UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.Washington, DC 20549
FORM 10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2017
OR
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OR | |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 |
For the |
For the transition period from to
Commission file number 000-52091File Number: 001-39563
GEOVAX LABS,, INC.
(Exact name of Registrantregistrant as specified in its charter)
Delaware |
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(State or other jurisdiction | ( | |
of incorporation or organization) | ||
1900 Lake Park Drive, | Suite 380 | |
| 30080 | |
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(Address of principal executive offices) | (Zip Code) |
(678) 384-7220
(Registrant’sRegistrant’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 $0.001 par value | GOVX | The Nasdaq Capital Market |
Warrants to Purchase Common Stock | GOVXW | The Nasdaq Capital Market |
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 requirementsrequirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-acceleratednon‑accelerated filer, 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 | |||
| ☒ | Emerging growth company | ☐ | |
Smaller reporting 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 ☒
As of November 9, 2017, 83,913,900of August 3, 2022, 24,744,043 shares of the Registrant’s common stock, $.001 par value, were issued and outstanding.
TABLE OF CONTENTS
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PART I – FINANCIAL INFORMATION | |||
Item 1 | Condensed Consolidated Financial Statements: | ||
Condensed Consolidated Balance Sheets as of | 1 | ||
Condensed Consolidated Statements of Operations for the three-month and | 2 | ||
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three-month and six-month periods ended June 30, 2022 and 2021 (unaudited) | 3 | ||
Condensed Consolidated Statements of Cash Flows for the | |||
Notes to Condensed Consolidated Financial Statements (unaudited) | |||
Item 2 | Management's Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3 | Quantitative and Qualitative Disclosures about Market Risk |
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Item 4 | Controls and Procedures |
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PART II – OTHER INFORMATION | |||
Item 1 | Legal Proceedings |
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Item 1A | Risk Factors |
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Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds |
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Item 3 | Defaults Upon Senior Securities |
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Item 4 | Mine Safety Disclosures |
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Item 5 | Other Information |
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Item 6 | Exhibits |
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SIGNATURES |
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Part I -- FINANCIAL INFORMATION
Item 1Financial Statements
GEOVAX LABS, INC. | ||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
September 30, | December 31, | |||||||
2017 | 2016 | |||||||
ASSETS | (unaudited) | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 343,826 | $ | 454,030 | ||||
Grant funds receivable | 89,895 | 28,074 | ||||||
Prepaid expenses and other current assets | 12,420 | 62,275 | ||||||
Total current assets | 446,141 | 544,379 | ||||||
Property and equipment, net | 38,484 | 54,828 | ||||||
Deposits | 11,010 | 11,010 | ||||||
Total assets | $ | 495,635 | $ | 610,217 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 118,131 | $ | 75,607 | ||||
Accrued expenses (Note 6) | 613,411 | 294,240 | ||||||
Total current liabilities | 731,542 | 369,847 | ||||||
Commitments (Note 7) | ||||||||
Stockholders’ equity (deficiency): | ||||||||
Preferred stock, $.01 par value: | ||||||||
Authorized shares – 10,000,000 | ||||||||
Series B convertible preferred stock, $1,000 stated value; 100 shares issued and outstanding at September 30, 2017 and December 31, 2016 | 76,095 | 76,095 | ||||||
Series C convertible preferred stock, $1,000 stated value; 2,690 and 2,868 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 882,348 | 940,705 | ||||||
Series D convertible preferred stock, $1,000 stated value; 1,000 and -0- shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 980,000 | - | ||||||
Common stock, $.001 par value: | ||||||||
Authorized shares – 600,000,000 and 300,000,000 at September 30, 2017 and December 31, 2016, respectively | ||||||||
Issued and outstanding shares – 70,913,900 and 55,235,233 at September 30, 2017 and December 31, 2016, respectively | 70,914 | 55,235 | ||||||
Additional paid-in capital | 35,155,343 | 34,914,963 | ||||||
Accumulated deficit | (37,400,607 | ) | (35,746,628 | ) | ||||
Total stockholders’ equity (deficiency) | (235,907 | ) | 240,370 | |||||
Total liabilities and stockholders’ equity | $ | 495,635 | $ | 610,217 |
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 30,902,454 | $ | 11,423,870 | ||||
Grant funds receivable | - | 49,006 | ||||||
Prepaid expenses | 1,135,780 | 156,240 | ||||||
Total current assets | 32,038,234 | 11,629,116 | ||||||
Property and equipment, net | 214,783 | 156,938 | ||||||
Other assets | 987,508 | 11,010 | ||||||
Total assets | $ | 33,240,525 | $ | 11,797,064 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 237,315 | $ | 2,057,534 | ||||
Accrued expenses | 3,130,553 | 3,377,826 | ||||||
Total current liabilities | 3,367,868 | 5,435,360 | ||||||
Other liabilities | 2,000,000 | 2,000,000 | ||||||
Total liabilities | 5,367,868 | 7,435,360 | ||||||
Commitments (Note 4) | ||||||||
Stockholders’ equity: | ||||||||
Common stock, $.001 par value: | ||||||||
Authorized shares – 600,000,000 Issued and outstanding shares – 16,238,739 and 6,381,541 at June 30, 2022 and December 31, 2021, respectively | 16,239 | 6,382 | ||||||
Additional paid-in capital | 96,901,530 | 68,731,220 | ||||||
Accumulated deficit | (69,045,112 | ) | (64,375,898 | ) | ||||
Total stockholders’ equity | 27,872,657 | 4,361,704 | ||||||
Total liabilities and stockholders’ equity | $ | 33,240,525 | $ | 11,797,064 |
See accompanying notes to condensed consolidated financial statements.
GEOVAX LABS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Grant and collaboration revenue | $ | 247,994 | $ | 440,106 | $ | 895,866 | $ | 653,986 | ||||||||
Operating expenses: | ||||||||||||||||
Research and development | 498,200 | 683,939 | 1,568,093 | 1,519,519 | ||||||||||||
General and administrative | 340,143 | 220,707 | 985,001 | 1,472,030 | ||||||||||||
Total operating expenses | 838,343 | 904,646 | 2,553,094 | 2,991,549 | ||||||||||||
Loss from operations | (590,349 | ) | (464,540 | ) | (1,657,228 | ) | (2,337,563 | ) | ||||||||
Other income: | ||||||||||||||||
Interest income | 1,592 | 340 | 3,249 | 1,249 | ||||||||||||
Total other income | 1,592 | 340 | 3,249 | 1,249 | ||||||||||||
Net loss | $ | (588,757 | ) | $ | (464,200 | ) | $ | (1,653,979 | ) | $ | (2,336,314 | ) | ||||
Basic and diluted: | ||||||||||||||||
Loss per common share | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.03 | ) | $ | (0.06 | ) | ||||
Weighted averages shares outstanding | 67,000,857 | 44,305,161 | 60,757,109 | 38,796,896 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Grant revenue | $ | 0 | $ | 79,708 | $ | 81,526 | $ | 190,125 | ||||||||
Operating expenses: | ||||||||||||||||
Research and development | 1,307,177 | 832,835 | 2,637,721 | 1,435,618 | ||||||||||||
General and administrative | 935,311 | 733,499 | 2,114,335 | 1,805,209 | ||||||||||||
Total operating expenses | 2,242,488 | 1,566,334 | 4,752,056 | 3,240,827 | ||||||||||||
Loss from operations | (2,242,488 | ) | (1,486,626 | ) | (4,670,530 | ) | (3,050,702 | ) | ||||||||
Other income (expense): | ||||||||||||||||
Interest income | 789 | 1,068 | 1,316 | 3,121 | ||||||||||||
Interest expense | 0 | (531 | ) | 0 | (1,286 | ) | ||||||||||
Gain on debt extinguishment | 0 | 172,056 | 0 | 172,056 | ||||||||||||
Total other income (expense) | 789 | 172,593 | 1,316 | 173,891 | ||||||||||||
Net loss | $ | (2,241,699 | ) | $ | (1,314,033 | ) | $ | (4,669,214 | ) | $ | (2,876,811 | ) | ||||
Basic and diluted: | ||||||||||||||||
Net loss per common share | $ | (0.18 | ) | $ | (0.21 | ) | $ | (0.47 | ) | $ | (0.49 | ) | ||||
Weighted average shares outstanding | 12,721,696 | 6,322,799 | 9,931,088 | 5,830,165 |
See accompanying notes to condensed consolidated financial statements.
