| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 30-0793665 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
449 South 12 th Street, Unit 1705Tampa, FL | 33602 | ||
(Address of principal executive offices) | (Zip Code) | ||
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
| Emerging growth company | ☐ | |||||
Inhibitor Therapeutics, Inc.
Quarterly Report on Form
TABLE OF CONTENTS
Page | ||||||
Part I. Financial Information | ||||||
Item 1. | Condensed Financial Statements (unaudited) | |||||
| 1 | ||||||
| 2 | ||||||
| 3 | ||||||
| 4 | ||||||
| 5 | ||||||
Item 2. | 11 | |||||
Item 3. | 12 | |||||
Item 4. | 12 | |||||
| 13 | ||||||
Item 1 | 14 | |||||
Item 1A. | ||||||
| 15 | ||||||
Item | 15 | |||||
Item | 15 | |||||
Item 4 | Mine Safety Disclosures | 15 | ||||
Item 5 | Other Information | 15 | ||||
Item 6. | Exhibits | 15 | ||||
| S-1 | ||||||
(Unaudited) September 30, 2021 | December 31, 2020 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 53,287 | $ | 75,059 | ||||
Prepaid expenses | 36,792 | 32,292 | ||||||
Total current assets | 90,079 | 107,351 | ||||||
Other long-term assets | 2,439 | 24,408 | ||||||
Total assets | $ | 92,518 | $ | 131,759 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 304,820 | $ | 269,416 | ||||
Interest payable, related party | 10,161 | 0 | ||||||
Dividends payable, related party | 50,411 | 100,822 | ||||||
Note payable, short-term (PPP Loan) | 0 | 30,044 | ||||||
Term debt facility, short-term, related party | 192,500 | 0 | ||||||
Other liabilities | 33,000 | 25,124 | ||||||
Total current liabilities | 590,892 | 425,406 | ||||||
Note payable, long-term (PPP Loan) | 0 | 11,556 | ||||||
Term debt facility, long-term, related party | 38,500 | 55,000 | ||||||
Deferred revenue, related party | 3,000,000 | 3,000,000 | ||||||
Total liabilities | 3,629,392 | 3.491,962 | ||||||
Commitments and contingencies (Note 7) | 0 | 0 | ||||||
Stockholders’ deficit: | ||||||||
Series A Preferred Stock, $0.0001 par value; 500,000 shares authorized; 0 shares issued and outstanding | 0 | 0 | ||||||
Series B Convertible, Redeemable, Preferred Stock, $0.0001 par value; 7,246,377 shares authorized; 5,797,102 shares issued and outstanding at September 30, 2021 and December 31, 2020 | 3,960,866 | 3,960,866 | ||||||
Undesignated Preferred Stock, $0.0001 par value; 2,253,623 shares authorized; 0 shares issued or outstanding | 0 | 0 | ||||||
Common stock, $0.0001 par value; 500,000,000 shares authorized; 375,876,361 and 376,858,323 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively | 37,686 | 37,364 | ||||||
Additional paid-in capital | 50,051,711 | 49,814,043 | ||||||
Accumulated deficit | (57,587,137 | ) | (57,172,476 | ) | ||||
Total stockholders’ deficit | (3,536,874 | ) | (3,360,203 | ) | ||||
Total liabilities and stockholders’ deficit | $ | 92,518 | $ | 131,759 | ||||
(Unaudited) September 30, 2022 | December 31, 2021 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 53,058 | $ | 30,626 | ||||
Prepaid expenses | 10,059 | 28,158 | ||||||
Total current assets | 63,117 | 58,784 | ||||||
Total assets | $ | 63,117 | $ | 58,784 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 326,464 | $ | 279,842 | ||||
Dividends payable, related party | 250,413 | 100,823 | ||||||
Notes payable, related party | 411,000 | 231,000 | ||||||
Interest payable, related party | 34,845 | 14,965 | ||||||
