UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2022

Commission File Number 001-35817

VYANT BIO, INC.

(Exact name of registrant as specified in the charter)

Delaware		04-3462475
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

2 Executive Campus

2370 State Route 70, Suite 310

Cherry Hill, NJ 08002

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (201) 479-1357

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.0001 Par Value		VYNT		The Nasdaq Stock Market LLC

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 registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards 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 ☒.

There were 29,412,798 shares of common stock, par value $0.0001 of Vyant Bio, Inc. issued and outstanding as of May 10, 2022.

Vyant Bio, Inc. and Subsidiaries

INDEX

		Page No.

Part I	Financial Information	3

Item 1:	Condensed Consolidated Financial Statements (unaudited)	3

	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Interim Condensed Consolidated Financial Statements	7
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3:	Quantitative and Qualitative Disclosures about Market Risk	30
Item 4:	Controls and Procedures	30

Part II	Other Information	31

Item 1:	Legal Proceedings	31
Item 1A:	Risk Factors	31
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3:	Defaults Upon Senior Securities	31
Item 4:	Mine Safety Disclosures	31
Item 5:	Other Information	31
Item 6:	Exhibits	32

Signatures		33

Part I Financial Information

Item 1 Condensed Consolidated Financial Statements

Vyant Bio, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(Shares and USD in Thousands)

	2022			2021
	March 31,			December 31,
	2022			2021

Assets
Current assets:
Cash and cash equivalents	$	16,440		$	20,608
Trade accounts and other receivables		585			434
Inventory		497			475
Prepaid expenses and other current assets		1,941			895
Assets of discontinuing operations – current		1,001			802
Total current assets		20,464			23,214
Non-current assets:
Fixed assets, net		908			1,020
Operating lease right-of-use assets, net		1,764			673
Long-term prepaid expenses and other assets		1,265			1,221
Assets of discontinuing operations – non-current		8,128			11,508
Total non-current assets		12,065			14,422
Total assets	$	32,529		$	37,636

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,765		$	740
Accrued expenses		1,476			764
Deferred revenue		72			74
Obligations under operating leases, current portion		241			174
Obligation under finance lease, current portion		158			157
Liabilities of discontinuing operations – current		3,760			3,522
Total current liabilities		7,472			5,431
Obligations under operating leases, less current portion		1,540			516
Obligations under finance leases, less current portion		258			293
Long-term debt		57			57
Liabilities of discontinuing operations – non-current		834			49
Total liabilities	$	10,161		$	6,346

Commitments and contingencies		-			-

Stockholders’ equity:
Preferred stock, authorized 9,764 shares $0.0001 par value, none issued		-			-
Common stock, authorized 100,000 shares, $0.0001 par value, 29,412 and 28,993 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively		3			3
Additional paid-in capital		110,411			110,174
Accumulated deficit		(87,976	)		(78,813	)
Accumulated comprehensive loss		(70	)		(74	)
Total Stockholders’ equity		22,368			31,290
Total liabilities and Stockholders’ equity	$	32,529		$	37,636

See Notes to Unaudited Condensed Consolidated Financial Statements.

Vyant Bio, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(unaudited)

(Shares and USD in Thousands)

	2022			2021
	Three months ended March 31,
	2022			2021
Revenue:
Service	$	94		$	97
Product		209			106
Total revenue		303			203
Operating costs and expenses:
Cost of goods sold – service		38			64
Cost of goods sold – product		348			396
Cost of goods sold
Research and development		1,551			820
Selling, general and administrative		2,763			1,214
Merger related costs		-			2,145
Total operating costs and expenses		4,700			4,639
Loss from operations		(4,397	)		(4,436	)

Other (expense) income:
Change in fair value of warrant liability		-			214
Change in fair value of share-settlement obligation derivative		-			(250	)
Loss on debt conversions		-			(2,518	)
Interest expense		(9	)		(368	)
Total other expense		(9	)		(2,922	)
Loss from continuing operations before income taxes		(4,406	)		(7,358	)
Income tax expense (benefit)		-			-
Loss from continuing operations		(4,406	)		(7,358	)
Discontinuing operations (net of $0 tax benefit in 2022 and 2021)		(4,757	)		(8	)
Net loss		(9,163	)		(7,366	)
Cumulative translation adjustment		4			-
Comprehensive loss	$	(9,159	)	$	(7,366	)

Net loss per share attributed to common stock – basic and diluted:
Net loss per share from continuing operations	$	(0.15	)	$	(2.31	)
Net loss per share from discontinuing operations		(0.17	)		-
Net loss per share	$	(0.32	)	$	(2.31	)
Weighted average shares outstanding:
Weighted average common shares outstanding - Basic and Diluted		29,013			3,184

See Notes to Unaudited Condensed Consolidated Financial Statements.

