UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~UNITED STATES~~

~~SECURITIES AND EXCHANGE COMMISSION~~

~~Washington, D.C. 20549~~

FORM 10-Q

(Mark one)

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

For the quarterly period ended ~~June 30, 2021~~March 31, 2022

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

For the transition period from ____________ to ____________

Commission file number 000-05576

AIKIDO PHARMA INC.

(Exact name of registrant as specified in its charter)

Delaware		52-0849320
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One Rockefeller Plaza, 11^th Floor, New York, NY 10020

(Address of Principal Executive Offices, including zip code)

(703) 992-9325

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted and posted 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 such files.) Yes ☒ No ☐

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

Large Accelerated Filer	☐	Accelerated Filer	☐
Non-accelerated Filer	☒	Smaller Reporting Company	☒
Emerging growth company	☐

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

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

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

Title of each class		Trading Symbol(s)	~~Trading Symbol(s)~~		Name of each exchange on which registered
Common Stock, $0.0001 par value		AIKI		The Nasdaq Capital Market LLC

As of ~~August 11, 2021,~~May 16, 2022, there were ~~89,681,146~~89,293,446 shares of the Company’s common stock issued and outstanding.

AIKIDO PHARMA INC.

Form 10-Q

For the Quarter Ended ~~June 30, 2021~~March 31, 2022

Index

		Page No.

Part I. Financial Information

Item 1.	Financial Statements (Unaudited)	1

	Condensed Consolidated Balance Sheets as of ~~June 30,~~March 31, 2021 (Unaudited) and December 31, 2020	1

	Condensed Consolidated Statements of Operations for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ (Unaudited)	2

	Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ (Unaudited)	3

	Condensed Consolidated Statements of Cash Flows for the ~~six~~Three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ (Unaudited)	54

	Notes to the Condensed Consolidated Financial Statements (Unaudited)	65

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1216

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	1420

Item 4.	Controls and Procedures	1420

Part II. Other Information

Item 1.	Legal Proceedings	1521

Item 1A.	Risk Factors	1521

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	1521

Item 6.	Exhibits	1521

Signatures
~~Signatures~~		1622

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

AIKIDO PHARMA INC.

Condensed Consolidated Balance Sheets

($ in thousands except share and per share amounts)

June 30, December 31,
2021 2020
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 7,718 $ 2,715
Marketable securities 87,832 24,801
Prepaid expenses and other assets 176 215
Short-term investment 1,866 -
Deposits 4,476 -
Total current assets 102,068 27,731

Convertible note receivable 2,067 -
Investments - 2,764
$ 104,135 $ 30,495

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses $ 319 $ 567
Accrued salaries and benefits 733 310
Total current liabilities 1,052 877

Total liabilities 1,052 877

Commitments and contingencies

Stockholders’ equity
Preferred stock, $.0001 par value, 50,000,000 Authorized
Series D: 5,000,000 shares designated; 4,725 shares issued and outstanding at June 30, 2021 and December 31, 2020; liquidation value of $0.0001 per share - -
Series D-1: 5,000,000 shares designated; 834 shares issued and outstanding at June 30, 2021 and December 31, 2020; liquidation value of $0.0001 per share - -
Common stock, $0.0001 par value, 100,000,000 shares authorized; 89,531,149 and 34,920,222 shares issued at June 30, 2021 and December 31, 2020, respectively; 89,531,146 and 34,920,219 shares outstanding at June 30, 2021 and December 31, 2020, respectively 9 3
Additional paid-in capital 265,255 186,482
Treasury stock, at cost, 3 shares at June 30, 2021 and December 31, 2020 (264 ) (264 )
Accumulated deficit (161,917 ) (156,603 )
Total stockholders’ equity 103,083 29,618
Total liabilities and stockholders’ equity $ 104,135 $ 30,495

	March 31,			December 31,
	2022			2021
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	49,686		$	65,562
Restricted cash		20,953			-
Marketable securities		14,435			11,427
Prepaid expenses and other assets		348			442
Short-term investments at fair value		255			2,273
Notes receivable at fair value		9,310			6,984
Deposits		4,194			4,201
Total current assets		99,181			90,889

Convertible note receivable at fair value		-			2,147
Investments		18,610			9,465
Security deposit		155			155
Total assets	$	117,946		$	102,656

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses	$	209		$	381
Accrued salaries and benefits		686			680
Total current liabilities		895			1,061

Total liabilities		895			1,061

Commitments and contingencies
Series O Redeemable Convertible Preferred Stock, $0.0001 par value; 11,000 and 0 shares issued and outstanding, at $1,000.00 per share at March 31, 2022 and December 31, 2021		11,000			-
Series P Redeemable Convertible Preferred Stock, $0.0001 par value; 11,000 and 0 shares issued and outstanding, at $1,000.00 per share at March 31, 2022 and December 31, 2021		11,000			-

Stockholders’ equity
Preferred stock, $.0001 par value, 50,000,000 Authorized
Series D: 5,000,000 shares designated; 3,825 shares issued and outstanding at March 31, 2022 and December 31, 2021; liquidation value of $0.0001 per share		-			-
Series D-1: 5,000,000 shares designated; 834 shares issued and outstanding at March 31, 2022 and December 31, 2021; liquidation value of $0.0001 per share		-			-
Common stock, $0.0001 par value, 100,000,000 shares authorized; 89,293,446 and 89,681,258 shares issued at March 31, 2022 and December 31, 2021, respectively; 89,293,443 and 89,681,255 shares outstanding at March 31, 2022 and December 31, 2021, respectively		9			9
Additional paid-in capital		262,615			265,624
Treasury stock, at cost, 3 shares at March 31, 2022 and December 31, 2021		(264	)		(264	)
Accumulated deficit		(167,309	)		(163,774	)
Total stockholders’ equity		95,051			101,595
Total liabilities, redeemable convertible preferred stock and stockholders’ equity	$	117,946		$	102,656

See accompanying notes to condensed consolidated financial ~~statements~~

~~AIKIDO PHARMA INC.~~

~~Condensed Consolidated Statements of Operations~~

~~($ in thousands except share and per share amounts)~~

~~(Unaudited)~~

Three Months Ended
June 30, Six Months Ended
June 30,
2021 2020 2021 2020
Operating costs and expenses
General and administrative $ 2,343 $ 1,017 $ 3,555 $ 2,320
Research and development 325 675 397 760
Research and development - license acquired 91 102 1,125 1,113
Total operating expenses 2,759 1,794 5,077 4,193
Loss from operations (2,759 ) (1,794 ) (5,077 ) (4,193 )

Other income (expenses)
Other income - 15 135 15
Interest income 40 - 67 -
Gains on marketable securities 1,798 1,125 459 262
Change in fair value of investment (431 ) (1,659 ) (898 ) (6,730 )
Total other income (expenses) 1,407 (519 ) (237 ) (6,453 )
Net loss $ (1,352 ) $ (2,313 ) $ (5,314 ) $ (10,646 )

Net loss per share, basic and diluted
Basic and Diluted $ (0.02 ) $ (0.07 ) $ (0.07 ) $ (0.50 )

Weighted average number of shares outstanding, basic and diluted
Basic and Diluted 89,595,614 32,975,170 75,019,737 21,085,382

~~See accompanying notes to condensed consolidated financial statements~~

~~AIKIDO PHARMA INC.~~

~~Condensed Consolidated Statements of Changes in Stockholders’ Equity~~

~~($ in thousands except share and per share amounts)~~

~~(Unaudited)~~

~~For the Three Months Ended June 30, 2021~~

Common Stock Preferred Stock Additional
Paid-in Treasury Stock Accumulated Total Stockholders’
Shares Amount Shares Amount Capital Shares Amount Deficit Equity
Balance at March 31, 2021 89,531,146 $ 9 5,559 $ - $ 265,192 3 $ (264 ) $ (160,565 ) $ 104,372
Stock-based compensation - - - - 63 - - - 63
Net loss - - - - - - - (1,352 ) (1,352 )
Balance at June 30, 2021 89,531,146 $ 9 5,559 $ - $ 265,255 3 $ (264 ) $ (161,917 ) $ 103,083

~~For the Three Months Ended June 30, 2020~~

Common Stock Preferred Stock Additional
Paid-in Treasury Stock Accumulated Total Stockholders’
Shares Amount Shares Amount Capital Shares Amount Deficit Equity
Balance at March 31, 2020 20,857,909 $ 2 5,559 $ - $ 173,836 3 $ (264 ) $ (152,599 ) $ 20,975
Issuance of common stock, net of offering cost 14,000,000 1 - - 12,766 - - - 12,768
Common warrant and prefunded warrant exercise 62,310 - - - 65 - - - 65
Net loss - - - - - - - (2,313 ) (2,313 )
Balance at June 30, 2020 34,920,219 $ 3 5,559 $ - $ 186,667 3 $ (264 ) $ (154,912 ) $ 31,494

~~See accompanying notes to condensed consolidated financial statements~~

~~AIKIDO PHARMA INC.~~

~~Condensed Consolidated Statements of Changes in Stockholders’ Equity~~

~~($ in thousands except share and per share amounts)~~

~~(Unaudited)~~

~~For the Six Months Ended June 30, 2021~~

Common Stock Preferred Stock Additional
Paid-in Treasury Stock Accumulated Total Stockholders’
Shares Amount Shares Amount Capital Shares Amount Deficit Equity
Balance at December 31, 2020 34,920,219 $ 3 5,559 $  - $ 186,482 3 $ (264 ) $ (156,603 ) $ 29,618
Issuance of common stock and warrants (net of offering costs of $8,260) 53,905,927 6 - - 77,983 - - - 77,989
Exercise of warrants 80,000 - - - 84 - - - 84
Issuance of common stock for research and development license acquired 625,000 - - - 531 - - - 531
Stock-based compensation - - - - 175 - - - 175
Net loss - - - - - - - (5,314 ) (5,314 )
Balance at June 30, 2021 89,531,146 $ 9 5,559 $ - $ 265,255 3 $ (264 ) $ (161,917 ) $ 103,083

~~For the Six Months Ended June 30, 2020~~

Common Stock Preferred Stock Additional
Paid-in Treasury Stock Accumulated Total Stockholders’
Shares Amount Shares Amount Capital Shares Amount Deficit Equity
Balance at December 31, 2019 4,825,549 $ - 5,559 $ - $ 155,062 3 $ (264 ) $ (144,266 ) $ 10,532
Issuance of common stock, common warrants and prefunded warrants, net of offering cost 3,245,745 - - - 6,559 - - - 6,559
Issuance of common stock, net of offering cost 16,090,909 2 - - 17,843 - - - 17,845
Common warrant and prefunded warrant exercise 10,758,016 1 - - 7,203 - - - 7,204
Net loss - - - - - - - (10,646 ) (10,646 )
Balance at June 30, 2020 34,920,219 $ 3 5,559 $ - $ 186,667 3 $ (264 ) $ (154,912 ) $ 31,494

~~See accompanying notes to condensed consolidated financial statements~~statements.