Other liabilities | 65,000 | 53,000 | ||||||
Total current liabilities | 1,087,722 | 679,630 | ||||||
Deferred revenue, related party | 3,000,000 | 3,000,000 | ||||||
Total liabilities | 4,087,722 | 3,679,630 | ||||||
Commitments and contingencies (note 7) | — | — | ||||||
Stockholders’ deficit: | ||||||||
Series A Preferred Stock, $0.0001 par value; 500,000 shares authorized; no shares issued and outstanding | — | — | ||||||
Series B Convertible, Redeemable, Preferred Stock, $0.0001 par value; 7,246,377 shares authorized; 5,797,102 shares issued and outstanding at September 30, 2022 and December 31, 2021 | 3,960,866 | 3,960,866 | ||||||
Undesignated Preferred Stock, $0.0001 par value; 2,253,623 shares authorized; no shares issued or outstanding | — | — | ||||||
Common stock, $0.0001 par value; 500,000,000 shares authorized; 376,858,323 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively | 37,686 | 37,686 | ||||||
Additional paid-in capital | 50,051,711 | 50,051,711 | ||||||
Accumulated deficit | (58,074,868 | ) | (57,671,109 | ) | ||||
Total stockholders’ deficit | (4,024,605 | ) | (3,620,846 | ) | ||||
Total liabilities and stockholders’ deficit | $ | 63,117 | $ | 58,784 | ||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Revenues: | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||
Expenses: | ||||||||||||||||
Research and development | 0 | 32,468 | 4,830 | 182,584 | ||||||||||||
General and administrative | 66,248 | 270,306 | 291,806 | 820,676 | ||||||||||||
Total Expenses: | 66,248 | 302,774 | 296,636 | 1,003,260 | ||||||||||||
Loss from operations | (66,248 | ) | (302,774 | ) | (296,636 | ) | (1,003,260 | ) | ||||||||
Interest income | 0 | 7 | 0 | 1,182 | ||||||||||||
Interest expense, related party | (4,803 | ) | 0 | (10,035 | ) | 0 | ||||||||||
Gain on loan forgiveness | 0 | 0 | 41,600 | 0 | ||||||||||||
Net loss | (71,051 | ) | (302,767 | ) | (265,071 | ) | (1,002,078 | ) | ||||||||
Preferred stock dividend | (50,412 | ) | (50,411 | ) | (149,590 | ) | (150,137 | ) | ||||||||
Net loss applicable to common stockholders | $ | (121,463 | ) | $ | (353,178 | ) | $ | (414,661 | ) | $ | (1,152,215 | ) | ||||
Basic and diluted net loss applicable to common stockholders per share | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||
Weighted average common stock shares outstanding – basic and diluted | 376,708,894 | 373,150,486 | 376,042,025 | 371,354,198 | ||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Revenues: | $ | — | $ | — | $ | — | $ | — | ||||||||
Expenses: | ||||||||||||||||
Research and development | — | — | 6,150 | 4,830 | ||||||||||||
General and administrative | 69,987 | 66,248 | 228,141 | 291,806 | ||||||||||||
Total Expenses: | 69,987 | 66,248 | 234,291 | 296,636 | ||||||||||||
Loss from operations | (69,987 | ) | (66,248 | ) | (234,291 | ) | (296,636 | ) | ||||||||
Interest expense, related party | (7,705 | ) | (4,803 | ) | (19,878 | ) | (10,035 | ) | ||||||||
Gain on loan forgiveness | — | — | — | 41,600 | ||||||||||||
Net loss | (77,692 | ) | (71,051 | ) | (254,169 | ) | (265,071 | ) | ||||||||
Preferred stock dividend | (50,411 | ) | (50,412 | ) | (149,590 | ) | (149,590 | ) | ||||||||
Net loss applicable to common stockholders | $ | (128,103 | ) | $ | (121,463 | ) | $ | (403,759 | ) | $ | (414,661 | ) | ||||
