SEC Form 10-Q filed by TFF Pharmaceuticals Inc.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the Quarterly Period Ended
OR
For the transition period from _______________to_______________
Commission file number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification no.) |
(Address of principal executive offices, including zip code)
(Registrant’s telephone number, including area code)
1751 River Run, Suite 400
Fort Worth, Texas 76107
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The |
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.
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 (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
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 (as defined in Rule 12b-2 of the Act):
| Large accelerated filer | ☐ | 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
The number of shares of the registrant’s
common stock outstanding as of November 18, 2024 was
TFF PHARMACEUTICALS, INC.
TABLE OF CONTENTS
i
CAUTIONARY NOTICE
As previously announced, on November 14, 2024, following the conclusion of our review of strategic alternatives, our board of directors (“Board”) approved the dissolution and liquidation (“Dissolution”) of TFF Pharmaceuticals, Inc. (“Company”) pursuant to a plan of complete liquidation and dissolution (“Plan of Dissolution”), which plan is subject to stockholder approval. We intend to call a special meeting of the stockholders to seek approval of the Plan of Dissolution and intend to file a preliminary proxy statement relating to the special meeting with the Securities and Exchange Commission (“SEC”).
The Company cautions that trading in the Company’s securities is highly speculative and poses substantial risks. Trading prices for the Company’s securities may bear little or no relationship to the actual value realized, if any, by holders of the Company’s securities. Accordingly, the Company urges extreme caution with respect to existing and future investments in its securities.
FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Those forward-looking statements include our expectations, beliefs, intentions and strategies regarding the future.
The forward-looking statements in this Quarterly Report on Form 10-Q include, among other things, statements about:
| ● | our plans and expectations regarding our planned Dissolution; |
| ● | our anticipated uses of cash, cash runway and future cash position, including the availability, timing and amount of liquidating distributions, the amounts that will need to be set aside by us and the adequacy of such reserves to satisfy our obligations; |
| ● | the amount of proceeds that might be realized from the sale or other disposition of any of our remaining assets; |
| ● | the timing and stockholder approval of our planned Dissolution; |
| ● | the incurrence by the Company of expenses relating to the Dissolution; |
| ● | the limitations on trading of our common stock prior to the Dissolution; |
| ● | our ability to retain employees, consultants, advisors and other resources to carry out the Dissolution; and |
| ● | our estimates regarding our results of operations, financial condition, liquidity and capital requirements. |
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in Item 1.A. “Risk Factors” included in this Quarterly Report on Form 10-Q that could cause actual results or events to differ materially from the forward-looking statements that we make. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
ii
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
TFF PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, 2024 | December 31, 2023 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Research and development tax incentive receivable | ||||||||
| Prepaid assets and other current assets | ||||||||
| Total current assets | ||||||||
| Operating lease right-of-use asset, net | ||||||||
| Property and equipment, net | ||||||||
| Investment in Vaxanix | ||||||||
| Note receivable - Augmenta | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Deferred research grant revenue | ||||||||
| Current portion of operating lease liability | ||||||||
| Total current liabilities | ||||||||
| Operating lease liability, net of current portion | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (see Note 5) | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock; $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
TFF PHARMACEUTICALS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenues: | ||||||||||||||||
| Feasibility | $ | $ | $ | $ | ||||||||||||
| Grant | ||||||||||||||||
| Total revenues | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest income, net | ||||||||||||||||
| Change in fair value of note receivable | ( | ) | ( | ) | ( | ) | ||||||||||
| Total other income (expense), net | ( | ) | ||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share, basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average common shares outstanding, basic and diluted | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other comprehensive loss: | ||||||||||||||||
| Foreign currency translation adjustments | ( | ) | ( | ) | ( | ) | ||||||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
TFF PHARMACEUTICALS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
| Common Stock | Additional Paid in | Accumulated Other Comprehensive | Accumulated | Total Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Loss | Deficit | Equity | |||||||||||||||||||
| Balance, January 1, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Sales of common stock through the at-the-market offering | ||||||||||||||||||||||||
| Sale of common stock and warrants through direct offering, net of offering costs | ||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||
| Costs related to ATM | - | ( | ) | ( | ) | |||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, March 31, 2024 | ( | ) | ( | ) | ||||||||||||||||||||
| Sales of common stock through the at-the-market offering | ||||||||||||||||||||||||
| Sale of common stock and warrants through public offering, net of offering costs | ||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||
| Costs related to ATM | - | ( | ) | ( | ) | |||||||||||||||||||
| Foreign currency translation adjustment | - | |||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, June 30, 2024 | ( | ) | ( | ) | ||||||||||||||||||||
| Sales of common stock through the at-the-market offering | ||||||||||||||||||||||||
| Issuance of common stock for warrant exercises | ( | ) | ||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||
| Costs related to ATM | - | ( | ) | ( | ) | |||||||||||||||||||
| Foreign currency translation adjustment | - | |||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Balance, January 1, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||
| Costs related to ATM | - | ( | ) | ( | ) | |||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, March 31, 2023 | ( | ) | ( | ) | ||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||
| Costs related to ATM | - | ( | ) | ( | ) | |||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, June 30, 2023 | ( | ) | ( | ) | ||||||||||||||||||||
| Sale of common stock in public offering, net of offering costs | ||||||||||||||||||||||||
| Sale of common stock through the at-the-market offering | ||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
TFF PHARMACEUTICALS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| For The Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustment to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock based compensation | ||||||||
| Interest accrued on note receivable | ( | ) | ( | ) | ||||
| Change in fair value of note receivable | ||||||||
| Write-off of construction-in-process | ||||||||
| Depreciation and amortization | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Research and development tax incentive receivable | ( | ) | ||||||
| Prepaid assets and other current assets | ||||||||
| Accounts payable | ||||||||
| Accrued liabilities | ( | ) | ||||||
| Deferred revenue | ( | ) | ||||||
| Operating lease obligation | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Sale of common stock in public offering, net of offering costs | ||||||||
| Sales of common stock through ATM | ||||||||
| Payment of offering costs in connection with ATM | ( | ) | ( | ) | ||||
| Payment of deferred offering costs | ( | ) | ||||||
| Proceeds from issuance of common stock for pre-funded warrant exercises | ||||||||
| Sales of common stock and warrants through offerings, net of offering costs | ||||||||
| Net cash provided by (used in) financing activities | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ( | ) | ||||
| Net change in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for income taxes | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Conversion of note receivable into common stock of Augmenta | $ | $ | ||||||
| Exchange of Augmenta common stock for common stock of Vaxanix | $ | $ | ||||||
| Deferred offering costs included in accounts payable | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
TFF PHARMACEUTICALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For The Three and Nine Months Ended September 30, 2024 and 2023
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
TFF Pharmaceuticals, Inc. (the “Company”)
was incorporated in the State of Delaware on
On November 14, 2024, after completing a review of the strategic options available to the Company, the Company’s board of directors approved the dissolution and liquidation of the Company (the “Dissolution”), pursuant to a plan of complete liquidation and dissolution (“Plan of Dissolution”), subject to the approval of the Company’s stockholders, and implemented a reduction-in-force of substantially all of its employees, including officers, effective as of November 14, 2024. The Company intends to hold a special meeting of stockholders (“Special Meeting”) to seek stockholder approval of the Plan of Dissolution.
Reverse Stock Split
NOTE 2 - GOING CONCERN AND MANAGEMENT’S PLANS
The accompanying condensed consolidated financial statements have been prepared under the assumption the Company will continue to operate as a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts of liabilities that may result from uncertainty related to the Company’s ability to continue as a going concern.
