GeoVax Labs(GOVX) - 2019 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents GeoVax Labs, Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis for the periods ended June 30, 2019 Item 1 Condensed Consolidated Financial Statements This section presents GeoVax Labs, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, changes in stockholders' equity, and cash flows, along with detailed notes explaining the company's business, accounting policies, and financial position as of June 30, 2019 Condensed Consolidated Balance Sheets This section provides a snapshot of GeoVax's financial position, detailing assets, liabilities, and equity at specific dates | Metric ($) | Dec 31, 2018 ($) | Jun 30, 2019 ($) | Change ($) | | :----- | :----------- | :----------- | :----- | | Cash and cash equivalents | $259,701 | $216,411 | -$43,290 | | Total current assets | $619,704 | $319,796 | -$299,908 | | Total assets | $642,064 | $342,633 | -$299,431 | | Total current liabilities | $1,624,831 | $1,638,975 | +$14,144 | | Total liabilities | $1,664,411 | $1,671,266 | +$6,855 | | Total stockholders' equity (deficiency) | $(1,022,347) | $(1,328,633) | -$306,286 | Condensed Consolidated Statements of Operations This section details GeoVax's revenues, expenses, and net loss over the three-month and six-month periods ended June 30, 2019 and 2018 | Metric ($) | 3 Months Ended Jun 30, 2019 ($) | 3 Months Ended Jun 30, 2018 ($) | 6 Months Ended Jun 30, 2019 ($) | 6 Months Ended Jun 30, 2018 ($) | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Grant and collaboration revenue | $209,941 | $93,265 | $574,173 | $314,564 | | Research and development | $451,227 | $372,202 | $1,006,945 | $859,196 | | General and administrative | $412,650 | $359,197 | $922,714 | $716,425 | | Total operating expenses | $863,877 | $731,399 | $1,929,659 | $1,575,621 | | Net loss | $(654,148) | $(637,043) | $(1,355,602) | $(1,258,856) | | Loss per common share | $(1.01) | $(2.05) | $(2.37) | $(4.50) | - Grant and collaboration revenue significantly increased by 125% for the three-month period and 82.5% for the six-month period year-over-year[13] - Loss per common share decreased for both periods, from $(2.05) to $(1.01) for three months and from $(4.50) to $(2.37) for six months, despite higher net loss, due to an increase in weighted average shares outstanding[13] Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficiency) This section outlines the changes in GeoVax's stockholders' equity, including net loss and stock transactions, for the specified periods - Net loss for the three months ended March 31, 2019, was $(701,454), and for the three months ended June 30, 2019, was $(654,148)[15] - The company sold convertible preferred stock for cash and cancellation of notes payable, contributing $490,000 to equity[15] - Conversion of preferred stock to common stock and issuance of common stock for services significantly increased common stock shares and additional paid-in capital[15] Condensed Consolidated Statements of Cash Flows This section presents GeoVax's cash inflows and outflows from operating, investing, and financing activities for the six-month periods | Metric ($) | 6 Months Ended Jun 30, 2019 ($) | 6 Months Ended Jun 30, 2018 ($) | | :----- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(773,809) | $(761,758) | | Net cash used in investing activities | $(4,272) | $-0- | | Net cash provided by financing activities | $734,791 | $640,000 | | Net decrease in cash and cash equivalents | $(43,290) | $(121,758) | | Cash and cash equivalents at end of period | $216,411 | $190,969 | - Non-cash financing activities included the exchange of Series C and E Preferred Stock for Series F Preferred Stock, issuance of Series G Preferred Stock for cancellation of term notes, and conversion of preferred stock into common stock[18] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements 1. Description of Business This note describes GeoVax's core business, its MVA-VLP vaccine platform, and its development programs - GeoVax develops immunotherapies and vaccines using a Modified Vaccinia Ankara Virus-Like Particle (MVA-VLP) vector vaccine platform[21] - Current