Greenwich LifeSciences, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS GREENWICH LIFESCIENCES, INC. CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2023 AND DECEMBER 31, 2022 (UNAUDITED) September 30, 2023 December 31, 2022 Assets Current assets Cash $ 9,143,619 $ 13,468,026 Non-current assets Acquired patents, net 6,294 9,003 Total assets $ 9,149,913 $ 13,477,029 Liabilities and stockholders’ equity Current liabilities Accounts payable & accrued interest $ 230,902 $ 220,845 Unreimbursed expenses 66,385 42,060 Total current liabilities 297,287 262,905 Total liabilities 297,287 262,905 Stockholders’ equity Common stock, $ 0.001 par value; 100,000,000 shares authorized; 12,848,165 shares issued and outstanding as of September 30, 2023 and December 31, 2022 12,848 12,848 Additional paid-in capital 56,457,608 54,674,042 Accumulated deficit ( 47,617,830 ) ( 41,472,766 ) Total stockholders’ equity 8,852,626 13,214,124 Total liabilities and stockholders’ equity $ 9,149,913 $ 13,477,029 See accompanying notes to unaudited financial statements. - 3 - GREENWICH LIFESCIENCES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022 (UNAUDITED) 2023 2022 2023 2022 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenue $ — $ — $ — $ — Operating expenses Research and development 2,158,167 1,723,493 5,365,641 4,017,564 General and administrative 344,758 659,568 1,126,192 1,128,007 Total operating expenses 2,502,925 2,383,061 6,491,833 5,145,571 Loss from operations ( 2,502,925 ) ( 2,383,061 ) ( 6,491,833 ) ( 5,145,571 ) Interest Income 111,136 64,037 346,769 110,846 Net loss $ ( 2,391,789 ) $ ( 2,319,024 ) $ ( 6,145,064 ) $ ( 5,034,725 ) Per share information: Net loss per common share, basic and diluted $ ( 0.19 ) $ ( 0.18 ) $ ( 0.48 ) $ ( 0.39 ) Weighted average common shares outstanding, basic and diluted 12,848,165 12,823,447 12,848,165 13,067,620 See accompanying notes to unaudited financial statements. - 4 - GREENWICH LIFESCIENCES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022 (UNAUDITED) Shares Par Amount Paid-in Capital Accumulated Deficit Stockholders’ Equity Common Stock Additional Total Shares Par Amount Paid-in Capital Accumulated Deficit Stockholders’ Equity Balances, December 31, 2021 13,147,829 $ 13,148 $ 60,466,093 $ ( 33,647,529 ) $ 26,831,712 Stock-based compensation 73,452 74 165,193 — 165,267 Repurchase of common stock via stock buy back program, net of costs ( 269,828 ) ( 270 ) ( 5,513,441 ) — ( 5,513,711 ) Net loss — ( 1,969,628 ) ( 1,969,628 ) Balances, March 31, 2022 12,951,453 12,952 55,117,845 ( 35,617,157 ) 19,513,640 Stock-based compensation 73,356 73 224,430 — 224,503 Repurchase of common stock via stock buy back program, net of costs ( 250,000 ) ( 250 ) ( 2,022,255 ) — ( 2,022,505 ) Net loss — ( 746,073 ) ( 746,073 ) Balances, June 30, 2022 12,774,809 12,775 53,320,020 ( 36,363,230 ) 16,969,565 Stock-based compensation 73,356 73 759,500 — 759,573 Net loss — ( 2,319,024 ) ( 2,319,024 ) Balances, September 30, 2022 12,848,165 $ 12,848 $ 54,079,520 $ ( 38,682,254 ) $ 15,410,114 Balances, December 31, 2022 12,848,165 $ 12,848 $ 54,674,042 $ ( 41,472,766 ) $ 13,214,124 Stock-based compensation — — 594,522 — 594,522 Net loss - - — ( 2,124,902 ) ( 2,124,902 ) Balances, March 31, 2023 12,848,165 12,848 55,268,564 ( 43,597,668 ) 11,683,744 Stock-based compensation - - 594,522 — 594,522 Net loss - - — ( 1,628,373 ) ( 1,628,373 ) Balances, June 30, 2023 12,848,165 12,848 55,863,086 ( 45,226,041 ) 10,649,893 Balances 12,848,165 $ 12,848 $ 55,863,086 $ ( 45,226,041 ) $ 10,649,893 Stock-based compensation — — 594,522 — 594,522 Net loss - - — ( 2,391,789 ) ( 2,391,789 ) Balances, September 30, 2023 12,848,165 $ 12,848 $ 56,457,608 $ ( 47,617,830 ) $ 8,852,626 Balances 12,848,165 $ 12,848 $ 56,457,608 $ ( 47,617,830 ) $ 8,852,626 See accompanying notes to unaudited financial statements. - 5 - GREENWICH LIFESCIENCES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022 (UNAUDITED) 2023 2022 Nine Months Ended September 30, 2023 2022 Operating activities: Net loss $ ( 6,145,064 ) $ ( 5,034,725 ) Adjustments required to reconcile net loss to net cash used in operating activities: Amortization 2,709 2,709 Stock-based compensation 1,783,566 1,149,343 Changes in operating assets and liabilities: Accounts payable 10,057 — Unreimbursed expenses (accrued) 24,325 ( 147,293 ) Net cash used in operating activities ( 4,324,407 ) ( 4,029,966 ) Financing activities: Repurchase of common stock via stock buy back program, net of costs — ( 7,536,216 ) Net cash provided by (used in) financing activities — ( 7,536,216 ) Net increase (decrease) in cash ( 4,324,407 ) ( 11,566,182 ) Cash, beginning of period 13,468,026 27,204,269 Cash, end of period $ 9,143,619 $ 15,638,087 See accompanying notes to unaudited financial statements. - 6 - GREENWICH LIFESCIENCES, INC. NOTES TO CONSOLIDATED 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. In February 2023, Greenwich LifeSciences Europe Limited was incorporated as a wholly owned subsidiary in Ireland. 