Adhera Therapeutics, Inc. [ATRX] Filings

10-Q 1 form10-q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended: September 30, 2023

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

For the transition period from _____________ to _____________.

Commission File Number: 000-13789

ADHERA THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

Delaware

11-2658569

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification No.)

8000 Innovation Parkway

Baton Rouge, LA

70820

(Address of principal executive offices)

(Zip Code)

(919) 518-3748

(Registrant’s telephone number, including area code)

N/A

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

Securities registered pursuant to Section 12(b) of the Act: None

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	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 to13(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 ☒.

As of November 20, 2023, there were 7,220,900 shares of the registrant’s common stock outstanding.

ADHERA THERAPEUTICS, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2023

TABLE OF CONTENTS

		Page

PART I - FINANCIAL INFORMATION

ITEM 1	Financial Statements	3

	Consolidated Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022	3

	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023, and 2022 (unaudited)	4

	Consolidated Statements of Stockholders’ Deficit for the Three and Nine Months Ended September 30, 2023, and 2022 (unaudited)	5

	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023, and 2022 (unaudited)	6

	Condensed Notes to Unaudited Consolidated Financial Statements	7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	49

ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	53

ITEM 4.	Controls and Procedures	53

PART II - OTHER INFORMATION

ITEM 1.	Legal Proceedings	54

ITEM 1A.	Risk Factors	54

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54

ITEM 3.	Defaults on Senior Securities	55

ITEM 4.	Mine Safety Disclosures	55

ITEM 5.	Other Information	55

ITEM 6.	Exhibits	55

SIGNATURES		56

PART I - FINANCIAL INFORMATION

ITEM I – FINANCIAL INFORMATION

ADHERA THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	September 30,			December 31,
	2023			2022
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash	$	32,388		$	31,761
Prepaid expenses		11,686			46,750

Total Current Assets		44,074			78,511

Total Assets	$	44,074		$	78,511

LIABILITIES AND STOCKHOLDERS’ DEFICIT

CURRENT LIABILITIES:
Accounts payable	$	2,351,653		$	2,396,716
Due to related parties		61,892			25,568
Accrued expenses		5,545,905			4,372,366
Accrued dividends		578,333			498,453
Term loans, net of discounts		9,660,355			7,332,978
Convertible notes payable		1,168,765			1,251,696
Contract liabilities		100,000			-
Derivative liabilities		6,892,612			6,386,284

Total Current Liabilities		26,359,515			22,264,061

Total Liabilities		26,359,515			22,264,061

Commitments and Contingencies (Note 9)		-			-

STOCKHOLDERS’ DEFICIT:
Preferred stock: $0.01 par value; 100,000 authorized;
Series C convertible preferred stock: $0.01 par value; 1,200 shares designated; 100 shares issued and outstanding at September 30, 2023 and December 31, 2022 ($510,000 liquidation preference)		-			-
Series D convertible preferred stock: $0.01 par value; 220 shares designated; 40 shares issued and outstanding at September 30, 2023 and December 31, 2022 ($12,000 liquidation preference)		-			-
Series E convertible preferred stock: $0.01 par value; 3,500 shares designated; 267 shares issued and outstanding at September 30, 2023 and December 31, 2022 ($1,886,414 liquidation preference)		3			3
Series F convertible preferred stock: $0.01 par value; 2,200 shares designated; no shares issued and outstanding at September 30, 2023 and December 31, 2022		-			-
Series G convertible preferred stock: $0.01 par value; 6,000 shares designated; no shares issued and outstanding at September 30, 2023 and December 31, 2022		-			-
Preferred stock: $0.01 par value; 100,000 authorized;
Common stock: $0.006 par value, 180,000,000 shares authorized; 5,168,912 and 3,160,877 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively		31,014			18,938
Additional paid-in capital		33,636,179			33,547,890
Treasury stock (5,594 shares, at cost)		(2,000	)		(2,000	)
Accumulated deficit		(59,980,637	)		(55,750,381	)

Total Stockholders’ Deficit		(26,315,441	)		(22,185,550	)

Total Liabilities and Stockholders’ Deficit	$	44,074		$	78,511

See accompanying condensed notes to unaudited consolidated financial statements.