development programs target HIV, hemorrhagic fever viruses (Ebola, Sudan, Marburg, Lassa), Zika, malaria, chronic hepatitis B, and multiple solid tumor cancers[22] - The most advanced program is a preventive HIV vaccine (clade B subtype) currently in human clinical trials[22] - The corporate strategy is to advance products to human clinical testing and seek partnership/licensing for regulatory approval and commercialization[23] 2. Basis of Presentation This note explains the accounting principles, reverse stock split, and going concern considerations for the financial statements - A one-for-five hundred reverse stock split of common stock was enacted on April 30, 2019, with all share and per share information retroactively restated[27] - Substantial doubt exists regarding the company's ability to continue as a going concern beyond Q1 2020 due to operating losses and continuous need for capital for R&D[29] - Management is exploring additional government grants, corporate collaborations, and equity sales to secure necessary capital[29] 3. Significant Accounting Policies and Recent Accounting Pronouncements This note outlines the key accounting policies and the impact of recently adopted accounting standards - Adopted ASU 2016-02 (Leases) effective January 1, 2019, with no material impact on financial statements[31] 4. Basic and Diluted Loss Per Common Share This note details the calculation of basic and diluted loss per common share, including anti-dilutive equivalents | Potentially Dilutive Common Share Equivalents (shares) | 3 Months Ended Jun 30, 2019 (shares) | 6 Months Ended Jun 30, 2019 (shares) | 3 Months Ended Jun 30, 2018 (shares) | 6 Months Ended Jun 30, 2018 (shares) | | :------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Excluded from diluted EPS (anti-dilutive) | 376,130 | 351,684 | 51,270 | 51,155 | 5. Property and Equipment This note provides a breakdown of GeoVax's property and equipment, net of accumulated depreciation | Asset Category ($) | Jun 30, 2019 ($) | Dec 31, 2018 ($) | | :------------- | :----------- | :----------- | | Laboratory equipment | $534,578 | $530,306 | | Total property and equipment, net | $11,827 | $11,350 | 6. Accrued Expenses This note details the company's accrued liabilities, including management salaries, directors' fees, and other expenses | Accrued Expense Category ($) | Jun 30, 2019 ($) | Dec 31, 2018 ($) | | :----------------------- | :----------- | :----------- | | Accrued management salaries | $1,128,425 | $924,509 | | Accrued directors' fees | $361,470 | $295,670 | | Other accrued expenses | $20,373 | $18,373 | | Total accrued expenses | $1,510,268 | $1,238,552 | 7. Notes Payable This note describes GeoVax's outstanding notes payable, including terms and repayment schedules - GRA Note: $50,000 issued in Feb 2018, 5% annual interest, principal repayments started in March 2019[36] - Term Notes: $250,000 issued in Dec 2018, cancelled in Feb 2019 in exchange for convertible preferred stock[37] 8. Commitments This note outlines GeoVax's contractual obligations, including operating leases and unrecorded purchase commitments - Operating lease for office/lab space expires Dec 31, 2019, with annual extension options through Dec 31, 2022[38] - Future minimum lease payments for the remainder of 2019 total $80,633[38] - Unrecorded purchase commitments of approximately $459,000 as of June 30, 2019, expected to be reimbursed by government grants[39] 9. Preferred Stock This note details the various series of preferred stock, their outstanding shares, and carrying values | Preferred Stock Series | Shares Outstanding (Jun 30, 2019) | Carrying Value (Jun 30, 2019) ($) | Shares Outstanding (Dec 31, 2018) | Carrying Value (Dec 31, 2018) ($) | | :--------------------- | :-------------------------------- | :---------------------------- | :-------------------------------- | :---------------------------- | | Series B | 100 | $76,095 | 100 | $76,095 | | Series C | - | - | 2,150 | $705,238 | | Series E | - | - | 1,200 | $1,190,000 | | Series F | 2,302 | $1,418,822 | - | - | | Series G | 1,000 | $842,950 | - | - | | Total | 3,402 | $2,337,867 | 3,450 | $1,971,333 | - In