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 September 30, 2015

OR

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 000-52091

 

GEOVAX LABS, INC.

(Exact name of Registrant as specified in its charter)

 

Delaware

 

87-0455038

(State or other jurisdiction

 

(I.R.S. Employer Identification No.)

of incorporation or organization)

 

 

 

 

 

1900 Lake Park Drive

 

 

Suite 380

 

 

Smyrna, Georgia

 

30080

(Address of principal executive offices)

 

(Zip Code)

 

(678) 384-7220

(Registrant’s telephone number, including area code )

   

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒    No ☐

 

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See the definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer 

Accelerated filer 

   

Non-accelerated filer 
(Do not check if a smaller reporting company)

Smaller reporting company 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes    No

 

As of November 12, 2015, 31,950,813 shares of the Registrant’s common stock, $.001 par value, were issued and outstanding.

 

 
 

 

 

TABLE OF CONTENTS

 

 

 

 

 

Page

 

 

 

 

PART I – FINANCIAL INFORMATION  

 

 

 

 

 

Item 1

 

Condensed Consolidated Financial Statements:

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets as of September 30, 2015 (unaudited) and December 31, 2014

1

 

 

 

 

 

 

Condensed Consolidated Statements of Operations for the three-month and nine-month periods ended  September 30, 2015 and 2014 (unaudited)

2

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the nine-month periods ended  September 30, 2015 and 2014 (unaudited)

3

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements (unaudited) 

4

 

 

 

 

 Item 2

 

Management's Discussion and Analysis of Financial Condition and Results of Operations  

8

 

 

 

 

 Item 3

 

Quantitative and Qualitative Disclosures about Market Risk  

12

 

 

 

 

 Item 4

 

Controls and Procedures

13

 

 

 

 

PART II. – OTHER INFORMATION

 

 

 

 

 

Item 1

 

Legal Proceedings

13

 

 

 

 

Item 1A

 

Risk Factors 

13

 

 

 

 

Item 2  

 

Unregistered Sales of Equity Securities and Use of Proceeds

13

 

 

 

 

Item 3

 

Defaults Upon Senior Securities

13

 

 

 

 

Item 4  

 

Mine Safety Disclosures  

13

 

 

 

 

Item 5

 

Other Information

13

 

 

 

 

Item 6    Exhibits  13
       
SIGNATURES 14
       

EXHIBIT INDEX  

15

 

 
 

 

 

Part I -- FINANCIAL INFORMATION

 

Item 1      Financial Statements

 

GEOVAX LABS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   

September 30,

   

December 31,

 
   

2015

   

2014

 

 

 

(unaudited)

         
ASSETS                

Current assets:

               

Cash and cash equivalents

  $ 1,821,037     $ 1,101,651  

Grant funds receivable

    -       79,341  

Prepaid expenses and other current assets

    75,276       44,503  
                 

Total current assets

    1,896,313       1,225,495  
                 

Property and equipment, net

    90,842       96,693  
                 

Deposits

    11,010       11,010  
                 

Total assets

  $ 1,998,165     $ 1,333,198  
                 
                 

LIABILITIES AND STOCKHOLDERS’ EQUITY

               

Current liabilities:

               

Accounts payable

  $ 42,492     $ 55,616  

Accrued expenses

    5,000       52,490  

Amounts payable to a related party (Note 11)

    70,729       78,917  
                 

Total current liabilities

    118,221       187,023  
                 

Commitments (Note 6)

               
                 

Stockholders’ equity:

               

Preferred stock, $.01 par value:

               

Authorized shares – 10,000,000

               

Series B convertible preferred stock, $1,000 stated value; 100 shares issued and outstanding at September 30, 2015 and December 31, 2014

    76,095       76,095  

Series C convertible preferred stock, $1,000 stated value; 3,000 and -0- shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively

    983,941       -  

Common stock, $.001 par value:

               

Authorized shares – 150,000,000 and 75,000,000 at September 30, 2015 and December 31, 2014, respectively

               

Issued and outstanding shares – 31,950,813 at September 30, 2015 and December 31, 2014

    31,951       31,951  

Additional paid-in capital

    32,570,153       30,823,769  

Accumulated deficit

    (31,782,196 )     (29,785,640 )
                 

Total stockholders’ equity

    1,879,944       1,146,175  
                 

Total liabilities and stockholders’ equity

  $ 1,998,165     $ 1,333,198  

 

See accompanying notes to condensed consolidated financial statements.

 

 
1

 

   

GEOVAX LABS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2015

   

2014

   

2015

   

2014

 

Grant revenue

  $ 93,130     $ 322,086     $ 268,028     $ 659,867  
                                 

Operating expenses:

                               

Research and development

    378,521       425,498       1,166,803       1,344,560  

General and administrative

    335,932       411,814       1,102,262       1,128,478  

Total operating expenses

    714,453       837,312       2,269,065       2,473,038  
                                 

Loss from operations

    (621,323 )     (515,226 )     (2,001,037 )     (1,813,171 )
                                 

Other income:

                               

Interest income

    1,424       711       4,481       3,201  

Total other income

    1,424       711       4,481       3,201  
                                 

Net loss

  $ (619,899 )   $ (514,515 )   $ (1,996,556 )   $ (1,809,970 )
                                 

Basic and diluted:

                               

Loss per common share

  $ (0.02 )   $ (0.02 )   $ (0.06 )   $ (0.07 )

Weighted averages shares outstanding

    31,950,813       25,325,141       31,950,813       25,109,811  

 

See accompanying notes to condensed consolidated financial statements.