AIKIDO PHARMA INC.

Condensed Consolidated Statements of ~~Cash Flows~~Operations

($ in ~~thousands)~~thousands except share and per share amounts)

(Unaudited)

Six Months Ended
June 30,
2021 2020
Cash flows from operating activities
Net loss $ (5,314 ) $ (10,646 )
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of investment 898 6,730
Research and development-acquired license, expensed 1,125 1,113
Stock-based compensation 175 -
Realized gain on marketable securities (1,084 ) (544 )
Unrealized loss on marketable securities 1,395 614
Changes in assets and liabilities:
Prepaid expenses and other assets 39 76
Accounts payable and accrued expenses (248 ) 608
Accrued salaries and benefits 423 (389 )
Interest receivable on convertible note (67 ) -
Payable to DatChat - 50
Net cash used in operating activities (2,658 ) (2,388 )

Cash flows from investing activities
Purchase of marketable securities (86,497 ) (78,042 )
Sale of marketable securities 23,155 52,215
Sale of Hoth common shares - 460
Funds to deposit accounts, net (4,476 ) -
Purchase of research and development licenses (594 ) (1,113 )
Purchase of convertible note (2,000 ) -
Net cash used in investing activities (70,412 ) (26,480 )

Cash flows from financing activities
Proceeds from issuance of common stock and warrants, net of offering cost 77,989 6,559
Proceeds from issuance of common stock, net of offering cost - 17,845
Proceeds from exercise of warrants 84 7,204
Net cash provided by financing activities 78,073 31,608

Net increase in cash and cash equivalents 5,003 2,740
Cash and cash equivalents, beginning of period 2,715 91

Cash and cash equivalents, end of period $ 7,718 $ 2,831

	Three Months Ended March 31,
	2022			2021
Operating costs and expenses
General and administrative	$	1,787		$	1,212
Research and development		2,016			72
Research and development - license acquired		-			1,034
Total operating expenses		3,803			2,318
Loss from operations		(3,803	)		(2,318	)

Other income (expenses)
Other income		64			135
Interest income		179			27
Loss on marketable securities		(497	)		(1,339	)
Change in fair value of investment		522			(467	)
Total other income (expenses)		268			(1,644	)
Net loss	$	(3,535	)	$	(3,962	)
Deemed dividends related to Series O and Series P Redeemable Convertible Preferred Stock		(3,009	)		-
Net Loss Attributable to Common Shareholders	$	(6,544	)	$	(3,962	)

Net loss per share, basic and diluted
Basic and Diluted	$	(0.07	)	$	(0.07	)

Weighted average number of shares outstanding, basic and diluted
Basic and Diluted		89,293,446			60,281,906

See accompanying notes to condensed consolidated financial ~~statements~~statements.

AIKIDO PHARMA INC.

Condensed Consolidated Statements of Changes in Redeemable Preferred Stock and Stockholders’ Equity

($ in thousands except share and per share amounts)

(Unaudited)

For the Three Months Ended March 31, 2022

	Redeemable Convertible Preferred Stock																			Additional											Total
	Series O					Series P					Common Stock					Preferred Stock				Paid-in			Treasury Stock					Accumulated			Stockholders’
	Shares		Amount			Shares		Amount			Shares			Amount		Shares		Amount		Capital			Shares		Amount			Deficit			Equity
Balance at December 31, 2021		-	$	-			-	$	-			89,681,258		$	9		4,659	$	-	$	265,624			3	$	(264	)	$	(163,774	)	$	101,595
Issuance of Series O redeemable convertible preferred stock for cash		11,000		11,000								-					-		-		-			-		-			-			-
Issuance of Series P redeemable convertible preferred stock for cash							11,000		11,000			-					-		-		-			-		-			-			-
Cost on issuance of Series O and Series P Redeemable Convertible Preferred Stock		-		(1,504	)		-		(1,505	)		-					-		-		-			-		-			-			-
Deemed dividends related to Series O and Series P Redeemable Convertible Preferred Stock		-		1,504			-		1,505			-			-		-				(3,009	)		-		-			-			(3,009	)
Cancellation of common stock related to investment in CBM		-		-			-		-			(387,812	)		-		-		-		-			-		-			-			-
Net loss		-		-			-		-			-			-		-		-		-			-		-			(3,535	)		(3,535	)
Balance at March 31, 2022		11,000	$	11,000			11,000	$	11,000			89,293,446		$	9		4,659	$	-	$	262,615			3	$	(264	)	$	(167,309	)	$	95,051

For the Three Months Ended March 31, 2021

	Common Stock				Preferred Stock				Additional Paid-in		Treasury Stock					Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		Shares		Amount			Deficit			Equity
Balance at December 31, 2020		34,920,219	$	3		5,559	$	-	$	186,482		3	$	(264	)	$	(156,603	)	$	29,618
Issuance of common stock and warrants (net of offering costs of $8,260)		53,905,927		6		-		-		77,983		-		-			-			77,989
Exercise of warrants		80,000		-		-		-		84		-		-			-			84
Issuance of common stock for research and development license acquired		625,000		-		-		-		531		-		-			-			531
Stock-based compensation		-		-		-		-		112		-		-			-			112
Net loss		-		-		-		-		-		-		-			(3,962	)		(3,962	)
Balance at March 31, 2021		89,531,146	$	9		5,559	$	-	$	265,192		3	$	(264	)	$	(160,565	)	$	104,372

See accompanying notes to condensed consolidated financial statements.

AIKIDO PHARMA INC.

Condensed Consolidated Statements of Cash Flows

($ in thousands)

(Unaudited)

	Three Months Ended March 31,
	2022			2021
Cash flows from operating activities
Net loss	$	(3,535	)	$	(3,962	)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of short-term investment		886			467
Change in fair value of long-term investment		(1,408	)
Research and development-acquired license, expensed		-			1,034
Stock-based compensation		-			112
Realized loss (gain) on marketable securities		224			(424	)
Unrealized loss on marketable securities		333			2,049
Realized gain on sale of digital currencies		(64	)		-
Changes in operating assets and liabilities:
Prepaid expenses and other assets		66			16
Accounts payable and accrued expenses		(172	)		(323	)
Accrued salaries and benefits		6			5
Interest receivable on convertible note		(179	)		(27	)
Deposits		7			-
Net cash used in operating activities		(3,836	)		(1,053	)

Cash flows from investing activities
Purchase of marketable securities		(27,096	)		(83,586	)
Sale of marketable securities		24,662			14,335
Proceeds from sale of digital currencies		93			-
Purchase of short-term and long-term investments		(7,737	)		-
Purchase of research and development licenses		-			(503	)
Purchase of convertible note		-			(2,000	)
Net cash used in investing activities		(10,078	)		(71,754	)

Cash flows from financing activities
Proceeds from issuance of common stock and warrants, net of offering cost		-			77,989
Proceeds from issuance of Series O and Series P Redeemable Convertible Preferred Stock, net of discount and offering cost		18,991			-
Proceeds from exercise of warrants		-			84
Net cash provided by financing activities		18,991			78,073

Net increase in cash and cash equivalents and restricted cash		5,077			5,266
Cash and cash equivalents and restricted cash, beginning of period		65,562			2,715

Cash and cash equivalents and restricted cash, end of period	$	70,639		$	7,981

Non-cash investing and financing activities
Transfer from short-term investment to marketable securities	$	1,482		$	-
Reclassify from convertible note receivable to notes receivable at fair value	$	2,147		$	-

See accompanying notes to condensed consolidated financial statements.

AIKIDO PHARMA INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1. Organization and Description of Business and Recent Developments

Organization and Description of Business

AIkido Pharma Inc. (the “Company” ~~and “We”~~), formerly known as Spherix Incorporated, was initially formed in 1967. Since 2017, the Company has operated as a biotechnology company with a diverse portfolio of small-molecule anticancer and antiviral therapeutics in development. The Company’s pipeline consists of patented technology from leading universities and researchers. The ~~Company is currently in the process of developing its~~Company’s innovative therapeutic drug pipeline is currently being advanced through strong ~~partnerships~~collaborations with ~~world~~ renowned educational institutions, including the University of Texas at Austin, the University of Maryland, Baltimore and Wake Forest University. The Company’s oncology therapeutics include prospective treatments for pancreatic cancer, acute myeloid leukemia (AML) and acute lymphoblastic leukemia (ALL). The Company is also developing a broad-spectrum antiviral platform, in which the lead compounds have activity in cell-based assays against multiple viruses including Influenza virus, Ebolavirus and Marburg virus, SARS-CoV, MERS-CoV, and SARS-CoV-2, the cause of COVID-19.

As a result of the Company’s biotechnology research and development and associated investments and acquisitions, its business portfolio now focuses on the treatment of three different cancers and multiple types of viral infections. The Company’s pancreatic drug candidate, DHA-dFdC, developed at and licensed from the University of Texas at Austin, is a new compound that it hopes will become the next generation of chemotherapy treatment for advanced pancreatic cancer. DHA-dFdC overcomes tumor cell resistance to current chemotherapeutic drugs and is well tolerated in preclinical toxicity tests. Preclinical studies have also indicated that DHA-dFdC inhibits pancreatic cancer cell growth (up to 100,000-fold more potent that gemcitabine, a current standard therapy), ~~targets~~accumulates preferentially in pancreatic ~~tumors~~tissue and has demonstrated activities against other ~~cancers.~~cancers, including leukemia, lung and melanoma. The Company’s AML and ALL compound, developed at the Wake Forest University, is a targeted therapeutic designed to overcome multiple resistance mechanisms observed with the current standard of care.

