Silo Pharma, Inc. — Form 10-Q Summary
Reporting period: Quarter and six months ended June 30, 2022. The financial statements are unaudited. Silo is a development-stage biopharmaceutical company pursuing licensed research and technology for neurological, psychiatric, and other conditions, including psychedelic-related research. Its former NFID apparel business was sold in September 2021 and is reported as discontinued operations.
Financial performance and position
| Metric | Q2 2022 | Six months 2022 |
|---|---|---|
| License-fee revenue | $18,025 | $36,051 |
| Gross profit / gross margin | $16,566 / 91.9% | $33,132 / 91.9% |
| Operating expenses | $510,851 | $1,054,676 |
| Operating loss | $494,285 | $1,021,544 |
| Other income (expense), net | $(164,117) | $(239,767) |
| Net loss | $(658,402) | $(1,262,474) |
| Net loss per common share, basic and diluted | $(0.01) | $(0.01) |
- At June 30, cash and cash equivalents were $8.734 million; current assets were $8.947 million and current liabilities $268,845, yielding working capital of $8.679 million. Total assets were $9.045 million and total liabilities $1.171 million.
- Cash used in operating activities was $1.189 million for the six months; investing activities provided $86,707, and financing activities provided no cash. Cash declined $1.103 million from year-end 2021.
- No conventional borrowings are reported on the balance sheet. Liabilities primarily included deferred license revenue; current and long-term deferred revenue totaled about $974,000.
- Equity investments were $113,012 at fair value, down from $419,995 at December 31, 2021. The company recorded a $104,700 realized loss on its Aikido Pharma investment sale and a $221,309 unrealized loss on investments for the six-month period.
Changes versus comparable periods
- Q2 revenue was essentially unchanged from Q2 2021 ($18,025 versus $18,026). Q2 net loss increased to $658,402 from $461,990, primarily reflecting investment losses and higher operating expenses.
- Six-month operating expenses fell to $1.055 million from $1.371 million, mainly as professional fees declined; research and development expense rose to $275,955 from $147,448.
- Six-month net loss improved to $1.262 million from $1.393 million. The prior-year loss available to common stockholders was higher, at $2.797 million, partly due to a $1.404 million deemed preferred-stock dividend in 2021.
- NFID discontinued-operations loss was $1,163 for the first half of 2022 versus $140,150 in 2021.
Outlook, risks, and notable matters
- Management said existing cash should fund obligations for at least 12 months from the filing date; it reported no material capital-expenditure commitments. No revenue, earnings, or clinical-development guidance was provided.
- The company reported a six-month net loss, operating cash outflow, and $4.525 million accumulated deficit, but said working capital mitigated historical going-concern concerns.
- Research programs and licensing involve execution, clinical-trial, funding, regulatory, intellectual-property, and commercialization risks. Psilocybin is a Schedule I substance; the company also warned that COVID-19 could delay partner research and trials and affect access to capital.
- Commitments include Columbia University research support of up to $1.436 million over one year and a planned $225,000 contribution to a ketamine joint venture with Zylö Therapeutics. The joint-venture entity had not been formed by the report date. The filing also describes milestone, royalty, and sublicense-payment obligations under its University of Maryland, Baltimore license.
- The company received 77,939 Home Bistro shares valued at $85,733 for a lock-up agreement. It had 99,395,304 common shares outstanding at June 30 and July 29, 2022. Outstanding warrants covered 17,353,987 shares and options covered 1,442,466 shares.
- Management concluded disclosure controls were not effective at June 30, citing inadequate segregation of accounting duties and insufficient system and manual controls. The company reported no material legal proceedings and no material changes to previously disclosed risk factors.
Important facts for investors to verify
- Confirm cash runway against the pace of research spending, contractual research commitments, and potential need for additional financing.
- Track progress, timing, and potential costs of university research, license options, and formation of the Zylö joint venture.
- Assess potential dilution from warrants and options, and the market-value sensitivity of equity investments.
- Review remediation of the disclosed material weaknesses in internal controls.
- Reconcile filing inconsistencies in comparative disclosures: the statements report six-month 2021 revenue of $35,213, while MD&A gives $35,313; compensation expense is also reported as $167,234 in the statements and $164,234 in MD&A.