For the nine months ended September 30, 2024 and
2023, the Company reported a net loss of $
Based on the Company’s current working capital and anticipated operating expenses, management believes that there is substantial doubt about its ability to continue as a going concern for a period of 12 months following the date that these unaudited condensed consolidated financial statements are issued.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and with Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by GAAP for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of September 30, 2024 and the results of operations, changes in stockholders’ equity and cash flows for the periods presented. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
5
TFF PHARMACEUTICALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For The Three and Nine Months Ended September 30, 2024 and 2023
Reclassification
Certain prior period amounts have been reclassified to conform to the current period classification. Grant revenues have been reflected separately from feasibility revenues in the condensed consolidated statements of operations with no changes in the previously reported net losses.
Principles of Consolidation
The consolidated financial statements include the accounts of TFF Pharmaceuticals, Inc. and its wholly owned subsidiary, TFF Australia. All material intercompany accounts and transactions have been eliminated in consolidation.
Fair Value Option - Convertible Note Receivable
The guidance in Accounting Standards Codification (“ASC”) 825, Financial Instruments, provides a fair value option election that allows entities to make an irrevocable election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets and liabilities. The Company elected to measure its convertible note receivable using the fair value option prior to its conversion. Under the fair value option, bifurcation of an embedded derivative is not necessary, and all related gains and losses on the host contract and derivative due to change in the fair value will be reflected in other income (expense), net in the condensed consolidated statements of operations. Interest accrues on the unpaid principal balance on a quarterly basis and is recognized in interest income in the condensed consolidated statements of operations.
The decision to elect the fair value option is determined on an instrument-by-instrument basis and must be applied to an entire instrument and is irrevocable once elected. Pursuant to this guidance, assets and liabilities are measured at fair value based, in part, on general economic and stock market conditions and those characteristics specific to the underlying investments. The carrying value is adjusted to estimated fair value at the end of each quarter, required to be reported separately in our condensed consolidated balance sheets from those instruments using another accounting method.
Investment in Equity Security
The Company’s investment in Vaxanix is a non-marketable equity security. This investment does not have a readily determinable fair value, therefore the Company has elected to measure the investment at cost less any impairment, adjusted to fair value if there are observable price changes in orderly transactions for an identical or similar investment of the same issuer, in accordance with ASC 321, Investments - Equity Securities. At each reporting period, the Company performs an assessment to determine if it still qualifies for this measurement alternative.
At each reporting period, the Company makes a qualitative assessment considering impairment indicators to evaluate whether the investment is impaired. If a qualitative assessment indicates the investment is impaired, the Company estimates the investment’s fair value. If the fair value is less than the investment’s carrying value, an impairment charge is recorded in the condensed consolidated statements of operations equal to the difference between the carrying value and fair value and a new basis in the investment is established.
Fair Value of Financial Instruments
Authoritative guidance requires disclosure of the fair value of financial instruments. The Company measures the fair value of certain of its financial assets and liabilities on a recurring basis. A fair value hierarchy is used to rank the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value which is not equivalent to cost will be classified and disclosed in one of the following three categories:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets and liabilities.
Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as unadjusted quoted prices for similar assets and liabilities, unadjusted quoted prices in the markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
6
TFF PHARMACEUTICALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For The Three and Nine Months Ended September 30, 2024 and 2023
Revenue Recognition
Feasibility Agreements
The Company has entered into feasibility and material transfer agreements (“Feasibility Agreements”) with third parties that provide the Company with funds in return for certain research and development activities. Revenue from the Feasibility Agreements is recognized in the period during which the related qualifying services are rendered and costs are incurred, provided that the applicable conditions under the Feasibility Agreements have been met.
The Feasibility Agreements are on a best-effort basis and do not require scientific achievement as a performance obligation. All fees received under the Feasibility Agreements are non-refundable. The costs associated with the Feasibility Agreements are expensed as incurred and are reflected as a component of research and development expense in the accompanying consolidated statements of operations.
Funds received from the Feasibility Agreements are recorded as revenue as the Company is the principal participant in the arrangement because the activities under the Feasibility Agreements are part of the Company’s development programs. In those instances where the Company first receives consideration in advance of providing underlying services, the Company classifies such consideration as deferred revenue until (or as) the Company provides the underlying services. In those instances where the Company first provides the underlying services prior to its receipt of consideration, the Company records a grant receivable.
Grants
The Company accounts for grants awarded from a government-sponsored entity for research and development related activities that provide for payments for reimbursed costs, which includes overhead and general and administrative costs, as well as an administrative fee. The Company recognizes revenue from grants as it performs services under the arrangements. Associated expenses are recognized when incurred as research and development expense. Revenue and related expenses are presented gross in the consolidated statements of operations.
Research and Development Expenses and Related Prepaid and Accrued Expenses
Research and development (“R&D”) expenses consist of costs incurred for R&D of its product candidate and are recorded to operating expenses when incurred. The Company’s R&D expenses consist primarily of costs incurred in performing R&D activities, including personnel-related expenses such as salaries, stock-based compensation and benefits, as well as facilities costs, dues and subscriptions and external costs of outside vendors engaged as contract research organization, contract manufacturers, consultants and other third parties to conduct and support our clinical trials. The Company accrues expenses related to development activities performed by third parties based on an evaluation of services received and efforts expended pursuant to the terms of the contractual arrangements. Payments under some of these contracts depend on clinical trial milestones. There may be instances in which payments made to the Company’s vendors will exceed the level of services provided and result in a prepayment of expenses. In accruing service fees, the Company estimates the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual or prepaid expense accordingly.
Research and Development Tax Incentive
The Company is eligible to obtain a cash refund from the Australian Taxation Office for eligible research and development expenditures under the Australian R&D Tax Incentive Program (the “Australian Tax Incentive”). The Company recognizes the Australian Tax Incentive when there is reasonable assurance that the cash refund will be received, the relevant expenditure has been incurred, and the consideration can be reliably measured.
7
TFF PHARMACEUTICALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For The Three and Nine Months Ended September 30, 2024 and 2023
As the Company has determined that it has reasonable
assurance that it will receive the cash refund for eligible research and development expenditures, the Company records the Australian
Tax Incentive as a reduction to research and development expenses as the Australian Tax Incentive is not dependent on the Company generating
future taxable income, the Company’s ongoing tax status, or tax position. At each period end, management estimates the refundable
tax offset available to the Company based on available information at the time. This percentage of eligible research and development expenses
reimbursable under the Australian Tax Incentive is
The research and development incentive receivable
represents amounts due in connection with the Australian Tax Incentive and from the IRS. The Company has recorded a research and development
tax incentive receivable of $
Basic and Diluted Earnings per Common Share
Basic net loss per common share is calculated
by dividing the net loss by the weighted-average number of common shares outstanding for the period. Diluted net loss per share is computed
by dividing the net loss by the weighted-average number of common shares and dilutive share equivalents outstanding for the period, determined
using the treasury-stock and if-converted methods. Since the Company has had net losses for all periods presented, all potentially dilutive
securities are anti-dilutive. Basic weighted average shares outstanding for the three and nine months ended September 30, 2024 include
| For The Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Stock Options | ||||||||
| Warrants | ||||||||
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates include the fair value of the convertible note receivable prior to its conversion, stock-based compensation and warrants, the valuation of the investment in a non-marketable equity security and the valuation allowance against deferred tax assets. Actual results could differ from those estimates.
Stock-Based Compensation
The Company computes stock-based compensation in accordance with authoritative guidance. The Company uses the Black-Scholes-Merton option-pricing model to determine the fair value of its stock options. The Black-Scholes-Merton option-pricing model includes various assumptions, including the fair market value of the common stock of the Company, expected life of stock options, the expected volatility and the expected risk-free interest rate, among others. These assumptions reflect the Company’s best estimates, but they involve inherent uncertainties based on market conditions generally outside the control of the Company.
8
TFF PHARMACEUTICALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For The Three and Nine Months Ended September 30, 2024 and 2023
As a result, if other assumptions had been used, stock-based compensation cost, as determined in accordance with authoritative guidance, could have been materially impacted. Furthermore, if the Company uses different assumptions on future grants, stock-based compensation cost could be materially affected in future periods.
