Vaxxinity 10Q 2022 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

(Mark One)

☒

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

For the quarterly period ended

March 31, 2022

-OR-

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission file number

001-41058

Vaxxinity, Inc.

(Exact name of registrant as specified in its charter)

Delaware

86-2083865

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

1717 Main St

Ste 3388

Dallas

75201

(

254

)

244-5739

(Registrant’s telephone number, including area code)

Not Applicable

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

__________________

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

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

Class A Common Stock, par value

$0.0001 per share

VAXX

The

Nasdaq

Global 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 requirements for the past 90

days. Yes

☐

☒

Indicate by check mark whether the registrant has submitted

electronically every Interactive Data File required to be submitted

pursuant to Rule 405 of Regulation S-T

(§232.405 of this chapter) during the preceding 12 months (or

for such shorter period that the registrant was required

to submit such files). Yes

☒

☐

Indicate by check mark whether the registrant is a large accelerated

filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth

company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange

Act:

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☒

If an emerging growth company, indicate by check mark if the registrant has elected not to

use the extended transition period for complying with any

new or revised

financial accounting standards provided pursuant to Section 13(a)

of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company

(as defined in Rule 12b-2 of the Exchange Act).

☐

As of May 6, 2022, the registrant had

112,120,585

shares of $0.0001 par value Class A common stock

outstanding and

13,874,132

shares of $0.0001 par value Class B

common stock outstanding.

SPECIAL NOTE REGARDING FORWARD

-LOOKING STATEMENTS

This Quarterly Report on Form

10-Q contains forward-looking statements. Forward-looking statements are neither historical facts

nor

assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of

our

business,

future

plans

and

strategies

and

other

future

conditions.

some

cases,

you

can

identify

forward-looking

statements

because

they

contain

words

such

“anticipate,”

“believe,”

“estimate,”

“expect,”

“intend,”

“may,”

“predict,”

“project,”

“target,”

“potential,” “seek,” “will,” “would,” “could,” “should,” “continue,” “contemplate,” “plan,” other words and terms of similar meaning

and the negative of these words or similar terms.

Forward-looking statements

are subject to

known and unknown

risks and uncertainties,

many of which

may be beyond

our control.

caution you

that forward-looking

statements are not

guarantees of

future performance or

outcomes and that

actual performance

and outcomes may

differ materially

from those made

in or suggested

by the forward-looking

statements contained

in this Quarterly

Report. In addition, even if our results of

operations, financial condition and cash flows, and the development of the

markets in which

we operate, are consistent with the forward-looking statements contained in this Quarterly Report, those results or developments may

not be indicative of results or

developments in subsequent periods. New factors emerge from

time to time that may

cause our business

not to develop

as we expect,

and it is not

possible for us to

predict all of

them. Factors that

could cause actual

results and outcomes

to differ from those reflected

in forward-looking statements include, among others,

the following:

•

the prospects of UB-612

and other product candidates,

including the timing of

data from our clinical

trials for UB-612

and other product candidates and our ability

to obtain and maintain regulatory approval for our

product candidates;

•

our ability to develop and commercialize

new products and product candidates;

•

our ability to leverage our Vaxxine

Platform;

•

the rate and degree of market acceptance of our

products and product candidates;

•

our

status as

a clinical-stage

company

and

estimates

of our

addressable

market,

market

growth,

future

revenue,

expenses, capital requirements and our

needs for additional financing;

•

our ability to comply with multiple legal and regulatory systems relating to privacy, tax, anti-corruption and

other applicable laws;

•

our ability to hire and retain key personnel and to manage

our future growth effectively;

•

competitive companies and technologies

and our industry and our ability to compete;

•

our and our

collaborators’, including

United Biomedical’s

(“UBI”), ability

and willingness to

obtain, maintain,

defend

and enforce our

intellectual property protection

for our proprietary

and collaborative product

candidates, and the

scope

of such protection;

•

the

performance

third

party

suppliers

and

manufacturers

and

our

ability

find

additional

suppliers

and

manufacturers;

•

our ability

and the

potential to

successfully manufacture

our product

candidates for

pre-clinical use,

for clinical

trials

and on a larger scale for commercial

use, if approved;

•

the

ability

and

willingness

our

third-party

collaborators,

including

UBI,

continue

research

and

development

activities relating to our product candidates;

•

general economic, political, demographic and business conditions

in the United States, Taiwan

and other jurisdictions;

•

the potential effects of government

regulation, including regulatory developments

in the United

States and other jurisdictions;

•

ability to obtain additional financing

in future offerings;

•

expectations about market trends;

and

•

the

effects

the

Russia-Ukraine

conflict

and

the

COVID-19

pandemic

business

operations,

the

initiation,

development and operation of our clinical trials and patient enrollment of our

clinical trials.

discuss many

of these

factors in

greater detail

under Item

1A. “Risk

Factors” in

our Annual

Report on

Form 10-K

for the

year ended

December 31,

2021. These

risk factors

are not

exhaustive and

other sections

of this

report may

include additional

factors which

could adversely

impact our

business and

financial performance.

Given these

uncertainties,

you should

not place

undue reliance on these forward-looking

statements.

You

should read

this Quarterly

Report and

the documents

that we reference

in this Quarterly

Report and

have filed as

exhibits

completely and with the understanding that our

actual future results may be materially different from what

we expect. We qualify

all of

the forward

-looking

statements

in this

Quarterly

Report

by these

cautionary

statements.

Except

as required

by law,

undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events

or otherwise.

As used

in this

Quarterly Report

on Form

10-Q, unless

otherwise specified

or the

context otherwise

requires, the

terms “we,”

“our,” “us,” the

“Company” refer to

Vaxxinity,

Inc. and

its subsidiaries.

All brand names

or trademarks

appearing in this

Quarterly

Report are the property of their respective owners.

Table of

Contents

Page

PART I—Financial Information

Item 1. Financial Statements

Condensed Consolidated Balance Sheets

Condensed Consolidated Statements of Operations

Condensed Consolidated Statements of Stockholders’ Equity and Convertible Preferred Stock

Condensed Consolidated Statements of Cash Flows

Notes to Condensed Consolidated Financial Statements

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Item 4. Controls and Procedures

PART II—Other Information

Item 1. Legal Proceedings

Item 1A. Risk Factors

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Item 6. Exhibits

Signature

PART

I – FINANCIAL INFORMATION

Item 1. Financial Statements.

VAXXINITY,

INC.

CONDENSED CONSOLIDATED

BALANCE SHEETS

(in thousands, except share and per share amounts)

March 31,

December 31,

2022

2021

(Unaudited)

Assets

Current assets:

Cash and cash equivalents

124,766

144,885

Amounts due from related parties

399

393

Prepaid expenses and other current assets

8,183

8,851

Total current assets

133,348

154,129

Property and equipment, net

12,594

12,173

Long-term prepaid fixed assets

157

199

Long-term deposits

1,351

Restricted cash

172

Total assets

147,528

166,673

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

1,460

3,192

Amounts due to related parties

16,787

19,407

Accrued expenses and other current liabilities

5,784

4,519

Notes payable

380

376

Total current liabilities

24,411

27,494

Other liabilities

Notes payable, net of current portion

10,226

10,323

Other long-term liabilities

236

237

Total liabilities

34,873

38,054

Commitments and contingencies (Note 16)

Preferred stock: $

0.0001

par value,

50,000,000

shares authorized at March 31, 2022 and December 31,

2021

Stockholders’ equity:

Class A common stock, $

0.0001

par value;

1,000,000,000

shares authorized,

111,967,092

and

111,518,094

shares issued and

outstanding at March 31, 2022 and December 31, 2021,

respectively

278

Class B common stock, $

0.0001

par value;

100,000,000

shares authorized,

13,874,132

shares issued and outstanding at

March 31, 2022 and December 31, 2021

Additional paid-in capital

360,121

357,822

Accumulated deficit

(247,744)

(229,481)

Total stockholders’ equity

112,655

128,619

Total liabilities and stockholders’ equity

147,528

166,673

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

VAXXINITY,

INC.

CONDENSED CONSOLIDATED

STATEMENTS

OF OPERATIONS

(in thousands, except share and per share amounts)

(Unaudited)

Three Months Ended March 31,

2022

2021

Revenue

—

Cost of revenue

—

Gross profit

—

Operating expenses:

Research and development

11,478

11,688

General and administrative

6,686

8,584

Total operating expenses

18,164

20,272

Loss from operations

(18,164)

(20,256)

Other (income) expense:

Interest expense

105

511

Interest income

(5)

—

Change in fair value of convertible notes

—

2,667

Change in fair value of simple agreement for future equity

—

8,365

Change in fair value of warrant liability

—

214

(Gain) loss on foreign currency translation, net

(1)

Other (income) expense

11,765

Net loss

(18,263)

(32,021)

Net loss per share, basic and diluted

(0.15)

(0.47)

Weighted average

common shares outstanding, basic and diluted

125,709,613

68,550,993

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

VAXXINITY,

INC.

CONDENSED CONSOLIDATED

STATEMENTS

OF CONVERTIBLE PREFERRED STOCK

(in thousands, except share amounts)

(Unaudited)

Convertible Preferred Stock

Series Seed

Series Seed-1

Series Seed-2

Series A-1

Series A-2

Series A

Series B

Amount

Total

Balance at December 31, 2020

7,831,528

10,383

22,876,457

20,903

14,615,399

11,315

1,871,511

4,640

6,307,690

15,234

62,475

Exchange of Series Seed, Series Seed-1, Series Seed-2, Series

A-1 and Series A-2 for Series A

(7,831,528)

(10,383)

(22,876,457)

(20,903)

(14,615,399)

(11,315)

(1,871,511)

(4,640)

(6,307,690)

(15,234)

53,502,585

62,475

—

Conversion of convertible notes to Series A preferred stock,

net of debt issuance costs

—

3,624,114

27,545

—

27,545

Conversion of notes payable with related parties to Series A

convertible preferred

—

423,230

2,205

—

2,205

Conversion of Simple Agreement for Future Equity to Series A

convertible preferred

—

4,539,060

35,600

—

35,600

Conversion of warrant liability to Series A convertible

preferred

—

134,106

614

—

614

Issuance of Series B convertible preferred stock, net of

issuance costs of $

—

5,441,863

43,480

Balance at March 31, 2021

62,223,095

128,439

5,441,863

43,480

171,919

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

VAXXINITY,

INC.

CONDENSED CONSOLIDATED

STATEMENTS

OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

(Unaudited)

Common Stock-Class A

Common Stock-Class B

Treasury Stock

Amount

Additional Paid-in

Capital

Accumulated

Deficit

Stockholders’

Equity (Deficit)

Balance at December 31, 2021

111,518,094

278

13,874,132

—

357,822

(229,481)

128,619

Issuance of common stock upon exercise of stock options

448,998

—

121

—

121

Stock-based compensation expense

—

2,178

—

2,178

Net loss

—

(18,263)

Balance at March 31, 2022

111,967,092

278

13,874,132

—

360,121

(247,744)

112,655

Common Stock-Class A

Common Stock-Class B

Treasury Stock

Amount

Additional Paid-in

Capital

Accumulated

Deficit

Stockholders’

Equity (Deficit)

Balance at December 31, 2020

60,360,523

272

10,999,149

—

(3,169,093)

(23)

4,682

(92,306)

(87,375)

Issuance of common stock upon exercise of stock options

9,785

—

Vesting of restricted stock

15,405

—

Issuance of common stock upon stock grant

485,836

—

103

—

103

Retirement of treasury stock upon reorganization

(3,169,093)

—

3,169,093

(23)

—

Stock-based compensation expense

—

3,440

—

3,440

Net loss

—

(32,021)

Balance at March 31, 2021

57,702,456

272

10,999,149

—

8,206

(124,327)

(115,849)

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

VAXXINITY,

INC.

CONDENSED CONSOLIDATED

STATEMENTS

OF CASH FLOWS

(in thousands)

(Unaudited)

Three Months Ended March 31,

2022

2021

Cash flows from operating activities:

Net loss

(18,263)

(32,021)

Adjustments to reconcile net loss to net cash used in operating

activities:

Depreciation expense

333

282

Amortization of debt issuance costs

228

Stock-based compensation expense

2,178

3,440

Non-cash interest expense

—

Change in fair value of convertible notes

—

2,667

Change in fair value of warrant liability

—

214

Change in fair value of simple agreement for future equity

—

8,365

Changes in operating assets and liabilities:

Accounts receivable

—

Amounts due from related parties

(6)

(5)

Prepaid expenses and other current assets

667

(12,752)

Long-term deposits

(1,351)

—

Deferred offering costs

—

(862)

Accounts payable

(1,733)

914

Amounts due to related parties

(2,620)

(1,671)

Accrued expenses and other current liabilities

1,268

2,937

Other long-term liabilities

(1)

(3)

Net cash used in operating activities

(19,514)

(28,241)

Cash flows from investing activities:

Purchase of property and equipment

(713)

—

Net cash used in investing activities

(713)

—

Cash flows from financing activities:

Proceeds from issuance of notes payable with related parties

—

2,000

Repayment of convertible notes payable

—

(2,000)

Repayment of notes payable

(107)

(104)

Proceeds from issuance of simple agreement for future equity

—

2,900

Proceeds from issuance of Series B convertible preferred stock,

net of issuance costs

—

43,480

Proceeds from exercise of stock options

121

Net cash provided by financing activities

46,280

Increase (decrease) in cash, cash equivalents, and restricted

cash

(20,213)

18,039

Cash, cash equivalents, and restricted cash at beginning of

period

145,057

31,198

Cash, cash equivalents, and restricted cash at end of period

124,844

49,237

Supplemental Disclosure

Cash paid for interest

Noncash Financing Activities

Exchange of Series Seed, Series Seed-1, Series Seed-2, Series

A-1 and Series A-2 for Series A preferred

stock

—

62,475

Conversion of simple agreement for future equity into Series A

preferred stock

—

35,600

Conversion of convertible notes payable into Series A

preferred stock

—

27,545

Conversion of notes payable with related parties into Series

A preferred stock

—

2,205

Conversion of warrant liability into Series A preferred stock

—

614

Retirement of treasury stock upon reorganization

—

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

VAXXINITY,

INC.

