicaid programs, a Federal and state program which extends healthcare to low-income individuals and other groups, by, among other things, allowing states to offer Medicaid coverage to certain individuals and adding new eligibility categories for certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability; ● expansion of manufacturers’ rebate liability under the Medicaid Drug Rebate Program, which requires that drug manufacturers provide rebates to states in exchange for state Medicaid coverage for most of the manufacturers’ drugs by increasing the minimum rebate for both branded and generic drugs and revising the definition of “average manufacturer price,” for calculating and reporting Medicaid drug rebates on outpatient prescription drug prices and extending rebate liability to prescriptions for individuals enrolled in Medicare Advantage plans (i.e., a type of Medicare healthcare plan offered by private companies); ● a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for products that are inhaled, infused, instilled, implanted or injected; ● expansion of the types of entities eligible for the 340B drug discount program, which requires drug manufacturers to provide outpatient drugs to eligible healthcare organizations and covered entities at significantly reduced prices; ● establishment of the Medicare Part D coverage gap discount program, which requires manufacturers to provide a 50% point-of-sale-discount (increased to 70% pursuant to the Bipartisan Budget Act of 2018, or BBA, effective as of January 1, 2019) off the negotiated price of applicable products to eligible beneficiaries during their coverage gap period as a condition for the manufacturers’ outpatient products to be covered under Medicare Part D; ● creation of a new non-profit, nongovernmental institute, called the Patient-Centered Outcomes Research Institute, to oversee, identify priorities in and conduct comparative clinical effectiveness research, along with funding for such research; and ● establishment of the Center for Medicare and Medicaid Innovation within Centers for Medicare & Medicaid to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription product spending. 20 Since its enactment, there have been numerous judicial, administrative, executive, and legislative challenges to certain aspects of the ACA, and we expect there will be additional challenges and amendments to the ACA in the future.
Among the provisions of the ACA of importance to our potential therapeutic candidates are the following: ● an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs, apportioned among these entities according to their market share in certain government healthcare programs, although this fee would not apply to sales of certain products approved exclusively for orphan indications; ● expansion of eligibility criteria for Medicaid programs, a Federal and state program which extends healthcare to low-income individuals and other groups, by, among other things, allowing states to offer Medicaid coverage to certain individuals and adding new eligibility categories for certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability; ● expansion of manufacturers’ rebate liability under the Medicaid Drug Rebate Program, which requires that drug manufacturers provide rebates to states in exchange for state Medicaid coverage for most of the manufacturers’ drugs by increasing the minimum rebate for both branded and generic drugs and revising the definition of “average manufacturer price,” for calculating and reporting Medicaid drug rebates on outpatient prescription drug prices and extending rebate liability to prescriptions for individuals enrolled in Medicare Advantage plans (i.e., a type of Medicare healthcare plan offered by private companies); ● a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for products that are inhaled, infused, instilled, implanted or injected; ● expansion of the types of entities eligible for the 340B drug discount program, which requires drug manufacturers to provide outpatient drugs to eligible healthcare organizations and covered entities at significantly reduced prices; ● establishment of the Medicare Part D coverage gap discount program, which requires manufacturers to provide a 50% point-of-sale-discount (increased to 70% pursuant to the Bipartisan Budget Act of 2018, or BBA, effective as of January 1, 2019) off the negotiated price of applicable products to eligible beneficiaries during their coverage gap period as a condition for the manufacturers’ outpatient products to be covered under Medicare Part D; ● creation of a new non-profit, nongovernmental institute, called the Patient-Centered Outcomes Research Institute, to oversee, identify priorities in and conduct comparative clinical effectiveness research, along with funding for such research; and ● establishment of the Center for Medicare and Medicaid Innovation within Centers for Medicare & Medicaid to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription product spending. 17 Since its enactment, there have been numerous judicial, administrative, executive, and legislative challenges to certain aspects of the ACA, and we expect there will be additional challenges and amendments to the ACA in the future.
When an entity is determined to have violated the FCA, the government may impose civil fines and penalties for each false claim, plus treble damages, and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs; ● the federal civil monetary penalties laws, which impose civil fines for, among other things, the offering or transfer or remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state health care program, unless an exception applies; 22 ● The Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 and their implementing regulations (collectively referred to as “HIPAA”) as well as numerous other federal and state laws and regulations, govern the collection, dissemination, use, privacy, security, confidentiality, integrity and availability of personally identifiable information (“PII”), including protected health information (“PHI”).
When an entity is determined to have violated the FCA, the government may impose civil fines and penalties for each false claim, plus treble damages, and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs; ● the federal civil monetary penalties laws, which impose civil fines for, among other things, the offering or transfer or remuneration to a Medicare or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state health care program, unless an exception applies; ● The Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 and their implementing regulations (collectively referred to as “HIPAA”) as well as numerous other federal and state laws and regulations, govern the collection, dissemination, use, privacy, security, confidentiality, integrity and availability of personally identifiable information (“PII”), including protected health information (“PHI”).
The risks and uncertainties that we face with respect to our rights principally include the following: ● pending patent applications we have filed or will file may not result in issued patents or may take longer than we expect to result in issued patents; ● we may be subject to interference proceedings; ● we may be subject to reexamination proceedings; ● we may be subject to post grant review proceedings; ● we may be subject to inter partes review proceedings; ● we may be subject to derivation proceedings; ● we may be subject to opposition proceedings in foreign countries; ● any patents that are issued or licensed to us may not provide us with any competitive advantages or meaningful protection; 26 ● we may not be able to develop additional proprietary technologies that are patentable; ● other companies may challenge patents licensed or issued to us; ● other companies may have independently developed and patented (or may in the future independently develop and patent) similar or alternative technologies, or duplicate our technologies; ● other companies may design around technologies we have licensed or developed; ● enforcement of patents is complex, uncertain and very expensive and we may not be able to secure, enforce and defend our patents; ● in the event that we were to ever seek to enforce our patents in ligation, there is some risk that they could be deemed invalid, not infringed, or unenforceable; and ● the patents of others may have an adverse effect on our business.
The risks and uncertainties that we face with respect to our rights principally include the following: ● pending patent applications we have filed or will file may not result in issued patents or may take longer than we expect to result in issued patents; ● we may be subject to interference proceedings; ● we may be subject to reexamination proceedings; ● we may be subject to post grant review proceedings; ● we may be subject to inter partes review proceedings; ● we may be subject to derivation proceedings; ● we may be subject to opposition proceedings in foreign countries; ● any patents that are issued or licensed to us may not provide us with any competitive advantages or meaningful protection; ● we may not be able to develop additional proprietary technologies that are patentable; ● other companies may challenge patents licensed or issued to us; ● other companies may have independently developed and patented (or may in the future independently develop and patent) similar or alternative technologies, or duplicate our technologies; ● other companies may design around technologies we have licensed or developed; ● enforcement of patents is complex, uncertain and very expensive and we may not be able to secure, enforce and defend our patents; ● in the event that we were to ever seek to enforce our patents in ligation, there is some risk that they could be deemed invalid, not infringed, or unenforceable; and ● the patents of others may have an adverse effect on our business.
A data breach affecting sensitive personal information, including health information, also could result in significant legal and financial exposure and reputational damages that could potentially have an adverse effect on our business. ● the FDCA, which governs the production, sale, distribution and promotion of drugs, biologics and medical devices and prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices; ● the U.S. federal legislation commonly referred to as Physician Payments Sunshine Act, and its implementing regulations, which requires certain manufacturers of drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program to report annually to the CMS information related to certain payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.
A data breach affecting sensitive personal information, including health information, also could result in significant legal and financial exposure and reputational damages that could potentially have an adverse effect on our business. 19 ● the FDCA, which governs the production, sale, distribution and promotion of drugs, biologics and medical devices and prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices; ● the U.S. federal legislation commonly referred to as Physician Payments Sunshine Act, and its implementing regulations, which requires certain manufacturers of drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program to report annually to the CMS information related to certain payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.
Patient enrollment depends on many factors, including: ● the size of the patient population required for analysis of the trial’s primary endpoints and the process for identifying patients; ● identifying and enrolling eligible patients, including those willing to discontinue use of their existing medications; ● the design of the clinical protocol and the patient eligibility and exclusion criteria for the trial; ● safety profile, to date, of the therapeutic candidate under study; ● the willingness or availability of patients to participate in our trials, including due to the perceived risks and benefits, stigma or other side effects of use of a controlled substance; 16 ● perceived risks and benefits of our approach to treatment of indication; ● the proximity of patients to clinical sites; ● our ability to recruit clinical trial investigators with the appropriate competencies and experience; ● the availability of competing clinical trials; ● the availability of new drugs approved for the indication the clinical trial is investigating; ● clinicians’ and patients’ perceptions of the potential advantages of the drug being studied in relation to other available therapies, including any new therapies that may be approved for the indications we are investigating; and ● our ability to obtain and maintain patient informed consents.
