UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark one)
For
the quarterly period ended
For the transition period from ____________ to ____________
Commission
file number
| (Exact name of registrant as specified in its charter) |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| (Address of Principal Executive Offices, including zip code) |
| (Registrant’s telephone number, including area code) |
| 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.
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.)
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 | ☐ | |
| ☒ | 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) | Name of each exchange on which registered | ||
| The |
As of November 9, 2022, there were 5,485,096 shares of the Company’s common stock issued and outstanding.
AIKIDO PHARMA INC.
Form 10-Q
For the Quarter Ended September 30, 2022
Index
i
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
AIKIDO PHARMA INC.
Condensed Consolidated Balance Sheets
($ in thousands except share and per share amounts)
| September 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Marketable securities | ||||||||
| Prepaid expenses and other assets | ||||||||
| Short-term investments at fair value | ||||||||
| Notes receivable at fair value | ||||||||
| Deposits | ||||||||
| Total current assets | ||||||||
| Convertible note receivable at fair value | ||||||||
| Notes receivable at fair value | ||||||||
| Investments | ||||||||
| Right-of-use assets | ||||||||
| Security deposit | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accrued salaries and benefits | ||||||||
| Lease liability - current | - | |||||||
| Total current liabilities | ||||||||
| Lease liability | - | |||||||
| Total liabilities | ||||||||
| Stockholders’ equity | ||||||||
| Preferred stock, $ | ||||||||
| Series D: | ||||||||
| Series D-1: | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Treasury stock, at cost, | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
1
AIKIDO PHARMA INC.
Condensed Consolidated Statements of Operations
($ in thousands except share and per share amounts)
(Unaudited)
| Three
Months Ended September 30, | Nine
Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Operating costs and expenses | ||||||||||||||||
| General and administrative | $ | $ | $ | $ | ||||||||||||
| Research and development | ||||||||||||||||
| Research and development - license acquired | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (expenses) income | ||||||||||||||||
| Other income | ||||||||||||||||
| Interest income | ||||||||||||||||
| Loss on marketable securities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in fair value of investments | ||||||||||||||||
| Total other (expenses) income | ( | ) | ( | ) | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Deemed dividends related to Series O and Series P Redeemable Convertible Preferred Stock | - | ( | ) | |||||||||||||
| Net Loss Attributable to Common Shareholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share, basic and diluted | ||||||||||||||||
| $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Weighted average number of shares outstanding, basic and diluted | ||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
2
AIKIDO PHARMA INC.
Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity
($ in thousands except share and per share amounts)
(Unaudited)
For the Three Months Ended September 30, 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 June 30, 2022 | - | $ | - | - | $ | - | $ | - | $ | - | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||
| Purchase of treasury stock | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2022 | - | $ | - | - | $ | - | $ | - | $ | - | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||
For the Three Months Ended September 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 June 30, 2021 | $ | - | $ | - | $ | - | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance at September 30, 2021 | $ | - | $ | - | $ | - | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
3
AIKIDO PHARMA INC.
Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity
($ in thousands except share and per share amounts)
(Unaudited)
For the Nine Months Ended September 30, 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 | $ | $ | $ | - | $ | - | $ | - | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||||||
| Issuance of Series O redeemable convertible preferred stock for cash | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Series P redeemable convertible preferred stock for cash | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||
| Cost on issuance of Series O and Series P Redeemable Convertible Preferred Stock | - | ( | ) | - | ( | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Deemed dividends related to Series O and Series P Redeemable Convertible Preferred Stock | - | - | - | - | - | - | ( | ) | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Redemption of Series O Redeemable Convertible Preferred Stock | ( | ) | ( | ) | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||
| Redemption of Series P Redeemable Convertible Preferred Stock | - | - | ( | ) | ( | ) | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||
| Purchase of treasury stock | - | - | - | - | - | - | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Cancellation of common stock related to investment in CBM | - | - | ( | ) | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Fractional shares adjusted for reverse split | - | - | - | - | ( | ) | - | - | - | ( | ) | - | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2022 | - | $ | - | - | $ | - | $ | - | $ | - | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||
4
AIKIDO PHARMA INC.
Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity
($ in thousands except share and per share amounts)
(Unaudited)
For the Nine Months Ended September 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 | $ | - | $ | - | $ | - | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
| Issuance of common stock and warrants (net of offering costs of $ | - | - | - | - | ||||||||||||||||||||||||||||||||
| Exercise of warrants | - | - | - | - | ||||||||||||||||||||||||||||||||
| Issuance of common stock for research and development license acquired | - | - | - | - | ||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | ||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance at September 30, 2021 | $ | - | $ | - | $ | - | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
5
AIKIDO PHARMA INC.
Condensed Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
| Nine
Months Ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Amortization of right-of-use assets | ||||||||
| Change in fair value of short-term investment | ( | ) | ||||||
| Change in fair value of long-term investment | ( | ) | ||||||
| Research and development-acquired license, expensed | ||||||||
| Stock-based compensation | ||||||||
| Realized loss (gain) on marketable securities | ( | ) | ||||||
| Unrealized loss on marketable securities | ||||||||
| Realized gain on sale of digital currencies | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other assets | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ||||||||
| Accrued salaries and benefits | ( | ) | ||||||
| Lease liabilities | ||||||||
| Interest receivable on convertible note | ( | ) | ( | ) | ||||
| Deposits | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchase of marketable securities | ( | ) | ( | ) | ||||
| Sale of marketable securities | ||||||||
| Proceeds from sale of digital currencies | ||||||||
| Proceeds from sale of DatChat common shares | - | |||||||
| Proceeds from promissory note receivable interest received | ||||||||
| Funds to deposit accounts, net | ( | ) | ||||||
| Purchase of short-term and long-term investments | ( | ) | ( | ) | ||||
| Purchase of research and development licenses | ( | ) | ( | ) | ||||
| Purchase of short-term and long-term promissory notes | ( | ) | ||||||
| Purchase of convertible note | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of common stock and warrants, net of offering cost | ||||||||
| Proceeds from issuance of Series O and Series P Redeemable Convertible Preferred Stock, net of discount and offering cost | ||||||||
| Proceeds from exercise of warrants | ||||||||
| Payment for fractional shares | ( | ) | ||||||
| Redemption of Series O and Series P Redeemable Convertible Preferred Stock | ( | ) | ||||||
| Purchase of treasury stock | ( | ) | ||||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Net (decrease) increase in cash and cash equivalents and restricted cash | ( | ) | ||||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Non-cash investing and financing activities | ||||||||
Transfer from short-term investment to marketable securities | $ | $ | ||||||
| Reclassify from convertible note receivable to notes receivable at fair value | $ | $ | ||||||
| Promissory convertible note receivable conversion into common shares | $ | $ | ||||||
| Unpaid investment | $ | - | $ | |||||
See accompanying notes to unaudited condensed consolidated financial statements.
6
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”), 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. Over the past year, in an effort to enhance shareholder
value, the Company has shifted its primary focus away from biotechnology to a new line of business in the fintech and financial services
industries. In furtherance of this new focus, in June of this year the Company formed a wholly owned financial services subsidiary,
Dominari Financial Inc. (“Dominari”), with the purpose of making strategic acquisitions across the fintech and financial services
industries. Additionally, AIkido Labs, LLC (“Aikido Labs”), another wholly owned subsidiary of the Company, has and
will continue to explore other opportunities in high growth industries. To date, Aikido Labs has acquired equity positions in Anduril
Industries, Inc, Databricks, Inc., Discord, Inc., Epic Games, Inc., Payward, Inc. dba Kraken, Space Exploration Technologies Corp. dba
SpaceX, Tevva Motors Ltd., Thrasio, LLC, and Yanka Industries, Inc. dba Masterclass. Please see Notes 6, 7 and 8 below for a further
discussion of the Company’s investments. Finally, the Company will continue to foster and develop its historical pipeline of biotechnology
assets consisting of patented technology from leading universities and researchers, including prospective treatments for pancreatic cancer,
acute myeloid leukemia and acute lymphoblastic leukemia.
Reverse Stock Split
On
June 7, 2022, the Company effected a seventeen-for-one (17-for-1) reverse stock split of its class of common stock (the “Reverse
Stock Split”). The Reverse Stock Split, which was approved by stockholders at an annual stockholder meeting on May 20, 2022, was
consummated pursuant to a Certificate of Amendment filed with the Secretary of State of Delaware on June 2, 2022. The Reverse Stock Split
was effective on June 7, 2022. All references to common stock, convertible preferred stock, warrants to purchase common stock, options
to purchase common stock, restricted stock units, restricted stock awards, share data, per share data and related information contained
in the condensed consolidated financial statements have been retrospectively adjusted to reflect the effect of the Reverse Stock Split
for all periods presented. Payment for fractional shares resulting from the reverse stock split amounted to $
7
AIKIDO PHARMA INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
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 equity offerings.
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 unaudited 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, AIkido Labs and Dominari. 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 September 30, 2022, condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021, condensed consolidated statements of stockholders’ equity for the three and nine months ended September 30, 2022 and 2021, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2022 and 2021 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 nine months ended September 30, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022 or for any future interim period. The condensed consolidated balance sheet at December 31, 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, 2021 and notes thereto included in the Company’s annual report on Form 10-K, which was filed with the SEC on March 28, 2022.
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
Aside from the policies 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 28, 2022.
8
AIKIDO PHARMA INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Leases
The Company accounts for its leases under ASC 842, Leases. Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the condensed consolidated balance sheet as both a right-of-use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right-of-use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right-of-use asset result in straight-line rent expense over the lease term. For finance leases, interest on the lease liability and the amortization of the right-of-use asset results in front-loaded expense over the lease term. Variable lease expenses are recorded when incurred. See Note 12 – Commitment and Contingencies.
Treasury Stock
Treasury stock is recorded at cost and is presented as a reduction of stockholders’ equity.
Recent accounting pronouncements
Management does not believe that any recently issued, but not yet effective accounting pronouncements, if currently adopted, would have an effect on the Company’s unaudited condensed consolidated financial statements.
Note 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 nine months ended September 30, 2022 and 2021, which are recorded as a component of gains and (losses) on marketable securities on the consolidated statements of operations, are as follows ($ in thousands):
| Three
Months Ended September 30, | Nine
Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Realized (loss) gain | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||
| Unrealized loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Dividend income | ||||||||||||||||
| Total | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Note 5. Short-term investments
The following table presents the Company’s short-term investments at September 30, 2022 and December 31, 2021 ($ in thousands):
| September 30,
2022 | December 31, 2021 | |||||||
| Investment in Hoth Therapeutics, Inc. | ||||||||
| Investment in DatChat, Inc. | ||||||||
| Investment in Vicinity Motor Corp. | ||||||||
| Total | ||||||||
The change in the fair value of the short-term investments for the nine months ended September 30, 2022 is summarized as follows: ($ in thousands):
| Beginning balance | $ | |||
| Transfer to marketable securities | ( | ) | ||
| Change in fair value of investment | ( | ) | ||
| Realized gain recognized through sale of marketable securities | ||||
| Ending balance | $ |
9
AIKIDO PHARMA INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Investment in Hoth Therapeutics, Inc.