The grant-date fair value of restricted stock units (“RSUs”) equals the mean of the high and low sales prices of the Company’s common stock on the grant date.
Recent Accounting Standards
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This amended guidance applies to all public entities and aims to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, to enable investors to develop more decision-useful financial analyses. This guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently analyzing the impact that ASU No. 2023-07 will have on its consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This amended guidance applies to all entities and broadly aims to enhance the transparency and decision usefulness of income tax disclosures. For public business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted for any annual periods for which financial statements have not been issued or made available for issuance. The Company is currently analyzing the impact that ASU No. 2023-09 will have on its consolidated financial statements.
The Company’s management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the consolidated financial statements.
NOTE 4 - SUPPLEMENTAL FINANCIAL INFORMATION
Accrued Liabilities
| September 30, 2024 | December 31, 2023 | |||||||
| Accrued compensation | $ | $ | ||||||
| Accrued research and development expenses | ||||||||
| Insurance premium financing | ||||||||
| $ | $ | |||||||
In October 2023, the Company entered into a short-term
note payable of $
9
TFF PHARMACEUTICALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For The Three and Nine Months Ended September 30, 2024 and 2023
NOTE 5 - COMMITMENTS AND CONTINGENCIES
Operating Leases
In May 2022, the Company entered into a lease agreement for lab space in Austin, Texas. The lease commenced on June 1, 2022 and expires on May 31, 2025. The lease has an additional three-year option for renewal, which the Company has determined it is not reasonably certain to exercise. The Company rents an office space on a month-to-month basis with no long-term commitment, which is considered a short-term lease.
| September 30, 2024 | December 31, 2023 | |||||||
| Operating leases: | ||||||||
| Operating lease right-of-use assets | $ | $ | ||||||
| Operating lease liability - current portion | $ | $ | ||||||
| Operating lease liability - long-term portion | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
| Statement of Operations | For The Three Months Ended September 30, | For The Nine Months Ended September 30, | ||||||||||||||||
| Lease | Classification | 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Operating lease cost | Research and development | $ | $ | $ | $ | |||||||||||||
| Short-term lease cost | Research and development | |||||||||||||||||
| Short-term lease cost | General and administrative | |||||||||||||||||
| Total lease expense | $ | $ | $ | $ | ||||||||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| Weighted-average remaining lease term | ||||||||
| Weighted-average discount rate | % | % | ||||||
10
TFF PHARMACEUTICALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For The Three and Nine Months Ended September 30, 2024 and 2023
| For The Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash paid for operating lease liabilities | $ | $ | ||||||
| Fiscal Year Ending December 31, | ||||
| 2024 (Remaining) | $ | |||
| 2025 | ||||
| Total minimum lease payments | ||||
| Less: Imputed interest | ( | ) | ||
| Total | $ | |||
Legal
The Company may be involved, from time to time, in legal proceedings and claims arising in the ordinary course of its business. Such matters are subject to many uncertainties and outcomes and are not predictable with assurance. While management believes that such matters are currently insignificant, matters arising in the ordinary course of business for which the Company is or could become involved in litigation may have a material adverse effect on its business and financial condition. To the Company’s knowledge, neither the Company nor any of its properties are subject to any pending legal proceedings.
NOTE 6 - CONVERTIBLE NOTE RECEIVABLE - AUGMENTA
Effective January 1, 2023, the Company and Augmenta
Bioworks, Inc. (“Augmenta”) entered into a convertible note purchase agreement (“Augmenta Note”) pursuant to which
a receivable due from Augmenta in connection with a joint development agreement was converted into the Augmenta Note. Under the terms
of the Augmenta Note, Augmenta agreed to pay the principal amount of $
The Company elected to measure the Augmenta Note at fair value in accordance with ASC 825 (see Note 7) prior to its conversion.
Effective June 7, 2024 (“Conversion Date”), Company agreed to convert the Augmenta Note into shares of common stock of Augmenta (“Augmenta Shares”), immediately prior to the closing of a change of control transaction in which VAXANIX BIO, LTD (“Vaxanix”), Vaxanix Bio Acquisition Corp. VI and Augmenta entered into a merger agreement (“Vaxanix Merger”) pursuant to which Augmenta was merged into Vaxanix and the Augmenta Shares were converted into common shares of Vaxanix. The estimated fair value of the Augmenta Shares on the Conversion Date was determined by the derived equity value of Augmenta, based on the ownership percentage obtained by all notes that were converted on the Conversion Date (see Note 8).
11
TFF PHARMACEUTICALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For The Three and Nine Months Ended September 30, 2024 and 2023
NOTE 7 - FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
The carrying value of cash and cash equivalents, accounts payable and accrued liabilities approximate fair value because of their short-term nature. The Augmenta Note was held at fair value until the Conversion Date. After the conversion, there are no assets and liabilities measured at fair value.
| Fair value measured as of December 31, 2023 | ||||||||||||||||
| Quoted prices in active markets | Significant other observable inputs | Significant unobservable inputs | ||||||||||||||
| Total | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
| Assets | ||||||||||||||||
| Augmenta Note at fair value | $ | $ | $ | $ | ||||||||||||
Level 3 Measurement
| Fair Value of Level 3 Augmenta Note | ||||
| Beginning balance, January 1, 2023 | $ | |||
| Accrued interest receivable | ||||
| Change in fair value | ||||
| Ending balance, December 31, 2023 | ||||
| Accrued interest receivable | ||||
| Change in fair value | ( | ) | ||
| Conversion of note receivable | ( | ) | ||
| Ending balance, September 30, 2024 | $ | |||
The fair value of the Augmenta Note was measured using Level 3 (unobservable) inputs. The Company determined the fair value for the Augmenta Note using a probability weighted-scenario valuation model with the assistance of a third-party valuation specialist. The unobservable inputs included estimates of the equity value of Augmenta and the timing and probability of future financing events, optional conversion to common stock, and repayment at maturity. The conversion upon a qualified financing scenario valued the Augmenta Note based on a bond plus call option model. The optional conversion to common stock valued the Augmenta Note based on the present value of common stock, determined using an adjusted net assets method and option-pricing model, and implied number of common shares upon conversion. The repayment upon maturity was based on the total principal and accrued interest through the maturity date. At the Conversion Date, the fair value of the Augmenta Note was determined by the derived equity value of Augmenta, based on the ownership percentage obtained by all notes that were converted on the Conversion Date.
NOTE 8 - INVESTMENT IN EQUITY SECURITY
On the Conversion Date, as a result of the Vaxanix
Merger, the Company’s investment in Augmenta was exchanged for common shares of Vaxanix, a private commercial-stage oncology company.
Vaxanix has an approved device for late-stage cancer treatment and a deep pipeline of cell and immunotherapy agents in development from
preclinical to Phase 3. The Company’s common shares in Vaxanix constitutes a
12
TFF PHARMACEUTICALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For The Three and Nine Months Ended September 30, 2024 and 2023
The investment in Vaxanix has been accounted for
as an investment in a non-marketable equity security in accordance with ASC 321 on the condensed consolidated balance sheet. For equity
interests without a readily determinable fair value, an entity may elect to measure these investments at cost minus any impairment. The
Company has elected to carry this investment at the value of the Augmenta Shares obtained immediately prior to the Vaxanix Merger. The
value of the investment is $
The Company will consider qualitative impairment factors in determining if there are any signs of impairment. If the Company determines there are indicators of impairment, the Company will perform a fair value measurement. Due to the proximity between the Vaxanix Merger and September 30, 2024, the qualitative factors considered for the period ended September 30, 2024, included Vaxanix’s progress and likelihood of obtaining equity financing at a price per share lower than the current value of the Company’s investment. As of September 30, 2024, there are no indicators of impairment.