NOTES TO THE CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

1. Nature of the Business

Vaxxinity,

Inc.,

Delaware

corporation

(“Vaxxinity

,”

and

together

with

its

subsidiaries,

the

“Company”),

was

formed

through

the

combination of

two separate businesses

that originated

from United Biomedical,

Inc. (“UBI”)

in two separate

transactions: a

spin-out

from UBI in

2014 of

operations focused on

developing chronic disease

product candidates that

resulted in United

Neuroscience (“UNS”),

and a second spin-out

from UBI in 2020 of

operations focused on the

development of a COVID-19

vaccine that resulted in

C19 Corp.

(“COVAXX”).

On February 2, 2021,

Vaxxinity

was incorporated for the

purpose of reorganizing

and combining UNS and

COVAXX

and on March 2, 2021, did so by

acquiring all of the outstanding equity interests

of UNS and COVAXX

pursuant to a contribution and

exchange

agreement

(the

“Contribution

and

Exchange

Agreement”)

whereby

the

existing

equity

holders

UNS

and

COVAXX

contributed their equity interests in each of UNS and COVAXX

in exchange for equity in Vaxxinity

(the “Reorganization”).

The Company is a biotechnology company currently focused on

developing product candidates for human use in the

fields of neurology

and coronaviruses utilizing its

“Vaxxine

Platform”—a peptide vaccine technology first

developed by UBI and

subsequently refined over

the

last

two

decades.

The

Company

engaged

the

development

and

commercialization

rationally

designed

prophylactic

and

therapeutic vaccines to combat chronic disorders and infectious diseases with large patient populations and unmet medical need. UBI is

a significant shareholder of the Company and, therefore, considered

a related party.

The Company

is subject

to risks and

uncertainties common

to early-stage

companies in

the biotechnology

industry including,

but not

limited

to,

uncertainty

product

development

and

commercialization,

lack

marketing

and

sales

history,

development

its

competitors of new

technological innovations, dependence on

key personnel, market

acceptance of products,

product liability, protection

of proprietary technology,

ability to raise additional

financing, and compliance

with government regulations. If

the Company does not

successfully commercialize any of its

product candidates, it will

be unable to generate

recurring product revenue or

achieve profitability.

The

Company’s

product

candidates

are

development

and

will

require

significant

additional

research

and

development

efforts,

including extensive pre-clinical and clinical testing and

regulatory approval prior to commercialization. These efforts require significant

amounts of

additional capital, adequate

personnel and

infrastructure and

extensive compliance-reporting

capabilities. There can

be no

assurance that

the Company’s

research and

development will

be successfully

completed, that

adequate protection

for the

Company’s

intellectual property

will be

obtained, that

any products

developed will

obtain necessary

government regulatory

approval or

that any

approved products will be commercially viable.

Even if the Company’s product development efforts are

successful, it is uncertain when,

if ever, the Company will generate significant revenue from product sales. The Company operates in an environment of rapid change in

technology and is dependent upon the services of its employees and consultants.

Contribution and Exchange Agreement

On March

2, 2021,

in accordance

with the

Contribution and

Exchange Agreement,

(i) all

outstanding shares

of UNS

and COVAXX

preferred stock and

common stock were

contributed to Vaxxinity and exchanged for

like shares

of stock in

Vaxxinity,

(ii) the outstanding

options to

purchase shares

of UNS and

COVAXX

common stock

were terminated

and substituted

with options

to purchase

shares of

common stock in Vaxxinity,

(iii) the outstanding warrant to purchase shares of COVAXX

common stock was cancelled and exchanged

for a warrant to acquire common stock in Vaxxinity

and (iv) each outstanding Reorganization Convertible Note (as defined below) was

contributed to Vaxxinity

and the holders of such notes received Series A preferred stock in Vaxxinity.

In particular:

•

Each UNS common share and convertible preferred share was exchanged

for 0.2191 shares of Vaxxinity

common stock or

Series A preferred stock, as applicable;

•

Each share of COVAXX

common and convertible preferred stock was exchanged for

3.4233

shares of Vaxxinity

common

stock or Series A preferred stock, as applicable (and prior to the closing of the Reorganization,

all the holders of outstanding

COVAXX

SAFEs agreed to convert such SAFEs into shares of Series A-3 preferred

stock of COVAXX,

which shares were

then exchanged for shares of Vaxxinity’s

Series A preferred stock);

•

The Reorganization Convertible Notes were exchanged

for an aggregate of

4,047,344

shares of Vaxxinity’s

Series A

preferred stock; and

•

Each outstanding option of both UNS and COVAXX

to purchase common shares of UNS or COVAXX

was terminated and

substituted with an option to purchase shares of Class A common stock of

Vaxxinity.

Each outstanding UNS option was

exchanged based on a conversion ratio of

0.2191

. Each outstanding COVAXX

option was exchanged based on a conversion

ratio of

3.4233

VAXXINITY,

INC.

NOTES TO THE CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

All parties to

the Contribution

and Exchange

Agreement intended

that the contribution

of outstanding equity

interests to Vaxxinity

exchange for Vaxxinity’s

common stock and preferred stock be treated as

an integrated transaction for U.S. federal income

tax purposes

that is governed by Section 351(a) of the Internal Revenue Code of 1986, as amended.

The Reorganization

was determined

to be a

common control

transaction, so

the carrying

values of all

contributed assets

and assumed

liabilities

remained

unchanged

and

the

financial

information

for

all

periods

the

financial

statements

presented

prior

the

Reorganization are presented on a consolidated basis.

Reverse Stock Split

On October 29,

2021, the

Company effectuated

a reverse stock

split of 1-for-

1.556

(the “Stock Split”)

of the Company’s

Class A and

Class B common

stock pursuant to

an amendment to

the Company’s

Amended and Restated

Certificate of Incorporation

approved by

the Company’s

board of directors

and stockholders.

As a result

of the Stock

Split, the Company

also adjusted the

share and per

amounts

associated

with

its options

and

warrants

purchase shares

its common

stock.

These

unaudited

condensed

consolidated

financial

statements

including

the

notes

have

been

retroactively

adjusted

reflect

the

Stock

Split

for

all

periods

presented.

Any

fractional shares that would have resulted from the Stock Split have been rounded down

to the nearest whole share.

Initial Public Offering

On November 15, 2021, the Company closed its IPO of

6,000,000

shares of Class A common stock at a public offering price of $

13.00

per share. On

November 18, 2021

the Company held

a subsequent closing for

the issuance of an

additional

537,711

shares of Class A

common stock pursuant

to a

30-day option granted

to the

underwriters to purchase

up to an

additional

900,000

shares of Class

A common

stock at

the IPO

price, less

underwriting

discounts and

commissions. The

aggregate net

proceeds to

the Company

from the

offering,

after deducting underwriting discounts

and commissions and

other offering expenses payable

by the Company, was approximately

71.1

million. Upon the closing

of the IPO, all previously

outstanding shares of the Company’s

redeemable convertible preferred

stock were

automatically converted at the same ratio used for the Stock Split (1-for-

1.556

) into shares of its Class A common stock.

Liquidity

At three

months

ended

March 31,

2022,

the

Company

had $124.8

million

cash

and

cash equivalents.

date,

the

Company

has

primarily financed

its operations through

the sale of

convertible preferred

stock and

common stock and

borrowings under

promissory

notes

(including

Convertible

Notes),

portion

which

has

been

raised

from

party

entities.

The

Company

has

experienced

significant

negative cash

flows from

operations

since inception,

and incurred

a net

loss of

$18.3 million

for the

three months

ended

March 31, 2022. Net cash used in operating

activities for the three months ended March 31, 2022

was $19.5 million.

In addition, as of

March 31, 2022, the Company has an accumulated deficit of $247.7 million. The Company expects to incur substantial operating losses

and negative cash flows from operations for the foreseeable future. As of the

date these financial statements were available to be issued,

the

Company

expects

its

existing

cash

and

cash

equivalents

sufficient

fund

its

operating

expenses

and

capital

expenditure

requirements for at least the next 12 months.

The Company will need to obtain additional funding

beyond the period that is 12 months from the date these financial

statements were

available to be issued whether through collaboration

agreements, private or public equity or

debt offerings or a combination thereof, and

such

additional

funding

may

not

available

terms

the

Company

finds

acceptable

all.

the

Company

unable

obtain

sufficient

capital to

continue

to advance

its programs,

the Company

would be

forced to

delay,

limit, reduce

or terminate

its product

development

future

commercialization

efforts

grant

rights

third

parties

develop

and

market

product

candidates

that

the

Company would otherwise prefer to develop and market itself.

The

accompanying

unaudited

condensed

consolidated

financial

statements

have

been

prepared

going

concern

basis,

which

contemplates

the

realization

assets

and

satisfaction

liabilities

the

ordinary

course

business.

The

unaudited

condensed

consolidated

financial

statements

not

include

any

adjustments

relating

the

recoverability

and

classification

recorded

asset

amounts or the amounts and classification of liabilities that might result from the outcome

of the uncertainties described above.

2. Summary of Significant Accounting Policies

Basis of presentation

The

accompanying

interim

unaudited

condensed

consolidated

financial

statements

have

been

prepared

using

generally

accepted

accounting principles in the United States of America (GAAP)

and pursuant to the rules and regulations of the

United States Securities

and Exchange Commission (“SEC”) for interim financial

reporting. The unaudited condensed consolidated financial

statements for the

VAXXINITY,

INC.

NOTES TO THE CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

periods presented include the accounts of UNS and COVAXX that were parties to the Contribution and Exchange Agreement. All share

and per share

amounts, as originally

recorded by each

entity,

have been converted

to a number

of shares and

per share amounts

using

the conversion ratios determined under the Contribution and Exchange Agreement

and the Stock Split ratio.

These interim

condensed consolidated

financial statements

are unaudited

and, in

the opinion

of management,

include all

adjustments

(consisting of normal

recurring adjustments and

accruals) necessary to

fairly present the

results of the interim

periods. The condensed

consolidated balance sheet at December 31, 2021, has been derived from the

audited financial statements at that date. Operating results

for the three months ended March 31, 2022 and cash flows for the three months ended March 31, 2022 are not necessarily indicative of

the results that

may be expected for

the fiscal year

ended December 31,

2022 or any

other future period.

Certain information and footnote

disclosures normally

included in

annual financial

statements prepared

in accordance

with accounting

principles generally

accepted in

the United States (“U.S.

GAAP”) have been omitted

in accordance with the

rules and regulations for

interim reporting of the

SEC. These

interim unaudited condensed financial statements should be read in conjunction with the financial

statements and notes thereto included

in our report for the year ended December 31, 2021.

Leases

At inception of a contract, we determine whether an arrangement is or contains a lease. For all leases, we

determine the classification as

either

operating

leases

financing

leases.

Operating

leases

are

included

Operating

lease

right-of-use

assets

and

Operating

lease

liabilities in our Condensed Consolidated Balance Sheets.

Lease recognition occurs

at the commencement date

and lease liability amounts

are based on the present

value of lease payments

over

the lease term. Our lease

terms may include options

to extend or terminate the

lease when it is reasonably

certain that we will exercise

that

option.

If a

lease

does not

provide

information

to determine

an implicit

interest rate,

use our

incremental

borrowing

rate

determining the present value of

lease payments. Right-of-use (ROU) assets represent

our right to use an underlying

asset for the lease

term, and lease liabilities represent our obligation to make lease payments under the lease. ROU assets also include any lease payments

made prior

to the commencement

date and exclude

lease incentives received.

Operating lease expense

is recognized on

a straight-line

basis over the lease term. The depreciable life of assets and leasehold improvements are limited by the expected lease term,

unless there

is a transfer of

title or purchase option

reasonably certain of exercise.

Lease agreements with

both lease and nonlease

components, are

generally accounted for together as a single lease component.

Related party transactions

The Company has a Related

Party policy which defines related parties,

and assigns oversight responsibility for related

party transactions

the

Company's

Audit

Committee.

The

Committee

reviews

advance

party

transactions,

and

considers

multiple

factors,

including the proposed aggregate

value of the

transaction, or, in the

case of indebtedness,

the amount of

principal that would

be involved,

the benefits

to the

Company of

the proposed

transaction, the

availability of

other sources

of comparable

products or

services, and

assessment of

whether the

proposed transaction

is on terms

that are comparable

to the terms

available to

or from, as

the case may

be,

unrelated third parties. Under the policy, related party transactions are approved only if the Committee determines in good faith that the

transaction is not inconsistent with the interests of the Company and its shareholders.

Significant accounting policies

The significant accounting policies used in preparation of these unaudited

condensed consolidated financial statements are disclosed in

our

annual

financial

statements

for

the

year

ended

December 31,

2021.

There

have

been

changes

the

Company’s

significant

accounting policies during the three months ended March 31, 2022.

Recently issued accounting pronouncements

From time

to time,

new accounting

pronouncements are

issued by

the FASB

or other

standard setting

bodies and

are adopted

by the

Company

the

specified

effective

date.

Unless

otherwise

discussed,

the

Company

believes

that

the

impact

recently

issued

standards that are not yet effective will not have a material impact on

its financial position or results of operations upon adoption.

Recently adopted accounting standards

July

2018,

the

FASB

issued

ASU

No.

2018-11,

Leases

(Topic

842):

Targeted

Improvements

(“ASU

2018-11”).

