UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2024

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

For the transition period from _______ to _______

Commission File Number: 001-41184

ZYVERSA THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

Delaware		86-2685744
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2200 N. Commerce Parkway, Suite 208 Weston, FL 33326		33326
(Address of registrant’s principal executive offices)		(Zip Code)

(754) 231-1688
(Registrant’s telephone number, including area code)

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

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, $0.0001 par value per share		ZVSA		The Nasdaq Capital Market

Securities registered pursuant to Section 12(g) 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 to Section 13(a) of the Exchange Act. ☐

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

As of August 8, 2024, the number of shares outstanding of the registrant’s common stock, $0.0001 par value per share, was 1,029,196.

Except as otherwise indicated, all share and per share information in this Report gives effect to the reverse stock split of the registrant’s outstanding common stock at a ratio of one-for-ten shares, which was effected as of 4:01 p.m. Eastern Time on April 25, 2024.

ZYVERSA THERAPEUTICS, INC.

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PART I FINANCIAL INFORMATION	1

Item 1. Financial Statements	1

Condensed Consolidated Balance Sheets as of June 30, 2024 (unaudited) and December 31, 2023	1

Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and June 30, 2023	2

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2024 and June 30, 2023	3

Unaudited Condensed Consolidated Statements of Cash flows for the Six Months Ended June 30, 2024 and June 30, 2023	4

Notes to Unaudited Condensed Consolidated Financial Statements	5

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	14

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.	23

ITEM 4. Controls and Procedures.	23

PART II - OTHER INFORMATION	24

ITEM 1. Legal Proceedings.	24

ITEM 1A. Risk Factors.	24

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.	24

ITEM 3. Defaults Upon Senior Securities.	24

ITEM 4. Mine Safety Disclosures.	24

ITEM 5. Other Information.	24

ITEM 6. Exhibits.	25

SIGNATURES	26

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

ZYVERSA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2024			2023
	(Unaudited)
Assets

Current Assets:
Cash	$	119,486		$	3,137,674
Prepaid expenses and other current assets		521,906			215,459
Total Current Assets		641,392			3,353,133
Equipment, net		1,733			6,933
In-process research and development		18,647,903			18,647,903
Vendor deposit		178,476			98,476
Operating lease right-of-use asset		-			7,839
Total Assets	$	19,469,504		$	22,114,284
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	8,316,506		$	8,431,583
Accrued expenses and other current liabilities		1,678,322			1,754,533
Operating lease liability		-			8,656
Total Current Liabilities		9,994,828			10,194,772
Deferred tax liability		854,621			844,914
Total Liabilities		10,849,449			11,039,686

Commitments and contingencies (Note 6)		-			-
Stockholders’ Equity:
Preferred stock, $0.0001 par value, 1,000,000 shares authorized:
Series A preferred stock, 8,635 shares designated, 50 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		-			-
Series B preferred stock, 5,062 shares designated, 5,062 shares issued and outstanding as of June 30, 2024 and December 31, 2023		1			1
Preferred stock value		1			1
Common stock, $0.0001 par value, 250,000,000 shares authorized;
834,903 and 405,212 shares issued at June 30, 2024 and December 31, 2023, respectively, and 834,896 and 402,205 shares outstanding as of June 30, 2024 and December 31, 2023, respectively		83			40
Common stock value		83			40
Additional paid-in-capital		117,436,743			114,300,849
Accumulated deficit		(108,809,604	)		(103,219,124	)
Treasury stock, at cost, 7 shares at June 30, 2024 and December 31, 2023, respectively		(7,168	)		(7,168	)
Total Stockholders’ Equity		8,620,055			11,074,598

Total Liabilities and Stockholders’ Equity	$	19,469,504		$	22,114,284

The accompanying notes are an integral part of these condensed consolidated financial statements.

