GeoVax Labs(GOVX) - 2020 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements Q3 public offering significantly improved financial position, boosting cash to $11.6 million and equity to $10.8 million, with a slight net loss decrease Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (unaudited) | Metric | September 30, 2020 | December 31, 2019 | Change | | :--- | :--- | :--- | :--- | | Assets | | | | | Cash and cash equivalents | $11,580,594 | $283,341 | +$11,297,253 | | Total current assets | $11,734,794 | $447,264 | +$11,287,530 | | Total assets | $11,755,897 | $468,880 | +$11,287,017 | | Liabilities & Equity | | | | | Total current liabilities | $923,647 | $2,016,193 | -$1,092,546 | | Total liabilities | $942,153 | $2,043,436 | -$1,101,283 | | Total stockholders' equity (deficiency) | $10,813,744 | ($1,574,556) | +$12,388,300 | - The company's financial position dramatically improved, moving from a stockholders' deficiency of $1.6 million at the end of 2019 to a positive stockholders' equity of $10.8 million by September 30, 2020, driven by significant financing activities during the third quarter[10] Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (unaudited) | Metric | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Grant and collaboration revenue | $415,458 | $333,209 | $1,572,037 | $907,382 | | Total operating expenses | $851,769 | $759,149 | $3,051,763 | $2,688,808 | | Loss from operations | ($436,311) | ($425,940) | ($1,479,726) | ($1,781,426) | | Net loss | ($570,648) | ($424,434) | ($1,621,546) | ($1,780,036) | | Net loss per common share | ($0.73) | ($1,282.28) | ($2.85) | ($14,016.03) | - For the nine months ended September 30, 2020, revenue from grants and collaborations increased by 73% year-over-year, while the net loss slightly decreased from $1.78 million to $1.62 million[12] Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficiency) - During the third quarter of 2020, the company executed several significant equity transactions, including the sale of common stock for cash ($11.16M), conversion of preferred stock, conversion of debentures ($0.57M), and conversion of accrued compensation ($1.5M), which collectively transformed the balance sheet[14] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows Highlights (unaudited) | Metric | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | ($1,208,619) | ($1,117,737) | | Net cash used in investing activities | ($2,470) | ($4,272) | | Net cash provided by financing activities | $12,508,342 | $1,431,667 | | Net increase in cash and cash equivalents | $11,297,253 | $309,658 | | Cash and cash equivalents at end of period | $11,580,594 | $569,359 | - Financing activities were the primary source of cash, providing $12.5 million in the first nine months of 2020, a significant increase from $1.4 million in the same period of 2019. This was mainly driven by net proceeds from the sale of common stock and warrants amounting to $11.16 million[17] Notes to Condensed Consolidated Financial Statements - GeoVax is a clinical-stage biotechnology company developing immunotherapies and vaccines for infectious diseases (COVID-19, HIV, Zika, Ebola) and cancers using its GV-MVA-VLP™ vector vaccine platform[18][19] - Due to financing activities in Q3 2020, management concluded there is no longer substantial doubt about the company's ability to operate as a going concern for at least the next twelve months, with cash resources sufficient to fund operations into early 2022[27] - On September 29, 2020, the company closed an underwritten public offering of 2,560,000 units, raising gross proceeds of approximately $12.8 million and net proceeds of approximately $11.2 million[48] - In Q3 2020, $1.2 million in convertible debentures and $1.5 million in deferred compensation were converted into equity, further strengthening the company's balance sheet[38][51] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations A $11.2 million public offering resolved 'going concern' issues, funding operations into early 2022, while grant revenue increased 73% alongside higher R&D and G&A expenses Overview - GeoVax is a clinical-stage biotech company using its GV-MVA-VLP™ platform to develop vaccines and immunotherapies for infectious diseases like COVID-19 and HIV, as well as for solid tumor cancers[69][70] - The company's strategy is to advance product candidates through human clinical testing and then seek partnerships for regulatory approval and commercialization, leveraging collaborations with government, academic, and corporate entities[71] Liquidity and Capital Resources Financial Position Comparison | Metric | September 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $11,580,594 | $283,341 | | Working capital (deficit) | $10,811,147 | ($1,568,929) | - The company's liquidity was significantly boosted by a public offering in September 2020, which yielded net proceeds of approximately $11.2 million[80][86] - Management believes that existing cash resources, along with government funding, are sufficient to continue planned operations into early 2022. The primary use of proceeds will be to advance COVID-19 and immuno-oncology