Greenwich LifeSciences, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS GREENWICH LIFESCIENCES, INC. BALANCE SHEETS AS OF SEPTEMBER 30, 2021 (UNAUDITED AND DECEMBER 31, 2020 September 30, 2021 December 31, 2020 Assets Current assets Cash $ 28,905,993 $ 28,660,375 Total current assets 28,905,993 28,660,375 Acquired patents, net 13,518 16,227 Total assets $ 28,919,511 $ 28,676,602 Liabilities and stockholders’ deficit Current liabilities Accounts payable & accrued interest $ 295,845 $ 710,971 Unreimbursed expenses 159,274 59,367 Advance from related party/shareholder — 275,154 Total current liabilities 455,119 1,045,492 Total liabilities 455,119 1,045,492 Stockholders’ equity Common stock, $ 0.001 par value; 100,000,000 shares authorized; 12,993,609 and 12,703,541 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively 12,994 12,704 Additional paid-in capital 59,738,222 56,695,359 Accumulated deficit ( 31,286,824 ) ( 29,076,953 ) Total stockholders’ equity 28,464,392 27,631,110 Total liabilities and stockholders’ equity $ 28,919,511 $ 28,676,602 See accompanied notes to unaudited financial statements. 3 GREENWICH LIFESCIENCES, INC. STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020 (UNAUDITED) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Revenue $ — $ — $ — $ — Operating expenses Research and development 657,096 158,031 1,495,607 458,726 General and administrative 209,590 98,834 725,130 253,210 Total operating expenses 866,686 256,865 2,220,737 711,936 Loss from operations ( 866,686 ) ( 256,865 ) ( 2,220,737 ) ( 711,936 ) Interest Income 3,568 — 10,866 — Net loss $ ( 863,118 ) $ ( 256,865 ) $ ( 2,209,871 ) $ ( 711,936 ) Per share information: Net loss per common share, basic and diluted $ ( 0.07 ) $ ( 0.03 ) $ ( 0.17 ) $ ( 0.08 ) Weighted average common shares outstanding, basic and diluted 12,968,891 8,788,032 12,826,249 8,628,958 See accompanied notes to unaudited financial statements. 4 GREENWICH LIFESCIENCES, INC. STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER, 2021 AND 2020 (UNAUDITED) Common Stock Preferred Stock Additional Total Stockholders’ Shares Par Amount Shares Par Amount Paid-in Capital Accumulated Deficit Equity (Deficit) Balances, December 31, 2019 8,458,048 $ 8,458 1,980,365 $ 1,981 $ 25,853,134 $ ( 27,213,991 ) $ ( 1,350,418 ) Stock-based compensation 77,571 78 — — 173,865 — 173,943 Issuance of common stock in initial public offering, net of offering costs Issuance of common stock in initial public offering, net of offering costs, shares Additional preferred stock issued due to anti-dilution - - - - - - - Additional preferred stock issued due to anti-dilution, shares - - - - - - - Conversion of preferred to common stock Conversion of preferred to common stock, shares Exercise of common stock from Green Shoe of follow-on offering, net of offering costs Exercise of common stock from Green Shoe of follow-on offering, net of offering costs, shares Net loss ( 244,641 ) ( 244,641 ) Balances, March 31, 2020 8,535,619 8,536 1,980,365 1,981 26,026,999 ( 27,458,632 ) ( 1,421,116 ) Stock-based compensation 77,571 78 — — 173,865 — 173,943 Net loss ( 210,430 ) ( 210,430 ) Balances, June 30, 2020 8,613,190 8,614 1,980,365 1,981 26,200,864 ( 27,669,062 ) ( 1,457,603 ) Stock-based compensation 73,356 73 — — 164,978 — 165,051 Issuance of common stock in initial public offering, net of offering costs 1,260,870 1,260 — — 6,206,242 — 6,207,502 Additional preferred stock issued due to anti-dilution — — 42,404 42 ( 42 ) — — Conversion of preferred to common stock 2,022,769 2,023 ( 2,022,769 ) ( 2,023 ) — — — Net loss ( 256,865 ) ( 256,865 ) Balances, September 30, 2020 11,970,185 $ 11,970 — $ — $ 32,572,042 $ ( 27,925,927 ) $ 4,658,085 Balances, December 31, 2020 12,703,541 $ 12,704 — $ — $ 56,695,359 $ ( 29,076,953 ) $ 27,631,110 Stock-based compensation 73,356 73 — — 164,978 — 165,051 Exercise of common stock from Green Shoe of follow-on offering, net of offering costs 70,000 70 — — 2,547,930 — 2,548,000 Net loss ( 597,008 ) ( 597,008 ) Balances, March 31, 2021 12,846,897 12,847 — — 59,408,267 ( 29,673,961 ) 29,747,153 Balances 12,846,897 12,847 — — 59,408,267 ( 29,673,961 ) 29,747,153 Stock-based compensation 73,356 73 — — 164,978 — 165,051 Net loss ( 749,745 ) ( 749,745 ) Balances, June 30, 2021 12,920,253 12,920 — — 59,573,245 ( 30,423,706 ) 29,162,459 Beginning balances, value 12,920,253 12,920 — — 59,573,245 ( 30,423,706 ) 29,162,459 Stock-based compensation 73,356 74 — — 164,977 — 165,051 Net loss ( 863,118 ) ( 863,118 ) Balances, September 30, 2021 12,993,609 $ 12,994 — $ — $ 59,738,222 $ ( 31,286,824 ) $ 28,464,392 Balances 12,993,609 $ 12,994 — $ — $ 59,738,222 $ ( 31,286,824 ) $ 28,464,392 See accompanied notes to unaudited financial statements. 