GEOVAX LABS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
Three-Month and Six-Month Periods Ended June 30, 2022 | ||||||||||||||||||||||||||||
Total | ||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Additional | Accumulated | Stockholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Paid-in Capital | Deficit | Equity | ||||||||||||||||||||||
Balance at December 31, 2021 | 0 | $ | 0 | 6,381,541 | $ | 6,382 | $ | 68,731,220 | $ | (64,375,898 | ) | $ | 4,361,704 | |||||||||||||||
Sale of common stock and warrants for cash | 0 | 0 | 707,484 | 707 | 9,228,541 | 0 | 9,229,248 | |||||||||||||||||||||
Issuance of common stock upon warrant exercise | 0 | 0 | 2,360,000 | 2,360 | (2,336 | ) | 0 | 24 | ||||||||||||||||||||
Stock option expense | - | 0 | - | 0 | 190,191 | 0 | 190,191 | |||||||||||||||||||||
Net loss for the three months ended March 31, 2022 | - | 0 | - | - | - | (2,427,515 | ) | (2,427,515 | ) | |||||||||||||||||||
Balance at March 31, 2022 | - | - | 9,449,025 | 9,449 | 78,147,616 | (66,803,413 | ) | 11,353,652 | ||||||||||||||||||||
Sale of common stock and warrants for cash | - | - | 1,050,000 | 1,050 | 18,496,896 | - | 18,497,946 | |||||||||||||||||||||
Issuance of common stock upon warrant exercises | - | - | 5,671,214 | 5,671 | (5,104 | ) | - | 567 | ||||||||||||||||||||
Issuance of common stock for services | - | - | 68,500 | 69 | 71,931 | - | 72,000 | |||||||||||||||||||||
Stock option expense | - | - | - | 0 | 190,191 | - | 190,191 | |||||||||||||||||||||
Net loss for the three months ended June 30, 2022 | - | - | - | - | - | (2,241,699 | ) | (2,241,699 | ) | |||||||||||||||||||
Balance at June 30, 2022 | - | $ | - | 16,238,739 | $ | 16,239 | $ | 96,901,530 | $ | (69,045,112 | ) | $ | 27,872,657 |
Three-Month and Six-Month Periods Ended June 30, 2021 | ||||||||||||||||||||||||||||
Total | ||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Additional | Accumulated | Stockholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Paid-in Capital | Deficit | Equity | ||||||||||||||||||||||
Balance at December 31, 2020 | 100 | $ | 76,095 | 3,834,095 | $ | 3,834 | $ | 55,294,504 | $ | (45,805,581 | ) | $ | 9,568,852 | |||||||||||||||
Sale of common stock for cash | 0 | 0 | 1,644,000 | 1,644 | 9,407,276 | 0 | 9,408,920 | |||||||||||||||||||||
Issuance of common stock upon warrant exercise | 0 | 0 | 835,900 | 836 | 3,173,320 | 0 | 3,174,156 | |||||||||||||||||||||
Issuance of common stock for services | 0 | 0 | 1,472 | 1 | 5,999 | 0 | 6,000 | |||||||||||||||||||||
Stock option expense | - | - | - | - | 56,190 | - | 56,190 | |||||||||||||||||||||
Net loss for the three months ended March 31, 2021 | - | - | - | - | - | (1,562,778 | ) | (1,562,778 | ) | |||||||||||||||||||
Balance at March 31, 2021 | 100 | 76,095 | 6,315,467 | 6,315 | 67,937,289 | (47,368,359 | ) | 20,651,340 | ||||||||||||||||||||
Repurchase of preferred stock | (100 | ) | (76,095 | ) | 0 | 0 | 75,095 | 0 | (1,000 | ) | ||||||||||||||||||
Issuance of common stock for services | 0 | 0 | 12,235 | 13 | 65,828 | 0 | 65,841 | |||||||||||||||||||||
Stock option expense | - | 0 | - | 0 | 56,190 | 0 | 56,190 | |||||||||||||||||||||
Net loss for the three months ended June 30, 2021 | - | 0 | - | 0 | 0 | (1,314,033 | ) | (1,314,033 | ) | |||||||||||||||||||
Balance at June 30, 2021 | 0 | $ | 0 | 6,327,702 | $ | 6,328 | $ | 68,134,402 | $ | (48,682,392 | ) | $ | 19,458,338 |
See accompanying notes to consolidated financial statements.
GEOVAX LABS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
Six Months Ended June 30, | ||||||||
2022 | 2021 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (4,669,214 | ) | $ | (2,876,811 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 24,538 | 17,871 | ||||||
Stock-based compensation expense | 412,329 | 163,553 | ||||||
Gain on debt extinguishment | 0 | (172,056 | ) | |||||
Changes in assets and liabilities: | ||||||||
Grant funds and other receivables | 49,006 | 182,663 | ||||||
Prepaid expenses and other current assets | (939,487 | ) | 71,319 | |||||
Deposits and other assets | (976,498 | ) | 0 | |||||
Accounts payable and accrued expenses | (2,067,492 | ) | (266,105 | ) | ||||
Total adjustments | (3,497,604 | ) | (2,755 | ) | ||||
Net cash used in operating activities | (8,166,818 | ) | (2,879,566 | ) | ||||
Cash flows from investing activities | ||||||||
Purchase of equipment | (82,383 | ) | (19,929 | ) | ||||
Net cash used in investing activities | (82,383 | ) | (19,929 | ) | ||||
Cash flows from financing activities: | ||||||||
Net proceeds from sale of common stock | 27,727,194 | 9,408,920 | ||||||
Net proceeds from warrant exercises | 591 | 3,174,156 | ||||||
Repurchase of preferred stock | 0 | (1,000 | ) | |||||
Principal repayment of note payable | 0 | (27,864 | ) | |||||
Net cash provided by financing activities | 27,727,785 | 12,554,212 | ||||||
Net increase in cash and cash equivalents | 19,478,584 | 9,654,717 | ||||||
Cash and cash equivalents at beginning of period | 11,423,870 | 9,883,796 | ||||||
Cash and cash equivalents at end of period | $ | 30,902,454 | $ | 19,538,513 |
Supplemental disclosure of non-cash financing activities:
During the six months ended June 30, 2021, we issued 145,866 shares of common stock upon the cashless exercise of 188,668 stock purchase warrants, and $172,056 of principal and accrued interest was extinguished upon loan forgiveness by the lender.
GEOVAX LABS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30, | ||||||||
2017 | 2016 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (1,653,979 | ) | $ | (2,336,314 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 20,694 | 21,585 | ||||||
Stock-based compensation expense | 43,535 | 525,887 | ||||||
Changes in assets and liabilities: | ||||||||
Grant funds receivable | (61,821 | ) | 111,213 | |||||
Prepaid expenses and other current assets | 49,855 | (25,648 | ) | |||||
Accounts payable and accrued expenses | 361,695 | 125,599 | ||||||
Total adjustments | 413,958 | 758,636 | ||||||
Net cash used in operating activities | (1,240,021 | ) | (1,577,678 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchase of property and equipment | (4,350 | ) | - | |||||
Net cash used in investing activities | (4,350 | ) | - | |||||
Cash flows from financing activities: | ||||||||
Net proceeds from sale of preferred stock | 980,000 | - | ||||||
Net proceeds from sale of common stock | 154,167 | 1,028,426 | ||||||
Net cash provided by financing activities | 1,134,167 | 1,028,426 | ||||||
Net decrease in cash and cash equivalents | (110,204 | ) | (549,252 | ) | ||||
Cash and cash equivalents at beginning of period | 454,030 | 1,060,348 | ||||||
Cash and cash equivalents at end of period | $ | 343,826 | $ | 511,096 |
Supplemental disclosure of cash flow information:
During the nine months ended September 30, 2017, 178 shares of Series C Convertible Preferred Stock were converted into 11,862,000 shares of common stock. During the nine months ended September 30, 2016, 132 shares of Series C Convertible Preferred Stock were converted into 1,400,000 shares of common stock (Note 8).
See accompanying notes to condensed consolidated financial statements.
GEOVAX LABS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SeptemberJune 30,, 2017 2022
(unaudited)
1.Nature of Business |
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GeoVax Labs, Inc. (“GeoVax” or, headquartered in the “Company”),Atlanta, Georgia metropolitan area, is a clinical-stage biotechnology company incorporated under the laws of the State of Delaware. GeoVax Labs, Inc. and its wholly owned subsidiary, GeoVax, Inc., a Georgia corporation, are collectively referred to as “GeoVax” or the “Company”.
The Company is focused on developing immunotherapies and vaccines against infectious diseases and cancers using novel vector vaccine platforms. GeoVax’s product pipeline includes ongoing human vaccines using our novel vaccine platform. Our currentclinical trials in COVID-19 and head and neck cancer. Additional research and development programs are focused oninclude preventive vaccines against Human Immunodeficiency Virus (HIV), Zika Virus, hemorrhagic fever viruses (Ebola, Sudan, Marburg, and Lassa), and malaria, as well as therapeutic vaccinesimmunotherapies for chronic Hepatitis B infections and cancers. We believe our technology and vaccine development expertise are well-suited for a variety of human infectious diseases and we intend to pursue further expansion of our product pipeline.solid tumors.
Certain2.Summary of our vaccine development activities have been, and continue to be, financially supported by the U.S. government. This support has been both in the form of research grants and contracts awarded directly to us, as well as indirect support for the conduct of preclinical animal studies and human clinical trials.Significant Accounting Policies
We operatedisclosed in a highly regulatedNote 2 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021 those accounting policies that we consider significant in determining our results of operations and competitive environment. The manufacturing and marketing of pharmaceutical products require approval from, and are subjectfinancial position. During the six months ended June 30, 2022, there have been no material changes to, ongoing oversight by the Food and Drug Administration (FDA)or in the United States, byapplication of, the European Medicines Agency (EMA)accounting policies previously identified and described in the European Union, and by comparable agencies in other countries. Obtaining approval for a new pharmaceutical product is never certain, may take many years and often involves expenditure of substantial resources. Our goal is to build a profitable company by generating income from products we develop and commercialize, either alone or with one or more potential strategic partners.Form 10-K.
GeoVax is incorporated under the lawsBasis of the State of Delaware and our principal offices are located in Smyrna, Georgia (metropolitan Atlanta area).