Vyant Bio, Inc.

Condensed Consolidated Statements of Temporary Equity Common Stockholders’ Equity (Deficit)

(unaudited)

(Shares and USD in Thousands)

					Shares		Amount		Capital			Deficit			Loss			Equity
					Three Months Ended March 31, 2022
					Common Stock				Additional Paid In			Accumulated			Comprehensive			Total Stockholders’
					Shares		Amount		Capital			Deficit			Loss			Equity
Balance as of January 1, 2022	-	-	-	-		28,993	$	3	$	110,174		$	(78,813	)	$	(74	)	$	31,290
Stock-based compensation						-		-		334			-			-			334
Exercise of stock options						5		-		4			-						4
Vesting of restricted stock						8		-		-			-			-			-
Issuance of common stock to Lincoln Park Capital Fund, LLC, and issuance costs						406		-		(101	)		-			-			(101	)
Foreign currency translation adjustment						-		-		-			-			4			4
Net loss	-	-	-	-		-		-		-			(9,163	)		-			(9,163	)
Balance as of March 31, 2022	-	-	-	-		29,412	$	3	$	110,411		$	(87,976	)	$	(70	)	$	22,368

	Shares			Amount			Shares			Amount			Shares			Amount			Equity			Shares		Amount		Capital		Deficit			(Deficit)
	Three Months Ended March 31, 2021
	Series A Preferred Stock						Series B Preferred Stock						Series C Preferred Stock						Total Temporary			Common Stock				Additional Paid In		Accumulated			Total Common Stockholders’ Equity
	Shares			Amount			Shares			Amount			Shares			Amount			Equity			Shares		Amount		Capital		Deficit			(Deficit)
Balance as of January 1, 2021		4,612		$	12,356			3,489		$	16,651			-			-		$	29,007			2,594		-	$	1,514	$	(37,954	)	$	(36,440	)
Beginning balance		4,612		$	12,356			3,489		$	16,651			-			-		$	29,007			2,594		-	$	1,514	$	(37,954	)	$	(36,440	)
Stock-based compensation		-			-			-			-			-			-			-			-		-		366		-			366

Exercise of stock options		-			-			-			-			-			-			-			-		-		4		-			4
Issuance of Series C Convertible Preferred shares, net of issuance costs of $214		-			-			-			-			567			1,786			1,786			-		-		-		-			-
Issuance of Common Stock for acquisition consideration		-			-			-			-			-			-			-			11,007		2		59,918		-			59,920
Issuance of Incremental shares to StemoniX shareholders upon Merger		-			-			-			-			-			-			-			805		-		-		-			-
Conversion of Preferred Stock to Common Stock upon Merger		(4,612	)		(12,356	)		(3,489	)		(16,651	)		(567	)		(1,786	)		(30,793	)		11,197		1		30,792		-			30,793
Conversion of 2020 Notes to Common Stock upon Merger		-			-			-			-			-			-			-			3,339		-		16,190		-			16,190
Preferred stock warrant settled for Common Stock upon Merger		-			-			-			-			-			-			-			43		-		-		-			-

Warrant liability reclassified to equity upon Merger		-			-			-			-			-			-			-					-		421		-			421
Net loss		-			-			-			-			-			-			-			-		-		-		(7,366	)		(7,366	)
Balance as of March 31, 2021		-		$	-			-		$	-			-		$	-			-			28,985	$	3	$	109,205	$	(45,320	)	$	63,888
Ending balance		-		$	-			-		$	-			-		$	-			-			28,985	$	3	$	109,205	$	(45,320	)	$	63,888

Vyant Bio, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(USD in Thousands)

