ZyVersa Therapeutics(ZVSA) - 2025 Q2 - Quarterly Report

PART I Item 1. Financial Statements Presents unaudited condensed consolidated financial statements and notes for periods ended June 30, 2025, and December 31, 2024, prepared under U.S. GAAP Condensed Consolidated Balance Sheets Provides a snapshot of assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 - Total assets decreased from $20.6 million at December 31, 2024, to $19.6 million at June 30, 2025, primarily due to a decrease in cash[10] - Total liabilities increased, driven by higher accounts payable and accrued expenses, while stockholders' equity decreased from $8.5 million to $6.1 million[10] | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | Change ($) | Change (%) | | :-------------------------------- | :------------------------ | :------------------ | :--------- | :--------- | | Cash | $72,086 | $1,530,924 | $(1,458,838) | -95.3% | | Total Current Assets | $549,069 | $1,715,797 | $(1,166,728) | -68.0% | | Total Assets | $19,641,111 | $20,599,414 | $(958,303) | -4.65% | | Total Current Liabilities | $12,689,678 | $11,231,308 | $1,458,370 | 13.0% | | Total Liabilities | $13,541,337 | $12,082,967 | $1,458,370 | 12.1% | | Total Stockholders' Equity | $6,099,774 | $8,516,447 | $(2,416,673) | -28.4% | Condensed Consolidated Statements of Operations Details revenues, expenses, and net loss for the three and six months ended June 30, 2025, and 2024 - The company reported a reduced net loss for both the three and six months ended June 30, 2025, compared to the same periods in 2024, primarily driven by decreases in research and development and general and administrative expenses[12] - However, interest expense significantly increased[12] | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Research and development | $409,937 | $709,049 | $(299,112) | -42.2% | | General and administrative | $1,634,195 | $2,044,929 | $(410,734) | -20.1% | | Total Operating Expenses | $2,044,132 | $2,753,978 | $(709,846) | -25.8% | | Net Loss | $(2,211,317) | $(2,763,743) | $552,426 | -20.0% | | Net Loss Per Share (Basic and Diluted) | $(0.46) | $(3.31) | $2.85 | -86.1% | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Research and development | $668,813 | $1,221,987 | $(553,174) | -45.3% | | General and administrative | $3,519,889 | $4,358,627 | $(838,738) | -19.2% | | Total Operating Expenses | $4,188,702 | $5,580,614 | $(1,391,912) | -24.9% | | Net Loss | $(4,468,247) | $(5,590,480) | $1,122,233 | -20.1% | | Net Loss Per Share (Basic and Diluted) | $(1.13) | $(7.67) | $6.54 | -85.3% | Condensed Consolidated Statements of Changes in Stockholders' Equity Outlines changes in stockholders' equity for the three and six months ended June 30, 2025, and 2024 - Stockholders' equity decreased from $8.5 million at December 31, 2024, to $6.1 million at June 30, 2025, primarily due to net losses incurred during the period[16] - This decrease was partially offset by increases from private placement of warrants and common stock issuances[16] | Metric | December 31, 2024 | June 30, 2025 | Change ($) | Change (%) | | :-------------------------------- | :------------------ | :---------------- | :--------- | :--------- | | Total Stockholders' Equity | $8,516,447 | $6,099,774 | $(2,416,673) | -28.4% | | Accumulated Deficit | $(112,632,559) | $(117,100,806) | $(4,468,247) | 4.0% | | Additional Paid-In Capital | $121,155,922 | $123,207,260 | $2,051,338 | 1.7% | Condensed Consolidated Statements of Cash Flows Summarizes cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025, and 2024 - Net cash used in operating activities decreased significantly in the first six months of 2025 compared to 2024[20] - Net cash provided by financing activities also decreased, leading to a smaller net decrease in cash overall[20] | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Net Cash Used In Operating Activities | $(3,293,780) | $(5,690,688) | $2,396,908 | -42.1% | | Net Cash Provided By Financing Activities | $1,834,942 | $2,672,500 | $(837,558) | -31.3% | | Net Decrease in Cash | $(1,458,838) | $(3,018,188) | $1,559,350 | -51.7% | | Cash - End of Period | $72,086 | $119,486 | $(47,400) | -39.7% | Notes to Condensed Consolidated Financial Statements Provides detailed explanations and disclosures for financial statements, covering business, going concern, accounting policies, liabilities, taxes, and equity Note 1 – Business Organization, Nature of Operations and Basis of Presentation Describes the company's business, operational nature, and the basis for financial statement presentation - ZyVersa Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on developing first-in-class drugs for chronic renal or inflammatory diseases[22] - The financial