ADHERA THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2023			2022			2023			2022

REVENUES, NET	$	-		$	-		$	-		$	-

OPERATING EXPENSES:
Professional fees		83,267			169,166			339,972			521,861
Compensation expense		143,238			154,161			429,396			304,161
General and administrative expenses		42,992			224,243			148,153			430,268

Total Operating Expenses		269,497			547,570			917,521			1,256,290

LOSS FROM OPERATIONS		(269,497	)		(547,570	)		(917,521	)		(1,256,290	)

OTHER INCOME (EXPENSES):
Interest expense, net		(359,184	)		(317,045	)		(1,050,830	)		(989,288	)
Amortization of debt discount		(245,839	)		(777,082	)		(1,245,825	)		(1,265,419	)
Gain on debt extinguishment, net		12,671			92,068			87,921			306,707
Loan inducement expense		-			-			(809,126	)		-
Derivative income (expense)		(2,673,966	)		(253,723	)		(214,994	)		1,425,494

Total Other Income (Expenses), net		(3,266,318	)		(1,255,782	)		(3,232,854	)		(522,506	)

NET LOSS		(3,535,815	)		(1,803,352	)		(4,150,375	)		(1,778,796	)

Accrued preferred stock dividends		(26,920	)		(8,706	)		(79,881	)		(574,706	)

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(3,562,735	)	$	(1,812,058	)	$	(4,230,256	)	$	(2,353,502	)

NET LOSS PER COMMON SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS:
Basic	$	(0.83	)	$	(0.57	)	$	(1.16	)	$	(1.17	)
Diluted	$	(0.83	)	$	(0.57	)	$	(1.16	)	$	(1.17	)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		4,303,866			3,160,877			3,649,428			2,019,953
Diluted		4,303,866			3,160,877			3,649,428			2,019,953

See accompanying condensed notes to unaudited consolidated financial statements.

ADHERA THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

(Unaudited)


	Preferred Stock																Common Stock				Additional			Treasury Stock								Total
	Series C of Shares		Amount		Series D of Shares		Amount		Series E of Shares		Amount		Series F of Shares		Amount		of Shares		Amount		Paid-in Capital			of Shares		Amount			Accumulated Deficit			Stockholders’ Deficit

Balance at December 31, 2022		100	$	-		40	$	-		267	$	3		-	$	-		3,160,877	$	18,938	$	33,547,890			5,954	$	(2,000	)		(55,750,381	)	$	(22,185,550	)

Accrued dividend		-		-		-		-		-		-		-		-		-		-		-			-		-			(26,334	)		(26,334	)

Issuance of common stock for convertible note conversions		-		-		-		-		-		-		-		-		17,861		107		4,893			-		-			-			5,000

Net loss		-		-		-		-		-		-		-		-		-		-		-			-		-			(885,839	)		(885,839	)

Balance at March 31, 2023		100		-		40		-		267		3		-		-		3,178,738		19,045		33,552,783			5,954		(2,000	)		(56,662,554	)		(23,092,723	)

Accrued dividend		-		-		-		-		-		-		-		-		-		-		-			-		-			(26,627	)		(26,627	)

Issuance of common stock for convertible note conversions		-		-		-		-		-		-		-		-		660,716		3,964		56,883			-		-			-			60,847

Net income		-		-		-		-		-		-		-		-		-		-		-			-		-			271,279			271,279

Balance on June 30, 2023		100		-		40		-		267		3		-		-		3,839,454		23,009		33,609,666			5,954		(2,000	)		(56,417,902	)		(22,787,224	)

Accrued dividend		-		-		-		-		-		-		-		-		-		-		-			-		-			(26,920	)		(26,920	)

Issuance of common stock for convertible note and accrued interest conversions		-		-		-		-		-		-		-		-		1,029,458		6,205		28,313			-		-			-			34,518

Issuance of common stock for cashless warrant exercises		-		-		-		-		-		-		-		-		300,000		1,800		(1,800	)		-		-			-			-

Net loss		-		-		-		-		-		-		-		-		-		-		-			-		-			(3,535,815	)		(3,535,815	)

Balance on September 30, 2023		100	$	-		40	$	-		267	$	3		-	$	-		5,168,912	$	31,014	$	33,636,179			5,954	$	(2,000	)	$	(59,980,637	)	$	(26,315,441	)

	Preferred Stock																				Common Stock				Additional		Treasury Stock								Total
	Series C of Shares		Amount		Series D of Shares		Amount		Series E of Shares			Amount			Series F of Shares			Amount			of Shares		Amount		Paid-in Capital		of Shares		Amount			Accumulated Deficit			Stockholders’ Deficit

Balance at December 31, 2021		100	$	-		40	$	-		3,326		$	33			358		$	3			853,946	$	5,124	$	27,905,994		-	$	-		$	(53,016,772	)	$	(25,105,618	)

Accrued dividend		-		-		-		-		-			-			-			-			-		-		-		-		-			(364,166	)		(364,166	)

Issuance of common stock with convertible notes		-		-		-		-		-			-			-			-			12,500		75		17,905		-		-			-			17,980

Issuance of common stock for convertible note conversions		-		-		-		-		-			-			-			-			12,721		76		27,908		-		-			-			27,984

Net loss		-		-		-		-		-			-			-			-			-		-		-		-		-			(73,730	)		(73,730	)