NOTE 9 - STOCKHOLDERS’ EQUITY
Common Stock
At-Market-Offerings
On June 10, 2022, the Company entered into an
Open Market Sale Agreement with Jefferies LLC, as agent, under which the Company may offer and sell, from time to time at its sole discretion,
shares of its common stock having an aggregate offering price of up to $
On May 17, 2024, the Company entered into an At
The Market Offering Agreement with H.C. Wainwright & Co., LLC, as agent, under which the Company may offer and sell, from time to
time at its sole discretion, shares of its common stock having an aggregate offering price of up to $
March 2024 Offering
On March 22, 2024, the Company completed a registered
direct offering, selling
May 2024 Public Offering
On May 1, 2024, the Company completed a public
offering (“May 2024 Offering”) of (i)
13
TFF PHARMACEUTICALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For The Three and Nine Months Ended September 30, 2024 and 2023
The Series B warrants have an exercise price of
$
The Company received net proceeds of approximately
$
Pre-Funded Warrant Exercise
During the nine months ended September 30, 2024,
NOTE 10 - STOCK BASED COMPENSATION
In January 2018, the Company’s board of
directors approved its 2018 Stock Incentive Plan (“2018 Plan”). The 2018 Plan provides for the grant of non-qualified stock
options and incentive stock options to purchase shares of the Company’s common stock, the grant of restricted and unrestricted share
awards and grant of restricted stock units. There are
In September 2021, the Company’s board of
directors approved its 2021 Stock Incentive Plan (“2021 Plan”), which was also approved by the stockholders of the Company
at the Company’s annual meeting of stockholders held on November 4, 2021. On June 4, 2024, the stockholders of the Company approved
an amendment to the 2021 Plan to increase the number of shares of common stock reserved for issuance by
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| General and administrative | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
As of September 30, 2024, there was approximately
$
The Company records compensation expense for awards with graded vesting using the straight-line method. The Company recognizes compensation expense over the requisite service period applicable to each individual award, which generally equals the vesting term.
14
TFF PHARMACEUTICALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For The Three and Nine Months Ended September 30, 2024 and 2023
Stock Option Information
| Number of Shares | Weighted- Average Exercise Prices | Weighted- Average Remaining Contractual Term (In Years) | Intrinsic Value | |||||||||||||
| Outstanding at January 1, 2024 | $ | $ | ||||||||||||||
| Granted | - | |||||||||||||||
| Cancelled | ( | ) | - | |||||||||||||
| Outstanding at September 30, 2024 | $ | $ | ||||||||||||||
| Exercisable at September 30, 2024 | $ | $ | ||||||||||||||
The Company estimates the fair value of each option award using the Black-Scholes-Merton option pricing model. Forfeitures are recognized when realized. The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had strike prices lower than the fair value of the Company’s common stock.
| For The Nine Months September 30, 2024 | ||||
| Weighted average exercise price | $ | |||
| Weighted average grant date fair value | $ | |||
| Assumptions | ||||
| Expected volatility | % | |||
| Expected term (in years) | ||||
| Risk-free interest rate | % | |||
| Expected dividend yield | % | |||
The risk-free interest rate was obtained from U.S. Treasury rates for the applicable periods. The Company’s expected volatility was based upon the historical volatility for industry peers and the historical volatility of the Company’s common stock and used an average of those volatilities. The expected life of the Company’s options was determined using the simplified method as a result of limited historical data regarding the Company’s activity for employee awards and the contractual term for nonemployee awards. The dividend yield considers that the Company has not historically paid dividends, and does not expect to pay dividends in the foreseeable future. The Company uses the mean of the high and low sales prices of the Company’s common stock on the date of grant as the fair value of the common stock.
Restricted Stock Units
In April 2024, the Company granted
15
TFF PHARMACEUTICALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For The Three and Nine Months Ended September 30, 2024 and 2023
| Number of Shares |
Weighted- Average Grant Date Fair Value |
|||||||
| Unvested balance at January 1, 2024 | $ | |||||||
| Granted | ||||||||
| Vested | ||||||||
| Forfeited | ( |
) | ||||||
| Unvested balance at September 30, 2024 | $ | |||||||
NOTE 11 - WARRANTS
In connection with the March 2024 Offering, the
Company issued warrants to purchase
In connection with the May 2024 Offering, the
Company issued pre-funded warrants exercisable for an aggregate of
The Company evaluated these warrants to assess their proper classification and determined that the warrants meet the criteria for equity classification in the condensed consolidated balance sheet. The warrants issued to the placement agent were considered offering costs and netted against additional paid-in capital.
| Number of Shares | Range of Exercise Prices | Weighted- Average Exercise Prices (excluding pre-funded warrants) | Weighted- Average Remaining Life (excluding pre-funded warrants) | |||||||||||||
| Outstanding at January 1, 2024 | $ | $ | ||||||||||||||
| Issued | - | |||||||||||||||
| Expired | - | |||||||||||||||
| Exercised | ( | ) | - | |||||||||||||
| Outstanding at September 30, 2024 | $ | $ | ||||||||||||||
NOTE 12 - SBIR GRANT
On June 23, 2023, the National Institute of Allergy
and Infectious Diseases, part of the National Institutes of Health, awarded the Company a Direct to Phase II Small Business Innovation
Research (“SBIR”) grant of approximately $
The purpose of the SBIR grant is to provide funding to support preclinical and IND enabling studies to advance the development of a shelf-stable dry powder formulation of a novel universal influenza virus vaccine, developed in the laboratory of Dr. Ted Ross at the Cleveland Clinic (previously of University of Georgia). Funding from the SBIR grant is expected to take place over three years.
16
TFF PHARMACEUTICALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For The Three and Nine Months Ended September 30, 2024 and 2023
Revenue from the SBIR grant will be recognized in the period during which the related qualifying services are rendered and costs are incurred, provided that the applicable conditions under the SBIR grant have been met. The costs associated with the SBIR grant will be expensed as incurred and will be reflected as a component of research and development expense in the accompanying consolidated statements of operations.
Funds received from the SBIR grant will be recorded as revenue as the Company is the principal participant in the arrangement because the activities under the SBIR grant are part of the Company’s development programs. In those instances where the Company first receives consideration in advance of providing underlying services, the Company will classify such consideration as deferred revenue until (or as) the Company provides the underlying services. In those instances where the Company first provides the underlying services prior to its receipt of consideration, the Company will record a grant receivable.
During the three and nine months ended September
30, 2024, the Company recognized approximately $
NOTE 13 - SUBSEQUENT EVENTS
The Company has performed an evaluation of events occurring subsequent to September 30, 2024 through the filing date of this Quarterly Report. Based on its evaluation, there are no events that need to be disclosed, except as described below.
On November 14, 2024, the Company’s board of directors approved the
Plan of Dissolution that would, subject to stockholder approval, include the liquidation of our remaining assets, if any, satisfaction
of our remaining obligations, including any related transaction expenses to the extent of cash or other assets available therefor, and
making distributions to stockholders of available liquidation proceeds, if any, following an orderly wind down of the Company’s
operations. In connection with the approval of the Plan of Dissolution, all the members of the board of directors and the then-Chief Executive
Officer and Chief Financial Officer of the Company resigned and the board of directors approved a reduction in force of substantially
all of the Company’s employees effective on November 14, 2024. Affected employees were offered separation benefits, including severance
payments along with temporary healthcare coverage assistance, resulting in a one-time charge of approximately $
As a result of our Board’s approval of the Dissolution, that certain Amended and Restated Patent License Agreement (“License Agreement”) dated April 20, 2022 between the Company and The University of Texas at Austin, on behalf of the Board of Regents of the University of Texas System, automatically terminated under the terms of the License Agreement.
On November 15, 2024, 896,000 shares of common stock were issued in connection with the exercise of pre-funded warrants for an insignificant amount of proceeds.
17
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Statement
The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes thereto contained elsewhere in this report. The information contained in this quarterly report on Form 10-Q is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this report and in our other filings with the Securities and Exchange Commission, or SEC, including our 2023 Annual Report on Form 10-K filed with the SEC on March 28, 2024.