5 GREENWICH LIFESCIENCES, INC. STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020 (UNAUDITED) Nine Months Ended September 30, 2021 2020 Operating activities: Net loss $ ( 2,209,871 ) $ ( 711,936 ) Adjustments required to reconcile net loss to net cash used in operating activities: Amortization 2,709 2,706 Stock-based compensation 495,153 512,937 Changes in operating assets and liabilities: Accounts payable ( 451,732 ) 15,000 Accrued interest 36,606 54,910 Unreimbursed expenses (accrued) 99,907 126,383 Net cash used in operating activities ( 2,027,228 ) — Financing activities: Proceeds from sale of common stock 2,548,000 — Repayment to related party/shareholder ( 275,154 ) — Net proceeds from initial public offering of common stock — 6,207,502 Net cash provided by (used in) financing activities 2,272,846 6,207,502 Net increase (decrease) in cash 245,618 6,207,502 Cash, beginning of period 28,660,375 6,835 Cash, end of period $ 28,905,993 $ 6,214,337 Non-cash investing and financing activities: Conversion of preferred stock to common 2,023 Issuance of preferred stock due to antidilution 42 See accompanied notes to unaudited financial statements. 6 GREENWICH LIFESCIENCES, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. Organization and Description of the Business Greenwich LifeSciences, Inc. (the “Company”) was incorporated in the state of Delaware in 2006 under the name Norwell, Inc. In March 2018, Norwell, Inc. changed its name to Greenwich LifeSciences, Inc. The Company is developing a breast cancer immunotherapy focused on preventing the recurrence of breast cancer following surgery. 2. Significant Accounting Policies Basis of Presentation The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission and should be read in conjunction with the audited financial statements and notes thereto of the Company contained elsewhere herein. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements of the Company for the years ended December 31, 2020 and 2019 as reported in the Company’s Form 10-K have been omitted. Basic and Diluted Loss per Share As of September 30, 2021 and 2020, the Company has common stock equivalents related to underwriter warrants outstanding to acquire 100,870 shares of the Company’s common stock. As of September 30, 2021 and 2020, the Company has no common stock equivalents related to convertible preferred stock issued and outstanding. The following table sets forth the computation of basic and diluted net loss per common share for the periods indicated: Schedule of Basic and Diluted Net Loss Per Common Share Nine Months Ended September 30, 2021 2020 Basic and diluted net loss per share calculation: Net loss, basic ( 2,209,871 ) ( 711,936 ) Change in fair value of warrants — — Net loss, diluted ( 2,209,871 ) ( 711,936 ) Weighted average common shares outstanding, basic and diluted 12,826,249 8,628,958 Net loss per common share, basic and diluted $ ( 0.17 ) $ ( 0.08 ) 3. Related Party Transactions Unreimbursed expenses have been accrued and incurred by management, which total $ 159,274 as of September 30, 2021 and $ 59,367 as of December 31, 2020. Between January 1, 2021 and March 15, 2021, the Company paid off the remaining related party loans of $ 155,154 and $ 120,000 to Snehal Patel and the Kenneth Hallock and Annette Hallock Revocable Trust, respectively. 