NanoViricides(NNVC) - 2024 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION This section covers the company's financial statements, management's analysis, market risk, and internal control disclosures Financial Statements The company reported a $4.1 million net loss, decreased assets, and a $135.1 million accumulated deficit, raising going concern issues Condensed Balance Sheets Condensed Balance Sheet Summary (Unaudited) | Metric | Dec 31, 2023 ($) | June 30, 2023 ($) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $5,245,374 | $8,149,808 | | Total current assets | $5,317,816 | $8,445,294 | | Total assets | $13,402,210 | $16,899,880 | | Liabilities & Equity | | | | Total current liabilities | $951,074 | $534,250 | | Total liabilities | $951,074 | $2,034,250 | | Total stockholders' equity | $12,451,136 | $14,865,630 | Condensed Statements of Operations Condensed Statements of Operations Summary (Unaudited) | Metric | Three Months Ended Dec 31, 2023 ($) | Three Months Ended Dec 31, 2022 ($) | Six Months Ended Dec 31, 2023 ($) | Six Months Ended Dec 31, 2022 ($) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $1,573,879 | $1,170,710 | $3,040,544 | $2,283,369 | | General and administrative | $610,877 | $663,284 | $1,175,803 | $1,172,985 | | Loss from operations | $(2,184,756) | $(1,833,994) | $(4,216,347) | $(3,456,354) | | Net loss | $(2,114,937) | $(1,745,134) | $(4,083,683) | $(3,315,776) | | Net loss per share | $(0.18) | $(0.15) | $(0.35) | $(0.29) | Condensed Statements of Changes in Stockholders' Equity - Stockholders' equity decreased from $14.9 million at June 30, 2023, to $12.5 million at December 31, 2023. The decrease was primarily driven by a net loss of $4.1 million, partially offset by non-cash transactions including the conversion of a $1.5 million related-party promissory note into Series A preferred stock and stock-based compensation[13] Condensed Statements of Cash Flows Condensed Statements of Cash Flows Summary (Unaudited) | Metric | Six Months Ended Dec 31, 2023 ($) | Six Months Ended Dec 31, 2022 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,890,669) | $(2,433,380) | | Net cash used in investing activities | $(13,765) | $(89,845) | | Net cash used in financing activities | $0 | $(94,788) | | Net change in cash | $(2,904,434) | $(2,618,013) | | Cash at end of period | $5,245,374 | $11,448,346 | Notes to the Condensed Financial Statements - The company is a clinical-stage biopharmaceutical firm with its lead drug candidate, NV-CoV-2, in Phase 1a/1b human clinical trials for COVID-19. The drug's active ingredient, NV-387, has also shown pre-clinical effectiveness against Respiratory Syncytial Virus (RSV) and smallpox[20] - The company has an accumulated deficit of approximately $135.1 million and has not generated any revenue. Management believes its cash of $5.2 million and a $2 million line of credit are sufficient to fund operations for at least 12 months, but additional capital will be needed for long-term plans[27][29] - Significant related-party transactions exist with TheraCour Pharma, Inc. for technology licenses and R&D services, and with Karveer Meditech, Pvt., Ltd (KMPL) for clinical trial management in India. The company's CEO, Dr. Anil Diwan, has a controlling interest in TheraCour and is a passive investor in KMPL[35][36] - Subsequent to the quarter end, the company amended its COVID-19 License Agreement with TheraCour to defer cash milestone payments until the company achieves a "Revenue Event," significantly easing near-term cash flow pressures[66] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's clinical-stage progress with NV-CoV-2, increased net loss and R&D expenses, and liquidity for future operations - The lead drug candidate, NV-CoV-2, is in Phase 1a/1b clinical trials. Its active ingredient, NV-387, has demonstrated broad-spectrum antiviral activity against Coronaviruses, RSV, and Poxviruses (Mpox/Smallpox) in pre-clinical models[75][81][83] - The healthy subjects part of the Phase 1a/1b human clinical trial for NV-CoV-2 was successfully completed with no adverse events reported, indicating a strong safety and tolerability profile for NV-387[157] - The company has doubled its manufacturing capacity for NV-387 in preparation for potential Phase II clinical trials for COVID or Phase II/III trials for RSV[145] Results of Operations Comparison (Six Months Ended Dec 31) | Metric | 2023 ($) | 2022 ($) | Change ($) | | :--- | :--- | :--- | :--- | | Research & Development Expenses | $3,040,544 | $2,283,369 | +$757,175 | | General & Administrative Expenses | $1,175,803 | $1,172,985 | +$2,818 | | Net Loss | $(4,083,683) | $(3,315,776) | +$767,907 | | Net Loss per Share | $(0.35) | $(0.29) | +$0.06 | - As of December 31, 2023, the company had $5.2 million in cash. Management believes this, along with an available line of credit, is sufficient to fund operations for at least the next twelve months[176][217] Quantitative and Qualitative Disclosures About Market Risk The company is a smaller reporting company and is therefore not required to provide information for this item - As a smaller reporting company, NanoViricides, Inc. is not required to provide quantitative and qualitative disclosures about market risk[222] Controls and Procedures Management concluded that disclosure controls and procedures were ineffective due to an un-remediated material weakness in internal control over financial reporting - The company's CEO and CFO concluded that disclosure controls and procedures were not effective as of December 31, 2023[224] - The ineffectiveness is due to a material weakness in internal control over financial reporting, as described in the company's Form 10-K for the fiscal year ended June 30, 2023[224] - A remediation plan, including a financial reporting controls committee, has been established but has not yet fully remediated the material weakness, particularly concerning timeliness[226] PART II OTHER INFORMATION This section includes disclosures on legal proceedings, equity sales, defaults, and other relevant corporate information Legal Proceedings The company reports that there are no pending or threatened legal proceedings that it believes will have a material adverse effect on its business, financial position, or operations - As of the filing date, the company is not aware of any pending or threatened legal proceedings against it[229] Unregistered Sales of Equity Securities and Use of Proceeds The company issued unregistered Series A preferred stock, common stock, and warrants for note conversion and compensation, relying on Securities Act exemptions - On October 27, 2023, TheraCour Pharma, Inc. converted a $1,500,000 note into 331,859 shares of Series A preferred stock[231] - The company issued Series A preferred stock, common stock, and warrants to its CEO, employees, directors, and consultants as compensation for services rendered during the period[232][233][235][236][237] - All securities were issued without registration under the Securities Act of 1933, relying on exemptions provided by Section 4(a)(2) and Rule 506(b) of Regulation D[238] Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[240] Mine Safety Disclosures This item is not applicable to the company - Not applicable[241] Other Information The company reported no other material information, including no changes to board nominee procedures or Rule 10b5-1 trading arrangements - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the reporting period[244] Exhibits This section lists the exhibits filed with the Form 10-Q, which include the required certifications by the Chief Executive Officer and Chief Financial Officer, as well as Inline XBRL financial data files - The exhibits filed with this report include CEO and CFO certifications under Rule 13(a)-14(a)/15(d)-14(a) and Section 1350, along with Inline XBRL documents[246]