 

 
2

 

 

GEOVAX LABS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   

Nine Months Ended September 30,

 
   

2015

   

2014

 

Cash flows from operating activities:

               

Net loss

  $ (1,996,556 )   $ (1,809,970 )

Adjustments to reconcile net loss to net cash used in operating activities:

               

Depreciation and amortization

    21,701       50,003  

Stock-based compensation expense, including common stock issued for services

    50,516       165,638  

Changes in assets and liabilities:

               

Grant funds receivable

    79,341       140,909  

Prepaid expenses and other current assets

    (30,773 )     (20,631 )

Accounts payable and accrued expenses

    (68,802 )     (142,116 )

Total adjustments

    51,983       193,803  

Net cash used in operating activities

    (1,944,573 )     (1,616,167 )
                 

Cash flows from investing activities:

               

Purchase of property and equipment

    (15,850 )     (35,503 )

Net cash used in investing activities

    (15,850 )     (35,503 )
                 

Cash flows from financing activities:

               

Net proceeds from sale of preferred stock

    2,679,809       -  

Net cash provided by financing activities

    2,679,809       -  
                 

Net increase (decrease) in cash and cash equivalents

    719,386       (1,651,670 )

Cash and cash equivalents at beginning of period

    1,101,651       2,513,861  
                 

Cash and cash equivalents at end of period

  $ 1,821,037     $ 862,191  

 

Supplemental disclosure of non-cash financing activities:

During the nine-month period ended September 30, 2014, an aggregate of 71 shares of our Series A Convertible Preferred Stock were converted into 202,857 shares of common stock, and an aggregate of 525 shares of our Series B Convertible Preferred Stock were converted into 1,500,000 shares of common stock.

   

See accompanying notes to condensed consolidated financial statements.

 

 
3

 

 

GEOVAX LABS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30 , 20 15

(unaudited)

   

1.     Description of Company

 

GeoVax Labs, Inc. (“GeoVax” or the “Company”), is a clinical-stage biotechnology company developing human vaccines using our novel platform technology. Our current development programs are focused on vaccines against Ebola and Marburg viruses, and Human Immunodeficiency Virus (HIV). Our vaccine delivery technology generates virus-like particles (VLPs) that are effective at eliciting safe and effective immune responses. Our proprietary Ebola vaccine technology has been developed internally using technology licensed from the National Institutes of Health (NIH), while our HIV vaccine technology was developed in collaboration with Emory University, the NIH, and the Centers for Disease Control and Prevention (CDC) and is exclusively licensed to us. GeoVax is incorporated under the laws of the State of Delaware and our principal offices are located in Smyrna, Georgia.

 

2.     Basis of Presentation

 

The accompanying condensed consolidated financial statements at September 30, 2015 and for the three-month and nine-month periods ended September 30, 2015 and 2014 are unaudited, but include all adjustments, consisting of normal recurring entries, which we believe to be necessary for a fair presentation of the dates and periods presented. Interim results are not necessarily indicative of results for a full year. The financial statements should be read in conjunction with our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2014. We expect our operating results to fluctuate for the foreseeable future; therefore, period-to-period comparisons should not be relied upon as predictive of the results in future periods.

 

Our financial statements have been prepared assuming that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of the financial statements. We are devoting substantially all of our present efforts to research and development of our vaccine candidates. We have funded our activities to date from government grants and clinical trial assistance, and from sales of our equity securities. We will continue to require substantial funds to continue our research and development activities. We believe that our existing cash resources and grant commitments will be sufficient to fund our planned operations through the first quarter of 2016, but due to our history of operating losses and our continuing need for capital to conduct our research and development activities, there is substantial doubt concerning our ability to operate as a going concern beyond that date. We are currently exploring sources of capital through government grants and clinical trial support and through philanthropic foundation support. We may also secure additional funds through sales of our equity securities or the exercise of currently outstanding stock purchase warrants. Management believes that the Company’s demonstrated history of successful funding through both government sources and equity securities alleviate the substantial doubt about the Company’s ability to operate as a going concern. However, additional funding may not be available on favorable terms or at all. If we fail to obtain additional capital when needed, we may be required to delay, scale back, or eliminate some or all of our research and development programs as well as reduce our general and administrative expenses.

 

3.     Significant Accounting Policies and Recent Accounting Pronouncements

 

We disclosed in Note 2 to our financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2014 those accounting policies that we consider significant in determining our results of operations and financial position. There have been no material changes to, or in the application of, the accounting policies previously identified and described in the Form 10-K.

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which creates a new Topic, Accounting Standards Codification Topic 606. The standard is principle-based and provides a five-step model to determine when and how revenue is recognized. The core principle is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for the Company beginning in 2017 and allows for either full retrospective adoption or modified retrospective adoption. We are currently evaluating the impact of the adoption of ASU 2014-09 on our financial statements.

 

There have been no other recent accounting pronouncements or changes in accounting pronouncements during the nine-month period ended September 30, 2015 which we expect to have a material impact on our financial statements.

 

 
4

 

   

4.     Basic and Diluted Loss Per Common Share

 

Basic net loss per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed using the weighted-average number of common shares and potentially dilutive common share equivalents outstanding during the period. Potentially dilutive common share equivalents consist of convertible preferred stock, stock options and stock purchase warrants. Common share equivalents which potentially could dilute basic earnings per share in the future, and which were excluded from the computation of diluted loss per share, as the effect would be anti-dilutive, totaled approximately 79.0 million and 12.5 million shares at September 30, 2015 and 2014, respectively.

 

5.     Property and Equipment

 

Property and equipment as shown on the accompanying Condensed Consolidated Balance Sheets is composed of the following as of September 30, 2015 and December 31, 2014:

 

   

September 30,

2015

   

December 31,

2014

 

Laboratory equipment

  $ 525,956     $ 510,106  

Leasehold improvements

    115,605       115,605  

Other furniture, fixtures & equipment

    28,685       28,685  

Total property and equipment

    670,246       654,396  

Accumulated depreciation and amortization

    (579,404 )     (557,703 )

Property and equipment, net

  $ 90,842     $ 96,693  

 

6.     Commitments

 

Lease Agreement

 

We lease approximately 8,400 square feet of office and laboratory space located in Smyrna, Georgia, pursuant to an operating lease which expires on December 31, 2016, an additional 12-month renewal option. As of September 30, 2015, our future minimum lease payments for the current lease term (excluding the renewal option) total $36,523 for the remainder of 2015, and $149,042 for 2016.

