Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

November 9, 2022

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File No. 001-36672

KIORA PHARMACEUTICALS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

    

98-0443284

(State or other jurisdiction of
Incorporation or organization)

(I.R.S. Employer
Identification No.)

1371 East 2100 South

Suite 200

Salt Lake City, UT 84105

(Address of Principal Executive Offices, including zip code)

(781) 788-8869

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

    

Trading symbol(s)

    

Name of each exchange on which registered

Common Stock, $0.01 par value

KPRX

The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes       No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit).      Yes       No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)

  Yes       No

On November 8, 2022, there were 1,141,863 shares of the registrant’s common stock outstanding.

Table of Contents

KIORA PHARMACEUTICALS, INC.

Table of Contents

QUARTERLY REPORT ON FORM 10-Q

For the Period Ended September 30, 2022

INDEX

Page

PART I - FINANCIAL INFORMATION

Item 1

Financial Statements

3

Condensed Consolidated Balance Sheets as of September 30, 2022 (unaudited) and December 31, 2021

3

Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) for the Three and Nine Months Ended September 30, 2022 and 2021

4

Condensed Consolidated Statement of Stockholders’ Equity (unaudited) for the Three and Nine Months Ended September 30, 2022 and 2021

5

Condensed Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2022 and 2021

9

Notes to Condensed Consolidated Financial Statements

10

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

29

Item 4.

Controls and Procedures

29

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings

30

Item 1A.

Risk Factors

30

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

30

Item 3.

Defaults Upon Senior Securities

30

Item 4.

Mine Safety Disclosures

30

Item 5.

Other Information

30

Item 6.

Exhibits

30

SIGNATURES

31

1

Table of Contents

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains statements that are not statements of historical fact and are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The forward-looking statements are principally, but not exclusively, contained in “Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements include, but are not limited to, statements about management’s confidence or expectations, and our plans, objectives, expectations, and intentions that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “goals,” “sees,” “estimates,” “projects,” “predicts,” “intends,” “think,” “potential,” “objectives,” “optimistic,” “strategy,” and similar expressions intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

the timing and success of preclinical studies and clinical trials conducted by us and our development partners;
the ability to obtain and maintain regulatory approval of our product candidates, and the labeling for any approved products;
the scope, progress, expansion, and costs of developing and commercializing our product candidates;
the size and growth of the potential markets for our product candidates and the ability to serve those markets;
our expectations regarding our expenses and revenue, the sufficiency of our cash resources and needs for additional financing;
the rate and degree of market acceptance of any of our product candidates;
our expectations regarding competition;
our anticipated growth strategies;
our ability to attract or retain key personnel;
our ability to establish and maintain development partnerships;
our expectations regarding federal, state and foreign regulatory requirements;
regulatory developments in the U.S. and foreign countries;
our ability to obtain and maintain intellectual property protection for our product candidates;
the anticipated trends and challenges in our business and the market in which we operate; and
the impact of the evolving COVID-19 pandemic and the global response thereto.

We discuss many of these risks in detail under the heading “Item 1A. Risk Factors” beginning on page 23 of our Annual Report on Form 10-K/A, as filed with the Securities and Exchange Commission, or the SEC, on July 7, 2022, or the Annual Report. You should carefully review all these factors, as well as other risks described in our public filings, and you should be aware that there may be other factors, including factors of which we are not currently aware, that could cause these differences.

Also, these forward-looking statements represent our estimates and assumptions only as of the date of this report. We may not update these forward-looking statements, even though our situation may change in the future, unless we have obligations under the federal securities laws to update and disclose material developments related to previously disclosed information.

Kiora Pharmaceuticals, Inc. is referred to herein as “we,” “our,” “us,” and “the Company.”