On
March 11, 2022,
On
August 17, 2022,
The following summarizes the Company investment in Hoth as of September 30, 2022 and December 31, 2021:
| Security Name | Shares Owned as of September 30, 2022 | Fair
value per Share as of September 30, 2022 | Fair value as of September 30, 2022 (in thousands) | |||||||||
| HOTH | $ | $ |
| 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 | $ | $ | | |||||||||
Investment in DatChat, Inc.
On
February 14, 2022,
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
The following table provides quantitative information regarding Level 3 fair value measurements inputs at their measurement dates:
| September 30,
2022 | December 31, 2021 | |||||||
| Option term (in years) | % | |||||||
| Volatility | % | % | ||||||
| Risk-free interest rate | % | % | ||||||
| Expected dividends | % | % | ||||||
| Stock price | $ | $ | ||||||
10
AIKIDO PHARMA INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
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 September 30, 2022 and December 31, 2021 ($ in thousands):
| September 30,
2022 | December 31, 2021 | |||||||
| Investment in Kerna Health Inc | $ | $ | ||||||
| Investment in Kaya Now | ||||||||
| Investment in Tevva Motors | ||||||||
| Investment in ASP Isotopes | ||||||||
| Investment in AerocarveUS Corporation | ||||||||
| Investment in Qxpress | ||||||||
| Investment in Masterclass | ||||||||
| Investment in Kraken | ||||||||
| Investment in Epic Games | ||||||||
| Investment in Tesspay | ||||||||
| Investment in SpaceX | ||||||||
| Investment in Databricks | ||||||||
| Investment in Discord | ||||||||
| Investment in Thrasio | ||||||||
| Investment in Automation Anywhere | ||||||||
| Investment in Anduril | ||||||||
| Total | $ | $ | ||||||
The change in the value of the long-term investments for the nine months ended September 30, 2022 is summarized as follows: ($ in thousands):
| Beginning balance | $ | |||
| Purchase of investments | ||||
| Change in fair value of long-term investments | ||||
| Ending balance | $ |
Investment in Kerna Health Inc
In
May 2022, the Company purchased additional
11
AIKIDO PHARMA INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Investment in Kaya Now Inc (aka Kaya Holding Corp)
On
March 2, 2022, the Company purchased additional
On
July 21, 2022, in consideration for extending the maturity date of the Kaya Now Promissory Note (See Note 7 – Notes Receivable)
to February 1, 2023, Kaya agreed to issue to the Company
The
Company recorded approximate $
Investment in Tevva Motors
Tevva
Motors (“Tevva”), a private company, raised capital during the first quarter of 2022, increasing its share price value to
$
Investment in ASP Isotopes
In
August 2022, the Company purchased additional
Investment in AerocarveUS Corporation
The
investment in AerocarveUS Corporation was valued at $
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
Investment in Masterclass
In
March of 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
12
AIKIDO PHARMA INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Investment in Kraken
In
March of 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
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
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
Investment in SpaceX
On
March 30, 2022, the Company entered into a securities purchase agreement (the “SpaceX Securities Purchase Agreement”) with
SpaceX, under which the company agreed to purchase shares of common stock of SpaceX for $1.5 million. In April 2022, the Company invested
an additional $2 million for the purchase of additional shares of common stock of SpaceX. The investment in SpaceX was valued at $
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
Investment in Discord, Inc.
In
May 2022, the Company entered into a securities purchase agreement (the “Discord Securities Purchase Agreement”) with privately-held
company Discord, Inc., a social communications platform provider that is particularly popular with gamers, as one of the Company’s
pursuits of potentially high growth interests with near term monetization events. Under the Discord Securities Purchase Agreement, the
Company agreed to purchase a total of
Investment in Thrasio, LLC
In
April 2022, the Company entered into a securities purchase agreement (the “Thrasio Securities Purchase Agreement”) with privately-held
company Thrasio, LLC, an aggregator of private brands of top Amazon businesses and direct-to-consumer brands, as one of the Company’s
pursuits of potentially high growth interests with near term monetization events. Under the Thrasio Securities Purchase Agreement, the
Company agreed to purchase a total of
13
AIKIDO PHARMA INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Investment in Automation Anywhere, Inc.
In
April 2022, the Company entered into a securities purchase agreement (the “Automation Anywhere Securities Purchase Agreement”)
with privately-held company Automation Anywhere, Inc., a provider of business automation solutions, as one of the Company’s pursuits
of potentially high growth interests with near term monetization events. Under the Automation Anywhere Securities Purchase Agreement,
the Company agreed to purchase a total of
Investment in Anduril Industries, Inc.
In
April 2022, the Company entered into a securities purchase agreement (the “Anduril Securities Purchase Agreement”) with privately-held
company Anduril Industries, Inc., a defense products company, as one of the Company’s pursuits of potentially high growth interests
with near term monetization events. Under the Anduril Securities Purchase Agreement, the Company agreed to purchase a total of
Note 7. Notes Receivable
The following table presents the Company’s notes receivable at September 30, 2022 ($ in thousands):
| Maturity Date | Stated Interest Rate | Principal Amount | Interest Receivable | Fair Value | ||||||||||||||
| Shor-term convertible notes receivable | ||||||||||||||||||
| Convergent Investment | % | $ | $ | $ | ||||||||||||||
| Nano Innovations Inc Investment | % | $ | $ | $ | ||||||||||||||
| Short-term notes receivable | ||||||||||||||||||
| Mr. Jeffrey Cooper Investment | % | $ | $ | $ | ||||||||||||||
| Raefan Industries LLC Investment | % | $ | $ | $ | ||||||||||||||
| Kaya Now Investment | % | $ | $ | $ | ||||||||||||||
| Total | $ | |||||||||||||||||
| Long-term notes receivable | ||||||||||||||||||
| American Innovative Robotics Investment | | % | $ | $ | $ | |||||||||||||
Convergent Investment
The
Company recorded an interest income receivable of approximately $
Mr. Jeffrey Cooper Investment
Raefan
Group LLC promissory note was satisfied and replaced with a personal note issued to Mr. Jeffrey Cooper, of Raefan Industries. The Company
recorded an interest income receivable of approximately $
14
AIKIDO PHARMA INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Raefan Industries LLC Investment
The Company recorded an interest income receivable
of approximately $
Slinger Bag Inc Investment
The Company recorded an interest income receivable
of approximately $
Nano Innovations Inc Investment
The Company recorded an interest income receivable
of approximately $
Kaya Now Investment
On April 5, 2022, the Company purchased an
On July 21, 2022, the Company and Kaya executed
an amendment of the Kaya Now Promissory Note (“Amendment”) such that the Kaya Now Promissory Note shall mature on
The Company recorded an interest income of approximately
$
American Innovative Robotics Investment
On April 1, 2022, the Company purchased an
The Company recorded an interest income of approximately
$
Note 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.
15
AIKIDO PHARMA INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
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 September 30, 2022 and December 31, 2021 ($ in thousands):
| Fair value measured at September 30, 2022 | ||||||||||||||||
| Total at September 30, | Quoted prices in active markets | Significant other observable inputs | Significant unobservable inputs | |||||||||||||
| 2022 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
| Assets | ||||||||||||||||
| Marketable securities: | ||||||||||||||||
| Equities | $ | $ | $ | $ | ||||||||||||
| Total marketable securities | $ | $ | $ | $ | ||||||||||||
| Short-term investment | $ | $ | $ | $ | ||||||||||||
| Short-term notes receivable at fair value | $ | $ | $ | $ | ||||||||||||
| Long-term notes receivable at fair value | $ | $ | $ | $ | ||||||||||||
| 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 | $ | $ | $ | $ | ||||||||||||
| Total marketable securities | $ | $ | $ | $ | ||||||||||||
| Short-term investment | $ | $ | $ | $ | ||||||||||||
| Notes receivable at fair value | $ | $ | $ | $ | ||||||||||||
| Convertible note receivable | $ | $ | $ | $ | ||||||||||||
16
AIKIDO PHARMA INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Level 3 Measurement
The following 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 ($ in thousands):
| Short-term notes receivable at fair value at December 31, 2021 | $ | |||
| Accrued interest receivable | ||||
| Reclassify from convertible note receivable to notes receivable at fair value | ||||
| Purchase of notes receivable | ||||
| Change in fair value of note receivable | ( | ) | ||
| Conversion of note receivable to marketable securities | ( | ) | ||
| Short-term notes receivable at fair value at September 30, 2022 | $ |
| Long-term notes receivable at fair value at December 31, 2021 | $ | |||
| Purchase of notes receivable | ||||
| Long-term notes receivable at fair value at September 30, 2022 | $ | |||
| Short-term investment at December 31, 2021 | $ | |||
| Change in fair value of investment | ( | ) | ||
| Short-term investment at September 30, 2022 | $ |
Long term and Short-term Note Receivable and Convertible Notes Receivable
The Company has elected to measure the purchases of the 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 consolidated statements of operations.
The value at which the Company’s 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.
Interest accrues on the unpaid principal balance on a quarterly basis and is recognized in interest income in the consolidated statements of operations.
Convergent Investment
As of September 30, 2022, the fair value of the
Convergent Convertible Note was measured at $
17
AIKIDO PHARMA INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Mr. Jeffrey Cooper Investment
As of September 30, 2022, the fair value of the
Mr. Jeffrey Cooper Promissory Note was measured at approximately $
Raefan Industries LLC Investment
As of September 30, 2022, the fair value of the
Raefan Industries Promissory Note was measured at approximately $
Slinger Bag Inc Investment
The Company recorded an interest income receivable
of approximately $
As of September 30, 2022, the fair value of the
Slinger Bag Convertible Note was measured at $
Nano Innovations Inc Investment
As of September 30, 2022, the fair value of the
Nano Convertible Note was measured at approximately $
The Company believes that the fair value of the warrant of Nano is immaterial.
Kaya Now Investment
On July 21, 2022,
As of September 30, 2022, the fair value of the
Kaya Now Promissory Note was measured at $
The Company believes that the fair value of the warrant of Kaya is immaterial.
American Innovative Robotics Investment
As of September 30, 2022, the fair value of the
Robotics Promissory Note was measured at $
18
AIKIDO PHARMA INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 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 September 30, 2022 and 2021 are as follows:
| As of September 30, | ||||||||
| 2022 | 2021 | |||||||
| Convertible preferred stock | ||||||||
| Warrants to purchase common stock | ||||||||
| Options to purchase common stock | ||||||||
| Total | ||||||||
Note 10. Redeemable Convertible Preferred Stock
Series O and Series P Redeemable Convertible Preferred Stock
On February 24, 2022, the Company entered into
a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (the “Investors”),
pursuant to which the Company agreed to issue and sell, in concurrent registered direct offerings (the “Offerings”), (i)
In connection with the Offerings, the Company
has entered into an engagement agreement (the “Engagement Agreement Agreement”) with H.C Wainwright & Company, LLC, as
placement agent (“HCW”), pursuant to which the Company agreed to pay HCW an aggregate cash fee equal to
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 equal to
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.
