azrx10q_mar312021

10-Q 1 azrx10q_mar312021.htm QUARTERLY REPORT azrx10q_mar312021

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2021

[ ] TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934

From the transition period from to

Commission File Number 001-37853

AZURRX BIOPHARMA, INC.

(Exact name of small business issuer as specified in its charter)

Delaware		46-4993860
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

1615 South Congress Avenue, Suite 103

Delray Beach, Florida 33445

(Address of principal executive offices)

(646) 699-7855

(Issuer’s telephone number)

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

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common stock, par value $0.0001 per share	AZRX	Nasdaq Capital Market

Securities registered under Section 12(g) of the Exchange Act: None

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 [X] 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 (Sec.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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	[X]	Smaller reporting company	[X]
		Emerging growth company	[X]

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 [X]

There were 78,575,131 shares of the registrant’s common stock, par value $0.0001 per share (the “Common Stock”), outstanding as of May 18, 2021.

TABLE OF CONTENTS

			Page

PART I.	FINANCIAL INFORMATION		1

	Item 1.	Consolidated Financial Statements	1

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41

	Item 4.	Controls and Procedures	41

PART II.	OTHER INFORMATION		42

	Item 1.	Legal Proceedings	42

	Item 1A.	Risk Factors	42

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42

	Item 3.	Defaults Upon Senior Securities	42

	Item 4.	Mine Safety Disclosures	42

	Item 5.	Other Information	42

	Item 6.	Exhibits	42

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Table of Contents

PART I

FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

In our opinion, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly our financial position, results of operations, and cash flows for the interim periods presented. We have condensed such financial statements in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Therefore, such financial statements do not include all disclosures required by accounting principles generally accepted in the United States of America. In preparing these consolidated financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through the date the consolidated financial statements were issued by filing with the SEC.

These financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2020 included in our Annual Report filed on Form 10-K, filed with the SEC on March 31, 2021.

The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the fiscal year ended December 31, 2021.

Table of Contents

AZURRX BIOPHARMA, INC.

Consolidated Balance Sheets (unaudited)


	March 31,	December 31,
	2021	2020
ASSETS

Current Assets:
Cash and cash equivalents	$12,025,632	$6,062,141
Other receivables	501,660	551,489
Prepaid expenses	643,131	1,256,154
Total Current Assets	13,170,423	7,869,784

Property, equipment, and leasehold improvements, net	92	18,329

Other Assets:
Patents, net	2,747,649	2,879,536
Goodwill	1,973,963	2,054,048
Operating lease right-of-use assets	61,524	74,238
Deposits	29,242	27,920
Total Other Assets	4,812,378	5,035,742
Total Assets	$17,982,893	$12,923,855

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$1,707,841	$1,685,603
Payable related to license agreement	1,250,000	13,250,000
Accrued dividend payable	204,382	-
Note payable	347,082	552,405
Other current liabilities	65,335	57,417
Total Current Liabilities	3,574,640	15,545,425

Other liabilities	6,566	19,123
Total Liabilities	3,581,206	15,564,548

Stockholders' Equity:
Common stock - Par value $0.0001 per share; 250,000,000 and 150,000,000 shares authorized; 74,926,902 and 31,150,309 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively.	7,493	3,115
Series B preferred stock- Par value $0.0001 per share; 5,194.81 shares authorized; 1,209.52 and 2,773.6 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively.	-	-
Series C preferred stock- Par value $0.0001 per share; 75,000 shares authorized; 0 and 0 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively.	-	-
Additional paid-in capital	118,693,364	93,834,936
Accumulated deficit	(103,051,827)	(95,366,198)
Accumulated other comprehensive loss	(1,247,343)	(1,112,546)
Total Stockholders' Equity	14,401,687	(2,640,693)
Total Liabilities and Stockholders' Equity	$17,982,893	$12,923,855

See accompanying notes to consolidated financial statements

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AZURRX BIOPHARMA, INC.