2

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1.   Financial Statements

KIORA PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

    

September 30, 2022

    

   

(unaudited)

   

December 31, 2021

ASSETS

 

  

 

  

Current Assets:

 

  

 

  

Cash and Cash Equivalents

$

4,801,616

$

7,854,690

Prepaid Expenses and Other Current Assets

 

260,005

 

606,520

Tax Receivables

1,562,575

529,560

Total Current Assets

 

6,624,196

 

8,990,770

Non-Current Assets:

Property and Equipment, Net

 

59,192

 

73,999

Restricted Cash

 

49,037

 

45,000

Intangible Assets and In-Process R&D, Net

 

10,749,414

 

10,768,164

Operating Lease Assets

147,456

209,411

Other Assets

 

33,023

 

42,964

Total Assets

$

17,662,318

$

20,130,308

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

  

Current Liabilities:

 

 

  

Accounts Payable

$

749,192

$

160,621

Accrued Expenses

 

1,800,010

 

1,330,141

Operating Lease Liabilities

 

131,482

 

118,846

Contingent Consideration

313,714

Total Current Liabilities

 

2,994,398

 

1,609,608

Non-Current Liabilities:

 

 

Contingent Consideration, Non-Current

 

3,339,589

 

3,048,955

Deferred Tax Liability

 

802,131

 

802,131

Operating Lease Liabilities, Non-Current

4,764

90,566

Total Non-Current Liabilities

 

4,146,484

 

3,941,652

Total Liabilities

 

7,140,882

 

5,551,260

Commitments and Contingencies (Note 9)

 

 

  

Stockholders’ Equity:

 

 

  

Preferred Stock, $0.01 Par Value: 10,000,000 shares authorized; 3,750 designated Series A, 0 shares issued and outstanding; 10,000 designated Series B, 0 shares issued and outstanding; 10,000 shares designated Series C, 0 shares issued and outstanding as; 20,000 shares designated Series D, 7 shares issued and outstanding; 1,280 shares designated Series E,0 shares , issued and outstanding

 

 

Common Stock, $0.01 Par Value: 50,000,000 shares authorized and 1,079,045 and 316,599 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

 

10,790

 

3,166

Additional Paid-In Capital

 

142,738,557

 

135,541,662

Accumulated Deficit

 

(131,964,513)

 

(120,879,349)

Accumulated Other Comprehensive Loss

 

(263,398)

 

(86,431)

Total Stockholders’ Equity

 

10,521,436

 

14,579,048

Total Liabilities and Stockholders’ Equity

$

17,662,318

$

20,130,308

See Accompanying Notes to Condensed Consolidated Financial Statements.

3

Table of Contents

KIORA PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(unaudited)

Three Months Ended September 30,

Nine Months Ended, September 30,

    

2022

    

2021

    

2022

    

2021

Operating Expenses:

 

  

 

  

General and Administrative

$

2,033,367

$

1,338,616

$

5,500,036

$

3,944,624

Research and Development

1,332,153

1,628,467

2,607,308

4,348,631

Executive Severance

962,833

Change in Fair Value of Contingent Consideration

337,515

68,006

604,348

(428,480)

Total Operating Expenses

3,703,035

3,035,089

 

9,674,525

 

7,864,775

Operating Loss Before Other Expense

(3,703,035)

(3,035,089)

 

(9,674,525)

 

(7,864,775)

Other Income (Expense), Net:

 

 

Change in Fair Value of Warranty Liability

(1,425,102)

(1,425,102)

Gain on Forgiveness of Loan

278,190

Interest Income (Expense), Net

7,861

259

 

9,315

 

(1,878)

Other Income (Expense), Net

937

5,148

Total Other Income (Expense), Net

(1,416,304)

259

 

(1,410,639)

 

276,312

Net Loss

$

(5,119,339)

$

(3,034,830)

$

(11,085,164)

$

(7,588,463)

Net Loss per Common Share - Basic and Diluted

$

(6.03)

$

(11.34)

$

(22.06)

$

(35.69)

Weighted Average Shares Outstanding - Basic and Diluted

848,534

267,591

502,436

212,612

Other Comprehensive Loss:

 

 

Net Loss

$

(5,119,339)

$

(3,034,830)

$

(11,085,164)

$

(7,588,463)

Foreign Currency Translation Adjustments

(38,537)

(44,734)

 

(176,967)

 

(59,068)

Comprehensive Loss

$

(5,157,876)

$

(3,079,564)

$

(11,262,131)

$

(7,647,531)

See Accompanying Notes to Condensed Consolidated Financial Statements.