In this report we make, and from time to time we otherwise make written and oral statements regarding our business and prospects, such as projections of future performance, statements of management’s plans and objectives, forecasts of market trends, and other matters that are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements containing the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimates,” “projects,” “believes,” “expects,” “anticipates,” “intends,” “target,” “goal,” “plans,” “objective,” “should” or similar expressions identify forward-looking statements, which may appear in our documents, reports, filings with the SEC, and news releases, and in written or oral presentations made by officers or other representatives to analysts, stockholders, investors, news organizations and others, and in discussions with management and other of our representatives.
Our future results, including results related to forward-looking statements, involve a number of risks and uncertainties, including those risks included in Part II, Item 1A. “Risk Factors” in this report. No assurance can be given that the results reflected in any forward-looking statements will be achieved. Any forward-looking statement speaks only as of the date on which such statement is made. Our forward-looking statements are based upon assumptions that are sometimes based upon estimates, data, communications and other information from suppliers, government agencies and other sources that may be subject to revision. Except as required by law, we do not undertake any obligation to update or keep current either (i) any forward-looking statement to reflect events or circumstances arising after the date of such statement or (ii) the important factors that could cause our future results to differ materially from historical results or trends, results anticipated or planned by us, or which are reflected from time to time in any forward-looking statement.
Overview
The purpose of the following discussion and analysis is to provide material information relevant to an assessment of our financial condition and results of operations from management’s perspective, including to describe and explain key trends, events and other factors that impacted our reported results and that are reasonably likely to impact our future performance.
As previously announced, on November 14, 2024, following the conclusion of our review of strategic alternatives, our board of directors (“Board”) approved the dissolution and liquidation of our Company (“Dissolution”), pursuant to a plan of complete liquidation and dissolution (“Plan of Dissolution”), which plan is subject to stockholder approval. On November 14, 2024, in connection with the planned wind down of the Company’s operations, the Board unanimously approved a reduction-in-force (the “Reduction in Force”) of substantially all of our employees to be effective on November 15, 2024. We expect to incur one-time charges associated with the workforce reduction of approximately $1.8 million, primarily related to severance payments, benefits and related termination costs, of which up to approximately $82,000 in severance will be paid prior to November 30, 2024 to non-executive employees. The estimates of charges, costs and expenses that the Company expects to incur in connection with the workforce reduction are subject to a number of assumptions and actual results may differ materially from estimates.
As a result of our Board’s approval of the Dissolution, that certain Amended and Restated Patent License Agreement (“License Agreement”) dated April 20, 2022 between the Company and The University of Texas at Austin, on behalf of the Board of Regents of the University of Texas System automatically terminated under the terms of the License Agreement. Pursuant to the License Agreement, we held an exclusive worldwide, royalty bearing license to the patent rights for our thin film freezing platform, which was the foundational intellectual property upon which our business model was based. Whether our stockholders approve the Dissolution, we have, for all practical purposes, lost the intellectual property rights necessary to continue our historical operations. Further, our remaining assets, including our Company-owned intellectual property rights and clinical data, have limited value to anyone other than the successor, if any, to the patent rights formerly represented by the License Agreement.
18
The Plan of Dissolution contemplates an orderly wind down of our business and operations in accordance with the provisions of Delaware law. If our stockholders approve the Plan of Dissolution, we intend to file a Certificate of Dissolution with the Delaware Secretary of State dissolving the Company, satisfy or resolve our remaining liabilities and obligations (to the extent of cash or other assets available therefor), including but not limited to contingent liabilities and claims and costs associated with the dissolution and liquidation, make reasonable provisions for unknown claims and liabilities (to the extent of available cash or other assets therefor) and attempt to convert all of our remaining assets into cash or cash equivalents, and make distributions to our stockholders of cash available for distribution, if any, subject to applicable legal requirements. The proxy materials that we will file with the SEC and mail to our stockholders will contain more important information regarding the proposed Plan of Dissolution.
We cannot predict with certainty the amount of distributions, if any, to our stockholders. While there is some possibility that we may realize greater than expected value in the future from our remaining assets, including our Company-owned intellectual property rights and clinical data, based on the information currently available to us and if our stockholders approve the Dissolution, we expect as of the date of this report that there will not be any amounts available for distribution to our stockholders in the Dissolution. Our expectation is based on the fact that our current cash assets plus the cash we reasonably expect to realize from the disposition of our non-cash assets is significantly less than our current liabilities plus the expected costs of carrying out the Plan of Dissolution.
Pursuant to Delaware law, the Company will continue to exist for three years after the Certificate of Dissolution is filed or for such longer period as the Delaware Court of Chancery shall direct. If our stockholders approve the Dissolution, we will be authorized to cease operations, sell or otherwise dispose of our non-cash assets and dissolve the Company and its subsidiaries without further approval of the stockholders, unless required to obtain such approval under Delaware law.
If our stockholders do not approve the Dissolution, the Board will explore other alternatives to Dissolution, if any, available to the Company, including seeking voluntary dissolution at a later time with diminished assets or seeking bankruptcy protection. However, we do not anticipate that any amounts available to our stockholders under those alternative scenarios would exceed any amounts available in connection with the Dissolution.
The following discussion and analysis of our business, financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and should also take into account our recent announcement regarding our planned Dissolution. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report includes forward-looking statements that involve risks and uncertainties, including risks associated with our planned Dissolution. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Quarterly Report, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis.
General
Until recently, TFF Pharmaceuticals, Inc. (NASDAQ: TFFP) was a clinical stage biopharmaceutical company focused on developing and commercializing innovative drug products based on our patented Thin Film Freezing, or TFF, technology platform. Based on our internal and sponsored testing and studies, we believe that our TFF platform can significantly improve the solubility of poorly water-soluble drugs, which make up approximately 40% of marketed pharmaceuticals worldwide, thereby improving the bioavailability and pharmacokinetics of those drugs. We believe that in the case of some new drugs that cannot be developed due to poor water solubility, our TFF platform has the potential to increase the pharmacokinetic effect of the drug to a level allowing for its development and commercialization. When administered as an inhaled dry powder for treatment of lung disorders, we believe the TFF platform formulations can be used to increase efficacy and minimize systemic toxicities and drug-drug interactions.
As of the date of this report, we have two product candidates in clinical trials, TFF Tacrolimus Inhalation Powder, or TFF TAC, and TFF Voriconazole Inhalation Powder, or TFF VORI. To date, we have completed one Phase 1 study in healthy volunteers and one Phase 1b study in patients with asthma exploring the safety, tolerability and pharmacokinetics of TFF VORI. We have also completed a Phase 1 study in healthy volunteers exploring the safety, tolerability and pharmacokinetics of TFF TAC. We have initiated Phase 2 clinical trials of TFF TAC and TFF VORI and, in December 2023, we released positive initial data from both trials, along with clinical data from our ongoing TFF VORI Expanded Access Program. In March 2024, we announced our decision to prioritize clinical development of TFF TAC based on positive Phase 2 data. In March 2024, we announced that we are evaluating strategic options for TFF VORI to preserve capital resources. We concluded our Phase 2 clinical trials of TFF VORI in the first half of 2024. We provided interim updates to the TFF TAC Phase 2 trial in May and August 2024 and ended enrollment in the ongoing TFF TAC Phase 2 study in October 2024.
19
Recent Developments
March 2024 Offering
On March 22, 2024, we completed a registered direct offering, selling 147,500 shares of our common stock and warrants to purchase up to 147,500 shares of our common stock at an offering price of $8.00 per share. The warrants are immediately exercisable upon issuance at an exercise price of $8.00 per share and will expire five and one-half years following the date of issuance. We received gross proceeds of approximately $1.2 million before deducting placement agent fees and other offering expenses.
