UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39811

Virios Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

Delaware

85-4314201

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

44 Milton Avenue

Alpharetta, GA 30009

(Address of Principal Executive Offices)

(866) 620-8655

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	◻	Accelerated filer	◻
Non-accelerated filer	☒	Smaller reporting company	☒	Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ◻ No ⌧

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading symbol	Name of Exchange on which registered
Common Stock, par value $0.0001 per share	VIRI	Nasdaq Capital Market

As of November 11, 2021, there were 8,330,390 shares of the registrant’s common stock outstanding.

		Page

Part I	Financial Information

Item 1.	Financial Statements	3

	Condensed Balance Sheets as of September 30, 2021 (Unaudited) and December 31, 2020	3

	Condensed Statements of Operations for the three and nine months ended September 30, 2021 and 2020 (Unaudited)	4

	Condensed Statements of Changes in Members’ Deficit/Stockholders’ Equity for the three and nine months ended September 30, 2021 and 2020 (Unaudited)	5

	Condensed Statements of Cash Flows for the nine months ended September 30, 2021 and 2020 (Unaudited)	6

	Notes to Condensed Financial Statements (Unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	19

Item 4.	Controls and Procedures	20

Part II	Other Information

Item 1.	Legal Proceedings	21

Item 1A.	Risk Factors	21

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21

Item 3.	Defaults Upon Senior Securities	21

Item 4.	Mine Safety Disclosures	21

Item 5.	Other Information	21

Item 6.	Exhibits	21

Exhibit Index

Signatures


	September 30,		December 31,
	2021		2020
		(Unaudited)
Assets
Current assets:
Cash	$	19,186,324	$	29,795,366
Prepaid expenses and other current assets		920,912		1,677,365
Total current assets		20,107,236		31,472,731
Total assets	$	20,107,236	$	31,472,731
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	483,496	$	368,905
Accrued expenses		743,291		784,104
Accrued salaries		—		378,833
Total current liabilities		1,226,787		1,531,842
Total liabilities		1,226,787		1,531,842
Commitments and contingencies (Note 10)
Stockholders' equity:
Common stock, $0.0001 par value; 43,000,000 shares authorized, 8,330,390 and 8,305,075 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively		833		830
Preferred stock, $0.0001 par value; 2,000,000 shares authorized, no shares issued and outstanding at September 30, 2021 and December 31, 2020		—		—
Additional paid-in capital		58,293,698		57,905,164
Accumulated deficit		(39,414,082)		(27,965,105)
Total stockholders' equity		18,880,449		29,940,889
Total liabilities and stockholders' equity	$	20,107,236	$	31,472,731


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Revenue	$	—	$	—	$	—	$	—

Operating expenses:
Research and development		2,961,122		108,086		7,877,281		161,944
General and administrative expenses		1,150,369		2,554,724		3,576,101		3,421,798
Total operating expenses		4,111,491		2,662,810		11,453,382		3,583,742

Loss from operations		(4,111,491)		(2,662,810)		(11,453,382)		(3,583,742)

Other income (expense):
Interest income (expense), net		1,509		(104,440)		4,405		(304,646)
Other income		—		43,221		—		43,221
Total other income (expense)		1,509		(61,219)		4,405		(261,425)

Loss before income taxes		(4,109,982)		(2,724,029)		(11,448,977)		(3,845,167)
Income tax provision (benefit)		—		—		—		—

Net loss	$	(4,109,982)	$	(2,724,029)	$	(11,448,977)	$	(3,845,167)
Basic and diluted net loss per share (1)	$	(0.49)	$	(0.56)	$	(1.37)	$	(0.80)
Weighted average number of shares outstanding – basic and diluted (1)		8,330,390		4,832,494		8,328,946		4,832,494