4

Table of Contents

KIORA PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

Three Months Ended September 30, 2022 and 2021

(unaudited)

Accumulated

Additional

Other

Total

Preferred Stock

Common Stock

Paid-In

Accumulated

Comprehensive

Stockholders’

    

Shares

    

Amount

    

Shares

    

Amount

    

Capital

    

Deficit

    

Loss

    

Equity

Balance at June 30, 2022

 

7

$

 

326,686

$

3,266

$

135,828,737

$

(126,845,174)

$

(224,861)

$

8,761,968

 

  

 

  

 

  

 

  

 

 

  

 

  

 

Stock-Based Compensation

 

 

 

 

 

130,153

 

 

 

130,153

Issuance of Common Stock from Public Offering, Net of Offering Costs of $505,020

592,392

5,924

2,456,914

2,462,838

Issuance of Series E Preferred Stock from Public Offering, Net of Offering Costs of $136,401

1,280

13

665,178

665,191

Conversion of Series E Preferred Stock into common stock

(1,280)

(13)

160,000

1,600

(1,587)

Reclassification of Warrant Liability

 

 

 

 

 

3,674,791

 

 

 

3,674,791

Adjustments Due to the Rounding Impact from the Reverse Stock Split for Fractional Shares

(33)

(15,629)

(15,629)

Foreign Currency Translation Adjustment

(38,537)

(38,537)

Net Loss

 

 

 

 

 

 

(5,119,339)

 

 

(5,119,339)

 

  

 

  

 

 

  

 

  

 

 

  

 

  

Balance at September 30, 2022

 

7

$

1,079,045

$

10,790

$

142,738,557

$

(131,964,513)

$

(263,398)

$

10,521,436

5

Table of Contents

Accumulated

 

Additional

Other

Total

Preferred Stock

Common Stock

Paid-In

Accumulated

Comprehensive

Stockholders’

    

Shares

    

Amount

    

Shares

    

Amount

    

Capital

    

Deficit

    

Loss

    

Equity

Balance at June 30, 2021

 

4,138

$

41

 

177,448

$

1,774

$

125,356,091

$

(111,662,297)

$

(15,136)

$

13,680,473

Stock-Based Compensation

 

 

 

 

 

149,469

 

 

 

149,469

Conversion of Series C Preferred Stock into Common Stock

(4,092)

(41)

21,313

213

(172)

Issuance of Common Stock from Registered Direct Offering, Net of Offering Costs of $993,666

116,721

1,167

9,755,181

9,756,348

Foreign Currency Translation Adjustment

 

 

 

 

 

 

 

(44,734)

 

(44,734)

Net Loss

 

 

 

 

 

 

(3,034,830)

 

 

(3,034,830)

Balance at September 30, 2021

 

46

$

 

315,482

$

3,154

$

135,260,569

$

(114,697,127)

$

(59,870)

$

20,506,726

6

Table of Contents

KIORA PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

Nine Months Ended September 30, 2022 and 2021

(unaudited)

Accumulated

Additional

Other

Total

Preferred Stock

Common Stock

Paid-In

Accumulated

Comprehensive

Stockholders’

    

Shares

    

Amount

    

Shares

    

Amount

    

Capital

    

Deficit

    

Loss

    

Equity

Balance at December 31, 2021

 

7

$

 

316,599

$

3,166

$

135,541,662

$

(120,879,349)

$

(86,431)

$

14,579,048

 

  

 

  

 

 

 

 

  

 

  

 

Stock-Based Compensation

 

 

 

417,328

 

 

 

417,328

Issuance of Common Stock from Panoptes Holdback Shares

10,087

100

(100)

Issuance of Common Stock from Public Offering, Net of Offering Costs of $505,020

592,392

5,924

2,456,914

2,462,838

Issuance of Series E Preferred Stock from Public Offering, Net of Offering Costs of $136,401

1,280

13

665,178

665,191

 

 

Conversion of Series E Preferred Stock into common stock

 

(1,280)

(13)

160,000

1,600

(1,587)

 

 

 

 

 

 

 

  

Reclassification of Warrant Liability

 

 

 

 

3,674,791

 

 

 

3,674,791

Adjustments Due to the Rounding Impact from the Reverse Stock Split for Fractional Shares