May 2024 Offering
On May 1, 2024, we completed a public offering of (i) 578,914 shares of our common stock; (ii) pre-funded warrants exercisable for an aggregate of 1,086,305 shares of common stock; and (iii) Series B warrants exercisable for an aggregate of 1,665,219 shares of common stock issued pursuant to a securities purchase agreement, dated April 29, 2024 between us and certain institutional investors. The offering price of each common share and accompanying Series B warrant was $2.875. The offering price of each pre-funded warrant and accompanying Series B warrant was $2.8749.
The Series B warrants have an exercise price of $2.75 per share of common stock, are exercisable upon issuance and expire five years from the date of issuance. The pre-funded warrants are immediately exercisable and may be exercised at a nominal consideration of $0.0001 per share of common stock at any time until all of the pre-funded warrants are exercised in full. We also issued warrants to designees of the placement agent exercisable for an aggregate of 116,565 shares of common stock. The placement agent warrants have substantially the same terms as the Series B warrants, except that the placement agent warrants have an exercise price equal to $3.5938 per share.
We received net proceeds of approximately $4.2 million from the offering, after deducting offering expenses payable by us, including the placement agent’s commissions and fees.
Results of Operations
We were formed in January 2018 and have not commenced revenue-producing operations. To date, our operations have consisted of the development and early-stage testing, Phase 1 human clinical trials of our initial product candidates and the Phase 2 clinical trials of our TFF TAC and TFF VORI. In March 2024, we announced our decision to prioritize clinical development of TFF TAC based on positive Phase 2 data. Also in March 2024, we announced that we are evaluating strategic options for TFF VORI to preserve capital resources. We have generated limited grant revenue and non-recurring revenue under feasibility and material transfer agreements.
We do not expect to receive any further feasibility or grant revenue from the date of this report as a result of our Dissolution. We expect to continue to incur significant expenses and operating losses for the foreseeable future in connection with the Dissolution and the Reduction in Force. Our existing cash and cash equivalents as of September 30, 2024 will be used primarily for the payment and settlement of creditor and other claims against the Company, to fund the wind down of our operations, execute the Reduction in Force, and execute the Plan of Dissolution, as approved by our Board and subject to the approval of our stockholders.
Three Months Ended September 30, 2024 Compared to the Three Months Ended September 30, 2023
The following table summarizes our results of operations with respect to the items set forth below for the three months ended September 30, 2024 and 2023 together with the percentage change for those items.
| For The Three Months Ended September 30, | ||||||||||||||||
| 2024 | 2023 | Increase (Decrease) | Change | |||||||||||||
| Feasibility revenues | $ | 106,047 | $ | 189,449 | $ | (83,402 | ) | (44 | )% | |||||||
| Grant revenues | 87,340 | 45,314 | 42,026 | 93 | % | |||||||||||
| Total revenues | $ | 193,387 | $ | 234,763 | $ | (41,376 | ) | (18 | )% | |||||||
| Research and development expense | $ | 1,694,619 | $ | 2,386,707 | $ | (692,088 | ) | (29 | )% | |||||||
| General and administrative expense | 2,080,796 | 2,268,656 | (187,860 | ) | (8 | )% | ||||||||||
| Total operating expense | $ | 3,775,415 | $ | 4,655,363 | $ | (879,948 | ) | (19 | )% | |||||||
We have entered into feasibility and material transfer agreements with third parties that provide us with funds in return for certain research and development activities. On June 23, 2023, we were awarded a Direct to Phase II Small Business Innovation Research, or SBIR, grant of approximately $2.8 million to continue development of a novel, pan-flu multivariant mucosal vaccine. During the three months ended September 30, 2024 and 2023, revenue from the feasibility and material transfer agreements decreased by approximately $83,000 and revenues from the SBIR grant increased by approximately $42,000. The decrease in feasibility revenues is due to less activity for open agreements and the increase in grant revenues is due to more services being provided. The costs associated with the feasibility and material transfer agreements and SBIR grant are expensed as incurred and are reflected as a component of research and development expense.
20
Research and development expense was as follows for the periods indicated:
| For The Three Months Ended September 30, | ||||||||||||||||
| 2024 | 2023 | Increase (Decrease) | Change | |||||||||||||
| Payroll, stock-based compensation and related | $ | 765,200 | $ | 824,754 | $ | (59,554 | ) | (7 | )% | |||||||
| Manufacturing and related | 442,497 | 697,681 | (255,184 | ) | (37 | )% | ||||||||||
| Clinical and preclinical | 264,626 | 574,010 | (309,384 | ) | (54 | )% | ||||||||||
| Other | 222,296 | 290,262 | (67,966 | ) | (23 | )% | ||||||||||
| Total research and development expense | $ | 1,694,619 | $ | 2,386,707 | $ | (692,088 | ) | (29 | )% | |||||||
Research and development expense decreased during the three months ended September 30, 2024 compared to the three months ended September 30, 2023 due to decreases of $0.3 million in manufacturing and related expenses, $0.3 million in clinical and preclinical expense, approximately $68,000 in payroll and related expense and approximately $60,000 in other research and development expenses. Manufacturing expenses during the three months ended September 30, 2023 were higher because of the manufacturing of products for the Phase 2 trials of TFF TAC and TFF VORI. Clinical expenses decreased year over year due to wind down of the TFF VORI trial in 2024. We expect our current level of research and development expenses to decrease with the Reduction in Force, termination of TFF TAC clinical trial and the Company’s planned Dissolution.
General and administrative expense was as follows for the periods indicated:
| For The Three Months Ended September 30, | ||||||||||||||||
| 2024 | 2023 | Increase (Decrease) | Change | |||||||||||||
| Payroll, stock-based compensation and related | $ | 790,425 | $ | 1,032,286 | $ | (241,861 | ) | (23 | )% | |||||||
| Professional and legal fees | 481,308 | 477,909 | 3,399 | 3 | % | |||||||||||
| Insurance and office expense | 351,614 | 497,274 | (145,660 | ) | (29 | )% | ||||||||||
| Consulting | 308,188 | 61,500 | 246,688 | 401 | % | |||||||||||
| Market research | 125,632 | 91,755 | 33,877 | 37 | % | |||||||||||
| Other | 23,629 | 107,932 | (84,303 | ) | (78 | )% | ||||||||||
| Total general and administrative expense | $ | 2,080,796 | $ | 2,268,656 | $ | (187,860 | ) | (8 | )% | |||||||
General and administrative expense decreased during the three months ended September 30, 2024 compared to the three months ended September 30, 2023 due to decreases of $0.2 million in payroll related expenses, $0.1 million in insurance and office expenses and approximately $84,000 in other general and administrative expenses, offset by increases of $0.2 million in consulting expenses and approximately $34,000 in market research expenses. The decrease in general and administrative expenses was due in part to strategic cost reduction efforts implemented by management. We expect our current level of general and administrative expenses to decrease with the Reduction in Force and the Company’s planned Dissolution.
The following table summarizes our other income (expense), net for the three months ended September 30, 2024 and 2023 together with the percentage change.
| For The Three Months Ended September 30, | ||||||||||||||||
| 2024 | 2023 | Favorable (Unfavorable) | Change | |||||||||||||
| Interest income, net | $ | 37,095 | $ | 88,810 | $ | (51,715 | ) | (58 | )% | |||||||
| Change in fair value of note receivable | $ | - | $ | (77,454 | ) | $ | (77,454 | ) | (100 | )% | ||||||
Interest income, net decreased during fiscal 2024 due to a lower average balance of cash equivalents. There was no change in the fair value of the note receivable during fiscal 2024 as the note was converted into shares of Vaxanix in June 2024.
We incurred a net loss of $3.5 million and $4.4 million for the three months ended September 30, 2024 and 2023, respectively. We expect to continue to incur significant expenses and operating losses for the foreseeable future in connection with the Dissolution and the Reduction in Force.