February 2019, all Series C (1,563 shares) and Series E (1,200 shares) Preferred Stock were exchanged for 2,763 shares of Series F Preferred Stock[44][46][47] - 1,000 shares of Series G Preferred Stock were issued for $500,000 cash and cancellation of $250,000 in Term Notes, along with warrants to purchase 100,002 common shares[48][49] 10. Common Stock and Stock-Based Compensation This note discusses common stock transactions, including a reverse stock split, and stock-based compensation expenses - A one-for-five hundred reverse stock split was implemented on April 30, 2019, to improve marketability and provide additional shares for equity financing[50][80] - 371,580 shares of common stock were issued in the six months ended June 30, 2019, from preferred stock conversions[51] | Stock-Based Compensation Expense ($) | 3 Months Ended Jun 30, 2019 ($) | 3 Months Ended Jun 30, 2018 ($) | 6 Months Ended Jun 30, 2019 ($) | 6 Months Ended Jun 30, 2018 ($) | | :------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Stock option expense | $26,664 | $23,221 | $53,316 | $47,199 | | Stock issued for services | $78,509 | $57,143 | $205,080 | $85,714 | | Total stock-based compensation expense | $105,173 | $80,364 | $258,396 | $132,913 | 11. Income Taxes This note explains GeoVax's income tax position, including deferred tax assets and valuation allowances - Deferred tax assets are fully offset by a valuation allowance due to uncertainty of future profitability and ability to utilize net operating loss carryforwards[58] 12. Grants and Collaboration Revenue This note provides a breakdown of revenue derived from government grants and collaboration agreements | Revenue Source ($) | 3 Months Ended Jun 30, 2019 ($) | 3 Months Ended Jun 30, 2018 ($) | 6 Months Ended Jun 30, 2019 ($) | 6 Months Ended Jun 30, 2018 ($) | | :------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Grant Revenues | $184,938 | $93,265 | $539,257 | $309,564 | | Collaboration Revenues | $25,003 | $-0- | $34,916 | $5,000 | | Total | $209,941 | $93,265 | $574,173 | $314,564 | - As of June 30, 2019, $2,049,990 in approved grant funds are available for use in 2019 and 2020[59][92] 13. Subsequent Events This note discloses significant events that occurred after the balance sheet date, impacting the company's financial position - On July 16, 2019, Series F and G Preferred Stock were exchanged for 3,257 shares of Series H Convertible Preferred Stock[61] - On July 24, 2019, a Securities Purchase Agreement for 700 shares of Series I Convertible Preferred Stock was entered into for gross proceeds of $700,000[62][81] - In July and August 2019, preferred stock conversions resulted in 1,825,841 shares of common stock, and 37,827 common shares were issued for consulting services[64] Item 2 Management's Discussion and Analysis of Financial Condition And Results of Operations This section provides management's perspective on GeoVax's financial condition and results of operations, highlighting its business overview, liquidity challenges, capital resources, and detailed analysis of revenues and expenses for the periods ended June 30, 2019 Overview This section provides a high-level summary of GeoVax's business, its MVA-VLP platform, and development pipeline - GeoVax is a clinical-stage biotechnology company developing immunotherapies and vaccines using its MVA-VLP platform[66] - Current programs target HIV, hemorrhagic fever viruses, Zika, malaria, chronic hepatitis B, and solid tumor cancers, with the HIV program being most advanced[67] - The company has not generated product revenue and expects significant R&D, preclinical/clinical testing, and regulatory approval costs before commercialization[69] Critical Accounting Policies and Estimates This section discusses the accounting policies and estimates that require significant judgment and impact financial reporting - No significant changes to critical accounting policies from the 2018 Annual Report[71] Recent Accounting Pronouncements This section refers to Note 3 for details on recently adopted accounting standards and their impact - Refer to Note 3 for details on recent accounting pronouncements[72] Liquidity