 

Other Commitments

 

In the normal course of business, we may enter into various firm purchase commitments related to production and testing of our vaccine material, conduct of our clinical trials, and other research-related activities. As of September 30, 2015, we had approximately $36,200 of unrecorded outstanding purchase commitments to our vendors and subcontractors, all of which we expect will be due in 2015.

 

7.     Preferred Stock

 

Series B Convertible Preferred Stock

 

As of September 30, 2015, there are 100 shares of our Series B Convertible Preferred Stock outstanding (issued in December 2013), convertible into 285,714 shares of our common stock. During the nine-month period ended September 30, 2015, there were no conversions or other transactions involving our Series B Convertible Preferred Stock.

 

Series C Convertible Preferred Stock

 

In February 2015, we established from the authorized preferred stock a series of preferred stock, consisting of 3,000 shares of Series C Convertible Preferred Stock, $1,000 stated value (“Series C Preferred Shares”) and entered into a Securities Purchase Agreement (“SPA”) whereby we issued to two institutional investors (“Purchasers”) the Series C Preferred Shares for gross proceeds of $3.0 million. Net proceeds to the Company from this transaction, after deduction of placement agent fees and other expenses, were approximately $2.7 million.

 

The Series C Preferred Shares may be converted at any time at the option of the Purchasers into shares of our common stock. The initial conversion price of the Series C Preferred Shares was $0.18 per share (“Conversion Price”). The Series C Preferred Shares have a liquidation preference equal to the initial purchase price, have no voting rights, and are not entitled to a dividend. The Series C Preferred Shares contains price adjustment provisions, which may, under certain circumstances, reduce the Conversion Price on several future dates according to a formula based on the then-current market price for our common stock. As discussed below, on April 8, 2015 the Conversion Price was adjusted to $0.142 per share resulting in an aggregate total of 21,126,760 shares of our common stock (“Conversion Shares”) into which the Series C Preferred Shares currently may be converted.

 

 
5

 

   

Pursuant to the terms of the SPA, we issued to each Purchaser Series D, E and F Warrants (collectively, the “Investor Warrants”), each to purchase up to a number of shares of our common stock equal to 100% of the Conversion Shares underlying the Series C Preferred Shares (up to 16,666,666 shares in the aggregate for each of the three series of warrants, or 49,999,998 shares in total). The Series D Warrants had an initial exercise price of $0.22 per share, are currently exercisable, and have a term of exercise equal to five years from the date of issuance. The Series E Warrants had an initial exercise price of $0.18 per share, are currently exercisable, and have a term of exercise equal to one year from the date of issuance. The Series F Warrants had an initial exercise price of $0.22 per share and have a term of exercise equal to five years from the date of issuance, but only vest and become exercisable upon, and in proportion to, the exercise of the one-year Series E Warrants. We also issued to our placement agent warrants (“Placement Agent Warrants”) to acquire 1,333,333 shares of our Common Stock with terms substantially the same as the Series D Warrants. The Investor Warrants and Placement Agent Warrants contain anti-dilution and price adjustment provisions, which may, under certain circumstances, (i) reduce the exercise price on several future dates according to a formula based on the then-current market price for our common stock and (ii) reduce the exercise price to match if we sell or grant options to purchase, including rights to reprice, our common stock or common stock equivalents at a price lower than the exercise price of the warrants, or if we announce plans to do so. The number of shares subject to warrants will not increase due to such reductions in exercise price.

 

In connection with the sale of the Series C Preferred Shares, we entered into a Registration Rights Agreement (“RRA”) with the Purchasers, pursuant to which we filed a registration statement with the Securities and Exchange Commission (“SEC”) on March 20, 2015. It was declared effective by the SEC on April 8, 2015, which triggered the price adjustment provisions of the Series C Preferred Shares and the related warrants. As of that date, the conversion price of the Series C Preferred Shares was reduced to $0.142, the exercise price of the Series E Warrants was reduced to $0.142, and the exercise price of the Series D Warrants, Series F Warrants and Placement Agent Warrants was reduced to $0.1704.

 

Accounting Treatment and Allocation of Proceeds . We first assessed the Series C Preferred Shares under ASC Topic 480, “ Distinguishing Liabilities from Equity ” (“ASC 480”) and determined such preferred stock not to be a liability under ASC 480. We next assessed the preferred stock under ASC Topic 815. “ Derivatives and Hedging ” (“ASC 815”). The preferred stock contains an embedded feature allowing an optional conversion by the holder into common stock which meets the definition of a derivative. However, we believe that the preferred stock is an “equity host” (as described by ASC 815) for purposes of assessing the embedded derivative for potential bifurcation and determined that the optional conversion feature is clearly and closely associated to the preferred stock host; we therefore determined that the embedded derivative does not require bifurcation and separate recognition under ASC 815. We then assessed the preferred stock under ASC Topic 470, “ Debt ” (“ASC 470”), and determined there to be no beneficial conversion feature (“BCF”) requiring recognition at the issuance date. We also assessed the warrants issued in connection with the financing under ASC 815 and determined that they do not initially meet the definition of a derivative, but will require evaluation on an on-going basis.