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Presentation –The accompanying condensed consolidated financial statements at September 30, 2017include the accounts of GeoVax Labs, Inc. and for the three-month and nine-month periods ended September 30, 2017 and 2016GeoVax, Inc. All intercompany transactions have been eliminated in consolidation. The financial statements are unaudited, but include all adjustments, consisting of normal recurring entries, which we believe to be necessary for a fair presentation of the dates andinterim periods presented. Interim results are not necessarily indicative of results for a full year. The financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K10-K for the year ended December 31, 2016. 2021. We expect our operating results to fluctuate for the foreseeable future; therefore, period-to-period comparisons should not be relied upon as predictive of the results in future periods.
Our financial statements have been prepared assuming that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period followingbusiness. As of the date these financial statements are issued, the Company expects its existing cash and cash equivalents to be sufficient to fund its operations for at least the next twelve months. Since inception, the Company’s activities have consisted primarily of the financial statements. We are devoting substantially all of our present efforts toperforming research and development of our vaccine candidates. We have funded our activities to date from government grants and clinical trial assistance, and from sales of our equity securities. We willadvance its technologies. The Company expects to continue to generate operating losses in the foreseeable future and will require substantial fundsadditional funding to continue these activities.
We believe that our existing cash resources and government funding commitments will be sufficient to continue our planned operations into the first quarter of 2018. Due to our history of operating losses and our continuing need for capital to conduct ourits research and development activities, there is substantial doubt concerning our ability to operate as a going concern beyond that date. We are currently exploring sources of capital through additional government grants and contracts. We also intend to activities. The Company may seek additional funds through sales of ourfurther equity securities, exercise of currently outstanding stock purchase warrants,financings, debt financings, collaborations, strategic alliances and marketing, distribution or other means. Management believes that we will be successful in securing the additional capital required to continue the Company’s planned operations, but that our plans do not fully alleviate the substantial doubt about the Company’s ability to operate as a going concern. Additional funding may not be available on favorable terms or at all. If we fail to obtain additional capital when needed, we will be required to delay, scale back, or eliminate some or all of our research and development programs as well as reduce our general and administrative expenses.
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We disclosed in Note 2 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016 those accounting policies that we consider significant in determining our results of operations and financial position. There have been no material changes to, or in the application of, the accounting policies previously identified and described in the Form 10-K.
In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which amends Accounting Standards Codification Topic 718, Compensation – Stock Compensation. ASU 2016-09 is an attempt to simplify several aspects of the accounting for stock-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. We adopted ASU 2016-09 effective January 1, 2017; such adoption had no material impact on our financial statements.licensing arrangements.
In May 2017,Recent Accounting Pronouncements – During the FASB issued Accounting Standards Update 2017-09, Scope of Modification Accounting (“ASU 2017-09”), which amends Accounting Standards Codification Topic 718, Compensation – Stock Compensation. ASU 2017-09 is an attempt to provide clarity and reduce both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718 Compensation – Stock Compensation, to a change to the terms or conditions of a share-based payment award. ASU 2017-09 is effective for the Company beginning January 1, 2018. We are currently evaluating the impact of the adoption of ASU 2017-09 on our financial statements.
In July 2017, the FASB issued Accounting Standards Update 2017-11, (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception (“ASU 2017-11”), which amends Accounting Standards Codification Topic 260, Earnings Per Share, Topic 480, Distinguishing Liabilities from Equity, and Topic 815, Derivatives and Hedging. ASU 2017-11 changes the classification of certain equity-linked financial instruments (or embedded features) with down round features, and clarifies existing disclosure requirements for equity-classified instruments. ASU 2017-11 is effective for the Company beginning January 1, 2019. We are currently evaluating the impact of the adoption of ASU 2017-11 on our financial statements.
Theresix months ended June 30, 2022, there have been no other recent new accounting pronouncements or changes in accounting pronouncements during the nine months ended September 30, 2017, as compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, which we expect to have a material impact on our financial statements.
3.Balance Sheet Components |
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Basic net loss per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed using the weighted-average number of common shares and potentially dilutive common share equivalents outstanding during the period. Potentially dilutive common share equivalentsPrepaid Expenses – Prepaid expenses consist of convertible preferred stock, stock options and stock purchase warrants. Common share equivalents which potentially could dilute basic earnings per share in the future, and which were excluded from the computation of diluted loss per share, as the effect would be anti-dilutive, totaled approximately 277.5 million and 73.1 million shares at September 30, 2017 and 2016, respectively.following:
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June 30, 2022 | December 31, 2021 | |||||||
Prepaid clinical trial expenses | $ | 1,020,352 | $ | 0 | ||||
Prepaid insurance premiums | 42,383 | 123,248 | ||||||
Prepaid rent | 13,045 | 13,045 | ||||||
Other prepaid expenses | 60,000 | 19,947 | ||||||
Total prepaid expenses | $ | 1,135,780 | $ | 156,240 |
Property and Equipment – Property and equipment as shown onconsist of the accompanying Condensed Consolidated Balance Sheets is composedfollowing:
June 30, 2022 | December 31, 2021 | |||||||
Equipment and furnishings | $ | 673,937 | $ | 591,554 | ||||
Leasehold improvements | 115,605 | 115,605 | ||||||
Total property and equipment | 789,542 | 707,159 | ||||||
Accumulated depreciation and amortization | (574,759 | ) | (550,221 | ) | ||||
Total property and equipment, net | $ | 214,783 | $ | 156,938 |
Other Assets – Other assets consist of the following asthe following:
June 30, 2022 | December 31, 2021 | |||||||
Prepaid clinical trial expenses | $ | 976,498 | $ | 0 | ||||
Lease deposit | 11,010 | 11,010 | ||||||
Total other assets | $ | 987,508 | $ | 11,010 |
Accrued Expenses – Accrued expenses consist of Septemberthe following:
June 30, 2022 | December 31, 2021 | |||||||
Accrued technology license fees – current portion | $ | 3,000,000 | $ | 3,000,000 | ||||
Accrued compensation | 4,583 | 269,000 | ||||||
Other accrued expenses | 125,970 | 108,826 | ||||||
Total accrued expenses | $ | 3,130,553 | $ | 3,377,826 |
Other Liabilities – Other liabilities were $2,000,000 at June 30, 2017 2022 and December 31, 2016:2021 and consist of the noncurrent portion of accrued technology license fees.
September 30, 2017 | December 31, 2016 | |||||||
Laboratory equipment | $ | 530,306 | $ | 525,956 | ||||
Leasehold improvements | 115,605 | 115,605 | ||||||
Other furniture, fixtures & equipment | 28,685 | 28,685 | ||||||
Total property and equipment | 674,596 | 670,246 | ||||||
Accumulated depreciation and amortization | (636,112 | ) | (615,418 | ) | ||||
Property and equipment, net | $ | 38,484 | $ | 54,828 |
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Accrued expenses as shown on the accompanying Condensed Consolidated Balance Sheets is composed of the following as of September 30, 2017 and December 31, 2016:
September 30, 2017 | December 31, 2016 | |||||||
Accrued management salaries | $ | 441,942 | $ | 201,170 | ||||
Accrued directors’ fees | 156,469 | 78,070 | ||||||
Other accrued expenses | 15,000 | 15,000 | ||||||
Total accrued expenses | $ | 613,411 | $ | 294,240 |
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Lease Agreement
Operating Lease –We lease approximately 8,4008,400 square feet of office and laboratory space pursuant to an operating lease which expires on December 31, 2018, with an additional 12-month renewal option. As2022. Rent expense for the three-month and six-month periods ended June 30, 2022 was $44,089 and $88,178, respectively, as compared to $42,803 and $85,607, respectively, for the same periods of September 30, 2017, our future2021. Future minimum lease payments total $194,543, $37,998 of which will $88,178 in 2022, although the lease may be payable during 2017 and $156,545 in 2018.terminated at any time by either party with ninety days written notice.
Other CommitmentsLicense Agreements –We have entered into license agreements for various technologies and patent rights associated with our product development activities. These agreements may contain provisions for upfront payments, milestone fees due upon the achievement of selected development and regulatory events, minimum annual royalties or other fees, and royalties based on future net sales. Aggregate unrecorded future minimum payments under these agreements (excluding milestone and royalty payments due upon contingent future events) are approximately $124,200 in 2022, $127,500 in 2023, $127,500 in 2024, $27,500 in 2025 and $27,500 in 2026.
Other Commitments –In the normal course of business, we may enter into various firm purchase commitments and other contractual obligations related to production and testing of our vaccine products,product candidates, conduct of our clinical trials and preclinical research studies, and other research-related activities. As of SeptemberJune 30, 2017, we had2022, there are approximately $79,000$1,082,000 of unrecorded outstandingnoncancelable purchase commitments to our vendors and subcontractors, the majority of which we expect will be paid during 2017. We expect this entire amount to be reimbursable to us pursuant to currently outstanding government grants (See Note 10).due in 2022.
5.Stockholders’ Equity |
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Series B Convertible January 2022 Private Placement –On January 19, 2022, we closed a private placement of 707,484 shares of common stock, a pre-funded warrant to purchase 2,360,000 shares of common stock for a nominal exercise price per share (the “Jan 2022 Pre-Funded Warrant”), and a warrant to purchase up to 3,067,484 shares of common stock at an exercise price of $3.26 per share (the “Jan 2022 Common Warrant”). Net proceeds after deducting placement agent commissions and other offering expenses were approximately $9.2 million. During March 2022, the Jan 2022 Pre-Funded Warrant was exercised in full. The Jan 2022 Common Warrant is currently exercisable and will expire on February 10, 2027.