Patient enrollment depends on many factors, including: ● the size of the patient population required for analysis of the trial’s primary endpoints and the process for identifying patients; ● identifying and enrolling eligible patients, including those willing to discontinue use of their existing medications; ● the design of the clinical protocol and the patient eligibility and exclusion criteria for the trial; ● safety profile, to date, of the therapeutic candidate under study; 14 ● the willingness or availability of patients to participate in our trials, including due to the perceived risks and benefits, stigma or other side effects of use of a controlled substance; ● perceived risks and benefits of our approach to treatment of indication; ● the proximity of patients to clinical sites; ● our ability to recruit clinical trial investigators with the appropriate competencies and experience; ● the availability of competing clinical trials; ● the availability of new drugs approved for the indication the clinical trial is investigating; ● clinicians’ and patients’ perceptions of the potential advantages of the drug being studied in relation to other available therapies, including any new therapies that may be approved for the indications we are investigating; and ● our ability to obtain and maintain patient informed consents.
We or any partners must also obtain separate state registrations, permits or licenses in order to be able to obtain, handle, and distribute controlled substances for clinical trials or commercial sale, and failure to meet applicable regulatory requirements could lead to enforcement and sanctions by the states in addition to those from the DEA or otherwise arising under federal law. 12 ● Clinical trials.
We or any partners must also obtain separate state registrations, permits or licenses in order to be able to obtain, handle, and distribute controlled substances for clinical trials or commercial sale, and failure to meet applicable regulatory requirements could lead to enforcement and sanctions by the states in addition to those from the DEA or otherwise arising under federal law. ● Clinical trials.
Disputes over intellectual property that we have licensed may prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, and we may be unable to successfully develop and commercialize our product candidate. Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities.
Disputes over intellectual property that we have licensed may prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, and we may be unable to successfully develop and commercialize our product candidate. 24 Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities.
In addition, the securities market has, from time to time, experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may have a material adverse effect the market price of our common stock. 32 Market and economic conditions may negatively impact our business, financial condition and share price.
In addition, the securities market has, from time to time, experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may have a material adverse effect the market price of our common stock. Market and economic conditions may negatively impact our business, financial condition and share price.
Third parties may assert infringement claims against us based on existing intellectual property rights and intellectual property rights that may be granted in the future. If we are found to infringe a third party’s intellectual property rights, we could be required to obtain a license from such third party to continue developing and marketing our products.
Third parties may assert infringement claims against us based on existing intellectual property rights and intellectual property rights that may be granted in the future. 23 If we are found to infringe a third party’s intellectual property rights, we could be required to obtain a license from such third party to continue developing and marketing our products.
Moreover, lawsuits to protect or enforce our intellectual property rights could be expensive, time-consuming and ultimately unsuccessful. 28 Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain.
Moreover, lawsuits to protect or enforce our intellectual property rights could be expensive, time-consuming and ultimately unsuccessful. Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain.
In addition, new laws and additional health reform measures may result in additional reductions in Medicare and other healthcare funding, which may adversely affect customer demand and affordability for our future therapeutic candidates and, accordingly, the results of our financial operations. 21 Our business operations and current and future relationships with investigators, health care professionals, consultants, third-party payors and customers may be subject, directly or indirectly, to U.S. federal and state healthcare fraud and abuse laws, false claims laws, health information privacy and security laws, other healthcare laws and regulations and other foreign privacy and security laws.
In addition, new laws and additional health reform measures may result in additional reductions in Medicare and other healthcare funding, which may adversely affect customer demand and affordability for our future therapeutic candidates and, accordingly, the results of our financial operations. 18 Our business operations and current and future relationships with investigators, health care professionals, consultants, third-party payors and customers may be subject, directly or indirectly, to U.S. federal and state healthcare fraud and abuse laws, false claims laws, health information privacy and security laws, other healthcare laws and regulations and other foreign privacy and security laws.
Any of the foregoing could harm our business and we cannot anticipate all the ways in which the current economic climate and financial market conditions could adversely impact our business. 31 Risks Relating to Our Securities Our Certificate of Incorporation grants our board of directors, without any action or approval by our stockholders, the power to designate and issue preferred stock with rights, preferences and privileges that may be adverse to the rights of the holders of our common stock.
Any of the foregoing could harm our business and we cannot anticipate all the ways in which the current economic climate and financial market conditions could adversely impact our business. 25 Risks Relating to Our Securities Our Certificate of Incorporation grants our board of directors, without any action or approval by our stockholders, the power to designate and issue preferred stock with rights, preferences and privileges that may be adverse to the rights of the holders of our common stock.
If the DEA delays or denies the grant of a researcher registration to one or more research sites, the clinical trial could be significantly delayed, and we could lose clinical trial sites. ● Importation.
If the DEA delays or denies the grant of a researcher registration to one or more research sites, the clinical trial could be significantly delayed, and we could lose clinical trial sites. 11 ● Importation.
Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection, even post-grant. 27 Patent reform legislation has increased the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents.
Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection, even post-grant. 22 Patent reform legislation has increased the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents.
Strict compliance with state and local laws with respect to psilocybin and psilocin does not absolve us of potential liability under U.S. federal law or EU law, nor provide a defense to any proceeding which may be brought against us. Any such proceedings brought against us may adversely affect our operations and financial performance.
Strict compliance with state and local laws with respect to psilocybin and psilocin does not absolve us of potential liability under U.S. federal law or EU law, nor provide a defense to any proceeding which may be brought against us.
We may sustain losses in the future as we implement our business plan. [We have not yet achieved positive cash flow on a monthly basis during any fiscal year including the fiscal year ended December 31, 2022, and there can be no assurance that we will ever generate revenues or operate profitably.] 10 We will require additional financing in the future to fund our operations.
We have not yet achieved positive cash flow on a monthly basis during any fiscal year including the fiscal year ended December 31, 2023, and there can be no assurance that we will ever generate revenues or operate profitably. We will require additional financing in the future to fund our operations.
Regardless of the merits or eventual outcome, liability claims may cause, among other things, the following: ● decreased demand for our therapies due to negative public perception; ● injury to our reputation; ● withdrawal of clinical trial participants or difficulties in recruiting new trial participants; ● initiation of investigations by regulators; ● costs to defend or settle the related litigation; ● a diversion of management’s time and our resources; ● substantial monetary awards to trial participants or patients; ● recalls, withdrawals or labeling, marketing or promotional restrictions; ● loss of revenue from therapeutic sales; and ● our inability to commercialize any of our future therapeutic candidates, if approved. 19 In addition, we may not be able to obtain or maintain insurance coverage at a reasonable cost or obtain insurance coverage that will be adequate to satisfy any liability that may arise.
Regardless of the merits or eventual outcome, liability claims may cause, among other things, the following: ● decreased demand for our therapies due to negative public perception; ● injury to our reputation; ● withdrawal of clinical trial participants or difficulties in recruiting new trial participants; 16 ● initiation of investigations by regulators; ● costs to defend or settle the related litigation; ● a diversion of management’s time and our resources; ● substantial monetary awards to trial participants or patients; ● recalls, withdrawals or labeling, marketing or promotional restrictions; ● loss of revenue from therapeutic sales; and ● our inability to commercialize any of our future therapeutic candidates, if approved.
Further, these outcomes could damage investor confidence in the accuracy and reliability of our financial statements. 33 Our management has concluded that our internal controls over financial reporting were, and continue to be, ineffective, as December 31, 2022 as a result of the following: (i) we lack segregation of duties within accounting functions duties as a result of our limited financial resources to support hiring of personnel, and; (ii) we not have not implemented adequate system and manual controls.
Our management has concluded that our internal controls over financial reporting were, and continue to be, ineffective, as December 31, 2022 as a result of the following: (i) we lack segregation of duties within accounting functions duties as a result of our limited financial resources to support hiring of personnel, and; (ii) we not have not implemented adequate system and manual controls.
Litigation may be necessary to defend against these claims, and any such litigation could have an unfavorable outcome. 29 In addition, while it is our policy to require our employees and contractors who may be involved in the development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we regard as our own.
In addition, while it is our policy to require our employees and contractors who may be involved in the development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we regard as our own.
Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance, and share price and could require us to delay or abandon development or commercialization plans.
Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance, and share price and could require us to delay or abandon development or commercialization plans. 26 Future sales and issuances of our securities could result in additional dilution of the percentage ownership of our stockholders and could cause our share price to fall.
Despite the current status of psilocybin and psilocin as Schedule I controlled substances in the United States, there may be changes in the status of psilocybin or psilocin under the laws of certain U.S. cities or states.
Any such proceedings brought against us may adversely affect our operations and financial performance. 12 Despite the current status of psilocybin and psilocin as Schedule I controlled substances in the United States, there may be changes in the status of psilocybin or psilocin under the laws of certain U.S. cities or states.
If our future therapeutic candidates fail to gain market access and acceptance, this will have a material adverse impact on our ability to generate revenue to provide a satisfactory, or any, return on our investments.
If our future therapeutic candidates fail to gain market access and acceptance, this will have a material adverse impact on our ability to generate revenue to provide a satisfactory, or any, return on our investments. Even if some therapies achieve market access and acceptance, the market may prove not to be large enough to allow us to generate significant revenue.
The total number of preferred stock that we are authorized to issue is 5,000,000 shares of which 1,000,000 shares have been designated as Series A Preferred Stock, none of which are issued and outstanding as of March 23, 2023, 2,000 shares have been designated as Series B Preferred Stock, none of which are issued and outstanding as of March 23, 2023 and 4,280 shares have been designated as Series C Preferred Stock, of which none of which are issued and outstanding as of March 23, 2023.