 

The following is a summary of the allocation of the net proceeds from the preferred stock financing:

 

Net proceeds after transaction costs

  $ 2,679,809  

Less: Fair value of warrants (recorded to Additional Paid-in Capital)

    (1,695,868 )

Recorded value of Series C Preferred Shares at September 30, 2015

  $ 983,941  

   

  

8.     Common Stock

 

Increase in Authorized Shares of Common Stock

 

At our annual meeting of stockholders held on May 12, 2015, our stockholders approved an amendment to our certificate of incorporation to increase our authorized shares of common stock from 75,000,000 shares to 150,000,000 shares. The amendment to our certificate of incorporation was filed with the Delaware Secretary of State on May 13, 2015.

 

Common Stock Transactions

 

During the nine-month period ended September 30, 2015, there were no transactions involving our Common Stock.  

 

 
6

 

   

Stock Options

 

We maintain a stock option plan that provides the Board of Directors broad discretion in creating equity incentives for employees, officers, directors and consultants. The following table presents a summary of stock option transactions during the nine-month period ended September 30, 2015:

 

   

Number of Shares

   

Weighted Average

Exercise Price

 

Outstanding at December 31, 2014

    1,183,100     $ 3.50  

Granted

    41,400       0.15  

Exercised

    --       --  

Forfeited or expired

    (68,000 )     1.50  

Outstanding at September 30, 2015

    1,156,500     $ 3.50  

Exercisable at September 30, 2015

    720,094     $ 5.42  

 

Stock Purchase Warrants

 

The following table presents a summary of stock purchase warrant transactions during the nine-month period ended September 30, 2015:

 

   

Number of Shares

   

Weighted Average

Exercise Price

 

Outstanding at December 31, 2014

    5,108,826     $ 0.66  

Issued – Series D Warrants (1)

    16,666,666       0.17  

Issued – Series E Warrants (1)

    16,666,666       0.14  
Issued – Series F Warrants (1)     16,666,666       0.17  

Issued – Placement Agent Warrants (1)

     1,333,333       0.17  

Outstanding at September 30, 2015

    56,442,157     $ 0.20  

Exercisable at September 30, 2015

    39,775,491     $ 0.21  

 

(1)

See discussion under “Series C Convertible Preferred Stock” in Note 7 .

 

Stock-Based Compensation Expense

 

During the three-month and nine-month periods ended September 30, 2015 and 2014, we recorded stock-based compensation expense as follows:

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2015

   

2014

   

2015

   

2014

 

Stock Option Expense

  $ 16,926     $ 24,573     $ 50,516     $ 75,927  

Common Stock Issued for Services

    -       -       -       50,000  

Warrant Modification Expense

    -       -       -       39,711  

Total Stock-Based Compensation Expense

  $ 16,926     $ 24,573     $ 50,516     $ 165,638  

 

Stock-based compensation expense related to stock options is recognized on a straight-line basis over the requisite service period for the award and is allocated to research and development expense or general and administrative expense based upon the related employee classification. As of September 30, 2015, there was $64,330 of unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted average period of 1.5 years.

 

Common Stock Reserved

 

A summary of our common stock reserved for future issuance is as follows as of September 30, 2015:

 

Series B Convertible Preferred Stock

    285,714  

Series C Convertible Preferred Stock

    21,126,760  

Common Stock Purchase Warrants

    56,442,157  

Equity Incentive Plans

    1,197,529  

Total

    79,052,160  

 

9.     Income Taxes

 

Because of our historically significant net operating losses, we have not paid income taxes since inception. We maintain deferred tax assets that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. These deferred tax assets are comprised primarily of net operating loss carryforwards and also include amounts relating to nonqualified stock options and research and development credits. The net deferred tax asset has been fully offset by a valuation allowance because of the uncertainty of our future profitability and our ability to utilize the deferred tax assets. Utilization of operating losses and credits may be subject to substantial annual limitations due to ownership change provisions of Section 382 of the Internal Revenue Code. The annual limitation may result in the expiration of net operating losses and credits before utilization.

 

 
7

 

   

10.   Government Grants

 

We record revenue associated with government grants as the related costs and expenses are incurred and such revenue is reported as a separate line item in our statements of operations. Grant revenues recorded during the three-month and nine-month periods ended September 30, 2015 and 2014 relate to grants from the NIH in support of our HIV vaccine development activities. As of September 30, 2015, there is $260,522 of approved grant funds remaining and available for use, which we anticipate recognizing as revenue during the remainder of 2015 and the first half of 2016.

 

11.   Related Party Transactions

 

We are obligated to reimburse Emory University (a significant stockholder of the Company) for certain prior and ongoing costs in connection with the filing, prosecution and maintenance of patent applications subject to our technology license agreement from Emory. During the three-month and nine-month periods ended September 30, 2015, we recorded $30,785 and $94,690, respectively, of general and administrative expense associated with these patent cost reimbursements to Emory, as compared to $19,757 and $135,150, respectively, for the same periods in 2014.

   

 

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

 

FORWARD LOOKING STATEMENTS

 

In addition to historical information, the information included in this Form 10-Q contains forward-looking statements. Forward-looking statements involve numerous risks and uncertainties, including but not limited to the risk factors set forth under the heading “Risk Factors” in the Annual Report on Form 10-K for the year ended December 31, 2014, and should not be relied upon as predictions of future events. Certain such forward-looking statements can be identified by the use of forward-looking terminology such as ‘‘believes,’’ ‘‘expects,’’ ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘seeks,’’ ‘‘approximately,” ‘‘intends,’’ ‘‘plans,’’ ‘‘pro forma,’’ ‘‘estimates,’’ or ‘‘anticipates’’ or other variations thereof or comparable terminology, or by discussions of strategy, plans or intentions. Such forward-looking statements are necessarily dependent on assumptions, data or methods that may be incorrect or imprecise and may be incapable of being realized. The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:

 

whether we can raise additional capital as and when we need it;

whether we are successful in developing our products;

whether we are able to obtain regulatory approvals in the United States and other countries for sale of our products;

whether we can compete successfully with others in our market; and

whether we are adversely affected in our efforts to raise cash by the volatility and disruption of local and national economic, credit and capital markets and the economy in general.