The Company’s broad-spectrum antiviral platform was developed at the University of Maryland Baltimore (“UMB”), which granted the Company an exclusive worldwide Master License Agreement (MLA”) to technology covered by three separate patent applications. The licensed technology comprises broadly acting pan-viral inhibitory compounds targeting multiple viral pathogens. The technology was invented by UMB scientists Drs. Matthew Frieman, Alexander MacKerell and Stuart Watson. The Company has also executed a Sponsored Research Agreement with UMB to support the development of the technology under the direction of these inventors at UMB.

Note 2. Liquidity and Capital Resources

The Company continues to incur ongoing administrative and other expenses, including public company expenses, in excess of corresponding (non-financing related) revenue. While the Company continues to implement its business strategy, it intends to finance its activities through managing current cash on hand from the Company’s past debt and equity offerings.

During the first quarter of 2021, the Company consummated a public offering of 53,905,927 shares of common stock (including the underwriter overallotment). The Company received net proceeds of approximately $78.0 million after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. Based upon projected cash flow requirements, the Company has adequate cash to fund its operations for at least the next twelve months from the date of the issuance of these consolidated financial statements.

Note 3. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated interim financial statements include the accounts of the Company and its wholly-owned subsidiaries, Nuta Technology Corp. (“Nuta”), Spherix Portfolio Acquisition II, Inc. (“SPAII”), Guidance IP, LLC (“Guidance”), Directional IP, LLC (“Directional”), Spherix Management Services, LLC (“SMS”), Spherix Delaware Merger Sub Inc. (“Merger Sub”), Spherix Merger Subsidiary, Inc (“SMSI”) and NNPT, LLC (“NNPT”).subsidiary, AIkido Labs LLC. All significant intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and on the same basis as the Company prepares its annual audited consolidated financial statements. The condensed consolidated balance sheet as of ~~June 30, 2021,~~March 31, 2022, condensed consolidated statements of operations for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ condensed consolidated statements of stockholders’ equity for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ and the condensed consolidated statements of cash flows for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The results for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 are not necessarily indicative of results to be expected for the year ending December 31, ~~2021~~2022 or for any future interim period. The condensed consolidated balance sheet at December 31, ~~2020~~2021 has been derived from audited financial statements; however, it does not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, ~~2020~~2021 and notes thereto included in the Company’s annual report on Form 10-K, which was filed with the SEC on March ~~25, 2021.~~28, 2022.

~~AIKIDO PHARMA INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Use of Estimates

The accompanying condensed consolidated financial statements have been prepared in conformity with US GAAP. This requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the period. The Company’s significant estimates and assumptions include stock-based compensation, the valuation of investments, the valuation of convertible note and the valuation allowance related to the Company’s deferred tax assets. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates and assumptions.

Significant Accounting Policies

Other than as described below, there have been no material changes in the Company’s significant accounting policies to those previously disclosed in the Company’s annual report on Form 10-K, which was filed with the SEC on March ~~25, 2021.~~28, 2022.

~~Fair Value Option -~~Redeemable Convertible ~~Note~~Preferred Stock

The ~~guidance~~convertible preferred stock was not unconditionally redeemable at the option of the holder thereof. However, the convertible preferred stock was contingently redeemable upon certain liquidation events. As redemption by the holders was not solely within the control of the Company, all of the outstanding convertible preferred stock was classified as temporary equity in ~~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. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. 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. Assets and liabilities measured at fair value pursuant to this guidance are required to be reported separately in our condensed consolidated balance ~~sheets from those instruments using another accounting method.~~sheets.

~~Deposits~~Restricted Cash

~~During~~The following table provides a summary of the Company’s cash and restricted cash total as presented in the condensed consolidated statements of cash flows for the three months ended ~~June 30, 2021,~~March 31, 2022 (in thousands):

	March 31, 2022
Cash	$	49,686
Restricted cash		20,953
Total cash and restricted cash	$	70,639

In accordance with the public offering of 11,000 shares of Series O Redeemable Convertible Preferred Stock and 11,000 shares of Series P Redeemable Convertible Preferred Stock, $21.0 million is held in escrow and disbursed to the Company ~~deposited $5 million with a fund to identify opportunities to expand the Company’s core business strategies in Asia. The cash are held in bank accounts on behalf~~only upon conversion of the ~~Company until~~Series O and Series P Preferred Stock. The proceeds are included within restricted cash on the ~~fund manager identifies investments. During the three months ended June 30, 2021, the Company incurred fees of approximately $0.5 million advisory fees and the~~accompanying consolidated balance ~~held in cash in this fund was $4.5 million as of June 30, 2021.~~sheets. See Note 10.

~~Recently Adopted Accounting Standards~~Recent accounting pronouncements

~~In December 2019,~~Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if currently adopted, would have an effect on the ~~Financial Accounting Standards Board (“FASB”) issued ASU No. 2019-12, “~~~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~ (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company adopted ASU No. 2019-12 effective January 1, 2021, and the adoption did not have a material impact on itsCompany’s condensed consolidated financial statements.

~~Note 4. License agreement with Silo Pharma Inc.~~

Effective January 5, 2021, the Company entered into an exclusive patent license agreement (the “License Agreement”) with Silo Pharma Inc., a Delaware corporation and Silo Pharma Inc., a Florida corporation, and their affiliates/subsidiaries (collectively, “Silo Pharma”). On April 12, 2021, the Company entered into an amendment to the License Agreement (“Amendment”). The Amendment amended a portion of the license fees included in the original License Agreement and exchange 500 shares of the Company’s Series M Convertible Preferred Stock to an aggregate of 625,000 restricted shares of the Company’s common stock, par value $0.001 per share, effective as of January 5, 2021. The Company paid a one-time nonrefundable cash payment of $0.5 million to Silo Pharma. The Company shall also pay Silo Pharma a running royalty equal to 2% of “net sales” (as such term is defined in the License Agreement).

~~AIKIDO PHARMA INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Note 5.4. Investments in Marketable Securities

The realized gain or loss, unrealized gain or loss, and dividend income related to marketable securities for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ which are recorded as a component of gains and (losses) on marketable securities on the consolidated statements of operations, are as follows ($ in thousands):

For the Three Months Ended
June 30, For the Six Months Ended
June 30,
2021 2020 2021 2020
Realized gain (loss) $ 661 $ 597 $ 1,084 $ 544
Unrealized gain (loss) 653 212 (1,395 ) (614 )
Dividend income 484 246 770 259
Interest income - - - 4
$ 1,798 $ 1,055 $ 459 $ 193

	Three Months Ended March 31,
	2022			2021
Realized (loss) gain	$	(224	)	$	424
Unrealized loss		(333	)		(2,049	)
Dividend income		60			286
	$	(497	)	$	(1,339	)

Note 6. 5. Short-term investments

The following table presents the Company’s short-term investments at March 31, 2022 and December 31, 2021 ($ in thousands):

	March 31, 2022		December 31, 2021
Investment in Hoth Therapeutics, Inc.		24		770
Investment in DatChat, Inc.		-		1,084
Investment in Vicinity Motor Corp.		231		419
Total		255		2,273

The change in the fair value of the short-term investments for the three months ended March 31, 2022 is summarized as follows: ($ in thousands):

Beginning balance	$	2,273
Transfer to marketable securities		(1,482	)
Change in fair value of investment		(886	)
Realized gain recognized through sale of marketable securities		350
Ending balance	$	255

Investment in Hoth Therapeutics, Inc.

On March 11, 2022, 1,130,701 shares of Hoth common stock were transferred to marketable securities account and were sold for net proceeds of approximately $0.9 million.

The following summarizes the Company investment in Hoth as of ~~June 30,~~March 31, 2022 and December 31, 2021:

Security Name		Shares Owned as of March 31, 2022				Fair value per Share as of March 31, 2022				Fair value as of March 31, 2022 (in thousands)
HOTH			35,714			$	0.69			$	24

Security Name		Shares Owned as of December 31, 2021				Fair value per Share as of December 31, 2021				Fair value as of December 31, 2021 (in thousands)
HOTH			1,166,415			$	0.66			$	770

Investment in DatChat, Inc.

On February 14, 2022, 357,916 shares (valued at $2.21 per share) of DatChat common stock were transferred to marketable securities account and were sold for net proceeds of approximately $0.8 million.

Investment in Vicinity Motor Corp.

On October 25, 2021, the Company entered into a warrant agreement with Vicinity Motor Corp. (“Vicinity”) that entitles the Company to purchase up to 246,399 shares of Vicinity common stock at $5.10 per share. The warrant expires on October 25, 2024. The fair value was determined using a Black-Scholes simulation. The Company recorded the fair value of the Vicinity warrant of approximately $0.3 and $0.4 million in the consolidated balance sheet as of March 31, 2022 and December 31, 2021, respectively, reflecting the benefit received as part of its purchase of Vicinity common shares through its brokerage account. The initial investment in Vicinity was measured at approximately $0.6 million. Gains or losses associated with changes in the fair value of investments in Vicinity warrants are recognized as Change in fair value of investment on consolidated statements of operations. During the three months ended March 31, 2022, the Company recorded approximately $188,000 of change in fair value of investment for this investment.

The following table provides quantitative information regarding Level 3 fair value measurements inputs at their measurement dates:

	March 31, 2022			December 31, 2021
Option term (in years)		2.6			2.8
Volatility		93.90	%		95.52	%
Risk-free interest rate		2.45	%		0.97	%
Expected dividends		0.00	%		0.00	%
Stock price	$	2.40		$	3.50

Note 6. Long-Term Investments

Effective January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2016-01 and related ASU 2018-03 concerning recognition and measurement of financial assets and financial liabilities. In adopting this guidance, the Company has made an accounting policy election to adopt an adjusted cost method measurement alternative for investments in equity securities without readily determinable fair values.

For equity investments that are accounted for using the measurement alternative, the Company initially records equity investments at cost but is required to adjust the carrying value of such equity investments through earnings when there is an observable transaction involving the same or a similar investment with the same issuer or upon an impairment.