The total number of preferred stock that we are authorized to issue is 5,000,000 shares, none of which are issued and outstanding as of March 23, 2024.
Political pressures and adverse publicity could lead to delays in, and increased expenses for, and limit or restrict the introduction and marketing of any future therapeutic candidates. 14 Our clinical trials may fail to demonstrate substantial evidence of the safety and effectiveness of future product candidates that we may identify and pursue, which would prevent, delay or limit the scope of regulatory approval and commercialization.
Our clinical trials may fail to demonstrate substantial evidence of the safety and effectiveness of future product candidates that we may identify and pursue, which would prevent, delay or limit the scope of regulatory approval and commercialization.
We may incur significant costs to comply with these current or future environmental and health and safety laws and regulations. Furthermore, if we fail to comply with such laws and regulations, we could be subject to fines or other sanctions.
We may incur significant costs to comply with these current or future environmental and health and safety laws and regulations.
Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources.
Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could compromise our ability to compete in the marketplace.
Accordingly, in markets outside the United States, the reimbursement for our therapies may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenue and profits. 25 We will be subject to environmental, health and safety laws and regulations, and we may become exposed to liability and substantial expenses in connection with environmental compliance or remediation activities which may adversely affect our business and financial condition.
We will be subject to environmental, health and safety laws and regulations, and we may become exposed to liability and substantial expenses in connection with environmental compliance or remediation activities which may adversely affect our business and financial condition.
Risks Relating to Our Intellectual Property Rights The failure to obtain or maintain patents, licensing agreements and other intellectual property could materially impact our ability to compete effectively.
Furthermore, if we fail to comply with such laws and regulations, we could be subject to fines or other sanctions. 21 Risks Relating to Our Intellectual Property Rights The failure to obtain or maintain patents, licensing agreements and other intellectual property could materially impact our ability to compete effectively.
Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could compromise our ability to compete in the marketplace. 30 We may spend considerable resources developing and maintaining patents, license agreements and other intellectual property that may later be abandoned or may otherwise never result in products brought to market.
We may spend considerable resources developing and maintaining patents, license agreements and other intellectual property that may later be abandoned or may otherwise never result in products brought to market.
Claims that we have violated individuals’ privacy rights, failed to comply with data protection laws, or breached our contractual obligations, even if we are not found liable, could be expensive and time-consuming to defend and could result in adverse publicity that could harm our business. 24 The successful commercialization of any of our future therapeutic candidates will depend in part on the extent to which governmental authorities and health insurers establish adequate reimbursement levels and pricing policies.
Claims that we have violated individuals’ privacy rights, failed to comply with data protection laws, or breached our contractual obligations, even if we are not found liable, could be expensive and time-consuming to defend and could result in adverse publicity that could harm our business.
We may never have a therapy that is commercially successful. To date, we have no therapy authorized for marketing. Furthermore, if approved, our future therapies may not achieve an adequate level of acceptance by payors, health technology assessment bodies, healthcare professionals, patients and the medical community at large, and we may not become profitable.
The future commercial success of our future therapeutic candidates will depend on the degree of market access and acceptance of our potential therapies among healthcare professionals, patients, healthcare payors, health technology assessment bodies and the medical community at large. We may never have a therapy that is commercially successful. To date, we have no therapy authorized for marketing.
If we do not establish commercial capabilities successfully, either on our own or in collaboration with third parties, we may not be successful in commercializing our therapies, which in turn would have a material adverse effect on our business, prospects, financial condition and results of operations. 17 The future commercial success of our future therapeutic candidates will depend on the degree of market access and acceptance of our potential therapies among healthcare professionals, patients, healthcare payors, health technology assessment bodies and the medical community at large.
If we do not establish commercial capabilities successfully, either on our own or in collaboration with third parties, we may not be successful in commercializing our therapies, which in turn would have a material adverse effect on our business, prospects, financial condition and results of operations.
The distribution of pharmaceutical products is subject to additional requirements and regulations, including licensing, extensive record-keeping, storage and security requirements intended to prevent the unauthorized sale of pharmaceutical products. 23 The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially in light of the lack of applicable precedent and regulations.
The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially in light of the lack of applicable precedent and regulations.
An investor’s contribution to and involvement in such activities may result in federal civil and/or criminal prosecution, including, but not limited to, forfeiture of his, her or its entire investment, fines and/or imprisonment. 13 Various federal, state, provincial and local laws govern our business in any jurisdictions in which we may operate, and to which we may export our products, including laws relating to health and safety, the conduct of our operations, and the production, storage, sale and distribution of our products.
Various federal, state, provincial and local laws govern our business in any jurisdictions in which we may operate, and to which we may export our products, including laws relating to health and safety, the conduct of our operations, and the production, storage, sale and distribution of our products.
The research, testing, manufacturing, safety, efficacy, labeling, approval, sale, marketing, and distribution of any in-licensed product is, and will remain, subject to comprehensive regulation by the FDA, the DEA, the European Medicines Agency (“EMA”), the Medicines and Healthcare Products Regulatory Agency (“MHRA”) and foreign regulatory authorities. 11 Any therapeutic candidates we may develop in the future may be subject to controlled substance laws and regulations in the territories where the product will be marketed, and failure to comply with these laws and regulations, or the cost of compliance with these laws and regulations, may adversely affect the results of our business operations and our financial condition.
Any therapeutic candidates we may develop in the future may be subject to controlled substance laws and regulations in the territories where the product will be marketed, and failure to comply with these laws and regulations, or the cost of compliance with these laws and regulations, may adversely affect the results of our business operations and our financial condition.
We commenced operations in 2010 and have a limited history upon which an evaluation of our prospects and future performance can be made and have no history of profitable operations.
We were incorporated in 2010 but starting operating under our current business plan in September 2020 and have a limited history upon which an evaluation of our prospects and future performance can be made and have no history of profitable operations. We may sustain losses in the future as we implement our business plan.
Accordingly, our business may depend on the successful regulatory approval of potential in-licensed product candidates. We cannot be certain that any of our product candidates will receive regulatory approval or that our therapies will be successfully commercialized even if we receive regulatory approval.
Accordingly, our business may depend on the successful regulatory approval of potential in-licensed product candidates.
Compliance with U.S. and foreign privacy and data protection laws and regulations could require us to take on more onerous obligations in our contracts, restrict our ability to collect, use and disclose data, or in some cases, impact our ability to operate in certain jurisdictions.
Depending on the facts and circumstances, we could be subject to significant civil, criminal, and administrative penalties if we obtain, use, or disclose individually identifiable health information maintained by a HIPAA-covered entity in a manner that is not authorized or permitted by HIPAA. 20 Compliance with U.S. and foreign privacy and data protection laws and regulations could require us to take on more onerous obligations in our contracts, restrict our ability to collect, use and disclose data, or in some cases, impact our ability to operate in certain jurisdictions.
In addition, in the event of such delisting, we could experience a decreased ability to issue additional securities and obtain additional financing in the future. Even if our common stock is listed on the Nasdaq Capital Market, there can be no assurance that an active trading market for our common stock will develop or be sustained after our initial listing.
Even if our common stock is listed on the Nasdaq Capital Market, there can be no assurance that an active trading market for our common stock will develop or be sustained after our initial listing. 27 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
The level of acceptance we ultimately achieve may be affected by negative public perceptions and historic media coverage of psychedelic substances, including psilocybin.
Furthermore, if approved, our future therapies may not achieve an adequate level of acceptance by payors, health technology assessment bodies, healthcare professionals, patients and the medical community at large, and we may not become profitable. The level of acceptance we ultimately achieve may be affected by negative public perceptions and historic media coverage of psychedelic substances, including psilocybin.
Anti-psychedelic protests have historically occurred and may occur in the future and generate media coverage.
Anti-psychedelic protests have historically occurred and may occur in the future and generate media coverage. Political pressures and adverse publicity could lead to delays in, and increased expenses for, and limit or restrict the introduction and marketing of any future therapeutic candidates.
Even if some therapies achieve market access and acceptance, the market may prove not to be large enough to allow us to generate significant revenue. 18 Changes in methods of therapeutic candidate manufacturing or formulation may result in additional costs or delay.
Changes in methods of therapeutic candidate manufacturing or formulation may result in additional costs or delay.
It is also illegal to aid or abet such activities or to conspire or attempt to engage in such activities.
It is also illegal to aid or abet such activities or to conspire or attempt to engage in such activities. An investor’s contribution to and involvement in such activities may result in federal civil and/or criminal prosecution, including, but not limited to, forfeiture of his, her or its entire investment, fines and/or imprisonment.
Removed
Additionally, many states have enacted similar laws that may impose more stringent requirements on entities like ours. Depending on the facts and circumstances, we could be subject to significant civil, criminal, and administrative penalties if we obtain, use, or disclose individually identifiable health information maintained by a HIPAA-covered entity in a manner that is not authorized or permitted by HIPAA.