19
AIKIDO PHARMA INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
During the second quarter of 2022,
During the nine months ended September 30, 2022,
the Company recognized approximately $
Note 11. Stockholders’ Equity
Common Stock
One June 5, 2020, CBM Biopharma, Inc. (“CBM”)
approved a distribution to its stockholders of
During the nine months ended September 30, 2022, the Company issued an aggregate of
Treasury Stock
On January 21, 2022, the Company’s board
of directors authorized a share buyback program (the “Share Buyback Program”), pursuant to which the Company authorized the
Repurchase Program in an amount of up to three million dollars. During the nine months ended September 30, 2022, the Company repurchased
Warrants
A summary of warrant activity for the nine months ended September 30, 2022, is presented below:
| Warrants | Weighted Average Exercise Price | Total Intrinsic Value | Weighted Average Remaining Contractual Life (in years) | |||||||||||||
| Outstanding as of December 31, 2021 | $ | |||||||||||||||
| Issued | ||||||||||||||||
| Outstanding as of September 30, 2022 | $ | |||||||||||||||
20
AIKIDO PHARMA INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Restricted Stock Awards
A summary of restricted stock awards activity for the nine months ended September 30, 2022, is presented below:
| Number of Restricted Stock Awards | Weighted Average Grant Day Fair Value | |||||||
| Nonvested at December 31, 2021 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Nonvested at September 30, 2022 | $ | |||||||
As of September 30, 2022, approximately $
Stock Options
A summary of stock option activity for the nine months ended September 30, 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 | $ | $ | ||||||||||||||
| Employee options granted | ||||||||||||||||
| Employee options forfeited | ( | ) | ||||||||||||||
| Employee options expired | ( | ) | ||||||||||||||
| Outstanding as of September 30, 2022 | $ | $ | ||||||||||||||
| Options vested and exercisable | $ | $ | ||||||||||||||
Stock-based compensation associated with the amortization
of stock option expense was approximately $
Estimated future stock-based compensation expense
relating to unvested stock options is approximately $
Note 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.
21
AIKIDO PHARMA INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Risks and Uncertainties - COVID-19
Management continues to evaluate 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.
Leases
On December 1, 2021, the Company entered into a Lease
Agreement (the “Company’s Lease”) with Trump Tower Commercial LLC, a New York limited liability company. Under the Company’s
Lease, the Company will rent a portion of the twenty-second floor at 725 Fifth Avenue, New York, New York (the “22nd
Floor Premises”). The Company plans to use the 22nd Floor Premises to run its day-to-day operations. The initial term
of the Company’s Lease is seven (7) years commencing on July 11, 2022 (“Commencement Date). Under
The tables below represent the Company’s lease assets and liabilities as of September 30, 2022:
| September 30, 2022 | ||||
| Assets: | ||||
| Operating lease right-of-use-assets | $ | |||
| Liabilities: | ||||
| Current | ||||
| Operating | ||||
| Long-term | ||||
| Operating | ||||
| $ | ||||
22
AIKIDO PHARMA INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following tables summarize quantitative information about the Company’s operating leases, under the adoption of ASC Topic 842, Leases:
| September 30, 2022 | ||||
| Weighted-average remaining lease term – operating leases (in years) | ||||
| Weighted-average discount rate – operating leases | % | |||
During the nine months
ended September 30, 2022, the Company recorded approximately $
| Three Months Ended September 30, 2022 | ||||
| Operating leases | ||||
| Operating lease cost | $ | | ||
| Variable lease cost | ||||
| Operating lease expense | ||||
| Short-term lease rent expense | ||||
| Net rent expense | $ | |||
Supplemental cash flow information related to leases were as follows:
| Three Months Ended September 30, 2022 | ||||
| Operating cash flows - operating leases | $ | |||
| Right-of-use assets obtained in exchange for operating lease liabilities | $ | |||
As of September 30, 2022, future minimum payments during the next five years and thereafter are as follows:
| Operating Leases | ||||
| Remaining Period Ended December 31, 2022 | $ | |||
| Year Ended December 31, 2023 | ||||
| Year Ended December 31, 2024 | ||||
| Year Ended December 31, 2025 | ||||
| Year Ended December 31, 2026 | ||||
| Thereafter | ||||
| Total | ||||
| Less present value discount | ( | ) | ||
| Operating lease liabilities | $ | |||
23
AIKIDO PHARMA INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 13. License agreements
On April 13, 2020, the Company entered into a License Agreement (the “License Agreement”) with University of Maryland (“UM”) pursuant to which UM granted the Company an exclusive, worldwide, royalty bearing license to certain intellectual property to, among other things, discover, develop, make, have made, use and sell certain licensed products and sell, use and practice certain licensed services with respect to cancer.
During the nine months ended September 30, 2022,
the Company paid approximately $
Note 14. Subsequent events
Dominari’s Lease of Office Space at Trump Tower New York
On September 23, 2022, Dominari entered into a
Lease Agreement (“Dominari’s Lease”) with Trump Tower Commercial LLC, a New York limited liability company.
24
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
Since 2017, we have operated as a biotechnology company with a diverse portfolio of small-molecule anticancer and antiviral therapeutics in development. Over the past year, in an effort to enhance shareholder value, we have shifted our primary focus away from biotechnology to a new line of business in the fintech and financial services industries. In furtherance of this new focus, in June of this year we formed a wholly owned financial services subsidiary, Dominari Financial Inc. (“Dominari”), with the purpose of making strategic acquisitions across the fintech and financial services industries. Additionally, AIkido Labs, LLC (“Aikido Labs”), another wholly owned subsidiary, has and will continue to explore other opportunities in high growth industries. To date, Aikido Labs has acquired equity positions in Anduril Industries, Inc, Databricks, Inc., Discord, Inc., Epic Games, Inc., Payward, Inc. dba Kraken, Space Exploration Technologies Corp. dba SpaceX, Tevva Motors Ltd., Thrasio, LLC, and Yanka Industries, Inc. dba Masterclass. Finally, we will continue to foster and develop our historical pipeline of biotechnology assets consisting of patented technology from leading universities and researchers, including prospective treatments for pancreatic cancer, acute myeloid leukemia and acute lymphoblastic leukemia. We are 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.
25
On September 9, 2022, Dominari entered into a membership interest purchase agreement (the “FPS Purchase Agreement”) with Fieldpoint Private Bank & Trust (“Seller”), a Connecticut bank, for the purchase of its wholly owned subsidiary, Fieldpoint Private Securities, LLC, a Connecticut limited liability company (“FPS”) and broker-dealer registered with the Financial Industry Regulatory Authority (“FINRA”). Pursuant to the terms of the FPS Purchase Agreement, Dominari will purchase from the Seller 100% of the membership interests in of FPS (the “Membership Interests”) and, as a result thereof, will, thereafter, operate FPS’s registered broker-dealer business as a wholly owned subsidiary. The FPS Purchase Agreement provides for Dominari’s acquisition of FPS’s Membership Interests in two closings, the first of which occurred on October 4, 2022 (the “Initial Closing”), at which Dominari paid to the Seller $2,000,000 in consideration for a transfer by the Seller to Dominari of 20% of the Membership Interests. Following the Initial Closing, FPS filed a continuing membership application requesting approval for a change of ownership, control, or business operations with FINRA in accordance with FINRA Rule 1017 (the “Rule 1017 Application”). Upon FINRA’s approval of the Rule 1017 Application, the second closing will occur (the “Second Closing”), at which Dominari will pay to the Seller an additional $1.00 in consideration for a transfer by the Seller to Dominari of the remaining 80% of the Membership Interests. The Second Closing is subject to FINRA’s final approval under FINRA Rule 1017 as well as other customary closing conditions, including the accuracy of the representations and warranties of the applicable parties under the FPS Purchase Agreement and compliance therewith. Additionally, on October 17, 2022, we entered into an Amended and Restated Services Agreement with Kyle Wool, pursuant to which he has agreed to serve as Dominari’s Chief Executive Officer, upon the termination of his existing relationship with another registered broker-dealer and lead our transition to a fintech and financial services company.
Our anticipated diversified financial platform may be affected by a variety of factors including the continuing impact of the COVID-19 pandemic, higher inflation, the actions by the Federal Reserve to address inflation, the possibility of recession, Russia’s invasion of Ukraine, and rising energy prices. These factors create uncertainty about the future economic environment which will continue to evolve and may impact our business in future periods. These developments and the impact on the financial markets and the overall economy continue to be highly uncertain and cannot be predicted. If the financial markets and/or the overall economy continue to be impacted, our results of operations, financial position, and cash flows may be materially adversely affected.
Critical Accounting Policies
Our critical accounting policies are disclosed in our annual report on Form 10K for the year ended December 31, 2021 and there have been no material changes to such policy or estimates during the nine months ended September 30, 2022.
26
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 in our 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 unaudited condensed consolidated financial statements for a discussion of our significant accounting policies.
Recently Issued Accounting Pronouncements
See Note 3 to the unaudited condensed consolidated financial statements for a discussion of recent accounting standards.
Results of Operations
We had little or no revenue for the past two years.
Three months ended September 30, 2022 compared to three months ended September 30, 2021
During the three months ended September 30, 2022, we incurred a loss from operations of approximately $5.1 million, as compared to a loss of approximately $1.8 million for the comparable period of the prior year. The approximate $3.3 million increase in loss year-over-year was primarily attributable to (i) an approximate $2.8 million increase in general and administrative expenses from approximately $1.7 million, during the three months ended September 2021, to approximately $4.5 million, for the same period in 2022, and (ii) an approximate $0.5 million increase in research and development expenses from approximately $0.1 million, during the three months ending September 30, 2021, to approximately $0.6 million, for the same period in 2022. The increase in (i) was a result of approximately $1.4 million in expenses related to fully-vested restricted stock grants issued to the members of the board of directors and executive officers and additional contractual and discretionary bonus expense of approximately $0.6 million. We also incurred approximately $1.0 million in legal and accounting advisory fees related to our transition into a financial services business. The increase in (ii) was primarily due to an additional payment under our license agreement with the University of Maryland (“UM”) pursuant to which the UM granted us an exclusive, worldwide, royalty bearing license to certain intellectual property to, among other things, discover, develop, make, have made, use and sell certain licensed products and sell, use and practice certain licensed services with respect to the treatment of cancer.
During the three months ended September 30, 2022, other expense was approximately $1.1 million as compared to other income of approximately $1.7 million for the comparable prior year period. The activity for the three months ended September 30, 2022, as compared to the same period in the prior year, is a result of an overall volatility in equity valuations due to macroeconomic uncertainty (i.e. inflation, global tensions in the Ukraine, etc.) impacting the change in fair value of investments and unrealized losses on marketable securities. Specifically, we recognized $0.3 million in change of fair value of investments for the three months ended September 30, 2022, which is reflective of volatility in equity valuations, as stated above. For the three months ended September 30, 2021, change in fair value of investments increased to $4.4 million primarily as a result of our investment in DatChat, Inc. (“DatChat”) which increased to $4.4 million following DatChat’s initial public offering during July 2021. Unrealized losses on marketable securities for the three months ended September 30, 2022, were $1.6 million, as compared to $3.0 million for the same period during the prior year, which was a result of continued volatility in equity-based exchange traded funds.