Basic and diluted net loss applicable to common stockholders per share | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||
Weighted average common stock shares outstanding – basic and diluted | 376,858,323 | 376,708,894 | 376,858,323 | 376,042,025 | ||||||||||||
Preferred Stock – Series B | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders’ Deficit | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balances, January 1, 2021 | 5,797,102 | $ | 3,960,866 | 373,635,873 | $ | 37,364 | $ | 49,814,043 | $ | (57,172,476 | ) | $ | (3,360,203 | ) | ||||||||||||||
Common shares issued in payment of Preferred Stock dividend, related party | — | — | 2,240,488 | 224 | 100,598 | — | 100,822 | |||||||||||||||||||||
Stock based compensation | — | — | — | — | 37,990 | — | 37,990 | |||||||||||||||||||||
Preferred stock dividends, related party | — | — | — | — | — | (49,315 | ) | (49,315 | ) | |||||||||||||||||||
Net loss | — | — | — | — | — | (127,838 | ) | (127,838 | ) | |||||||||||||||||||
Balances, March 31, 2021 | 5,797,102 | $ | 3,960,866 | 375,876,361 | $ | 37,588 | $ | 49,952,631 | $ | (57,349,629 | ) | $ | (3,398,544 | ) | ||||||||||||||
Preferred stock dividends, related party | — | — | — | — | — | (49,863 | ) | (49,863 | ) | |||||||||||||||||||
Net loss | — | — | — | — | — | (66,182 | ) | (66,182 | ) | |||||||||||||||||||
Balances, June 30, 2021 | 5,797,102 | $ | 3,960,866 | 375,876,361 | $ | 37,588 | $ | 49,952,631 | $ | (57,465,674 | ) | $ | (3,514,589 | ) | ||||||||||||||
Common shares issued in payment of Preferred Stock dividend, related party | — | — | 981,962 | 98 | 99,080 | — | 99,178 | |||||||||||||||||||||
Preferred stock dividends, related party | — | — | — | — | — | (50,412 | ) | (50,412 | ) | |||||||||||||||||||
Net loss | — | — | — | — | — | (71,051 | ) | (71,051 | ) | |||||||||||||||||||
Balances, September 30, 2021 | 5,797,102 | $ | 3,960,866 | 376,858,323 | $ | 37,686 | $ | 50,051,711 | $ | (57,587,137 | ) | $ | (3,536,874 | )) | ||||||||||||||
Preferred Stock – Series B | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders’ Deficit | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balances, January 1, 2022 | 5,797,102 | $ | 3,960,866 | 376,858,323 | $ | 37,686 | $ | 50,051,711 | $ | (57,671,109 | ) | $ | (3,620,846 | ) | ||||||||||||||
Preferred stock dividends, related party | — | — | — | — | — | (49,315 | ) | (49,315 | ) | |||||||||||||||||||
Net loss | — | — | — | — | — | (98,910 | ) | (98,910 | ) | |||||||||||||||||||
Balances, March 31, 2022 | 5,797,102 | $ | 3,960,866 | 376,858,323 | $ | 37,686 | $ | 50,051,711 | $ | (57,819,334 | ) | $ | (3,769,071 | ) | ||||||||||||||
Preferred stock dividends, related party | — | — | — | — | — | (49,864 | ) | (49,864 | ) | |||||||||||||||||||
Net loss | — | — | — | — | — | (77,567 | ) | (77,567 | ) | |||||||||||||||||||
Balance, June 30, 2022 | 5,797,102 | $ | 3,960,866 | 376,858,323 | $ | 37,686 | $ | 50,051,711 | $ | (57,946,765 | ) | $ | (3,896,502 | ) | ||||||||||||||
Preferred stock dividends, related party | — | — | — | — | — | (50,411 | ) | (50,411 | ) | |||||||||||||||||||
Net loss | — | — | — | — | — | (77,692 | ) | (77,692 | ) | |||||||||||||||||||
Balances, September 30, 2022 | 5,797,102 | $ | 3,960,866 | 376,858,323 | $ | 37,686 | $ | 50,051,711 | (58,074,868 | ) | (4,024,605 | ) | ||||||||||||||||