Added
We cannot be certain that any of our product candidates will receive regulatory approval or that our therapies will be successfully commercialized even if we receive regulatory approval. 10 The research, testing, manufacturing, safety, efficacy, labeling, approval, sale, marketing, and distribution of any in-licensed product is, and will remain, subject to comprehensive regulation by the FDA, the DEA, the European Medicines Agency (“EMA”), the Medicines and Healthcare Products Regulatory Agency (“MHRA”) and foreign regulatory authorities.
Removed
Future sales and issuances of our securities could result in additional dilution of the percentage ownership of our stockholders and could cause our share price to fall.
Added
In addition, any regulatory approvals that we receive for our future therapeutic candidates may also be subject to limitations on the approved indicated uses for which the therapy may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase IV clinical trials, and surveillance to monitor the safety and efficacy of such therapeutic candidates.
Added
In addition, we may not be able to obtain or maintain insurance coverage at a reasonable cost or obtain insurance coverage that will be adequate to satisfy any liability that may arise.
Added
The distribution of pharmaceutical products is subject to additional requirements and regulations, including licensing, extensive record-keeping, storage and security requirements intended to prevent the unauthorized sale of pharmaceutical products.
Added
Additionally, many states have enacted similar laws that may impose more stringent requirements on entities like ours.
Added
The successful commercialization of any of our future therapeutic candidates will depend in part on the extent to which governmental authorities and health insurers establish adequate reimbursement levels and pricing policies.
Added
Accordingly, in markets outside the United States, the reimbursement for our therapies may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenue and profits.
Added
Litigation may be necessary to defend against these claims, and any such litigation could have an unfavorable outcome.
Added
Further, these outcomes could damage investor confidence in the accuracy and reliability of our financial statements.
Added
In addition, in the event of such delisting, we could experience a decreased ability to issue additional securities and obtain additional financing in the future.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our principal executive offices are located at 560 Sylvan Avenue, Suite 3160, Englewood Cliffs, NJ 07632. We pay $102 per month to rent for such space on a month-to-month lease basis. We believe that our current office space will be adequate for the foreseeable future.
Biggest changeITEM 2. PROPERTIES Our principal executive offices are located at 677 N. Washington Boulevard Sarasota, FL. We pay approximately $80 per month to rent for such space on a month-to-month lease basis. We believe that our current office space will be adequate for the foreseeable future.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe are currently not aware of any such legal proceedings or claims that will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 34 PART II
Biggest changeWe are currently not aware of any such legal proceedings or claims that will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 28 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeCommon Stock We have not declared or paid dividends on our common stock since our formation. Declaration or payment of dividends, if any, in the future, will be at the discretion of our Board of Directors and will depend on our then current financial condition, results of operations, capital requirements and other factors deemed relevant by the board of directors.
Biggest changeDeclaration or payment of dividends, if any, in the future, will be at the discretion of our Board of Directors and will depend on our then current financial condition, results of operations, capital requirements and other factors deemed relevant by the board of directors. There are no contractual restrictions on our ability to declare or pay dividends.
Security Holders As of March 8, 2023, there were 104 stockholders of record of our common stock. The actual number of holders of our common stock is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers or held by other nominees.
Security Holders As of March 17, 2024, there were 97 stockholders of record of our common stock. The actual number of holders of our common stock is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers or held by other nominees.
Removed
Dividends Preferred Stock Series C Preferred Stock Deemed Dividends For the year ended December 31, 2021, the Company recorded $1,403,997 of deemed dividends resulting from the beneficial conversion feature in connection with the issuance of these Series C Convertible Preferred Stock. For the year ended December 31, 2022, the Company did not record any deemed dividend.
Added
Dividends Common Stock We have not declared or paid dividends on our common stock since our formation.
Removed
There are no contractual restrictions on our ability to declare or pay dividends. Stock Repurchase Program We did not purchase any of our registered equity securities during the period covered by this Annual Report. Recent Sales of Unregistered Securities None. ITEM 6. [RESERVED]
Added
Stock Repurchase Program On January 26, 2023, our Board of Directors authorized a stock repurchase plan to repurchase up to $1.0 million of the Company’s issued and outstanding common stock, from time to time, with such plan to be in place until December 31, 2023.
Added
On January 9, 2024, the Board of Directors of the Company approved an extension of the previously announced stock repurchase program authorizing the purchase of up to $1 million of the Company’s common stock until March 31, 2024.
Added
Through December 31, 2023, we purchased 252,855 shares of our common stock for a cost of $471,121, which is reflected in treasury stock on the accompanying consolidated balance sheet.
Added
The following is a summary of our common stock repurchases during the quarterly period ended December 31, 2023: Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced program Maximum number (or approximate dollar value) of shares that may yet be purchased under the program October 1, 2023 through October 31, 2023 54,475 $ 1.54 54,475 November 1, 2023 through November 30, 2023 43,752 $ 1.63 43,752 December 1, 2023 through December 31, 2023 25,335 $ 1.55 25,335 Total 123,562 $ 1.57 123,562 $ 528,879 Recent Sales of Unregistered Securities None.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeDecember 31, 2022 December 31, 2021 Working Capital Change Percentage Change Working capital: Total current assets $ 11,572,056 $ 10,402,320 $ 1,169,736 11 % Total current liabilities (436,318 ) (490,039 ) 53,721 11 % Working capital: $ 11,135,738 $ 9,912,281 $ 1,223,457 12 % The increase in working capital of $1,223,457 was primarily attributable to an increase in current assets of $1,169,736 primarily due to increase in cash of $1.5 million and an increase in current liabilities of $53,721, offset by a decrease in equity investments of $417,000. 43 Cash Flows A summary of cash flow activities is summarized as follows: Year Ended December 31, 2022 2021 Cash used in operating activities $ (3,497,622 ) $ (2,278,016 ) Cash provided by investing activities 86,707 7,192,526 Cash provided by financing activities 4,940,948 3,794,102 Net increase in cash $ 1,530,033 $ 8,708,612 Net Cash Used in Operating Activities Net cash used in operating activities for the years ended December 31, 2022 and 2021 were $3,497,622 and $2,278,016, respectively, an increase of $1,219,606, or 54%. ● Net cash used in operating activities for the year ended December 31, 2022 primarily reflected a net loss of $3,908,551, adjusted for the add-back of non-cash items such net realized loss on equity investments of $104,700, net unrealized loss on equity investments of $331,203, bad debt recovery of $20,000, stock-based compensation of $156,047, and equity shares earned for lock up agreement of $85,733, and changes in operating asset and liabilities primarily consisting of a decrease in prepaid expenses and other current assets of $55,335, an increase of interest receivable of $4,800, a decrease in accounts payable and accrued expenses of $53,721 and a decrease in deferred revenue of $72,102. ● Net cash used in operating activities for the year ended December 31, 2021 primarily reflected a net income of $3,903,741 adjusted for the add-back of non-cash items such net realized gain on equity investments of $6,660,483, net unrealized gain on equity investments of $248,588, bad debt recovery of $148,500, amortization of prepaid stock-based compensation of $107,970, stock-based compensation of $83,728, gain on forgiveness of PPP note payable of $19,082, gain on disposal of assets from discontinued operations of $1,553 and changes in operating asset and liabilities primarily consisting of an increase in prepaid expenses and other current assets of $38,862, an increase in assets of discontinued operations of $24,963, an increase of interest receivable of $1,210, an increase in accounts payable and accrued expenses of $291,050 and an increase in deferred revenue of $478,736.
Biggest changeCash Flows A summary of cash flow activities is summarized as follows: Year Ended December 31, 2023 2022 Net cash used in operating activities $ (3,224,498 ) $ (3,497,622 ) Net cash (used in) provided by investing activities (4,147,107 ) 86,707 Net cash (used in) provided by financing activities (471,121 ) 4,940,948 Net (decrease) increase in cash $ (7,842,726 ) $ 1,530,033 Net Cash Used in Operating Activities Net cash used in operating activities for the years ended December 31, 2023 and 2022 were $3,224,498 and $3,497,622, respectively, a decrease of $273,124, or 8%. ● Net cash used in operating activities for the year ended December 31, 2023 primarily reflected a net loss of $3,700,6837, adjusted for the add-back of non-cash items such as net unrealized loss on equity investments of $3,118, bad debt expense of $69,600, stock-based compensation of $14,125, and amortization of prepaid stock-based professional fees of $90,067, and changes in operating asset and liabilities primarily consisting of a decrease in prepaid expenses and other current assets of $35,695, an increase of interest receivable of $3,590, an increase in accounts payable and accrued expenses of $339,272, and a decrease in deferred revenue of $72,102. 37 ● Net cash used in operating activities for the year ended December 31, 2022 primarily reflected a net loss of $3,908,551, adjusted for the add-back of non-cash items such net realized loss on equity investments of $104,700, net unrealized loss on equity investments of $331,203, bad debt recovery of $20,000, stock-based compensation of $156,047, and equity shares earned for lock up agreement of $85,733, and changes in operating asset and liabilities primarily consisting of a decrease in prepaid expenses and other current assets of $55,335, an increase of interest receivable of $4,800, a decrease in accounts payable and accrued expenses of $53,721 and a decrease in deferred revenue of $72,102.
Realized gains and losses are determined on a specific identification basis which is recorded as net realized gain (loss) on equity investments in the consolidated statement of operations. The Company reviews equity investments, at fair value for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recovered.
