2023 Q3 Form 10-Q Financial Statement

#000121390023070884 Filed on August 25, 2023

View on sec.gov

Income Statement

Concept 2023 Q3 2023 Q2 2022 Q4
Revenue $51.19K $59.53K $511.2K
YoY Change -90.84% 31.79%
Cost Of Revenue $71.20K $184.0K $432.4K
YoY Change -76.89% 111.18%
Gross Profit -$20.01K -$124.4K $78.84K
YoY Change -107.99% 196.67%
Gross Profit Margin -39.09% -209.04% 15.42%
Selling, General & Admin $1.314M $462.8K $1.304M
YoY Change 56.54%
% of Gross Profit 1653.63%
Research & Development $263.7K $203.9K $525.6K
YoY Change -44.73% -11.89%
% of Gross Profit 666.62%
Depreciation & Amortization $5.485K $6.901K $9.240K
YoY Change -76.69% 0.0%
% of Gross Profit 11.72%
Operating Expenses $1.577M $666.7K $1.829M
YoY Change 19.83% 4.62%
Operating Profit -$1.522M -$788.0K -$1.750M
YoY Change 42.79% 14.71%
Interest Expense $40.11K $1.100M -$4.504M
YoY Change -101.27% 21.44%
% of Operating Profit
Other Income/Expense, Net -$70.49K -$1.064M -$43.24K
YoY Change 136.46%
Pretax Income $4.174M -$3.344M -$6.177M
YoY Change -198.0% 55.53%
Income Tax $63.00 $63.00 $500.00
% Of Pretax Income 0.0%
Net Earnings $4.183M -$3.337M -$6.182M
YoY Change -198.24% 55.41%
Net Earnings / Revenue 8172.22% -5604.64% -1209.23%
Basic Earnings Per Share $0.77 -$1.40
Diluted Earnings Per Share $0.77 -$1.40 -$1.11
COMMON SHARES
Basic Shares Outstanding 5.800M shares 2.378M shares
Diluted Shares Outstanding 5.319M shares 2.378M shares

Balance Sheet

Concept 2023 Q3 2023 Q2 2022 Q4
SHORT-TERM ASSETS
Cash & Short-Term Investments $2.219M $19.07K $264.9K
YoY Change 404.91%
Cash & Equivalents $2.219M $19.07K $264.9K
Short-Term Investments
Other Short-Term Assets $5.940M $5.065M $269.6K
YoY Change 3572.06%
Inventory $598.3K $465.5K $518.6K
Prepaid Expenses
Receivables $138.0K $125.5K $45.97K
Other Receivables $0.00 $0.00 $0.00
Total Short-Term Assets $8.895M $5.675M $1.099M
YoY Change 484.55%
LONG-TERM ASSETS
Property, Plant & Equipment $3.836K $7.498K $33.95K
YoY Change -92.76%
Goodwill
YoY Change
Intangibles $225.0K $206.4K $164.3K
YoY Change
Long-Term Investments
YoY Change
Other Assets $1.431M
YoY Change
Total Long-Term Assets $255.4K $1.684M $198.2K
YoY Change 52.95%
TOTAL ASSETS
Total Short-Term Assets $8.895M $5.675M $1.099M
Total Long-Term Assets $255.4K $1.684M $198.2K
Total Assets $9.150M $7.359M $1.297M
YoY Change 441.87%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $271.6K $1.058M $758.7K
YoY Change -40.19%
Accrued Expenses $26.80K $39.47K $13.00K
YoY Change -20.78%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $23.54M $0.00
YoY Change
Long-Term Debt Due $8.770K $555.0K $21.33M
YoY Change -43.33%
Total Short-Term Liabilities $2.481M $28.86M $23.92M
YoY Change 18.99%
LONG-TERM LIABILITIES
Long-Term Debt $24.65M $1.270M
YoY Change
Other Long-Term Liabilities $0.00 $0.00 $255.0K
YoY Change -100.0%
Total Long-Term Liabilities $152.6K $1.373M $1.525M
YoY Change -99.3%
TOTAL LIABILITIES
Total Short-Term Liabilities $2.481M $28.86M $23.92M
Total Long-Term Liabilities $152.6K $1.373M $1.525M
Total Liabilities $2.634M $30.24M $24.87M
YoY Change -88.72%
SHAREHOLDERS EQUITY
Retained Earnings -$30.57M -$34.75M -$28.82M
YoY Change
Common Stock $580.00 $238.00 $239.00
YoY Change
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $6.554M -$22.30M -$23.58M
YoY Change
Total Liabilities & Shareholders Equity $9.150M $7.359M $1.297M
YoY Change 441.87%

Cashflow Statement

Concept 2023 Q3 2023 Q2 2022 Q4
OPERATING ACTIVITIES
Net Income $4.183M -$3.337M -$6.182M
YoY Change -198.24% 55.41%
Depreciation, Depletion And Amortization $5.485K $6.901K $9.240K
YoY Change -76.69% 0.0%
Cash From Operating Activities -$3.753M -$313.5K -$65.98K
YoY Change 297.57%
INVESTING ACTIVITIES
Capital Expenditures $27.91K $18.13K $58.64K
YoY Change 1773.15%
Acquisitions
YoY Change
Other Investing Activities
YoY Change
Cash From Investing Activities -$27.91K -$18.13K -$58.64K
YoY Change 1773.15%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities 5.971M 321.1K -68.63K
YoY Change 362.75%
NET CHANGE
Cash From Operating Activities -3.753M -313.5K -65.98K
Cash From Investing Activities -27.91K -18.13K -58.64K
Cash From Financing Activities 5.971M 321.1K -68.63K
Net Change In Cash 2.190M -10.55K -193.3K
YoY Change 535.1%
FREE CASH FLOW
Cash From Operating Activities -$3.753M -$313.5K -$65.98K
Capital Expenditures $27.91K $18.13K $58.64K
Free Cash Flow -$3.781M -$331.6K -$124.6K
YoY Change 299.9%