 

Readers are cautioned not to place undue reliance on forward-looking statements, which reflect our management’s analysis only. We assume no obligation to update forward-looking statements.

 

Overview

 

GeoVax is a clinical-stage biotechnology company developing human vaccines using our novel platform technology. Our current development programs are focused on Ebola and Marburg viruses, and HIV. Our HIV vaccine technology was developed in collaboration with researchers at Emory University, the NIH, and the CDC, and is exclusively licensed to us from Emory University. We also have nonexclusive licenses to certain patents owned by the NIH. Our Ebola and Marburg vaccines are being developed with technology licensed to us from the NIH.

 

Our most advanced HIV vaccine development efforts are focused on a preventive vaccine to address the clade B subtype of the HIV virus that is most prevalent in the developed world (primarily North America and Western Europe). All of the clinical trials for our preventive HIV vaccine (through Phase 2a) have been conducted by the HIV Vaccine Trials Network (HVTN) with funding from the NIH. Through a continued collaboration with the NIH and HVTN, in late 2015 we expect to initiate a Phase 1 clinical trial investigating the effect of a “protein boost” to increase the antibody responses elicited by our vaccine. While this effort continues, we are also exploring our options to secure funding to advance our vaccine (without the additional protein boost) directly into pivotal Phase 2b efficacy trials. We have also begun preclinical studies to develop an HIV vaccine candidate for the clade C subtype of HIV prevalent in the developing world (primarily sub-Saharan Africa and India); these studies are currently being supported by NIH grants. Our Ebola vaccine development efforts were initiated in 2014 and we are currently conducting preclinical animal studies through a collaboration with the NIH.

 

 
8

 

   

We have neither received regulatory approval for any of our vaccine candidates, nor do we have any commercialization capabilities; therefore, it is possible that we may never successfully derive significant product revenues from any of our existing or future development programs or product candidates.

 

Critical Accounting Policies and Estimates

 

This discussion and analysis of our financial condition and results of operations is based on the accompanying unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates and adjusts the estimates as necessary. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.

 

Our significant accounting policies are summarized in Note 2 to our financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2014. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements:

 

Revenue Recognition

 

We recognize revenue in accordance with the SEC’s Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements, as amended by Staff Accounting Bulletin No. 104, Revenue Recognition, (“SAB 104”). SAB 104 provides guidance in applying U.S. generally accepted accounting principles (“GAAP”) to revenue recognition issues, and specifically addresses revenue recognition for upfront, nonrefundable fees received in connection with research collaboration agreements. During 2015 and 2014, our revenue consisted of grant funding received from the NIH. Revenue from these arrangements is approximately equal to the costs incurred and is recorded as income as the related costs are incurred.

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which creates a new Topic, Accounting Standards Codification Topic 606. The standard is principle-based and provides a five-step model to determine when and how revenue is recognized. The core principle is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for the Company beginning in 2017 and allows for either full retrospective adoption or modified retrospective adoption. We are currently evaluating the impact of the adoption of ASU 2014-09 on our financial statements.

 

Stock-Based Compensation

 

We account for stock-based transactions in which the Company receives services from employees, directors or others in exchange for equity instruments based on the fair value of the award at the grant date. Compensation cost for awards of common stock is estimated based on the price of the underlying common stock on the date of issuance. Compensation cost for stock options or warrants is estimated at the grant date based on each instrument’s fair value as calculated by the Black-Scholes option pricing model. We recognize stock-based compensation cost as expense ratably on a straight-line basis over the requisite service period for the award.

 

Liquidity and Capital Resources

 

Historically, our primary uses of cash have been to finance our research and development activities. We have funded our activities to date primarily from government grants and clinical trial assistance, and from sales of our equity securities. Due to our significant research and development expenditures, we have not been profitable and have generated operating losses since our inception in 2001.

 

We believe that our existing cash resources will be sufficient to fund our planned operations through the first quarter of 2016. We will require additional funds to continue our planned operations beyond that date. We are currently seeking sources of non-dilutive capital through government grant programs and clinical trial support, and we may also conduct additional offerings of our equity securities. However, additional funding may not be available on favorable terms or at all and if we fail to obtain additional capital when needed, we may be required to delay, scale back, or eliminate some or all of our research and development programs as well as reduce our general and administrative expenses.

 

 
9

 

   

At September 30, 2015, we had cash and cash equivalents of $1,821,037 and working capital of $1,778,092, as compared to $1,101,651 and $1,038,472, respectively, at December 31, 2014. As of September 30, 2015, we had an accumulated deficit of $31.8 million and we expect that, for the foreseeable future, our operations will result in a net loss on a quarterly and annual basis.

 

Net cash used in operating activities was $1,944,573 and $1,616,167 for the nine-month periods ended September 30, 2015 and 2014, respectively.

 

Net cash used in investing activities was $15,850 and $35,503 for the nine-month periods ended September 30, 2015 and 2014, respectively.

 

Net cash provided by financing activities was $2,679,809 and $-0- for the nine-month periods ended September 30, 2015 and 2014, respectively. The increase is related to our February 2015 financing discussed below.

 

The NIH has funded the costs of conducting all of our human clinical trials (Phase 1 and Phase 2a) to date for our preventive HIV vaccines, with GeoVax incurring certain costs associated with manufacturing the clinical vaccine supplies and other study support. We also expect the NIH to fully fund the cost of another Phase 1 trial (HVTN 114) of our preventive HIV vaccine to begin in late 2015, which will investigate the effect of adding a “protein boost” component to our vaccine. While efforts are underway to evaluate the protein boost concept, we also intend to seek funding to expedite our vaccine (without the additional protein boost) directly into pivotal Phase 2b efficacy trials.