Realized gains and losses are determined on a specific identification basis which is recorded as net realized gain (loss) on equity investments in the consolidated statement of operations and comprehensive loss. The Company reviews equity investments, at fair value for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recovered.
Rare Disease Therapeutics We seek to acquire and/or develop intellectual property or technology rights from leading universities and researchers to treat rare diseases, including the use of psychedelic drugs, such as psilocybin, and the potential benefits they may have in certain cases involving depression, mental health issues and neurological disorders.
Rare Disease Therapeutics We seek to acquire and/or develop intellectual property or technology rights from leading universities and researchers to treat rare diseases, including the use of psychedelic drugs, such as psilocybin, ketamine, and the potential benefits they may have in certain cases involving depression, mental health issues and neurological disorders.
Results of Operations Comparison of Our Results of Operations for the Years Ended December 31, 2022 and 2021 The following table summarizes the results of operations for the years ending December 31, 2022 and 2021 and were based primarily on the comparative audited financial statements, footnotes and related information for the periods identified and should be read in conjunction with the consolidated financial statements and the notes to those statements that are included elsewhere in this report.
Results of Operations Comparison of Our Results of Operations for the Years Ended December 31, 2023 and 2022 The following table summarizes the results of operations for the years ending December 31, 2023 and 2022 and were based primarily on the comparative audited financial statements, footnotes and related information for the periods identified and should be read in conjunction with the consolidated financial statements and the notes to those statements that are included elsewhere in this report.
Stock-Based Compensation Stock-based compensation is accounted for based on the requirements of ASC 718 – “Compensation – Stock Compensation”, which requires recognition in the financial statements of the cost of employee, director, and non-employee services received in exchange for an award of equity instruments over the period the employee, director, or non-employee is required to perform the services in exchange for the award (presumptively, the vesting period).
Critical Accounting Estimates Stock-Based Compensation Stock-based compensation is accounted for based on the requirements of ASC 718 – “Compensation – Stock Compensation”, which requires recognition in the financial statements of the cost of employee, director, and non-employee services received in exchange for an award of equity instruments over the period the employee, director, or non-employee is required to perform the services in exchange for the award (presumptively, the vesting period).
We recorded bad debt recovery from the collection of a previously written off note receivable deemed uncollectible. 42 ● Selling, General and Administrative Expenses : Selling, general and administrative expenses include advertising and promotion, patent related expenses, public company expenses, custodian fees, bank service charges, travel, and other office expenses.
In 2022, we recorded bad debt recovery from the collection of a previously written off note receivable deemed uncollectible. ● Selling, General and Administrative Expenses : Selling, general and administrative expenses include advertising and promotion, patent related expenses, public company expenses, custodian fees, bank service charges, travel, and other office expenses.
Investigator-Sponsored Study Agreement with UMB for CNS Homing Peptide On January 5, 2021, we entered into an investigator-sponsored study agreement with UMB. The research project is a clinical study to examine a novel peptide-guided drug delivery approach for the treatment of Multiple Sclerosis (“MS”).
We have notified UCSF we do not plan to continue this study Investigator-Sponsored Study Agreement with UMB for CNS Homing Peptide On January 5, 2021, we entered into an investigator-sponsored study agreement with UMB. The research project is a clinical study to examine a novel peptide-guided drug delivery approach for the treatment of Multiple Sclerosis (“MS”).
In addition, the parties agreed in the Fourth Amendment to allow the Company to extend the term of the License Agreement to June 30, 2023 by paying UMB a fee of $1,000 on or before February 28, 2022.
In addition, the parties agreed in the Fourth Amendment to allow the Company to extend the term of the License Agreement to June 30, 2023 by paying UMB a fee of $1,000 on or before February 28, 2023. This fee was paid and thus the term of the License Agreement was extended to June 30, 2023.
We plan to actively pursue the acquisition and/or development of intellectual property or technology rights to treat rare diseases, and to ultimately expand our business to focus on this new line of business. 36 License Agreements between the Company and a Vendor Vendor License Agreement with the University of Maryland, Baltimore for CNS Homing Peptide On February 12, 2021, we entered into a Master License Agreement (the “UMB License Agreement”) with the University of Maryland, Baltimore (“UMB”) pursuant to which UMB granted us an exclusive, worldwide, sublicensable, royalty-bearing license to certain intellectual property (i) to make, have made, use, sell, offer to sell, and import certain licensed products and (ii) to use the invention titled, “Central nervous system-homing peptides in vivo and their use for the investigation and treatment of multiple sclerosis and other neuroinflammatory pathology” (the “Invention”) and UMB’s confidential information to develop and perform certain licensed processes for the therapeutic treatment of neuroinflammatory disease.
License Agreements between the Company and Vendor Vendor License Agreement with the University of Maryland, Baltimore for CNS Homing Peptide On February 12, 2021, we entered into a Master License Agreement (the “UMB License Agreement”) with the University of Maryland, Baltimore (“UMB”) pursuant to which UMB granted us an exclusive, worldwide, sublicensable, royalty-bearing license to certain intellectual property (i) to make, have made, use, sell, offer to sell, and import certain licensed products and (ii) to use the invention titled, “Central nervous system-homing peptides in vivo and their use for the investigation and treatment of multiple sclerosis and other neuroinflammatory pathology” (the “Invention”) and UMB’s confidential information to develop and perform certain licensed processes for the therapeutic treatment of neuroinflammatory disease.
This increase was a result of increase in the cost of renewal of D&O insurance policy. ● Bad Debt Recovery: For the year ended December 31, 2022 and 2021, we recorded bad debt recovery of $20,000 and $148,500, a decrease of $128,500.
This decrease was a result of decrease in the cost of renewal of the D&O insurance policy. ● Bad Debt Expense (Recovery): For the year ended December 31, 2023 and 2022, we recorded bad debt recovery of $0 and $20,000.
The Company paid the first payment of $430,825 in November 2021 and the second payment of $430,825 in July 2022. 38 Sponsored Research Agreement with University of Maryland, Baltimore for the Study of Targeted liposomal drug delivery for rheumatoid arthritis On July 6, 2021, we entered into a sponsored research agreement (the “July 2021 Sponsored Research Agreement”) with UMB pursuant to which UMB shall evaluate the pharmacokinetics of dexamethasone delivered to arthritic rats via liposome.
Sponsored Research Agreement with University of Maryland, Baltimore for the Study of Targeted liposomal drug delivery for rheumatoid arthritis On July 6, 2021, we entered into a sponsored research agreement (the “July 2021 Sponsored Research Agreement”) with UMB pursuant to which UMB shall evaluate the pharmacokinetics of dexamethasone delivered to arthritic rats via liposome.
The ASC also requires measurement of the cost of employee, director, and non-employee services received in exchange for an award based on the grant-date fair value of the award. [The Company has elected to recognize forfeitures as they occur as permitted under Accounting Standards Update (“ASU”) 2016-09 Improvements to Employee Share-Based Payment.] Research and Development In accordance with ASC 730-10, “Research and Development-Overall,” research and development costs are expensed when incurred.
The ASC also requires measurement of the cost of employee, director, and non-employee services received in exchange for an award based on the grant-date fair value of the award. The Company has elected to recognize forfeitures as they occur as permitted under Accounting Standards Update (“ASU”) 2016-09 Improvements to Employee Share-Based Payment.
Psilocybin is considered a serotonergic hallucinogen and is an active ingredient in some species of mushrooms. Recent industry studies using psychedelics, such as psilocybin, have been promising, and we believe there is a large unmet need with many people suffering from depression, mental health issues and neurological disorders.
Recent industry studies using psychedelics, such as psilocybin, have been promising, and we believe there is a large unmet need with many people suffering from depression, mental health issues and neurological disorders.
On October 13, 2022, the Company entered into an amendment of the sponsored research agreement pursuant to which the parties agreed to extend the payment schedule until March 31, 2024.
On October 13, 2022, the Company entered into an amendment of the sponsored research agreement pursuant to which the parties agreed to extend the payment schedule until March 31, 2024. The Company paid the first payment of $430,825 in November 2021 and the second payment of $430,825 in July 2022.
The increase was a result of increase in research and development costs in connection with the Investigator-sponsored Study Agreement with UCSF, UMB, Columbia University, and other parties. ● Insurance Expense : For the year ended December 31, 2022 and 2021, insurance expense was $125,889 and $108,750, respectively, an increase of $17,139, or 15.8%.
The decrease was a result of a decrease in research and development costs in connection with the Investigator-sponsored Study Agreement with UCSF, UMB, Columbia University, and other parties. ● Insurance Expense : For the year ended December 31, 2023 and 2022, insurance expense was $89,007 and $125,889, respectively, a decrease of $36,882, or 29.3%.
For the year ended December 31, 2022 and 2021, selling, general and administrative expenses were $227,259 and $162,953, respectively, an increase of $64,306, or 39.5%.
For the year ended December 31, 2023 and 2022, selling, general and administrative expenses were $390,071 and $227,259, respectively, an increase of $162,812, or 71.6%.
The term of the UMB License Agreement shall expire 15 years after the effective date in which (a) there were never any patent rights, (b) there was never any data protection, new chemical entity, orphan drug exclusivity, regulatory exclusivity, or other legally enforceable market exclusivity or (c) there was never a first commercial sale of a licensed product.