and Capital Resources This section analyzes GeoVax's ability to meet its short-term and long-term financial obligations and its capital-raising efforts | Metric ($) | Jun 30, 2019 ($) | Dec 31, 2018 ($) | | :----- | :----------- | :----------- | | Cash and cash equivalents | $216,411 | $259,701 | | Total assets | $342,633 | $642,064 | | Working capital deficit | $(1,319,179) | $(1,005,127) | - Net cash used in operating activities was $(773,809) for the six months ended June 30, 2019, compared to $(761,758) for the same period in 2018[74] - Executive management and board members have deferred $1,489,895 in salaries and fees to conserve cash, with ongoing deferrals expected until a significant financing event[75] - The company believes existing cash, government funding, and equity commitments will fund operations into Q1 2020, but additional capital is required beyond that, leading to substantial doubt about going concern[82] Off-Balance Sheet Arrangements This section discloses any material off-balance sheet transactions or obligations that could affect the company's financial position - No material off-balance sheet arrangements[83] Contractual Obligations This section outlines GeoVax's future cash payment commitments under various contractual agreements | Contractual Obligation | Total ($ thousands) | Less than 1 Year ($ thousands) | | :--------------------- | :---- | :--------------- | | Operating Lease Obligations | $81 | $81 | | Purchase Obligations | $459 | $459 | | Total | $540 | $540 | - Purchase obligations for research activities are expected to be reimbursed by government grants[87] - Potential future milestone and royalty payments under technology license agreements are contingent and not included as they are neither probable nor reasonably estimable[88] Results of Operations This section provides a detailed analysis of GeoVax's financial performance, including revenues and expenses, for the reporting periods Net Loss This section presents the company's net loss for the three-month and six-month periods ended June 30, 2019 and 2018 | Metric ($) | 3 Months Ended Jun 30, 2019 ($) | 3 Months Ended Jun 30, 2018 ($) | 6 Months Ended Jun 30, 2019 ($) | 6 Months Ended Jun 30, 2018 ($) | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net Loss | $(654,148) | $(637,043) | $(1,355,602) | $(1,258,856) | Grant and Collaboration Revenues This section details the revenue generated from government grants and collaboration agreements | Revenue Source ($) | 3 Months Ended Jun 30, 2019 ($) | 3 Months Ended Jun 30, 2018 ($) | 6 Months Ended Jun 30, 2019 ($) | 6 Months Ended Jun 30, 2018 ($) | | :------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Grant Revenues | $184,938 | $93,265 | $539,257 | $309,564 | | Collaboration Revenues | $25,003 | $-0- | $34,916 | $5,000 | | Total | $209,941 | $93,265 | $574,173 | $314,564 | - Grant revenues increased by 98% for the three-month period and 74% for the six-month period year-over-year[92] Research and Development Expenses This section analyzes the costs incurred for GeoVax's research and development activities | Metric ($) | 3 Months Ended Jun 30, 2019 ($) | 3 Months Ended Jun 30, 2018 ($) | 6 Months Ended Jun 30, 2019 ($) | 6 Months Ended Jun 30, 2018 ($) | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | R&D Expenses | $451,227 | $372,202 | $1,006,945 | $859,196 | - R&D expenses increased by $147,749 (17%) for the six-month period, mainly due to timing of government grant expenditures[95] - The company does not provide forward-looking estimates for R&D costs and timelines due to high volatility and uncertainties in vaccine development[97] General and Administrative Expenses This section details the general and administrative costs, including legal fees and insurance, for the reporting periods | Metric ($) | 3 Months Ended Jun 30, 2019 ($) | 3 Months Ended Jun 30, 2018 ($) | 6 Months Ended Jun 30, 2019 ($) | 6 Months Ended Jun 30, 2018 ($) | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | G&A Expenses | $412,650 | $359,197 | $922,714 | $716,425 | - Excluding stock-based compensation, G&A expenses increased by $29,455 (10.2%) for the three-month period