The following table presents the Company’s other investments at March 31, 2022 and December 31, 2021 ($ in thousands):

	March 31, 2022		December 31, 2021
Investment in Kerna Health Inc	$	3,800	$	3,800
Investment in Kaya Holding Corp		2,340		1,665
Investment in Tevva Motors		3,364		2,000
Investment in ASP Isotopes		1,000		1,000
Investment in AerocarveUS Corporation		1,000		1,000
Investment in Qxpress		1,000		-
Investment in Masterclass		170		-
Investment in Kraken		486		-
Investment in Epic Games		1,500		-
Investment in Tesspay		1,250		-
Investment in SpaceX		1,500		-
Investment in Databricks		1,200		-
Total	$	18,610	$	9,465

The change in the value of the long-term investments for the three months ended March 31, 2022 is summarized as follows: ($ in thousands):

Beginning balance	$	9,465
Purchase of investments		7,737
Adjustment to carrying value of investments		1,408
Ending balance	$	18,610

Investment in Kerna Health Inc

The investment in Kerna Health Inc. was valued at $3.8 million as of March 31, 2022.

Investment in Kaya Holding Corp

On March 2, 2022, the Company purchased additional 3,375,000 shares of common stock of Kaya Holding Corp., (“Kaya”) for approximately $0.6 million. The Company recorded approximate $34,000 in unrealized gain on this investment during the three months ended March 31, 2022. The investment in Kaya was valued at approximately $2.3 million as of March 31, 2022.

Investment in Tevva Motors

Tevva Motors (“Tevva”), a private company, raised capital during the first quarter of 2022, increasing its share price value to $58.0 per share. Therefore, the Company recorded a $1.4 million unrealized gain on this investment during the three months ended March 31, 2022. The investment in Tevva was valued at approximately $3.4 million as of March 31, 2022.

Investment in ASP Isotopes

The investment in ASP Isotopes Inc. was valued at $1.0 million as of March 31, 2022.

Investment in AerocarveUS Corporation

The investment in AerocarveUS Corporation was valued at $1.0 million as of March 31, 2022.

Security Name Shares Owned
as of
June 30,
2021 Fair value per Share
as of
June 30,
2021 Fair value
as of
June 30,
2021
(in thousands)
HOTH 1,166,415 $ 1.60 $ 1,866

Investment in Qxpress

On January 27, 2022, the Company entered into a securities purchase agreement (the “Qxpress Securities Purchase Agreement”) with Qxpress. Under the Qxpress Securities Purchase Agreement, the Company agreed to purchase 46,780 shares of common stock of Qxpress for $1.0 million. The investment in Qxpress was valued at $1.0 million as of March 31, 2022.

Investment in Masterclass

On March 11, 2022, the Company entered into a securities purchase agreement (the “Masterclass Securities Purchase Agreement”) with Masterclass. Under the Masterclass Securities Purchase Agreement, the Company agreed to purchase 4,841 shares of common stock of Masterclass for approximately $0.2 million. The investment in Masterclass was valued at approximately $0.2 million as of March 31, 2022.

Investment in Kraken

On March 11, 2022, the Company entered into a securities purchase agreement (the “Kraken Securities Purchase Agreement”) with Kraken. Under the Kraken Securities Purchase Agreement, the Company agreed to purchase a total of 8,409 shares of common stock of Kraken for approximately $0.5 million. The investment in Kraken was valued at approximately $0.5 million as of March 31, 2022.

Investment in Epic Games

On March 22, 2022, the Company entered into a securities purchase agreement (the “Epic Games Securities Purchase Agreement”) with Epic Games. Under the Epic Games Securities Purchase Agreement, the Company agreed to purchase an aggregate of 901 shares of common stock of Epic Games for a total $1.5 million. The investment in Epic Games was valued at $1.5 million as of March 31, 2022.

Investment in Tesspay

On March 23, 2022, the Company entered into a securities purchase agreement (the “Tesspay Securities Purchase Agreement”) with Tesspay. Under the Tesspay Securities Purchase Agreement, the Company agreed to purchase 1,000,000 shares of common stock of Tesspay for approximately $0.2 million. The Company also invested an additional $1.0 million for pre-IPO. Tesspay, a private company, raised capital during the first quarter of 2022, increasing its share price value to $0.25 per share. Therefore, the Company recorded $10,000 in unrealized gain on this investment during the three months ended March 31, 2022. The investment in Tesspay was valued at approximately $1.3 million as of December 31, 2021.

Investment in SpaceX

On March 30, 2022, the Company entered into a securities purchase agreement (the “SpaceX Securities Purchase Agreement”) with SpaceX. Under the SpaceX Securities Purchase Agreement, the Company agreed to purchase a total of 100,000 shares of common stock of SpaceX for $1.5 million. The investment in SpaceX was valued at $1.5 million as of March 31, 2022.

Investment in Databricks

On March 25, 2022, the Company entered into a securities purchase agreement (the “Databricks Securities Purchase Agreement”) with Databricks. Under the Databricks Securities Purchase Agreement, the Company agreed to purchase an aggregate of 3,830 shares of common stock of Databricks for a total $1.2 million. The investment in Databricks was valued at $1.2 million as of March 31, 2022.

Note 7. Notes Receivable

The following table presents the Company’s notes receivable at March 31, 2022 ($ in thousands):

	Maturity Date	Stated Interest Rate			Principal Amount		Interest Receivable		Fair Value
Short-term convertible notes receivable
Convergent Investment	01/29/2023		8	%	$	2,000	$	187	$	2,187
Slinger Bag Inc Investment	08/06/2022		8	%	$	1,400	$	73	$	1,473
Nano Innovations Inc Investment	12/26/2022		10	%	$	750	$	20	$	769

Short-term notes receivable
Raefan Group LLC Investment	10/13/2022		8	%	$	2,780	$	103	$	2,882
Raefan Industries LLC Investment	12/06/2022		8	%	$	1,950	$	49	$	1,999
Total									$	9,310

Convergent Investment

The Company recorded an interest income receivable of approximately $0.2 million on the Convergent Convertible Note as of March 31, 2022.

Raefan Group LLC Investment

The Company recorded an interest income receivable of approximately $0.1 million on the Raefan Group Promissory Note as of March 31, 2022.

Raefan Industries LLC Investment

The Company recorded an interest income receivable of approximately $49,000 on the Raefan Industries Promissory Note as of March 31, 2022.

Slinger Bag Inc Investment

The Company recorded an interest income receivable of approximately $73,000 on the Slinger Bag Convertible Note as of March 31, 2022.

Nano Innovations Inc Investment

The Company recorded an interest income receivable of approximately $20,000 on the Nano Convertible Note as of March 31, 2022.

Note 7.8. Fair Value of Financial Assets and Liabilities

Financial instruments, including cash and cash equivalents, accounts payable and accrued liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. The Company measures the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value.

The Company uses three levels of inputs that may be used to measure fair value:

Level 1 - quoted prices in active markets for identical assets or liabilities

Level 2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 - inputs that are unobservable (for example, cash flow modeling inputs based on assumptions)

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment.

The following table presents the Company’s assets and liabilities that are measured at fair value at ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 ($ in thousands):

	Fair value measured at June 30, 2021								Fair value measured at March 31, 2022
	Total at June 30,		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs		Total at March 31,		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
	2021		(Level 1)		(Level 2)		(Level 3)		2022		(Level 1)		(Level 2)		(Level 3)
Assets
Marketable securities:
Equities	$	62,306	$	62,306	$	—	$	—	$	13,500	$	13,500	$	-	$	-
Mutual fund securities	$	25,013	$	25,013	$	—	$	—
Unit Investments Trust	$	513	$	513	$	—	$	—
	$	87,832	$	87,832	$	—	$	—
Fixed Income									$	935	$	935
Total marketable securities									$	14,435	$	14,435	$	-	$	-
Short-term investment	$	1,866	$	1,866	$	—	$	—	$	255	$	24	$	-	$	231
Convertible note receivable	$	2,067	$	—	$	—	$	2,067
Notes receivable at fair value									$	9,310	$	-	$	-	$	9,310

~~AIKIDO PHARMA INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

	Fair value measured at December 31, 2021
	Total at December 31,		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
	2021		(Level 1)		(Level 2)		(Level 3)
Assets
Marketable securities:
Equities	$	11,427	$	11,427	$	-	$	-
Total marketable securities	$	11,427	$	11,427	$	-	$	-
Short-term investment	$	2,273	$	1,854	$	-	$	419
Notes receivable at fair value	$	6,984	$	-	$	-	$	6,984
Convertible note receivable	$	2,147	$	-	$	-	$	2,147

Fair value measured at December 31, 2020
Total at
December 31, Quoted prices in active markets Significant other observable inputs Significant unobservable inputs
2020 (Level 1) (Level 2) (Level 3)
Assets
Marketable securities $ 24,801 $ 24,801 $ - $ -
Investments $ 2,764 $ 2,764 $ - $ -

Level 3 ~~Valuation Techniques~~Measurement

The following ~~table sets~~tables set forth a summary of the changes in the fair value of the Company’s Level 3 financial assets that are measured at fair value on a recurring ~~basis:~~basis ($ in thousands):

Fair Value of Level 3
investment
June 30,
2021 December 31,
2020
Beginning balance $ - $ -
Purchase of convertible note 2,000 -
Accrued interest receivable 67 -
Ending balance $ 2,067 $ -

Notes receivable at fair value at December 31, 2021	$	6,984
Accrued interest receivable at December 31, 2021		179
Reclassify from convertible note receivable to notes receivable at fair value		2,147
Notes receivable at fair value at March 31, 2022	$	9,310

Short-term investment at December 31, 2021	$	419
Change in fair value of investment		(188	)
Short-term investment at March 31, 2022	$	231

~~Convergent Investment~~

~~On January 29, 2021, the Company purchased an 8% convertible promissory note (“~~Short-term Note Receivable and Convertible Note”) issued by Convergent Therapeutics, Inc. (“Convergent”) with a principal amount of $2 million pursuant to a Note Purchase Agreement with Convergent. The Company paid a purchase price for the Convertible Note of $2 million. The Company will receive interest on the Convertible Note at the rate of 8% per annum payable upon conversion or maturity of the Convertible Note. The Convertible Note shall mature on January 29, 2023.Notes Receivable

The Company has elected to measure the ~~purchase~~purchases of the ~~Convertible Note from Convergent~~notes using the fair value option at each reporting date. 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 interest income and other, net in the ~~condensed~~ consolidated statements of operations.