statements are unaudited and prepared in accordance with U.S. GAAP for interim financial information, including normal recurring adjustments[23] - A 1-for-10 reverse stock split was effected on April 25, 2024, and all share and per share amounts have been retroactively adjusted[24][25] Note 2 - Going Concern and Management's Plans Addresses the company's ability to continue operations and outlines management's plans to mitigate risks - As of June 30, 2025, the Company had cash of $72.1 thousand, a working capital deficit of $12.1 million, and an accumulated deficit of $117.1 million[27] - The Company incurred a net loss of $4.5 million and used $3.3 million in cash from operations during the six months ended June 30, 2025[27] - These conditions raise substantial doubt about the Company's ability to continue as a going concern for at least one year, necessitating additional equity or debt financing[29] Note 3 – Summary of Significant Accounting Policies Outlines the key accounting principles and methods used in preparing the financial statements - No material changes to significant accounting policies since December 31, 2024[30] - The Company operates as one segment (clinical stage biopharmaceutical) and has not generated revenue from product sales[35] | Potentially Dilutive Securities | As of June 30, 2025 | As of June 30, 2024 | | :------------------------------ | :------------------ | :------------------ | | Warrants | 3,849,308 | 689,293 | | Options | 9,460 | 9,671 | | Series A Convertible Preferred Stock | 72 | 72 | | Series B Convertible Preferred Stock | 2,067 | 2,067 | | Total potentially dilutive shares | 3,860,907 | 701,103 | Note 4 – Accrued Expenses and Other Current Liabilities Details the composition and changes in accrued expenses and other current liabilities - Total accrued expenses and other current liabilities increased by over $1 million from December 31, 2024, to June 30, 2025, primarily due to increases in interest accrual, bonus accrual, and accrued issuable equity[41] | Accrued Expense Category | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :----------------------- | :------------ | :---------------- | :--------- | :--------- | | Payroll accrual | $1,101,584 | $1,039,338 | $62,246 | 6.0% | | Bonus accrual | $917,375 | $536,500 | $380,875 | 71.0% | | Interest accrual | $518,390 | $268,972 | $249,418 | 92.7% | | Accrued issuable equity | $289,006 | $- | $289,006 | N/A | | Other accrued expenses | $81,832 | $41,970 | $39,862 | 95.0% | | Registration delay liability | $7,261 | $7,261 | $0 | 0.0% | | Total | $2,915,448 | $1,894,041 | $1,021,407 | 53.9% | Note 5 – Income Taxes Explains the company's income tax position, effective tax rate, and deferred tax assets/liabilities - The Company's effective tax rate was 0.00% for the three and six months ended June 30, 2025 and 2024, due to a full valuation allowance on significant net deferred tax assets[42] - The Tax Reform Act of 2025, signed on July 4, 2025, will not have a financial impact as of June 30, 2025, but its effects will be reflected in future periods[43][44] Note 6 – Commitments and Contingencies Discloses the company's contractual commitments and potential contingent liabilities - The Company is involved in a dispute with a vendor regarding invoices for retroactive interest and unsupported charges, with $518,390 accrued for interest as of June 30, 2025, and an additional $1,123,973 claimed by the vendor not yet accrued[46] - The Company extended its office lease for an additional year on January 9, 2025, with a total base rent commitment of approximately $120,819[48] | Rent Expense | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :----------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Operating Lease | $45,168 | $43,271 | $1,897 | 4.4% | | Rent Expense | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :----------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Operating Lease | $89,364 | $84,743 | $4,621 | 5.5% | Note 7 – Stockholders' Equity Provides details on common stock, preferred stock, warrants, and other equity-related transactions - The Company issued 260,000 shares of common stock to vendors for marketing services during the six months ended June 30, 2025, with fair values ranging from $51,800 to $81,600[51][52][53] - On June 24, 2025, the Company entered into an Equity Purchase Agreement with Williamsburg Venture Holdings, LLC, allowing the sale of up to $10.0 million in common stock and the issuance of 426,829 Commitment Shares[54] | Stock-Based Compensation Expense | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Total | $59,199 | $160,664 | $(101,465) | -63.2% | | Stock-Based Compensation Expense | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Total | $131,490 | $384,237 | $(252,747) | -65.8% | Note 8 – Subsequent Events Reports significant events that occurred after the balance sheet date but before financial statement issuance - On July 8, 2025, the Company entered into a warrant exercise inducement offer, where a holder exercised existing warrants for $2.05 million at a reduced price of $0.67 per share, in exchange for new Inducement Warrants to purchase up to 6,124,930 shares[67][68] - Nasdaq suspended trading of the Company's common stock on July 17, 2025, and initiated delisting due to non-compliance with the minimum bid price requirement[69] - The common stock began trading on the OTCQB® Venture Market on July 28, 2025, under the symbol "ZVSA"[70] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's perspective on financial condition and results for periods ended June 30, 2025 and 2024, covering operations, liquidity, and risks Business Overview Provides an overview of the company's core business, product candidates, and strategic focus - ZyVersa Therapeutics, Inc. is a clinical-stage biopharmaceutical company developing first-in-class drugs for renal (VAR 200 for FSGS) and inflammatory diseases (IC 100 for obesity with cardiometabolic comorbidities)[72][73] Financial Operations Overview Summarizes the company's financial performance, including revenue, net losses, and accumulated deficit - The Company has not generated revenue and incurred net losses of $4.5 million for the six months ended June 30, 2025, and $5.6 million for the same period in 2024[74] - As of June 30, 2025, the Company had an accumulated deficit of $117.1 million and cash of $0.1 million[74] - Significant expenses are expected to continue, requiring additional financing through equity, debt, grants, or collaborations[75] Recent Developments Highlights significant recent events impacting the company's operations or financial status - Nasdaq suspended trading of the Company's common stock on July 17, 2025, and initiated delisting due to non-compliance with the minimum bid price rule[76] - The Company's common stock began trading on the OTCQB® Venture Market on July 28, 2025, under the symbol "ZVSA" to mitigate delisting risks[76] Components of Operating Results Details operating results components, including revenue, R&D, and G&A expenses, and their influencing factors Revenue Discusses the company's revenue generation strategy and future expectations - The Company has not generated any revenue since inception and does not expect to in the near future[77] - Future revenue generation is contingent on successful product candidate development, regulatory approval, or collaboration/license agreements[78] Operating Expenses Elaborates on R&D and G&A operating expenses, their drivers, and expected future trends Research and Development Expenses Details the nature and expected trends of research and development expenditures - R&D expenses include costs for CROs, investigative sites, raw materials, manufacturing, employee salaries, stock-based compensation, equipment, and regulatory fees[84] - R&D expenses are expected to increase as product candidates (VAR 200 and IC 100) advance through preclinical and clinical development, with later stages incurring higher costs[80] - The successful development and commercialization of product candidates are highly uncertain, with costs and timing dependent on clinical trial outcomes, regulatory approvals, and intellectual property defense[81][82] General and Administrative Expenses Describes the nature and expected trends of general and administrative expenditures - G&A expenses primarily cover salaries, stock-based compensation for administrative/executive/finance functions, professional fees (legal, accounting, audit, tax, consulting), insurance, HR, IT, office, and travel[83] - G&A expenses are expected to increase with headcount growth to support R&D and potential commercialization, as well as increased costs associated with being a public company[86] Results of Operations Compares operating results for the three and six months ended June 30, 2025, and 2024, focusing on expense changes Comparison of Three Months Ended June 30, 2025 vs. 2024 Compares financial performance for the three months ended June 30, 2025, against the same period in 2024 - Net loss decreased by 20.0% to $(2.2) million for the three months ended June 30, 2025, from $(2.8) million in the prior year, driven by lower operating expenses[89] - Research and development expenses decreased by 42.2% ($0.3 million) due to lower CRO fees, consultant costs, and pre-clinical costs for VAR 200 and IC 100[90] - General and administrative expenses decreased by 20.1% ($0.4 million) due to lower insurance premiums, investor relations