Revelation Biosciences(REVB) - 2023 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures for the quarter ended March 31, 2023 Condensed Consolidated Financial Statements (Unaudited) This section presents the unaudited financial statements for Q1 2023, highlighting a shift to net income, increased cash from a public offering, and ongoing going concern doubts Condensed Consolidated Balance Sheets The balance sheet shows a significant increase in cash and total assets, primarily driven by financing activities and a rise in stockholders' equity | | March 31, 2023 ($) | December 31, 2022 ($) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | 17,702,818 | 5,252,979 | | Total current assets | 18,035,205 | 5,413,282 | | Total assets | 18,119,075 | 5,503,415 | | Liabilities & Equity | | | | Warrant Liability | 3,511,155 | 0 | | Total current liabilities | 8,101,429 | 4,450,962 | | Total stockholders' equity | 10,017,646 | 1,052,453 | Condensed Consolidated Statements of Operations The company reported a net income of $6.16 million in Q1 2023, a significant turnaround driven by a warrant liability gain and reduced operating expenses | Metric | Q1 2023 ($) | Q1 2022 ($) | | :--- | :--- | :--- | | Research and development | 525,273 | 3,680,280 | | General and administrative | 1,094,574 | 2,906,020 | | Loss from operations | (1,619,847) | (6,586,300) | | Change in fair value of warrant liability | 7,744,935 | 0 | | Net income (loss) | 6,159,195 | (6,616,541) | | Net earnings (loss) per share, basic | 2.79 | (15.90) | Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) Stockholders' equity significantly increased due to net income and equity issuances from the February 2023 Public Offering and warrant exercises - Key activities impacting stockholders' equity in Q1 2023 included the February 2023 Public Offering, exercise of Class C Pre-Funded and Common Stock Warrants, stock-based compensation expense, and the net income of $6.16 million[15] Condensed Consolidated Statements of Cash Flows Cash flows show improved operating cash usage and a significant increase in cash from financing activities, primarily a $14.0 million public offering | Cash Flow Activity | Q1 2023 ($) | Q1 2022 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | (1,575,154) | (4,830,066) | | Net cash provided by financing activities | 14,024,993 | 10,741,598 | | Net increase in cash and cash equivalents | 12,449,839 | 5,911,532 | | Cash and cash equivalents at end of period | 17,702,818 | 7,186,261 | - The company received net proceeds of $14,029,974 from its February 2023 Public Offering[18] Notes to the Condensed Consolidated Financial Statements Key notes include a reverse stock split, a $14.0 million public offering, ongoing going concern doubts, and details on significant legal disputes - The company executed a 1-for-35 reverse stock split on February 1, 2023, and increased its authorized common stock from 100 million to 500 million shares[25][88] - Management has substantial doubt about the company's ability to continue as a going concern, as current cash is not expected to sustain operations for one year from the financial statement issuance date[27] - The company is involved in legal proceedings with LifeSci Capital LLC for approximately $5.3 million in disputed fees and with A-IR Clinical Research Ltd. for £1.6 million in disputed invoices[63][65] - The Class C Common Stock Warrants issued in the February 2023 offering are accounted for as a liability, and the change in their fair value resulted in a $7.7 million gain recognized in the statement of operations[123][126] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, liquidity, and operational focus, highlighting reduced operating expenses, a $14.0 million capital raise, and persistent going concern doubts - The company is a clinical-stage biopharmaceutical firm focused on developing therapeutics and diagnostics for the innate immune system and has not yet generated any revenue[132][137] - Management has substantial doubt about the company's ability to continue as a going concern, as current cash is not anticipated to be sufficient to sustain operations for one year[134][154] Operating Expenses | Expense Category | Q1 2023 ($) | Q1 2022 ($) | Change ($) | | :--- | :--- | :--- | :--- | | Research and development | 525,273 | 3,680,280 | (3,155,007) | | General and administrative | 1,094,574 | 2,906,020 | (1,811,446) | | Total operating expenses | 1,619,847 | 6,586,300 | (4,966,453) | - The decrease in R&D expenses was primarily due to a $2.8 million reduction in clinical study expenses for REVTx-99a. The decrease in G&A expenses was mainly due to lower financial advisory, legal, and D&O insurance costs[147][148] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, detailed market risk disclosures are not required, with interest rate and foreign currency risks deemed immaterial - The company is a smaller reporting company and is not required to provide the information otherwise required under this item[178] - The company's exposure to interest rate risk and foreign currency risk is not considered material. A 10% change in currency exchange rates would not have a material effect on financial results[167][168] Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2023[179] - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[180] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, and other disclosures Legal Proceedings The company is involved in two significant legal disputes concerning disputed fees and invoices, with outcomes currently indeterminable - LifeSci Capital LLC filed an action seeking damages of approximately $2.7 million in cash and $2.6 million in equity for unpaid banking and advisory fees. The company is disputing the amount[183] - A-IR Clinical Research Ltd. filed a claim for £1.6 million in unpaid invoices related to a viral challenge study, which the company is disputing on the basis of non-performance and misrepresentation[185] Risk Factors No material changes have occurred regarding the risk factors previously disclosed in the company's Annual Report on Form 10-K - There have been no material changes from the risk factors disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2022[186] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported during the period - This item is not applicable for the reporting period[187][190] Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - This item is not applicable for the reporting period[187] Mine Safety Disclosures This section is not applicable as the company is not involved in mining operations - This item is not applicable[188] Other Information No other information was reported for the period - There is no other information to report[189] Exhibits This section lists exhibits filed with the Form 10-Q, including officer certifications and XBRL financial data - The exhibits filed with this report include CEO and CFO certifications pursuant to Sarbanes-Oxley Act rules and XBRL interactive data files[192]