programs[89][88] Results of Operations Net Loss Comparison (unaudited) | Period | 2020 | 2019 | | :--- | :--- | :--- | | Three Months Ended Sep 30 | ($570,648) | ($424,434) | | Nine Months Ended Sep 30 | ($1,621,546) | ($1,780,036) | Grant and Collaboration Revenue Comparison (unaudited) | Period | 2020 | 2019 | | :--- | :--- | :--- | | Three Months Ended Sep 30 | $415,458 | $333,209 | | Nine Months Ended Sep 30 | $1,572,037 | $907,382 | - Research and development expenses increased by 14% for the nine-month period of 2020 compared to 2019, primarily due to the timing and amount of expenditures related to government grants[97] - General and administrative expenses (excluding stock-based compensation) increased by 40% for the nine-month period of 2020 compared to 2019, mainly due to higher legal costs associated with capital restructuring and patent prosecution[100] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section is noted as not applicable for the company - The company states that this item is not applicable[106] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of September 30, 2020, with no material changes to internal control over financial reporting - Based on an evaluation as of the end of the reporting period, the Principal Executive Officer and Principal Financial and Accounting Officer concluded that the company's disclosure controls and procedures are effective[108] - There were no significant changes in internal control over financial reporting during the third quarter of 2020 that have materially affected, or are reasonably likely to materially affect, these controls, although some procedures were modified due to the COVID-19 pandemic[109] PART II – OTHER INFORMATION Item 1. Legal Proceedings The company reports that there are no legal proceedings to disclose for the period - The company reports no legal proceedings[112] Item 1A. Risk Factors Significant risks include ongoing operating losses, funding needs, unproven product candidates, intense competition, intellectual property dependencies, and common stock volatility Risks Related to Our Business - The company has a history of operating losses and expects them to continue for the foreseeable future, as it has no product revenue to date[114] - The business requires substantial additional financing. While current working capital is expected to support operations into early 2022, failure to secure future funding could force the company to curtail operations[115][118] - The COVID-19 pandemic could disrupt operations due to employee absenteeism, travel restrictions impacting business development, and potential interruptions at collaborator facilities[121][122][123] Risks Related to Development and Commercialization of Product Candidates and Dependence on Third Parties - The company's products are still in development, are unproven in human clinical trials, and may not be successful or receive regulatory approval[124] - The company faces intense competition from larger companies with substantially greater financial, scientific, and marketing resources[127] - GeoVax relies heavily on third parties, such as the HIV Vaccine Trials Network (HVTN) and NIAID, for the execution of its clinical trials and does not control many aspects of their activities[131] Risks Related to Our Intellectual Property - The company's rights to significant technology are licensed from third parties and could be terminated if contractual obligations, such as milestone payments and royalties, are not met[145] - The company must finalize license agreements with the National Institutes of Health (NIH) for its MVA backbone technology; failure to do so on acceptable terms could prevent the continuation of its work[146] Risks Related to Our Common Stock - The company has outstanding warrants exercisable for 3.6 million shares, which, if exercised, will cause significant dilution to existing shareholders[154] - The market price of the common stock is highly volatile and does not have a vigorous trading market, which may make it difficult for investors to sell their shares[155][157] - The company has never paid dividends and does not plan to in the foreseeable future, meaning any potential return will depend on stock price appreciation[159] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities or use of proceeds for the period - The company reports none[167] Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities - The company reports none[168] Item 4. Mine Safety Disclosures This section is noted as not applicable for the company - The company states that this item is not applicable[169] Item 5. Other Information No information required to be disclosed in a Form 8-K was not already reported during the period - No information was required to be disclosed in a Current Report on Form 8-K that was not already reported[170] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including the Underwriting Agreement, Certificate of Incorporation amendments, and required certifications - The report includes a list of filed exhibits, such as the Underwriting Agreement from the September 2020 offering, various forms of warrants, and required SEC certifications[171]