Balance at March 31, 2022		100		-		40		-		3,326			33			358			3			879,167		5,275		27,951,807		-		-			(53,454,668	)		(25,497,550	)

Accrued dividend		-		-		-		-		-			-			-			-			-		-		-		-		-			(201,834	)		(201,834	)

Issuance of common stock with term loan		-		-		-		-		-			-			-			-			19,231		115		11,705		-		-			-			11,820

Conversion of Series E Preferred to common stock		-		-		-		-		(3,059	)		(30	)		-			-			2,035,306		12,212		5,044,457		-		-			-			5,056,639

Conversion of Series F Preferred to common stock		-		-		-		-		-			-			(358	)		(3	)		233,127		1,399		539,863		-		-			-			541,259

Repurchase of common stock																												5,954		(2,000	)		-			(2,000	)

Net loss		-		-		-		-		-			-			-			-			-		-		-		-		-			98,286			98,286

Balance on June 30, 2022		100		-		40		-		267			3			-			-			3,166,831		19,001		33,547,832		5,954		(2,000	)		(53,558,216	)		(19,993,380	)
Balance		100		-		40		-		267			3			-			-			3,166,831		19,001		33,547,832		5,954		(2,000	)		(53,558,216	)		(19,993,380	)

Accrued dividend		-		-		-		-		-			-			-			-			-		-		-		-		-			(8,706	)		(8,706	)

Net loss		-		-		-		-		-			-			-			-			-		-		-		-		-			(1,803,352	)		(1,803,352	)
Net Income (loss)		-		-		-		-		-			-			-			-			-		-		-		-		-			(1,803,352	)		(1,803,352	)

Balance on September 30, 2022		100		-		40		-		267			3			-			-			3,166,831		19,001		33,547,832		5,954		(2,000	)		(55,370,274	)		(21,805,438	)
Balance		100		-		40		-		267			3			-			-			3,166,831		19,001		33,547,832		5,954		(2,000	)		(55,370,274	)		(21,805,438	)

See accompanying condensed notes to unaudited consolidated financial statements.

ADHERA THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	For the Nine Months Ended
	September 30,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(4,150,375	)	$	(1,778,796	)
Adjustments to reconcile net loss to net cash used in operating activities:
Gain on debt extinguishment		(87,921	)		(306,707	)
Derivative expense (income)		214,994			(1,425,494	)
Amortization of debt discount and fees		1,245,825			1,265,419
Inducement expense		809,126			-
Change in operating assets and liabilities:
Prepaid expenses and other assets		35,064			(3,555	)
Accounts payable		(8,739	)		(38,167	)
Accrued expenses		1,186,871			931,338
Contract liabilities		100,000			-

NET CASH USED IN OPERATING ACTIVITIES		(655,155	)		(1,355,962	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable		788,900			2,000,000
Proceeds from convertible notes payable		-			200,000
Notes payable and convertible notes issuance costs		(42,300	)		(327,800	)
Repayment of convertible notes payable		(90,818	)		(456,954	)
Purchase of treasury stock		-			(2,000	)

NET CASH PROVIDED BY FINANCING ACTIVITIES		655,782			1,413,246

NET INCREASE IN CASH		627			57,284

CASH, beginning of the period		31,761			76,104

CASH, end of the period	$	32,388		$	133,388

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	17,513		$	117,301
Income taxes	$	-		$	-

Non-cash investing and financing activities:
Conversion of Series E to common stock	$	-		$	5,056,635
Conversion of Series F to common stock	$	-		$	541,258
Debt discounts for issuance costs, warrants and derivatives	$	406,846		$	1,342,957
Issuance of common stock for conversion of convertible notes and accrued interest	$	72,774		$	9,922
Accrued and deemed dividends	$	79,881		$	574,705

See accompanying condensed notes to unaudited consolidated financial statements.

ADHERA THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

(Unaudited)

NOTE 1 – ORGANIZATION AND BUSINESS OPERATIONS

Adhera Therapeutics, Inc. and its wholly-owned subsidiaries(collectively “Adhera,” “we”, or the “Company”), historically focused on drug development and commercialization of “small molecule” drugs to treat Parkinson’s disease (PD) and Type 1 diabetes. More recently, as it has struggled to operate with very limited working capital, it has been seeking to license a diabetes drug to a publicly-traded Nasdaq company as described in Note 9.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and note disclosures required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. This quarterly report should be read in conjunction with the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The information furnished in this Report reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations and cash flows for each period presented. The results of operations for the nine months ended September 30, 2023, are not necessarily indicative of the results for the year ending December 31, 2023, or for any future period.

Principles of Consolidation

The consolidated financial statements include the accounts of Adhera Therapeutics, Inc. and the wholly-owned subsidiaries and eliminates any inter-company balances and transactions. All wholly-owned subsidiaries of Adhera Therapeutics, Inc. are inactive.