ASU

2018-11

provided an alternative method in addition to the modified retrospective transition method for ASU No. 2016-02, Leases: Amendments

to the FASB

Accounting Standards Codification (“ASU

2016-02”), issued in February

2016. Under ASU 2018-11,

an entity may elect

to initially

apply the

new lease

standard at

the adoption

date and

recognize a

cumulative-effect adjustment

to the

opening balance

retained earnings in the

period of adoption. Under

ASU 2016-02, a lease is required

to recognize assets and liabilities

with lease terms

VAXXINITY,

INC.

NOTES TO THE CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

of more than

twelve months. ASU

2016-02 is effective for

nonpublic business entities

and public entities

eligible to be

Smaller Reporting

Companies for fiscal years beginning after December 15, 2021.

The Company

adopted the

new standard

on January

1, 2022

using the

modified retrospective

approach. The

Company has

elected to

apply the

transition method

that allows companies

to continue

applying the

guidance under the

lease standard

in effect

at that time

the comparative

periods presented

in the condensed

financial statements

and recognize

a cumulative-effect

adjustment to

the opening

balance of accumulated deficit on the date of adoption. The Company has elected to combine lease components (for example fixed rent

payments)

with

non-lease

components

(for

example,

common-area

maintenance

costs)

our

facility,

lab

equipment

and

CRO

embedded

lease

asset classes.

The

Company

also

elected

the “package

of practical

expedients”,

which

permits

the

Company

not

reassess under the new standard the Company’s

prior conclusions about lease identification, lease classification

and initial direct costs.

In addition, the Company also elected the

short-term lease practical expedients allowed under the standard. Lastly, the Company did not

elect the

practical expedient

allowing the

use-of-hindsight

which would

require the

Company to

reassess the

lease term

of its

leases

based on all facts and circumstances through the effective date.

Results for reporting

period beginning after

January 1, 2022

are presented under

the new standard,

while prior period

amounts are not

adjusted

and

continue

reported

under

the

accounting

standards

effect

for

the

prior

period.

Upon

adoption

of the

new

lease

standard, on January

1, 2022, the

Company was not

entered into any

leases subject to

ASC 842 and

did not capitalize

a ROU asset

lease liability.

3. Fair Value

Measurements

The Company's money market accounts are shown at

fair value based on unadjusted quoted

market prices in active markets for

identical

assets.

The following

table presents

information about

the Company’s

financial instruments

measured at

fair value

on a

recurring basis

and

indicate the level of the fair value hierarchy used to determine such fair values (in

thousands):

March 31, 2022

Level 1

Level 2

Level 3

Total

Assets:

Money market account

119,796

—

119,796

Total assets

119,796

—

119,796

December 31, 2021

Level 1

Level 2

Level 3

Total

Assets:

Money market account

139,794

—

139,794

Total assets

139,794

—

139,794

During the three months ended March 31, 2022 and the year ended December 31, 2021, there were

transfers between Level 1, Level

2 and Level 3.

4. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):

March 31,

December 31,

2022

2021

Prepaid materials and supplies

3,657

3,517

Deposits

3,468

4,379

Clinical prepayments

709

614

Other

349

341

8,183

8,851

The Company’s prepaid material and supplies related to enzyme-linked immunosorbent assay (“ELISA”) test

production, of which $

1.0

million was paid to a related

party and $

2.5

million related to materials to be

utilized during its Phase 3 COVID-19 vaccine

clinical trial.

VAXXINITY,

INC.

NOTES TO THE CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

5. Property and Equipment

Property and equipment, net consisted of the following (in thousands):

March 31,

December 31,

2022

2021

Airplane

11,983

Laboratory and computer equipment

2,560

1,831

Software

169

168

Facilities, furniture and fixtures

110

Vehicles

Total property

and equipment

14,908

14,154

Less: accumulated depreciation

(2,314)

(1,981)

Property and equipment, net

12,594

12,173

Depreciation expense for the three months ended March 31, 2022

and 2021 was $

0.3

million.

6. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in

thousands):

March 31,

December 31,

2022

2021

Accrued external research and development

3,498

1,501

Accrued bonuses

1,200

2,294

Accrued professional fees and other

1,055

692

Accrued interest

5,784

4,519

7. Other Long-Term

Liabilities

Other long-term liabilities consisted of the following (in thousands):

March 31,

December 31,

2022

2021

Accrued tax provision

236

Accrued rent

—

236

237

As of March 31, 2022 and December 31, 2021, approximately $

0.2

million of the accrued tax provision relates to penalties and interest

the Company

may be

subject to

paying for

late filing

fees related

to a

foreign subsidiary.

The Company

expects these

amounts to

forgiven but has accrued for them until the statute of limitations expires

and it is appropriate to write them off.

8. Notes Payable

Notes Payable with Related Parties

In December 2018,

the Company entered

into related party convertible

notes payable (the “2018

Related Notes” and together

with the

Convertible Notes, the “Reorganization Convertible

Notes”) for $

2.0

million in aggregate proceeds,

received in three tranches.

The 2018

Notes

bore

simple

interest

annual

rate

and

contain

number

provisions

addressing

events

default

and

prepayment. In accordance with the Contribution and Exchange Agreement, on March 2, 2021, the 2018 Related Notes were converted

into Series A preferred stock.

VAXXINITY,

INC.

NOTES TO THE CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

During the three months ended March 31, 2021, the Company recognized interest expense of less than

0.1

million on the 2018 Related

Notes.

2019 Executive Note

In November 2019, the Company borrowed $

0.1

million from its Chief Executive Officer (the “2019 Executive Note”). No formal loan

agreement was executed. The Company

has elected to accrue interest at

an annual rate of

%, consistent with the terms and

conditions

of the Convertible Notes and 2018

Related Notes, which was the closest

benchmark the Company could

evaluate. The 2019 Executive

Note was repaid in August 2021.

The activity of the 2018 Related Notes and 2019 Executive Note is as follows (in thousands):

2018 Related Notes and 2019 Executive Note

Related Party

Principal

Accrued

Interest

Balance

December 31, 2020

2,100

194

2,294

Accrued interest

—

Conversion

(2,000)

(205)

(2,205)

March 31, 2021

100

107

Note Payable—Airplane

In connection with

the acquisition of

an airplane, the Company

entered into a note

payable agreement (the

“2025 Note”) in

June 2020

for $

11.5

million, with an annual interest rate of

3.4

% and a maturity date of June

9, 2025. Principal and interest payments

are payable

monthly in the amount

of $

0.07

million with a

final payment of $

9.4

million at maturity. The 2025 Note

is guaranteed by the

co-founders

of the Company. In addition, the Company

incurred debt issuance costs of $

0.3

million, which are being amortized over the term of the

loan. There are no financial covenants associated with the 2025 Note.

The carrying value of the 2025 Note is as follows (in thousands):

March 31,

December 31,

2022

2021

Principal

10,776

10,883

Unamortized debt issuance cost

(170)

(184)

Carrying amount

10,606

10,699

Less: current portion

(380)

(376)

Note payable, net of current portion and debt issuance cost

10,226

10,323

As of March 31, 2022, the remaining principal payments for the 2025

Note, are as follows (in thousands):

Amount

2022

322

2023

444

2024

458

2025

9,552

10,776

Interest expense

associated with the

2025 Note was

0.1

million for each

of the three

months ended

March 31, 2022

and 2021. As

March 31, 2022,

accrued interest of

less than $

0.1

million was included

in accrued expenses

and other liabilities

in the accompanying

condensed consolidated balance sheets as of March 31, 2022 (unaudited)

and December 31, 2021.

VAXXINITY,

INC.

NOTES TO THE CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Note Payable—Paycheck Protection Program

The Company

applied for

and received

a loan,

which is

in the

form of

a note

dated May

5, 2020,

from HSBC

Bank USA,

National

Association (“HSBC”)

in the aggregate

amount of approximately

0.3

million (the “PPP

Loan”), pursuant

to the Paycheck

Protection

Program (“PPP”).

The PPP,

established as

part of

the Coronavirus

Aid, Relief

and Economic

Security Act

(“CARES Act”),

provides

for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. As of

March 31, 2021, there were no events of default under the PPP Loan.

The Company paid off the PPP Loan in full, including all accrued

but unpaid interest to the repayment date, in August 2021.

9. Convertible Preferred Stock

In connection with

the Reorganization, each

UNS convertible preferred share

was exchanged for

0.2191

shares of Vaxxinity

preferred

stock and

each share of

COVAXX

convertible preferred

stock was exchanged

for

3.4233

shares of Vaxxinity

preferred stock.

During

the first

and second

quarters of

2021, the

Company raised

gross proceeds

of $

122.8

million in

connection with

its Series

B preferred

stock financing. The

Company issued a total

15,365,574

shares at a price

of $

8.00

per share. All shares

of the Company’s

Series B

preferred stock converted

into shares

of the Company’s Class

A common stock

concurrently with

the closing

of the initial

public offering.

As of March 31, 2022 and

December 31, 2021, Vaxxinity’s

Amended and Restated Certificate

of Incorporation authorized

50,000,000

shares of

preferred stock

with a

par value

of $

0.0001

per share.

There were

no shares

of preferred

stock outstanding

as of

March 31,

2022 and December 31, 2021.

10. Common Stock

As explained

in Note

1, in

accordance with

the Contribution

and Exchange

Agreement, on

March 2,

2021, all

outstanding shares

common

stock

UNS

and

COVAXX

were

contributed

Vaxxinity

and

exchanged

for

aggregate

60,360,523

Vaxxinity’s

Class A common

stock and

10,999,149

shares of Vaxxinity’s

Class B common

stock. Each

UNS share of

common stock

was exchanged

for

0.2191

shares of Vaxxinity

common stock and

each share of

COVAXX

common stock

was exchanged for

3.4233

shares of Vaxxinity

common stock.

March 31,

2022

and

December

31,

2021,

Vaxxinity’s

Amended

and

Restated

Certificate

Incorporation

authorized

1,100,000,000

shares of common

stock with a

par value of $

0.0001

per share, of

which

1,000,000,000

shares have been designated

Class A common stock and

100,000,000

shares have been designated as Class B common stock.

Holders of Class

A common stock and

Class B common

stock have identical rights,

except with respect

to voting and conversion.

Except

as otherwise expressly provided in Vaxxinity’s

Amended and Restated Certificate of Incorporation or Bylaws, or

required by applicable

law,

holders

of Class

A common

stock will

be entitled

to one

vote per

share on

all matters

submitted

to a

vote

of stockholders

and

holders of our Class B common stock will be entitled to ten votes per share on all matters submitted

to a vote of stockholders.

Holders

Class A

common

stock

and

Class B

common

stock

vote

together

as a

single class

all matters

submitted

vote

stockholders, except (i) amendments

to Vaxxinity’s

Amended and Restated Certificate of

Incorporation to increase or

decrease the par

value

class

capital

stock,

which

case

the

applicable

class

would

required

vote

separately

approve

the

proposed

amendment

and (ii)

amendments to

Vaxxinity’s

Amended and

Restated Certificate

of Incorporation

that alter

or change

the powers,

preferences or special rights

of a class of capital

stock in a manner

that affects its holders adversely,

in which case the applicable

class

would be required to vote separately to approve the proposed amendment.

Holders of common

stock are entitled to

receive, ratably,

dividends as may

be declared by

Vaxxinity’s

board of directors out

of funds

legally available therefor if the board of directors, in its discretion, determines to issue dividends.

The

voting,

dividend,

and

liquidation

rights of

the holders

common

stock

are

subject to

and

qualified

the rights,

powers,

and

preferences of the holders of Vaxxinity’s

preferred stock.

VAXXINITY,

INC.

NOTES TO THE CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

The Company has reserved shares of common stock for issuance for the following

purposes:

March 31,

December 31,

2022

2021

Options issued and outstanding

20,274,077

21,387,909

Options available for future grants

6,727,691

7,209,538

Warrants issued and

outstanding

1,928,020

28,929,788

30,525,467

11.

Stock-Based Compensation

Stock Options

As of March 31, 2022 there were options for

13,911,622

shares of Class A stock outstanding and options for

6,362,455

shares of Class

B stock outstanding,

of which

8,466,456

Class A and

4,897,414

Class B shares were

exercisable, respectively.

As of March

31, 2022,

the maximum number of stock options awards available for future issuance

under the Company’s plans is

6,727,691

The following table summarizes stock option activity during the three

months ended March 31, 2022:

Number of Stock

Options

Outstanding

Weighted Price

Per Share

Weighted

Contractual

Term

(years)

Aggregate

Intrinsic Value

(in thousands)

Balance at December 31, 2021

21,387,909

5.25

7.4

49,684

Granted

303,086

5.36

Exercised

(842,938)

(3.89)

Forfeited

(573,980)

(5.16)

Balance at March 31, 2022

20,274,077

5.31

7.5

32,167

Options vested and exercisable at March 31, 2022

13,363,870

4.46

7.1

27,022

The aggregate intrinsic value of options is calculated as the difference between the exercise price of the options and the fair value of the

common stock for those options that had exercise prices lower than the fair

value of the common stock as of March 31, 2022.

The intrinsic value of options exercised during the three months ended

March 31, 2022 was $

3.6

million.

The weighted-average grant-date fair value per share of options granted

during the three months ended March 31, 2022 was $

4.02

Restricted Stock

The following table summarizes the Company’s

restricted stock activity for the three months ended March 31, 2022:

Number of

Weighted

Average

Grant Date

Fair Value

Per Share

Unvested at December 31, 2021

Issued

300,000

3.76

Unvested at March 31, 2022

300,000

3.76

Stock-based compensation expense recognized on vested restricted stock

was immaterial for the three months ended March 31, 2022.

VAXXINITY,

INC.