May 2022 Private Placement – On May 27, 2022, we closed a private placement of 1,050,000 shares of common stock, pre-funded warrants to purchase an aggregate of 11,071,214 shares of common stock for a nominal exercise price per share (the “May 2022 Pre-Funded Warrants”), and preferred investment options to purchase up to an aggregate of 12,121,214 shares of common stock at an exercise price of $1.65 per share (the “May 2022 Preferred StockInvestment Options”). Net proceeds after deducting placement agent commissions and other offering expenses were approximately $18.5 million.
The May 2022 Pre-Funded Warrants were exercised as to 1,980,304 shares concurrent with the closing and during June 2022 an aggregate of 3,690,910 additional shares were exercised, leaving 5,400,000 of the May 2022 Pre-Funded Warrants outstanding at June 30, 2022. The remaining May 2022 Pre-Funded Warrants were fully exercised during July 2022 (see Note 9).
As of SeptemberJune 30, 2017, there2022, the May 2022 Preferred Investment Options are 100currently exercisable (subject to certain common stock ownership restrictions contained in the warrant agreements) and expire as to 3,030,304 shares on May 27, 2027 and as to 9,090,910 shares on May 29, 2028. During August 2022, 3,030,304 of the May 2022 Preferred Investment Options were exercised for cash (see Note 9).
Other Common Stock Transactions – During the six months ended June 30, 2022, we issued 68,500 shares of restricted common stock pursuant to a consulting agreement.
Stock Options – We have a stock-based incentive plan (the “2020 Plan”) pursuant to which our Series B Convertible Preferred Stock (“Series B Preferred Stock”) outstanding. The Series B Preferred Stock Board of Directors may be converted at any time at the optiongrant stock options and other stock-based awards to our employees, directors and consultants. A total of the holder into1,500,000 shares of our common stock at a conversion price of $0.35 per share, or 285,714 shares. During the nine months ended September 30, 2017, there were no conversions or other transactions involving our Series B Preferred Stock.
Series C Convertible Preferred Stock
As of September 30, 2017, there are 2,690 shares of our Series C Convertible Preferred Stock (“Series C Preferred Stock”) outstanding. The Series C Preferred Stock may be converted at any time at the option of the holder into shares of our common stock at a conversion price of $0.015 per share, or 179,349,733 shares. In May 2017, in connection with thereserved for issuance of our Series D Convertible Preferred Stock discussed below, the conversion price of our Series C Preferred Stock was automatically reduced from $0.05 per share to $0.015 per share. During the nine months ended September 30, 2017, we issued an aggregate of 11,862,000 shares of our common stock related to conversion of 178 shares our Series C Preferred Stock.
Series D Convertible Preferred Stock
In May 2017, we issued 1,000 shares of our Series D Convertible Preferred Stock, $1,000 stated value (“Series D Preferred Stock”), for gross proceeds of $1.0 million. Net proceeds, after deduction of certain expenses, were $980,000.
Each share of Series D Preferred Stock is entitled to a liquidation preference equal to the initial purchase price, has no voting rights, and is not entitled to a dividend. The Series D Preferred Stock is convertible at any time at the option of the holders into shares of our common stock, with an initial conversion price of $0.015 per share. The Series D Preferred Shares contains price adjustment provisions, which may, under certain circumstances, reduce the conversion price on future dates according to a formula based on the then-current market price for our common stock.
We assessed the Series D Preferred Stock under ASC Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”), ASC Topic 815, “Derivatives and Hedging” (“ASC 815”), and ASC Topic 470, “Debt” (“ASC 470”). The preferred stock contains an embedded feature allowing an optional conversion by the holder into common stock which meets the definition of a derivative. However, we determined that the preferred stock is an “equity host” (as described by ASC 815) for purposes of assessing the embedded derivative for potential bifurcation and that the optional conversion feature is clearly and closely associated to the preferred stock host; therefore, the embedded derivative does not require bifurcation and separate recognition under ASC 815. We determined there to be a beneficial conversion feature (“BCF”) requiring recognition at its intrinsic value. Since the conversion option of the preferred stock was immediately exercisable, the amount allocated to the BCF was immediately accreted to preferred dividends, resulting in an increase in the carrying value of the preferred stock.
Increase in Authorized Shares of Common Stock
At a special meeting of our stockholders held on August 4, 2017, our stockholders approved an amendment to our certificate of incorporation to increase our authorized shares of common stock from 300,000,000 to 600,000,000 shares. The amendment to our certificate of incorporation was filed with the Delaware Secretary of State on August 4, 2017.
Common Stock Transactions
As discussed above, during the nine months ended September 30, 2017, we issued 11,862,000 shares of our common stock pursuant to the conversion of 178 shares of our Series C Preferred Stock.2020 Plan. During the ninesix months ended SeptemberJune 30, 2017, we also issued 3,816,667 shares of our common2022, there were 0 stock option transactions related to the 2020 Plan. As of June 30, 2022, there are 962,300 stock options outstanding, with a weighted-average exercise price of stock purchase warrants, resulting in net proceeds to us$3.18 per share and a weighted-average remaining term of $154,167.8.8 years.
Stock Options
The following table presents a summary of our stock option transactions during the nine months ended September 30, 2017:
Number of Shares | Weighted Average Exercise Price | |||||||
Outstanding at December 31, 2016 | 3,499,475 | $ | 1.21 | |||||
Granted | -- | -- | ||||||
Exercised | -- | -- | ||||||
Forfeited or expired | (115,200 | ) | 17.75 | |||||
Outstanding at September 30, 2017 | 3,384,275 | $ | 0.64 | |||||
Exercisable at September 30, 2017 | 1,140,494 | $ | 1.76 |
Stock Purchase Warrants– The table below presents summary information about our warrants outstanding as of June 30, 2022.
The following table presents a summary of stock purchase warrant transactions during the nine months ended September 30, 2017:
Warrant Description | Number of Shares | Exercise Price | Expiration | ||||||
2020 Warrants | 120,000 | $ | 1.65 | Jun 2025 | |||||
2020 Unit Warrants | 2,396,631 | 5.00 | Sep 2025 | ||||||
2020 Representative Warrants | 128,000 | 5.50 | Mar 2024 | ||||||
2021 Representative Warrants | 72,000 | 6.875 | Aug 2024 | ||||||
2021 Warrants | 100,000 | 13.00 | Sep 2026 | ||||||
Jan 2022 Common Warrants | 3,067,484 | 3.26 | Feb 2027 | ||||||
May 2022 Pre-Funded Warrants | 5,400,000 | 0.001 | perpetual | ||||||
May 2022 Preferred Investment Options | 9,090,910 | 1.65 | May 2028 | ||||||
May 2022 Preferred Investment Options | 3,030,304 | 1.65 | May 2027 | ||||||
Total Warrants Outstanding at June 30, 2022 | 23,405,329 |
Number of Shares | Weighted Average Exercise Price | |||||||
Outstanding at December 31, 2016 | 32,751,578 | $ | 0.07 | |||||
Granted | -- | -- | ||||||
Exercised | (3,816,667 | ) | 0.04 | |||||
Forfeited or expired | (1,112,001 | ) | 0.57 | |||||
Outstanding at September 30, 2017 | 27,822,910 | $ | 0.02 | |||||
Exercisable at September 30, 2017 | 27,822,910 | $ | 0.02 |
6.Stock-Based Compensation Expense
Stock-based compensation expense related toour stock option plans was $14,433 and $43,535 for the three-month and nine-month periods ended September 30, 2017, respectively, as compared to $13,686 and $41,058 for the three-month and nine-month periods ended September 30, 2016, respectively. Additionally, during the three-month and nine-month periods ended September 30, 2016, we recorded $15,030 and $484,829, respectively, of stock-based compensation expense related to modifications to stock purchase warrants.
Stock-based compensation expense for stock options is recognized on a straight-line basis over the requisite service period for the award and is allocated to research and development expense or general and administrative expense based upon the related employee classification.classification of the individual to whom the award is granted. As of September June 30, 2017,2022, there was $88,449is $1,039,762 of unrecognized compensation expense related to stock options, whichthat we expect to recognize over a weighted-average period of 1.9 years.
We also have issued shares of restricted common stock to consultants and recognize the related expense over the terms of the related agreements. As of June 30, 2022, there is $60,000 recorded as a prepaid expense for these arrangements, which will be recognized as expense over the term of the related agreement.
The following table summarizes our total stock-based compensation expense:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Stock options: | ||||||||||||||||
Research and development | $ | 54,293 | $ | 21,468 | $ | 108,585 | $ | 42,936 | ||||||||
General and administrative | 135,898 | 34,722 | 271,797 | 69,444 | ||||||||||||
Total stock option expense | 190,191 | 56,190 | 380,382 | 112,380 | ||||||||||||
Stock awards (consultants): | ||||||||||||||||
General and administrative | 16,987 | 30,573 | 31,947 | 51,173 | ||||||||||||
Total stock-based compensation expense | $ | 207,178 | $ | 86,763 | $ | 412,329 | $ | 163,553 |
7.Net Loss Per Share
Basic and diluted loss per common share are computed based on the weighted average periodnumber of 1.9 years.