27
Nine months ended September 30, 2022 compared to nine months ended September 30, 2021
During the nine months ended September 30, 2022, we incurred a loss from operations of approximately $11.2 million, as compared to approximately $6.9 million during the comparable prior year period. The approximate $4.3 million increase in loss was primarily attributable to (i) an approximate $3.3 million increase in general and administrative expenses from approximately $5.2 million, during the nine months ended September 30, 2021, to approximately $8.5 million, during the same period in 2022, (ii) an approximate $1.6 million increase in research and development expenses from approximately $0.5 million, during the nine months ended September 30, 2021, to approximately $2.1 million, during the same period in 2022, and (iii) an approximate decrease of $0.6 million in research and development – license acquired from approximately $1.1 million, during the nine months ended September 30, 2021, to approximately $0.5 million, during the same period in 2022, The increase in (i) was a result of approximately $1.4 million in expenses related to fully-vested restricted stock grants issued to the members of the board of directors and executive officers and additional contractual and discretionary bonus expense of approximately $0.6 million. We also incurred approximately $1.0 million in legal and accounting advisory fees related to our transition into a financial services business. The increase in (ii) was primarily due to an approximate $1.6 million increase in expense related to our continued development of a broad-spectrum antiviral platform, in which the lead compounds have activity in cell-based assays against multiple viruses including the Influenza virus, Ebolavirus and Marburg virus, SARS-CoV, MERS-CoV, and SARS-CoV-2, the cause of COVID-19. The decrease in (iii) was primarily attributable to an approximate $0.6 million decrease related to a one-time expense for restricted stock units issued in the prior year in relation to use of the license.
During the nine months ended September 30, 2022, other expense was approximately $3.6 million as compared to other income of approximately $1.5 million for the comparable prior year period. The activity for the nine months ended September 30, 2022, as compared to the same period in the prior year, is a result of overall volatility in equity valuations due to macroeconomic uncertainty (i.e. inflation, global tensions in the Ukraine, etc.) impacting the change in fair value of investments and unrealized losses on marketable securities. Specifically, we recognized $0.1 million in change of fair value of investments for the nine months ended September 30, 2022, which is reflective of volatility in equity valuations, as stated above. For the nine months ended September 30, 2021, change in fair value of investments increased to $3.8 million primarily as a result of our investment in DatChat which increased to $4.4 million following DatChat’s initial public offering during July 2021. Unrealized losses on marketable securities for the nine months ended September 30, 2022, were $4.3 million, as compared to $2.6 million for the same period during the prior year, which was a result of continued volatility in equity-based exchange traded funds.
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. While we continue to implement our business strategy, we intend to finance our activities through:
| ● | managing current cash and cash equivalents on hand from our past debt and equity offerings; |
| ● | monetizing current and future strategic long-term investments; |
| ● | 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. |
28
Our ultimate success is dependent on our ability to obtain additional financing, monetize our long-term investments, 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 investments it needs to execute its longer-term business plan to transition to a fintech and financial services business . Our working was approximately $54.2 million at September 30, 2022. We may 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 on favorable terms, or at all. As a result of recent volatility and weakness in the public markets, due to, among other factors, uncertainty in the global economy and financial markets, it may be much more difficult to raise additional capital, if and when, it is needed, unless the public markets become less volatile and stronger at such time that we seek to raise additional capital. There are no known trends, demands, commitments, or events that will result in or that are reasonably likely to result in our liquidity increasing or decreasing in any material way.
Cash Flows from Operating Activities - For the nine months ended September 30, 2022 and 2021, net cash used in operations was approximately $8.7 million and $4.6 million, respectively. The cash used in operating activities for the nine months ended September 30, 2022 primarily resulted from a net loss of $14.9 million and change in fair value of long-term investment of $1.6 million and is partially offset by change in fair value of short-term investment of $1.5 million and unrealized loss on marketable securities of $3.9 million. The cash used in operating activities for the nine months ended September 30, 2021 primarily resulted from a net loss of $5.4 million and change in fair value of investment of $3.8 million, and partially offset by $4.3 million unrealized loss on marketable securities and $1.1 million research and development expense related with license acquired.
Cash Flows from Investing Activities - For the nine months ended September 30, 2022 and 2021, net cash used in investing activities was approximately $16.0 million and $70.3 million, respectively. The cash used in investing activities for the nine months ended September 30, 2022 primarily resulted from our purchase of marketable securities of $27.5 million, purchase of promissory notes of $1.6 million and purchase of investments of $15.0 million, partially offset by our sale of marketable securities of $28.5 million since we invest excess cash into marketable securities until additional cash is needed. The cash used in investing activities for the nine months ended September 30, 2021 primarily resulted from our purchase of marketable securities of $90.5 million, funds to deposit accounts of $4.4 million (net of fee), purchase of investments at fair value of $4.1 million and purchase of convertible note of $2.0 million, partially offset by our sale of marketable securities of $30.4 million since we invest excess cash into marketable securities until additional cash is needed.
Cash Flows from Financing Activities - Cash used in financing activities for the nine months ended September 30, 2022 was $6.4 million, which reflects the cost for redemption of Series O and Series P Redeemable Convertible Preferred Stock of $22.0 million and cost for purchase of treasury stock of $2.2 million, partially offset by net proceeds of $17.9 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 nine months ended September 30, 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.
Off-balance sheet arrangements.
None.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required for smaller reporting companies.
29
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 September 30, 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 September 30, 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. The Company is working to change internal controls to address material weaknesses and adding additional employees as part of a plan to discuss with FINRA.
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 September 30, 2022 which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
30
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, 2021 and in our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2022 and June 30, 2022.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
None.
31
Item 6. Exhibits
| 31.1 | Certification of Principal Executive Officer of AIkido Pharma Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2 | Certification of 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). |
32
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: November 10, 2022 | By: | /s/ Anthony Hayes |
| Anthony Hayes | ||
| Chief Executive Officer | ||
| (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) | ||
33
Exhibit 31.1
Certification of Chief Executive Officer
Pursuant
to Exchange Act Rules 13a-14(a) and 15d-14(a),
as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, Anthony Hayes, certify that:
| 1. | I have reviewed this report on Form 10-Q of AIkido Pharma Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s Board of Directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| /s/ Anthony Hayes | |
| Anthony Hayes | |
| Chief Executive Officer | |
| (Principal Executive Officer) | |
| November 10, 2022 |
Exhibit 31.2
Certification of Chief Financial Officer
Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a),
as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, Anthony Hayes, certify that:
| 1. | I have reviewed this report on Form 10-Q of AIkido Pharma Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s Board of Directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| /s/ Anthony Hayes | |
| Anthony Hayes | |
| Chief Financial Officer Officer | |
| (Principal Financial Officer and Principal Accounting Officer) | |
| November 10, 2022 |
Exhibit 32.1
Certification of Chief Executive Officer and Chief Financial Officer
18 U.S.C. Section 1350
As Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
I, Anthony Hayes, Director, Chief Executive Officer, Principal Financial and Accounting Officer of AIkido Pharma Inc. (the “Company”), in compliance with Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify that, to the best of my knowledge, the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2022 (the “Report”) filed with the Securities and Exchange Commission:
| ● | Fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| ● | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| /s/ Anthony Hayes | |
| Anthony Hayes | |
| Chief Executive Officer and Chief Financial Officer | |
| (Principal Executive Officer, | |
| Principal Financial Officer and Principal Accounting Officer) | |
| November 10, 2022 |
A signed copy of this written statement required by Section 906 has been provided to AIkido Pharma Inc. and will be retained by AIkido Pharma Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Preferred stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
| Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
| Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
| Common stock, shares authorized | 100,000,000 | 100,000,000 |
| Common stock, shares issued | 5,485,096 | 5,275,329 |
| Common stock, shares outstanding | 5,140,114 | 5,275,329 |
| Treasury stock, at cost | 344,982 | 0 |
| Series D Preferred Stock | ||
| Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
| Preferred stock, shares issued | 3,825 | 3,825 |
| Preferred stock, shares outstanding | 3,825 | 3,825 |
| Liquidation value, per share (in Dollars per share) | $ 0.0001 | $ 0.0001 |
| Series D-1 Preferred Stock | ||
| Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
| Preferred stock, shares issued | 834 | 834 |
| Preferred stock, shares outstanding | 834 | 834 |
| Liquidation value, per share (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Condensed Consolidated Statements of Operations (Unaudited) (Parentheticals) - $ / shares |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Income Statement [Abstract] | ||||
| Basic and Diluted (in Dollars per share) | $ (1.17) | $ (0.01) | $ (3.59) | $ (1.14) |
| Basic and Diluted (in Shares) | 5,344,989 | 5,272,446 | 5,283,182 | 4,702,556 |
Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity (Unaudited) (Parentheticals) $ in Thousands |
9 Months Ended |
|---|---|
|
Sep. 30, 2021
USD ($)
| |
| Statement of Stockholders' Equity [Abstract] | |
| Net of offering costs | $ 8,260 |
Organization and Description of Business and Recent Developments |
9 Months Ended |
|---|---|
Sep. 30, 2022 | |
| Organization and Description of Business and Recent Developments [Abstract] | |
| Organization and Description of Business and Recent Developments | Note 1. Organization and Description of Business and Recent Developments
Organization and Description of Business
AIkido Pharma Inc. (the “Company”), 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. Over the past year, in an effort to enhance shareholder value, the Company has shifted its primary focus away from biotechnology to a new line of business in the fintech and financial services industries. In furtherance of this new focus, in June of this year the Company formed a wholly owned financial services subsidiary, Dominari Financial Inc. (“Dominari”), with the purpose of making strategic acquisitions across the fintech and financial services industries. Additionally, AIkido Labs, LLC (“Aikido Labs”), another wholly owned subsidiary of the Company, has and will continue to explore other opportunities in high growth industries. To date, Aikido Labs has acquired equity positions in Anduril Industries, Inc, Databricks, Inc., Discord, Inc., Epic Games, Inc., Payward, Inc. dba Kraken, Space Exploration Technologies Corp. dba SpaceX, Tevva Motors Ltd., Thrasio, LLC, and Yanka Industries, Inc. dba Masterclass. Please see Notes 6, 7 and 8 below for a further discussion of the Company’s investments. Finally, the Company will continue to foster and develop its historical pipeline of biotechnology assets consisting of patented technology from leading universities and researchers, including prospective treatments for pancreatic cancer, acute myeloid leukemia and acute lymphoblastic leukemia. 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.
On September 9, 2022, Dominari entered into a membership interest purchase agreement (the “FPS Purchase Agreement”) with Fieldpoint Private Bank & Trust (“Seller”), a Connecticut bank, for the purchase of its wholly owned subsidiary, Fieldpoint Private Securities, LLC, a Connecticut limited liability company (“FPS”) and broker-dealer registered with the Financial Industry Regulatory Authority (“FINRA”). Pursuant to the terms of the FPS Purchase Agreement, Dominari will purchase from the Seller 100% of the membership interests in of FPS (the “Membership Interests”) and, as a result thereof, will, thereafter, operate FPS’s registered broker-dealer business as a wholly owned subsidiary of the Company. The FPS Purchase Agreement provides for Dominari’s acquisition of FPS’s Membership Interests in two closings, the first of which occurred on October 4, 2022 (the “Initial Closing”), at which Dominari paid to the Seller $2,000,000 in consideration for a transfer by the Seller to Dominari of 20% of the Membership Interests. Following the Initial Closing, FPS filed a continuing membership application requesting approval for a change of ownership, control, or business operations with FINRA in accordance with FINRA Rule 1017 (the “Rule 1017 Application”). Upon FINRA’s approval of the Rule 1017 Application, the second closing will occur (the “Second Closing”), at which Dominari will pay to the Seller an additional $1.00 in consideration for a transfer by the Seller to Dominari of the remaining 80% of the Membership Interests. The Second Closing is subject to FINRA’s final approval under FINRA Rule 1017 as well as other customary closing conditions, including the accuracy of the representations and warranties of the applicable parties under the FPS Purchase Agreement and compliance therewith. Additionally, on October 17, 2022, the Company entered into an Amended and Restated Services Agreement with Kyle Wool, pursuant to which he has agreed to serve as Dominari’s Chief Executive Officer, upon the termination of his existing relationship with another registered broker-dealer and lead the Company’s transition to a fintech and financial services company.