marketing, professional fees, and stock-based compensation, partially offset by increased public company costs[91] Comparison of Six Months Ended June 30, 2025 vs. 2024 Compares financial performance for the six months ended June 30, 2025, against the same period in 2024 - Net loss decreased by 20.1% to $(4.5) million for the six months ended June 30, 2025, from $(5.6) million in the prior year, primarily due to reduced operating expenses[94] - Research and development expenses decreased by 45.3% ($0.6 million) due to lower CRO fees, consultant costs, and pre-clinical costs for VAR 200 and IC 100[95] - General and administrative expenses decreased by 19.2% ($0.8 million) due to lower insurance premiums, investor relations, professional fees, and stock-based compensation, partially offset by increased legal patent fees and public company costs[96] Cash Flows Summarizes cash flow activities for the six months ended June 30, 2025, and 2024, detailing operating and financing changes Cash Flows from Operating Activities Details cash generated or used by the company's primary business operations - Net cash used in operating activities decreased by $2.4 million (42.1%) to $(3.3) million for the six months ended June 30, 2025, compared to $(5.7) million in the prior year[98][99] - The decrease was primarily due to a lower net loss and positive cash generated by changes in operating assets and liabilities in 2025, compared to cash used in 2024[99] Net Cash Provided By (Used In) Financing Activities Details cash flows related to debt, equity, and other financing transactions - Net cash provided by financing activities decreased by $0.8 million (31.3%) to $1.8 million for the six months ended June 30, 2025, from $2.7 million in the prior year[98][100] - 2025 financing was primarily from $2.0 million in private placement of warrants, offset by $0.2 million in issuance costs, while 2024 financing was from warrant exercises[100] Liquidity and Capital Resources Discusses financial liquidity, capital needs, funding strategies, and going concern risks Working Capital and Cash Position Analyzes the company's short-term financial health and available cash - The Company had a working capital deficiency of $(12.1) million as of June 30, 2025, an increase from $(9.5) million at December 31, 2024[101] - Cash on hand of $0.1 million as of June 30, 2025, is only sufficient to fund operating expenses and capital expenditure requirements on a month-to-month basis[101] | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change ($ in thousands) | Change (%) | | :---------------------- | :--------------------------- | :------------------------------- | :---------------------- | :--------- | | Current Assets | $549 | $1,716 | $(1,167) | -68.0% | | Current Liabilities | $12,690 | $11,231 | $1,459 | 13.0% | | Working Capital Deficiency | $(12,141) | $(9,515) | $(2,626) | 27.6% | Going Concern Assesses the company's ability to continue operations for the foreseeable future - The Company's history of operating losses, negative cash flows, and current cash position raise substantial doubt about its ability to continue as a going concern for the next 12 months[102] - Additional financing is required to fund operations and complete product development, with no assurance of availability on acceptable terms[102] Future Capital Needs and Funding Strategy Outlines anticipated capital requirements and plans for securing future funding - The Company expects to raise additional capital through equity, equity-linked securities, or debt offerings to fund continued development of VAR 200 and IC 100[104][106] - Significant proceeds from warrant exercises are not expected in the near term due to current market prices being below exercise prices[106] - Future capital requirements are dependent on clinical trial progress, regulatory approvals, intellectual property costs, manufacturing, and commercialization efforts[108][112] JOBS Act Accounting Election Explains the company's election to use extended transition periods for accounting standards under the JOBS Act - As an "emerging growth company" under the JOBS Act, ZyVersa uses the extended transition period for complying with new or revised accounting standards, which may make its financial statements not comparable to other public companies[111][113] - The Company intends to rely on other exemptions and reduced reporting requirements provided by the JOBS Act[114] Off-Balance Sheet Arrangements Confirms the absence of material off-balance sheet arrangements impacting financial condition or liquidity - The Company has no off-balance sheet arrangements that are material or reasonably likely to have a current or future effect on its financial condition, results of