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Because of our historically significant net operating losses, we have not paid income taxes since inception. We maintain deferred tax assets that reflectcommon shares outstanding, including the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. These deferred tax assets are comprised primarily of net operating loss carryforwards and alsoMay 2022 Pre-Funded Warrants outstanding at June 30, 2022. The Company’s additional potentially dilutive securities, which include amounts relating to nonqualified stock options and researchstock purchase warrants, have been excluded from the computation of diluted net loss per share as the effect would be antidilutive. The securities that could potentially dilute basic earnings per share in the future and development credits.that have been excluded from the computation of diluted net loss per share totaled 18,967,629 and 3,395,635 shares at June 30, 2022 and 2021, respectively.
8.Income Taxes
No provision for income taxes was recorded in either of the six-month periods ended June 30, 2022 and 2021. The Company remains in a cumulative loss position with a full valuation allowance recorded against its net deferred income tax asset has been fully offset byassets as of June 30, 2022.
9.Subsequent Events
During July 2022, we issued 75,000 shares of restricted common stock to a valuation allowance becauseconsultant and will recognize the related expense of $60,750 over the term of the uncertainty of our future profitability and our ability to utilize the deferred tax assets. Utilization of operating losses and credits will be subject to substantial annual limitations due to ownership change provisions of Section 382 of the Internal Revenue Code. The annual limitation will result in the expiration of net operating losses and credits before utilization.
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Government Grants and Contractsrelated agreement.
We receive payments from government entities under our grants and contracts with the National Institute of Allergy and Infectious Diseases in support of certain of our vaccine research and development efforts. We record revenue associated with government grants and contracts as the reimbursable costs are incurred. During the three-month and nine-month periods ended September 30, 2017, July 2022, we recorded $247,994 and $800,866, respectively, of revenues associated with these grants and contracts, as compared to $440,106 and $653,986, respectively, for the comparable periods of 2016. As of September 30, 2017, there isissued an aggregate of $744,769 in approved grant and contract funds available for use.
Collaboration Revenue
In March 2017, we entered into a clinical trial collaboration agreement with American Gene Technologies International, Inc. (“AGT”) whereby AGT intends5,400,000 shares of common stock upon the exercise of the May 2022 Pre-Funded Warrants. Subsequent to conduct a phase 1 human clinical trial investigating our combined technologies as a functional cure for HIV infection. In connection withthese exercises, NaN of the agreement, during the second quarter of 2017 AGT paid to us a non-refundable fee of $95,000, which we recorded as collaboration revenue during the nine-month period ended September 30, 2017.May 2022 Pre-Funded Warrants remain outstanding.
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During October 2017, August 2022, we issued 8,000,000an aggregate of 3,030,304 shares of our common stock pursuant toupon the conversion of 120 shares of our Series C Preferred Stock. During October and November 2017 we issued 5,000,000 shares of our common stock pursuant to thepartial exercise of stock purchase warrants for netthe May 2022 Preferred Investment Options, with gross cash proceeds to us of $75,000.$5,000,000. Subsequent to these exercises, 9,090,910 of the May 2022 Preferred Investment Options remain outstanding.
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FORWARD LOOKING STATEMENTS
In additionThe following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to historical information,help the informationreader understand our results of operations and financial condition. This MD&A is provided as a supplement to, and should be read in conjunction with, our condensed consolidated financial statements and the accompanying notes thereto and other disclosures included in this Quarterly Report on Form 10-Q contains forward-looking statements. Forward-looking(this “Report”), and our audited financial statements involve numerous risks and uncertainties, including but not limited to the risk factors set forth under the heading “Risk Factors”accompanying notes thereto included in theour Annual Report on Form 10-K for the year ended December 31, 2016,2021, which was filed with the Securities and should not be relied upon as predictions of future events. Certain suchExchange Commission on March 9, 2022.
Forward-Looking Statements
Information included in this Report contains forward-looking statements canwithin the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are not statements of historical facts, but rather reflect our current expectations concerning future events and results. We generally use the words “believes,” “expects,” “intends,” “plans,” “anticipates,” “likely,” “will” and similar expressions to identify forward-looking statements. All statements in this Report, other than statements of historical facts, including statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans, intentions, expectations and objectives could be identified by the use of forward-looking terminology such as ‘‘believes,’’ ‘‘expects,’’ ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘seeks,’’ ‘‘approximately,” ‘‘intends,’’ ‘‘plans,’’ ‘‘pro forma,’’ ‘‘estimates,’’ or ‘‘anticipates’’ or other variations thereof or comparable terminology, or by discussions of strategy, plans, or intentions.statements. Such forward-looking statements, including those concerning our expectations, involve risks, uncertainties and other factors, some of which are necessarily dependent on assumptions, data, or methods thatbeyond our control, which may be incorrect or imprecise and may be incapable of being realized. The following factors, among others, could cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks, uncertainties and future eventsfactors include, but are not limited to, differ materially from those factors set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. We operate in a highly competitive, highly regulated and rapidly changing environment and our business is constantly evolving. Therefore, it is likely that new risks will emerge, and that the nature and elements of existing risks will change, over time. It is not possible for management to predict all such risk factors or contemplated inchanges therein, or to assess either the forward-looking statements:
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Readers are cautioned not to place undue relianceimpact of all such risk factors on forward-looking statements, which reflect our management’s analysis only.business. We assume no obligation to publicly update or revise any forward-looking statements.statements, whether as a result of new information, future events or otherwise. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this Report.
Overview
GeoVax is a clinical-stage biotechnology company developing humanimmunotherapies and vaccines against infectious diseases and cancercancers using a novel patented Modified Vaccinia Ankara-Virus Like Particle (MVA-VLP) vector vaccine platform. In this platform, MVA, a large virus capable of carrying several vaccine antigens, expresses highly effective VLP immunogensplatforms. GeoVax’s product pipeline includes ongoing human clinical trials in the person being vaccinated. The platform elicits durable immune responses while providing the safety characteristics of a replication-defective vector.
Our currentCOVID-19 and head and neck cancer. Additional research and development programs are focused oninclude preventive vaccines against HIV, Zika Virus, hemorrhagichemorrhagic fever viruses (Ebola, Sudan, Marburg, and Lassa), and malaria, as well as therapeutic vaccinesimmunotherapies for chronic Hepatitis B infections and cancers. All of our potential products are in preclinical research and development phases, with the exception of our preventive HIV vaccine, which is currently in human clinical trials.solid tumors.
Our corporate strategy is to advance and protect our vaccine platform and use its capabilities to design and develop an arrayprograms are in various stages of products. We aim to advance products through to human clinical testing, and to seek partnership or licensing arrangements for commercialization. We will also leverage third party resources through collaborations and partnerships for preclinical and clinical testing. Our current collaborators include National Institutedevelopment, the most significant of Allergy and Infectious Diseases (NIAID), HIV Vaccines Trial Network (HVTN), Centers for Disease Control and Prevention (CDC), United States Army Research Institute of Infectious Disease (USAMRIID), University of Pittsburgh, Georgia State University Research Foundation, University of Maryland, Peking University, Burnet Institute, American Gene Technologies International, Inc., and ViaMune, Inc.which are summarized below:
● | GEO-CM04S1 is currently undergoing a Phase 2 clinical trial (NCT04977024), evaluating its safety and efficacy as a preventive COVID-19 vaccine in patients who have previously received either an allogeneic hematopoietic cell transplant, an autologous hematopoietic cell transplant or chimeric antigen receptor (CAR) T cell therapy. GEO-CM04S1 is the only COVID-19 vaccine that includes both SARS-CoV-2 spike and nucleocapsid proteins to advance to a Phase 2 trial in cancer patients. The trial is also the first to compare an investigational multi-antigenic COVID-19 vaccine to the current Food and Drug Administration (FDA)-approved mRNA vaccine from Pfizer/BioNTech in people who are immunocompromised. |
● | GEO-CM04S1 is also undergoing the Phase 2 portion of a Phase 1/2 trial (NCT04639466), evaluating its use as a universal booster vaccine to current FDA-approved two-shot mRNA vaccines from Pfizer/BioNTech and Moderna. |
● | Gedeptin® is currently undergoing a Phase 1/2 clinical trial (NCT03754933) for treatment of patients with recurrent head and neck squamous cell carcinoma (HNSCC). The initial stage of this trial is being conducted with funding support from the U.S. Food & Drug Administration (FDA) pursuant to its Orphan Products Clinical Trials Grants Program. |
● | GEO-CM02 (our pan coronavirus vaccine) has shown promising results in preclinical studies to date and we have recently initiated additional studies to prepare for IND (Investigational New Drug) filing and subsequent human clinical trials. |
● | Our research program for treatment of solid tumors (MVA-VLP-MUC1) is progressing with additional preclinical studies recently initiated. The initial animal studies of our MVA-VLP-MUC1 vaccine and ICI combination, have been encouraging, showing that a combination of our MVA-VLP-MUC1 vaccine candidate with a MUC1 synthetic peptide was capable of breaking tolerance to human MUC1 in transgenic mice and inducing immune responses with efficacy against challenge in a lymphoma tumor model. Our studies also demonstrated a significant reduction of the tumor burden in a mouse model for colorectal cancer. We have initiated animal studies to determine the optimal course and schedule of vaccination to define a protocol that can be evaluated in a Phase 1 clinical trial. |
● | Our additional research programs for vaccines against Zika virus, malaria and hemorrhagic fever viruses are at various stages of preclinical development. |
Financial Overview
Revenues
Our grant revenues relate to grants and contracts from agencies of the U.S. government in support of our vaccine development activities. We record revenue associated with these grants as the related costs and expenses are incurred. We have not generated any revenues from the sale of any of our products, and we do not expectproduct sales to generate any such revenues for at least the next several years.date. Our product candidates will require significant additional research and development efforts, including extensive preclinical and clinical testing. All product candidates that we advance to clinical testing will require regulatory approval prior to commercial use and will require significant costs for commercialization. We may not be successful in
Research and development expenses
Since our inception, we have focused and we continue to focus significant resources on our research and development efforts,activities, including developing our vector platform and we may never generate sufficient product revenueanalytical testing methods, conducting preclinical studies, developing manufacturing processes, and conducting clinical trials. Research and development costs are expensed as incurred and consist primarily of the following:
● | personnel costs in our research, development and regulatory functions, which include salaries, benefits and stock-based compensation; |
● | expenses incurred under agreements with contract research organizations (“CROs”), that conduct clinical trials on our behalf; |
● | expenses incurred under agreements with contract manufacturing organizations (“CMOs”), that manufacture product used in the clinical trials; |
● | expenses incurred in procuring materials and for analytical and release testing services required to produce vaccine candidates used in clinical trials; |
● | process development expenses incurred internally and externally to improve the efficiency and yield of the bulk vaccine; |
● | laboratory supplies, vendor expenses and other third-party contract expenses related to preclinical research activities; |
● | technology license fees; |
● | consultant expenses for services supporting our clinical, regulatory and manufacturing activities; and |
● | facilities, depreciation and other general overhead expenses. |
We track our external research and development costs on a program-by-program basis. We do not track our internal research and development expenses on a program-by-program basis as they primarily relate to be profitable.shared costs deployed across multiple projects under development.