NOTES TO THE CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Stock-Based Compensation Expense

The

Company

recorded

stock-based

compensation

expense

the

following

expense

categories

the

accompanying

unaudited

condensed consolidated statements of operations (in thousands):

Three Months Ended March 31,

2022

2021

General and administrative

1,371

3,167

Research and development

807

273

Total stock-based

compensation expense

2,178

3,440

As of

March 31, 2022,

total unrecognized

compensation cost

related to

the unvested

stock-based awards

was $

24.2

million, which

expected to be recognized over a weighted average period of

3.0

years.

12. Income Taxes

The Company computes its

expected annual effective

income tax rate in accordance

with ASC 740 and makes

changes on a quarterly

basis,

necessary,

based

certain

factors

such

changes

forecasted

annual

pre-tax

income;

changes

actual

forecasted

permanent book to tax differences; impacts from tax audits with state, federal or foreign tax authorities; impacts from tax law changes;

or change in judgment as to the realizability of deferred tax assets. The Company identifies items which are unusual and non-recurring

in nature and treats these

as discrete events. The tax effect of

discrete items is recorded in

the quarter in which the discrete

events occur.

The Company’s

effective tax rate for the

three months ended March 31, 2022

and 2021 was

0.00

%, due primarily to its uncertainty of

realizing a benefit from net operating losses incurred during the period.

In assessing

the realizability

of deferred

tax assets,

management considers

whether it

is more

likely than

not that

some or

all of

the

recorded deferred

tax assets will

be realized.

The ultimate

realization of

deferred tax

assets is dependent

on the

generation of

future

taxable income in the periods in which those temporary differences become deductible.

Management considers the scheduled reversal

of deferred tax liabilities, projected future taxable income, and tax planning strategies in

making this assessment.

Based on these items

and the consecutive years of pretax losses (resulting from impairment), management determined that enough uncertainty

exists relative

the

realization

the

deferred

income

tax

asset

balances

warrant

the

application

full

valuation

allowance

for

all

taxing

jurisdictions.

The Company files

income tax returns

in the U.S.

federal and various

state and local

jurisdictions. The Company

also files returns

numerous foreign jurisdictions

that have varied

years remaining open

for examination, but

generally the statute

of limitations is three

to four years from when the return is filed. As of March 31, 2022, the Company

currently has no ongoing audits.

The

Company

has

net

operating

loss

(“NOL”)

carryforwards

for

federal

and

state

income

tax

purposes.

Use

the

NOL

carryforwards is limited under Section

382 of the Internal Revenue Code,

as we have had a change in ownership

of more than 50% of

our capital

stock over

a three-year

period as

measured under

Section 382

of the

Internal Revenue

Code. These

complex changes

ownership rules generally

focus on ownership changes

involving shareholders owning

directly or indirectly

5% or more of

our stock,

including certain public “groups” of

shareholders as set forth under Section

382 of the Internal Revenue Code,

including those arising

from

new stock

issuances and

other

equity transactions.

Some of

these NOL

carryforwards

will expire

if they

are not

used within

certain periods. At this time,

we consider it more

likely than not that

we will not have

sufficient taxable income

in the future that

will

allow us to realize these NOL carryforwards.

13. Net Loss Per Share

The Company’s unvested restricted

common shares have been excluded from the computation of basic net loss per

share.

VAXXINITY,

INC.

NOTES TO THE CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

The

Company’s

potentially

dilutive

securities,

which

include

options,

unvested

restricted

stock,

convertible

notes

payable

and

convertible preferred stock, have

been excluded from the computation

of diluted net loss per share

as the effect would be to

reduce the

net loss per share.

Therefore, the weighted average

number of common

shares outstanding used to

calculate both basic and

diluted net

loss per share is the

same. The Company excluded

the following potential common

shares, presented based on

amounts outstanding at

each period end, from

the computation of diluted

net loss per share

as of March 31, 2022

and March 31, 2021

because including them

would have had an anti-dilutive effect:

March 31,

2022

2021

Options and RSUs issued and outstanding

20,574,077

19,712,504

Warrants issued and

outstanding stock

1,928,020

128,702

22,502,097

19,841,206

14. Commitments and Contingencies

Contractual Obligations

The Company

enters into

agreements with

contract research

organizations

(“CROs”) to

conduct clinical

trials and

preclinical studies

and contract manufacturing organizations

(“CMOs”) to produce vaccines and other

potential product candidates. Contracts with

CROs

and CMOs are generally cancellable, with notice, at the Company’s

option.

As of March 31, 2022, the Company had remaining prepayments to CROs of $

3.1

million and remaining prepayments to CMOs of $

2.6

million for activities

associated with the conduct

of its clinical

trials and for

the production of

the Company’s anticipated vaccine product

candidate.

Michael J. Fox Foundation Grant

On November 3,

2021, the Company

was awarded a

grant from the

Michael J. Fox

Foundation for Parkinson’s

Research (“MJFF”) in

the amount of $

0.8

million to be used

in a project for

the exploration of markers

for target engagement

in individuals immunized

with

UB-312, an

active

-Synuclein immunotherapy.

The Company

will oversee

sample management,

sample preparation

(IgG fractions)

and

distribution,

well

characterize

the

binding

properties

the

antibodies

against

pathological

forms

aSyn.

funding

expected to be

utilized over a

two-year period, as

cash is

received, the amount

expected to the

utilized within twelve

months is

recognized

to short-term

restricted cash/deposits,

with a

corresponding short-term

accrued liability,

which is

released as

the related

expenses are

offset. The Company recognizes

payments from MJFF as a

reduction of research and development

expenses, in the same period

as the

expenses that the

grant is intended

to reimburse

are incurred.

The remaining balance

of cash

received is recognized

to long-term

restricted

cash/deposits, with a corresponding long-term accrued liability. As of

March 31, 2022, the

balance of short-term restricted cash/deposits

and the corresponding

short-term accrued liability

was $

and the balance

of long-term restricted

cash/deposits and the

corresponding

long-term accrued liability

was $

. For

the three months

ended March 31,

2022, the Company

did not recognize

any reduction of

research

and development expenses for amounts reimbursed through the grant.

Lease Agreements

The Company has short-term leases resulting in $

0.1

million short-term lease expense and less than $

0.1

million variable lease expense

during the three months ended March 31, 2022. As of March 31, 2022, the

Company has not entered into any finance lease agreements

or operating lease agreements resulting in the capitalization of a ROU asset or

lease liability.

License Agreements

In August 2021,

Vaxxinity

entered into a

license agreement (the

“Platform License Agreement”)

with UBI and

certain of its

affiliates

that

expanded

intellectual

property

rights

previously

licensed

under

previously

issued

license

agreements

with

UBI.

part

the

agreement, Vaxxini

ty obtained a worldwide,

sublicensable (subject to certain

conditions), perpetual, fully paid-up,

royalty-free license

research,

develop,

make,

have

made,

utilize,

import,

export,

market,

distribute,

offer

for

sale,

sell,

have

sold,

commercialize

otherwise exploit peptide-based vaccines in the field of all human prophylactic and therapeutic uses, except for such vaccines related to

human immunodeficiency

virus (HIV), herpes

simplex virus (HSE)

and Immunoglobulin E

(IgE). The patents

and patent applications

licensed under the

Platform License Agreement

include claims directed

to a CpG delivery

system, artificial T

helper cell epitopes

and

certain designer

peptides and

proteins utilized

in UB-612.

As described

above, in

consideration for

the Platform

License Agreement,

the Company issued to UBI a warrant to purchase Class A common stock (the

“UBI Warrant”).

VAXXINITY,

INC.

NOTES TO THE CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

The Company considered ASC 805, “Business Combinations” (“ASC 805”) and ASC 730,

“Research and Development” (“ASC 730”)

in determining how to account

for the issuance of the

Class A common stock warrants. The

Class A common stock warrants

were issued

to a related party in exchange for a license agreement.

The majority of the voting interests in the related party

and that of the Company

were held

by a

group of

immediate family

members, at

the time

of the

transaction, and

as such the

transaction constitutes

a common

control transaction,

which requires

the license

to be

accounted for

at the

carrying value

in the

books of

the transferor.

As the

party did not have any basis in the assets licensed, there was no accounting impact for the Company.

Indemnification Agreements

In the

ordinary course

of business,

the Company

may provide

indemnification of

varying scope

and terms

to employees,

consultants,

vendors, lessors,

business partners

and other

parties with

respect to

certain matters

including, but

not limited

to, losses

arising out

breach of such agreements

or from intellectual property

infringement claims made by

third parties. In addition,

the Company has entered

into indemnification

agreements with

members of

its board

of directors

and executive

officers that

will require

the Company,

among

other things, to indemnify them

against certain liabilities that may

arise by reason of their status

or service as directors or

officers. The

maximum potential amount

of future payments the

Company could be

required to make under

these indemnification agreements

is, in

many cases, unlimited. To

date, the Company has not incurred any material costs as a result of such

indemnifications. The Company is

not aware of any

indemnification arrangements that

could have a material effect

on its financial position,

results of operations, or

cash

flows, and it has not accrued any liabilities related to such obligations as of March

31, 2022 and December 31, 2021.

Legal Proceedings

From time to time, the Company may become involved in legal proceedings arising in the ordinary course of business. As of March 31,

2022 and December 31, 2021, the Company was not a party to any material

legal matters or claims.

15. Benefit Plans

March

2018,

the

Company

established

defined

contribution

savings

plan

under

Section

401(k)

the

Code.

This

plan

covers

substantially all

U.S. employees

who meet

minimum age

and service

requirements and

allows participants

to defer

a portion

of their

annual compensation on a pre-tax basis. The Company does not make matching

contributions to the Plan.

The Company offers

its Ireland-based employees

a Personal Retirement Savings

Account (“PRSA”) that allows

participants to defer a

portion of their annual compensation. The

Company provides contributions equal to

% of each participant’s annual salary. During both

of the three months ended March 31, 2022 and 2021, the Company contributed less than

0.1

million to PRSA accounts.

16. Related Party Transactions

The Company has related party arrangements with UBI

and a number of its

affiliated companies listed namely, United Biomedical, Inc.,

Asia (“UBI-Asia”), UBI Pharma, Inc. (“UBI-P”), United BioPharma,

Inc (“UBP”) and UBI IP Holding (“UBI-IP”).

As of March 31, 2022

UBI owned

% of the Company’s stock. The majority of

the voting interests in both UBI

and the Company were

held by a group of immediate family members,

and as such the entities are under common control.

Total amounts

due to related parties were $

16.8

million and $

19.4

million as of March 31,

2022 and December 31,

2021, respectively.

Total amounts

due from related parties were $

0.4

million and $

0.4

million as of March 31, 2022 and

December 31, 2021, respectively.

Total service fees incurred

were $

0.8

million and $

8.7

million for the three months ended March 31, 2022 and 2021, respectively.

Taiwan

Centers for Disease Control Grant (“Taiwan

CDC”)

UBI-Asia, which is responsible for applying for and managing grants on our behalf under the

COVID-19 program, was awarded a grant

by the Taiwan

CDC for COVID-19

vaccine development.

The Company

contracted with UBI-Asia

to conduct a

two-phase study of

COVID-19 vaccine

clinical trial in

Taiwan.

The grant provides

that costs incurred

to complete the

two phases of

the clinical trial

will

be reimbursed based on the achievement of certain milestones as provided

in the agreement.

The Company provides administrative

services to UBI-IP.

Under the arrangement, the

Company issues vendor payments

and provides

technical services mostly for

legal services on behalf

UBI-IP.

The Company bills UBI-IP

for services based on

the costs incurred with

no markup.

VAXXINITY,

INC.

NOTES TO THE CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

Total related party operating

activity, including the activity described

above, are as follows (in thousands):

March 31,

December 31,

2022

2021

Consolidated balance sheet

Assets

Prepaid expenses and other current assets

3,546

3,517

Amounts due from related parties

399

393

Property and equipment, net

299

337

Liabilities

Amounts due to related parties

16,787

19,407

Accrued expenses

168

—

Three Months Ended March 31,

2022

2021

Operating expenses

Research and development

Services provided by related parties

784

10,633

Taiwan CDC grant reimbursement

from related party

—

(2,417)

General and administrative

Services provided by related parties

—

507

17. Subsequent Events

The Company has

evaluated subsequent events

and has concluded

that no events

or transactions have

occurred that require

disclosure

in the accompanying consolidated financial statements,

except as follows:

Coalition for Epidemic Preparedness Innovations (“CEPI”)

Grant

In April

2022, the

Company entered

into an

agreement with

the Coalition

for Epidemic

Preparedness Innovations

(“CEPI”) whereby

CEPI has agreed to provide funding of up to US$

9.25

million to co-fund a Phase 3 clinical trial of Vaxxinity’s

next generation UB-612

COVID-19 vaccine candidate

as a heterologous –

or ‘mix-and-match’ – booster dose.

The Phase 3 trial,

which began in the

US earlier

this year, is evaluating

the ability of UB-612

to boost COVID-19 immunity against

the original strain and multiple

variants of concern

including Omicron - in people aged 16 years or older,

who have been previously immunized with an authorized COVID-19 vaccine.

The

Company

will

also

performing

further

manufacturing

scale-up

work

enable

readiness

for

pivotal

trial

and

potential

commercialization. If successful, a portion of the

released doses of the commercial product

will be delivered to the COVID-19 Vaccines

Global Access (“COVAX”)

consortium for distribution to developing countries at low cost.

Lease

In April 2022, the Company entered into

a facility lease agreement for an

additional

4,419

square feet of space in New

York, New York.

The lease is

estimated to commence

in April 2022

and expire March

2029

with no option

to renew.

The lease will

be recognized

and

measured in accordance with ASC 842 guidance.