 

During 2014, we completed a Phase 1 clinical trial (GV-TH-01) investigating the therapeutic use of our GOVX-B11 vaccine in HIV-infected patients. Future therapeutic studies of our vaccine may investigate the vaccine’s ability to act as a “shock agent” in a shock and kill therapy in combination with standard of care antiretroviral drug therapy to seek a cure for HIV infection. We are currently not contemplating the use of any of our existing cash resources for this program. The timetable and specific plans for additional clinical studies will be dependent upon our ability to secure external funding for the program, and on the nature of any potential collaborations we may establish.

 

Our Ebola/Marburg vaccine program began in late 2014, and our primary activities during 2015 are focused on constructing the vaccines and conducting preclinical animal studies. During April 2015, we entered into a Research Collaboration Agreement with the National Institute of Allergy and Infectious Disease (NIAID), part of NIH, pursuant to which NIAID is contributing certain materials and carrying out animal protection studies in small animals. The initial animal studies are ongoing, and we expect to be ready for human clinical trials to begin in late 2016 or early 2017.

 

In addition to clinical trial support from the NIH for our preventive HIV vaccines and collaborative research support from NIAID for our Ebola vaccine program, our operations have been partially funded by NIH research grants for our HIV program. As of September 30, 2015, there was $260,522 of unused grant funds available for use during the remainder of 2015 and the first half of 2016. We intend to pursue additional grants from the federal government for our HIV and Ebola programs but cannot be assured of success.

 

In February 2015, we sold shares of Series C convertible preferred stock for an aggregate purchase price of $3.0 million. Net proceeds to the Company were approximately $2.7 million. As part of this transaction, we also issued several series of five-year and one-year stock purchase warrants. The one-year warrants have a current exercise price of $0.142 and an expiration date of February 27, 2016. If exercised in full, these warrants would result in net cash proceeds to us of approximately $2.4 million.

 

We have no off-balance sheet arrangements that are likely or reasonably likely to have a material effect on our financial condition or results of operations.

 

Contractual Obligations

 

As of September 30, 2015, we had noncancellable lease obligations and other firm purchase obligations totaling approximately $222,000, as compared to approximately $297,000 at December 31, 2014. We have no committed lines of credit and no other committed funding or long-term debt. We have employment agreements with our senior management team, each of which may be terminated with 30 days advance notice. There have been no other material changes to the table presented in our Annual Report on Form 10-K for the year ended December 31, 2014.

 

Results of Operations

 

Net Loss

 

We recorded a net loss of $619,899 for the three-month period ended September 30, 2015, as compared to $514,515 for the three-month period ended September 30, 2014. For the nine-month period ended September 30, 2015, we recorded a net loss of $1,996,556, as compared to a net loss of $1,809,970 for nine-month period ended September 30, 2014. Our net losses will typically fluctuate due to the timing of activities and related costs associated with our vaccine research and development activities and our general and administrative costs, as described in more detail below.

 

 
10

 

   

Grant Revenue

 

During the three-month and nine-month periods ended September 30, 2015, we recorded grant revenue of $93,130 and $268,028, respectively, as compared to $322,086 and $659,867, respectively, during the comparable periods of 2014. Grant revenues for these periods relate to grants from the NIH in support of our HIV vaccine development activities. We record revenue associated with these grants as the related costs and expenses are incurred. The difference in our grant revenues from period to period is directly related to our expenditures for activities supported by the grants, and can fluctuate significantly based on the timing of the related expenditures.

 

In September 2007, the NIH awarded us a grant entitled “GM-CSF-Adjuvanted Clade C DNA/MVA and MVA/MVA Vaccines”. The aggregate award (including subsequent amendments) totaled approximately $20.4 million. For this grant, we recorded revenues of $-0- and $75,464 for the three-month and nine-month periods ended September 30, 2015, respectively, as compared to $269,334 and $484,988, respectively during the comparable periods of 2014. There are no unrecognized grant funds remaining and available for use pursuant to this grant as of September 30, 2015.

 

In July 2013, the NIH awarded us a Small Business Innovative Research (SBIR) grant entitled “Enhancing Protective Antibody Responses for a GM-CSF Adjuvanted HIV Vaccine.” The initial grant award was $276,690 for the first year of a two year project period beginning August 1, 2013. In July 2014, the NIH awarded us $289,641 for the second year of the project period. For this grant, we recorded revenues of $54,067 and $153,501 for the three-month and nine-month periods ended September 30, 2015, respectively, as compared to $52,752 and $174,879, respectively during the comparable periods of 2014. There are no unrecognized grant funds remaining and available for use pursuant to this grant as of September 30, 2015.

 

In June 2015, the NIH awarded us a Small Business Innovative Research (SBIR) grant entitled “Directed Lineage Immunizations for Eliciting Broadly Neutralizing Antibody.” The initial grant award of $299,585 is for the first year of a two year project period beginning July 1, 2015. For this grant, we recorded revenues of $39,063 for the three-month and nine-month periods ended September 30, 2015; no revenues related to this grant were recorded during the comparable periods of 2014. There is $260,522 in approved grant funds remaining and available for use as of September 30, 2015, which we anticipate recognizing as revenue during the remainder of 2015 and through June 30, 2016.

 

Research and Development

 

During the three-month and nine-month periods ended September 30, 2015, we recorded $378,521 and $1,166,803, respectively, of research and development expense as compared to $425,498 and $1,344,560, respectively, during the three-month and nine-month periods ended September 30, 2014. Research and development expense for the three-month and nine-month periods of 2015 includes stock-based compensation expense of $5,340 and $15,972, respectively, while the comparable periods of 2014 include stock-based compensation expense of $7,404 and $24,420, respectively (see discussion under “Stock-Based Compensation Expense” below). Our research and development expenses can fluctuate considerably on a period-to-period basis, depending on our need for vaccine manufacturing by third parties, the timing of expenditures related to our grants from the NIH, the timing of costs associated with clinical trials being funding directly by us, and other factors.

