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 March 31, 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 May 12, 2021, there were 8,330,390 of the registrant’s common stock outstanding.

		Page

Part I	Financial Information

Item 1.	Financial Statements	3

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

	Condensed Statements of Operations for the three months ended March 31, 2021 and 2020 (Unaudited)	4

	Condensed Statements of Changes in Members’ Deficit/Stockholders’ Equity for the three months ended March 31, 2021 and 2020 (Unaudited)	5

	Condensed Statements of Cash Flows for the three months ended March 31, 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	14

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	18

Item 4.	Controls and Procedures	18

Part II	Other Information

Item 1.	Legal Proceedings	20

Item 1A.	Risk Factors	20

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20

Item 3.	Defaults Upon Senior Securities	20

Item 4.	Mine Safety Disclosures	20

Item 5.	Other Information	20

Item 6.	Exhibits	20

Exhibit Index

Signatures


	March 31,		December 31,
	2021		2020
		(Unaudited)
Assets
Current assets:
Cash	$	24,585,560	$	29,795,366
Prepaid expenses and other current assets		3,688,977		1,677,365
Total current assets		28,274,537		31,472,731
Total assets	$	28,274,537	$	31,472,731
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	614,659	$	368,905
Accrued expenses		552,635		784,104
Accrued salaries		—		378,833
Total current liabilities		1,167,294		1,531,842

Total liabilities		1,167,294		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 March 31, 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 March 31, 2021 and December 31, 2020		—		—
Additional paid-in capital		58,127,548		57,905,164
Accumulated deficit		(31,021,138)		(27,965,105)
Total stockholders' equity		27,107,243		29,940,889
Total liabilities and stockholders' equity	$	28,274,537	$	31,472,731


	Three Months Ended
	March 31,
	2021		2020
Revenue	$	—	$	—

Operating expenses:
Research and development		1,706,957		30,539
General and administrative expenses		1,350,476		352,014
Total operating expenses		3,057,433		382,553

Loss from operations		(3,057,433)		(382,553)

Other income (expense):
Interest income (expense), net		1,400		(84,000)
Total other income (expense)		1,400		(84,000)

Loss before income taxes		(3,056,033)		(466,553)
Income tax provision (benefit)		—		—

Net loss	$	(3,056,033)	$	(466,553)
Basic and diluted net loss per share (1)	$	(0.37)	$	(0.10)
Weighted average number of shares outstanding – basic and diluted (1)		8,326,010		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


	Voting		Non-voting				Total
	Member’s		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)


				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	62,734		7.26	—
Outstanding at March 31, 2021	581,897	$	9.70	9.74
Exercisable at March 31, 2021	519,163	$	10.00	9.73

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 of 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 of 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 of Form S-1, filed with the SEC on October 16, 2020)

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:	SVP of Finance, Corporate Secretary and Treasurer
		(Principal Financial and Accounting Officer)


	Three Months Ended
	March 31,
	2021		2020
Cash flows from operating activities
Net loss	$	(3,056,033)	$	(466,553)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of issuance costs		—		10,623
Provision for uncollectable receivables		—		100
Share-based compensation expense		24,825		—
Changes in operating assets and liabilities:
Increase in prepaid expenses and other current assets		(2,011,612)		(6,404)
Increase in accounts payable		530,803		73,848
(Decrease) increase in accrued expenses		(221,352)		81,840
(Decrease) increase in accrued salaries		(378,833)		29,167
Net cash used in operating activities		(5,112,202)		(277,379)
Cash flows from financing activities
Proceeds from issuance of convertible promissory notes		—		1,162,500
Proceeds from the exercise of warrants		197,562		—
Payment of offering costs for initial public offering		(295,166)		—
Net cash (used in) provided by financing activities		(97,604)		1,162,500
Net (decrease) increase in cash		(5,209,806)		885,121
Cash, beginning of period		29,795,366		309,384
Cash, end of period	$	24,585,560	$	1,194,505

Supplemental disclosure of non-cash financing transactions:
Accrued deferred issuance costs	$	—	$	29,214
Public offering costs included in accounts payable and accrued expenses	$	—	$	35,000


	March 31,		December 31,
	2021		2020
Prepaid insurance	$	1,206,366	$	1,586,042
Prepaid clinical research costs		2,178,854		85,270
Prepaid investigator meeting expenses		253,582		—
Prepaid services		50,175		5,729
Miscellaneous receivables		—		324
	$	3,688,977	$	1,677,365


	March 31,		December 31,
	2021		2020
Accrued compensation	$	226,930	$	573,479
Accrued interest on preferred members’ interests		188,085		188,085
Accrued contract research and manufacturing costs		44,188		—
Other		93,432		22,540
	$	552,635	$	784,104


	Three Months Ended
	March 31,
	2021		2020

	(Unaudited)
Statement of Cash Flows Data:
Net cash (used in) provided by:
Operating activities	$	(5,112,202)	$	(277,379)
Financing activities		(97,604)		1,162,500
(Decrease) increase in cash	$	(5,209,806)	$	885,121

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