	2022			2021
	Three months ended March 31,
	2022			2021
Cash Flows from Operating Activities:
Net loss	$	(9,163	)	$	(7,366	)
Net loss from discontinuing operations		4,757			8
Reconciliation of net loss to net cash used in operating activities, continuing operations:
Stock-based compensation		278			366
Amortization of operating lease right-of-use assets		98			117
Depreciation and amortization expense		142			126
Change in fair value of share-settlement obligation derivative		-			250
Change in fair value of warrant liability		-			(214	)
Change in fair value of 2020 Convertible Note with fair value election		-			4
Accretion of debt discount		-			173
Loss on conversion of debt		-			2,518
Changes in operating assets and liabilities net of impacts of business combination:
Trade accounts and other receivables		(151	)		138
Inventory		(22	)		6
Prepaid expenses and other current assets		213			(110	)
Accounts payable		(279	)		(727	)
Obligations under operating leases		(98	)		(117	)
Accrued expenses and other current liabilities		714			251
Net cash used in operating activities, continuing operations		(3,511	)		(4,577	)
Net cash used in operating activities, discontinuing operations		(461	)		(8	)
Net cash used in operating activities		(3,972	)		(4,585	)
Cash Flows from Investing Activities:
Equipment purchases		(30	)		(26	)
Cash acquired from acquisition		-			30,163
Net cash (used in) provided by investing activities, continuing operations		(30	)		30,137
Net cash used in investing activities, discontinuing operations		(30	)		-
Net cash (used in) provided by investing activities		(60	)		30,137
Cash Flows from Financing Activities:
Issuance of common stock, net of issuance costs		(97	)		4
Issuance of Series C Preferred Stock, net of issuance costs		-			1,786
2020 Convertible Note proceeds		-			5,022
Principal payments on long-term debt		-			(82	)
Principal payments on obligations under finance leases		(34	)		-
Net cash (used in) provided by financing activities, continuing operations		(131	)		6,730
Net cash used in financing activities, discontinuing operations		(5	)		-
Net cash (used in) provided by financing activities		(136	)		6,730
Net (decrease) increase in cash and cash equivalents		(4,168	)		32,282
Cash and cash equivalents, and restricted cash beginning of the period		20,608			792
Cash and cash equivalents, and restricted cash end of the period	$	16,440		$	33,074

Cash and cash equivalents	$	16,440		$	32,337
Restricted cash		-			737
Total cash and cash equivalents and restricted cash	$	16,440		$	33,074

Supplemental disclosure of cash flow information from continuing operations:
Cash paid for interest	$	7		$	-
Cash paid for income taxes		1			-
Non-cash investing activities from continuing operations:
Fair value of non-cash merger consideration	$	-		$	59,920
Right-of-use asset obtained in exchange for new lease		1,189			-
Non-cash financing activities from continuing operations:
Conversion of Preferred Stock to Common Stock upon Merger	$	-		$	30,793
Conversion of 2020 Convertible Notes and Accrued Interest to Common Stock upon Merger		-			16,190
Reclass warrant liability to equity upon Merger		-			421

See Notes to Unaudited Condensed Consolidated Financial Statements.

Vyant Bio, Inc.

Notes to Condensed Consolidated Financial Statements

Period Ended March 31, 2021

(Unaudited)

Note 1. Organization and Description of Business

Vyant Bio, Inc. (the “Company”, “Vyant Bio”, “VYNT” or “we”), is an innovative biotechnology company reinventing drug discovery for complex neurodevelopmental and neurodegenerative disorders. Our central nervous system (“CNS”) drug discovery platform combines human-derived organoid models of brain disease, scaled biology, and machine learning. Our platform is designed to: 1) elucidate disease pathophysiology; 2) formulate key therapeutic hypotheses; 3) identify and validate drug targets, cellular assays, and biomarkers to guide candidate molecule selection; and 4) guide clinical trial patient selection and trial design. Our current programs are focused on identifying repurposed and novel small molecule clinical candidates for rare CNS genetic disorders including Rett Syndrome (“Rett”), CDKL5 Deficiency Disorders (“CDD”) and familial Parkinson’s Disease (“PD”). The Company’s management believes that drug discovery needs to progressively shift as the widely used preclinical models for predicting safe and effective drugs have under-performed, as evidenced by the time and cost of bringing novel drugs to market. As a result, Vyant Bio is focused on combining sophisticated data science capabilities with highly functional human cell derived disease models. We leverage our ability to identify validated targets and molecular-based biomarkers to screen and test thousands of small molecule compounds in human diseased 3D brain organoids in order to create a unique approach to assimilating biological data that supports decision making iteratively throughout the discovery phase of drug development to identify both novel and repurposed drug candidates.