Our research and development expenses can fluctuate considerably on a period-to-period basis. We expect our research and development expenses to increase substantially in the future as we advance our existing and future product candidates into and through clinical trials and pursue regulatory approval. The process of conducting the necessary clinical studies to obtain regulatory approval is costly and time-consuming. Clinical trials generally become larger and more costly to conduct as they advance into later stages.
At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development of any product candidates that we develop from our programs. We are also unable to predict when, if ever, material net cash inflows will commence from sales of product candidates we develop, if at all. This is due to the numerous risks and uncertainties associated with developing product candidates.
General and administrative expenses
Our general and administrative expenses consist primarily of personnel costs in our executive, finance and investor relations, business development and administrative functions, including stock-based compensation. Other general and administrative expenses include consulting fees, professional service fees for accounting and legal services, lease expenses related to our offices, insurance premiums, intellectual property costs incurred in connection with filing and prosecuting patent applications, depreciation and other costs. We expect our general and administrative expenses to continue to increase in the future as we expand our operating activities and prepare for potential commercialization of our current and future product candidates, increase our headcount and investor relations activities and maintain compliance with requirements of Nasdaq and the Securities and Exchange Commission.
Critical Accounting Policies and Estimates
This discussion and analysis of our financial condition and results of operations is based on the accompanying unauditedour condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates and adjusts the estimates as necessary. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.
Our significantFor a description of critical accounting policies are summarizedthat require significant judgments and estimates during the preparation of our financial statements, refer to Item 7 in Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 2 to our consolidated financial statements includedConsolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2016. We believe the following2021. There have been no significant changes to our critical accounting policies affectfrom those disclosed in our more significant judgments and estimates used in the preparation of our financial statements:2021 Annual Report.
Revenue Recognition
We recognize revenueInformation regarding recent accounting pronouncements is contained in accordance with the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements, as amended by Staff Accounting Bulletin No. 104, Revenue Recognition, (“SAB 104”). SAB 104 provides guidance in applying U.S. generally accepted accounting principles (“GAAP”) to revenue recognition issues, and specifically addresses revenue recognition for upfront, nonrefundable fees received in connection with research collaboration agreements. Historically, our revenue has consisted primarily of grant and contract funding received from NIAID. Revenue from these arrangements is approximately equalNote 2 to the costs incurred and is recorded as income as the related costs are incurred.
In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which creates a new Topic, Accounting Standards Codification Topic 606. The standard is principle-based and provides a five-step model to determine when and how revenue is recognized. The core principle is that an entity should recognize revenue when it transfers promised goods or services to customerscondensed consolidated financial statements, included in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for the Company beginning in 2018 and allows for either full retrospective adoption or modified retrospective adoption. We are currently evaluating the impact of the adoption of ASU 2014-09 on our financial statements.
Stock-Based Compensation
We account for stock-based transactions in which the Company receives services from employees, directors or others in exchange for equity instruments based on the fair value of the award at the grant date. Compensation cost for awards of common stock is estimated based on the price of the underlying common stock on the date of issuance. Compensation cost for stock options or warrants is estimated at the grant date based on each instrument’s fair value as calculated by the Black-Scholes option pricing model. We recognize stock-based compensation cost as expense ratably on a straight-line basis over the requisite service period for the award.
Liquidity and Capital Resources
Historically, our primary uses of cash have been to finance our research and development activities. Since inception, we have funded these activities primarily from government grants and clinical trial assistance, and from sales of our equity securities. At September 30, 2017, we had cash and cash equivalents of $343,826 and total assets of $495,635, as compared to $454,030 and $610,217, respectively, at December 31, 2016. At September 30, 2017, we had a working capital deficit of $285,401, compared to positive working capital of $174,532 at December 31, 2016. Our current liabilities at September 30, 2017 include $598,411 of accrued management salaries and director fees, payment of which is continuing to be deferred.
Net cash used in operating activities was $1,240,021 and $1,577,678 for the nine-month periods ended September 30, 2017 and 2016, respectively. Generally, the variances between periods are due to fluctuations in our net losses, offset by non-cash charges such as depreciation and stock-based compensation expense, and by net changes in our assets and liabilities. Our net losses generally fluctuate based on expenditures for our research activities, partially offset by government grant revenues. As of September 30, 2017, there is $744,769 in approved grant funds available for use during the remainder of 2017 and through June 30, 2018. See the table with further details under “Results of Operations – Grant and Collaboration Revenues” below.
NIAID has funded the costs of conducting all of our human clinical trials (Phase 1 and Phase 2a) to date for our preventive HIV vaccines, with GeoVax incurring certain costs associated with manufacturing the clinical vaccine supplies and other study support. NIAID is also currently funding the cost of an ongoing Phase 1 trial (HVTN 114), which is investigating the effect of adding a “protein boost” component to our vaccine. Concurrently, a preclinical study in non-human primates (funded by a NIAID grant) is evaluating two additional proteins specifically chosen as boosting agents for GOVX-B11, and planning is underway for a Phase 1 trial to evaluate the safety and immunogenicity of these proteins in humans. Based on the results from these studies, we expect NIAID may then be ready to support a large phase 2b efficacy trial. In July 2016, NIAID awarded us a contract of up to $7.8 million for the production of the DNA vaccine component of GOVX-B11, which is intended for use in advanced clinical trials.
Net cash used in investing activities was $4,350 and $-0- for the nine-month periods ended September 30, 2017 and 2016, respectively. Our investing activities have consisted predominantly of capital expenditures.
Net cash provided by financing activities was $1,134,167 and $1,028,426 for the nine-month periods ended September 30, 2017 and 2016, respectively. During the nine-month period ended September 30, 2017, warrants to purchase shares of our common stock were exercised for aggregate net proceeds of $154,167. During May 2017, we sold shares of our Series D convertible preferred stock to certain institutional investors for net proceeds of $980,000.
As of September 30, 2017, we had an accumulated deficit of $37.4 million. We expect for the foreseeable future we will continue to operate at a loss. The amount of the accumulated deficit will continue to increase, as it will be expensive to continue research and development efforts. We will continue to require substantial funds to continue our activities and cannot predict the outcome of our efforts. We believe that our existing cash resources, combined with funding from existing NIH grants and clinical trial support will be sufficient to fund our planned operations into the first quarter of 2018. We will require additional funds to continue our planned operations beyond that date. We are currently seeking sources of capital through additional government grant programs and clinical trial support, and we may also conduct additional offerings of our equity securities. However, additional funding may not be available on favorable terms or at all and if we fail to obtain additional capital when needed, we may be required to delay, scale back, or eliminate some or all of our research and development programs as well as reduce our general and administrative expenses.this Quarterly Report.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that are likely or reasonably likely to have a material effect on our financial condition or results of operations.
Contractual Obligations
As of September 30, 2017, we had noncancelableoperations, other than the operating lease obligationsfor our office and other firm purchase obligations totaling approximately $274,000, as compared to approximately $457,000 at December 31, 2016. Approximately $79,000 of the purchase commitments at September 30, 2017 relate to subcontracts associated with our government grants, which we expect will be fully reimbursed to us pursuant to those grants. We have no committed lines of credit and no other committed funding or long-term debt. We have employment agreements with our senior management team, each of which may be terminated with 30 days advance notice. There have been no other material changes to the table presented in our Annual Report on Form 10-K for the year ended December 31, 2016.laboratory space.
Results of Operations
Net LossThe following tables summarize our results of operations for the three-month and six-month periods ended June 30, 2022 and 2021:
We recorded a net loss of $588,757 for the three months ended September 30, 2017, as compared to $464,200 for the three months ended September 30, 2016. For the nine months ended September 30, 2017, we recorded a net loss of $1,653,979, as compared to $2,336,314 for the nine months ended September 30, 2016. Our net losses will typically fluctuate due to the timing of activities and related costs associated with our vaccine research and development activities and our general and administrative costs, as described in more detail below.