The term of the UMB License Agreement shall expire 15 years after the effective date in which (a) there were never any patent rights, (b) there was never any data protection, new chemical entity, orphan drug exclusivity, regulatory exclusivity, or other legally enforceable market exclusivity or (c) there was never a first commercial sale of a licensed product. 32 As described below, the Company has entered into an investigator sponsored research agreement with UMB related to a clinical study to examine a novel peptide-guided drug delivery approach for the treatment of Multiple Sclerosis.
Net Cash Provided by Investing Activities Net cash provided by investing activities for the years ended December 31, 2022 and 2021 were $86,707 and $7,192,526, respectively, a decrease of $7,105,819 or 99%. ● Net cash provided by investing activities for the year ended December 31, 2022 was $86,707 which consisted of aggregate proceeds from sale of equity investments in Aikido of $66,707 and proceeds from collection of previously written off notes receivable of $20,000. ● Net cash provided by investing activities for the year ended December 31, 2021 was $7,192,526 which consisted of aggregate proceeds from sale of equity investments in Aikido and DatChat, Inc. of $7,020,526, proceeds from collection of previously written off notes receivable of $7,500 and proceeds from notes receivable collection of $164,500.
Net Cash (Used in) Provided by Investing Activities Net cash (used in) provided by investing activities for the years ended December 31, 2023 and 2022 were $(4,147,107) and $86,707, respectively, a change of $4,233,814, or 4,883%. ● Net cash used in investing activities for the year ended December 31, 2023 was $4,147,107 which consisted of aggregate payments for the purchase of short-term investments of $4,147,107. ● Net cash provided by investing activities for the year ended December 31, 2022 was $86,707 which consisted of aggregate proceeds from sale of equity investments in Aikido of $66,707 and proceeds from collection of previously written off notes receivable of $20,000.
Equity Investments At December 31, 2022 and 2021, equity investments, at cost of $3,118 and $419,995, respectively, comprised mainly of marketable common stock. Equity investments are carried at fair value with unrealized gains or losses which is recorded as net unrealized gain (loss) on equity investments in the accompanying consolidated statement of operations.
Equity investments are carried at fair value with unrealized gains or losses which are recorded as net unrealized gain (loss) on equity investments in the accompanying consolidated statement of operations and comprehensive loss.
If the Company elects to exercise the option, both parties will commence negotiation of a license agreement and will execute a license agreement no later than 3 months after the dated of the exercise of the option. Columbia University and the Company will work towards developing a therapeutic treatment for patients suffering from Alzheimer’s disease to posttraumatic stress disorder.
If the Company elects to exercise the option, both parties will commence negotiation of a license agreement and will execute a license agreement no later than 3 months after the dated of the exercise of the option.
Years Ended December 31, 2022 2021 Revenues $ 72,102 $ 71,264 Cost of revenues 5,838 5,004 Gross profit 66,264 66,260 Operating expenses 3,693,920 2,810,603 Operating loss from continuing operations (3,627,656 ) (2,744,343 ) Other income (expense), net (279,732 ) 6,926,327 Provision for income taxes - (24,876 ) Loss from discontinued operations, net of tax (1,163 ) (253,367 ) Net income (loss) $ (3,908,551 ) $ 3,903,741 41 Revenues During the years ended December 31, 2022 and 2021, we generated minimal revenues from operations.
Years Ended December 31, 2023 2022 Revenues $ 72,102 $ 72,102 Cost of revenues 5,838 5,838 Gross profit 66,264 66,264 Operating expenses 3,921,856 3,693,920 Operating loss from continuing operations (3,855,592 ) (3,627,656 ) Other income (expense), net 224,509 (279,732 Provision for income taxes - - Loss from discontinued operations, net of tax (69,600 ) (1,163 ) Net income (loss) $ (3,700,683 ) $ (3,908,551 ) 35 Revenues During the years ended December 31, 2023 and 2022, we generated minimal revenues from operations.
On January 28, 2022, the Company and University of Maryland, Baltimore entered into a second amendment to the License Agreement dated February 26, 2021 (“Second Amendment”). [The Second Amendment extended the term of the License Agreement until December 31, 2022.] However, if the Company exercises the Exclusive Option, the License Agreement shall expire at the end of the negotiation period (as defined in the License Agreement) or upon execution of a master license agreement, whichever occurs first.
On January 28, 2022, the Company and University of Maryland, Baltimore entered into a second amendment to the License Agreement dated February 26, 2021 (“Second Amendment”). The Second Amendment extended the term of the License Agreement until December 31, 2022.
Operating Expenses For the years ended December 31, 2022 and 2021, total operating expenses consisted of the following: For the Years Ended December 31, 2022 2021 Compensation expense $ 577,651 $ 395,123 Professional fees 1,496,687 1,598,367 Research and development 1,286,434 693,910 Insurance expense 125,889 108,750 Bad debt (recovery) expense (20,000 ) (148,500 ) Selling, general and administrative expenses 227,259 162,953 Total $ 3,693,920 $ 2,810,603 ● Compensation Expense : For the years ended December 31, 2022 and 2021, compensation expense was $577,651 and $395,123, respectively, an increase of $182,528, or 46.2%.
Operating Expenses For the years ended December 31, 2023 and 2022, total operating expenses consisted of the following: For the Years Ended December 31, 2023 2022 Compensation expense $ 871,625 $ 577,651 Professional fees 1,726,061 1,496,687 Research and development 845,092 1,286,434 Insurance expense 89,007 125,889 Bad debt recovery - (20,000 ) Selling, general and administrative expenses 390,071 227,259 Total $ 3,921,856 $ 3,693,920 ● Compensation Expense : For the years ended December 31, 2023 and 2022, compensation expense was $871,625 and $577,651, respectively, an increase of $293,974, or 50.9%.
These events served to mitigate the conditions that historically raised substantial doubt about the Company’s ability to continue as a going concern. The Company believes the proceeds received during the years ended December 31, 2022 and 2021 will provide sufficient cash flows to meet its obligations for a minimum of twelve months from the date of this filing.
The positive working capital serves to mitigate the conditions that historically raised substantial doubt about our ability to continue as a going concern. We believe that the Company has sufficient cash to meet its obligations for a minimum of twelve months from the date of this filing.
This fee was paid and thus the term of the License Agreement was extended to June 30, 2023. 37 Joint Venture Agreement with Zylö Therapeutics, Inc. for Z-pod™ Technology On April 22, 2021, the Company entered into a Joint Venture Agreement with Zylö Therapeutics, Inc.
We let this license expire by its terms on December 31, 2023. Joint Venture Agreement with Zylö Therapeutics, Inc. for Z-pod™ Technology On April 22, 2021, the Company entered into a Joint Venture Agreement with Zylö Therapeutics, Inc.
Furthermore, pursuant to the JV Agreement, ZTI granted the Company an exclusive option to enter into a separate joint venture for the clinical development of psilocybin using ZTI’s Z-pod™ technology on the same terms and conditions set forth in the JV Agreement, which option shall expire 24 months after the JV Effective Investigator-Sponsored Study Agreements between the Company and Vendors Sponsored Research Agreement with Columbia University for the Study of Ketamine in Combination with Other Drugs for Treatment of Alzheimer’s and Depression Disorders On October 1, 2021, the Company entered into a sponsored research agreement with Columbia University (“Columbia”) pursuant to which Columbia shall conduct two different studies related to all uses of Ketamine or its metabolites in combination with Prucalopride, one of which is related to Alzheimer’s and the other of which is related to Depression, PTSD and Stress Projects.
Furthermore, pursuant to the JV Agreement, ZTI granted the Company an exclusive option to enter into a separate joint venture for the clinical development of psilocybin using ZTI’s Z-pod™ technology on the same terms and conditions set forth in the JV Agreement, which option shall expire 24 months after the JV Effective Date.
For the year ended December 31, 2022, revenues consisted of revenues on licensing fees related to our biopharmaceutical operation of $72,102, as compared to $71,264 for the year ended December 31, 2021. Such revenues are primarily related to the Aikido License and Sublicense Agreement.
For the year ended December 31, 2023 and 2022, revenues amounted to $72,102 and $72,102, respectively. Such revenues are related to the Aikido License and Sublicense Agreement and are recognized over the term of the related license agreement.
Net Income (Loss) Available to Common Stockholders For the year ended December 31, 2022, net loss and net loss available to common stockholders amounted to $(3,908,551) or $(1.71) per common share (basic and diluted), as compared to net income of $3,903,741 and net income available to common stockholders of $2,499,744, or $1.45 per common share (basic) and $1.43 per common share (diluted) for the year ended December 31, 2021, a negative change of $6,408,295, or 256.4%.
Net Loss For the year ended December 31, 2023, net loss amounted to $3,700,683 or $1.20 per common share (basic and diluted), as compared to net loss of $3,908,551, or $1.71 per common share (basic and diluted) for the year ended December 31, 2022, a decrease of $207,868, or 5.3%.
This increase resulted from an increase in stock-based compensation of $111,014, an increase in BOD fees of $44,000, an increase payroll expense of $89,100, and an increase in other payroll related expenses of $19,914, offset by a decrease in bonus of $81,500. ● Professional Fees : For the years ended December 31, 2022 and 2021, professional fees were $1,496,687 and $1,598,367, respectively, a decrease of $101,680, or 6.4%.