Preferred Stock – Series B | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders’ Deficit | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balances, January 1, 2020 | 5,797,102 | $ | 3,960,866 | 370,446,185 | $ | 37,045 | $ | 49,384,953 | $ | (55,913,999 | ) | $ | (2,531,135 | ) | ||||||||||||||
Stock based compensation | — | — | — | — | 16,819 | — | 16,819 | |||||||||||||||||||||
Preferred stock dividends, related party | — | — | — | — | — | (49,863 | ) | (49,863 | ) | |||||||||||||||||||
Net loss | — | — | — | — | — | (384,417 | ) | (384,417 | ) | |||||||||||||||||||
Balance March 31, 2020 | 5,797,102 | $ | 3,960,866 | 370,446,185 | $ | 37,045 | $ | 49,401,772 | $ | (56,348,279 | ) | $ | (2,948,596 | ) | ||||||||||||||
Stock based compensation | — | — | — | — | 42,753 | — | 42,753 | |||||||||||||||||||||
Preferred stock dividends, related party | — | — | — | — | — | (49,863 | ) | (49,863 | ) | |||||||||||||||||||
Net loss | — | — | — | — | — | (314,894 | ) | (314,894 | ) | |||||||||||||||||||
Balances, June 30, 2020 | 5,797,102 | $ | 3,960,866 | 370,446,185 | $ | 37,045 | $ | 49,444,525 | $ | (56,713,036 | ) | $ | (3,270,600 | ) | ||||||||||||||
Common shares issued in payment of Preferred Stock dividend, related party | — | — | 3,189,688 | 319 | 200,229 | — | 200,548 | |||||||||||||||||||||
Stock based compensation | — | — | — | — | 49,953 | — | 49,953 | |||||||||||||||||||||
Preferred stock dividends, related party | — | — | — | — | — | (50,411 | ) | (50,411 | ) | |||||||||||||||||||
Net loss | — | — | — | — | — | (302,767 | ) | (302,767 | ) | |||||||||||||||||||
Balances, September 30,2021 | 5,797,102 | $ | 3,960,866 | 373,635,873 | $ | 37,364 | $ | 49,694,707 | $ | (57,066,214 | ) | $ | (3,373,277 | ) | ||||||||||||||
Preferred Stock – Series B | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders’ Deficit | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balances, January 1, 2021 | 5,797,102 | $ | 3,960,866 | 373,635,873 | $ | 37,364 | $ | 49,814,043 | $ | (57,172,476 | ) | $ | (3,360,203 | ) | ||||||||||||||
Common shares issued in payment of Preferred Stock dividend, related party | — | — | 2,240,488 | 224 | 100,598 | — | 100,822 | |||||||||||||||||||||
Stock based compensation | — | — | — | — | 37,990 | — | 37,990 | |||||||||||||||||||||
Preferred stock dividends, related party | — | — | — | — | — | (49,315 | ) | (49,315 | ) | |||||||||||||||||||
Net loss | — | — | — | — | — | (127,838 | ) | (127,838 | ) | |||||||||||||||||||
Balances, March 31, 2021 | 5,797,102 | $ | 3,960,866 | 375,876,361 | $ | 37,588 | $ | 49,952,631 | $ | (57,349,629 | ) | $ | (3,398,544 | ) | ||||||||||||||
Preferred stock dividends, related party | — | — | — | — | — | (49,863 | ) | (49,863 | ) | |||||||||||||||||||
Net loss | — | — | — | — | — | (66,182 | ) | (66,182 | ) | |||||||||||||||||||
Balances, June 30, 2021 | 5,797,102 | $ | 3,960,866 | 375,876,361 | $ | 37,588 | $ | 49,952,631 | $ | (57,465,674 | ) | $ | (3,514,589 | ) | ||||||||||||||
Common shares issued in payment of Preferred Stock dividend, related party | — | — | 981,962 | 98 | 99,080 | — | 99,178 | |||||||||||||||||||||
Preferred stock dividends, related party | — | — | — | — | — | (50,412 | ) | (50,412 | ) | |||||||||||||||||||
Net loss | — | — | — | — | — | (71,051 | ) | (71,051 | ) | |||||||||||||||||||
Balances, September 30, 2021 | 5,797,102 | $ | 3,960,866 | 376,858,323 | $ | 37,686 | $ | 50,051,711 | $ | (57,587,137 | ) | $ | (3,536,874 | ) | ||||||||||||||