 

We cannot predict the level of support we may receive from the HVTN, NIH, or other federal agencies (or divisions thereof) for our future research and development efforts. We expect that our research and development costs will increase in the future as we progress into the later stage human clinical trials for our HIV vaccines and as we expand our Ebola and Marburg vaccine development program.

 

Our vaccine candidates still require significant, time-consuming and costly research and development, testing and regulatory clearances. Completion of clinical development will take several years or more, but the length of time generally varies substantially according to the type, complexity, novelty and intended use of a product candidate. The NIH has funded the costs of conducting all of our human clinical trials to date for our preventive HIV vaccine, with GeoVax incurring costs associated with manufacturing the clinical vaccine supplies and other study support. We are having discussions with the HVTN and NIH with regard to the conduct of an additional trial of our preventive vaccine, and we expect the NIH will provide support for this trial as well. We intend to seek government and/or third party support for future clinical human trials and for production of our vaccine product for use in clinical trials, but there can be no assurance that we will be successful.

 

The duration and the cost of future clinical trials may vary significantly over the life of the project as a result of differences arising during development of the human clinical trial protocols, including, among others:

 

the number of patients that ultimately participate in the clinical trial;

 

the duration of patient follow-up that seems appropriate in view of the results;

 

the number of clinical sites included in the clinical trials; and

 

the length of time required to enroll suitable patient subjects.

   

 
11

 

 

Due to the uncertainty regarding the timing and regulatory approval of clinical trials and pre-clinical studies, our future expenditures are likely to be highly volatile in future periods depending on the outcomes of the trials and studies. From time to time, we will make determinations as to how much funding to direct to these programs in response to their scientific, clinical and regulatory success, anticipated market opportunity and the availability of capital to fund our programs.

 

In developing our product candidates, we are subject to a number of risks that are inherent in the development of products based on innovative technologies. For example, it is possible that our vaccines may be ineffective or toxic, or will otherwise fail to receive the necessary regulatory clearances, causing us to delay, extend or terminate our product development efforts. Any failure by us to obtain, or any delay in obtaining, regulatory approvals could cause our research and development expenditures to increase which, in turn, could have a material adverse effect on our results of operations and cash flows. Because of the uncertainties of clinical trials, estimating the completion dates or cost to complete our research and development programs is highly speculative and subjective. As a result of these factors, we are unable to accurately estimate the nature, timing and future costs necessary to complete the development of our product candidates. In addition, we are unable to reasonably estimate the period when material net cash inflows could commence from the sale, licensing or commercialization of such product candidates, if ever.

 

General and Administrative Expense

 

During the three-month and nine-month periods ended September 30, 2015, we incurred general and administrative costs of $335,932 and $1,102,262, respectively, as compared to $411,814and $1,128,478, respectively, during the comparable periods in 2014. General and administrative costs include officers’ salaries, legal and accounting costs, patent costs, amortization expense associated with intangible assets, and other general corporate expenses. General and administrative expense for the three-month and nine-month periods of 2015 include stock-based compensation expense of $11,586 and $34,544, respectively; while the comparable periods of 2014 include stock-based compensation expense of $106,880 and $141,218, respectively (see discussion under “Stock-Based Compensation Expense” below). We expect that our general and administrative costs may increase in the future in support of expanded research and development activities and other general corporate activities.

 

Stock-Based Compensation Expense

 

We recorded stock-based compensation expense of $16,926 and $50,516 during the three-month and nine-month periods ended September 30, 2015, respectively, as compared to $114,284 and $165,638, respectively, during the comparable periods of 2014. We allocate stock-based compensation expense to research and development expense or general and administrative expense according to the classification of cash compensation paid to the employee, consultant or director to whom the stock compensation was granted. For the three-month and nine-month periods ended September 30, 2015 and 2014, stock-based compensation expense was allocated as follows:

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 

Expense Allocated to:

 

2015

   

2014

   

2015

   

2014

 

General and Administrative Expense

  $ 11,586     $ 106,880     $ 34,544     $ 141,218  

Research and Development Expense

    5,340       7,404       15,972       24,420  

Total Stock-Based Compensation Expense

  $ 16,926     $ 114,284     $ 50,516     $ 165,638  

 

Other Income

 

Interest income for the three-month and nine-month periods ended September 30, 2015 was $1,424 and $4,481, respectively, as compared to $711 and $3,201, respectively, for comparable periods of 2014. The variances between periods are primarily attributable to cash available for investment and interest rate fluctuations.

 

Item 3      Quantitative and Qualitative Disclosures About Market Risk

 

Our exposure to market risk is limited primarily to interest income sensitivity, which is affected by changes in the general level of United States interest rates, particularly because a significant portion of our investments are in institutional money market funds. The primary objective of our investment activities is to preserve principal while at the same time maximizing the income received without significantly increasing risk. Due to the nature of our short-term investments, we believe that we are not subject to any material market risk exposure.  

 

 
12

 

   

Item 4      Controls and Procedures

 

Evaluation of disclosure controls and procedures

 

Disclosure controls and procedures are controls and other procedures that are designed to ensure that the information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended (Exchange Act), is (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to management, including the Chief Executive Officer and Principal Financial and Accounting Officer, as appropriate to allow timely decisions regarding required disclosure.

 

Our management has carried out an evaluation, under the supervision and with the participation of our Principal Executive Officer and our Principal Financial and Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15 as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

 

Changes in internal control over financial reporting

 

There was no change in our internal control over financial reporting that occurred during the three months ended September 30, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

 

PART II -- OTHER INFORMATION

 

Item 1      Legal Proceedings

 

None.