Consolidated Statements of Operations and Comprehensive Loss (unaudited)

	Three Months	Three Months
	Ended	Ended
	03/31/21	03/31/20
Operating expenses:
Research and development expenses	$2,516,027	$1,548,831
General and administrative expenses	5,697,514	1,379,620
Total operating expenses	8,213,541	2,928,451

Loss from operations	(8,213,541)	(2,928,451)

Other income (expenses):
Interest expense	(5,144)	(2,332,839)
Interest income	403	-
Change in fair value of liability	532,653	-
Total other income (expenses)	527,912	(2,332,839)

Loss before income taxes	(7,685,629)	(5,261,290)

Income taxes	-	-

Net loss	$(7,685,629)	$(5,261,290)

Other comprehensive loss:
Foreign currency translation adjustment	(134,797)	157,494
Total comprehensive loss	$(7,820,426)	$(5,103,796)

Net loss	$(7,685,629)	$(5,261,290)
Deemed dividend on preferred stock issuances	(4,507,125)	-
Deemed dividend of preferred stock exchanges	(17,584,048)	-
Preferred stock dividends	(204,382)	-
Net loss applicable to common stockholders	(29,981,184)	(5,261,290)

Basic and diluted weighted average shares outstanding	55,348,130	26,941,803

Net loss per share - basic and diluted	$(0.14)	$(0.20)

See accompanying notes to consolidated financial statements

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AZURRX BIOPHARMA, INC.

Consolidated Statements of Changes in Stockholders' Equity (unaudited)

									Accumulated
	Series C Convertible		Series B Convertible				Additional		Other
	Preferred Stock		Preferred Stock		Common Stock		Paid In	Accumulated	Comprehensive
	Shares	Amount	Shares	Amount	Shares	Amount	Capital	Deficit	Loss	Total

Balance, January 1, 2020	-	$-	-	$-	26,800,519	$2,680	$68,575,851	$(62,694,732)	$(1,266,555)	$4,617,244
Common stock issued to settle related payable accounts payable					105,937	11	131,126			131,137
Common stock issued to consultants					101,195	10	87,095			87,105
Common stock issued to Lincoln Park for Equity Purchase agreement					150,000	15	143,985			144,000
Warrants issued in association with convertible debt issuances							1,252,558			1,252,558
Beneficial conversion feature on convertible debt issuances							1,838,422			1,838,422
Stock-based compensation							74,453			74,453
Foreign currency translation adjustment									157,494	157,494
Net loss								(5,261,290)		(5,261,290)
Balance, March 31, 2020	-	$-	-	$-	27,157,651	$2,716	$72,103,490	$(67,956,022)	$(1,109,061)	$3,041,123

Balance, January 1, 2021	-	$-	2,774	$-	31,150,309	$3,115	$93,834,936	$(95,366,198)	$(1,112,546)	$(2,640,693)
Issuance of Series C preferred stock and warrants for cash, net of offering costs	10,667	1	-	$-	-	-	7,105,167	-	-	7,105,167
Issuance of Series C preferred stock to settle liability arising from acquisition	3,290	1	-	$-	-	-	2,467,648			2,467,648
Beneficial conversion feature of Series C preferred stock	-	-	-	$-	-	-	4,507,125	-	-	4,507,125
Deemed dividend of Series C preferred stock	-	-	-	$-	-	-	(4,507,125)			(4,507,125)
Issuance of Series C preferred stock upon exchange of Series B preferred stock	13,501	1	(1,306)	$-	-	-	(1,009)			(1,009)
Warrants issued in connection with exchange of Series B preferred stock	-	-	-	$-	-	-	17,585,057			17,585,057
Deemed dividend related to exchange of Series B preferred stock	-	-	-	$-	-	-	(17,584,048)			(17,584,048)
Common stock issued upon conversion of Series B preferred stock	-	-	(259)	$-	2,582,782	258	(258)			-
Dividends on preferred stock	-	-	-	$-	-	-	(204,382)			(204,382)
Common stock and pre-funded warrants issued upon conversion of Series C preferred stock	(27,458)	(3)	-	$-	25,615,442	2,562	(2,559)			3
Issuance of common stock, pre-funded warrants and warrants for cash, net of offering costs	-	-	-	$-	5,800,000	580	9,058,710			9,059,290
Common stock issued upon exercise of warrants	-	-	-	$-	9,128,068	913	4,622,929			4,623,842
Common stock and warrants issued to consultants	-	-	-	$-	575,301	58	944,441			944,499
Issuance of common stock in connection with settlement with former investment bank	-	-	-	$-	75,000	7	94,492			94,499
Stock-based compensation	-	-	-	$-	-	-	772,240			772,240
Foreign currency translation adjustment	-	-	-	$-					(134,797)	(134,797)
Net loss	-	-	-	$-				(7,685,629)		(7,685,629)
Balance, March 31, 2021

SEC Form 10-Q filed by AzurRx BioPharma, Inc.