								Total
	Common Stock			Additional		Accumulated		Stockholders’
	Shares	Par		Paid-In Capital		Deficit		Equity
Balance, December 31, 2020	8,305,075	$	830	$	57,905,164	$	(27,965,105)	$	29,940,889
Share-based compensation expense	—		—		24,825		—		24,825
Exercise of warrants	25,315		3		197,559		—		197,562
Net loss	—		—		—		(3,056,033)		(3,056,033)
Balance, March 31, 2021	8,330,390		833		58,127,548		(31,021,138)		27,107,243
Share-based compensation expense	—		—		34,244		—		34,244
Net loss	—		—		—		(4,282,962)		(4,282,962)
Balance, June 30, 2021	8,330,390		833		58,161,792		(35,304,100)		22,858,525
Share-based compensation expense	—		—		131,906		—		131,906
Net loss	—		—		—		(4,109,982)		(4,109,982)
Balance, September 30, 2021	8,330,390	$	833	$	58,293,698	$	(39,414,082)	$	18,880,449


	Voting		Non-voting				Total
	Members'		Members'		Accumulated		Members’
	Interests		Interests		Deficit		Deficit
Balance, December 31, 2019	$	—	$	12,601,201	$	(17,618,710)	$	(5,017,509)
Net loss		—		—		(466,553)		(466,553)
Balance, March 31, 2020		—		12,601,201		(18,085,263)		(5,484,062)
Membership conversion to voting interests		12,601,201		(12,601,201)		—		—
Net loss		—		—		(654,585)		(654,585)
Balance, June 30, 2020		12,601,201		—		(18,739,848)		(6,138,647)
Conversion of convertible promissory notes		1,637,800		—		—		1,637,800
Equity-based compensation expense		2,000,000		—		—		2,000,000
Net loss		—		—		(2,724,029)		(2,724,029)
Balance, September 30, 2020	$	16,239,001	$	—	$	(21,463,877)	$	(5,224,876)


				Weighted
				Average
		Weighted		Remaining
		Average		Contractual
	Number of	Exercise		Term
	Shares	Price		(Years)
Outstanding at December 31, 2020	519,163	$	10.00	9.98
Granted	229,984		6.85	—
Outstanding at September 30, 2021	749,147	$	9.03	9.35
Exercisable at September 30, 2021	530,977	$	9.92	9.24


	Nine Months Ended
	September 30,
	2021		2020
Cash flows from operating activities
Net loss	$	(11,448,977)	$	(3,845,167)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of issuance costs		—		42,071
Recovery of uncollectable receivables		—		(15,020)
Gain on vendor concession		—		(43,221)
Share-based and equity compensation expense		190,975		2,000,000
Changes in operating assets and liabilities:
Decrease (increase) in prepaid expenses and other current assets		756,453		(39,478)
Increase in accounts payable		399,640		156,139
(Decrease) increase in accrued expenses		(30,696)		180,129
Decrease in accrued salaries		(378,833)		(44,287)
Net cash used in operating activities		(10,511,438)		(1,608,834)
Cash flows from financing activities
Proceeds from issuance of convertible promissory notes		—		1,994,133
Proceeds from the exercise of warrants		197,562		—
Payment of issuance costs for promissory notes		—		(57,971)
Payment of offering costs for initial public offering		(295,166)		(137,630)
Net cash (used in) provided by financing activities		(97,604)		1,798,532
Net (decrease) increase in cash		(10,609,042)		189,698
Cash, beginning of period		29,795,366		309,384
Cash, end of period	$	19,186,324	$	499,082

Supplemental cash flow disclosures:
Cash paid for interest	$	—	$	3,000

Non-cash financing transactions:
Public offering costs included in accounts payable and accrued expenses	$	—	$	87,648
Conversion of convertible promissory notes and accrued interest into membership interests	$	—	$	1,637,800


	September 30,		December 31,
	2021		2020
Prepaid insurance	$	383,569	$	1,586,042
Prepaid clinical research costs		495,428		85,270
Prepaid services		20,833		5,729
Other miscellaneous current assets		21,082		324
	$	920,912	$	1,677,365


	September 30,		December 31,
	2021		2020
Accrued compensation	$	459,060	$	573,479
Accrued interest on preferred members’ interests		188,085		188,085
Accrued professional fees		33,314		8,992
Accrued director fees		46,500		—
Other		16,332		13,548
	$	743,291	$	784,104

SEC Form 10-Q filed by Virios Therapeutics, Inc.