Reverse Stock Split
On June 7, 2022, the Company effected a seventeen-for-one (17-for-1) reverse stock split of its class of common stock (the “Reverse Stock Split”). The Reverse Stock Split, which was approved by stockholders at an annual stockholder meeting on May 20, 2022, was consummated pursuant to a Certificate of Amendment filed with the Secretary of State of Delaware on June 2, 2022. The Reverse Stock Split was effective on June 7, 2022. All references to common stock, convertible preferred stock, warrants to purchase common stock, options to purchase common stock, restricted stock units, restricted stock awards, share data, per share data and related information contained in the condensed consolidated financial statements have been retrospectively adjusted to reflect the effect of the Reverse Stock Split for all periods presented. Payment for fractional shares resulting from the reverse stock split amounted to $26 thousand. |
Liquidity and Capital Resources |
9 Months Ended |
|---|---|
Sep. 30, 2022 | |
| Liquidity and Capital Resources [Abstract] | |
| Liquidity and Capital Resources | 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 equity offerings.
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 unaudited consolidated financial statements. |
Summary of Significant Accounting Policies |
9 Months Ended |
|---|---|
Sep. 30, 2022 | |
| Summary of Significant Accounting Policies [Abstract] | |
| Summary of Significant Accounting Policies | 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, AIkido Labs and Dominari. 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 September 30, 2022, condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021, condensed consolidated statements of stockholders’ equity for the three and nine months ended September 30, 2022 and 2021, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2022 and 2021 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 nine months ended September 30, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022 or for any future interim period. The condensed consolidated balance sheet at December 31, 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, 2021 and notes thereto included in the Company’s annual report on Form 10-K, which was filed with the SEC on March 28, 2022.
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
Aside from the policies 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 28, 2022.
Leases
The Company accounts for its leases under ASC 842, Leases. Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the condensed consolidated balance sheet as both a right-of-use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right-of-use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right-of-use asset result in straight-line rent expense over the lease term. For finance leases, interest on the lease liability and the amortization of the right-of-use asset results in front-loaded expense over the lease term. Variable lease expenses are recorded when incurred. See Note 12 – Commitment and Contingencies.
Treasury Stock
Treasury stock is recorded at cost and is presented as a reduction of stockholders’ equity.
Recent accounting pronouncements
Management does not believe that any recently issued, but not yet effective accounting pronouncements, if currently adopted, would have an effect on the Company’s unaudited condensed consolidated financial statements. |
Investments in Marketable Securities |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments in Marketable Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments in Marketable Securities | Note 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 nine months ended September 30, 2022 and 2021, which are recorded as a component of gains and (losses) on marketable securities on the consolidated statements of operations, are as follows ($ in thousands):
|
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Short-Term Investments |
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| Short-Term Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Short-term investments | Note 5. Short-term investments
The following table presents the Company’s short-term investments at September 30, 2022 and December 31, 2021 ($ in thousands):
The change in the fair value of the short-term investments for the nine months ended September 30, 2022 is summarized as follows: ($ in thousands):
Investment in Hoth Therapeutics, Inc.
On March 11, 2022, 1,130,701 shares of Hoth common stock were transferred to the marketable securities account and were sold for net proceeds of approximately $0.9 million.
On August 17, 2022, 35,714 shares of Hoth common stock were transferred to marketable securities account.
The following summarizes the Company investment in Hoth as of September 30, 2022 and December 31, 2021:
Investment in DatChat, Inc.
On February 14, 2022, 357,916 shares (valued at $2.21 per share) of DatChat common stock were transferred to the 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 $33,000 and $0.4 million in the consolidated balance sheet as of September 30, 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 the consolidated statements of operations. During the nine months ended September 30, 2022, the Company recorded approximately $0.4 million of change in fair value of investment for this investment.
The following table provides quantitative information regarding Level 3 fair value measurements inputs at their measurement dates:
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Long-Term Investments |
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| Long-Term Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-Term Investments | Note 6. Long-Term Investments
Effective January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2016-01 and related ASU 2018-03 concerning recognition and measurement of financial assets and financial liabilities. In adopting this guidance, the Company has made an accounting policy election to adopt an adjusted cost method measurement alternative for investments in equity securities without readily determinable fair values.
For equity investments that are accounted for using the measurement alternative, the Company initially records equity investments at cost but is required to adjust the carrying value of such equity investments through earnings when there is an observable transaction involving the same or a similar investment with the same issuer or upon an impairment.
The following table presents the Company’s other investments at September 30, 2022 and December 31, 2021 ($ in thousands):
The change in the value of the long-term investments for the nine months ended September 30, 2022 is summarized as follows: ($ in thousands):
Investment in Kerna Health Inc
In May 2022, the Company purchased additional 400,000 shares of common stock of Kerna Health Inc, (“Kerna”) for approximately $1.1 million. The investment in Kerna was valued at $4.9 million as of September 30, 2022.
Investment in Kaya Now Inc (aka Kaya Holding Corp)
On March 2, 2022, the Company purchased additional 3,375,000 shares of common stock of Kaya Now Inc., aka Kaya Holding Corp., (“Kaya”) for approximately $0.6 million.
On July 21, 2022, in consideration for extending the maturity date of the Kaya Now Promissory Note (See Note 7 – Notes Receivable) to February 1, 2023, Kaya agreed to issue to the Company 1,000,000 shares at $0.2 per share of common stock.
The Company recorded approximate $0.2 million in unrealized gain on this investment during the nine months ended September 30, 2022. The investment in Kaya was valued at approximately $2.5 million as of September 30, 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 nine months ended September 30, 2022. The investment in Tevva was valued at approximately $3.4 million as of September 30, 2022.
Investment in ASP Isotopes
In August 2022, the Company purchased additional 100,000 shares of common stock of ASP Isotopes Inc. (“ASP”) for $0.3 million. The investment in ASP was valued at $1.3 million as of September 30, 2022.
Investment in AerocarveUS Corporation
The investment in AerocarveUS Corporation was valued at $1.0 million as of September 30, 2022.
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 September 30, 2022.
Investment in Masterclass
In March of 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 September 30, 2022.
Investment in Kraken
In March of 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. In August 2022, the Company entered into a common stock transfer agreement with a private seller to purchase 3,723 shares of Kraken for approximately $0.1 million. The investment in Kraken was valued at approximately $0.6 million as of September 30, 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. In April 2022, the Company invested an additional $2 million for the purchase of additional shares of common stock of Epic Games. The investment in Epic Games was valued at $3.5 million as of September 30, 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 nine months ended September 30, 2022. The investment in Tesspay was valued at approximately $1.3 million as of September 30, 2022.
Investment in SpaceX
On March 30, 2022, the Company entered into a securities purchase agreement (the “SpaceX Securities Purchase Agreement”) with SpaceX, under which the company agreed to purchase shares of common stock of SpaceX for $1.5 million. In April 2022, the Company invested an additional $2 million for the purchase of additional shares of common stock of SpaceX. The investment in SpaceX was valued at $3.5 million as of September 30, 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 September 30, 2022.
Investment in Discord, Inc.
In May 2022, the Company entered into a securities purchase agreement (the “Discord Securities Purchase Agreement”) with privately-held company Discord, Inc., a social communications platform provider that is particularly popular with gamers, as one of the Company’s pursuits of potentially high growth interests with near term monetization events. Under the Discord Securities Purchase Agreement, the Company agreed to purchase a total of 618 shares of common stock of Discord for approximately $0.5 million. The investment in Discord was valued at $0.5 million as of September 30, 2022.
Investment in Thrasio, LLC
In April 2022, the Company entered into a securities purchase agreement (the “Thrasio Securities Purchase Agreement”) with privately-held company Thrasio, LLC, an aggregator of private brands of top Amazon businesses and direct-to-consumer brands, as one of the Company’s pursuits of potentially high growth interests with near term monetization events. Under the Thrasio Securities Purchase Agreement, the Company agreed to purchase a total of 20,000 shares of common stock of Thrasio for $0.3 million. The investment in Thrasio was valued at $0.3 million as of September 30, 2022.
Investment in Automation Anywhere, Inc.
In April 2022, the Company entered into a securities purchase agreement (the “Automation Anywhere Securities Purchase Agreement”) with privately-held company Automation Anywhere, Inc., a provider of business automation solutions, as one of the Company’s pursuits of potentially high growth interests with near term monetization events. Under the Automation Anywhere Securities Purchase Agreement, the Company agreed to purchase a total of 18,490 shares of common stock of Automation Anywhere for approximately $0.5 million. The investment in Automation Anywhere was valued at $0.5 million as of September 30, 2022.
Investment in Anduril Industries, Inc.
In April 2022, the Company entered into a securities purchase agreement (the “Anduril Securities Purchase Agreement”) with privately-held company Anduril Industries, Inc., a defense products company, as one of the Company’s pursuits of potentially high growth interests with near term monetization events. Under the Anduril Securities Purchase Agreement, the Company agreed to purchase a total of 14,880 shares of common stock of Anduril for approximately $0.5 million. The investment in Anduril was valued at $0.5 million as of September 30, 2022. |
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Notes Receivable |
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| Notes Receivable | Note 7. Notes Receivable
The following table presents the Company’s notes receivable at September 30, 2022 ($ in thousands):
Convergent Investment
The Company recorded an interest income receivable of approximately $0.3 million on the Convergent Convertible Note as of September 30, 2022.
Mr. Jeffrey Cooper Investment
Raefan Group LLC promissory note was satisfied and replaced with a personal note issued to Mr. Jeffrey Cooper, of Raefan Industries. The Company recorded an interest income receivable of approximately $0.2 million on the Mr. Jeffrey Cooper Promissory Note as of September 30, 2022.
Raefan Industries LLC Investment
The Company recorded an interest income receivable of approximately $0.1 million on the Raefan Industries Promissory Note as of September 30, 2022.
Slinger Bag Inc Investment
The Company recorded an interest income receivable of approximately $63,000 on the Slinger Bag Convertible Note as of June 17, 2022. On June 17, 2022, the Company received 558,659 shares of common stock of Connexa Sports Technologies Inc (also known as Slinger Bag) as a result of conversion of principal and accrued interest on the Slinger Bag Convertible Note. All the 558,659 shares of common stock of Connexa Sports received were transferred to marketable securities account.
Nano Innovations Inc Investment
The Company recorded an interest income receivable of approximately $57,000 on the Nano Convertible Note as of September 30, 2022.
Kaya Now Investment
On April 5, 2022, the Company purchased an 8% promissory note (“Kaya Now Promissory Note”) issued by Kaya Now Inc (“Kaya”) in the principal amount of $0.5 million pursuant to a Note Purchase Agreement with Kaya Now. The Company paid a purchase price for the Kaya Now Promissory Note of $0.5 million. The Company will receive interest on the Kaya Now Promissory Note at the rate of 8% per annum payable upon conversion or maturity of the Kaya Now Promissory Note. The Kaya Now Promissory Note shall mature on February 1, 2023.