Nine Months Ended September 30, | ||||||||
2021 | 2020 | |||||||
Operating activities: | ||||||||
Net loss | $ | (265,071 | ) | $ | (1,002,078 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Stock based compensation | 37,990 | 109,525 | ||||||
Gain on loan forgiveness | (41,600 | ) | 0 | |||||
Changes in assets and liabilities: | ||||||||
Prepaid expense and other assets | 17,469 | 29,127 | ||||||
Accounts payable and other current liabilities | 53,440 | 54,717 | ||||||
Net cash used in operating activities | (197,772 | ) | (808,709 | ) | ||||
Financing activities: | ||||||||
Proceeds from note payable (Note 4) | 0 | 41,600 | ||||||
Proceeds from term debt facility, related party | 176,000 | 0 | ||||||
Net cash provided by financing activities | 176,000 | 41,600 | ||||||
Net change in cash and cash equivalents | (21,772 | ) | (767,109 | ) | ||||
Cash and cash equivalents at beginning of period | 75,059 | 803,816 | ||||||
Cash and cash equivalents at end of period | $ | 53,287 | $ | 36,707 | ||||
Non-cash financing activities: | ||||||||
Issuance of common stock for payment of Preferred Stock dividend | $ | 200,000 | $ | 200,348 | ||||
Accrued, but unpaid dividends | $ | 50,412 | $ | 50,411 | ||||
Nine Months Ended September 30, | ||||||||
2022 | 2021 | |||||||
Operating activities: | ||||||||
Net loss | $ | (254,169 | ) | $ | (265,071 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Stock based compensation | — | 37,990 | ||||||
Gain on loan forgiveness | — | (41,600 | ) | |||||
Changes in assets and liabilities: | ||||||||
Prepaid expense and other assets | 18,099 | 17,469 | ||||||
Accounts payable and other current liabilities | 78,502 | 53,440 | ||||||
Net cash used in operating activities | (157,568 | ) | (197,772 | ) | ||||
Financing activities: | ||||||||
| Proceeds from note payable, related party | 180,000 | 176,000 | ||||||
Net cash provided by financing activities | 180,000 | 176,000 | ||||||
Net change in cash and cash equivalents | 22,432 | (21,772 | ) | |||||
Cash and cash equivalents at beginning of period | 30,626 | 75,059 | ||||||
Cash and cash equivalents at end of period | $ | 53,058 | $ | 53,287 | ||||
Non-cash financing activities: | ||||||||
Issuance of common stock for payment of Preferred Stock dividend | $ | — | $ | 200,000 | ||||
Accrued, but unpaid dividends | $ | 250,413 | $ | 50,412 | ||||
1. | Corporate overview: |
1. | Corporate overview(continued): |
2 | Liquidity and management’s plans: |
3. | Summary of Significant Accounting Policies: |
3. | Summary of Significant Accounting Policies (continued): |
4. |
5. | Mayne |
5. | Mayne Term Debt Facility (continued): |
6. | Stockholders’ Equity: |
7. | Legal Proceedings: |
7. | Legal Proceedings (continued): |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with the Condensed Financial Statements and Notes thereto included elsewhere in this Quarterly Report. This discussion contains certain forward-looking statements that involve risks and uncertainties. The Company’s actual results and the timing of certain events could differ materially from those discussed in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth herein and elsewhere in this Quarterly Report and in the Company’s other filings with the SEC. See “Cautionary Note Regarding Forward Looking Statements” below.