Going Concern and Management’s Liquidity Plans

The accompanying unaudited condensed consolidated financial statements have been prepared on the basis that the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. As of September 30, 2023, the Company had approximately $32,000 of cash and has negative working capital of approximately $26.3 million.

The Company has no revenues and has incurred recurring losses and negative cash flows from operations since inception and has funded its operating losses through the sale of common stock, preferred stock, warrants to purchase common stock, convertible notes and secured promissory notes. The Company incurred a net loss and net cash used in operating activities of $4,150,375 and $655,155, respectively, for the nine months ended September 30, 2023. The Company had a stockholders’ deficit of approximately $26.3 million and an accumulated deficit of approximately $60.0 million as of September 30, 2023.

In addition, to the extent that the Company continues its business operations, the Company anticipates that it will continue to have negative cash flows from operations, at least into the near future. However, the Company cannot be certain that it will be able to obtain such funds required for our operations at terms acceptable to the Company or at all. General market conditions, as well as market conditions for companies in the Company’s financial and business position, as well as the ongoing issue arising from the COVID-19 pandemic, the war in Ukraine, the war in Israel, federal bank failures or other world-wide events, may make it difficult for the Company to seek financing from the capital markets, and the terms of any financing may adversely affect the holdings or the rights of its stockholders. If the Company is unable to obtain additional financing in the future, it will cease operations. . The Company plans to increase working capital by managing its cash flows and expenses, divesting development assets and raising additional capital through private or public equity or debt financing. There can be no assurance that such financing or partnerships will be available on terms which are favorable to the Company or at all. These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the issuance date of this Report. The consolidated financial statements do not contain any adjustments that might result from the resolution of any of the above uncertainties.

ADHERA THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

(Unaudited)

Reverse Stock Split

On September 30, 2022, the Company filed a Certificate of Amendment to the Certificate of Incorporation with the Delaware Secretary of State to effect a reverse stock split of all outstanding shares of the Company’s common stock at a ratio of 1-for-20. On October 5, 2022, the Company effected the 1-for-20 reverse stock split of its common stock. The reverse stock split did not cause an adjustment to the par value or the authorized shares of the common stock. As a result of the reverse stock split, the Company retroactively adjusted all outstanding common stock equivalents including options, warrants, convertible notes and other agreements with third parties.

All disclosures of common shares and per common share data in the accompanying consolidated financial statements and related notes reflect the reverse stock split for all periods presented.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. As of September 30, 2023, the Company had approximately $32,000 in cash.

The Company deposits its cash with a major financial institution that may at times exceed the federally insured limit. As of September 30, 2023, the Company’s cash balance did not exceed the federal deposit insurance limit.

Use of Estimates

The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Significant areas requiring the use of management estimates include accruals related to our operating activity including legal and other consulting expenses, the fair value of non-cash equity-based issuances, the fair value of derivative liabilities, and the valuation allowance on deferred tax assets. Actual results could differ materially from such estimates under different assumptions or circumstances.

Fair Value of Financial Instruments

Adhera Therapeutics, Inc. [ATRX] Filings
10-Q	[2023-11-20]
10-Q	[2023-08-21]
10-Q	[2023-05-22]
10-K	[2023-03-31]
S-1	[2022-12-02]
10-Q	[2022-11-14]
10-Q	[2022-08-15]
10-Q	[2022-05-16]
10-K	[2022-04-15]
10-Q	[2021-11-22]
10-Q	[2021-08-23]
10-Q	[2021-05-24]
10-K	[2021-04-07]
10-Q	[2020-11-18]
10-Q	[2020-08-19]
10-Q	[2020-07-06]
10-K	[2020-04-14]
10-Q	[2019-11-19]
10-Q	[2019-08-14]
10-Q	[2019-05-15]
10-K	[2019-04-16]
10-Q	[2018-11-19]
10-Q	[2018-08-10]
10-Q	[2018-05-18]
10-K	[2018-04-17]
10-Q	[2017-11-13]
10-Q	[2017-08-14]
S-1	[2017-06-26]
S-1	[2017-05-30]
10-Q	[2017-05-15]
10-K	[2017-03-31]
10-Q	[2016-11-21]
10-Q	[2016-08-15]
10-Q	[2016-05-16]
10-K	[2016-03-30]
10-Q	[2015-11-16]
S-1	[2015-08-28]
10-Q	[2015-08-13]
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S-1	[2014-12-03]
10-Q	[2014-11-14]
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10-Q	[2014-08-07]
10-Q	[2014-08-07]
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S-1	[2012-12-19]
10-Q	[2012-12-05]
10-Q	[2012-12-05]
10-Q	[2012-12-05]
10-K	[2012-10-10]