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 June 30, 2022


☐	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 August 11, 2022, 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 June 30, 2022 (Unaudited) and December 31, 2021	3

	Condensed Statements of Operations for the three and six months ended June 30, 2022 and 2021 (Unaudited)	4

	Condensed Statements of Stockholders’ Equity for the three and six months ended June 30, 2022 and 2021 (Unaudited)	5

	Condensed Statements of Cash Flows for the six months ended June 30, 2022 and 2021 (Unaudited)	6

	Notes to Condensed Financial Statements (Unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	18

Item 4.	Controls and Procedures	18

Part II	Other Information

Item 1.	Legal Proceedings	19

Item 1A.	Risk Factors	19

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19

Item 3.	Defaults Upon Senior Securities	19

Item 4.	Mine Safety Disclosures	19

Item 5.	Other Information	19

Item 6.	Exhibits	19

Exhibit Index

Signatures


	June 30,		December 31,
	2022		2021
		(Unaudited)
Assets
Current assets:
Cash	$	7,695,040	$	14,008,184
Prepaid expenses and other current assets		1,345,055		1,768,503
Total current assets		9,040,095		15,776,687
Total assets	$	9,040,095	$	15,776,687
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	665,538	$	353,863
Accrued expenses		1,232,193		921,760
Total current liabilities		1,897,731		1,275,623
Total liabilities		1,897,731		1,275,623
Commitments and contingencies (Note 8)
Stockholders' equity:
Common stock, $0.0001 par value; 43,000,000 shares authorized, 8,330,390 shares issued and outstanding at June 30, 2022 and December 31, 2021		833		833
Preferred stock, $0.0001 par value; 2,000,000 shares authorized, no shares issued and outstanding at June 30, 2022 and December 31, 2021		—		—
Additional paid-in capital		58,694,467		58,425,604
Accumulated deficit		(51,552,936)		(43,925,373)
Total stockholders' equity		7,142,364		14,501,064
Total liabilities and stockholders' equity	$	9,040,095	$	15,776,687


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Revenue	$	—	$	—	$	—	$	—

Operating expenses:
Research and development		2,406,438		3,209,201		5,175,540		4,916,159
General and administrative expenses		1,265,621		1,075,256		2,457,733		2,425,732
Total operating expenses		3,672,059		4,284,457		7,633,273		7,341,891

Loss from operations		(3,672,059)		(4,284,457)		(7,633,273)		(7,341,891)

Other income:
Interest income		4,804		1,495		5,710		2,896
Total other income		4,804		1,495		5,710		2,896

Loss before income taxes		(3,667,255)		(4,282,962)		(7,627,563)		(7,338,995)
Income tax provision		—		—		—		—

Net loss	$	(3,667,255)	$	(4,282,962)	$	(7,627,563)	$	(7,338,995)
Basic and diluted net loss per share	$	(0.44)	$	(0.51)	$	(0.92)	$	(0.88)
Weighted average number of shares outstanding – basic and diluted		8,330,390		8,330,390		8,330,390		8,328,212


								Total
	Common Stock			Additional		Accumulated		Stockholders’
	Shares	Par		Paid-In Capital		Deficit		Equity
Balance, December 31, 2021	8,330,390	$	833	$	58,425,604	$	(43,925,373)	$	14,501,064
Share-based compensation expense	—		—		131,906		—		131,906
Net loss	—		—		—		(3,960,308)		(3,960,308)
Balance, March 31, 2022	8,330,390	$	833	$	58,557,510	$	(47,885,681)	$	10,672,662
Share-based compensation expense	—		—		136,957		—		136,957
Net loss	—		—		—		(3,667,255)		(3,667,255)
Balance, June 30, 2022	8,330,390	$	833	$	58,694,467	$	(51,552,936)	$	7,142,364


				Weighted
				Average
		Weighted		Remaining
		Average		Contractual
	Number of	Exercise		Term
	Shares	Price		(Years)
Outstanding at December 31, 2021	749,147	$	9.03	9.09
Granted	262,500		4.23	—
Outstanding at June 30, 2022	1,011,647	$	7.79	8.96
Exercisable at June 30, 2022	635,454	$	9.41	8.55

Exhibit No.		Description

3.1		Certificate of Incorporation of Virios Therapeutics, Inc. (incorporated by reference herein from Exhibit 3.1 to the Company’s Registration Statement on Form S-1, filed with the SEC on August 28, 2020)

3.2		Bylaws of Virios Therapeutics, Inc. (incorporated by reference herein from Exhibit 3.2 to the Company’s Registration Statement on Form S-1, filed with the SEC on August 28, 2020)

4.1		Specimen Certificate evidencing shares of the Registrant’s common stock (incorporated by reference herein from Exhibit 4.1 to the Company’s Registration Statement on Form S-1, filed with the SEC on October 16, 2020)

10.1		Virios Therapeutics, Inc. Amended and Restated 2020 Equity Incentive Plan (incorporated by reference herein from Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on June 17, 2022)

31.1†		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2†		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1†		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2†		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS†		XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH†		XBRL Taxonomy Extension Schema Document

101.CAL†		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF†		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB†		XBRL Taxonomy Extension Label Linkbase Document

101.PRE†		XBRL Taxonomy Extension Presentation Linkbase Document

104†		Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)


	VIRIOS THERAPEUTICS, INC.

	By:	/s/ Greg Duncan
	Name:	Greg Duncan
	Title:	Chairman of the Board of Directors and Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ Angela Walsh
	Name:	Angela Walsh
	Title:	Senior Vice President of Finance, Corporate Secretary and Treasurer
		(Principal Financial and Accounting Officer)


	Six Months Ended
	June 30,
	2022		2021
Cash flows from operating activities
Net loss	$	(7,627,563)	$	(7,338,995)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation expense		268,863		59,069
Changes in operating assets and liabilities:
Decrease (increase) in prepaid expenses and other current assets		423,448		(252,325)
Increase in accounts payable		311,675		178,734
Increase (decrease) in accrued expenses		310,433		(130,320)
Decrease in accrued salaries		—		(378,833)
Net cash used in operating activities		(6,313,144)		(7,862,670)
Cash flows from financing activities
Proceeds from the exercise of warrants		—		197,562
Payment of offering costs for initial public offering		—		(295,166)
Net cash used in financing activities		—		(97,604)
Net decrease in cash		(6,313,144)		(7,960,274)
Cash, beginning of period		14,008,184		29,795,366
Cash, end of period	$	7,695,040	$	21,835,092


	June 30,		December 31,
	2022		2021
Prepaid insurance	$	663,921	$	1,329,385
Prepaid clinical research costs		633,124		422,591
Prepaid services		22,632		15,664
Other miscellaneous current assets		25,378		863
	$	1,345,055	$	1,768,503


	June 30,		December 31,
	2022		2021
Accrued compensation	$	346,496	$	532,678
Accrued interest on preferred members’ interests		188,085		188,085
Accrued clinical research costs		667,321		138,522
Accrued director fees		—		31,000
Accrued professional fees		17,800		24,100
Other miscellaneous accrued expenses		12,491		7,375
	$	1,232,193	$	921,760


	Six Months Ended
	June 30,
	2022		2021

	(Unaudited)
Statement of Cash Flows Data:
Net cash used in:
Operating activities	$	(6,313,144)	$	(7,862,670)
Financing activities		—		(97,604)
Decrease in cash	$	(6,313,144)	$	(7,960,274)

SEC Form 10-Q filed by Virios Therapeutics Inc.