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, 2022 and 2021 as reported in the Company’s Form 10-K have been omitted. Leases In February 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-02-Leases (Topic 842), which significantly amends the way companies are required to account for leases. Under the updated leasing guidance, some leases that did not have to be reported previously are now required to be presented as an asset and liability on the balance sheet. In addition, for certain leases, what was previously classified as an operating expense must now be allocated between amortization expense and interest expense. The Company elected to adopt this update using the modified retrospective transition method and prior periods have not been restated. The current monthly rent is approximately $ 2,555 . The month-to-month sub-lease is from a related party and the underlying lease expires in May of 2024. Any right of use asset and liability is deemed to be nominal as of September 30, 2023 and December 31, 2022. Basic and Diluted Loss per Share Basic EPS is computed by dividing net loss (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method. Diluted EPS excludes all dilutive potential shares if their effect is antidilutive. During periods of net loss, all common stock equivalents related to 1,498,128 options and 20,174 warrants outstanding as of September 30, 2023 and 2022 are excluded from the diluted EPS calculation because they are antidilutive. Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU 2016-13 effective January 1, 2023. The Company determined that the update applied to trade receivables, but that there was no material impact to the consolidated financial statements from the adoption of ASU 2016-13. - 7 - 3. Related Party Transactions Unreimbursed expenses have been accrued and incurred by management, which total $ 66,385 as of September 30, 2023 and $ 42,060 as of December 31, 2022. 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. Accounts payable includes accrued interest obligations to HJF which total $ 220,845 as of September 30, 2023 and December 31, 2022. 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, 2023, 893,181 shares of the 908,362 shares of the common stock grant, which includes an additional grant of 120 shares issued during the vesting period due to rounding up of fractional shares, had vested at approximately $ 2,009,657 value and 15,181 shares remain unvested and unrecognized at $ 34,157 value. There were no shares vested during the nine months ended September 30, 2023. On January 23, 2022, the Board of Directors authorized the Company’s management to implement a stock repurchase program for up to $ 10 million of the Company’s common stock at any time. The term of the Board of Directors authorization of the repurchase program ended on March 31, 2023. The repurchase program may be suspended or discontinued at any time and will be funded using the Company’s working capital. As of September 30, 2023 and 2022, approximately 519,828 shares of the Company’s common stock has been repurchased and cancelled at an aggregate purchase price, including all transactions costs, of approximately $ 7,536,216 . There were no shares repurchased during the nine months ended September 30, 2023. On January 23, 2022, the Board of Directors extended the lock-up of the shares owned by the Company’s directors, officers, and existing pre-IPO investors to March 24, 2023 (30 months from date of the Company’s IPO) from March 24, 2022 (18 months from date of the Company’s IPO). On November 30, 2022, the Board of Directors further extended the lock-up of the shares owned by the Company’s directors, officers, and existing pre-IPO investors to December 31, 2023 (approximately 39 months from date of the Company’s IPO) from March 24, 2023 (30 months from date of the Company’s IPO). During this period, current officers, directors and certain shareholders will not be able to sell their shares of the Company’s common stock unless otherwise modified by the Board of Directors . Warrants At September 30, 2023, outstanding warrants to purchase shares of common stock were as follows with an aggregate intrinsic value as of September 30, 2023 of $ 33,338 based on the September 29, 2023 closing share price of $ 8.84 : Schedule of Outstanding Warrants Shares Underlying Outstanding Exercise Expiration Warrants Price Date 20,174 $ 7.1875 September 24, 2025 20,174 Options On June 22, 2022, prior to the close of the Nasdaq market, 1,498,128 shares of common stock were granted to employees, consultants, and directors issuable upon exercise of outstanding stock options under the Company’s 2019 Equity Incentive Plan at an exercise price of $ 7.63 per share, which was the most recent prior closing share price on June 21, 2022. The options had a fair value on the grant date of $ 9,512,356 , based on a risk-free rate of 3.2 % and an annualized volatility of 106 %, of which $ 3,032,062 was expensed through September 30, 2023 and $ 6,480,294 will be expensed in the future if and as vesting occurs. Vesting will be based on time of service over a four year period and certain additional performance milestones for senior management, primarily related to the Phase III clinical trial. - 8 -