As used in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, unless otherwise indicated, the terms “the Company”, “we”, “us”, “our” and similar terminology refer to Inhibitor Therapeutics, Inc.
Background and Known Trends and Uncertainties
We are a pharmaceutical development company that is focused on developing and ultimately commercializing innovative therapeutics for patients with certain cancers and certain non-cancerous proliferation disorders. While we are not presently conducting research and development activities with respect to our currently in-licensed technologies and our own intellectual property as a result of pending litigations involving our company (see Note 7 to the accompanying financial statements), we have explored and, due to the settlement of such litigations as described in Note 7, we expect to continue to explore acquiring or licensing other innovative preclinical and clinical stage therapeutics following the consummation of the transactions (including the proposed change of control of the Company) described in Note 7 related to the settlement of such pending litigations. Such settlement received approval on November 10, 2022, and such transactions are expected to become effective on December 10, 2022.
Our results of operations must be viewed in light of the now settled litigations involving our company and our resulting inability (until such settlements are consummated, expected on December 10, 2022) to conduct meaningful research, development and other activities as a result. Until the settlement of such litigations are formally consummated, we will continue to be unable to progress our business. Moreover, if the litigation settlements described in Note 7 to the accompanying financial statements are consummated as approved by the Court we cannot currently predict if and how we will be able to recommence full operations, in part because a change of control in the Company will have taken place and our current officers and directors will be replaced.
Critical Accounting Policies
See Note 3 of the Notes to Condensed Financial Statements included in Item 1 of this Quarterly Report for a summary of significant accounting policies and information on recently issued accounting pronouncements.
Results of Operations
For the three months ended September 30, 20212022 compared to the three months ended September 30, 2020
Research and Development Expenses.
General and Administrative Expenses.
For the nine months ended September 30, 20212022 compared to the nine months ended September 30, 2020.
Research and Development Expenses. We recognized less than $0.01 in research and development expenses during the nine months ended September 30, 2022 and for the nine months ended September 30, 2021. Research and development expenses for both periods are primarily related to patents.
General and Administrative Expenses. We recognized approximately $0.2 million in general and administrative expenses during the nine months ended September 30, 2022 and $0.3 million for the nine months ended September 30, 2021. General and administrative expenses for both periods consisted primarily of professional fees, compensation and related costs for corporate administrative staff and Board members.
Gain on loan forgiveness.
11
Liquidity and Capital Resources
We had approximately $0.1 million$53,00 in cash on hand at September 30, 2021.2022. Based on our current operational plan and budget which includes a deferral of all cash compensation to employees and Board members that commenced July 1, 2021,additional funds from Mayne Pharma, we expect that we will have sufficient cash to manage our business into December 2022, when the first quartersettlements as described in Note 7 to the accompanying financial statements are expected to be consummated (including a change of 2022, although this estimationcontrol of our company and the funding of a substantial amount of working capital to our company). This estimate assumes we do not begin any clinical trials, acquire other drug development opportunitiesthat no party to the litigations appeal the court’s ruling approving the settlement or that will otherwise face unexpected events, costs or contingencies, any of which could affect our cash requirements. AvailableEven following the settlement funding and change of control (should it occur), available resources may be consumed more rapidly than anticipated, potentially resulting in the need for additional funding.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
None.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report, the Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer (the “Certifying Officers”), conducted evaluations of our disclosure controls and procedures. As defined under Sections 13a–15(e)15I and 15d–15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the term “disclosure controls and procedures” means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including the Certifying Officers, to allow timely decisions regarding required disclosures.