This increase resulted from, an increase in Board of Director fees of $25,000, an increase in payroll expense and related benefits of $265,863, and an increase in executive bonus pay of $100,000, offset by a decrease in stock-based compensation of $96,889. ● Professional Fees : For the years ended December 31, 2023 and 2022, professional fees were $1,726,061 and $1,496,687 and, respectively, an increase of $229,374, or 15.3%.
We had a working capital of $11,135,738 and $11,367,034 in cash and cash equivalents as of December 31, 2022, and working capital of $9,912,281 and $9,837,001 in cash and cash equivalents as of December 31, 2021, respectively.
We had working capital of $6,905,568, $4,140,880 in short-term investments, and $3,524,308 in cash and cash equivalents as of December 31, 2023, and working capital of $11,135,738 and $11,367,034 in cash and cash equivalents as of December 31, 2022, respectively.
We currently have no material commitments for any capital expenditures. Liquidity As reflected in the accompanying consolidated financial statements, the Company generated a net loss of $3,908,551 and used cash in operations of $3,497,622, for the year ended December 31, 2022. Additionally, the Company has an accumulated deficit of $7,171,128 at December 31, 2022.
Liquidity As reflected in the accompanying consolidated financial statements, we generated a net loss of $3,700,683 and used cash in operations of $3,224,498 during the year ended December 31, 2023. Additionally, we have an accumulated deficit of $10,871,811 on December 31, 2023. As of December 31, 2023, we had working capital of $6,905,568.
Other Income (Expenses), net For the year ended December 31, 2022 and 2021, other income (expense), net amounted to $(279,732) and $6,926,327, respectively, a change of $(7,206,059), or 104.0%.
The increase was primarily a result of the changes in operating expenses discussed above. Other Income (Expenses), net For the year ended December 31, 2023 and 2022, other income (expense), net amounted to $224,509 and $(279,732), respectively, a positive change of $504,241, or 180.3%.
All amounts in this report are in U.S. dollars, unless otherwise noted. 35 Overview We are a developmental stage biopharmaceutical company focused on merging traditional therapeutics with psychedelic research. We are committed to developing innovative solutions to address a variety of underserved conditions.
All amounts in this report are in U.S. dollars, unless otherwise noted. 29 Overview We are a developmental stage biopharmaceutical company developing novel therapeutics that address underserved conditions including PTSD, stress-induced anxiety disorders, fibromyalgia, and central nervous system (CNS) diseases. We are focused on developing novel therapies that include conventional drugs and psychedelic formulations.
In addition, as more fully described below, we have entered into a license agreement with the University of Maryland, Baltimore, and have entered into a joint venture with Zylö Therapeutics, Inc., with respect to certain intellectual property and technology that may be used for targeted delivery of potential novel treatments.
In addition, as more fully described below, we have entered into a license agreement with the University of Maryland, Baltimore, and developing a Ketamine polymer implant.
We are focused on merging traditional therapeutics with psychedelic research for people suffering from indications such as depression, post-traumatic stress disorder (“PTSD”), Parkinson’s, and other rare neurological disorders. Our mission is to identify assets to license and fund the research which we believe will be transformative to the well-being of patients and the health care industry.
We are focused on developing traditional therapeutics and psychedelic medicine. The company concentrates on the development and commercialization of therapies for unmet needs from indications such as depression, post-traumatic stress disorder (“PTSD”), , and other rare neurological disorders.
On April 6, 2021 (“Effective Date”), we entered into a sublicense agreement (the “Sublicense Agreement”) with Aikido pursuant to which we granted Aikido an exclusive worldwide sublicense to (i) make, have made, use, sell, offer to sell and import the Licensed Products (as defined below) and (ii) in connection therewith to (A) use the Invention that was sublicensed to us pursuant to the UMB License Agreement and (B) practice certain patent rights as set forth in the Sublicense Agreement (the “Patent Rights”) for the therapeutic treatment of neuroinflammatory disease in cancer patients.
SPU-16 On February 12, 2021, we entered into a Master License Agreement (the “UMB License Agreement”) with the University of Maryland, Baltimore (“UMB”) pursuant to which UMB granted us an exclusive, worldwide, sublicensable, royalty-bearing license to certain intellectual property (i) to make, have made, use, sell, offer to sell, and import certain licensed products and (ii) to use the invention titled “Central nervous system-homing peptides in vivo and their use for the investigation and treatment of multiple sclerosis and other neuroinflammatory pathology,” or SPU-16.
Cost of Revenues During the year ended December 31, 2022, cost of revenues on license fees related to our biopharmaceutical operation amounted to $5,838 as compared to $5,004 for the year ended December 31, 2021.
Cost of Revenues During the year ended December 31, 2023 and 2022, cost of revenues amounted to $5,838 and $5,838, respectively, and consisted of license fees related to the UMB License and Sublicense Agreement, which are being amortized into cost of revenues over the terms of their respective agreement.
Operating Loss from Continuing Operations For the years ended December 31, 2022 and 2021, loss from continuing operations amounted to $3,627,656 and $2,744,343, respectively, an increase of $883,313, or 32.2%. The increase was primarily a result of the changes in operating expenses discussed above.
The increase was primarily attributed to an increase in Delaware franchise taxes of $208,264 resulting from a reverse split in our outstanding shares, without a change in our authorized shares, offset by a net decrease in other general and administrative expenses of $45,452. 36 Operating Loss from Continuing Operations For the years ended December 31, 2023 and 2022, loss from continuing operations amounted to $3,855,592 and $3,627,656, respectively, an increase of $227,936, or 6.3%.
Loss from Discontinued Operations For the year ended December 31, 2022 and 2021, loss from discontinued operations amounted to $1,163 and $253,367, respectively, a decrease of $252,204, or 99.5%. The decrease was primarily due to a sale of the Company’s NFID business in September 2021.
Loss from Discontinued Operations For the year ended December 31, 2023 and 2022, loss from discontinued operations amounted to $69,600 and $1,163, respectively, an increase of $68,437. As of December 31, 2023, we recognized an allowance for loss on the NFID.
The decrease was primarily attributable to a decrease in other consulting fees of $188,163, a decrease in legal fees of $81,948 , a decrease in option fees of $10,000, a decrease in stock-based consulting fees of $62,937 related to the issuance of shares to consultants for business advisory and strategic planning services, and a decrease in accounting fees of $32,045, offset by an increase in auditing fees of $29,391 and an increase in investor relation fees of $244,022. ● Research and Development: For the year ended December 31, 2022 and 2021, we incurred research and development expense of $1,286,434 and $693,910, respectively, an increase of $592,524, or 85.4%.
The increase was primarily attributable to an increase in other consulting fees of $187,818, an increase in stock-based consulting fees of $45,033 related to the amortization of prepaid expense on previously issued shares to consultants for business advisory and strategic planning services, and an increase in legal fees of $274,220, offset by a decrease in investor relations fees of $262,936, and a decrease in accounting and auditing fees of $14,761.
Net Cash Provided by Financing Activities Net cash provided by financing activities for the years ended December 31, 2022 and 2021 were $4,940,948 and $3,794,102, respectively, an increase of $1,146,846, or 30%. ● Net cash provided by financing activities for the year ended December 31, 2022 was $4,940,948 which consisted of net proceeds from the sale of common stock of $4,940,948. ● Net cash provided by financing activities for the year ended December 31, 2021 was $3,794,102 which consisted of net proceeds from sale of preferred stock of $3,794,102, proceeds from a related party advance of $2,366 offset by repayment of the related party advance of $2,366. 44 Cash Requirements The Company believes that the proceeds from the sale of our equity investments of $66,707 and the proceeds from the sale of our common stock of $4,940,948 amounting to aggregate proceeds of $5,007,655, during the year ended December 31, 2022, will provide sufficient cash required to meet our obligations for a minimum of twelve months from the date of this filing.
Net Cash (Used in) Provided by Financing Activities Net cash (used in) provided by financing activities for the years ended December 31, 2023 and 2022 were $(471,121) and $4,940,948, respectively, a change of $5,412,069, or 110%. ● Net cash used in financing activities for the year ended December 31, 2032 was $471,121, which consisted of the purchase of treasury stock. ● Net cash provided by financing activities for the year ended December 31, 2022 was $4,940,948, which consisted of net proceeds from the sale of common stock of $4,940,948.
Removed
In these uncertain times, the mental health of the nation and beyond is being put to the test. More than ever, creative new therapies are needed to address the health challenges of today. Combining our resources with world-class medical research partners, we hope to make significant advances in the medical and psychedelic space.
Added
The Company’s lead program, SPC-15, is an intranasal drug targeting PTSD and stress-induced anxiety disorders. SP-26 is a time-release ketamine-based loaded implant for fibromyalgia and chronic pain relief.
Removed
As described below, the Company has entered into an investigator sponsored research agreement with UMB related to a clinical study to examine a novel peptide-guided drug delivery approach for the treatment of Multiple Sclerosis.
Added
Silo’s two preclinical programs are SPC-14, an intranasal compound for the treatment of Alzheimer’s disease, and SPU-16, a CNS-homing peptide targeting the central nervous system with initial research indication in multiple sclerosis (MS).