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Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023
The following table summarizes our results of operations with respect to the items set forth below for the nine months ended September 30, 2024 and 2023 together with the percentage change for those items.
| For The Nine Months Ended September 30, | ||||||||||||||||
| 2024 | 2023 | Increase (Decrease) | Change | |||||||||||||
| Feasibility revenues | $ | 503,246 | $ | 574,229 | $ | (70,983 | ) | (12 | )% | |||||||
| Grant revenues | 543,636 | 45,314 | 498,322 | 1,100 | % | |||||||||||
| Total revenues | $ | 1,046,882 | $ | 619,543 | $ | 427,339 | ) | 69 | % | |||||||
| Research and development expense | $ | 7,838,797 | $ | 9,087,264 | $ | (1,248,467 | ) | (14 | )% | |||||||
| General and administrative expense | 6,543,573 | 8,058,235 | (1,514,662 | ) | (19 | )% | ||||||||||
| Total operating expense | $ | 14,382,370 | $ | 17,145,499 | $ | (2,763,129 | ) | (16 | )% | |||||||
During the nine months ended September 30, 2024 and 2023, revenue from the feasibility and material transfer agreements decreased by approximately $71,000 and revenues from the SBIR grant increased by approximately $498,000. The decrease in feasibility revenues is due to less activity for open agreements and the increase in grant revenues is due to more services being provided. The costs associated with the feasibility and material transfer agreements and SBIR grant are expensed as incurred and are reflected as a component of research and development expense.
Research and development expense was as follows for the periods indicated:
| For The Nine Months Ended September 30, | ||||||||||||||||
| 2024 | 2023 | Increase (Decrease) | Change | |||||||||||||
| Payroll, stock-based compensation and related | $ | 2,818,946 | $ | 2,345,856 | $ | 473,090 | 20 | % | ||||||||
| Clinical and preclinical | 2,614,275 | 2,204,475 | 409,800 | 19 | % | |||||||||||
| Manufacturing and related | 1,751,550 | 3,883,985 | (2,132,435 | ) | (55 | )% | ||||||||||
| Other | 654,026 | 652,948 | 1,078 | - | % | |||||||||||
| Total research and development expense | $ | 7,838,797 | $ | 9,087,264 | $ | (1,248,467 | ) | (14 | )% | |||||||
Research and development expense decreased during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 due to a $2.1 million reduction in manufacturing and related expenses, offset by increases of $0.4 million in clinical and preclinical expenses and $0.5 million in payroll and related expense. Manufacturing expenses during the nine months ended September 30, 2023 were higher because of the manufacturing of products for the Phase 2 trials of TFF TAC and TFF VORI. Clinical expenses were higher during the nine months ended September 30, 2024 due to the increase in the number of patients enrolled in the Phase 2 trials of TFF TAC. We expect our current level of research and development expenses to decrease with the Reduction in Force, termination of TFF TAC clinical trial and the Company’s planned Dissolution.
General and administrative expense was as follows for the periods indicated:
| For The Nine Months Ended September 30, | ||||||||||||||||
| 2024 | 2023 | Increase (Decrease) | Change | |||||||||||||
| Payroll, stock-based compensation and related | $ | 2,513,756 | $ | 3,579,064 | $ | (1,065,308 | ) | (30 | )% | |||||||
| Professional and legal fees | 1,649,671 | 1,530,052 | 119,619 | 8 | % | |||||||||||
| Insurance and office expense | 1,133,316 | 1,591,556 | (458,240 | ) | (29 | )% | ||||||||||
| Consulting | 650,538 | 446,800 | 203,738 | 46 | % | |||||||||||
| Market research | 345,488 | 517,608 | (172,120 | ) | (33 | )% | ||||||||||
| Other | 250,804 | 393,155 | (142,351 | ) | (36 | )% | ||||||||||
| Total general and administrative expense | $ | 6,543,573 | $ | 8,058,235 | $ | (1,514,662 | ) | (19 | )% | |||||||
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General and administrative expense decreased during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 due to decreases of $1.1 million in payroll related expenses, $0.5 million in insurance and office expenses, $0.2 million in market research expenses and $0.1 million in other general and administrative expenses, offset by increases of $0.1 million in professional and legal fees and $0.2 million in consulting expenses. The decrease in general and administrative expenses was due in part to strategic cost reduction efforts implemented by management. We expect our current level of general and administrative expenses to decrease with the Reduction in Force and the Company’s planned Dissolution.
The following table summarizes our other income (expense), net for the nine months ended September 30, 2024 and 2023 together with the percentage change.
| For The Nine Months Ended September 30, | ||||||||||||||||
| 2024 | 2023 | Favorable (Unfavorable) | Change | |||||||||||||
| Interest income, net | $ | 136,663 | $ | 160,009 | $ | (23,346 | ) | (15 | )% | |||||||
| Change in fair value of note receivable | $ | (560,473 | ) | $ | (114,870 | ) | $ | (445,603 | ) | (388 | )% | |||||
Interest income, net decreased during fiscal 2024 due to a lower average balance of cash equivalents. The fair value of the note receivable decreased during fiscal 2024 due to the estimated fair value of the shares received in Augmenta upon conversion, which were exchanged for shares in Vaxanix.
We incurred a net loss of $13.8 million and $16.5 million for the nine months ended September 30, 2024 and 2023, respectively.
Financial Condition
As of September 30, 2024, we had total assets of approximately $7.1 million and a working capital deficit of approximately $0.4 million. As of September 30, 2024, our liquidity included approximately $2.6 million of cash and cash equivalents. Our non-cash assets, including our Company-owned intellectual property rights and clinical data, have limited value to anyone other than the successor, if any, to the patent rights formerly represented by the License Agreement
We expect to continue to incur significant expenses and operating losses for the foreseeable future in connection with the Dissolution and the Reduction in Force. Our existing cash and cash equivalents as of September 30, 2024 will be used primarily to fund the wind down of our operations, execute the Reduction in Force, and execute the Plan of Dissolution, as approved by our Board and subject to the approval of our stockholders. We intend to hold a Special Meeting to seek stockholder approval of the Plan of Dissolution. Our existing cash and cash equivalents will not be sufficient to meet our obligations as they become due within one year from the date the unaudited condensed consolidated financial statements are issued.
We cannot predict with certainty the amount of distributions, if any, to our stockholders. While there is some possibility that we may realize greater than expected value in the future from our remaining assets, including our Company-owned intellectual property rights and clinical data, based on the information currently available to us and if our stockholders approve the Dissolution, we expect as of the date of this report that there will not be any amounts available for distribution to our stockholders in the Dissolution. Our expectation is based on the fact that our current cash assets plus the cash we reasonably expect to realize from the disposition of our non-cash assets is significantly less than our current liabilities plus the expected costs of carrying out the Plan of Dissolution.
Critical Accounting Policies
Critical accounting policies are described in our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. During the nine months ended September 30, 2024, there was a material change to our critical accounting policies previously disclosed regarding our accounting for an investment in a non-marketable security in accordance with Accounting Standards Codification (“ASC”) 321, Investments – Equity Securities.
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Critical Accounting Estimates
Our management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts and experience. The effects of material revisions in estimates, if any, will be reflected in the consolidated financial statements prospectively from the date of change in estimates.
We hold an investment Vaxanix Bio, Ltd (“Vaxanix”), which is a non-marketable equity security that does not have a readily determinable fair value, therefore we have elected to measure the investment at cost less any impairment, adjusted to fair value if there are observable price changes in orderly transactions for an identical or similar investment of the same issuer, which is a material change to our accounting estimates as reported in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on March 28, 2024.
At each reporting period, we perform an assessment to determine if the investment still qualifies for this measurement alternative. We also make a qualitative assessment considering impairment indicators to evaluate whether the investment is impaired. If a qualitative assessment indicates the investment is impaired, we estimate the investment’s fair value. If the fair value is less than the investment’s carrying value, an impairment charge is recorded in the consolidated statements of operations equal to the difference between the carrying value and fair value and a new basis in the investment is established.
Due to the proximity between when the investment in Vaxanix was obtained and September 30, 2024, the qualitative factors considered for the period ended September 30, 2024, included Vaxanix’s progress and likelihood of obtaining equity financing at a price per share lower than the current value of our investment. As of September 30, 2024, there are no indicators of impairment.