ZYVERSA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	2024			2023			2024			2023
	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2024			2023			2024			2023
Operating Expenses:
Research and development	$	709,049		$	1,220,576		$	1,221,987		$	2,276,519
General and administrative		2,044,929			3,929,225			4,358,627			7,465,362
Impairment of in-process research and development		-			69,280,171			-			69,280,171
Impairment of goodwill		-			11,895,033			-			11,895,033
Total Operating Expenses		2,753,978			86,325,005			5,580,614			90,917,085
Loss From Operations		(2,753,978	)		(86,325,005	)		(5,580,614	)		(90,917,085	)

Other (Income) Expense:
Interest (income) expense		58			314			159			(765	)

Pre-Tax Net Loss		(2,754,036	)		(86,325,319	)		(5,580,773	)		(90,916,320	)
Income tax (provision) benefit		(9,707	)		7,812,226			(9,707	)		8,859,277
Net Loss		(2,763,743	)		(78,513,093	)		(5,590,480	)		(82,057,043	)
Deemed dividend to preferred stockholders		-			(7,915,836	)		-			(7,915,836	)
Net Loss Attributable to Common Stockholders	$	(2,763,743	)	$	(86,428,929	)	$	(5,590,480	)	$	(89,972,879	)

Net Loss Per Share
- Basic and Diluted	$	(3.31	)	$	(1,694.12	)	$	(7.67	)	$	(2,329.76	)
Weighted Average Number of Common Shares Outstanding
- Basic and Diluted		834,915			51,017			729,306			38,619

The accompanying notes are an integral part of these condensed consolidated financial statements.

ZYVERSA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For The Three and Six Months Ended June 30, 2024 and 2023

(Unaudited)

	Shares		Amount		Shares		Amount		Shares		Amount		Shares			Amount			Capital			Deficit			Equity
	For the Three and Six Months Ended June 30, 2024
	Series A Preferred Stock				Series B Preferred Stock				Common Stock				Treasury Stock						Additional Paid-In			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Shares			Amount			Capital			Deficit			Equity

Balance - December 31, 2023		50	$	-		5,062	$	1		405,212	$	40		(7	)	$	(7,168	)	$	114,300,849		$	(103,219,124	)	$	11,074,598
Exercise of warrants		-		-		-		-		213,800		21		-			-			2,672,479			-			2,672,500
Exercise of pre-funded warrants		-		-		-		-		131,481		13		-			-			(13	)		-			-
Issuance of common stock pursuant to vendor agreements		-		-		-		-		9,000		1		-			-			79,199			-			79,200
Round up share adjustment due to reverse split		-		-		-		-		75,410		8		-			-			(8	)		-			-
Stock-based compensation		-		-		-		-		-		-		-			-			223,573			-			223,573
Net loss		-		-		-		-		-		-		-			-			-			(2,826,737	)		(2,826,737	)
Balance - March 31, 2024		50		-		5,062		1		834,903		83		(7	)		(7,168	)		117,276,079			(106,045,861	)		11,223,134
Stock-based compensation		-		-		-		-		-		-		-			-			160,664			-			160,664
Net loss		-		-		-		-		-		-		-			-			-			(2,763,743	)		(2,763,743	)
Balance - June 30, 2024		50	$	-		5,062	$	1		834,903	$	83		(7	)	$	(7,168	)	$	117,436,743		$	(108,809,604	)	$	8,620,055

	For the Three and Six Months Ended June 30, 2023
	Series A Preferred Stock						Series B Preferred Stock				Common Stock				Treasury Stock						Additional Paid-In			Accumulated			Total Stockholders’
	Shares			Amount			Shares		Amount		Shares		Amount		Shares			Amount			Capital			Deficit			Equity

Balance - December 31, 2022		8,635		$	1			5,062	$	1	$	25,760	$	3		-			-			104,584,170			(4,921,178	)		99,662,997
Reclassification of formerly redeemable common stock		-			-			-		-		188		-		-			-			331,331			-			331,331
Issuance of common stock pursuant to vendor agreements		-			-			-		-		371		-		-			-			395,200			-			395,200
Registration costs associated with preferred stock issuance		-			-			-		-		-		-		-			-			(34,674	)		-			(34,674	)
Stock-based compensation		-			-			-		-		-		-		-			-			287,461			-			287,461
Net loss		-			-			-		-		-		-		-			-			-			(3,543,950	)		(3,543,950	)