Removed
During the years ended December 31, 2022 and 2021, the Company recorded research and development expense of $187,090 and $92,095, respectively.
Added
Our mission is to identify assets to license and fund the research which we believe will be transformative to the well-being of patients and the health care industry. Psilocybin is considered a serotonergic hallucinogen and is an active ingredient in some species of mushrooms.
Removed
Currently, this project was postponed until further notice and the second payment is not due. Investigator-Sponsored Study Agreement with Maastricht University of the Netherlands On November 1, 2020, we entered into an investigator-sponsored study agreement with Maastricht University of the Netherlands.
Added
We plan to actively pursue the acquisition and/or development of intellectual property or technology rights to treat rare diseases, and to ultimately expand our business to focus on this new line of business. 30 Product Candidates We are currently focusing on four product candidates: (i) SPC-15 for treatment of depression disorders; (ii) SP-26 for treatments of chronic pain; (iii)SPC-14 for the treatment of Alzheimer’s disease and (iv) SPU-16 for the treatment of CNS disorders with an initial indication for multiple sclerosis.
Removed
The research project is a clinical study to examine the effects of repeated low doses of psilocybin and lysergic acid diethylamide on cognitive and emotional dysfunctions in Parkinson’s disease and to understand its mechanism of action. The agreement shall terminate on October 31, 2024, unless earlier terminated pursuant to the terms thereof.
Added
SPC-15 On October 1, 2021, the Company entered into a sponsored research agreement with Columbia University pursuant to which the Company has been granted an option to license certain assets currently under development, including assets related to SPC-15 for the treatment of depression disorders.
Removed
We shall pay a total fee of 433,885 Euros ($507,602 USD) exclusive of value added tax based on a payment schedule set forth in the agreement. In December 2020, the Company paid the first payment of $101,520. In September 2021, we notified Maastricht University of Netherlands for an early termination of this agreement.
Added
On September 22, 2022, we entered into a First Amendment to Sponsored Research Agreement with Columbia to extend the term of the Columbia Agreement to conduct further research studies, which extension runs through March 31, 2024.
Removed
Maastricht University of Netherlands has not reached the second phase which is to obtain approval from ethical committee. We have no further obligation after the termination. 39 Other License Agreements between the Company and a Customer Customer Patent License Agreement with Aikido Pharma Inc.
Added
On April 11, 2023 the assets under development for which we have the option to license as described above were issued a patent from the U.S. Patent & Trademark Office (USPTO) for “Biomarkers for Efficacy of Prophylactic Treatments Against Stress-Induced Affective Disorders” (US 11,622,948, B2).
Removed
On January 5, 2021, we entered into a Patent License Agreement (the “Aikido License Agreement”) with our wholly-owned subsidiary, Silo Pharma, Inc., and Aikido Pharma Inc.
Added
The Company exercised its option for an exclusive license agreement for SPC-15, a prophylactic treatment for stress-induced affective disorders including anxiety and PTSD pursuant to which the Company will be granted an exclusive license to further develop, manufacture, and commercialize SPC-15 worldwide. The Company expects to have the complete license agreement with Columbia completed in the first half of 2024.
Removed
(“Aikido”) pursuant to which we granted Aikido an exclusive, worldwide, sublicensable, royalty-bearing license to certain intellectual property (i) to make, have made, use, provide, import, export, lease, distribute, sell, offer for sale, develop and advertise certain licensed products and (ii) to develop and perform certain licensed processes for the treatment of cancer and symptoms caused by cancer.
Added
SPC-15 is a targeted prophylactic therapeutic composition for the treatment and prevention for stress-induced affective disorders including PTSD. The treatment predicts levels of severity or progression of such disorders and their metabolomic biomarkers’ response to pharmacological treatments. We intend to develop SPC-15 under the Section 505(b)(2) regulatory pathway of the FDA rules.
Removed
The Aikido License Agreement relates to the rights which we had obtained under the UMB Option Agreement. Pursuant to the Aikido License Agreement, we agreed that if we exercised the UMB Option, we would grant Aikido a non-exclusive sublicense to certain UMB patent rights in the field of neuroinflammatory diseases occurring in patients diagnosed with cancer.
Added
Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act (“FDCA”) was enacted to enable sponsors to seek New Drug Application (“NDA”) approval for novel repurposed drugs without the need for such sponsors to undertake time consuming and expensive pre-clinical safety studies and Phase 1 safety studies.
Removed
The UMB Option was exercised on January 13, 2021. Accordingly, on April 6, 2021, we entered into a sublicense agreement with Aikido pursuant to which we granted Aikido a worldwide exclusive sublicense to our licensed patents under the UMB License Agreement (see below “ Sublicense with Aikido Pharma Inc. ”). Customer Sublicense Agreement with Aikido Pharma Inc.
Added
Proceeding under this regulatory pathway, we will be able to rely upon publicly available data with respect to our active ingredient in our NDA submission to the FDA for marketing approval.
Removed
“Licensed Products” means any product, service, or process, the development, making, use, offer for sale, sale, importation, or providing of which: (i) is covered by one or more claims of the Patent Rights; or (ii) contains, comprises, utilizes, incorporates, or is derived from the Invention or any technology disclosed in the Patent Rights.
Added
On November 15, 2023, the Company entered an exclusive license agreement with Medspray Pharma BV for its proprietary patented soft mist nasal spray technology, as the delivery mechanism for SPC-15, which agreement has an effective date of October 31, 2023.
Removed
Pursuant to the Sublicense Agreement, Aikido shall agree to pay the Company (i) an upfront license fee of $50,000, (ii) the same sales-based royalty payments that we are subject to under the UMB License Agreement and (iii) total milestone payments of up to $1.9 million.
Added
Preclinical and formulation studies are expected to be completed in the first quarter of 2024 and the Company intends to submit a pre-IND meeting request to FDA in the first half of 2024.
Removed
The Sublicense Agreement shall continue on a Licensed Product-by-Licensed Product and country-by-country basis until the later of (i) the date of expiration of the last to expire claim of the Patent Rights covering such Licensed Product in such country, (ii) the expiration of data protection, new chemical entity, orphan drug exclusivity, regulatory exclusivity or other legally enforceable market exclusivity, if applicable and (iii) 10 years after the first commercial sale of a Licensed Product in that country, unless terminated earlier pursuant to the terms of the Sublicense Agreement.
Added
SP-26 In March 2023, the Company filed a provisional patent application with the USPTO to use SP-26 for treatment of chronic pain, including fibromyalgia Fibromyalgia is a chronic condition causing pain to the connective tissues through the body including muscles, ligaments, and tendons. Musculoskeletal pain is often accompanied by sleep difficulties, fatigue, mood disorders, and problems with memory and concentration.
Removed
Furthermore, the Sublicense Agreement shall expire 15 years after the Effective Date with respect to any country in which (i) there were never any Patent Rights, (ii) there was never any data protection, new chemical entity, orphan drug exclusivity, regulatory exclusivity or other legally enforceable market exclusivity with respect to a Licensed Product and (ii) there was never a commercial sale of a Licensed Product, unless such agreement is earlier terminated pursuant to its terms.
Added
Fibromyalgia affects about 4 million American adults, or about 2% of the adult population. We intend to develop SP-26 following the Section 505(b)(2) regulatory pathway of the FDA rules.
Removed
The Company collected the upfront license fee of $50,000 in April 2021. COVID-19 The outbreak of the novel Coronavirus (COVID-19) evolved into a global pandemic. The Coronavirus has spread to many regions of the world.
Added
Section 505(b)(2) of the FDCA was enacted to enable sponsors to seek NDA approval for novel repurposed drugs without the need for such sponsors to undertake time consuming and expensive pre-clinical safety studies and Phase 1 safety studies.
Removed
The extent to which the Coronavirus impacts the Company’s business and operating results will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning the Coronavirus and the actions to contain the Coronavirus or treat its impact, among others.
Added
Proceeding under this regulatory pathway, we will be able to rely upon publicly available data with respect to our active ingredient in our NDA submission to the FDA for marketing approval.
Removed
As a result of the continuing spread of the Coronavirus, certain aspects of the Company’s business operations may be delayed or subject to interruptions.
Added
SPC-14 On October 1, 2021, the Company entered into a sponsored research agreement with Columbia University (“Columbia”) pursuant to which Columbia shall conduct two different studies related to the use of SPC-14 for the treatment of Alzheimer’s.
Removed
Specifically, as a result of the shelter-in-place orders and other mandated local travel restrictions, among other things, the research and development activities of certain of the Company’s partners may be affected, which may result in delays to the Company’s clinical trials, and the Company can provide no assurance as to when such trials, if delayed, will resume at this time or the revised timeline to complete trials once resumed.
Added
See “Investigator-Sponsored Study Agreements between the Company and Vendors---Sponsored Research Agreement with Columbia University for the Study of Ketamine in Combination with Other Drugs for Treatment of Alzheimer’s and Depression Disorders.” for additional details.
Removed
Furthermore, site initiation, participant recruitment and enrollment, participant dosing, distribution of clinical trial materials, study monitoring and data analysis may be delayed due to changes in hospital or university policies, federal, state or local regulations, prioritization of hospital resources toward pandemic efforts, or other reasons related to the pandemic.

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