The Convertible Note is disclosed as a noncurrent Convertible Note investment in the condensed consolidated balance sheets. As of June 30, 2021, the fair value of the Convertible Note was measured at $2.0 million, taking into consideration cost of the investment, market participant inputs, market conditions, liquidity, operating results and other qualitative and quantitative factors. The value at which the Company’s ~~Convertible Note~~convertible note is carried on its books is adjusted to estimated fair value at the end of each quarter, taking into account general economic and stock market conditions and those characteristics specific to the underlying investments. ~~No change in fair value was recorded during the six months ended June 30, 2021.~~

Interest accrues on the unpaid principal balance on a quarterly basis and is recognized in interest income in the ~~condensed~~ consolidated statements of operations.

Convergent Investment

As of March 31, 2022, the fair value of the Convergent Convertible Note was measured at $2.2 million, taking into consideration cost of the investment, market participant inputs, market conditions, liquidity, operating results and other qualitative and quantitative factors. No change in fair value for principal was recorded during the three months ended March 31, 2022.

Raefan Group LLC Investment

As of March 31, 2022, the fair value of the Raefan Group Promissory Note was measured at approximately $2.9 million, taking into consideration cost of the investment, market participant inputs, market conditions, liquidity, operating results and other qualitative and quantitative factors. No change in fair value for principal was recorded during the three months ended March 31, 2022.

Raefan Industries LLC Investment

As of March 31, 2022, the fair value of the Raefan Industries Promissory Note was measured at approximately $2.0 million, taking into consideration cost of the investment, market participant inputs, market conditions, liquidity, operating results and other qualitative and quantitative factors. No change in fair value for principal was recorded during the three months ended March 31, 2022.

Slinger Bag Inc Investment

As of March 31, 2022, the fair value of the Slinger Bag Convertible Note was measured at $1.5 million, taking into consideration cost of the investment, market participant inputs, market conditions, liquidity, operating results and other qualitative and quantitative factors. No change in fair value for principal was recorded during the three months ended March 31, 2022.

The Company believes that the fair value of the warrant of Slinger Bag is immaterial.

Nano Innovations Inc Investment

As of March 31, 2022, the fair value of the Nano Convertible Note was measured at approximately $0.8 million, taking into consideration cost of the investment, market participant inputs, market conditions, liquidity, operating results and other qualitative and quantitative factors. No change in fair value for principal was recorded ~~an interest income receivable~~during the three months ended March 31, 2022.

The Company believes that the fair value of ~~approximately $67,000 on~~ the warrant of Nano is immaterial.

~~Convertible Note as of June 30, 2021.~~

Note 8.9. Net Loss per Share Attributable to Common Stockholders

Basic loss per common share is computed by dividing the net loss allocable to common stockholders by the weighted-average number of shares of common stock or common stock equivalents outstanding. Diluted loss per common share is computed similar to basic loss per share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock. Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share at ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ are as follows:

As of June 30,
2021 2020
Convertible preferred stock 688 688
Warrants to purchase common stock 5,801,701 734,501
Options to purchase common stock 479,654 88,950
Total 6,282,043 824,139

~~AIKIDO PHARMA INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

	As of March 31,
	2022		2021
Convertible preferred stock		22,000,577		688
Warrants to purchase common stock		7,561,701		5,801,701
Options to purchase common stock		479,654		484,304
Total		30,041,932		6,286,693

Note ~~9. Stockholders’ Equity and~~10. Redeemable Convertible Preferred Stock

~~Public Offering~~Series O and Series P Redeemable Convertible Preferred Stock

On February ~~19, 2021,~~24, 2022, the Company ~~consummated the public offering pursuant to an amended and restated underwriting agreement~~entered into a Securities Purchase Agreement (the ~~“Underwriting~~“Purchase Agreement”) with ~~H.C. Wainwright & Co., LLC, as representative to the underwriters named therein~~certain institutional investors (the ~~“Underwriter”~~“Investors”), pursuant to which the Company agreed to issue and sell, in concurrent registered direct offerings (the “Offerings”), (i) 11,000 shares of the Company’s Series O Redeemable Convertible Preferred Stock, par value $0.001 per share (the “Series O Preferred Stock”), and (ii) 11,000 shares of the Company’s Series P Redeemable Convertible Preferred Stock, par value $0.001 per share (the “Series P Preferred Stock” and together with the Series O Preferred Stock, the “Preferred Stock”), in each case, at an offering price of $952.38 per share, representing a 5% original issue discount to the ~~Underwriter~~stated value of $1,000 per share of Preferred Stock, for gross proceeds of each Offering of $10,476.180, or approximately $21.9 million in ~~an underwritten public~~the aggregate for the Offerings, before the deduction of the placement agent’s fee and offering ~~(the “Offering”) an aggregate~~expenses. The shares of ~~46,875,000~~Series O Preferred Stock will have a stated value of $1,000 per share and will be convertible, at a conversion price of $1.00 per share, into 11,000,000 shares ~~(the “Shares”)~~ of common stock ~~$0.0001 par~~(subject in certain circumstances to adjustments). The shares of Series P Preferred Stock will have a stated value of $1,000 per share and will be convertible, at a conversion price of $1.00 per share, into 11,000,000 shares of common stock (subject in certain circumstances to adjustments). The Series O Preferred Stock and the Series P Preferred Stock are being offered by the Company pursuant to a registration statement on Form S-3 (File No. 333-238172) (the ~~“Common Stock”~~“Registration Statement”) filed under the Securities Act of 1933, as amended (the “Securities Act”). The ~~Company received gross proceeds of approximately $75 million before deducting underwriting discounts~~Purchase Agreement contains customary representations, warranties and ~~commissions and estimated offering expenses payable~~agreements by the ~~Company. On February 23, 2021,~~Company and customary conditions to closing. The closing of the ~~Underwriter partially exercised its over-allotment option and purchased~~Offerings occurred on March 2, 2022. In connection with this transaction, the Company placed $21.0 million in an ~~additional 7,030,927 Shares, resulting in aggregate proceeds~~escrow account which was recorded as restricted cash on the Condensed Consolidated Balance Sheets as of ~~approximately $86.2 million, before deducting underwriting discounts and commissions and other expenses. The total net proceeds received from these two offerings were approximately $78.0 million.~~March 31, 2022.

In connection with the ~~Offering,~~Offerings, the Company ~~issued~~has entered into an engagement agreement (the “Engagement Agreement Agreement”) with H.C Wainwright & Company, LLC, as placement agent (“HCW”), pursuant to which the ~~Underwriter~~Company agreed to pay HCW an aggregate cash fee equal to 8% of the aggregate gross proceeds raised in the offerings and issue HCW common stock purchase warrants ~~(the “Underwriter’s Warrants”)~~ to purchase up to ~~4,312,473~~1,760,000 shares of ~~Common Stock, or 8% of the Shares sold~~common stock in the ~~Offering. The Underwriter’s Warrants will be exercisable for a period of five years from February 19, 2021~~aggregate at an exercise price of ~~$2.00~~$1.25. The warrants were recorded as a component of stockholders’ equity in accordance with FASB Accounting Standards Codification (“ASC”) 815.

Redemption Rights

After (i) the earlier of (1) the receipt of stockholder approval and (2) the date that is 90 days following the Original Issue Date (the date of the first issuance of any shares of the Preferred Stock regardless of the number of transfers of any particular shares of Preferred Stock and regardless of the number of certificates which may be issued to evidence such Preferred Stock) and (ii) before the date that is 120 days after the Original Issue Date (the “Redemption Period”), each Holder shall have the right to cause the Company to redeem all or part of such Holder’s shares of Preferred Stock at a price per share ~~subject~~equal to ~~adjustment.~~105% of the Stated Value.

As a result, the Preferred Stock were recorded separately from stockholders’ equity because they are redeemable upon the occurrence of redemption events that are considered not solely within the Company’s control.

During the three months ended March 31, 2022, the Company recognized approximately $3.0 in deemed dividends related to the Preferred Stock in the condensed consolidated statements of operations and the condensed consolidated statements of changes in redeemable preferred stock and stockholders’ equity.

Note 11. Stockholders’ Equity

Common Stock

One June 5, 2020, CBM Biopharma, Inc. (“CBM”) approved a distribution to its stockholders of 1,939,058 the Company’s common shares. The Company, as 1 of CBM’s shareholder, received 387,812 shares of its common stock. The Company cancelled 387,812 shares received on January 1, 2022.

Warrants

A summary of warrant activity for the ~~six~~nine months ended ~~June 30, 2021~~March 31, 2022 is presented below:

Warrants Weighted Average Exercise Price Total Intrinsic Value Weighted Average Remaining Contractual Life
(in years)
Outstanding as of December 31, 2020 1,723,020 $ 3.07 57,333 1.11
Issued 4,312,473 2.00 - 4.64
Exercised (80,000 ) 1.05 - -
Expired (153,789 ) 19.67 - -
Forfeited (3 ) 16.15 - -
Outstanding as of June 30, 2021 5,801,701 $ 1.86 63,333 4.37

	Warrants		Weighted Average Exercise Price		Total Intrinsic Value		Weighted Average Remaining Contractual Life (in years)
Outstanding as of December 31, 2021		5,801,701	$	1.86		-		3.87
Issued		1,760,000		1.25		-		4.90
Outstanding as of March 31, 2022		7,561,701	$	1.72		-		3.95

Stock Options

A summary of stock option activity for the ~~six~~nine months ended ~~June 30, 2021~~March 31, 2022 is presented below:

	Number of Shares		Weighted Average Exercise Price		Total Intrinsic Value		Weighted Average Remaining Contractual Life (in years)
Outstanding as of December 31, 2021		479,654	$	32.35	$	-		8.2
Outstanding as of March 31, 2022		479,654	$	32.35	$	-		8.0
Options vested and exercisable		479,654	$	32.35	$	-		8.0

Number of Shares Weighted Average Exercise Price Total Intrinsic Value Weighted Average Remaining Contractual Life
(in years)
Outstanding as of December 31, 2020 384,304 $ 40.15 $ 69,000 8.9
Employee options granted 100,000 1.24 - 9.6
Employee options expired (4,650 ) - - -
Outstanding as of June 30, 2021 479,654 $ 32.35 $ 96,000 8.7
Options vested and exercisable 429,654 $ 35.97 $ 96,000 8.6

~~AIKIDO PHARMA INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Stock-based compensation associated with the amortization of stock option expense was approximately ~~$63,000~~$0 and $0$0.1 million for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020, respectively. Stock-based compensation associated with the amortization of stock option expense was approximately $0.2 million and $0 for the six months ended June 30, 2021 and 2020,~~ respectively. All stock compensation was recorded as a component of general and administrative expenses.

