SEC Filing Summary
Entity note: The request identifies Dominari Holdings Inc., but the supplied 10-Q is for Aikido Pharma Inc. (formerly Spherix Incorporated), ticker AIKI. The filing covers the quarter ended March 31, 2020, and was signed May 14, 2020.
Business context
Aikido described itself as an early-stage biotechnology company developing small-molecule cancer therapies and a broad-spectrum antiviral platform through university partnerships. It also held investments in Hoth Therapeutics and DatChat and had acquired CBM BioPharma assets. The company reported no operating revenue and did not expect revenue in the near term.
Financial results and liquidity
| Metric | Q1 2020 | Q1 2019 or prior year-end |
|---|---|---|
| Revenue | None reported | None reported |
| Operating expenses | $2.399 million | $0.713 million |
| Operating loss | $2.399 million | $0.713 million |
| Net loss | $8.333 million | $1.149 million |
| Net loss per share, basic and diluted | $0.91 | $0.57 |
| Net cash used in operations | $1.448 million | $0.896 million |
| Cash and cash equivalents | $0.252 million | $0.091 million at Dec. 31, 2019 |
| Marketable securities | $16.141 million | $0.857 million at Dec. 31, 2019 |
| Total liabilities | $0.615 million | $0.750 million at Dec. 31, 2019 |
| Stockholders’ equity | $20.975 million | $10.532 million at Dec. 31, 2019 |
Margins are not meaningful because the company reported no revenue. No debt was listed on the balance sheet. Cash used in investing activities was $17.174 million, chiefly reflecting purchases of marketable securities; financing activities provided $18.783 million. The quarter-end current assets were $16.558 million against current liabilities of $0.615 million, including substantial marketable securities.
Material changes and notable items
- Operating loss increased by about $1.7 million year over year, reflecting approximately $1.0 million of acquired-license research and development expense and a $0.6 million increase in general and administrative expense.
- Other expense rose to $5.934 million from $0.436 million, principally due to a $5.071 million decline in the fair value of the Hoth investment and $0.863 million of losses on marketable securities. The Hoth holding was valued at $5.007 million at quarter-end, versus $10.128 million at year-end 2019.
- The company recorded a $1.011 million CBM license-related R&D charge after raising more than $2 million, as required by the CBM purchase agreement.
- Q1 financing included net proceeds of $6.549 million from common stock, common warrants and pre-funded warrants; $5.095 million from a common-stock offering; and $7.139 million from warrant exercises. Issued common shares increased to 20.858 million from 4.826 million at year-end 2019.
- After quarter-end, an April 14 registered offering of 14 million shares at $1.00 per share raised approximately $14 million gross, before fees and expenses.
Outlook, risks and contingencies
- Going concern: Management stated there was substantial doubt about the company’s ability to continue as a going concern within one year of the filing date. It expected to require additional capital, which might not be available on acceptable terms or at all.
- Development outlook: The company’s candidates were preclinical, with no clinical-stage candidates reported. It described plans to file an IND for DHA-dFdC and hoped to begin human testing in 2021, while cautioning that timing and success were uncertain. No financial guidance was provided.
- COVID-19: Management said it did not expect a material impact on long-term development timelines or liquidity based on its then-current assessment, but also said the pandemic could negatively affect operations, finances and drug-candidate work; the specific impact was not determinable.
- Listing: Nasdaq notified the company on April 28 that its stock was below the $1.00 minimum bid-price requirement. The company had until December 28, 2020 to regain compliance by meeting the threshold for at least 10 consecutive business days.
- Controls: Management concluded disclosure controls were ineffective at March 31 due to material weaknesses, including inadequate segregation of duties and insufficient controls to ensure all material transactions and developments were reflected in the financial statements.
- The filing reported no material active or pending legal proceedings and no off-balance-sheet arrangements. It also established a Series L preferred-stock rights plan; no rights had been exercised by March 31.
Important facts for investors to verify
- Confirm the intended issuer: the supplied filing is Aikido Pharma Inc., not Dominari Holdings Inc.
- Review subsequent financing, share-count dilution and the terms and potential dilution of outstanding warrants.
- Assess cash runway and financing needs in light of the going-concern warning and the company’s pre-revenue development stage.
- Verify Nasdaq bid-price compliance and any later listing-status developments.
- Review remediation of the disclosed internal-control weaknesses and the valuation sensitivity of the Hoth investment.