12
Based on this evaluation, the Certifying Officers have concluded that our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during our third fiscal quarterfirst six months of 20212022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Internal Controls
Readers are cautioned that our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our control have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any control design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
Certain information set forth in this Quarterly Report on Form
the timing for final resolution of any pending litigation involving our company, and the nature of any such resolution, if achieved;
acceptance of our business model (namely the repurposing of a specialty formulation of the drug itraconazole for the treatment of cancer or other diseases, and the potential acquisition or license of other pharmaceutical technologies) by investors and potential commercial collaborators;
the uncertainties regarding the impact of the COVID-19 pandemicnovel coronavirus outbreak and related governmental actions on our business model and our ability to implement our business (including, should adequate funding be obtained, the conduct of clinical trials);business;
our future capital requirements and our ability to satisfy our capital needs;
our ability to commence and complete required clinical trials of our product candidate and obtain approval from the FDA or other regulatory agencies in different jurisdictions;
matters associated with the fact that Mayne Pharma is ourhas been majority stockholder and key licensor;
our ability to secure and maintain key development and commercialization partners for our product candidate;
our ability to obtain, maintain or protect the validity of our owned or licensed patents and other intellectual property;
our ability to internally develop, acquire or license new inventions and intellectual property;
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our ability to retain key executive members;
interpretations of current laws and the passages of future laws, rules and regulations applicable to our business; and
those risk factors listed under Item 1A of our 20202021 Annual Report and other factors detailed from time to time in our other filings with the SEC.
Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual future results will not be different from the expectations expressed in this Report. We undertake no obligation to publiclypublically update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On July 9, 2019, Hedgepath, LLC (“HPLLC”), a significant minority stockholder of ours and an investment vehicle associated with our former Executive Chairman, filed a civil action captioned
On December 3, 2019, HPLLC filed the Verified Amended and Supplemental Complaint. In the Complaint in the Action, purportedly brought directly and derivatively on behalf of us, HPLLC alleges claims for breach of fiduciary duty, waste, declaratory judgment, statutory violations, and dilution of stockholder equity, against the Individual Defendants and Mayne Pharma in connection with (i) the previously announced issuance of certain of our equity securities to Mayne Pharma on or about January 8, 2018, (ii) Mayne Pharma’s alleged influence over the timing and conduct of the previous clinical trial of SUBA-Itraconazole for the treatment of BCCNS, and (iii) previously announced amendments to the Supply and License Agreement, as amended (presently memorialized at the Third Amended SLA), between us and Mayne Pharma and certain transactions contemplated thereby. The Complaint also alleges claims for breach of fiduciary duty and fraudulent misrepresentation in connection with allegedly false and misleading statements included in our press releases and filings with the SEC. The Complaint seeks unspecified damages from the defendants, and equitable and other relief. Legal costs associated directly with the Company as a nominal defendant were initially payable by us until certain retention amounts were reached. Such costs are currently covered by our insurance policy.
On January 10, 2020, the Individual Defendants and Mayne Pharma each filed a motion to dismiss the Complaint. A hearing on those motions was scheduled on March 26, 2020, but was postponed to June 2020 due to the ongoing coronavirus outbreak. On June 4, 2020, the Delaware Court of Chancery held a hearing at which the separate motions of the Individual Defendants and Mayne Pharma to dismiss the Complaint were presented. At the conclusion of the hearing, the Court issued an oral ruling in which it denied the motions to dismiss the Complaint. Accordingly, the Action is anticipated to proceedhas been proceeding in the course typical for such litigation, which could include alternative dispute resolution methods.
Additionally, on March 23, 2020, a Stockholder Class Action Complaint was filed in the Delaware Court of Chancery by a stockholder and purported class representative, Samuel P. Sears, commencing litigation captioned
The Defendants have denied, and continue to deny, the Actionallegations of wrongdoing or liability asserted in the Coordinated Actions. Nevertheless, to eliminate the uncertainty, risk, disruption and Putativeexpense of further litigation, HPLLC, Sears, the Company, the Individual Defendants and Mayne Pharma have entered into a Stipulation and Agreement of Compromise, Settlement, and Release, dated and filed with the Court on September 9, 2022 (together with the exhibits thereto, the “Settlement Stipulation”).