Balance - March 31, 2023		8,635			1			5,062		1		26,319		3		-			-			105,563,488			(8,465,128	)		97,098,365
Balance		8,635			1			5,062		1		26,319		3		-			-			105,563,488			(8,465,128	)		97,098,365
Registered offering of common stock [1]		-			-			-		-		31,473		3		-			-			9,831,016			-			9,831,019
Redemption of Series A Preferred Stock		(8,400	)		(1	)		-		-		-		-		-			-			(10,080,000	)		-			(10,080,001	)
Conversion of Series A Preferred Stock into common stock		(35	)		-			-		-		50		-		-			-			-			-			-
Shares issued as consideration for extension of lock-up period		-			-			-		-		8,698		1		-			-			1,156,777			-			1,156,778
Issuance of common stock pursuant to vendor agreements		-			-			-		-		1,086		-		-			-			210,000			-			210,000
Stock-based compensation		-			-			-		-		-		-		-			-			365,742			-			365,742
Treasury stock acquired, at cost		-			-			-		-		-		-		(7	)		(7,168	)		-			-			(7,168	)
Net loss		-			-			-		-		-		-		-			-			-			(78,513,093	)		(78,513,093	)

Balance - June 30, 2023		200		$	-			5,062	$	1		67,626	$	7		(7	)	$	(7,168	)	$	107,047,023		$	(86,978,221	)	$	20,061,642
Balance		200		$	-			5,062	$	1		67,626	$	7		(7	)	$	(7,168	)	$	107,047,023		$	(86,978,221	)	$	20,061,642

The accompanying notes are an integral part of these condensed consolidated financial statements.

ZYVERSA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	2024			2023
	For the Six Months Ended June 30,
	2024			2023

Cash Flows From Operating Activities:
Net loss	$	(5,590,480	)	$	(82,057,043	)
Adjustments to reconcile net loss to net cash used in operating activities:
Impairment of in-process research and development		-			69,280,171
Impairment of goodwill		-			11,895,033
Stock-based compensation		384,237			653,203
Issuance of common stock pursuant to vendor agreements		79,200			605,200
Shares issued as consideration for extension of lock-up period		-			1,156,778
Depreciation of fixed assets		5,200			5,200
Non-cash rent expense		7,839			44,473
Deferred tax provision (benefit)		9,707			(8,882,516	)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(306,447	)		(661,564	)
Security deposit		-			46,659
Vendor deposits		(80,000	)		235,000
Accounts payable		(115,077	)		2,118,388
Operating lease liability		(8,656	)		(49,131	)
Accrued expenses and other current liabilities		(76,211	)		613,077
Net Cash Used In Operating Activities		(5,690,688	)		(4,997,072	)


Cash Flows From Financing Activities:
Proceeds from issuance of common stock in public offering		-			11,015,500
Registration and issuance costs associated with common stock issuance		-			(1,213,657	)
Redemption of Series A Preferred Stock		-			(10,465,610	)
Exercise of warrants		2,672,500			-
Purchase of treasury stock		-			(7,168	)
Registration and issuance costs associated with preferred stock issuance		-			(5,500	)

Net Cash Provided By (Used In) Financing Activities		2,672,500			(676,435	)

Net Decrease in Cash		(3,018,188	)		(5,673,506	)

Cash - Beginning of Period		3,137,674			5,902,199

Cash - End of Period	$	119,486		$	228,693

Supplemental Disclosures of Cash Flow Information:
Reclassification of formerly redeemable common stock	$	-		$	331,331
Accounts payable for deferred offering costs	$	-		$	44,892

The accompanying notes are an integral part of these condensed consolidated financial statements.

ZYVERSA THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

Note 1 – Business Organization, Nature of Operations and Basis of Presentation

Organization and Operations

ZyVersa Therapeutics, Inc. (“ZyVersa” and the “Company”) is a clinical stage biopharmaceutical company leveraging proprietary technologies to develop first-in-class drugs for patients with chronic renal or inflammatory diseases with high unmet medical needs. The Company’s mission is to develop drugs that optimize health outcomes and improve patients’ quality of life.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed consolidated financial statements of the Company as of June 30, 2024 and for the three and six months ended June 30, 2024 and 2023. The results of operations for the six months ended June 30, 2024 are not necessarily indicative of the operating results for the full year. It is suggested that these unaudited condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (“SEC”) on March 25, 2024 and as amended on May 15, 2024.