Item 2. Management’s Discussion and Analysis of

Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and

results of operations should be rea

together with our unaudited

condensed consolidated financial statements and related

notes and other financial information appearing elsewhere

in this Quarterly

Report. We

intend for this discussion to provide you with information that

will assist you in understanding our unaudited condensed

consolidated financial statements, the changes in key items in those unaudited

condensed consolidated financial statements from

period to period and the primary factors that accounted for those changes.

Some of the information contained in this discussion and

analysis or set forth elsewhere in this Quarterly

Report, including information with respect to

our plans and strategy for our business

and related financing, includes forward

-looking statements that involve risks, uncertainties and assumptions.

See the section of this

Quarterly Report titled “Special Note Regarding

Forward-Looking Statements” for a discussion of

forward-looking statements. As a

result of many factors, including those factors set forth

in the “Risk Factors” section of this Quarterly Report, our actual results

could

differ materially from management’s

expectations and the results described in or implied by

the forward-looking statements contained

in the following discussion and analysis.

Overview

Vaxxinity

is engaged in the development and commercialization of rationally designed prophylactic and therapeutic vaccines to combat

chronic

disorders and

infectious diseases

with large

patient populations

and unmet

medical needs.

While vaccines

have traditionally

been unable

to effectively

and safely

combat chronic

diseases, we

believe our

platform could

overcome the

traditional hurdles

facing

vaccines in this area.

Our Vaxxine

Platform relies on a synthetic peptide

vaccine technology first developed by

UBI and subsequently

refined over the last

two decades. We

believe our vaccines have

the potential to combat

conditions that have not

yet been successfully

treated, or which have primarily

been addressed with monoclonal antibodies

(“mAbs”) which, while generally

effective, are extremely

costly and cumbersome to administer,

and thus have limited accessibility.

Our pipeline primarily consists of five programs focused

chronic disease, particularly

neurodegenerative disorders, in

addition to other

neurology and cardiovascular

indications. Given the

global

COVID-19 pandemic and our Vaxxine

Platform’s applicability to infectious disease, we

are also opportunistically advancing a product

candidate that addresses SARS-CoV-2.

We separated our business from UBI

through two transactions:

a spin-out from UBI

in 2014 of

operations focused on

developing chronic

disease product candidates that resulted

in UNS, and a second spin-out

from UBI in 2020 of operations

focused on the development of

a COVID-19 vaccine that resulted in COVAXX.

On February 2, 2021, Vaxxinity

was incorporated for the purpose of reorganizing and

combining UNS and

COVAXX

and did so on

March 2, 2021 through

the Reorganization. The

Reorganization was determined

to be a

common control transaction,

so the

carrying values of

all contributed assets

and assumed liabilities

remained unchanged and

the financial

information for all

periods in this

section of the

financial statements presented

prior to the

Reorganization are presented on

a consolidated

basis. Unless the context

requires otherwise, in this section

we use the terms

“Vaxxinity,”

“we,” “us” and “our”

to refer to our

operations

(including through UNS and COVAXX)

both prior to and after the Reorganization.

Since our spin-out transactions

from UBI, we have

focused on organizing

and staffing our business,

business planning, raising

capital,

developing our Vaxxine

Platform and pipeline candidates,

identifying and testing

potential product candidates

and conducting clinical

trials. We have also

developed a SARS CoV-2

antibody ELISA test, which received an EUA from the FDA in January 2021.

Our current pipeline consists of six programs from early to late-stage

development, including five programs focused on chronic disease.

Our

neurodegenerative

chronic

disease

pipeline

has

three

primary

programs:

UB-311,

our

leading

neurology

product

candidate,

development for

Alzheimer’s Disease

(“AD”); UB-312,

in development

for Parkinson’s

Disease (“PD”)

and other

synucleinopathies;

and an anti-tau product candidate

which has the potential to

address multiple neurodegenerative conditions, including AD. Additionally,

we have

two other

primary

programs

focused on

chronic

disease: UB-313,

which

targets

CGRP to

prevent

migraines; and

our anti-

PCSK9 program,

which targets

hypercholesterolemia to

reduce the risk

of cardiac

events. Through

our Vaxxine

Platform, we

believe

we may be able to

address a wide range of

other chronic diseases, including chronic diseases

that are or could potentially

be successfully

treated by mAbs, which increasingly dominate the treatment paradigm

for many chronic diseases.

In addition

to our

chronic

disease pipeline,

given

our

Vaxxine

Platform’s

applicability

to infectious

disease and

the global

need

for

additional vaccines to address

SARS-CoV-2, we are advancing an infectious disease

product candidate. We have reported interim

results

of our

UB-612 Phase

1, Phase

2, and

Phase 1

extension clinical

trials. An

EUA application

for UB-612

was denied

by the

TFDA in

August 2021.

are pursuing

accelerated pathways

to authorization

with regulators

in multiple

jurisdictions, including

high income

countries and LMICs, based on a Phase 3 heterologous booster trial of UB-612

that began in the first half of 2022.

date, our revenue

has been generated

from the modest

sales of our

ELISA test and

the sale of

an option to

negotiate a license

with

UNS (which option

has expired). As

a result,

our ability to

generate revenue sufficient to

achieve profitability will

depend on the

eventual

regulatory approval, and

commercialization of one

or more of

our product candidates.

We have not yet obtained

any regulatory approvals

for our pipeline product candidates.

have

principally

funded

our operations

through financing

transactions.

Through

March 31, 202

2, we

received gross

proceeds

$306.1

million

connection with

various

financial

instruments,

including

the

sale of

preferred

and

common

stock, the

issuance

promissory

notes (including

convertible promissory

notes (“Convertible

Notes”)), the

entry into

simple agreements

for future

equity

(“SAFEs”), and proceeds from our initial public offering.

Costs associated with research and development are the most significant component of our expenses. These costs can vary greatly from

period to period depending on the timing

of various trials for our product

candidates. We expect our allocated research and development

costs and

general and

administrative expenses to

increase over time

as we

expand the

number of

product candidates that

we are

advancing

and to incur increased costs as a result of operating as a public company.

Further, we anticipate incurring greater

selling and marketing

expenses if

we commercialize

any of

our product

candidates in

the future.

Our product

candidates are

in clinical

stage or

pre-clinical

stage development,

and we have

generated limited

revenue to date

and have incurred

significant operating

losses since inception.

Net

losses were $18.3 million and $32.0 million for the

three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022,

we had an accumulated deficit

of $247.7 million. We expec

t our expenses and

capital requirements will increase

over time in connection

with our planned operations, which include:

•

continuing pre-clinical studies, existing clinical trials, or initiating new

clinical trials for product candidates UB-311,

UB-312,

UB-313, our COVID-19 product candidate and other product candidates;

•

hiring additional clinical, quality control, medical, scientific and other technical personnel

to support clinical and research and

development programs;

•

expanding operational, financial and management systems

and infrastructure, expanding our facilities

and increasing personnel

to support operations;

•

undertaking actions to meet the requirements and demands of being

a public company;

•

maintaining, expanding and protecting our intellectual property portfolio;

•

seeking regulatory approvals for any product candidates that successfully complete

clinical trials; and

•

undertaking pre-commercialization activities to establish sales, marketing

pharmacovigilance and distribution capabilities for

any product candidates for which we may receive regulatory approval in

regions where we elect to commercialize products

on our own or jointly with third parties.

As of

the date

of this

Report, we

expect our

existing cash

and cash

equivalents will

be sufficient

to fund

our operating

expenses and

capital expenditure requirements for at least the next 12

months. We also

believe that cash and cash equivalents on

hand will enable us

to fund our operating expenses

and capital requirements into the

second half of 2023.

Thereafter, our viability will depend on our

ability

to raise additional capital to finance operations, to

successfully commercialize our product candidates and/or to enter into

collaborations

with third

parties for

the development

of our

product candidates.

If we

are unable

to do

any of

the foregoing,

we would

be forced

delay,

limit, reduce or

terminate our product

candidate development or

future commercialization

efforts. Our

estimates are based

on a

variety of assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than expected. See “—

Liquidity and Capital Resources.”

Business Update Regarding COVID-19 Pandemic

In March

2020, the

World

Health Organization

declared the

COVID-19 outbreak

a pandemic.

The onset

of the

pandemic led

to our

institutional

prioritization

COVID-19

vaccine

development

efforts,

which

correlated

decline

research

and

development

expenditures for our chronic

disease product candidates.

To date,

our operations have not

been negatively impacted

by the COVID-19

pandemic in a material manner. However,

at this time, we cannot predict the specific extent, duration or full impact that the COVID-19

pandemic will

have on

our financial

condition and

operations, but

the development

of clinical

supply materials

could be

delayed and

enrollment of patients in our studies may be delayed or suspended, as hospitals and

clinics in areas where we are conducting trials shift

resources to cope with the COVID-19 pandemic

and may limit access or close facilities due to the COVID-19

pandemic. Additionally,

if our

trial participants

are unable

to travel

to our

clinical study

sites as a

result of

quarantines or

other restrictions

resulting from

the

COVID-19 pandemic, we may experience

higher drop-out rates or

delays in our clinical

studies. The impact of

the COVID-19 pandemic

our

financial

performance

will

depend

future

developments,

including

the

duration

and

spread

the

pandemic

and

governmental advisories and restrictions. These developments and the impact of the COVID-19

pandemic on the financial markets and

the overall economy are highly uncertain and cannot be predicted. If the financial markets and/or

the overall economy are impacted for

an extended period,

our results may

be materially adversely

affected. See

“Risk Factors—Risks Related

to Our Business

and Industry

our

Annual

Report

Form

10-K

for

the

year

ended

December

31,

2021—The

ongoing

coronavirus

pandemic

has

caused

interruptions or

delays of our

business plan.

Delays caused by

the coronavirus pandemic

may have a

significant adverse effect

on our

business.”

Components of Our Unaudited Condensed Consolidated Results of Operations

Revenue

No revenue

was generated

during the

three months

ended March

31, 2022.

Revenue for

the three

months ended

March 31,

2021 was

less than

$0.1 million

and consisted

of commercial

sales of

our ELISA

tests. We

do not

expect to

generate any

meaningful revenue

unless and until we obtain

regulatory approval of and commercialize

our product candidates, and we do

not know when, or if, this

will

occur. If our development efforts for our product candidates are successful and result in commercialization, we may generate additional

revenue in

the future from

a combination of

product sales or

payments from collaboration

or license agreements

that we have

entered

into or may enter into with third parties. See “Risk Factors—Risks Related to the Discovery and Development of Product Candidates in

our Annual Report

on Form 10-K for

the year ended December

31, 2021. We

have incurred significant

losses since our inception.

expect to incur losses for the foreseeable future and may never achieve or maintain

profitability.”

Cost of Revenue

Cost of revenue consists of

kit production costs consisting of materials,

labor and overhead expenses directly related

to ELISA tests sold

and the costs of expired ELISA tests, which are not available for commercial sale.

If our development

efforts in respect

of our current

pipeline of product

candidates are successful and

result in regulatory

approval, we

expect our

cost of revenue

will increase in

relative proportion

to the level

of our revenue

as we commercialize

the applicable

product

candidate. We

expect that

cost of

revenue will

increase in

absolute dollars

as and

if our

revenue grows

and will

vary from

period to

period as a percentage of revenue.

Research and Development Expenses

The design, initiation and execution of candidate discovery and development programs of our future potential product candidates is key

to our

success and

involves significant

expenses. Prior

to initiating

these programs,

project teams

incorporating individuals

from the

essential disciplines within Vaxxinity scope out the activities, timing, requirements, inclusion and exclusion

criteria and the primary and

secondary endpoint. Once

we have decided to

proceed, our Vaxxine

Platform enables the iteration

of drug candidates

in the discovery

phase through rapid, rational design

and formulation. After we have

identified drug candidates, the costs

of scaling the formulation from

research grade

to clinical

grade, then

to commercial

grade, typically

consumes significant

resources. In

addition, to

internal research

and development, we utilize

service providers, including related

parties, to complete activities we

do not have the internal

resources to

handle.

Research and development expenses consist primarily of costs

incurred for research activities, including drug

discovery efforts and the

development of our product candidates. We

expense research and development costs as incurred, which include:

•

expenses incurred to conduct the necessary preclinical studies and clinical

trials required to obtain regulatory approval;

•

expenses incurred under agreements with CROs that are primarily engaged in

the oversight and conduct of our clinical trials,

preclinical studies and drug discovery efforts and contract

manufacturers that are primarily engaged to provide preclinical

and clinical drug substance and product for our research and development programs;

•

other costs related to acquiring and manufacturing materials in connection

with our drug discovery efforts and preclinical

studies and clinical trial materials, including manufacturing validation

batches, as well as investigative sites and consultants

that conduct our clinical trials, preclinical studies and other scientific development

services;

•

payments made in cash or equity securities under third-party licensing, acquisition

and option agreements;

•

employee-related expenses, including salaries and benefits, travel and

stock-based compensation expense for employees

engaged in research and development functions;

•

costs related to compliance with regulatory requirements; and

•

facilities-related costs, depreciation and other expenses, which include

rent and utilities.

recognize

external

development

costs

based

evaluation

the

progress

completion

specific

tasks

using

information

provided to us by

service providers. This process

involves reviewing open contracts and

purchase orders, communicating with

personnel

to identify services that

have been performed on

our behalf and

estimating the level

of service performed and

the associated cost

incurred

for the service when we have not yet been invoiced or otherwise notified of actual costs. Any nonrefundable advance payments that

make for goods or services to be received in the future for use in research and development

activities are recorded as prepaid expenses.

Such amounts are expensed as the related goods are delivered or the related services are performed, or until it is no longer expected that

the goods will be delivered or the services rendered, at which point the net remainder

is expensed.

rely on

related parties

for certain

services to

advance our

research and

development programs,

including manufacturing,

quality

control,

testing,

validation,

supply

services,

research

support,

development

and

clinical

functions.