The Settlement Stipulation includes as an exhibit thereto a Notice of Pendency of Derivative and Class ActionActions, Proposed Settlement and Settlement Hearing (the “Notice”). The material terms of the proposed settlement of the Coordinated Actions are legallysummarized in the Notice and factually baseless,include, without limitation, that (i) the Defendants will cause $14,250,000 in cash (to be funded via Mayne Pharma’s director and officer insurance) to be paid to the Company (the “Cash Consideration”); (ii) Mayne Pharma will surrender all equity securities in the Company for cancellation, and will forgive certain debts it is owed by the Company; (iii) stock options and warrants held by the Individual Defendants will continuebe cancelled; (iv) certain intellectual property licenses to defend themselves vigorously.and from the Company, on one hand, and Mayne Pharma, on the other, will be converted or terminated, with only certain obligations remaining
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in place; (v) each of the Individual Defendants will retire from their positions with the Company, including as members of the Company’s Board of Directors and management; (vi) the previously-disclosed Third Amended and Restated Supply and License Agreement between the Company and Mayne will be cancelled, with the Company retaining a royalty on future net sales of SUBA-Itraconazole BCCNS in the United States subject to certain contingent payment obligations; and (vii) various releases will be exchanged among the parties to the Coordinated Actions. (viii) the $411,000 mayne Term Debt Facility will be paid by us.
Also as described in the Notice, HPLLC and Sears intend to petition the Court for approval of an award of attorneys’ fees and expenses in connection with the Coordinated Actions in an amount not to exceed $2,000,000 in the aggregate, to be paid out of the Cash Consideration.
As set forth in the Notice, the proposed settlement was subject to and conditioned on approval by the Court. As a result of Court approval, the proposed settlement will, among other things: (i) fully resolve the Coordinated Actions by dismissing all asserted claims with prejudice, and (ii) bar all claims released through the settlement.
A hearing date for the Court’s review of the proposed settlement and the applications for an award of attorneys’ fees and expenses was held November 10, 2022. At the conclusion of the hearing, the Court entered a Final Order And Judgment (the “Judgment”) approving in all respects the proposed settlement of the Coordinated Actions (the “Settlement”). Among other things, the Judgment: certified a class including record holders and beneficial owners of our stock between January 8, 2018 and December 17, 2018 (the “Class”), and appointed Sears as Class representative; found the Settlement to be fair, reasonable, adequate, and in the best interests of us, the Class, and our stockholders; approved the Settlement in all respects; released certain claims against certain parties, as set forth in each of the Notice and Settlement Stipulation; dismissed the Coordinated Actions; acknowledged that neither the Judgment nor the Settlement constituted an admission of any wrongdoing by any party; and awarded plaintiffs’ counsel certain fees and costs, which the Court deemed fair and reasonable, were not opposed by any party, and are to be paid by us from the proceeds of the Settlement.
Item 1A. Risk Factors.
Not required for smaller reporting companies.
Item 2. Unregistered Sales |
None.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits.
Number | Description | |
| 31.1 | Certification of Chief Executive Officer Pursuant | |
| 31.2 | Certification of Chief Financial Officer Pursuant | |
| 32.1 | Certification Pursuant To 18 U.S.C. Section 1350 (*) | |
| 32.2 | Certification Pursuant To 18 U.S.C. Section 1350 (*) | |
| 101.ins | XBRL Instance Document | |
| 101.sch | XBRL Taxonomy Extension Schema Document | |
| 101.cal | XBRL Taxonomy Calculation Linkbase Document | |
| 101.def | XBRL Taxonomy Definition Linkbase Document | |
| 101.lab | XBRL Taxonomy Label Linkbase Document | |
| 101.pre | XBRL Taxonomy Presentation Linkbase Document | |
| * | A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. |
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SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| INHIBITOR THERAPEUTICS, INC. | ||||||
| Date: November | By: | /s/ Nicholas J. Virca | ||||
Nicholas J. Virca President and Chief Executive Officer (Principal Executive Officer) | ||||||
| Date: November | By: | /s/ Garrison J. Hasara | ||||
Garrison J. Hasara, CPA Chief Financial Officer and Treasurer (Principal Financial Officer) | ||||||
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