Estimated future stock-based compensation expense relating to unvested stock options is approximately ~~$6,000 and will be recorded through July 2021.~~$0.

~~Restricted Stock Awards~~

Pursuant to the patent license agreement effective January 5, 2021 with Silo Parma Inc., the Company issued and delivered to Silo Pharma 625,000 shares of the Company’s restricted stock as consideration for the license of the licensed patents. This restricted stock award vested immediately. The Company recorded approximately $0.5 million in research and development expense related with license acquired during the six months ended June 30, 2021 related to this arrangement.

Note ~~10.~~12. Commitments and Contingencies

Legal Proceedings

In the past, in the ordinary course of business, the Company actively pursued legal remedies to enforce its intellectual property rights and to stop unauthorized use of our technology. Other than ordinary routine litigation incidental to the business, we know of no material, active or pending legal proceedings against us.

Risks and Uncertainties –- COVID-19

Management continues to valuate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for drug candidates, the specific impact is not readily determinable as of the date of these consolidated financial statements. The COVID-19 pandemic has slowed down some drug development efforts and has slowed the acquisition of new drugs. However, the impact of the pandemic and ensuing lockdowns are easing. The process of drug development and further acquisitions is now continuing. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Note ~~11.~~13. Subsequent Events

The Company evaluated events that have occurred after the balance sheet date through the date the condensed consolidated financial statements were issued. Based upon the evaluation and transactions, the Company did not identify any other subsequent events that would have required adjustment or disclosure in the condensed consolidated financial statements.

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

Forward-Looking Statements

You should read this discussion together with the Financial Statements, related Notes and other financial information included elsewhere in this Form 10-Q. The following discussion contains assumptions, estimates and other forward-looking statements that involve a number of risks and uncertainties. These risks could cause our actual results to differ materially from those anticipated in these forward-looking statements. All references to “we,” “us,” “our” and the “Company” refer to Aikido Pharma Inc., a Delaware corporation and its consolidated subsidiaries unless the context requires otherwise.

Overview

AIkido Pharma Inc. was initially formed in ~~1967. Since 2017, the Company has operated as~~1967 and is currently a biotechnology company with a diverse portfolio of small-molecule ~~anticancer and antiviral~~anti-cancer therapeutics in development. The Company’s ~~pipeline~~platform consists of patented technology from leading universities and ~~researchers. We are currently in the process of developing~~researchers and our innovative therapeutic drug ~~pipeline~~platform is currently being advanced through strong ~~partnerships~~collaborations with ~~world renowned~~world-renowned educational institutions, including the University of Texas at Austin, the University of Maryland, Baltimore and Wake Forest University. Our ~~oncology~~diverse pipeline of therapeutics ~~include treatments~~includes therapies for pancreatic cancer, acute myeloid leukemia ~~(AML)~~(“AML”) and acute lymphoblastic leukemia ~~(ALL)~~(“ALL”). The Company is also developing a broad-spectrum antiviral ~~platform, in which~~compounds with the ~~lead compounds have activity against~~potential to inhibit replication of multiple viruses including Influenza virus, SARS-CoV (coronavirus), MERS-CoV, Ebolavirus and Marburg ~~virus, SARS-CoV, MERS-CoV, and SARS-CoV-2, the cause of COVID-19.~~virus.

AsThe Company previously focused its efforts on owning, developing, acquiring and monetizing intellectual property assets. Since May 2016, the Company has received limited funds from its intellectual property monetization. In addition to its patent monetization efforts, since the fourth quarter of 2017, the Company has been transitioning to focus its efforts as a ~~result of the Company’s~~technology and biotechnology development company. These efforts have focused on biotechnology research and blockchain technology research. The Company’s investment in biotechnology research development and associated investments and acquisitions, our business portfolio now focuses on the treatment of three different cancers and multiple types of viral infections. Our pancreatic drug candidate, DHA-dFdC, developed at and licensed from the University of Texas at Austin, is a new compound that we hope will become the next generation of chemotherapy treatment for advanced pancreatic cancer. DHA-dFdC overcomes tumor cell resistance to current chemotherapeutic drugs and is well toleratedincludes: (i) an investment in preclinical toxicity tests. Preclinical studies have also indicated that DHA-dFdC inhibits pancreatic cancer cell growth (up to 100,000-fold more potent that gemcitabine, a current standard therapy), targets pancreatic tumors and has demonstrated activities against other cancers, including leukemia, lung and melanoma. Our AML and ALL compound, developed at the Wake Forest University, is a targeted therapeutic designed to overcome multiple resistance mechanisms observed with the current standard of care.

~~Our broad-spectrum antiviral platform was developed at the University of Maryland Baltimore~~Hoth Therapeutics, Inc. (“~~UMB”~~Hoth”), ~~which granted~~a development stage biopharmaceutical company focused on unique targeted therapeutics for patients suffering from indications such as atopic dermatitis, also known as eczema, (ii) an investment in DatChat, Inc. (“DatChat”), a privately held personal privacy platform focused on encrypted communication, internet security and digital rights management, and (iii) the ~~Company an exclusive worldwide Master License Agreement (MLA”~~acquisition of assets of CBM BioPharma, Inc. (“CBM”) to technology covered by three separate patent applications. The licensed technology comprises broadly acting pan-viral inhibitory compounds targeting multiple viral pathogens. The technology was invented by UMB scientists Drs. Matthew Frieman, Alexander MacKerell and Stuart Watson. The Company has also executed, a ~~Sponsored Research Agreement with UMB to support~~pharmaceutical company focusing on the development of ~~the technology under the direction~~cancer treatments. In January of ~~these inventors at UMB.~~

~~In addition, we are constantly seeking to grow our pipeline of treatments in oncology indications. For example, in January~~ 2021, the Company ~~invested~~acquired an ownership interest in Convergent Therapeutics, Inc., (“Convergent”) which has exclusive rights to technology related to ~~next-generation~~ dual-action peptide receptor radionuclide therapy (“PRRT”) for prostate cancer covered by multiple issued U.S. and foreign patents. Convergent is currently conducting advanced human trials relating to prostate cancer treatments utilizing PRRT that targets the prostate-specific membrane antigen (“PSMA”) present on prostate cancer cells. The technology was developed under the direction of Dr. Neil Bander, Professor of Urologic Oncology at Weill Cornell Medicine. ~~In addition,~~

Outside of the biotechnology space, the Company ~~was granted~~has put capital into a ~~license~~series of small investments in private companies that are expected to ~~four patent applications for the use of psilocybin~~go public in ~~cancer indications.~~

Additionally, on January 6, 2021 the Company announced that it entered into an exclusive patent license agreement with Silo Pharma Inc. (“Silo Pharma”) pursuant to which Silo Pharma granted the Company a worldwide exclusive, sublicensable, royalty-bearing license to certain Silo Pharma owned provisional patent applications directed to the use of psilocybin in cancer treatment, and any patents issuing therefrom, including all continuations, continuations-in-part, divisions, extensions, substitutions, reissues, re-examinations, and any applications and all patents issuing from any applications and patents that claim domestic benefit or foreign priority to the provisional patent applications. The license is for “Field of Use” (as defined in the exclusive patent license agreement) of “treatment of cancer and symptoms caused by cancer, including2022. These investments include, but are not limited to, ~~pain, nausea, neuroinflammation, brain~~an investment in Tevva Motors, an electric truck producer, a space with recent Rivian Automotive (NASDAQ: RIVN) IPO. Additionally, the Company has invested in Kerna Health, a growing tele-health business with recurring revenue and ~~neural dysfunction, depression, seizures, confusion, dizziness, numbness/tingling, dysfunction~~large contract backlog, as well an investment in Kaya Holding Corp., a holding company with a portfolio of ~~the senses~~wholly-owned subsidiaries focused on emerging technologies and ~~all other symptoms that are caused by cancer of any type.”~~social networking for cannabis enthusiasts.