During

the

three

months

ended

March 31, 2022 and 2021, related party expenses

were approximately 4% and 43% of our operating

expenses, respectively. We

expect

this reliance on related parties to continue to diminish in the future.

Where appropriate,

we allocate

our third-party

research

and development

expenses on

a program-by-program

basis. These

expenses

primarily

relate

outside

consultants,

CROs,

contract

manufacturers

and

research

laboratories

connection

with

pre-clinical

development, process

development, manufacturing

and clinical

development activities.

do not

allocate our

internal costs,

such as

employee costs,

costs associated

with our discovery

efforts, laboratory

supplies and

facilities, including

depreciation or

other indirect

costs, to

specific programs because

these costs often

relate to platform

development, to multiple

programs simultaneously or

to discovery

of new

programs, and

any such

allocation would

necessarily involve

significant estimates

and judgments

and, accordingly,

would be

imprecise. When we

refer to the

research and development

expenses associated with

a specific program,

these refer exclusively

to the

allocated

third-party

expenses

associated

with

that

product

candidate.

All

other

research

and

development

costs

are

referred

unallocated costs.

Product candidates in later

stages of clinical development

generally have higher development costs

than those in earlier

stages of clinical

development,

primarily

due

the

increased

size

and

duration

later-stage

clinical

trials.

Additionally,

greater

research

and

development overhead is required to support

broader and more rapid

development of our Vaxxine Platform and new product candidates.

As a result, we expect

that our research and development

expenses will increase as we continue

our existing and planned clinical

trials

and conduct

increased pre-clinical

and clinical

development activities,

including submitting

regulatory filings

for product

candidates,

and focus more

generally on

the development

of our chronic

disease product

candidates. A significant

driver of

such increases would

be the initiation

of our Phase 2b

trial for UB-311.

currently expect to

initiate a Phase 2b

early AD efficacy

trial in the second

half

of 2022. If we decide to advance UB-311 through the clinic

without a strategic partner, our costs would increase more significantly than

if we engage a partner to fund the development of UB-311.

At this

time, we

cannot reasonably

estimate or know

the nature,

timing and

costs of

the efforts

that will be

necessary to

complete the

pre-clinical and clinical development of any of our

product candidates or when, if ever,

material net cash inflows may commence from

any of our product candidates

General and Administrative Expenses

General

and

administrative

expenses

consist

primarily

salaries

and

benefits,

travel

and

stock-based

compensation

expense

for

personnel in

executive, business

development, finance,

human resources,

legal, information

technology and

administrative functions.

General and administrative expenses also include facility- related costs as well as insurance costs and professional fees for

legal, patent,

consulting, investor and public relations, accounting and audit services and other general operating expenses not otherwise classified as

research and development expenses. We

expense general and administrative costs as incurred.

We also anticipate

that our general and administrative expenses will increase

in the future as a result of increased costs associated

with

being a public company. In each case these increases will likely include increased costs related to the hiring of additional personnel and

fees to outside consultants, personnel-related

stock-based compensation costs, lawyers

and accountants, among other expenses,

and, in

the

case

public

company-related

expenses,

services

associated

with

maintaining

compliance

with

Nasdaq

listing

and

SEC

requirements, director and officer liability insurance costs and investor

and public relations costs.

Other Expense (Income)

Interest Expense

Interest expense consists

of (i) interest expense

recognized on the note

payable entered into during

June 2020 for the

acquisition of an

airplane

(the “2025

Note”),

(ii) interest

expense

recognized on

the Convertible

Notes

and

(iii)

interest

expense

recognized

on other

promissory

notes,

including

$0.1

million

borrowed

from

our

Chief

Executive

Officer

(the

“Executive

Note”)

and

party

Convertible Note

payable for

$2.0 million

in aggregate

proceeds that

was received

in three

tranches (the

“2018 Related

Notes”). The

Executive Note was repaid in full in

August 2021 and the 2018 Related

Notes were converted into Series A

preferred stock concurrently

with the Reorganization.

Interest Income

Interest income consists of income earned on our cash and cash equivalents.

Change in Fair Value

of Convertible Notes, SAFEs and Series A-1 Warrant

Liability

We issued a series of

Convertible Notes during the years 2018 through 2021,

a series of SAFEs during 2020 and 2021, and warrants to

purchase shares

of our Series

A-1 preferred

stock (“Series A-1

Warrants”)

during 2020, each

of which

were measured and

accounted

for at fair value. We

remeasured the fair value of each of the Convertible Notes, SAFEs and Series A-1 Warrants

at each reporting date

and recognize changes

in the fair

value in our

unaudited condensed

consolidated statements of

operations. Inputs to

the calculation of

fair value generally included market and acquisition comparable(s) as well

as other variables. In connection with the Reorganization, all

outstanding Convertible

Notes, SAFEs,

and Series

A-1 Warrants

were exchanged

for shares

of Series

A preferred

stock, which

were

subsequently exchanged into shares of Class A common stock upon closing of

the IPO in November 2021.

Loss on Foreign Currency

Translation, Net

Our foreign

subsidiaries, which are

wholly-owned by

Vaxxinity,

use the U.S.

dollar as their

functional currency

and maintain records

the

local

currency.

Nonmonetary

assets

and

liabilities

are

remeasured

historical

rates

and

monetary

assets

and

liabilities

are

remeasured at exchange rates in

effect at the end

of the reporting period. Income

statement accounts are remeasured at

average exchange

rates for the

reporting period.

The resulting gains

or losses are

included in foreign

currency (losses) gains

in the unaudited

condensed

consolidated financial statements.

Provision for Income Taxes

We have not recorded any significant amounts related to income tax but have reserved $0.6 million of unrecognized tax

benefits against

NOLs. We have not

recorded any income tax benefits for the majority of our net losses we incurred to

date.

account for

income taxes

using the

asset and

liability method,

which requires

the recognition of

deferred tax

assets and

liabilities

for the expected future tax

consequences of events that have

been included in the unaudited

condensed consolidated financial statements

or our tax returns.

Deferred tax assets and liabilities are

determined based on the difference between the

financial statement carrying amounts and tax basis

of existing assets and liabilities and for loss and credit carryforwards, which are measured using the enacted tax rates and laws in effect

in the years in which the differences are expected to reverse. The realization of our deferred tax assets is dependent upon the generation

of future taxable

income, the amount

and timing of which

are uncertain. Valuation

allowances are provided,

if, based upon the

weight

of available evidence, it is more likely than not that some or all of the deferred tax assets will not be

realized. As of March 31, 2022, we

continue to maintain

a full valuation allowance

against all of our

deferred tax assets based

on evaluation of

all available evidence.

file income tax returns in the U.S.

federal and state jurisdictions and may become subject to

income tax audit and adjustments by related

tax authorities. Our

tax return periods (for

entities then in existence)

for U.S. federal

income taxes for the

tax years since 2017

remain

open

to examination

under the

statute of

limitations

by the

Internal

Revenue

Service

and state

jurisdictions.

record

reserves

for

potential tax payments to various tax authorities related

to uncertain tax positions, if any. The nature of uncertain tax positions

is subject

to significant judgment

by management and

subject to change, which

may be substantial. These

reserves are based

on a determination

of whether

and how

much a

tax benefit

taken by

us in our

tax filings

or positions

is more

likely than

not to

be realized

following the

resolution

any

potential

contingencies

the

tax

benefit.

develop

our

assessment

uncertain

tax

positions,

and

the

associated cumulative probabilities, using internal expertise and assistance from third-party experts. As additional information becomes

available, estimates

are revised

and refined.

Differences between

estimates and

final settlement

may occur

resulting in

additional tax

expense. Potential

interest and

penalties associated

with such

uncertain tax

positions is

recorded as

a component

of our

provision for

income taxes.

Factors Affecting the Comparability of Our Unaudited Condensed

Consolidated Results of Operations

Reorganization

On March 2, 2021, Vaxxinity entered into the Contribution

and Exchange Agreement, pursuant to

which the outstanding equity interests

UNS

and

COVAXX

were

contributed

Vaxxinity

return

for

equity

interests

Vaxxinity,

resulting

UNS

and

COVAXX

becoming wholly owned subsidiaries of Vaxxinity.

Accordingly, all share and per share amounts prior to the Reorganization

have been

adjusted

reflect

the Reorganization.

As a

result,

the

historical

financial

information

between

January

2021

and March

2021

described in this Quarterly Report refers to the combined historical

financial information of UNS and COVAXX. Our operations for the

three months ended March 31, 2022 reflects the operations of Vaxxinity

and its subsidiaries. Our operations for the three months ended

March 31, 2021 reflects the

operations of UNS and COVAXX businesses on a condensed consolidated basis

for the period from January

1, 2021 to March 1,

2021 and of Vaxxinity and its subsidiaries for the remainder of that

three-month period. See Note 1 to our

unaudited

condensed consolidated financial statements included elsewhere

in this Quarterly Report.

Condensed Consolidated Results of Operations

Comparison of the Three Months Ended March 31, 2022

and 2021

The following table summarizes our unaudited condensed consolidated results of operations

for the three months ended March 31, 2022

and 2021, together with the dollar change in those items from period to period

(in thousands):

Three Months Ended March 31,

Change

2022

2021

Revenue

—

(17)

-100%

Costs of revenue

—

(1)

-100%

Gross (loss) profit

—

(16)

-100%

Operating expenses:

Research and development

11,478

11,688

(210)

-2%

General and administrative

6,686

8,584

(1,898)

-22%

Total operating expenses

18,164

20,272

(2,108)

-10%

Loss from operations

(18,164)

(20,256)

2,092

-10%

Other (income) expense:

Interest expense

105

511

(406)

-79%

Interest income

(5)

—

(5)

100%

Change in fair value of convertible notes

—

2,667

(2,667)

-100%

Change in fair value of simple agreements for future equity

—

8,365

(8,365)

-100%

Change in fair value of warrant liability

—

214

(214)

-100%

Loss (gain) on foreign currency translation, net

(1)

(9)

-113%

Other (income) expense, net

11,765

(11,666)

-99%

Net loss

(18,263)

(32,021)

13,758

-43%

Revenue

Total revenue was $— million and less

than $0.1 million for

the three months ended

March 31, 2022 and 2021,

respectively. All revenue

and comparable decreases were due

to sales of our ELISA tests. We

are not actively pursuing

commercialization of our ELISA tests at

this time.

Gross Margin

Gross margin was $—

million and less than

$0.1 million for the

three months ended March

31, 2022 and 2021,

respectively. All

gross

margin and comparable decreases were due to sales

of our ELISA tests. We

are not actively pursuing commercialization of our

ELISA

tests at this time.

Research and Development Expenses

Research

and

development

expenses

were

$11.5

million

and

$11.7

million

for

the

three

months

ended

March 31,

2022

and

2021,

respectively.

The $0.2 decrease was comprised of

a $3.9 million decrease in allocated

costs (i.e., costs that can be directly

attributed to

a specific

clinical program)

and a

$3.7 million

increase in

unallocated

costs. The

decrease in

allocated costs

was primarily

due to

decrease of $6.0 million in

costs related to UB-612, partially

offset by increases in

spend of $0.9 million on our

PCSK9 program, $0.8

million on our UB-313 migraine

program and $0.7 million on

our UB-312 Parkinson’s

Disease program.

The $3.7

million increase in

unallocated

costs was

driven by

increased salaries

and personnel-related

costs of

$2.6 million,

stock-based compensation

expense of

$0.5 million and $0.2 million in rent and other overhead associated with laboratory

space in Florida.

General and Administrative Expenses

General

and

administrative

expenses

were

$6.7

million

and

$8.6

million

for

the

three

months

ended

March 31,

2022

and

2021,

respectively. The $1.9 million decrease

was primarily due

to decreases in

professional services and

other expenses of

$1.2 million related

to our March 2021 Reorganization,

and decreases of $2.0 million in stock-based compensation

and recruiting expenses, partially offset

by increased audit fees of $0.4 million and insurance costs of $0.9 million related to being a

public company, and increased salaries and

personnel-related costs of $0.1 million.

Interest Expense

Interest expense was $0.1 million and $0.5 million for the three months ended March 31, 2022 and 2021, respectively. The $0.4 million

decrease was due to the exchange of Convertible Notes for Series A preferred

stock in connection with the Reorganization.

Interest Income

Interest income on cash was less than $0.1 million and $— million for

the three months ended March 31, 2022 and 2021, respectively.

Change in Fair Value

of Convertible Notes, SAFEs and Series A-1 Warrant

Liability

In connection with the Reorganization, all outstanding Convertible Notes,

SAFEs and Series A-1 Warrants

were exchanged into shares

of Series A preferred

stock, which were

subsequently exchanged

into shares of

Class A common

stock upon the

closing of the

IPO in

November 2021.

The $2.7 million change in fair value of the Convertible Notes recognized during the three months ended March 31, 2021 related to the

revaluation of the Convertible Notes

upon conversion to equity.

The $8.4 million change in

fair value of SAFEs recognized

during the

three months ended March 31, 2021 related to insight into the pricing of Vaxxinity’s

next stock issuance at a higher valuation. The $0.2

million change in fair value of Series A-1 Warrants

recognized during the three months ended March

31, 2021 related to an increase in

value of the Series A-1 preferred stock.

Loss on Foreign Currency Translation, Net

The net

loss of

foreign currency

translation reflected

a de

minimis increase

in the

foreign

exchange rate

for the

three months

ended

March 31, 2022 compared to the three months ended March 31, 2021.

Liquidity and Capital Resources

Sources of Liquidity

We have generated limited revenue from sales

of our ELISA

tests and have not

yet commercialized any of

our product candidates, which

are

various

phases

pre-clinical

and

clinical

development.