On December 4, 2023, the Company effected a reverse stock split of its common stock at a ratio of 1-for-35 (the “2023 Reverse Split”). Upon the effectiveness of the 2023 Reverse Split, every 35 issued shares of common stock were reclassified and combined into one share of common stock. In addition, the number of shares of common stock issuable upon the exercise of the Company’s equity awards, convertible securities and warrants was proportionally decreased, and the corresponding conversion price or exercise price was proportionally increased. No fractional shares were issued as a result of the 2023 Reverse Split.

On April 25, 2024, the Company effected a reverse stock split of its common stock at a ratio of 1-for-10 (the “2024 Reverse Split”). Upon the effectiveness of the 2024 Reverse Split, every 10 issued shares of common stock were reclassified and combined into one share of common stock. In addition, the number of shares of common stock issuable upon the exercise of the Company’s equity awards, convertible securities and warrants was proportionally decreased, and the corresponding conversion price or exercise price was proportionally increased. No fractional shares were issued as a result of the 2024 Reverse Split.

Accordingly, all share and per share amounts for all periods presented in these financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect the 2023 Reverse Split and the 2024 Reverse Split and adjustment of the conversion price or exercise price of each outstanding equity award, convertible security and warrant as if the transaction had occurred as of the beginning of the earliest period presented. See Note 7 – Stockholders’ Permanent and Temporary Equity – Reverse Stock Split.

ZYVERSA THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

Note 2 - Going Concern and Management’s Plans

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

As of June 30, 2024, the Company had cash of approximately $0.1 million and a working capital deficit of approximately $9.3 million. During the six months ended June 30, 2024, the Company incurred a net loss of approximately $5.6 million and used cash in operations of approximately $5.7 million. The Company has an accumulated deficit of approximately $108.8 million as of June 30, 2024.

The Company has not yet achieved profitability and expects to continue to incur cash outflows from operations. It is expected that its research and development and general and administrative expenses will continue to increase and, as a result, the Company will eventually need to generate significant product revenues to achieve profitability.

Consequently, the Company will be required to raise additional funds through equity or debt financing. On August 1, 2024, the Company received approximately $0.8 million upon the exercise of warrants. See Note 8 – Subsequent Events – Stock Warrants for additional details. Management believes that the Company has access to capital resources and continues to evaluate additional financing opportunities; however, there can be no assurance that it will be successful in securing additional capital or that the Company will be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds the Company might raise will enable the Company to complete its development initiatives or attain profitable operations. The aforementioned conditions raise substantial doubt about the Company’s ability to continue as a going concern for at least one year from the issuance date of these financial statements.

Note 3 – Summary of Significant Accounting Policies

Since the date the Company’s December 31, 2023 financial statements were issued in its 2023 Annual Report on Form 10-K, there have been no material changes to the Company’s significant accounting policies.

Use of Estimates

Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and the amounts disclosed in the related notes to the financial statements. The Company bases its estimates and judgments on historical experience and on various other assumptions that it believes are reasonable under the circumstances. The amounts of assets and liabilities reported in the Company’s balance sheets and the amounts of expenses reported for each of the periods presented are affected by estimates and assumptions, which are used for, but not limited to, fair value calculations for equity securities, derivative liabilities, share based compensation and acquired intangible assets, as well as establishment of valuation allowances for 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 actual results could differ from those estimates.

ZYVERSA THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

Net Loss Per Common Share

Basic net loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted net income per common share is computed by dividing net income by the weighted average number of common and dilutive common-equivalent shares outstanding during each period.

The following table sets forth the outstanding potentially dilutive securities that have been excluded from the calculation of diluted net loss per share because to do so would be anti-dilutive:

SEC Form 10-Q filed by ZyVersa Therapeutics Inc.