Three Months Ended June 30, | ||||||||||||
2022 | 2021 | Change | ||||||||||
Grant revenue | $ | - | $ | 79,708 | $ | (79,708 | ) | |||||
Operating expenses: | ||||||||||||
Research and development | 1,307,177 | 832,835 | 474,342 | |||||||||
General and administrative | 935,311 | 733,499 | 201,812 | |||||||||
Total operating expenses | 2,242,488 | 1,566,334 | 676,154 | |||||||||
Loss from operations | (2,242,488 | ) | (1,486,626 | ) | (755,862 | ) | ||||||
Total other income (expense), net | 789 | 172,593 | (171,804 | ) | ||||||||
Net loss | $ | (2,241,699 | ) | $ | (1,314,033 | ) | $ | (927,666 | ) |
Grant and Collaboration Revenues
During the three-month and nine-month periods ended September 30, 2017, we recorded grant and collaboration revenues of $247,994 and $895,866, respectively, as compared to $440,106 and $653,986, respectively, during the comparable periods of 2016.
Six Months Ended June 30, | ||||||||||||
2022 | 2021 | Change | ||||||||||
Grant revenue | $ | 81,526 | $ | 190,125 | $ | (108,599 | ) | |||||
Operating expenses: | ||||||||||||
Research and development | 2,637,721 | 1,435,618 | 1,202,103 | |||||||||
General and administrative | 2,114,335 | 1,805,209 | 309,126 | |||||||||
Total operating expenses | 4,752,056 | 3,240,827 | 1,511,229 | |||||||||
Loss from operations | (4,670,530 | ) | (3,050,702 | ) | (1,619,828 | ) | ||||||
Total other income (expense), net | 1,316 | 173,891 | (172,575 | ) | ||||||||
Net loss | $ | (4,669,214 | ) | $ | (2,876,811 | ) | $ | (1,792,403 | ) |
Our grant revenues relate to grants and contracts from NIAID in support of our vaccine development activities. We record revenue associated with these grants as the related costs and expenses are incurred. Grant Revenues
The difference infollowing table summarizes our grant revenues fromfor the three-month and six-month periods ended June 30, 2022 and 2021:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Lassa Fever – U.S. Army Grant | $ | - | $ | - | $ | 81,526 | $ | - | ||||||||
COVID-19 – NIH SBIR Grant | - | 79,708 | - | 190,125 | ||||||||||||
Total | $ | - | $ | 79,708 | $ | 81,526 | $ | 190,125 |
Total grant revenues decreased by $79,708 (100%) for the three-month period ended June 30, 2022 and by $108,599 (57%) for the six-month period ended June 30, 2022, versus the comparable 2021 periods, attributable to period is dependent upon our expenditures for activities supported by the differing mix of active grants and fluctuates based onas shown in the table above, as well as the timing of the expenditures. Additional detail concerning ourexpenditures related to such grants. As of June 30, 2022, all grant revenues and the remaining funds availableapproved for direct use as of September 30, 2017 is presented in the table below.
Grant Revenues Recorded During the Periods | Unused Funds | |||||||||||||||||||
Three Months Ended Sep 30, | Nine Months Ended Sep 30, | Available at | ||||||||||||||||||
2017 | 2016 | 2017 | 2016 | Sep 30, 2017 | ||||||||||||||||
HIV - SBIR Grant | $ | - | $ | 79,805 | $ | 158,972 | $ | 180,274 | $ | -0- | ||||||||||
HIV - SBIR Grant | 185,909 | 344,528 | 493,132 | 457,939 | 449,609 | |||||||||||||||
HIV - Vaccine Development Contract | 23,935 | 15,773 | 110,612 | 15,773 | 33,310 | |||||||||||||||
Zika - SBIR Grant | 38,150 | - | 38,150 | - | 261,850 | |||||||||||||||
Total Grants | $ | 247,994 | $ | 440,106 | $ | 800,866 | $ | 653,986 | $ | 744,769 |
In March 2017, we entered into a collaboration with American Gene Technologies International, Inc. (AGT) whereby AGT intends to conduct a Phase 1 human clinical trial with our combined technologies, with the goal of developing a functional cure for HIV infection. The cost of the clinical trial will be borne by AGT. The primary objectives of the trial will be to assess the safety and efficacy of the therapy, with secondary objectives to assess the immune responses as a measure of efficacy. In exchange for use of our vaccine product in the clinical trial, AGT paid us a fee of $95,000 which we received during the second quarter of 2017 and which is recorded as revenue in the nine-month period ended September 30, 2017. No commercial rights or licensesGeoVax have yet been granted to AGT.utilized.
Research and Development Expenses
DuringFor the three-monththree-month and nine-monthsix-month periods ended Septemberending June 30, 2017, we recorded2022, research and development expense of $498,200expenses increased by $474,342 (57%) and $1,568,093,$1,202,103 (84%), respectively, as compared to $683,939 and $1,519,519, respectively,versus the comparable 2021 periods. The overall increase during the comparable2022 periods relates primarily to higher personnel costs (including the use of 2016.external consultants), costs of conducting clinical trials for GEO-CM04S1 and Gedeptin, costs of manufacturing materials for use in our clinical trials, and a generally higher level of activity. Research and development expense for the three-month and nine-monthsix-month periods of 2017 includes2022 included stock-based compensation expense of $6,513$54,293 and $19,775 respectively,$108,585, respectively; as compared to $5,894$21,468 and $17,681,$42,936, respectively, for the comparable 2021 periods.
General and Administrative Expenses
For the three-month and six-month periods ending June 30, 2022, general and administrative expenses increased by $201,812 (28%) and $309,126 (17%), respectively, versus the comparable 2021 periods. The overall increase during the 2022 periods relates primarily to higher personnel costs (including the use of external consultants), patent costs and travel expenses. General and administrative expense for the three-month and six-month periods of 2022 included stock-based compensation expense of $152,885 and $303,744, respectively; as compared to $65,295 and $120,617, respectively, for the comparable periods of 2016 (see discussion under “Stock-Based Compensation Expense” below).2021.
Other Income (Expense)
Interest income for the three-month and six-month periods ended June 30, 2022 was $789 and $1,316, respectively, as compared to $1,068 and $3,121, respectively, for comparable periods of 2021. The variances between periods are primarily attributable to cash available for investment and interest rate fluctuations.
No interest expense was recorded during the three-month and six-month periods ended June 30, 2022. Interest expense for the three-month and six-month periods ended June 30, 2021 was $531 and $1,286, respectively.
During the three-month and six-month periods ended June 30, 2021, we recorded a $172,056 one-time gain on debt extinguishment associated with the forgiveness of the principal and accrued interest related to our Paycheck Protection Program (PPP) loan.
Liquidity, Capital Resources and Cash Flows
The following tables summarize our liquidity and capital resources as of June 30, 2022 and December 31, 2021, and our cash flows for the six-month periods ended June 30, 2022 and 2021:
Liquidity and Capital Resources | June 30, 2022 | December 31, 2021 | ||||||
Cash and cash equivalents | $ | 30,902,454 | $ | 11,423,870 | ||||
Working capital | 28,670,366 | 6,193,756 |
Six Months Ended June 30, | ||||||||
Cash Flow Data | 2022 | 2021 | ||||||
Net cash provided by (used in): | ||||||||
Operating activities | $ | (8,166,818 | ) | $ | (2,879,566 | ) | ||
Investing activities | (82,383 | ) | (19,929 | ) | ||||
Financing activities | 27,727,785 | 12,554,212 | ||||||
Net increase in cash and cash equivalents | $ | 19,478,584 | $ | 9,654,717 |
Operating Activities – Net cash used in operating activities of $8,166,818 for the six months ended June 30, 2022, was primarily due to our net loss of $4,669,214, as adjusted by non-cash items such as depreciation expense and stock-based compensation expense, and by changes in our working capital accounts. Net cash used in operating activities of $2,879,566 for the six months ended June 30, 2021, was primarily due to our net loss of $2,876,811, also adjusted by non-cash charges such as depreciation and stock-based compensation expense, and by changes in our working capital accounts.
Investing Activities – Net cash used in investing activities was $82,383 and $19,929 for the six-month periods ended June 30, 2022 and 2021, respectively, and relates primarily to purchases of laboratory equipment.
Financing Activities – Net cash provided by financing activities was $27,727,785 for the six-month period ended June 30, 2022, consisting of net proceeds from a private placement of our common stock and warrants as described in Note 5 to the condensed consolidated financial statements, included in this Quarterly Report. Net cash provided by financing activities was $12,554,212 for the six-month period ended June 30, 2021, consisting primarily of (i) net proceeds of $9,408,920 from a public offering of our common stock, (ii) $3,174,156 of net proceeds from the exercise of warrants, and (iii) $27,864 in principal repayments in retirement of a note payable.
Funding Requirements
We have no products approved for commercial sale. We do not expect to generate any meaningful revenue unless and until we obtain regulatory approval of and commercialize our product candidates. We do not know when, or if, this will occur. As of June 30, 2022, we have an accumulated deficit of approximately $69 million and we expect to incur operating losses and generate negative cash flows from operations for the foreseeable future. We have funded our operations to date primarily from sales of our equity securities and from government grants and clinical trial assistance.