As further described in Note 3, in December 2021, the Company’s Board of Directors approved a plan to sell the vivoPharm Pty Ltd and related subsidiaries (“vivoPharm”) business to focus the Company on the development of neurological developmental and degenerative disease therapeutics. The Company engaged an investment banker in December 2021 to sell the vivoPharm business during 2022.

The accompanying unaudited condensed consolidated financial statements include all accounts and wholly-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). All intercompany transactions have been eliminated. In accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”), the Company has omitted footnote disclosures that would substantially duplicate the disclosures contained in the audited consolidated financial statements of the Company.

No new accounting pronouncement issued or effective has had, or is expected to have, a material impact on the Company’s condensed consolidated financial statements.

These unaudited condensed consolidated financial statements should be read together with the audited consolidated financial statements for the year ended December 31, 2021, and notes thereto included in our Annual Report on Form 10-K as filed with the SEC. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Ultimate results could differ from those estimates. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the entire 2022 year.

Dollar amounts in tables are stated in thousands of U.S. dollars.

Note 2. Cancer Genetics, Inc. Merger

The Company formerly known as Cancer Genetics, Inc. (“CGI”), StemoniX and CGI Acquisition, Inc. (“Merger Sub”) entered into a merger agreement on August 21, 2020, which was amended on February 8, 2021 and February 26, 2021 (as amended, the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, Merger Sub was merged (the “Merger”) with and into StemoniX on March 30, 2021, with StemoniX surviving the Merger as a wholly owned subsidiary of the Company. For U.S. federal income tax purposes, the Merger qualified as a tax-free “reorganization”. Concurrent with the Merger closing, the Company changed its name to Vyant Bio, Inc. Under the terms of the Merger Agreement, upon consummation of the Merger, the Company issued (i) an aggregate of 17,977,544 shares of VYNT common stock, par value $0.0001 per share (the “Common Stock”) to the holders of StemoniX capital stock (after giving effect to the conversion of all StemoniX preferred shares and StemoniX 2020 Convertible Notes) and StemoniX warrants (which does not include a certain warrant (the “Investor Warrant”) issued to a certain StemoniX convertible note holder (the “Major Investor”)), (ii) options to purchase an aggregate of 891,780 shares of Common Stock to the holders of StemoniX options with exercise prices ranging from $0.66 to $4.61 per share and a weighted average exercise price of $1.46 per share, and (iii) a warrant (the “Major Investor Warrant”) to the Major Investor, expiring February 23, 2026 to purchase 143,890 shares of Common Stock at a price of $5.9059 per share in exchange for the Investor Warrant.

The Merger was accounted for as a reverse acquisition with StemoniX being the accounting acquirer of CGI using the acquisition method of accounting. Under acquisition accounting, the assets and liabilities (including executory contracts, commitments and other obligations) of CGI, as of March 30, 2021, the closing date of the Merger, were recorded at their respective fair values and added to those of StemoniX. Any excess of purchase price consideration over the fair values of the identifiable net assets is recorded as goodwill. The total consideration paid by StemoniX in the Merger amounted to $59.9 million, which represents the fair value of CGI’s 11,007,186 shares of Common Stock or $50.74 million, 2,157,686 Common Stock warrants or $9.04 million and 55,907 Common Stock options outstanding on the closing date of the Merger with a fair value of $139 thousand. In addition, at the effective time of the Merger, existing StemoniX shareholders received an additional 804,711 incremental shares in accordance with the conversion ratio set forth in the Merger Agreement.

The Company incurred $2.145 million of costs associated with the Merger that have been reported on the condensed consolidated statement of operations as Merger related costs for the three-months ended March 31, 2021. As of March 31, 2021 accounts payable includes $63 thousand of Merger-related costs.

The following details the allocation of the preliminary purchase price consideration recorded on March 30, 2021, the acquisition date, with adjustments recorded through March 30, 2022, the end of the period for which purchase accounting adjustments can be recorded, and the final purchase price allocation.