and $81,985 (13.5%) for the six-month period[98] - The increase is primarily due to higher legal fees, insurance costs, and expenses for a special stockholders' meeting[98] Stock-Based Compensation Expense This section provides a breakdown of expenses related to stock options and stock issued for services | Expense Allocated to: ($) | 3 Months Ended Jun 30, 2019 ($) | 3 Months Ended Jun 30, 2018 ($) | 6 Months Ended Jun 30, 2019 ($) | 6 Months Ended Jun 30, 2018 ($) | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | General and administrative expense | $93,851 | $69,853 | $235,755 | $111,451 | | Research and development expense | $11,322 | $10,511 | $22,641 | $21,462 | | Total stock-based compensation expense | $105,173 | $80,364 | $258,396 | $132,913 | Other Income (Expense) This section reports non-operating income and expenses, such as interest income and expense | Metric ($) | 3 Months Ended Jun 30, 2019 ($) | 3 Months Ended Jun 30, 2018 ($) | 6 Months Ended Jun 30, 2019 ($) | 6 Months Ended Jun 30, 2018 ($) | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Interest income | $881 | $1,716 | $2,105 | $3,034 | | Interest expense | $(1,093) | $(625) | $(2,221) | $(833) | | Total other income (expense) | $(212) | $1,091 | $(116) | $2,201 | Item 3 Quantitative and Qualitative Disclosures about Market Risk This item is not applicable to GeoVax Labs, Inc - Not applicable[102] Item 4 Controls and Procedures Management concluded that GeoVax's disclosure controls and procedures were effective as of June 30, 2019, with no material changes to internal control over financial reporting during the quarter. The company acknowledges inherent limitations in any control system Evaluation of disclosure controls and procedures This section confirms the effectiveness of GeoVax's disclosure controls and procedures as of the reporting date - Disclosure controls and procedures were deemed effective as of June 30, 2019[104] Changes in internal control over financial reporting This section reports on any material changes to GeoVax's internal control over financial reporting during the quarter - No material changes in internal control over financial reporting during the quarter[105] Limitations on Controls This section acknowledges the inherent limitations of any control system in preventing or detecting all errors or fraud - Control systems provide reasonable, not absolute, assurance and may not prevent or detect all errors or fraud[106] PART II – OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, and exhibits for GeoVax Labs, Inc Item 1 Legal Proceedings GeoVax Labs, Inc. reported no legal proceedings - No legal proceedings[108] Item 1A Risk Factors As a smaller reporting company, GeoVax is not required to provide information for this item - Not required to provide risk factors as a smaller reporting company[109] Item 2 Unregistered Sales of Equity Securities and Use of Proceeds GeoVax reported no unregistered sales of equity securities or use of proceeds not previously disclosed on Form 8-K - No new unregistered sales of equity securities or use of proceeds[110] Item 3 Defaults Upon Senior Securities GeoVax reported no defaults upon senior securities - No defaults upon senior securities[111] Item 4 Mine Safety Disclosures This item is not applicable to GeoVax Labs, Inc - Not applicable[112] Item 5 Other Information GeoVax reported no other information - No other information[112] Item 6 Exhibits This section lists the exhibits filed with the Form 10-Q, including certificates of amendment, stock certificates, certificates of designation for various preferred stock series, exchange agreements, and certifications - Includes Certificate of Amendment to Certificate of Incorporation, forms of stock certificates for common and various preferred stock series (F, G, H, I), and related exchange/purchase agreements[114] - Also includes certifications pursuant to Rule 13a-14(a) or 15d-14(a) and 18 U.S.C. Section 1350, and XBRL exhibits[114] SIGNATURES This section contains the official signatures certifying the accuracy of the report - The report was signed by Mark W. Reynolds, Chief Financial Officer, on August 13, 2019[118]