As a result of the Company’s biotechnology research development and associated investments and acquisitions, our business portfolio now focuses on the treatment of three different cancers, including pancreatic cancer, AML and ALL. DHA-dFdC, our pancreatic drug candidate developed at the University of Texas at Austin (“UTA”), is a new compound that we hope will become the next generation of chemotherapy treatment for advanced pancreatic cancer. DHA-dFdC is designed to overcome tumor cell resistance to current chemotherapeutic drugs and is well tolerated in preclinical toxicity tests. Preliminary studies have also indicated that DHA-dFdC inhibits pancreatic cancer cell growth in culture (up to 100,000-fold more potent that gemcitabine, a current standard therapy), has documented efficacy against pancreatic tumors in a clinically relevant transgenic mouse model and has demonstrated activities against other cancers, including leukemia, lung and melanoma. Ultimately, we plan to develop DHA-dFdC for oral and intravesous administration in a solid lipid nanoparticle carrier matrix, which has also been licensed from UTA, and is intended to be a second-line treatment for advanced pancreatic cancer. The Company has entered into an agreement with Parimer Scientific , which is working with other third parties, to assist in researching, developing and optimizing the manufacturing process of the active ingredient, formulating the dosage formulation and performing drug stability tests. The Company’s license with UTA (the “License”) is a royalty-bearing exclusive license that, unless terminated earlier, continues until the last date of expiration or termination of the patent rights granted under the License (the “Patent Rights”). With regard to DHA-dFdC, the Patent Rights include two issued U.S. Patents, several filed U.S. patent applications and an application filed under the Patent Cooperation Treaty (“PCT”) that is currently being prosecuted to secure rights in foreign countries. So far, two patents have issued, U.S. Patent No. 10,463,684 (the “684 Patent”) and U.S. Patent No. 11,219,633 (the “633 Patent”), which contain claims covering the compound DHA-dFdC. Assuming all maintenance fees are timely paid, the 684 Patent is expected to expire on October 27, 2035 and the 633 Patent is expected to expire on May 28, 2035. The Company’s license with UTA also covers a U.S. provisional patent application relating to the solid lipid nanoparticle carrier matrix for the drug, which was filed on June 6, 2019. In June of 2020, at the request of the Company, UTA filed both a U.S. non-provisional utility patent application as well as a PCT application relating to the lipid nanoparticle carrier matrix claiming the June 6, 2019 priority date of the provisional application. Patent prosecution on all pending patent applications is currently underway. The Company is currently engaged in research and development activities related to the manufacture of DHA-dFdC, which have thus far confirmed the critical chemical steps required for the manufacturing and scalability of the process. In collaboration with our contract manufacturing organization, Parimer Scientific, we are currently optimizing the manufacturing procedure for DHA-dFdC. Our manufacturing activities were initially delayed several months due to COVID-19 because Parimer was recruited by the U.S. and South Carolina governments to manufacture hand sanitizer for use in hospitals. For that reason, our manufacturing activities did not begin in earnest until the beginning of the third quarter of 2020. Once manufacturing began, shipping delays due to the pandemic further slowed progress. Further delay resulted from the inherent difficulty in producing scalable quantities of the key intermediate compound in the process. Despite these delays, we now have successfully replicated the synthesis as reported in the literature, have developed a new procedure for the production of the key intermediate on a large scale, and are currently optimizing the procedure to ensure that incorporation of our new procedure into the overall manufacturing process will result in levels of DHA-dFdC on an acceptably large scale. In tandem, the Company will also develop the solid lipid nanoparticle delivery system containing DHA-dFdC to optimize the manufacturing process for size and consistency of the particles. We plan to then develop the drug formulation for oral and intravenous delivery via the solid lipid nanoparticles for use in future animal testing. We do not currently have FDA approval, which will eventually be required to begin administering DHA-dFdC to patients as part of any clinical trials. Animal studies will be a necessary prerequisite to filing an Investigational New Drug Application (“IND”) with the FDA. Depending upon the success of the animal studies, the Company’s development activities will also include preparing the IND for submission to the FDA. The Company’s formulation is a new chemotherapy oral dosage form “repurposing” the chemotherapeutic agent gemcitabine, which we believe enables it to be developed for use in patients following a special regulatory pathway codified in Section 505(b)(2) of the FDA rules. Section 505(b)(2) was enacted to enable sponsors to seek New Drug Application (“NDA”) approval for novel repurposed drugs without the need for such sponsors to undertake certain time consuming and expensive safety studies. Proceeding under this regulatory pathway, we hope to be able to rely upon all of the publicly available safety and toxicology data with respect to gemcitabine in our FDA submissions. We believe that this path will dramatically reduce the required clinical development efforts, costs and risks as compared to what would be required of us if we were required to conduct the entire scope of trials required for new chemical entities that are not eligible to be reviewed pursuant to the Section 505(b)(2) regulatory pathway. We estimate that by using the Section 505(b)(2) regulatory pathway, the clinical development process may be several years shorter than is required for a new chemical entity, and the FDA approval process may be six to nine months shorter than the typical eighteen-month period, which we believe may result in lower development costs and shorter development time. As of the date hereof, we have not submitted an IND or an NDA to the FDA. Our AML and ALL compounds, developed at Wake Forest University, are targeted therapeutics designed to overcome multiple resistance mechanisms observed with the current standard of care. In addition, we are constantly seeking to grow our pipeline to treat unmet medical needs in oncology.

In addition, the Company owns an exclusive world-wide license to patented technology from the University of Maryland Baltimore (“UMB”). Our license is for a broad-spectrum antiviral drug platform. The licensed technology is a broadly acting pan-viral inhibitory compound with efficacy against multiple viral pathogens. The technology works to inhibit replication of multiple viruses including Influenza virus, SARS-CoV (coronavirus), MERS-CoV, Ebolavirus and Marburg virus. The technology is covered by two patent applications already on file with the United States Patent and Trademark Office. The Company’s license covers two U.S. provisional applications, which were consolidated and timely filed as a PCT application on June 5, 2020, commencing patent prosecution. Any patents issued from this application are expected to expire 20 years later, on June 5, 2040, unless the term is extended by the patent office. The PCT application describing the technology to which the Company is licensed was published on December 12, 2020 by the World Intellectual Property Organization under International Publication Number WO 2020/247860 A1. Currently, the Company and UMB are collaborating to identify chemical structures that are as effective as, or more effective than, the lead compounds covered in the PCT application. The UMB inventors are Drs. Matthew Frieman, Alexander MacKerell and Stuart Watson. The Company has also executed a Sponsored Research Agreement with UMB to support the development of the technology.

Effective March 23, 2020, and as amended and restated on November 24, 2020, the Company and Continental Stock Transfer & Trust Co. entered into a rights agreement (the “Rights Agreement”) The Rights Agreement provides each stockholder of record a dividend distribution of one “right” for each outstanding share of common stock. Rights become exercisable at the earlier of ten days following: (1) a public announcement that an acquirer has purchased or has the right to acquire 4.99% or more of our common stock, in connection with, (x) the Company consolidating, or merging into any other person, (y) any person consolidates or merges with or into the Company or (z) the Company sells or otherwise transfers to any person or persons, in one or more transactions, assets or earning power aggregating 50% or more of the assets or earning power of the Company, or (2) the commencement of a tender offer which would result in an offer or beneficially owning 10% or more of our outstanding common stock. All rights held by an acquirer or offer or expire on the announced acquisition date, and all rights expire at the close of business on March 23, 2023, subject to further extension. Each right entitles a stockholder to acquire, at a price of $5.00 per one one-thousandth of a share of our Series A preferred stock, subject to adjustments, which carries voting and dividend rights similar to one share of our common stock. The purchase price of the preferred stock fractional amount is subject to adjustment for certain events as described in the Rights Agreement. At the discretion of a majority of the Board and within a specified time period, we may redeem all of the rights at a price of $0.0001 per right. The Board may also amend any provisions of the Rights Agreement prior to exercise.

Critical Accounting Policies

Our critical accounting policies are disclosed in our annual report on Form 10K for the year ended December 31, ~~2020~~2021 and there have been no material changes to such policy or estimates during the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022.

Critical Accounting Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and related disclosures in the financial statements. Management considers an accounting estimate to be critical if:

	●	it requires assumptions to be made that were uncertain at the time the estimate was made, and

	●	changes in the estimate or different estimates that could have been selected could have material impact inour results of operations or financial condition.

While we base our estimates and judgments on our experience and on various other factors that we believe to be reasonable under the circumstances, actual results could differ from those estimates and the differences could be material.

See Note 2 to our condensed consolidated financial statements for a discussion of our significant accounting policies.

Recently Issued Accounting Pronouncements

See Note 3 to the condensed consolidated financial statements for a discussion of recent accounting standards.

Results of Operations

Three months ended ~~June 30, 2021~~March 31, 2022 compared to three months ended ~~June 30, 2020~~March 31, 2021

During the three months ended ~~June 30, 2021,~~March 31, 2022, we incurred a loss from operations of approximately ~~$2.8~~$3.8 million, as compared to ~~$1.8~~$2.3 million during the comparable prior year period. The increase in loss was primarily attributed to ~~$1.3~~$0.6 million increase in in general and administrative expenses ~~partially offset by $0.4~~and $1.9 million ~~decrease~~increase research and development expense, and ~~$11,000~~was partially offset by $1.0 million decrease in research and development expense related with license acquisition.

During the three months ended ~~June 30, 2021,~~March 31, 2022, other income was approximately ~~$1.4~~$0.3 million as compared to other expense of approximately ~~$0.5~~$1.7 million during the comparable prior year period. The ~~net loss per share decreased from a decrease in net operating losses and a significant~~ increase in ~~the number of shares outstanding. The decrease in~~ other ~~expense~~income was primarily attributed to a ~~$1.2~~$1.0 million ~~lower loss~~increase in the change in fair value of investment and $0.8 million decrease in ~~Hoth and $0.7 million increase in gains~~loss on marketable securities.

The Company experienced very little or no revenue in the last two years and we don’t expect any revenue until a biotechnology product is fully developed which may not occur for many years.

~~Six months ended June 30, 2021 compared to six months ended June 30, 2020~~

During the six months ended June 30, 2021, we incurred a loss from operations of approximately $5.1 million, as compared to a loss of $4.2 million during the comparable prior year period. The increase in loss was primarily attributed to $1.2 million increase in general and administrative expenses, and $12,000 increase in research and development expense related to the license acquisition, partially offset by $0.4 million decrease in research and development expense.

During the six months ended June 30, 2021, other expense was approximately $0.2 million as compared to approximately $6.5 million during the comparable prior year period. The decrease in other expense was primarily attributed to a $5.8 million lower loss in the change in fair value of investment in Hoth and $0.2 million increase in gains on marketable securities. The net loss per share decreased from a decrease in net operating losses and a significant increase in the number of shares outstanding.

~~The Company experienced very little or no revenue in the last two years and we don’t expect any revenue until a biotechnology product is fully developed which may not occur for many years.~~

Liquidity and Capital Resources

We continue to incur ongoing administrative and other expenses, including public company expenses, in excess of corresponding (non-financing related) revenue. ~~We do not expect to incur revenue until any of our biotechnology products are fully developed.~~ While we continue to implement our business strategy, we intend to finance our activities ~~through managing current cash on hand from our past equity offerings.~~through:

	●	managing current cash and cash equivalents on hand from our past debt and equity offerings;

	●	seeking additional funds raised through the sale of additional securities in the future;

	●	seeking additional liquidity through credit facilities or other debt arrangements; and

	●	increasing revenue from its patent portfolios, license fees and new business ventures.