(33)

(15,629)

(15,629)

 

 

 

  

 

  

 

 

  

 

Foreign Currency Translation Adjustment

 

 

 

 

 

 

(176,967)

 

(176,967)

Net Loss

 

 

 

 

 

(11,085,164)

 

 

(11,085,164)

 

  

 

  

 

  

 

  

 

  

 

 

 

Balance at September 30, 2022

 

7

$

 

1,079,045

$

10,790

$

142,738,557

$

(131,964,513)

$

(263,398)

$

10,521,436

7

Table of Contents

Accumulated

 

Additional

Other

Total

Preferred Stock

Common Stock

Paid-In

Accumulated

Comprehensive

Stockholders’

    

Shares

    

Amount

    

Shares

    

Amount

    

Capital

    

Deficit

    

Loss

    

Equity

Balance at December 31, 2020

 

4,138

$

41

 

138,910

$

1,389

$

116,837,777

$

(107,108,664)

$

(802)

$

9,729,741

Stock-Based Compensation

 

 

 

 

 

629,306

 

 

 

629,306

Conversion of Series C Preferred Stock into Common Stock

(4,092)

(41)

21,313

213

(172)

Issuance of Common Stock from Warrants, Net

260

2

49,999

50,001

Issuance of Common Stock from Private Placement, Net of Offering Costs of $11,142

38,278

383

7,988,478

7,988,861

Issuance of Common Stock from Registered Direct Offering, Net of Offering Costs of $993,666

116,721

1,167

9,755,181

9,756,348

Foreign Currency Translation Adjustment

 

 

 

 

 

 

 

(59,068)

 

(59,068)

Net Loss

 

 

 

 

 

 

(7,588,463)

 

 

(7,588,463)

Balance at September 30, 2021

 

46

$

 

315,482

$

3,154

$

135,260,569

$

(114,697,127)

$

(59,870)

$

20,506,726

See Accompanying Notes to Condensed Consolidated Financial Statements.

8

Table of Contents

KIORA PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

Nine Months Ended September 30, 

    

2022

    

2021

Operating Activities:

 

  

 

  

Net Loss

$

(11,085,164)

$

(7,588,463)

Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:

 

 

Depreciation and Amortization

 

31,324

 

34,260

Reduction of Right-of-Use Assets

 

113,574

 

133,514

Stock-Based Compensation

 

417,328

 

629,306

Change in Fair Value of Contingent Consideration

604,348

(428,480)

Change in Fair Value of Warrant Liability

1,425,102

Paycheck Protection Program Loan Forgiveness

(278,190)

Gain on Disposal of Equipment

(4,211)

Changes in Operating Assets and Liabilities:

 

 

Prepaid Expenses

 

342,029

 

107,940

Tax Receivable

 

(1,174,109)

 

(335,096)

Other Assets

 

2,596

 

12,826

Accounts Payable

 

635,153

 

(9,875)

Lease Liabilities

 

(124,784)

 

(133,514)

Accrued Expenses

 

517,681

 

100,050

Net Cash Used in Operating Activities

 

(8,299,133)

 

(7,755,722)

Investing Activities:

Purchases of Property and Equipment

(63,865)

Proceeds on Sale of Equipment

6,375

Net Cash Provided by (Used in) Investing Activities

6,375

(63,865)

Financing Activities:

 

 

Proceeds from Public Offerings, Net of Offering Costs

 

5,377,719

 

17,745,207

Exercise of Warrants

50,001

Net Cash Provided by Financing Activities

 

5,377,719

 

17,795,208

Effect of Exchange Rate Changes on Cash

 

(133,998)

 

(54,371)

Net (Decrease) Increase in Cash

 

(3,049,037)

 

9,921,250

Cash, Cash Equivalents and Restricted Cash, Beginning of Period

 

7,899,690

 

1,230,677

Cash, Cash Equivalents and Restricted Cash, End of Period

$

4,850,653

$

11,151,927

Supplemental Disclosures of Noncash Operating and Financing Activities

 

 

Creation of Right-of-Use Assets and Related Lease Liabilities

$

55,415

$

313,312

Conversion of Preferred Stock into Common Stock

$

1,600

$