Bone Biologics (BBLG) - 2024 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements The company reported no revenue, a significantly reduced net loss, and an improved balance sheet, but faces substantial doubt about its ability to continue as a going concern Unaudited Condensed Consolidated Balance Sheets Total assets increased slightly to $3.84 million while total liabilities decreased significantly to $164,626 due to a legal settlement Condensed Consolidated Balance Sheet Data (Unaudited) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash | $3,227,634 | $3,026,569 | | Total current assets | $3,839,574 | $3,737,763 | | Liabilities & Equity | | | | Accounts payable and accrued expenses | $146,186 | $360,662 | | Accrued legal settlement | $0 | $414,989 | | Total liabilities | $164,626 | $831,402 | | Total stockholders' equity | $3,674,948 | $2,906,361 | Unaudited Condensed Consolidated Statements of Operations The company's Q1 2024 net loss improved to $0.9 million from $3.7 million year-over-year, driven by a 90.5% decrease in R&D expenses Condensed Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Revenues | $0 | $0 | | Research and development expenses | $245,625 | $2,590,645 | | General and administrative expenses | $657,911 | $556,892 | | Loss from operations | ($903,536) | ($3,147,537) | | Net loss | ($865,970) | ($3,709,899) | | Loss per share - basic and diluted | ($1.31) | ($55.20) | Unaudited Condensed Consolidated Statements of Cash Flows Net cash used in operations was $1.3 million, offset by $1.5 million from financing activities, resulting in a cash balance of $3.23 million Cash Flow Summary (Unaudited) | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($1,303,411) | ($1,349,993) | | Net cash provided by financing activities | $1,504,476 | $0 | | Net increase (decrease) in cash | $201,065 | ($1,349,993) | | Cash, end of period | $3,227,634 | $6,188,319 | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail the company's 'Going Concern' issue, with cash reserves of $3.2 million only funding operations through Q3 2024 - The company is a medical device company focused on bone regeneration using the NELL-1 protein, licensed exclusively from UCLA TDG, which requires FDA pre-market approval[25] - The company has an accumulated deficit of approximately $81.8 million and incurred a net loss of $0.9 million in Q1 2024, raising substantial doubt about its ability to continue as a going concern[29] - Cash on hand of $3.2 million as of March 31, 2024, is expected to fund operations only through the third quarter of 2024, with estimated operating expenditures for the next twelve months at $6.9 million[29][30] - The company is obligated to make future milestone payments to UCLA TDG, including $250,000 upon Pivotal Study enrollment, $500,000 upon Pre-Market Approval, and $1,000,000 upon First Commercial Sale[75] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses reduced R&D expenses, a significant 'going concern' warning, and the need for an estimated $29 million to potentially achieve FDA approval Results of Operations Q1 2024 operating expenses fell 71.3% due to lower R&D costs, resulting in a net loss improvement to $0.9 million from $3.7 million in Q1 2023 Operating Expenses Comparison (Q1 2024 vs Q1 2023) | Expense Category | Q1 2024 | Q1 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Research and development | $245,625 | $2,590,645 | (90.52)% | | General and administrative | $657,911 | $556,892 | 18.14% | | Total operating expenses | $903,536 | $3,147,537 | (71.29)% | - The significant decrease in R&D costs is attributed to high expenses in 2023 for the production of the NELL-1 protein required for the initial clinical study[104] - The increase in G&A costs is mainly attributed to legal expenses related to settling ongoing litigation[105] Liquidity and Capital Resources The company faces significant liquidity challenges, with $3.2 million in cash expected to last only through Q3 2024 despite a recent $1.5 million offering - The company has incurred accumulated losses of $81.8 million and its ability to continue as a going concern is in substantial doubt[108] - Cash of $3,227,634 at March 31, 2024, is expected to fund operations through the third quarter of 2024[111] - The company anticipates needing approximately $5 million to complete first-in-man studies and an additional $24 million to achieve FDA approval[111] - A public offering on March 6, 2024, provided net proceeds of $1,504,476[109][112] Quantitative and Qualitative Disclosures about Market Risk The company states that this item is not applicable - Not applicable[114] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal controls - Based on an evaluation as of March 31, 2024, the Chief Financial Officer and Chief Executive Officer concluded that the company's disclosure controls and procedures were effective[115] - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, internal controls[116] PART II – OTHER INFORMATION Legal Proceedings The company settled a lawsuit for a total of $750,000, paying $414,989 out-of-pocket, leading to the case's dismissal - The company entered into a Settlement Agreement on January 10, 2024, to resolve a lawsuit involving claims of breach of contract and tortious interference[117] - Under the agreement, the company agreed to a total payment of $750,000 to the plaintiffs, paying $414,989 of this amount on February 7, 2024, with the remainder covered by its insurance carrier[117] Risk Factors No material changes to risk factors have occurred since the last Annual Report on Form 10-K - There have been no material changes from the risk factors as previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023[118] Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities or use of proceeds during the period - None[118] Other Information No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the first quarter of 2024 - No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended March 31, 2024[119] Exhibits The report includes exhibits such as warrant forms, purchase agreements, and amended executive employment agreements - Exhibits filed include forms of Warrants, Pre-Funded Warrants, and Placement Agent Warrants from the March 6, 2024 offering[121] - An Amended and Restated Employment Agreement for CEO Jeffrey Frelick and an amendment to the Employment Agreement for CFO Deina Walsh are included as exhibits[121]