On July 21, 2022, the Company and Kaya executed an amendment of the Kaya Now Promissory Note (“Amendment”) such that the Kaya Now Promissory Note shall mature on February 1, 2023. In consideration of the Amendment, Kaya has agreed to issue to the Company 1,000,000 additional shares at $0.2 per share of Kaya’s common stock. Under the amendment, interest on the Note during the extended term shall be paid on October 1, 2022 and January 1, 2023 at the rate of 8% per annum.
The Company recorded an interest income of approximately $20,000 on the Kaya Now Promissory Note as of September 30, 2022.
American Innovative Robotics Investment
On April 1, 2022, the Company purchased an 8% promissory note (“Robotics Promissory Note”) issued by American Innovative Robotics, LLC (“Robotics”) in the principal amount of $1.1 million pursuant to a Note Purchase Agreement with Robotics. The Company paid a purchase price for the Robotics Promissory Note of $1.1 million. The Company will receive interest on the Robotics Promissory Note at the rate of 8% per annum payable every three months starting from July 1, 2022. The Robotics Promissory Note shall mature on April 1, 2027.
The Company recorded an interest income of approximately $45,000 on the Robotics Promissory Note as of September 30, 2022. |
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Fair Value of Financial Assets and Liabilities |
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| Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value of Financial Assets and Liabilities | Note 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 September 30, 2022 and December 31, 2021 ($ in thousands):
Level 3 Measurement
The following 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 ($ in thousands):
Long term and Short-term Note Receivable and Convertible Notes Receivable
The Company has elected to measure the purchases of the 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 consolidated statements of operations.
The value at which the Company’s 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.
Interest accrues on the unpaid principal balance on a quarterly basis and is recognized in interest income in the consolidated statements of operations.
Convergent Investment
As of September 30, 2022, the fair value of the Convergent Convertible Note was measured at $2.3 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 nine months ended September 30, 2022.
Mr. Jeffrey Cooper Investment
As of September 30, 2022, the fair value of the Mr. Jeffrey Cooper Promissory Note was measured at approximately $3.0 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 nine months ended September 30, 2022.
Raefan Industries LLC Investment
As of September 30, 2022, the fair value of the Raefan Industries Promissory Note was measured at approximately $2.1 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 nine months ended September 30, 2022.
Slinger Bag Inc Investment
The Company recorded an interest income receivable of approximately $63,000 on the Slinger Bag Convertible Note as of June 17, 2022. On June 17, 2022, the Company received 558,659 shares of common stock of Connexa Sports Technologies Inc (also known as Slinger Bag) as a result of conversion of principal and accrued interest on the Slinger Bag Convertible Note. All the 558,659 shares of common stock of Connexa Sports received were transferred to marketable securities account.
As of September 30, 2022, the fair value of the Slinger Bag Convertible Note was measured at $0.
Nano Innovations Inc Investment
As of September 30, 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 during the nine months ended September 30, 2022.
The Company believes that the fair value of the warrant of Nano is immaterial.
Kaya Now Investment
On July 21, 2022, the Company and Kaya executed an amendment of the Kaya Now Promissory Note (“Amendment”) such that the Kaya Now Promissory Note shall mature on February 1, 2023. In consideration of the Amendment, Kaya has agreed to issue to the Company 1,000,000 additional shares at 20 cents per share of Kaya’s common stock. Under the amendment, interest on the Note during the extended term shall be paid on October 1, 2022 and January 1, 2023 at the rate of 8% per annum.
As of September 30, 2022, the fair value of the Kaya Now Promissory Note was measured at $0.5 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 nine months ended September 30, 2022.
The Company believes that the fair value of the warrant of Kaya is immaterial.
American Innovative Robotics Investment
As of September 30, 2022, the fair value of the Robotics Promissory Note was measured at $1.1 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 nine months ended September 30, 2022. |
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Net Loss per Share Attributable to Common Stockholders |
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| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Loss per Share Attributable to Common Stockholders | Note 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 September 30, 2022 and 2021 are as follows:
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Redeemable Convertible Preferred Stock |
9 Months Ended |
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Sep. 30, 2022 | |
| Redeemable Convertible Preferred Stock Abstract | |
| Redeemable Convertible Preferred Stock | Note 10. Redeemable Convertible Preferred Stock
Series O and Series P Redeemable Convertible Preferred Stock
On February 24, 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (the “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 stated value of $1,000 per share of Preferred Stock, for gross proceeds of each Offering of $10,476,180, or approximately $21.0 million in the aggregate for the Offerings, before the deduction of the placement agent’s fee and offering expenses. The shares of 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 of common stock (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 “Registration Statement”) filed under the Securities Act of 1933, as amended (the “Securities Act”). The Purchase Agreement contains customary representations, warranties and agreements by the Company and customary conditions to closing. The closing of the Offerings occurred on March 2, 2022. In connection with this transaction, the Company received net proceeds of $21.0 million, which was deposited in an escrow account.
In connection with the Offerings, the Company has entered into an engagement agreement (the “Engagement Agreement Agreement”) with H.C Wainwright & Company, LLC, as placement agent (“HCW”), pursuant to which the 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 to purchase up to 1,760,000 shares of common stock in the aggregate at an exercise price of $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 equal to 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 second quarter of 2022, the Company redeemed for cash at a price equal to 105% of the $1,000 stated value per share all of its 11,000 outstanding shares of Series O Preferred Stock and its 11,000 Series P Preferred Stock. The total redemption amount was $23.1 million. As a result, all shares of the Series O Preferred Stock and Series P Preferred Stock have been retired and are no longer outstanding.
During the nine months ended September 30, 2022, the Company recognized approximately $4.1 in deemed dividends related to the Preferred Stock in the condensed consolidated statements of operations and the unaudited condensed consolidated statements of changes in redeemable preferred stock and stockholders’ equity. |
Stockholders’ Equity |
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| Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 one of CBM’s shareholder, received 387,812 shares of its common stock. The Company cancelled 22,812 shares received on January 1, 2022.
Treasury Stock
On January 21, 2022, the Company’s board of directors authorized a share buyback program (the “Share Buyback Program”), pursuant to which the Company authorized the Repurchase Program in an amount of up to three million dollars. During the nine months ended September 30, 2022, the Company repurchased 344,982 shares at a cost of approximately $2.2 million or $6.48 per share through marketable securities account under the Share Buyback Program. The Company records treasury stock using the cost method.
Warrants
A summary of warrant activity for the nine months ended September 30, 2022, is presented below:
Restricted Stock Awards
A summary of restricted stock awards activity for the nine months ended September 30, 2022, is presented below:
As of September 30, 2022, approximately $24,000 of unrecognized stock-based compensation expense was related to restricted stock awards. The weighted average remaining contractual terms of unvested restricted stock awards was approximately 0.25 years at September 30, 2022.
Stock Options
A summary of stock option activity for the nine months ended September 30, 2022 is presented below:
Stock-based compensation associated with the amortization of stock option expense was approximately $40,000 and $0.2 million for the nine months ended September 30, 2022 and 2021, 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 $0.1 million. |
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Commitments and Contingencies |
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| Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies | Note 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 evaluate 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.
Leases
On December 1, 2021, the Company entered into a Lease Agreement (the “Company’s Lease”) with Trump Tower Commercial LLC, a New York limited liability company. Under the Company’s Lease, the Company will rent a portion of the twenty-second floor at 725 Fifth Avenue, New York, New York (the “22nd Floor Premises”). The Company plans to use the 22nd Floor Premises to run its day-to-day operations. The initial term of the Company’s Lease is seven (7) years commencing on July 11, 2022 (“Commencement Date). Under the Company’s Lease, the Company will pay monthly rent, commencing on January 11, 2023, equal to twelve-thousand, eight hundred and seventy-four dollars. Effective for the sixth and seventh years of the Company’s Lease, the rent shall increase to thirteen-thousand, five hundred and two dollars per month. The Company took possession of the Lease on the Commencement Date.
The tables below represent the Company’s lease assets and liabilities as of September 30, 2022:
The following tables summarize quantitative information about the Company’s operating leases, under the adoption of ASC Topic 842, Leases:
During the nine months ended September 30, 2022, the Company recorded approximately $71,000 as lease expense to current period operations.
Supplemental cash flow information related to leases were as follows:
As of September 30, 2022, future minimum payments during the next five years and thereafter are as follows:
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License Agreements |
9 Months Ended |
|---|---|
Sep. 30, 2022 | |
| License agreements [Abstract] | |
| License agreements | Note 13. License agreements
On April 13, 2020, the Company entered into a License Agreement (the “License Agreement”) with University of Maryland (“UM”) pursuant to which UM granted the Company an exclusive, worldwide, royalty bearing license to certain intellectual property to, among other things, discover, develop, make, have made, use and sell certain licensed products and sell, use and practice certain licensed services with respect to cancer.
During the nine months ended September 30, 2022, the Company paid approximately $0.5 million of additional license fees to UM. |
Subsequent Events |
9 Months Ended |
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Sep. 30, 2022 | |
| Subsequent Events [Abstract] | |
| Subsequent events | Note 14. Subsequent events
Dominari’s Lease of Office Space at Trump Tower New York
On September 23, 2022, Dominari entered into a Lease Agreement (“Dominari’s Lease”) with Trump Tower Commercial LLC, a New York limited liability company. Under Dominari’s Lease, Dominari will rent a portion of a floor at 725 Fifth Avenue, New York, New York (the “Premises”). Dominari plans to use the Premises to run its day-to-day operations. The initial term of Dominari’s Lease is seven (7) years commencing on the date that possession of the Premises is delivered to Dominari. Under Dominari’s Lease, Dominari will pay rent equal to forty-nine thousand three hundred and sixty-eight dollars per month. Effective for the sixth and seventh years of Dominari’s Lease, the rent shall increase to fifty-one thousand eight hundred and sixty-eight dollars per month. The Company anticipates that it will take possession of Dominari’s Lease in 2023. |
Accounting Policies, by Policy (Policies) |
9 Months Ended |
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Sep. 30, 2022 | |
| Accounting Policies [Abstract] | |
| Basis of Presentation and Principles of Consolidation | 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, AIkido Labs and Dominari. 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 September 30, 2022, condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021, condensed consolidated statements of stockholders’ equity for the three and nine months ended September 30, 2022 and 2021, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2022 and 2021 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 nine months ended September 30, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022 or for any future interim period. The condensed consolidated balance sheet at December 31, 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, 2021 and notes thereto included in the Company’s annual report on Form 10-K, which was filed with the SEC on March 28, 2022.
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| Use of Estimates | 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.
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| Significant Accounting Policies | Significant Accounting Policies
Aside from the policies 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 28, 2022.
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| Leases | Leases
The Company accounts for its leases under ASC 842, Leases. Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the condensed consolidated balance sheet as both a right-of-use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right-of-use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right-of-use asset result in straight-line rent expense over the lease term. For finance leases, interest on the lease liability and the amortization of the right-of-use asset results in front-loaded expense over the lease term. Variable lease expenses are recorded when incurred. See Note 12 – Commitment and Contingencies.