Prior

going

public

late

2021,

financed

operations

primarily

through the issuance of convertible

preferred stock, borrowings under promissory

notes (including Convertible Notes) and

the execution

of SAFEs. Through

December 31, 2020, we

received gross proceeds

of $99.3 million

in connection with

the issuance of

various financial

instruments, including the sale of preferred stock, the issuance of promissory notes (including

Convertible Notes), and the execution of

SAFEs. In addition,

we also generated

revenue from the

sale of an

option to negotiate

a license with

UNS (which option

has expired)

and the sales

of ELISA tests

in 2020 and

2021. During the

year ended December

31, 2021, we

raised a total

of $198.8 million,

which

consisted of $71.1 million

in net proceeds

from the issuance

of common stock in

connection with the

IPO, $122.8 million in

net proceeds

from the issuance

of Series B

preferred shares, $2.0

million in net

proceeds from the

issuance of convertible

debt, and $2.9

million in

net proceeds from the issuance of SAFEs. At March 31, 2022, we had $124.8 million in cash and cash equivalents, compared to $144.9

million as of

December 31, 2021. The

decrease in cash

and cash equivalents

balances for the periods

reported are primarily

due to the

factors described under “Cash Flows” below.

Cash Flows

The following table provides information regarding our cash flows

for the three months ended March 31, 2022 and 2021

(in thousands):

March 31,

December 31,

2022

2021

Balance Sheet Data:

Cash and cash equivalents

124,766

144,885

Restricted cash

172

Total assets

147,528

166,673

Total liabilities

34,873

38,054

Total stockholders' equity

(deficit)

112,655

128,619

Three Months Ended March 31,

2022

2021

Statement of Cash Flow Data:

Net cash flows used in operating activities

(19,514)

(28,241)

Net cash flows used in investing activities

(713)

—

Net cash flows provided by financing activities

46,280

Net increase in cash, cash equivalents and restricted cash

(20,213)

18,039

Operating Activities

Net cash

used in

operating activities

for the

three months

ended March 31,

2022 was

$19.5 million,

primarily resulting

from a

$18.3

million

net loss,

an unfavorable

$3.8 million

change in

operating

assets and

liabilities and

total non-cash

items of

$2.5 million.

The

changes in

net operating

assets and liabilities

were primarily

due to a

decrease of $2.6

million in amounts

due to related

party,

a $1.3

million increase in accrued expenses and other current

liabilities, a $1.7 million decrease in

accounts payable and other liabilities, a $0.7

million decrease in

prepaid expenses, and

a $1.4 million decrease

in long-term deposits.

The primary non-cash

adjustments

to net loss

consisted of $2.2 million of stock-based compensation and $0.3

million in depreciation.

Investing Activities

Net cash used

in investing activities

totaled $0.7 million for

the three months

ended March 31, 2022.

The cash used

in investing activities

consisted primarily of the acquisition of equipment.

Financing Activities

Net cash provided by financing activities was less than $0.1 million

for the three months ended March 31, 2022. We repaid $0.1 million

in relation to a note payable and received $0.1 million from the exercise of

stock options.

Funding Requirements

have generated

approximately $3.7

million in revenue

since inception

and have

incurred net

losses in each

reporting period

since

inception. 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.

If we

do not

receive regulatory

approval for

any of

our product

candidates, or if

we receive approval

but our commercialization

results fall

short of our

expectations, we will

continue to incur

significant

losses for the foreseeable future, and we expect the losses to increase as we continue the development of, and seek regulatory approvals

for, our product candidates and begin to commercialize

any approved products.

As of the

date of this

Quarterly Report, we

expect our existing

cash and cash

equivalents will be

sufficient to fund our

operating expenses

over the next 12 months. As of March 31, 2022, other than our 2025 Note, we have no

material debt obligations.

We have

based our projections of operating capital

requirements on assumptions that may

prove to be incorrect, and we may

use all of

our available capital resources sooner than we expect. Our future capital

requirements will depend on many factors, which include:

•

the number of discovery and pre-clinical programs that we pursue and

the speed with which they are advanced;

•

the number, size, and nature of clinical trials that we conduct;

•

the length of time it takes for regulators to review and approve any product candidates

that successfully complete clinical

trials;

•

the timing and manner in which we manufacture our pre-clinical and clinical

drug material, the terms on which we can have

such manufacturing completed, and the extent to which we undertake commercialization

of any drug products, if approved;

•

the extent to which we establish sales, marketing, medical affairs

and distribution infrastructure to commercialize any product

candidates;

•

the timing and extent to which we expand our operational, financial and management

systems and infrastructure, and

facilities;

•

the timing and extent to which we increase our personnel to support operations,

including necessary increases in headcount to

conduct and expand our clinical trials, commercialize any approved products and

support our operations as a public

company; and

•

the number of patent applications we must file and claims we must defend in order

to maintain, expand and protect our

intellectual property portfolio, and the costs of preparing, filing and prosecuting

patent applications, maintaining and

protecting our intellectual property rights.

Until such time, if ever, as we

can generate positive cash flows from operations,

we expect to finance our cash needs through

public or

private equity offerings, strategic collaborations and debt financing. To the extent that we raise additional capital through the sale

of our

Class A common

stock, convertible securities or

other equity securities,

shareholders’ ownership interest

will be diluted and

the terms

of these securities

could include liquidation

or other preferences

and anti-dilution protections.

In addition, debt

financing, if available,

may

result in

fixed

payment

obligations

and

may

involve agreements

that include

restrictive

covenants

that limit

our

ability

to take

specific actions, such as incurring additional debt, making capital expenditures, creating liens, redeeming shares or declaring dividends.

If we raise additional

funds through strategic collaborations

or marketing, distribution

or licensing arrangements

with third parties, we

may have to relinquish valuable rights to our technologies,

future revenue streams or product candidates or grant licenses on

terms that

may

not

favorable

us.

are

unable

raise

additional

funds

when

needed,

may

required

delay,

limit,

reduce

terminate our product

candidate development or

future commercialization efforts

or grant rights to

third parties to develop

and market

product candidates that we would otherwise prefer to develop and market

ourselves.

Contract Research and Manufacturing Organizations

recorded accrued

expenses of

$3.5 million

and $1.5

million in our

balance sheet

for expenditures

incurred by

CROs and

contract

manufacturers as of March 31, 2022 and December 31, 2021, respectively.

Tax

-Related Obligations

We have reserved

$0.6 million of unrecognized tax benefits against NOLs. Additionally,

as of three months ended March 31, 2022, we

accrued $0.2 million in interest and penalties related to prior year tax filings.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and do not

currently have, any off-balance sheet arrangements, as defined in

the rules and

regulations of the SEC.

Critical Accounting Policies and Estimates

The preparation of financial statements

in accordance with GAAP requires

management to make estimates and

assumptions that affect

the amounts

reported

in our

unaudited

condensed

consolidated financial

statements and

accompanying

notes. Management

bases its

estimates on

historical experience,

market and

other conditions,

and various

other assumptions

it believes

to be

reasonable. Although

these estimates are based

on management’s best knowledge of current events and actions

that may impact us

in the future, the

estimation

process

is,

its

nature,

uncertain

given

that

estimates

depend

events

over

which

may

not

have

control.

addition,

our

assumptions change,

we may

need to

revise our

estimates, or

take other

corrective actions,

either of

which may

also have

a material

effect on our unaudited condensed consolidated financial statements. Significant estimates contained within

these unaudited condensed

consolidated

financial

statements

include,

but

are

not

limited

to,

the

estimated

fair

value

our

common

stock,

stock-based

compensation,

income

tax

valuation

allowance

and

the

accruals

research

and

development

expenses.

base

our

estimates

historical

experience,

known

trends

and

other

market-specific

other

relevant

factors

that

believe

reasonable

under

the

circumstances. On an ongoing basis, management evaluates its estimates, as there are changes in facts and circumstances. If market and

other conditions

change from

those that

we anticipate,

our unaudited

condensed consolidated

financial statements

may be

materially

affected.

While our

significant accounting

policies are

described in

more detail

in the

notes to

our unaudited

condensed consolidated

financial

statements appearing elsewhere in this Quarterly Report, we believe that the following critical accounting policies and estimates have

higher degree of inherent uncertainty and require our most significant

judgments.

Accrued Research and Development Expenses

As part

of the

process

of preparing

our

unaudited

condensed

consolidated

financial

statements,

are required

to estimate

accrued

research and development expenses. As we advance our programs,

we anticipate conducting more complex clinical studies resulting

greater research

and development

expenses, which

will place

even greater

emphasis on

the accrual.

This process

involves reviewing

open contracts and purchase orders, communicating with our applicable personnel

to identify services that have been performed on our

behalf and estimating the level of service

performed and the associated cost incurred for

the service when we have not

yet been invoiced

or otherwise notified of

actual costs. The majority

of our service providers

invoice in arrears

for services performed, on

a pre-determined

schedule or when contractual milestones are met; however, some require advance payments. We make estimates of accrued expenses as

of each balance sheet date

in the unaudited condensed consolidated

financial statements based on facts

and circumstances known to us

that

time.

periodically

confirm

the

accuracy

the

estimates

with

the

service

providers

and

make

adjustments

necessary.

Examples of estimated accrued research and development expenses include

fees paid to:

•

vendors, including research laboratories, in connection with pre-clinical

development activities;

•

CROs and investigative sites in connection with pre-clinical studies and

clinical trials; and

•

contract manufacturers in connection with drug substance and drug product

formulation of pre-clinical studies and clinical

trial materials.

base our

expenses related

to pre-clinical

studies and

clinical trials

on our

estimates of

the services

received and

efforts expended

pursuant to quotes and contracts with multiple research institutions and CROs that supply,

conduct and manage pre-clinical studies and

clinical trials on our

behalf. The financial terms

of these agreements are subject

to negotiation, vary from

contract to contract and may

result

uneven

payment

flows.

There

may

instances

which

payments

made

our

vendors

will

exceed

the

level

services

provided and result

in a prepayment

of the expense.

Payments under some

of these contracts

depend on factors

such as the

successful

enrollment of patients

and the completion of

clinical trial milestones. In

accruing service fees, we

estimate the time period

over which

services will be performed

and the level of

effort to be

expended in each period.

If the actual timing

of the performance of

services or

the level

of effort

varies from

the estimate,

we adjust

the accrual

or the

prepaid expense

accordingly.

Although we

do not

expect our

estimates to

be materially

different from

amounts actually

incurred, our

understanding of

the status

and timing

of services performed

relative to the actual status and timing of services performed may vary and may result in reporting amounts

that are too high or too low

in any particular period. To

date, our estimated accruals have not differed materially from actual costs incurred.

Stock-Based Compensation

We measure all stock-based awards granted to employees, directors and non-employees based on their fair

value on the date of the

grant

and recognize the corresponding compensation expense of those awards over the requisite service period, which is

generally the vesting

period of the respective award.

Forfeitures are accounted for as

they occur.

We grant

stock options and restricted stock

awards that are

subject to service vesting conditions.

classify stock-based compensation

expense in our

unaudited condensed consolidated

statements of operations

in the same manner

in which the award recipient’s payroll

costs are classified or in which the award recipient’s

service payments are classified.

We estimate the fair value of each stock

option grant using the Black-Scholes

option-pricing model, which requires the use

of subjective

assumptions

that

could

materially

impact

the

estimation

fair

value

and

compensation

expense

recognized.

These

assumptions include (i) the expected volatility of our stock

price, (ii) the periods of time over

which recipients are expected to hold their

options prior to exercise (expected lives), (iii) expected dividend yield on our common stock, and (iv) risk-free interest rates, which

are

based

quoted

U.S.

Treasury

rates

for

securities

with

maturities

approximating

the

options’

expected

lives.

Developing

these

assumptions requires the use of judgment. Both prior to and after the IPO, we lacked company-specific historical and implied

volatility

information.

Therefore,

estimate

our

expected

stock

volatility

based

the

historical

volatility

publicly

traded

set

peer

companies. The expected term of the Company’s options has been determined

utilizing the “simplified” method for awards that qualify

as “plain-vanilla” options. The expected term of options granted to non-employees

is equal to the contractual term of the option award.

The expected dividend yield is

zero as we have

never paid dividends and do

not currently anticipate paying any

in the foreseeable future.

Simple Agreement for Future

Equity

During the

three months

ended March

31, 2021,

we entered

into SAFEs.

The SAFEs

were not

mandatorily redeemable,

nor did

they

require us to

repurchase a fixed

number of shares.

determined that the

SAFEs contained a liquidity

event provision that embodied

an obligation indexed

to the fair value

of the equity

shares and could

require us to

settle the SAFE obligation

by transferring assets

cash. Our SAFEs represented a

recurring measurement that is classified

within Level 3, disclosed and

defined in Note 3 to

our unaudited

condensed consolidated financial statements included

elsewhere in this

Report, of the

fair value hierarchy wherein

fair value is

estimated

using

significant

unobservable

inputs,

including

estimate

the

number

months

liquidity

event,

volatility

rates

and

the

estimation of the most likely conversion feature for converting the SAFE.

The fair value of the SAFEs

on the date of issuance was

determined to equal the proceeds we

received. The value of the SAFEs

on the

date of conversion

into Series A

preferred stock

was determined to

be equal to

the fair value

of the Series

A preferred

stock issued in

connection with the Reorganization.

