Filing summary
Entity and period: The supplied filing is AIkido Pharma Inc.’s Form 10-K for the fiscal year ended December 31, 2021, filed March 28, 2022. It is not a Dominari Holdings Inc. filing, and it reports annual results rather than a standalone 2021 fourth quarter. The financial statements are audited and presented in accordance with U.S. GAAP.
Business context
AIkido describes itself as an early-stage biotechnology company with oncology and antiviral programs licensed or developed with university collaborators. Its principal programs include preclinical pancreatic cancer candidate DHA-dFdC, AML/ALL candidate KPC34, and a University of Maryland broad-spectrum antiviral platform. The filing also describes investments in other companies, including Convergent Therapeutics and several private businesses. The company reported four full-time employees and one part-time employee at year-end.
Financial performance and position
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | Very little or none; the filing does not provide a clear exact amount | Very little or none; the filing does not provide a clear exact amount |
| Operating expenses / loss from operations | $9.441 million | $6.546 million |
| Net loss | $7.171 million | $12.337 million |
| Net loss per share, basic and diluted | $0.09 | $0.44 |
| Net cash used in operating activities | $6.603 million | $4.021 million |
| Cash and cash equivalents at year-end | $65.562 million | $2.715 million |
| Current assets / current liabilities | $90.889 million / $1.061 million | $27.731 million / $0.877 million |
| Total assets / total liabilities | $102.656 million / $1.061 million | $30.495 million / $0.877 million |
At year-end 2021, the company also reported $11.427 million of marketable securities, $9.465 million of long-term investments, $6.984 million of short-term notes receivable at fair value, and a $2.147 million convertible note receivable. Working capital was approximately $89.8 million. No debt balance is reported in the balance sheet; total liabilities were $1.061 million. The company reported no product revenue and no operating margin; profitability and cash-flow margins are not meaningful given its losses and development-stage status.
Changes versus 2020
- Operating loss increased by approximately $2.9 million, principally as general and administrative expense rose from $4.057 million to $7.734 million. Management cited approximately $1.2 million in 2021 fees to Revere Securities, a related party whose president was a company director.
- Net loss narrowed by approximately $5.2 million, mainly because the change in fair value of investments improved from a loss of $6.811 million in 2020 to income of $3.626 million in 2021. This non-operating investment valuation effect offset some of the higher operating loss.
- Operating cash use increased by approximately $2.6 million. Cash rose substantially following the February 2021 public offering, which generated approximately $78.2 million in net proceeds and materially diluted shareholders.
- The company’s investment portfolio expanded. Private-company investment valuations contributed significant unrealized gains, including reported gains on Kerna Health and Kaya Holding; those valuations involve management judgment.
Outlook, risks and unusual items
- Development and funding: The company said it expects no meaningful revenue until a biotechnology product is fully developed, which may take years or may never occur. DHA-dFdC remained preclinical; animal studies and an IND filing were still required before human trials. The filing describes an intended Section 505(b)(2) regulatory path but reports that no IND or NDA had been submitted.
- Liquidity and going concern: The MD&A states there is substantial doubt about the company’s ability to continue as a going concern within one year of filing, while Note 2 says projected cash flows indicate adequate cash for at least the next 12 months from issuance of the financial statements. Investors should note this tension; the filing does not reconcile it clearly.
- Program and intellectual-property risks: The antiviral program was at an early stage, with planned research payments of $3.1 million over two years under the UMB arrangement. The patent covering KPC34 expired in August 2021, and the filing says the remaining licensed patents expire by late 2022. Drug efficacy, clinical success, regulatory approval, manufacturing, commercialization and financing remain uncertain.
- Accounting and controls: Management concluded disclosure controls and internal control over financial reporting were ineffective at year-end due to inadequate segregation of duties and insufficient controls to ensure material transactions and developments were reflected. The auditor identified valuation of private-company investments as a critical audit matter. The auditor did not provide an opinion on internal-control effectiveness.
- Listing and capital structure: Nasdaq notified the company that it was below the $1.00 minimum bid-price requirement. In February 2022, Nasdaq granted an additional compliance period through August 8, 2022. The 2021 common-stock offering and outstanding warrants create dilution exposure.
- Subsequent events: In March 2022, the company closed preferred-stock offerings for approximately $21.9 million gross proceeds, with each series convertible at $1.00 per common share. The board also authorized repurchases of up to $3 million in January 2022. The filing reports a strategic-alternatives review and COVID-related delays to development work.
Important facts for investors to verify
- Confirm the issuer: this filing is for AIkido Pharma Inc., not Dominari Holdings Inc.; confirm whether this is the intended filing.
- Review the financial statements and notes for the precise revenue disclosure and reconcile the going-concern statements with the reported cash and working capital.
- Assess the valuation basis, liquidity and recoverability of private-company investments and notes receivable, including the significant unobservable Level 3 measurements.
- Check subsequent filings for use of 2022 financing proceeds, share issuance upon preferred-stock conversion, repurchases, Nasdaq compliance and any changes to the strategic review.
- Verify current development status, funding needs, patent coverage and timelines for DHA-dFdC, the antiviral platform and other licensed programs.
- Review remediation progress for the disclosed material weaknesses and the related-party relationship and fees involving Revere Securities.