~~During~~Our ultimate success is dependent on our ability to obtain additional financing and generate sufficient cash flow to meet our obligations on a timely basis. Our business will require significant amounts of capital to sustain operations and make the ~~six months of 2021,~~investments it needs to execute its longer-term business plan to support new technologies and help advance innovation. Our working capital amounted to approximately $98.3 million at March 31, 2022. We will need to obtain additional debt or equity financing, especially if we experience downturns in our business that are more severe or longer than anticipated, or if we experience significant increases in expense levels resulting from being a publicly-traded company or operations. If we attempt to obtain additional debt or equity financing, we cannot assume that such financing will be available to the Company consummated a public offering of 53,905,927 shares of common stock (including the underwriter overallotment). The Company received net proceeds of approximately $78.0 million after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. Therefore, the Company has adequate cash to fund its operations foron favorable terms, or at ~~least the next twelve months.~~

Moving forward, the Company intends to manage its cash through an investment committee focused on asset preservation and reasonable risk allocation. Further, the Company intends to grow its drug platform through additional licensing efforts that are similar to those the Company has already entered into and disclosed. In addition, the Company is seeking partnerships with academic institutions and private enterprise to find, fund and advance new drug compounds that can be brought to commercialization.all.

~~Management continues~~The Company plans to ~~evaluate~~pursue its plans regarding research and development of our two pre-clinical products which will require resources beyond those currently, ultimately requiring third party capital. During this time, the ~~impact of the COVID-19 pandemic on the industry~~Company does not expect to generate revenue and ~~has concluded that while it~~there is ~~reasonably possible that the virus could have a negative effect on~~substantial doubt about the Company’s ~~consolidated financial position, results of its consolidated operations and/or search for drug candidates, the specific impact is not readily determinable~~ability to continue as ofa going concern within one year from the date of ~~these consolidated financial statements.~~this filing. The consolidated financial statements have been prepared assuming that the Company will continue as a going concern, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets, or the amounts and classification of liabilities that ~~might~~may result from the outcome of this uncertainty.

Cash Flows from Operating Activities - For the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ net cash used in operations was approximately ~~$2.7~~$3.8 million and ~~$2.4~~$1.1 million, respectively. The cash used in operating activities for the ~~six~~three months ended ~~June 30,~~March 31, 2022 primarily resulted from a net loss of $3.5 million and change in fair value of long-term investment of $1.4 million, and is partially offset by change in fair value of short-term investment of $0.9 million. The cash used in operating activities for the three months ended March 31, 2021 primarily resulted from a net loss of ~~$5.3~~$4.0 million, ~~and $1.1 million realized gain on marketable securities,~~ and partially offset by ~~$1.4~~$2.0 million unrealized loss on marketable securities and ~~$1.1~~$1.0 million research and development expense related with license acquired. The cash used in operating activities for the six months ended June 30, 2020 primarily resulted from a net loss of $10.6 million, and partially offset by the reduction in fair value of investment of $6.7 million and $1.1 million research and development expense related with license required.

Cash Flows from Investing Activities - For the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ net cash used in investing activities was approximately ~~$70.4~~$10.1 million and ~~$26.5~~$71.8 million , respectively. The cash used in investing activities for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 primarily resulted from our purchase of marketable securities of ~~$86.5~~$27.1 million ~~funds to deposit accounts of $4.5 million (net of fee)~~ and purchase of ~~convertible note~~investments of ~~$2.0~~$7.7 million, partially offset by our sale of marketable securities of ~~$23.2~~$24.7 million since we invest excess cash into marketable securities until additional cash is needed. The cash used in investing activities for the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 primarily resulted from our purchase of marketable securities of ~~$78.0~~$83.6 million and ~~research and development expense related with license acquired~~purchase of ~~$1.1~~convertible note of $2.0 million, partially offset by our ~~purchase~~sale of marketable securities of ~~$52.2~~$14.3 million since we invest excess cash into marketable securities until additional cash is needed.

Cash Flows from Financing Activities - Cash provided by financing activities for the ~~six~~three months ended ~~June 30,~~March 31, 2022 was $19.0 million, which reflects the net proceeds of $19.0 million from investors in exchange of issuance of issuance of Series O and Series P Redeemable Convertible Preferred Stock. Cash provided by financing activities for the three months ended March 31, 2021 was $78.1 million, which reflects the net proceeds of $78.0 million from investors in exchange of issuance of common stock and warrants and net proceeds of $84,000 from the exercise of common warrants. Cash provided by financing activities for the six months ended June 30, 2020 was $31.6 million, which reflects the net proceeds of $6.6 from investors in exchange of issuance of common stock, common warrants and prefunded warrants, net proceeds of $17.8 from investors in exchange of issuance of common stock, and net proceeds of $7.2 million from the exercise of common warrants and prefunded warrants

Off-balance sheet arrangements.

None.

Item 3. Quantitative and Qualitative Disclosures ~~about~~About Market Risk

Not required for smaller reporting companies.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.

The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

With respect to the quarter ended ~~June 30, 2021,~~March 31, 2022, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures. Based upon this evaluation, our Chief Executive Officer has concluded that our disclosure controls and procedures were not effective as of ~~June 30, 2021~~March 31, 2022 due to the material weaknesses in our internal controls over financial reporting. We have a lack of segregation of duties, and a lack of controls in place to ensure that all material transactions and developments impacting the financial statements are reflected.

Changes in Internal Control over Financial Reporting:

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended ~~June 30, 2021~~March 31, 2022 which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings

In the past, in the ordinary course of business, we actively pursued legal remedies to enforce our intellectual property rights and to stop unauthorized use of our technology. Other than ordinary routine litigation incidental to the business, we know of no material, active or pending legal proceedings against us.

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 and in our Quarterly Report on Form 10-Q for the quarterly period ended ~~June 30, 2021.~~March 31, 2022.

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

None.

Item 6. Exhibits

31.1		Certification of Principal Executive Officer and Principal Financial Officer of AIkido Pharma Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Principal Executive Officer and Principal Financial Officer of AIkido Pharma Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

Signatures

Pursuant to the requirements of the Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Aikido Pharma Inc.
	(Registrant)

Date: ~~August 11, 2021~~May 16, 2022	By:	/s/ Anthony Hayes
		Anthony Hayes
		Chief Executive Officer
		(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

1622

0000012239 aiki:InvestmentInAerocarveUSCorporationMember 2022-03-31 iso4217:USD xbrli:shares

	June 30,			December 31,
	2021			2020
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	7,718		$	2,715
Marketable securities		87,832			24,801
Prepaid expenses and other assets		176			215
Short-term investment		1,866			-
Deposits		4,476			-
Total current assets		102,068			27,731

Convertible note receivable		2,067			-
Investments		-			2,764
	$	104,135		$	30,495

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses	$	319		$	567
Accrued salaries and benefits		733			310
Total current liabilities		1,052			877

Total liabilities		1,052			877

Commitments and contingencies

Stockholders’ equity
Preferred stock, $.0001 par value, 50,000,000 Authorized
Series D: 5,000,000 shares designated; 4,725 shares issued and outstanding at June 30, 2021 and December 31, 2020; liquidation value of $0.0001 per share		-			-
Series D-1: 5,000,000 shares designated; 834 shares issued and outstanding at June 30, 2021 and December 31, 2020; liquidation value of $0.0001 per share		-			-
Common stock, $0.0001 par value, 100,000,000 shares authorized; 89,531,149 and 34,920,222 shares issued at June 30, 2021 and December 31, 2020, respectively; 89,531,146 and 34,920,219 shares outstanding at June 30, 2021 and December 31, 2020, respectively		9			3
Additional paid-in capital		265,255			186,482
Treasury stock, at cost, 3 shares at June 30, 2021 and December 31, 2020		(264	)		(264	)
Accumulated deficit		(161,917	)		(156,603	)
Total stockholders’ equity		103,083			29,618
Total liabilities and stockholders’ equity	$	104,135		$	30,495

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Operating costs and expenses
General and administrative	$	2,343		$	1,017		$	3,555		$	2,320
Research and development		325			675			397			760
Research and development - license acquired		91			102			1,125			1,113
Total operating expenses		2,759			1,794			5,077			4,193
Loss from operations		(2,759	)		(1,794	)		(5,077	)		(4,193	)

Other income (expenses)
Other income		-			15			135			15
Interest income		40			-			67			-
Gains on marketable securities		1,798			1,125			459			262
Change in fair value of investment		(431	)		(1,659	)		(898	)		(6,730	)
Total other income (expenses)		1,407			(519	)		(237	)		(6,453	)
Net loss	$	(1,352	)	$	(2,313	)	$	(5,314	)	$	(10,646	)

Net loss per share, basic and diluted
Basic and Diluted	$	(0.02	)	$	(0.07	)	$	(0.07	)	$	(0.50	)

Weighted average number of shares outstanding, basic and diluted
Basic and Diluted		89,595,614			32,975,170			75,019,737			21,085,382

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2021		2020		2021			2020
Realized gain (loss)	$	661	$	597	$	1,084		$	544
Unrealized gain (loss)		653		212		(1,395	)		(614	)
Dividend income		484		246		770			259
Interest income		-		-		-			4
	$	1,798	$	1,055	$	459		$	193

Security Name		Shares Owned as of June 30, 2021				Fair value per Share as of June 30, 2021				Fair value as of June 30, 2021 (in thousands)
HOTH			1,166,415			$	1.60			$	1,866

	Fair Value of Level 3 investment
	June 30, 2021		December 31, 2020
Beginning balance	$	-	$	-
Purchase of convertible note		2,000		-
Accrued interest receivable		67		-
Ending balance	$	2,067	$	-

	As of June 30,
	2021		2020
Convertible preferred stock		688		688
Warrants to purchase common stock		5,801,701		734,501
Options to purchase common stock		479,654		88,950
Total		6,282,043		824,139

	Warrants			Weighted Average Exercise Price		Total Intrinsic Value		Weighted Average Remaining Contractual Life (in years)
Outstanding as of December 31, 2020		1,723,020		$	3.07		57,333		1.11
Issued		4,312,473			2.00		-		4.64
Exercised		(80,000	)		1.05		-		-
Expired		(153,789	)		19.67		-		-
Forfeited		(3	)		16.15		-		-
Outstanding as of June 30, 2021		5,801,701		$	1.86		63,333		4.37

	Number of Shares			Weighted Average Exercise Price		Total Intrinsic Value		Weighted Average Remaining Contractual Life (in years)
Outstanding as of December 31, 2020		384,304		$	40.15	$	69,000		8.9
Employee options granted		100,000			1.24		-		9.6
Employee options expired		(4,650	)		-		-		-
Outstanding as of June 30, 2021		479,654		$	32.35	$	96,000		8.7
Options vested and exercisable		429,654		$	35.97	$	96,000		8.6