	Preliminary		Adjustments			Final
Assets acquired:
Cash and equivalents	$	30,163	$	-		$	30,163
Accounts receivable		705		-			705
Other current assets		806		227			1,033
Intangible assets		9,500		-			9,500
Fixed assets		416		(256	)		160
Goodwill		22,164		216			22,380
Long-term prepaid expenses and other assets		1,381		-			1,381
Total assets acquired	$	65,135	$	187		$	65,322

Liabilities assumed:
Accounts payable and accrued expenses	$	2,670	$	437		$	3,107
Current liabilities of discontinuing operations		588		(141	)		447
Obligations under operating leases		198		-			198
Obligations under finance leases		106		-			106
Deferred revenue		1,293		(114	)		1,179
Payroll and income taxes payable		360		5			365
Total liabilities assumed	$	5,215	$	187		$	5,402

Net assets acquired:	$	59,920	$	-		$	59,920

The Company has completed valuation analyses necessary to assess the fair values of the tangible and intangible assets acquired and liabilities assumed and the amount of goodwill to be recognized as of the acquisition date. Fair values were based on management’s estimates and assumptions. The Company recognized intangible assets related to the Merger, which consist of the tradename valued at $1.5 million with an estimated useful life of ten years and customer relationships valued at $8.0 million with an estimated useful life of ten years. The initial measurement of these intangible assets were classified as Level 3 measurements within the fair value hierarchy. The value of the vivoPharm tradename was determined using the relief from royalty method based on analysis of profitability and review of market royalty rates. The Company determined that a 1.0% royalty rate was appropriate given the business-to-business nature of the vivoPharm operations. The value of the vivoPharm customer relationships was determined using an excess earnings method based on projected discounted cash flows and historic customer data. Key assumptions in this analysis included an estimated 10% annual customer attrition rate based on historical vivoPharm operations, a blended U.S. federal, state and Australian income tax rate of 27.1%, a present value factor of 8.5% as well as revenue, cost of revenue and operating expense assumptions regarding the future growth, operating expenses, including corporate overhead charges, and required capital investments.

The following presents the unaudited pro forma combined financial information as if the Merger had occurred as of January 1, 2020:

	March 31, 2021
Total revenue	$	1,841
Net loss	$	(6,495	)
Pro forma loss per common share, basic and diluted	$	(.21	)
Pro forma weighted average number of common shares outstanding, basic and diluted		28,985

The pro forma combined results of operations are not necessarily indicative of the results of operations that actually would have occurred had the Merger been completed as of January 1, 2020, nor are they necessarily indicative of future consolidated results.

Note 3. Discontinuing Operations

In December 2021, the Company’s Board of Directors approved a plan to sell the vivoPharm Pty Ltd and related subsidiaries (“vivoPharm”) business to focus the Company on the development of neurological developmental and degenerative disease therapeutics. In December 2021, the Company engaged an investment bank to sell the vivoPharm business which is expected to be completed 2022.

The Company classified the vivoPharm business as held for sale as of December 31, 2021, and, given the significance of the change in the Company’s strategy, classified this business as discontinuing operations in these condensed consolidated financial statements. Therefore, the results for the three months ended March 31, 2021 have been retroactively restated to reflect the vivoPharm business as discontinuing operations. In connection with the reclassification of the vivoPharm business as held for sale in the fourth quarter of 2021, the Company completed a valuation of the net carrying value of this business and recorded a goodwill impairment charge of $20.2 million. The Company valued the vivoPharm business as of December 31, 2021 equally weighting public company revenue multiples as of December 31, 2021 and comparable transaction revenue multiples, which are classified as Level 3 measurements within the fair value hierarchy. The Company updated the valuation of the vivoPharm business as of March 31, 2022 based on equally weighting public company revenue multiples as of March 31, 2022 and comparable transaction revenue multiples. As a result of this analysis, the Company recorded an additional impairment charge of $4.3 million during the quarter ended March 31, 2022 consisting of the write-off of the remaining $2.2 million goodwill balance and reducing the cost basis of customer relationships and tradenames by $1.8 million and $0.3 million, respectively.

Also included in discontinuing operations are pre-Merger-related payables related to Cancer Genetic’s sale of its BioPharma and Clinical businesses (“Pre-Merger discontinuing operations”). As of March 31, 2022 and December 31, 2021, $409 thousand of liabilities relating to these businesses are classified as other current liabilities – discontinuing operations on the Company’s condensed consolidated balance sheets.

The following tables reflect the vivoPharm business operations for the three months ended March 31, 2022 and as of March 31, 2022 and December 31, 2021. As the vivoPharm business was acquired on March 30, 2021, the results of discontinuing operations for this business for the three-months ended March 31, 2021 were not significant.

Results of discontinuing operations were as follows for the three months ended March 31, 2022:


Revenue	$	1,353
Cost of goods sold		775
General and administrative		1,045
Impairment of goodwill and intangible assets

SEC Form 10-Q filed by Vyant Bio Inc.