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| Treasury Stock | Treasury stock is recorded at cost and is presented as a reduction of stockholders’ equity. |
| Recent accounting pronouncements | Recent accounting pronouncements
Management does not believe that any recently issued, but not yet effective accounting pronouncements, if currently adopted, would have an effect on the Company’s unaudited condensed consolidated financial statements. |
Investments in Marketable Securities (Tables) |
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| Schedule of component of gains and (losses) on marketable securities |
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Short-Term Investments (Tables) |
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| Short-Term Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of short-term investments |
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| Schedule of change in the fair value of the short-term investments |
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| Schedule of company investment in Hoth |
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| Schedule of quantitative information regarding Level 3 fair value measurements inputs |
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Long-Term Investments (Tables) |
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| Long-Term Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of other investments |
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| Schedule of long-term investments |
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Notes Receivable (Tables) |
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| Notes Receivable [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of notes receivable |
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Fair Value of Financial Assets and Liabilities (Tables) |
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| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of fair value assets and liabilities |
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| Schedule of fair value of the company's level 3 financial assets |
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Net Loss per Share Attributable to Common Stockholders (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of potentially diluted loss per share |
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Stockholders’ Equity (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of warrant activity |
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| Schedule of restricted stock awards activity |
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| Schedule of stock option activity |
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Commitments and Contingencies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of lease assets and liabilities |
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| Schedule of summarize quantitative information about the operating leases |
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| Schedule of lease expense |
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| Schedule of supplemental cash flow information |
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| Schedule of future minimum payments |
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Organization and Description of Business and Recent Developments (Details) - USD ($) $ in Thousands |
9 Months Ended | |
|---|---|---|
Sep. 09, 2022 |
Sep. 30, 2022 |
|
| Accounting Policies [Abstract] | ||
| Description of biotechnology research development | 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. | |
| Purchase agreement description | On September 9, 2022, Dominari entered into a membership interest purchase agreement (the “FPS Purchase Agreement”) with Fieldpoint Private Bank & Trust (“Seller”), a Connecticut bank, for the purchase of its wholly owned subsidiary, Fieldpoint Private Securities, LLC, a Connecticut limited liability company (“FPS”) and broker-dealer registered with the Financial Industry Regulatory Authority (“FINRA”). Pursuant to the terms of the FPS Purchase Agreement, Dominari will purchase from the Seller 100% of the membership interests in of FPS (the “Membership Interests”) and, as a result thereof, will, thereafter, operate FPS’s registered broker-dealer business as a wholly owned subsidiary of the Company. The FPS Purchase Agreement provides for Dominari’s acquisition of FPS’s Membership Interests in two closings, the first of which occurred on October 4, 2022 (the “Initial Closing”), at which Dominari paid to the Seller $2,000,000 in consideration for a transfer by the Seller to Dominari of 20% of the Membership Interests. Following the Initial Closing, FPS filed a continuing membership application requesting approval for a change of ownership, control, or business operations with FINRA in accordance with FINRA Rule 1017 (the “Rule 1017 Application”). Upon FINRA’s approval of the Rule 1017 Application, the second closing will occur (the “Second Closing”), at which Dominari will pay to the Seller an additional $1.00 in consideration for a transfer by the Seller to Dominari of the remaining 80% of the Membership Interests. The Second Closing is subject to FINRA’s final approval under FINRA Rule 1017 as well as other customary closing conditions, including the accuracy of the representations and warranties of the applicable parties under the FPS Purchase Agreement and compliance therewith. | |
| Reverse stock split amount | $ 26 |
Investments in Marketable Securities (Details) - Schedule of component of gains and (losses) on marketable securities - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Schedule Of Component Of Gains And Losses On Marketable Securities Abstract | ||||
| Realized (loss) gain | $ (144) | $ (583) | $ (712) | $ 501 |
| Unrealized loss | (1,589) | (2,901) | (3,889) | (4,296) |
| Dividend income | 79 | 451 | 211 | 1,221 |
| Total | $ (1,654) | $ (3,033) | $ (4,390) | $ (2,574) |
Short-Term Investments (Details) - Schedule of short-term investments - USD ($) $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Short-Term Investments (Details) - Schedule of short-term investments [Line Items] | ||
| Short-term investment | $ 33 | $ 2,273 |
| Investment in Hoth Therapeutics, Inc. [Member] | ||
| Short-Term Investments (Details) - Schedule of short-term investments [Line Items] | ||
| Short-term investment | 770 | |
| Investment in DatChat, Inc. [Member] | ||
| Short-Term Investments (Details) - Schedule of short-term investments [Line Items] | ||
| Short-term investment | 1,084 | |
| Investment in Vicinity Motor Corp. [Member] | ||
| Short-Term Investments (Details) - Schedule of short-term investments [Line Items] | ||
| Short-term investment | $ 33 | $ 419 |
Short-Term Investments (Details) - Schedule of change in the fair value of the short-term investments $ in Thousands |
9 Months Ended |
|---|---|
|
Sep. 30, 2022
USD ($)
| |
| Schedule Of Change In The Fair Value Of The Short Term Investments Abstract | |
| Beginning balance | $ 2,273 |
| Transfer to marketable securities | (1,497) |
| Change in fair value of investment | (1,517) |
| Realized gain recognized through sale of marketable securities | 774 |
| Ending balance | $ 33 |
Short-Term Investments (Details) - Schedule of company investment in Hoth - HOTH [Member] - USD ($) $ / shares in Units, $ in Thousands |
Sep. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Schedule of Investments [Line Items] | ||
| Shares Owned | 1,166,415 | |
| Fair value per Share | $ 0.66 | |
| Fair value | $ 770 |
Short-Term Investments (Details) - Schedule of quantitative information regarding Level 3 fair value measurements inputs - Vicinity Motor Corp [Member] - $ / shares |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2022 |
Dec. 31, 2021 |
|
| Short-Term Investments (Details) - Schedule of quantitative information regarding Level 3 fair value measurements inputs [Line Items] | ||
| Option term (in years) | 2 years 1 month 6 days | 2 years 9 months 18 days |
| Volatility | 88.25% | 95.52% |
| Risk-free interest rate | 4.22% | 0.97% |
| Expected dividends | 0.00% | 0.00% |
| Stock price (in Dollars per share) | $ 1.01 | $ 3.5 |
Long-Term Investments (Details) - USD ($) $ / shares in Units, $ in Thousands |
1 Months Ended | 9 Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 09, 2022 |
Mar. 25, 2022 |
Mar. 23, 2022 |
Mar. 22, 2022 |
Mar. 02, 2022 |
Jan. 27, 2022 |
Aug. 31, 2022 |
May 31, 2022 |
Apr. 30, 2022 |
Mar. 31, 2022 |
Mar. 30, 2022 |
Sep. 30, 2022 |
Jul. 21, 2022 |
Dec. 31, 2021 |
|
| Long-Term Investments (Details) [Line Items] | ||||||||||||||
| Investment | $ 33 | $ 419 | ||||||||||||
| Price per share (in Dollars per share) | $ 6.48 | |||||||||||||
| Purchase of additional shares of common stock | $ 2,000 | |||||||||||||
| Securities purchase agreement descriptions | On September 9, 2022, Dominari entered into a membership interest purchase agreement (the “FPS Purchase Agreement”) with Fieldpoint Private Bank & Trust (“Seller”), a Connecticut bank, for the purchase of its wholly owned subsidiary, Fieldpoint Private Securities, LLC, a Connecticut limited liability company (“FPS”) and broker-dealer registered with the Financial Industry Regulatory Authority (“FINRA”). Pursuant to the terms of the FPS Purchase Agreement, Dominari will purchase from the Seller 100% of the membership interests in of FPS (the “Membership Interests”) and, as a result thereof, will, thereafter, operate FPS’s registered broker-dealer business as a wholly owned subsidiary of the Company. The FPS Purchase Agreement provides for Dominari’s acquisition of FPS’s Membership Interests in two closings, the first of which occurred on October 4, 2022 (the “Initial Closing”), at which Dominari paid to the Seller $2,000,000 in consideration for a transfer by the Seller to Dominari of 20% of the Membership Interests. Following the Initial Closing, FPS filed a continuing membership application requesting approval for a change of ownership, control, or business operations with FINRA in accordance with FINRA Rule 1017 (the “Rule 1017 Application”). Upon FINRA’s approval of the Rule 1017 Application, the second closing will occur (the “Second Closing”), at which Dominari will pay to the Seller an additional $1.00 in consideration for a transfer by the Seller to Dominari of the remaining 80% of the Membership Interests. The Second Closing is subject to FINRA’s final approval under FINRA Rule 1017 as well as other customary closing conditions, including the accuracy of the representations and warranties of the applicable parties under the FPS Purchase Agreement and compliance therewith. | |||||||||||||
| SpaceX Securities Purchase Agreement [Member] | ||||||||||||||
| Long-Term Investments (Details) [Line Items] | ||||||||||||||
| Securities purchase agreement descriptions | On March 30, 2022, the Company entered into a securities purchase agreement (the “SpaceX Securities Purchase Agreement”) with SpaceX, under which the company agreed to purchase shares of common stock of SpaceX for $1.5 million. In April 2022, the Company invested an additional $2 million for the purchase of additional shares of common stock of SpaceX. The investment in SpaceX was valued at $3.5 million as of September 30, 2022. | |||||||||||||
| Investment in Kerna Health Inc [Member] | ||||||||||||||
| Long-Term Investments (Details) [Line Items] | ||||||||||||||
| Additional purchased shares (in Shares) | 400,000 | |||||||||||||
| Additional shares of common stock | $ 1,100 | |||||||||||||
| Investment | $ 4,900 | |||||||||||||
| Investment in Kaya Holding Corp [Member] | ||||||||||||||