Convertible Notes

Beginning in 2018, we issued Convertible Notes that

bore simple interest at annual rates

ranging from 4.8% to 6%. All

unpaid principal,

together with

the accrued

interest thereon,

for the

Convertible Notes

were payable

upon the

event of

default or

upon maturity,

which

ranged from one to three years. The Convertible Notes contained a number of

provisions addressing automatic and optional conversion,

events

default

and

prepayment

provisions.

determined

that

portion

the

Convertible

Notes

contained

liquidity

event

provision, requiring them to

be measured and accounted

for at fair value at each

reporting date. We

determined that Convertible Notes

requiring a measurement to fair value represented a recurring measurement that was classified within Level 3

of the fair value hierarchy

wherein fair value is estimated using significant unobservable inputs, as disclosed and defined in Note 3 in our Annual Report on Form

10-K for the year ended December 31, 2021.

Taiwan

Centers for Disease Control Grant

UBIA, which is responsible for applying for

and managing grants on our behalf, was

awarded a grant by the Taiwan Centers for Disease

Control (“TCDC”) for COVID-19

vaccine development. The

grant provides that costs

incurred to complete the

two phases of

the clinical

trial will be reimbursed

based on the achievement

of certain milestones as

defined in the

agreement. We

are entitled to reimbursement

under the TCDC

grant. At each

reporting date,

we assess the

status of all

of the activities

involved in

completing the

clinical study

relation

the

milestones.

account

for

the

amounts

that

have

been

received

from

the TCDC

reimburse

costs

incurred

the

clinical study

and not

expected to

be refunded

back to

the TCDC

as contra

research and

development expenses

in the

accompanying

unaudited condensed consolidated statement of operations.

Item 3. Quantitative and Qualitative Disclosures About

Market Risk.

are exposed

to market risk

in the ordinary

course of our

business. These

risks primarily

relate to

foreign currency

and changes

interest rates.

Foreign Currency Exchange

Risk

have

limited

exposure

foreign

currency

exchange

risk

most

our

operating

activities

are

primarily

denominated

U.S.

dollars. We believe actual foreign

exchange gains and

losses did not

have a significant

impact on our

results of operations

for any periods

presented herein.

The results

of the

analysis based

on our

financial position

as of

March 31,

2022, indicated

that a

hypothetical 10%

increase or decrease in applicable foreign currency exchange rates would not

have a material effect on our financial results.

Interest Rate Risk

We are

exposed to market risk related

to changes in interest rates. As of

March 31, 2022 and December 31,

2021, our cash equivalents

consisted of

interest-bearing

checking accounts

and money

market accounts.

issued Convertible

Notes, which

Convertible Notes

were exchanged for

Series A preferred

stock in connection with

the Reorganization.

The Convertible Notes

bore simple interest

at the

annual rates ranging from 4.8%

to 6%, with redemption terms

payable at the earlier of

one year, or upon the event

of default. In addition,

the Convertible

Notes contained

provisions

addressing

automatic and

optional

conversion.

Given

the redemption

of the

Convertible

Notes, and the

short-term nature and

fixed interest rate,

we believe there

is no material

exposure to interest

rate risk. Additionally,

the

2025 Note we entered into for the year ended December 31,

2020 bears an annual interest rate of 3.4% and matures

in June 2025. Given

the fixed interest

rate of the

2025 Note, we

believe there is

no material exposure

to interest rate

risk. The results

of the analysis

based

on our financial position as of

March 31, 2022, indicated that a hypothetical 100 basis point

increase or decrease in risk-free rates would

not have a material effect on our financial results.

Our measurement of

interest rate risk involves

assumptions that are

inherently uncertain and,

as a result, cannot

precisely estimate the

impact of

changes in interest

rates on net

interest revenues.

Actual results may

differ from

simulated results due

to balance growth

decline and

the timing,

magnitude, and

frequency of

interest rate

changes, as

well as

changes in

market conditions

and management

strategies, including changes in asset and liability mix.

Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures

Our management, with

the participation of

our principal executive

officer and principal

accounting officer,

evaluated, as of

the end of

the period

covered by

this Quarterly

Report on

Form 10-Q,

the effectiveness

of our

disclosure controls

and procedures

(as defined

Rules

13a-15(e)

and

15d-15(e)

under

the

Exchange

Act).

designing

and

evaluating

our

disclosure

controls

and

procedures,

management

recognizes

that

any

controls

and

procedures,

matter

how

well

designed

and

operated,

can

provide

only

reasonable

assurance of achieving the desired control objectives. In addition,

the design of disclosure controls and procedures must reflect the fact

that there

are resource

constraints, and

that management

is required

to apply

judgment in

evaluating the

benefits of

possible controls

and procedures

relative to their

costs. Based on

management’s

evaluation and

as a result

of the material

weaknesses described below,

our

principal

executive

officer

and

principal

accounting

officer

concluded

that,

March

31,

2022,

our

disclosure

controls

and

procedures were not effective at the reasonable assurance

level.

Report on Internal Control Over Financial Reporting

This Report does

not include a report

of management’s

assessment regarding internal

control over financial

reporting or an attestation

report of

our independent

registered public

accounting firm

due to

a transition

period established

by the

rules of

the SEC

for newly

public companies.

Material Weaknesses in Internal

Control over Financial Reporting

A material

weakness is

a deficiency,

or combination

of deficiencies,

in internal

control over

financial reporting,

such that

there

is a

reasonable

possibility

that

material

misstatement

company’s

annual

and

interim

financial

statements

will

not

detected

prevented on a timely basis.

Management

identified

material

weaknesses

the

design

and

operation

our

internal

controls

over

financial

reporting

during

the

preparation of our audited consolidated

financial statements for the year ended

December 31, 2021. These material weaknesses

to:

•

performing our

financial close process,

including account reconciliation

and analysis on

a timely basis,

accruing for related-party

transactions, recording

stock-based compensation

expense and

aggregating and

mapping amounts

from trial

balances to financial

statements;

•

ensuring

that

formal

processes

exist

for

identifying,

analyzing

and

accounting

for

key

contracts

and

complex,

non-routine

transactions; and

•

proper segregation of

duties and responsibilities

within our finance

department, including

authorization and review

of accounting

entries.

Remediation Measures

are

investing

resources

remediate

the

material

weaknesses

identified

the

preparation

our

audited

consolidated

financial

statements for the year ended December 31, 2021 described

above through a combination of hiring additional qualified

accounting and

financial

reporting

personnel

and

further

evolving

and

refining

our

accounting

processes

and

policies.

These

remediation

activities

involve the following:

•

having hired, and

continuing to hire,

additional accounting

personnel with the

appropriate level of

skill and experience

for public

company financial reporting;

•

designing and implementing a formal financial close process that includes

multiple levels of reviews of accounting entries; and

•

supplementing

our resources

for evaluating

and accounting

for complex

transactions and

stock options

through the

use of

third-

party advisors.

While

are

working

remediate

the

identified

material

weaknesses

timely

and

efficiently

possible,

this

time

cannot

provide an

estimate of costs

expected to

be incurred

in connection with

our remediation

efforts, we

cannot provide

an estimate of

the

time it will take to complete

remediation, nor can we provide assurance

that our efforts will successfully prevent any

errors or omissions

that may result because of these material weaknesses.

Changes in Internal Control over Financial Reporting

Other

than

the

measures

described

“Remediation

Measures”

above,

there

were

changes

our

internal

control

over

financial

reporting (as

defined

in Rules

13a-15(f)

and 15d-15(f)

under the

Exchange

Act) during

the quarter

ended March

31, 2022

that have

materially affected, or are reasonably likely to materially

affect, our internal control over financial reporting.

PART

II – OTHER INFORMATION

Item 1. Legal Proceedings.

From time

to time we

are a party

to various

litigation matters

incidental to

the conduct

of our business.

are not presently

party to

any

legal proceedings

the resolution

of which

we believe

would

have a

material

adverse effect

on our

business, prospects,

financial

condition, liquidity, results

of operation, cash flows or capital levels.

Item 1A. Risk Factors.

As 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. Risk factors describing the major risks to our business can be found under Item 1A., “Risk Factors,”

in our Annual

Report on Form 10-K for the year ended December 31, 2021.

Item 2. Unregistered Sales of Equity Securities and

Use of Proceeds.

Unregistered Sales of Equity Securities

There were no unregistered sales of equity securities during the quarterly

period ended March 31, 2022.

Use of Proceeds

On November

15, 2021,

the Company

closed its

IPO, as

discussed in

Note 1

of our

consolidated financial

statements in

the Annual

Report

Form

10-K

for

the

year

ended

December

31,

2021.

The

aggregate

net

proceeds

from

the

offering,

after

deducting

underwriting discounts

and commissions

and other

offering expenses

payable by

us, was

approximately $71.1

million. The

proceeds

from our IPO have been invested primarily in money market accounts. There has been no material change in the expected use of the net

proceeds

from

our

IPO

described

our

prospectus

filed

pursuant

Rule

424(b)(4)

under

the

Securities

Act

with

the

SEC

November 12, 2021.

Item 6. Exhibits.

The following exhibits

required by Item 601

of Regulation S-K

are filed herewith

or have been

filed previously with

the SEC as

indicated

below:

Exhibit

No.

Index to Exhibits

3.1

Amended and Restated Certificate of Incorporation of Vaxxinity, Inc. to be in effect upon the completion of this

offering (incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K (File No. 001-41058) filed on

November 17, 2021).

3.2

Amended and Restated Bylaws of Vaxxinity, Inc. to be in effect upon the completion of this offering (incorporated by

reference to Exhibit 3.2 of our Current Report on Form 8-K (File No. 001 -41058) filed on November 17, 2021).

4.1

Warrant to Purchase Shares of Class A Common Stock of Vaxxinity, Inc. (incorporated by reference to Exhibit 4.1 of

our Registration Statement on Form S-1/A (File No. 333-260163) filed on November 5, 2021).

4.2

Description of Registered Securities

10.1

Form of Indemnification Agreement between Vaxxinity, Inc. and each of its directors and executive officers

(incorporated by reference to Exhibit 10.1 of our Registration Statement on Form S-1 (File No. 333-260163) filed on

October 8, 2021).

10.2

Registration Rights Agreement (incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K (File No.

001-41058) filed on November 17, 2021).

10.3

Voting Agreement, dated as of October 1, 2021, among Mei Mei Hu, Louis Reese, Blackfoot Healthcare Ventures LLC

and United Biomedical, Inc. (incorporated by reference to Exhibit 10.3 of our Registration Statement on Form S-1 (File

No. 333-260163) filed on October 8, 2021).

10.4

Platform License Agreement, dated as of August 5, 2021, among Vaxxinity, Inc., United Biomedical, Inc., UBI IP

Holdings and UBI US Holdings, LLC (incorporated by reference to Exhibit 10.4 of our Registration Statement on Form

S-1 (File No. 333-260163) filed on October 8, 2021).

10.5

United Neuroscience 2017 Share Option and Grant Plan (incorporated by reference to Exhibit 10.5 of our Registration

Statement on Form S-1 (File No. 333-260163) filed on October 8, 2021).

†

10.6

C19 Corp. 2020 Stock Option and Grant Plan (incorporated by reference to Exhibit 10.6 of our Registration Statement

on Form S-1 (File No. 333-260163) filed on October 8, 2021).

†

10.7

Vaxxinity, Inc. 2021 Stock Option and Grant Plan (incorporated by reference to Exhibit 10.7 of our Registration

Statement on Form S-1 (File No. 333-260163) filed on October 8, 2021).

†

10.8

Letter agreement by and between United Neuroscience, LLC and Dr. Farshad Guirakhoo, dated May 4, 2020

(incorporated by reference to Exhibit 10.8 of our Registration Statement on Form S-1 (File No. 333-260163) filed on

October 8, 2021).

†

10.9

Vaxxinity, Inc. 2021 Omnibus Incentive Compensation Plan (incorporated by reference to Exhibit 10.9 of our

Registration Statement on Form S-1/A (File No. 333-260163) filed on November 5, 2021).

†

10.10

Vaxxinity, Inc. 2021 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.10 of our Registration

Statement on Form S-1/A (File No. 333-260163) filed on November 5, 2021).

†

10.11

Form of Incentive Stock Option Grant Notice under the 2021 Stock Option and Grant Plan (incorporated by reference to

Exhibit 10.11 of our Registration Statement on Form S-1/A (File No. 333-260163) filed on November 5, 2021).

†

10.12

Form of Non-Qualified Stock Option Grant Notice under the 2021 Stock Option and Grant Plan (incorporated by

reference to Exhibit 10.12 of our Registration Statement on Form S-1/A (File No. 333-260163) filed on November 5,

2021).

†

10.13

Form of Restricted Stock Award Notice under the 2021 Stock Option and Grant Plan (incorporated by reference to

Exhibit 10.13 of our Registration Statement on Form S-1/A (File No. 333 -260163) filed on November 5, 2021).

†

10.14

Form of Notice of Stock Option Award 2021 Omnibus Incentive Compensation Plan (incorporated by reference to

Exhibit 10.14 of our Registration Statement on Form S-1/A (File No. 333 -260163) filed on November 5, 2021).

†

10.15

Form of Notice of Restricted Stock Unit Award 2021 Omnibus Incentive Compensation Plan (incorporated by reference

to Exhibit 10.15 of our Registration Statement on Form S-1/A (File No. 333-260163) filed on November 5, 2021).

†

31.1

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

31.2

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

32.1

Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-

Oxley Act of 2002**

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__________________________

Filed herewith.

Furnished herewith.

†

Indicates management contract or compensatory plan, contract or arrangement.

Portions of the

exhibit, marked by

brackets, have been

omitted because the

omitted information (i) is

not material and

(ii) would

likely cause competitive harm if publicly disclosed.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to

be signed on its behalf

by the undersigned, thereunto duly authorized on May 9, 2022.

VAXXINITY,

INC.

By:

/s/ Mei Mei Hu

Mei Mei Hu,

President and Chief Executive Officer

(Principal executive officer)

By:

/s/ Jason Pesile

Jason Pesile

Senior Vice President, Finance &

Accounting

(Principal financial and accounting officer)

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