Facts In Submission

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<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top"> <td style="width: 0.25in"><b>1.</b></td><td><b>NATURE OF OPERATIONS</b></td></tr></table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b> </b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">60 Degrees Pharmaceuticals, Inc. was incorporated in Delaware on June 1, 2022 and merged on the same day with 60 Degrees Pharmaceuticals, LLC, a District of Columbia limited liability company organized on September 9, 2010 (“60P LLC”). 60 Degrees Pharmaceuticals, Inc. and its subsidiaries (referred to collectively as the “Company”, “60P”, or “60 Degrees Pharmaceuticals”) is a specialty pharmaceutical company that specializes in the development and marketing of new medicines for the treatment and prevention of infectious diseases. 60P achieved FDA approval of its lead product, ARAKODA® (tafenoquine), for malaria prevention, in 2018. Currently, 60P’s pipeline under development covers development programs for COVID-19, fungal, tick-borne, and other viral diseases utilizing three of the Company’s future products: (i) new products that contain the Arakoda regimen of tafenoquine; (ii) new products that contain tafenoquine; and (iii) celgosivir. The Company’s headquarters are located in Washington, D.C., with a majority-owned subsidiary in Australia.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><span style="text-decoration:underline">Initial Public Offering</span></b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On July 14, 2023, the Company closed its initial public offering consisting of 1,415,095 units at a price of $5.30 per unit for approximately $6,454,300 in net proceeds, after deducting the underwriting discount and commission and other estimated offering expenses payable by the Company. Each unit consisted of one share of common stock of the Company, par value $0.0001 per share, one tradeable warrant to purchase one share of common stock at an exercise price of $6.095 per share, and one non-tradeable warrant to purchase one share of the Company’s common stock at an exercise price of $6.36 per share (the “IPO”).</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The units were offered and sold pursuant to the Company’s Registration Statement on Form S-1, as amended (File No. 333-269483), originally filed with the Securities and Exchange Commission (the “SEC”) on January 31, 2023 (the “Registration Statement”) and the final prospectus filed with the Commission pursuant to Rule 424(b)(4) of the Securities Act of 1933, as amended. The Registration Statement was declared effective by the Commission on July 11, 2023. The common stock and tradeable warrants began trading on The Nasdaq Capital Market on July 12, 2023 under the symbols “SXTP” and “SXTPW,” respectively. The closing of the IPO occurred on July 14, 2023.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of the completion of the IPO, among other things, certain of the Company’s then-outstanding convertible debt were converted into shares of common stock. See Notes 9 and 12 for more information.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b> </b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><span style="text-decoration:underline">Going Concern</span></b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company’s financial statements are prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of obligations in the normal course of business. However, the Company has not demonstrated the ability to generate enough revenues to date to cover operating expenses and has accumulated losses to date. This condition, among others, raises substantial doubt about the ability of the Company to continue as a going concern for one year from the date these financial statements are issued.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In view of these matters, continuation as a going concern is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to meet its financial requirements, raise additional capital, and the success of its future operations. The financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should the Company not continue as a going concern.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Management plans to fund operations of the Company through third party and related party debt/advances, private placement of restricted securities and the issuance of stock in a public offering until such a time as a business combination or other profitable investment may be achieved.</p>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><span style="text-decoration:underline">Reclassifications</span></b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no material effect on the consolidated results of operations and comprehensive loss, shareholders’ and members’ deficit, or cash flows.</p>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><span style="text-decoration:underline">Concentrations</span></b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, accounts receivable, inventory purchases, and lending.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Significant customers represent any customer whose business makes up 10% of our receivables or revenues. 100% of receivables as of June 30, 2023 (consisting of two significant customers at 76% and 24%) and 100% of total net revenues for the three months ended June 30, 2023 were generated by one significant customer (100% for the three months ended June 30, 2022 consisting of one significant customer). At December 31, 2022, 98% of the Company’s receivables, consisting of three customers and two significant at 59% and 39%, were generated from significant customers. 100% of the revenues were generated by the Company from one significant customer during the six months ended June 30, 2023 (100% for the six months ended June 30, 2022 consisting of one significant customer). Currently, the Company has exclusive relationships with distributors in Australia and Europe.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">A failure to perform by any of our current distributors would create disruption for patients in those markets. The US government has historically been the Company’s largest customer through a purchase support contract and a clinical study. Both of those activities ended during 2022 and near-term receivables and revenues from the government are not anticipated to be significant.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Since the Company first started working on tafenoquine all inventory has been acquired in a collaborative relationship from a sole vendor. Should the vendor cease to supply tafenoquine it would take significant costs and efforts to rebuild the supply chain with a new sole vendor sourcing the active pharmaceutical ingredient (“API”).</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of June 30, 2023, 84% (85% at December 31, 2022) of the Company’s non-related party debt is held by Knight Therapeutics, the senior secured lender and also a publicly traded Canadian company. The amount of senior secured debt with Knight Therapeutics currently limits the Company’s ability to access additional credit and management has been informed that additional lending with Knight Therapeutics is not currently possible.</p>
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