Our research and development expenses can fluctuate considerably on a period-to-period basis, depending on our needprimary uses of capital are for vaccine manufacturing by third parties, the timingpersonnel costs, costs of expenditures related to our grants from NIAID, the timing of costs associated with clinical trials being funding directly by us, and other factors. The overall variance in research and development expense from the 2016 periods to 2017 is primarily attributable to the timing and amount of costs associated with research subcontracts supported by our grants from NIAID. Our research and development costs do not include costs incurred by the HVTN in conducting clinical trials, of our preventive HIV vaccines; thosemanufacturing costs are funded directlyfor materials used in clinical trials, third-party research services, laboratory and related supplies, technology license fees, legal and other regulatory expenses, and general overhead costs. We expect these costs will continue to be the HVTN by NIAID.primary operating capital requirements for the near future.
We do not disclose our research and development expenses by project, since our employees’ time is spread across multiple programs and our laboratory facility is used for multiple vaccine candidates. We track the direct cost of research and development expenses related to government grant revenue by the percentage of assigned employees’ time spent on each grant and other direct costs associated with each grant. Indirect costs associated with grants are not tracked separately, but are applied based on a contracted overhead rate negotiated with the NIH. Therefore, the recorded revenues associated with government grants approximates the costs incurred. We believe that additional project-by-project information would not form a reasonable basis for disclosure to our investors.
We do not provide forward-looking estimates of costs and time to complete our research programs due to the many uncertainties associated with vaccine development. Due to these uncertainties, ourOur future expenditures are likely to be highly volatile in future periods depending on the outcomes of theour clinical trials and preclinical studies. AsWe expect our research and development costs to increase as we obtain data from pre-clinical studiescontinue development of our various programs and as we move toward later stages of development, especially with regard to the ongoing clinical trials we may elect to discontinue or delay vaccine development programs to focusfor Gedeptin and CEO-CM04S1. We expect our resources on more promising vaccine candidates. Completion of preclinical studies and human clinical trials may take several years or more, but the length of time can vary substantially depending upon several factors. The duration and the cost of future clinical trials may vary significantly over the life of the project because of differences arising during development of the human clinical trial protocols, including the number of patients that ultimately participate in the clinical trial; the duration of patient follow-up that seems appropriate in view of the results; the number of clinical sites included in the clinical trials; and the length of time required to enroll suitable patient subjects.
General and Administrative Expenses
During the three-month and nine-month periods ended September 30, 2017, we recorded general and administrative expense of $340,143 and $985,001, respectively, as compared to $220,707 and $1,472,030, respectively, during the comparable periods of 2016. General and administrative costs include officers’ salaries, legal and accounting costs, patent costs, and other general corporate expenses. General and administrative expense for the three-month and nine-month periods of 2017 include stock-based compensation expense of $7,920 and $23,760, respectively; as compared to $22,822 and $508,206, respectively, for the comparable periods of 2016 (see discussion under “Stock-Based Compensation Expense” below). Excluding stock-based compensation expense, general and administrative expenses were $332,223 and $961,241 during the three-month and nine-month periods ended September 30, 2017, respectively, as compared to $197,885 and $963,824, respectively during the comparable periods of 2016. The overall variance in general and administrative expense from the 2016 periods to 2017 is partially attributable in part to the timing of patent costs. Also, during the three months ended September 30, 2017, we incurred additional costs associated with the conduct of a special meeting of stockholders, which contributed to the increase as compared to the same period of 2016. We expect that our general and administrative costs may increase in the futurecommensurately in support of expanded research and development efforts.
As of the date of this Quarterly Report, we expect our existing cash and cash equivalents will be sufficient to fund our operations over at least the next twelve months.
We have based our projections of operating capital requirements on assumptions that may prove to be incorrect, and we may use our available capital resources sooner than we expect. Our future capital requirements will depend on many factors, which include but are not limited to:
● | the timing and costs of our ongoing and planned clinical trials; |
● | the timing and costs of manufacturing material for use in clinical trials; |
● | the number and scope of our research programs and the speed at which they are advanced; |
● | the progress and success of our preclinical and clinical development activities; |
● | the costs involved in prosecuting and enforcing patent claims and other intellectual property rights; |
● | the costs to attract and retain skilled personnel; |
● | the costs to maintain and expand our infrastructure to support our operations, our product development, and planned future commercialization efforts; |
● | the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; |
● | the costs associated with any products or technologies that we may in-license or acquire; and |
● | the costs and timing of regulatory approvals. |
We will need to continue to raise additional capital to support our future operating activities, including progression of our development programs, preparation for commercialization, and other general corporate activities.
Stock-Based Compensation Expense
For the three-month and nine-month periods ended September 30, 2017 and 2016, the components of stock-based compensation expense were as follows:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2016 | 2016 | |||||||||||||
Stock option expense | $ | 14,433 | $ | 13,686 | $ | 43,535 | $ | 41,058 | ||||||||
Warrant modification expense | - | 15,030 | - | 484,829 | ||||||||||||
Total stock-based compensation expense | $ | 14,433 | $ | 28,716 | $ | 43,535 | $ | 525,887 |
In general, stock-based compensation expense is allocated to research and development expense or general and administrative expense accordingoperating costs. Financing strategies we may pursue include, but are not limited to, the classificationpublic or private sale of cash compensation paidequity, debt financings or funds from other capital sources, such as government funding, collaborations, strategic alliances or licensing arrangements with third parties. There can be no assurances additional capital will be available to secure additional financing, or if available, that it will be sufficient to meet our needs on favorable terms. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the employee, consultantdevelopment of one or director to whom the stock compensation was granted. For the three month and nine month periods ended September 30, 2017 and 2016, stock-based compensation expense was allocated as follows:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
Expense Allocated to: | 2017 | 2016 | 2017 | 2016 | ||||||||||||
General and administrative expense | $ | 7,920 | $ | 22,822 | $ | 23,760 | $ | 508,206 | ||||||||
Research and development expense | 6,513 | 5,894 | 19,775 | 17,681 | ||||||||||||
Total stock-based compensation expense | $ | 14,433 | $ | 28,716 | $ | 43,535 | $ | 525,887 |
Other Income
Interest income for the three-month and nine-month periods ended September 30, 2017 was $1,592 and $3,249, respectively, as compared to $340 and $1,249, respectively, for comparable periodsmore of 2016. The variances between periods are primarily attributable to cash available for investment and interest rate fluctuations.our product candidates.
Item 3Quantitative and Qualitative Disclosures About Market Risk |
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Not applicable.applicable to smaller reporting companies.
Item 4Controls and Procedures |
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Evaluation of disclosure controls and procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that the information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended (Exchange Act), is (1) recorded, processed, summarized,, and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to management, including the Chief Executive Officer and Principal Financial and Accounting Officer, as appropriate to allow timely decisions regarding required disclosure.
Our management has carried out an evaluation, under the supervision and with the participation of our Principal Executive Officer and our Principal Financial and Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 andor 15d-15 as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.
Changes in internal control over financial reporting
There waswere no changesignificant changes in our internal control over financial reporting that occurred during the three months ended SeptemberJune 30, 20172022 that hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Controls
Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.
PART II -- OTHER INFORMATION
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None.Item 1Legal Proceedings
None.
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Item 1ARisk Factors |
For information regarding factors that could affect our results of operations, financial condition or liquidity, see the risk factors discussed under “Risk“Risk Factors” in Item 1A of our most recent Annual Report on Form 10-K. See also “Forward-Looking Statements,” included in Part I - Item 2 of this Quarterly Report on Form 10-Q. There have been noAs a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to provide the information called for by this Item 1A concerning any material changes from the risk factors previously disclosed in our most recent Annual Report on Form 10-K.
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Item 2Unregistered Sales of Equity Securities and Use of Proceeds |
NoneEffective as of May 1, 2022, we renewed our agreement with Content Carnivores, LLC for an additional one-year period. In connection with the renewal, in May 2022, we issued 68,500 shares of our common stock to Content Carnivores, LLC as a restricted stock award under our 2020 Stock Incentive Plan with a value at that date of $72,000. The Company relied on an exemption from the registration requirements of the Securities Act afforded by Section 4(a) (2) thereof and Rule 506 of Regulation D.
There were no other sales of unregistered securities during the period covered by this report that have not previously disclosedbeen reported on Form 8-K.
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Item 3Defaults Upon Senior Securities |
None.None.
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Item 4Mine Safety Disclosures |
Not applicableapplicable.
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Item 5Other Information |
During the period covered by this report, there was no information required to be disclosed by us in a Current Report on Form 8-K that was not so reported, nor were there any material changes to the procedures by which our security holders may recommend nominees to our board of directors.
Item 6 Exhibits
The exhibits filed with this report are set forth on the exhibit index following the signature page and are incorporated by reference in their entirety into this item.
* | Filed herewith |
** | Indicates a management contract or compensatory plan or arrangement |
(1) | These interactive data files shall not be deemed filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under these sections. |
(2) | Incorporated by reference from the registrant’s Current Report on Form 8-K filed January 20, 2022. |
(3) | Incorporated by reference from the registrant’s Annual Report on Form 10-K filed March 9, 2022. |
(4) | Incorporated by reference from the registrant’s Current Report on Form 8-K filed May 27, 2022. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this quarterly report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.
GEOVAX LABS, INC. | ||||
(Registrant) | ||||
Date: August 3, 2022 | By: | |||
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| /s/ Mark W. Reynolds | ||
Mark W. Reynolds | ||||
Chief Financial Officer | ||||
(duly authorized officer and principal | ||||
financial officer) |
EXHIBIT INDEX
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