While the qualitative factors utilized by management represent the most important factors to assess for potential impairment of the investment in the non-marketable equity security, as determined by management, there is inherent uncertainty in this assessment. If our assessment determined the investment is impaired, the assumptions used to calculate the investment’s fair value would be management’s best estimates and would also include inherent uncertainties. If the factors utilized or underlying assumptions and estimates change, our investment may be impaired in future periods.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 of the Securities Exchange Act of 1934. Based upon their evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of September 30, 2024.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Subsequent to September 30, 2024, we implemented the Reduction in Force impacting Mr. Coleman as our Chief Financial Officer and Dr. Weisman was terminated as our Chief Executive Officer, each effective November 14, 2024. Also, effective November 14, 2024, our then-board of directors appointed Mr. Jalbert as our Chief Executive Officer and Chief Financial Officer, including for the purposes of providing certifications regarding our disclosure controls and procedures. The workforce reduction and appointment of Mr. Jalbert resulted in necessary changes to our system of internal controls as Mr. Jalbert is performing control activities that he was not performing prior to the Reduction in Force. We expect changes in our system of internal controls over financial reporting in future periods as we align our control structure with the current workforce.
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PART II - OTHER INFORMATION
Item 1A. Risk Factors
Investing in our common stock involves a high degree of risk. Before purchasing our common stock, you should read and consider carefully the following risk factors as well as all other information contained in this report, including our financial statements and the related notes. Each of these risk factors, either alone or taken together, could adversely affect the value of an investment in our common stock. There may be additional risks that we do not presently know of or that we currently believe are immaterial, which could also impair our financial position. If any of the events described below were to occur, our financial condition, our ability to access capital resources, our results of operations and/or our future growth prospects could be materially and adversely affected and the market price of our common stock could decline. As a result, you could lose some or all of any investment you may make in our common stock.
The announcement and implementation of the Reduction in Force of our employees and the Dissolution, whether or not such Dissolution is consummated, has adversely affected our business. The announcement and implementation of the Reduction in Force of our employees in connection with the wind-down of our operations and the Dissolution, whether or not such Dissolution is consummated, has adversely affected the trading price of our common stock, our business and our relationships with third parties, including our partners and clinical research organizations. As a result of our Board’s approval of the Dissolution, that certain Amended and Restated Patent License Agreement (“License Agreement”) dated April 20, 2022 between the Company and The University of Texas at Austin, on behalf of the Board of Regents of the University of Texas System automatically terminated under the terms of the License Agreement. Pursuant to the License Agreement, we held an exclusive worldwide, royalty bearing license to the patent rights for our thin film freezing platform, which was the foundational intellectual property upon which our business model was based. Whether our stockholders approve the Dissolution, we have, for all practical purposes, lost the intellectual property rights necessary to continue our historical operations. Further, our remaining assets, including our Company-owned intellectual property rights and clinical data, have limited value to anyone other than the successor, if any, to the patent rights formerly represented by the License Agreement.
We do not expect to be able to make distributions to our stockholders. Under Delaware law, before a dissolved corporation may make any distribution to its stockholders, it must pay or make reasonable provision to pay all of its claims and obligations, including all contingent, conditional or unmatured contractual claims known to the corporation. While there is some possibility that we may realize greater than expected value in the future from our remaining assets, including our Company-owned intellectual property rights and clinical data, based on the information currently available to us and if our stockholders approve the Dissolution, we expect as of the date of this report that there will not be any amounts available for distribution to our stockholders in the Dissolution. Our expectation is based on the fact that our current cash assets plus the cash we reasonably expect to realize from the disposition of our non-cash assets is significantly less than our current liabilities plus the expected costs of carrying out the Plan of Dissolution.
If our stockholders do not approve the Plan of Dissolution, our Board will seek other alternatives to dissolving the Company. We do not anticipate that any amounts available to our stockholders under those scenarios would exceed any amounts available in connection with the Dissolution. If our stockholders do not approve the Plan of Dissolution, our Board will explore alternatives to the Dissolution, if any, available to the Company, including seeking voluntary dissolution at a later time with diminished assets or seeking bankruptcy protection. Given that our primary remaining assets are limited to our Company-owned intellectual property and rights to data generated in clinical trials of for TFF TAC and TFF VORI, we do not anticipate that any amounts available to our stockholders under those scenarios would exceed any amounts available in connection with the Dissolution.
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We may be subject to securities or other litigation, which is expensive and could divert our attention. We may be subject to securities class action or other litigation in connection with the Dissolution. Securities or other litigation against us could result in substantial costs and divert our management’s attention from completing the Dissolution, which could harm our business and increase our expenses.
We may no longer be required to file reports with the SEC during the pendency of or following the consummation of the Dissolution. We may file a notice terminating our reporting obligations under the Exchange Act during the pendency of or following the consummation of the Dissolution. Once effective, we may no longer be required to file any annual, quarterly or other current reports with the SEC. If we are no longer required to file reports with the SEC, stockholders will have very little public information available about us and our operations which will further affect the trading and liquidity of our common stock.
If we continue to be required to file reports with the SEC, we will incur costs and expenses relating to such reporting obligations. If we continue to have obligations to file annual, quarterly and other current reports with the SEC during the pendency of or following the consummation of the Dissolution, we will have to incur costs and expenses to make such filings and to comply with the Exchange Act and the rules and regulations promulgated thereunder.
If we fail to retain the services of appropriate personnel, the Plan of Dissolution may not succeed. The success of the Plan of Dissolution depends in large part upon our ability to retain the services of qualified personnel who will be charged with winding up our business following the Dissolution, subject to the Board’s continued oversight. The retention of qualified personnel may be particularly difficult under our current circumstances. There can be no assurance that we will be successful in retaining the services of such qualified personnel or that we will be able to retain the services of such qualified personnel for the amounts we are willing to pay for such services.
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Item 5. Other Information
During the three-month period ended September
30, 2024, no director or officer of the Company
Item 6. Exhibits
| Exhibit No. | Description | Method of Filing | ||
| 3.1 | Second Amended and Restated Certificate of Incorporation of the Registrant | Incorporated by reference from the Registrant’s Registration Statement on Form S-1 filed on August 20, 2019. | ||
| 3.2 | Certificate of Amendment to Second Amended and Restated Certificate of Incorporation of the Registrant | Incorporated by reference from the Registrant’s Annual Report on Form 10-K filed on March 31, 2023. | ||
| 3.3 | Certificate of Amendment to Second Amended and Restated Certificate of Incorporation of the Registrant | Incorporated by reference from the Registrant’s Report on Form 8-K filed on November 22, 2023. | ||
| 3.4 | Certificate of Amendment to Second Amended and Restated Certificate of Incorporation of the Registrant | Incorporated by reference from the Registrant’s Report on Form 8-K filed on December 19, 2023. | ||
| 3.5 | First Amended and Restated Bylaws of the Registrant | Incorporated by reference from the Registrant’s Current Report on Form 8-K filed on April 6. 2023. | ||
| 31.1 | Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Filed electronically herewith | ||
| 31.2 | Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Filed electronically herewith | ||
| 32.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350). | Filed electronically herewith | ||
| 101.INS | Inline XBRL Instance Document | Filed electronically herewith | ||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | Filed electronically herewith | ||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | Filed electronically herewith | ||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | Filed electronically herewith | ||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | Filed electronically herewith | ||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | Filed electronically herewith | ||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| TFF PHARMACEUTICALS, INC. | ||
| Date: November 20, 2024 | By: | /s/ Craig Jalbert |
| Craig Jalbert, | ||
|
Chief Executive Officer (Principal Executive Officer) | ||
Date: November 20, 2024 |
By: | /s/ Craig Jalbert |
| Craig Jalbert, | ||
| Chief Financial Officer | ||
| (Principal Financial Officer) | ||
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