Part I Business Scorpius Holdings operates as a CDMO, providing biologics manufacturing services, having refocused its business while facing delisting, customer concentration, and a significant backlog decrease - The company is a contract development and manufacturing organization (CDMO) focused on biologics, including cell- and gene-based therapies, with its primary facility in San Antonio, TX, which began operations in September 202217 - In 2023, the company refocused on biomanufacturing, leading to the divestment of its clinical-stage oncology assets and the Elusys Therapeutics biodefense business1838 - The company is exploring strategic alternatives with the assistance of Alliance Global Partners, announced in February 202524 - Trading of the company's common stock was suspended by the NYSE American in April 2025 due to low selling price, and the company expects to be delisted192021 Customer Concentration | Year | Customer A Revenue % | Customer B Revenue % | Customer C Revenue % | Customer D Revenue % (Discontinued Ops) | | :--- | :--- | :--- | :--- | :--- | | 2024 | 37% | 16% | - | - | | 2023 (Continuing Ops) | 70% | - | 12% | - | | 2023 (Inclusive of Discontinued Ops) | 36% | - | - | 49% | - The company's backlog decreased by 89% to approximately $1.1 million as of December 31, 2024, from $10.4 million as of December 31, 202370 Risk Factors The company faces significant financial and operational risks, including persistent net losses, going concern doubts, material internal control weaknesses, customer concentration, and impending stock delisting - The company has a history of significant net losses, with $34.3 million in 2024 and $46.8 million in 2023, and an accumulated deficit of $287.2 million as of December 31, 2024818790 - There is substantial doubt about the company's ability to continue as a going concern, with current cash sufficient only to fund operations through April 2025, necessitating additional capital which may not be available on acceptable terms868788 - Material weaknesses have been identified in internal controls over financial reporting, including issues with IT general controls, income tax disclosure, revenue recognition, and impairment of long-lived assets9394306 - The company is in payment default on its December 2024 Secured Convertible Notes as of April 30, 2025, having missed quarterly interest payments, with these notes secured by all company assets100102 - The company's common stock is expected to be delisted from the NYSE American, which will adversely affect liquidity, the ability to raise capital, and the stock price136143 - A significant portion of revenue comes from a limited number of customers; in 2024, two customers accounted for 53% of total revenue, and a major customer from 2023 migrated to a larger CDMO in 2024108 Unresolved Staff Comments The company reports that it has no unresolved staff comments from the SEC - There are no unresolved staff comments172 Cybersecurity The company maintains a cyber risk management program overseen by management and the Board, with past incidents having no material adverse effect - The company has a cyber risk management program to identify, assess, and manage threats, utilizing third-party cybersecurity providers173 - Management, with oversight from the Audit Committee and the Board of Directors, is responsible for the program, and the Audit Committee is briefed at least annually on cyber vulnerabilities and program effectiveness174175 - The company acknowledges that past cybersecurity incidents have not had a material adverse effect on its business, financial condition, or operations176 Properties The company's principal offices and main facilities are in San Antonio, Texas, under long-term leases, with a smaller lab in New Jersey and a former office lease assigned - The company's principal offices have been moved to its San Antonio, Texas location following the assignment of its Morrisville, North Carolina lease in March 2025177178179 - The company holds three significant leases in San Antonio, TX for its mammalian facility, microbial facility, and warehouse, with expiration dates in 2037 and 2038181 - A lease for a small laboratory space in North Brunswick, New Jersey was amended in July 2024 to reduce square footage and is set to expire in July 2025180 Legal Proceedings The company is not currently a party to any legal proceedings that would materially adversely affect its business or financial condition - The company is not presently a party to any material legal proceedings183 Mine Safety Disclosures This section is not applicable to the company - Not applicable184 Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock was suspended from NYSE American and is expected to be delisted, now trading on OTC Markets Pink Limited, with no plans for future dividends - The company's common stock (ticker: SCPX) was suspended from trading on the NYSE American on April 21, 2025, and is expected to be delisted, currently trading on the OTC Markets Pink Limited exchange186187188 - As of April 30, 2025, there were approximately 12 stockholders of record190 - The company has never paid cash dividends and does not anticipate paying any in the foreseeable future191 Equity Compensation Plan Information as of December 31, 2024 | Plan Category | Securities to be issued upon exercise of outstanding options | Weighted-average exercise price of outstanding options | Securities remaining available for future issuance | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 62,316 | $3.63 | 193,942 | Management's Discussion and Analysis of Financial Condition and Results of Operations The MD&A details the company's CDMO transition, declining revenue, significant net losses, and critical liquidity issues, necessitating ongoing financing and strategic alternatives - The company is exploring strategic alternatives to maximize shareholder value, announced in February 2025203275 - The company has substantial doubt about its ability to continue as a going concern, with cash and investments of $2.1 million at April 30, 2025, sufficient to fund operations only through April 2025233234235 Results of Operations (Continuing Operations) | Metric | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Revenue | $6.2M | $7.0M | | Cost of Revenues | $3.2M | $2.7M | | Research & Development Expense | $14.3M | $20.1M | | Selling, General & Administrative Expense | $21.6M | $26.2M | | Net Loss from Continuing Operations | ($34.3M) | ($41.8M) | - Net cash used in operating activities decreased to $26.0 million in 2024 from $31.5 million in 2023280 - Net cash provided by financing activities was $25.6 million in 2024, a significant increase from a use of $9.0 million in 2023, driven by proceeds from stock and