7 4. Commitments and Contingencies License Obligation, Legal Expenses, and Manufacturing Agreements The Company entered into an exclusive license agreement with The Henry M. Jackson Foundation (“HJF”) in April 2009, as amended, pursuant to which it acquired exclusive marketing rights to GP2, the Company’s product candidate. In consideration for such licensed rights, the Company issued HJF 202,619 shares of the Company’s common stock valued at $ 0.267 per share, which is amortized over 15 years at $ 3,607 per year. Pursuant to the exclusive license agreement, the Company is required to pay an annual maintenance fee, milestone payments and royalty payments based on sales of GP2 and to reimburse HJF for patent expenses related to GP2. The Company currently depends on third-party contract manufacturers for all required raw materials, active pharmaceutical ingredients, and finished product candidate for the Company’s clinical trials. The Company paid HJF an aggregate total of $ 434,732 in July 2021 related to annual maintenance fees and reimbursement of patent expenses. Accounts payable includes accrued patent and license obligations to HJF, including accrued interest, plus accrued expenses for manufacturing of GP2 for the upcoming Phase III clinical trial, which total $ 295,845 as of September 30, 2021 and $ 710,971 as of December 31, 2020. Legal Proceedings From time to time, the Company may be involved in disputes, including litigation, relating to claims arising out of operations in the normal course of business. Any of these claims could subject the Company to costly legal expenses and, while management generally believes that there will be adequate insurance to cover different liabilities at such time the Company becomes a public company and commences clinical trials, the Company’s future insurance carriers may deny coverage or policy limits may be inadequate to fully satisfy any damage awards or settlements. If this were to happen, the payment of any such awards could have a material adverse effect on the results of operations and financial position. Additionally, any such claims, whether or not successful, could damage the Company’s reputation and business. The Company is currently not a party to any legal proceedings, the adverse outcome of which, in management’s opinion, individually or in the aggregate, could have a material adverse effect on our results of operations or financial position. 5. Stockholders’ Equity As of September 30, 2021, 599,493 shares of the 908,242 shares of the common stock grant had vested at approximately $ 1,348,859 value and 308,749 shares remain unvested and unrecognized at approximately $ 694,685 value. An aggregate of 220,068 shares of common stock were vested at approximately $ 495,153 value in January through September 2021 in consideration for services rendered. On January 29, 2021, in connection with our December 2020 follow-on offering, the underwriter exercised its option to purchase 70,000 additional shares of common stock at the public offering price of $ 40.00 per share for gross proceeds of $ 2,800,000 and net proceeds of $ 2,548,000 , after deducting underwriting discounts and commissions and offering expenses borne by the Company, which totaled $ 252,000 . Warrants At September 30, 2021, outstanding underwriter warrants to purchase shares of common stock accounted for as equity or liabilities were as follows with an aggregate intrinsic value as of September 30, 2021 of $ 3,940,991 based on the September 30, 2021 closing share price of $ 39.07 : Schedule of Outstanding Warrants Shares Underlying Outstanding Exercise Expiration Warrants Price (1) Date (1) 100,870 $ 7.1875 September 24, 2025 100,870 (1) The underwriter warrants are exercisable at any time and from time to time, in whole or in part, during a period commencing March 24, 2021 and expiring September 24, 2025. The exercise price of the warrants is $ 7.1875 per share or $ 6.9718 per share if the warrants are exercised for cash within the first six months of the period in which they are exercisable. 6. Subsequent Events On October 19, 2021, the underwriter warrants were partially exercised resulting in the issuance of 80,696 shares of common stock and gross proceeds to the Company of $ 562,596 . As of October 19, 2021, warrants to purchase 20,174 shares of common stock remain outstanding. 8