| Long-Term Investments (Details) [Line Items] | ||||||||||||||
| Purchase shares (in Shares) | 3,375,000 | |||||||||||||
| Investment | $ 600 | 2,500 | ||||||||||||
| Issuance of shares (in Shares) | 1,000,000 | |||||||||||||
| Price per share (in Dollars per share) | $ 0.2 | |||||||||||||
| Unrealized gain | 200 | |||||||||||||
| Investment in Tevva Motors [Member] | ||||||||||||||
| Long-Term Investments (Details) [Line Items] | ||||||||||||||
| Investment | 3,400 | |||||||||||||
| Price per share (in Dollars per share) | $ 58 | |||||||||||||
| Unrealized gain | 1,400 | |||||||||||||
| Investment in ASP Isotopes [Member] | ||||||||||||||
| Long-Term Investments (Details) [Line Items] | ||||||||||||||
| Additional purchased shares (in Shares) | 100,000 | |||||||||||||
| Additional shares of common stock | $ 300 | |||||||||||||
| Investment | 1,300 | |||||||||||||
| Investment in AerocarveUS Corporation [Member] | ||||||||||||||
| Long-Term Investments (Details) [Line Items] | ||||||||||||||
| Investment | 1,000 | |||||||||||||
| Investment in Qxpress [Member] | ||||||||||||||
| Long-Term Investments (Details) [Line Items] | ||||||||||||||
| Purchase shares (in Shares) | 46,780 | |||||||||||||
| Investment | $ 1,000 | 1,000 | ||||||||||||
| Investment in Masterclass [Member] | ||||||||||||||
| Long-Term Investments (Details) [Line Items] | ||||||||||||||
| Purchase shares (in Shares) | 4,841 | |||||||||||||
| Investment | $ 200 | 200 | ||||||||||||
| Investment in Kraken [Member] | ||||||||||||||
| Long-Term Investments (Details) [Line Items] | ||||||||||||||
| Purchase shares (in Shares) | 3,723 | 8,409 | ||||||||||||
| Investment | $ 100 | $ 500 | 600 | |||||||||||
| Investment in Epic Games [Member] | ||||||||||||||
| Long-Term Investments (Details) [Line Items] | ||||||||||||||
| Purchase shares (in Shares) | 901 | |||||||||||||
| Investment | $ 1,500 | 3,500 | ||||||||||||
| Investment in Tesspay [Member] | ||||||||||||||
| Long-Term Investments (Details) [Line Items] | ||||||||||||||
| Purchase shares (in Shares) | 1,000,000 | |||||||||||||
| Investment | $ 200 | 1,300 | ||||||||||||
| Unrealized gain | 10,000,000 | |||||||||||||
| Invested additional amount | $ 1,000 | |||||||||||||
| Per share price (in Dollars per share) | $ 0.25 | |||||||||||||
| Investment in SpaceX [Member] | ||||||||||||||
| Long-Term Investments (Details) [Line Items] | ||||||||||||||
| Investment | $ 3,500 | |||||||||||||
| Investment in Databricks [Member] | ||||||||||||||
| Long-Term Investments (Details) [Line Items] | ||||||||||||||
| Purchase shares (in Shares) | 3,830 | |||||||||||||
| Investment | $ 1,200 | 1,200 | ||||||||||||
| Investment in Discord, Inc. [Member] | ||||||||||||||
| Long-Term Investments (Details) [Line Items] | ||||||||||||||
| Purchase shares (in Shares) | 618 | |||||||||||||
| Investment | $ 500 | 500 | ||||||||||||
| Investment in Thrasio, LLC [Member] | ||||||||||||||
| Long-Term Investments (Details) [Line Items] | ||||||||||||||
| Purchase shares (in Shares) | 20,000 | |||||||||||||
| Investment | $ 300 | 300 | ||||||||||||
| Investment in Automation Anywhere, Inc. [Member] | ||||||||||||||
| Long-Term Investments (Details) [Line Items] | ||||||||||||||
| Purchase shares (in Shares) | 18,490 | |||||||||||||
| Investment | $ 500 | 500 | ||||||||||||
| Investment in Anduril Industries, Inc. [Member] | ||||||||||||||
| Long-Term Investments (Details) [Line Items] | ||||||||||||||
| Purchase shares (in Shares) | 14,880 | |||||||||||||
| Investment | $ 500 | $ 500 | ||||||||||||
Long-Term Investments (Details) - Schedule of long-term investments $ in Thousands |
9 Months Ended |
|---|---|
|
Sep. 30, 2022
USD ($)
| |
| Schedule Of Long Term Investments Abstract | |
| Beginning balance | $ 9,465 |
| Purchase of investments | 15,016 |
| Change in fair value of long-term investments | 1,608 |
| Ending balance | $ 26,089 |
Fair Value of Financial Assets and Liabilities (Details) - Schedule of fair value of the company's level 3 financial assets $ in Thousands |
9 Months Ended |
|---|---|
|
Sep. 30, 2022
USD ($)
| |
| Schedule Of Fair Value Of The Companys Level3 Financial Assets Abstract | |
| Short-term notes receivable at fair value at December 31, 2021 | $ 6,984 |
| Accrued interest receivable | 522 |
| Reclassify from convertible note receivable to notes receivable at fair value | 2,147 |
| Purchase of notes receivable | 500 |
| Change in fair value of note receivable | (608) |
| Conversion of note receivable to marketable securities | (899) |
| Short-term notes receivable at fair value at September 30, 2022 | 8,645 |
| Long-term notes receivable at fair value at December 31, 2021 | |
| Purchase of notes receivable | 1,100 |
| Long-term notes receivable at fair value at September 30, 2022 | 1,100 |
| Short-term investment at December 31, 2021 | 419 |
| Change in fair value of investment | (386) |
| Short-term investment at September 30, 2022 | $ 33 |
Net Loss per Share Attributable to Common Stockholders (Details) - Schedule of potentially diluted loss per share - shares |
9 Months Ended | |
|---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 499,552 | 369,511 |
| Convertible preferred stock [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 34 | 40 |
| Warrants to purchase common stock [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 444,796 | 341,268 |
| Options to purchase common stock [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 54,722 | 28,203 |
Stockholders’ Equity (Details) - USD ($) |
9 Months Ended | |||
|---|---|---|---|---|
Jun. 05, 2020 |
Sep. 30, 2022 |
Sep. 30, 2021 |
Jan. 01, 2022 |
|
| Stockholders’ Equity (Details) [Line Items] | ||||
| Shares cancelled (in Shares) | 22,812 | |||
| Repurchased shares (in Shares) | 238,244 | |||
| Repurchased shares at cost | $ 344,982 | |||
| Amount of cost | $ 2,200,000 | |||
| Price per share (in Dollars per share) | $ 6.48 | |||
| Unrecognized stock-based compensation expense | $ 24,000 | |||
| Weighted average remaining contractual terms | 3 months | |||
| Stock-based compensation expense | $ 40,000 | $ 200,000 | ||
| Estimated future stock-based compensation expense | $ 100,000 | |||
| CBM [Member] | ||||
| Stockholders’ Equity (Details) [Line Items] | ||||
| Warrants to purchase common stock (in Shares) | 1,939,058 | |||
| Number of common stock issued (in Shares) | 1 | |||
| Received shares common stock (in Shares) | 387,812 | |||
Stockholders’ Equity (Details) - Schedule of warrant activity - Warrant [Member] |
9 Months Ended |
|---|---|
|
Sep. 30, 2022
USD ($)
$ / shares
shares
| |
| Class of Warrant or Right [Line Items] | |
| Outstanding beginning balance, Warrants | shares | 341,268 |
| Outstanding beginning balance, Weighted Average Exercise Price | $ / shares | $ 31.68 |
| Outstanding beginning balance, Total Intrinsic Value | $ | |
| Outstanding beginning balance, Weighted Average Remaining Contractual Life | 3 years 10 months 13 days |
| Outstanding ending balance, Warrants | shares | 444,796 |
| Outstanding ending balance, Weighted Average Exercise Price | $ / shares | $ 29.25 |
| Outstanding ending balance, Total Intrinsic Value | $ | |
| Outstanding ending balance, Weighted Average Remaining Contractual Life | 3 years 5 months 12 days |
| Issued, Warrants | shares | 103,528 |
| Issued, Weighted Average Exercise Price | $ / shares | $ 21.25 |
| Issued, Total Intrinsic Value | $ | |
| Issued, Weighted Average Remaining Contractual Life | 4 years 4 months 24 days |
Stockholders’ Equity (Details) - Schedule of restricted stock awards activity |
9 Months Ended |
|---|---|
|
Sep. 30, 2022
$ / shares
shares
| |
| Schedule Of Restricted Stock Awards Activity Abstract | |
| Number of Restricted Stock Awards, beginning balance | shares | |
| Weighted Average Grant Day Fair Value, beginning balance | $ / shares | |
| Number of Restricted Stock Awards, ending balance | shares | 8,068 |
| Weighted Average Grant Day Fair Value,ending balance | $ / shares | $ 5.64 |
| Number of Restricted Stock Awards, Granted | shares | 238,244 |
| Weighted Average Grant Day Fair Value, Granted | $ / shares | $ 6.13 |
| Number of Restricted Stock Awards, Vested | shares | (230,176) |
| Weighted Average Grant Day Fair Value, Vested | $ / shares | $ 6.15 |
Commitments and Contingencies (Details) - USD ($) |
9 Months Ended | |
|---|---|---|
Dec. 01, 2021 |
Sep. 30, 2022 |
|
| Commitments and Contingencies Disclosure [Abstract] | ||
| Lease agreement, description | the Company’s Lease, the Company will pay monthly rent, commencing on January 11, 2023, equal to twelve-thousand, eight hundred and seventy-four dollars. Effective for the sixth and seventh years of the Company’s Lease, the rent shall increase to thirteen-thousand, five hundred and two dollars per month. | |
| Lease expense | $ 71,000 |
Commitments and Contingencies (Details) - Schedule of lease assets and liabilities $ in Thousands |
Sep. 30, 2022
USD ($)
|
|---|---|
| Assets: | |
| Operating lease right-of-use-assets | $ 708 |
| Current | |
| Operating | 42 |
| Long-term | |
| Operating | 701 |
| Total liabilities | $ 743 |
Commitments and Contingencies (Details) - Schedule of summarize quantitative information about the operating leases |
Sep. 30, 2022 |
|---|---|
| Schedule Of Summarize Quantitative Information About The Operating Leases Abstract | |
| Weighted-average remaining lease term – operating leases (in years) | 7 years 3 months 18 days |
| Weighted-average discount rate – operating leases | 10.00% |
Commitments and Contingencies (Details) - Schedule of lease expense $ in Thousands |
9 Months Ended |
|---|---|
|
Sep. 30, 2022
USD ($)
| |
| Operating leases | |
| Operating lease cost | $ 35 |
| Variable lease cost | |
| Operating lease expense | 35 |
| Short-term lease rent expense | 36 |
| Net rent expense | $ 71 |
Commitments and Contingencies (Details) - Schedule of supplemental cash flow information $ in Thousands |
9 Months Ended |
|---|---|
|
Sep. 30, 2022
USD ($)
| |
| Schedule Of Supplemental Cash Flow Information Abstract | |
| Operating cash flows - operating leases | |
| Right-of-use assets obtained in exchange for operating lease liabilities | $ 731 |
Commitments and Contingencies (Details) - Schedule of future minimum payments $ in Thousands |
Sep. 30, 2022
USD ($)
|
|---|---|
| Schedule Of Future Minimum Payments Abstract | |
| Remaining Period Ended December 31, 2022 | |
| Year Ended December 31, 2023 | 154 |
| Year Ended December 31, 2024 | 154 |
| Year Ended December 31, 2025 | 142 |
| Year Ended December 31, 2026 | 142 |
| Thereafter | 479 |
| Total | 1,071 |
| Less present value discount | (328) |
| Operating lease liabilities | $ 743 |
License Agreements (Details) $ in Millions |
9 Months Ended |
|---|---|
|
Sep. 30, 2022
USD ($)
| |
| License agreements [Abstract] | |
| Additional license fees | $ 0.5 |
Subsequent Events (Details) |
1 Months Ended |
|---|---|
Sep. 23, 2022 | |
| Subsequent Events [Abstract] | |
| Subsequent event, description | Under Dominari’s Lease, Dominari will rent a portion of a floor at 725 Fifth Avenue, New York, New York (the “Premises”). Dominari plans to use the Premises to run its day-to-day operations. The initial term of Dominari’s Lease is seven (7) years commencing on the date that possession of the Premises is delivered to Dominari. Under Dominari’s Lease, Dominari will pay rent equal to forty-nine thousand three hundred and sixty-eight dollars per month. Effective for the sixth and seventh years of Dominari’s Lease, the rent shall increase to fifty-one thousand eight hundred and sixty-eight dollars per month. The Company anticipates that it will take possession of Dominari’s Lease in 2023. |