operations, liquidity, or capital resources[115] Critical Accounting Estimates Discusses accounting estimates requiring significant judgment, where actual results may differ from assumptions - Critical accounting estimates involve significant judgment and assumptions, particularly regarding the impairment of long-lived assets and goodwill[116][117] - Actual results could differ materially from estimates[118] ITEM 3. Quantitative and Qualitative Disclosures About Market Risk States that there are no applicable quantitative and qualitative disclosures about market risk for the company - Not applicable[120] ITEM 4. Controls and Procedures Addresses the effectiveness of disclosure controls and internal control over financial reporting as of March 31, 2025 Disclosure Controls and Procedures Assesses the effectiveness of controls designed to ensure timely and accurate financial disclosures - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of March 31, 2025[121][122] Changes in Internal Control over Financial Reporting Reports any material changes in the company's internal control over financial reporting - There were no material changes in internal control over financial reporting during the most recent fiscal quarter[123] Inherent Limitations of the Effectiveness of Controls Acknowledges that control systems provide reasonable, not absolute, assurance against errors and fraud - Management acknowledges that no control system can prevent or detect all errors and fraud, providing only reasonable, not absolute, assurance[124] PART II - OTHER INFORMATION ITEM 1. Legal Proceedings States that the company is not currently involved in any material legal proceedings - None[126] ITEM 1A. Risk Factors Outlines key risks, including "penny stock" rules, Nasdaq delisting, and changes in tax laws Penny Stock Rules Discusses the potential impact of SEC's "penny stock" rules on the company's common stock - The Company's common stock market price is less than $5.00, and trading was suspended by Nasdaq, but it is currently exempt from "penny stock" rules due to net tangible assets exceeding $2.0 million[127] - If the exemption is lost, the stock would be subject to additional sales practice requirements for broker-dealers, potentially reducing trading activity and marketability[127] FINRA Sales Practice Requirements Explains how FINRA sales practice requirements could affect trading in "penny stock" securities - If deemed "penny stock," FINRA rules would make it more difficult for broker-dealers to recommend the Company's securities, potentially limiting stock liquidity and adversely affecting the market[128] Nasdaq Delisting Addresses the recent Nasdaq delisting and future trading on other markets - Nasdaq suspended trading of the Company's common stock on July 17, 2025, and initiated delisting due to non-compliance with the minimum bid price requirement[129] - The common stock is now quoted on the OTCQB under "ZVSA," but there's no assurance it will trade on a national exchange again[129] Changes in Tax Laws and Regulations Discusses how changes in tax laws or regulations could impact the company's financial results - Changes in tax laws, such as the Tax Reform Act of 2025, or adverse outcomes from tax audits, could unfavorably impact the Company's effective tax rate, business, financial condition, and operating results[130] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds Indicates no unregistered sales of equity securities or use of proceeds to report - None[132] ITEM 3. Defaults Upon Senior Securities States that there were no defaults upon senior securities - None[132] ITEM 4. Mine Safety Disclosures Indicates that mine safety disclosures are not applicable to the company - Not applicable[133] ITEM 5. Other Information Reports no insider trading plan adoptions, modifications, or terminations by directors or officers - No insider trading plans (Rule 10b5-1 or non-Rule 10b5-1) were adopted, modified, or terminated by directors or officers during the six months ended June 30, 2025[134] ITEM 6. Exhibits Lists all exhibits filed with the Form 10-Q, including organizational documents, agreements, and certifications - Key exhibits include the Second Amended and Restated Certificate of Incorporation and Bylaws, Certificate of Designation for Series A Preferred Stock, Form of Series A-4 Warrant, Equity Purchase Agreement with Williamsburg Venture Holdings, LLC, Registration Rights Agreement, Inducement Letter, and Financial Advisory Agreement[136] SIGNATURES Provides the official signatures for the quarterly report, confirming its submission - The quarterly report was signed by Stephen C. Glover (Chief Executive Officer) and Peter Wolfe (Chief Financial Officer) on August 13, 2025[141]