debt issuances290291 - In December 2024, the company issued $13.4 million in senior secured convertible notes and warrants, receiving net proceeds of approximately $3.0 million after repurchasing prior warrants and repaying other debt210211 Controls and Procedures Management concluded that disclosure controls and procedures were ineffective as of December 31, 2024, due to multiple material weaknesses in internal financial controls, for which remediation efforts are underway - Management concluded that disclosure controls and procedures were not effective as of December 31, 2024296 - Multiple material weaknesses in internal control over financial reporting were identified as of December 31, 2024301 - Specific material weaknesses include: Ineffective IT general controls (user access, segregation of duties); Inadequate design of controls for accounting for income taxes; Ineffective design of management review controls; Ineffective controls around process development revenue recognition; and Ineffective controls over identifying and recording impairments of long-lived assets306 - The company is implementing remediation measures, including enhancing process controls, improving documentation, and designing new controls for income tax and revenue accounting302 Other Information As of April 28, 2025, the company received $1.94 million in net proceeds from the first tranche of a private placement for 48,755,000 common shares - As of April 28, 2025, the company received $1.94 million in net proceeds from the first tranche of a private placement for 48,755,000 shares of common stock308 - The offering was made to accredited or qualified institutional investors under exemptions from registration provided by Section 4(a)(2) and/or Regulation S of the Securities Act308 Part III Directors, Executive Officers and Corporate Governance This section details the company's leadership, board committee composition, director independence, and adopted corporate governance policies including a Code of Business Conduct and Ethics - The executive team is led by Jeffrey Wolf (Chairman, CEO, President) and William L. Ostrander (CFO, Secretary)312313316 - The Board of Directors has standing Audit, Compensation, and Nominating and Governance Committees, with all members (John Monahan, Edward B. Smith, III, John K. A. Prendergast) being independent328335336342 - The Board has determined that three of its four directors are independent as defined by NYSE American rules334 - The company has a Code of Business Conduct and Ethics applicable to all employees and directors, and an Insider Trading Policy that prohibits hedging and pledging of company securities349350 Executive Compensation Executive compensation for NEOs in 2024 primarily comprised base salary and performance bonuses, with no equity awards granted, while director compensation included annual cash fees and committee service fees 2024 Summary Compensation Table | Name and Principal Position | Year | Salary | Bonus | Total | | :--- | :--- | :--- | :--- | :--- | | Jeffrey Wolf (Chairman and CEO) | 2024 | $575,000 | $3,995 | $578,995 | | William L. Ostrander (CFO) | 2024 | $375,000 | $1,997 | $376,997 | - No equity-based compensation was issued to Named Executive Officers in 2024 due to the limited number of awards available for grant under the 2018 Stock Incentive Plan366 - Employment agreements for the CEO and CFO were amended in August 2024 to include a special performance bonus based on new business booking goals, which were the only bonuses paid in 2024363364376379 - Non-employee director compensation for 2024 included an annual cash fee of $55,000, plus additional fees for committee membership and chairmanship391 - The company has adopted a clawback policy for the recovery of erroneously awarded incentive-based compensation from executive officers in the event of a financial restatement388 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters As of April 30, 2025, 12,387,712 common shares were outstanding, with executive officers and directors owning less than 1%, and 3i, LP being the only beneficial owner above 5% at 6.6% - As of April 30, 2025, there were 12,387,712 shares of common stock outstanding394 - All current executive officers and directors as a group (6 persons) beneficially owned 56,816 shares, representing less than 1% of the company397 - 3i, LP is reported as a beneficial owner of 557,113 shares, or 6.6% of the common stock, excluding shares underlying convertible notes and warrants due to a 4.99% beneficial ownership limitation398 Certain Relationships and Related Transactions, and Director Independence Related party transactions primarily involve the divestiture of Elusys Therapeutics to an entity controlled by the CEO, including a convertible note and shared services agreement, with the Audit Committee overseeing such transactions and the board affirming director independence - The primary related party transaction involves the divestiture of Elusys Therapeutics to Elusys Holdings, a company controlled by CEO Jeffrey Wolf406405 - As part of the divestiture, the company entered into a Shared Services Agreement to provide administrative and other services to Elusys Holdings on a transitional basis406473 - The company issued a convertible promissory note for $2.25 million to Elusys Holdings as a post-closing covenant of the divestiture406563 - The Board of Directors has determined that all directors except for CEO Jeffrey Wolf are independent under NYSE American rules408 Principal Accountant Fees and Services This section details the audit fees billed by BDO USA, P.C. for fiscal years 2024 and 2023, with all services pre-approved by the Audit Committee Accountant Fees and Services | Fee Type | 2024 | 2023 | | :--- | :--- | :--- | | Audit fees and expenses | $890,166 | $702,600 | - Audit fees were for professional services for the audit and review of consolidated financial statements, issuance of consents, and review of SEC filings410 - All services provided by the independent registered public accounting firm were pre-approved by the Audit Committee410 Part IV Exhibits and Financial Statement Schedules This section lists the consolidated financial statements for 2024 and 2023, along with an extensive index of exhibits including corporate governance documents and certifications - This section contains the consolidated financial statements for the fiscal years ended December 31, 2024, and 2023415 - An index of all exhibits filed with the report is included, referencing material agreements, corporate charters, compensation plans, and SEC-required certifications417419421 Form 10-K Summary This section is not applicable to the company's filing - Not applicable414
Scorpius Holdings(SCPX) - 2024 Q4 - Annual Report