
PART I – FINANCIAL INFORMATION Provides detailed financial statements, management's analysis of operations, market risk disclosures, and internal control assessments Financial Statements The company reported no revenue, a reduced net loss of $15.3 million, and decreased total assets to $21.1 million for the nine months ended September 30, 2022 Condensed Consolidated Balance Sheets Total assets decreased to $21.1 million, liabilities to $5.1 million, and stockholders' equity to $16.0 million as of September 30, 2022 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2022 (Unaudited) | Dec 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $2,465 | $8,968 | | Short-term investments | $18,319 | $23,011 | | Total Current Assets | $20,872 | $32,169 | | Total Assets | $21,071 | $32,169 | | Liabilities & Equity | | | | Accounts payable | $3,325 | $8,220 | | Total Current Liabilities | $5,025 | $10,259 | | Total Liabilities | $5,117 | $10,259 | | Total Stockholders' Equity | $15,954 | $21,910 | Condensed Consolidated Statements of Operations The company reported no revenue, with a Q3 2022 net loss of $6.9 million and a nine-month net loss of $15.3 million, a significant reduction from the prior year Statement of Operations Summary (in thousands, except per share data) | Metric | Q3 2022 (Unaudited) | Q3 2021 (Unaudited) | YTD 2022 (Unaudited) | YTD 2021 (Unaudited) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $ - | $ - | $ - | $ - | | Research and development | $2,743 | $1,008 | $5,969 | $3,287 | | Selling, general and administrative | $4,280 | $4,946 | $9,510 | $36,050 | | Loss from Operations | $7,023 | $5,954 | $15,479 | $39,337 | | Net Loss | $(6,881) | $(5,453) | $(15,300) | $(39,991) | | Net loss per share | $(0.22) | $(0.17) | $(0.48) | $(1.54) | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased to $16.0 million due to a $15.3 million net loss, partially offset by equity compensation and stock issuance for payables - Key changes in stockholders' equity for the nine months ended Sep 30, 2022 include a net loss of $15.3 million, equity compensation totaling $6.3 million ($3.85 million to officers/employees and $2.46 million to consultants), and issuance of common stock worth $3.25 million to settle vendor payables15 Condensed Consolidated Statements of Cash Flows Net cash used in operations was $10.9 million, investing activities provided $4.6 million, resulting in a $6.5 million net cash decrease, ending at $2.5 million Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2022 (Unaudited) | Nine Months Ended Sep 30, 2021 (Unaudited) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(10,919) | $(11,901) | | Net Cash Provided by (Used in) Investing Activities | $4,639 | $(26,031) | | Net Cash (Used in) Provided by Financing Activities | $(223) | $42,317 | | Net (Decrease) Increase in Cash | $(6,503) | $4,385 | | Cash at Beginning of Period | $8,968 | $5,297 | | Cash at End of Period | $2,465 | $9,682 | Condensed Notes to Consolidated Financial Statements Notes detail the company's biopharmaceutical focus, liquidity, significant accounts payable settlement, stock-based compensation, ongoing litigation, and research commitments - The company is a clinical-stage biopharmaceutical company focused on developing its proprietary Tri-specific Killer Engager (TriKE) immuno-oncology platform23 - Management anticipates that its cash, cash equivalents, and short-term investments of $20.8 million as of September 30, 2022, are adequate to fund operations for at least one year27 - On August 24, 2022, the company settled a portion of its payables with a third-party manufacturer by issuing 1,222,281 shares of common stock valued at $3.3 million and making cash payments59 - On October 10, 2022, stockholders approved a reduction in the number of authorized shares of common stock from 750,000,000 to 250,000,000103 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's biopharmaceutical focus, increased R&D expenses, decreased SG&A, and confirms sufficient liquidity for over twelve months with projected future spending - The company is a clinical-stage biopharmaceutical company developing immuno-oncology products based on its proprietary Tri-specific Killer Engager (TriKE) platform106 - Management believes it has sufficient cash and short-term investments ($20.8 million as of Sep 30, 2022) to fund operations for more than twelve months from the filing date120 - Anticipated expenses for the next twelve months are projected to be $13 million to $15 million for R&D and $4 million to $5 million for SG&A119 Results of Operations R&D expenses increased to $5.9 million due to development costs, while SG&A expenses decreased to $9.5 million primarily from reduced stock-based compensation Operating Expense Comparison (in millions) | Expense Category | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | Change | | :--- | :--- | :--- | :--- | | Research & Development | $5.9 | $3.3 | +$2.6 | | Selling, General & Administrative | $9.5 | $36.1 | -$26.6 | - The increase in R&D expense was due to hiring additional employees and costs for developing advanced TriKE® product candidates GTB-3650 and GTB-5550112 - The decrease in SG&A expense was primarily due to a significant reduction in stock-based compensation to consultants, officers, and directors compared to the prior year113 Quantitative and Qualitative Disclosures About Market Risks As a smaller reporting company, the company is exempt from providing quantitative and qualitative disclosures about market risks - As a smaller reporting company, GT Biopharma is not required to provide disclosures about market risk129 Controls and Procedures Disclosure controls and procedures were deemed ineffective due to material weaknesses, prompting remediation efforts including new hires and external consultants - Disclosure controls and procedures were concluded to be not effective as of September 30, 2022129 - The ineffectiveness is due to material weaknesses in internal control, including: (i) inadequate segregation of duties, (ii) risks of executive override, and (iii) insufficient written accounting policies and procedures129 - Remediation measures include hiring an experienced CFO, retaining outside consultants, and actions by a Special Committee of the board to evaluate compliance and operations130 PART II – OTHER INFORMATION Presents information on legal proceedings and a list of exhibits filed with the report Legal Proceedings The company initiated binding arbitration against its former CFO for misappropriation of funds and stock, seeking $370,000 in damages and share returns - On May 13, 2022, the Company filed a claim against its former CFO, Michael Handelman, for misappropriating funds and stock and failing to file required SEC reports133 - The Company is seeking monetary damages estimated at $370,000, the return of unauthorized shares, and disgorgement of profits from the sale of those shares133 - The dispute is being resolved through binding arbitration with the American Arbitration Association (AAA)134 Exhibits The report includes key exhibits such as Sarbanes-Oxley certifications and a Settlement and Investment Agreement with Cytovance Biologics - Key exhibits filed include CEO and CFO certifications pursuant to Sarbanes-Oxley Act rules135 - A Settlement and Investment Agreement dated August 24, 2022, between the company and Cytovance Biologics, Inc. was filed as Exhibit 10.1135 Signatures Confirms the official signing and authorization of the quarterly report Signatures The quarterly report was signed and authorized on October 31, 2022, by Manu Ohri, Chief Financial Officer - The report was signed on October 31, 2022, by Manu Ohri, Chief Financial Officer139140