 

Item 1A   Risk Factors

 

For information regarding factors that could affect the our results of operations, financial condition or liquidity, see the risk factors discussed under “Risk Factors” in Item 1A of our most recent Annual Report on Form 10-K. See also “Forward-Looking Statements,” included in Item 2 of this Quarterly Report on Form 10-Q. There have been no material changes from the risk factors previously disclosed in our most recent Annual Report on Form 10-K.

 

Item 2      Unregistered Sales of Equity Securities and Use of Proceeds

 

None not previously disclosed on Form 8-K.

 

Item 3      Defaults Upon Senior Securities

 

None.

 

Item 4      Mine Safety Disclosures

 

Not applicable

 

Item 5      Other Information

 

During the period covered by this report, there was no information required to be disclosed by us in a Current Report on Form 8-K that was not so reported, nor were there any material changes to the procedures by which our security holders may recommend nominees to our board of directors.

 

Item 6      Exhibits

 

The exhibits filed with this report are set forth on the exhibit index following the signature page and are incorporated by reference in their entirety into this item.

 

 
13

 

 

SIGNATURES

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this quarterly report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

GEOVAX LABS, INC.

 

    (Registrant)  
       

 

 

 

 

Date:     November 12, 2015

By:

/s/ Mark W. Reynolds

 

 

 

Mark W. Reynolds

 

 

 

Chief Financial Officer

 

    (duly authorized officer and principal financial officer)  

 

 
14

 

 

EXHIBIT INDEX

   

 

Exhibit

Number   

Description
   

3.1

Certificate of Incorporation (1)

3.1.1

Certificate of Amendment to the Certificate of Incorporation of GeoVax Labs, Inc. filed April 13, 2010 (2)

3.1.2

Certificate of Amendment to the Certificate of Incorporation of GeoVax Labs, Inc. filed April 27, 2010 (3)

3.1.3

Certificate of Amendment to the Certificate of Incorporation of GeoVax Labs, Inc. filed August 2, 2013 (4)

3.1.4

Certificate of Amendment to the Certificate of Incorporation of GeoVax Labs, Inc. filed May 13, 2015 (7)

3.2

Bylaws (1)

4.2.1

Form of Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock filed December 13, 2013 (5)

4.2.2

Form of Stock Certificate for the Series B Convertible Preferred Stock (5)

4.3.1

Form of Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock filed February 27, 2015 (6)

4.3.2

Form of Stock Certificate for the Series C Convertible Preferred Stock (6)

10.1

Form of Securities Purchase Agreement dated February 25, 2015 (6)

10.2

Form of Registration Rights Agreement dated February 25, 2015 (6)

10.3

Form of Series D Warrant dated February 27, 2015 (6)

10.4

Form of Series E Warrant dated February 27, 2015 (6)

10.5

Form of Series F Warrant dated February 27, 2015 (6)

10.6

Form of Maxim warrant dated February 27, 2015 (6)

10.7*,**

Employment Agreement between GeoVax, Inc. and Farshad Guirakhoo dated October 19, 2015

31.1*

Certification pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934

31.2*

Certification pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934

32.1*

Certification pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002

32.2*

Certification pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002

101***

The following financial information from GeoVax Labs, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, formatted in Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets as of September 30, 2015 (unaudited) and December 31, 2014, (ii) Condensed Consolidated Statements of Operations (unaudited) for the three-month and nine-month periods ended September 30, 2015 and 2014, (iii) Condensed Consolidated Statements of Cash Flows (unaudited) for the nine-month periods ended September 30, 2015 and 2014, and (iv) Notes to Condensed Consolidated Financial Statements (unaudited).

 

_____________________         

* Filed herewith.
** Indicates a management contract or compensatory arrangement.

***

Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files in Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended and otherwise are not subject to liability under those sections.

 

(1)

Incorporated by reference from the registrant’s Current Report on Form 8-K filed on June 23, 2008.

(2)

Incorporated by reference from the registrant’s Current Report on Form 8-K filed April 14, 2010.

(3)

Incorporated by reference from the registrant’s Current Report on Form 8-K filed April 28, 2010.

(4)

Incorporated by reference from the registrant’s Current Report on Form 8-K filed August 2, 2013.

(5)

Incorporated by reference from the registrant’s Current Report on Form 8-K filed December 17, 2013.

(6)

Incorporated by reference from the registrant’s Current Report on Form 8-K filed March 2, 2015.

(7)

Incorporated by reference from the registrant’s Current Report on Form 8-K filed May 14, 2015.

 

 

15

Exhibit 10.7

 

Employment Agreement

Between

GeoVax, Inc. and Farshad Guirakhoo , Ph.D.

 

 

This EMPLOYMENT AGREEMENT (the "Agreement") by and between GeoVax , Inc. , a Georgia Corporation ("Company"), and Farshad Guirakhoo ("Employee"; and with the Company, collectively, the "Parties"), is entered into and effective as of October 19, 2015 (the "Effective Date”).

 

Employee will serve as Senior Vice Presid e n t, Research and Development of the Company. The Company and Employee desire that Employee be employed by the Company in the above capacity under the terms of this Agreement. Therefore, in consideration of the mutual covenants and agreements set forth herein, it is agreed:

 

1 .

Employment; Duties . Employee is hereby employed by the Company under the terms of this Agreement, and Employee accepts such employment. Employee shall serve in the capacity as defined above and shall perform the following duties (“Employees Duties”): such duties as are customary for someone in that position and duties that may be reasonably assigned from time to time by the Chief Scientific Officer and in the absence of the CSO , the President and CEO. Primary duties include but are not limited to: contributing to the commercialization of the Company’s HIV and Ebola vaccines currently undergoing development; leading the evaluation and expansion of the Company’s product focus to other infectious diseases, oncology, or another related field; competing for grants (both as a PI and as a collaborator); working as an active member of the Company’s executive team to establish research objectives, conceptualization and implementation programs for the development of vaccines to fulfill corporate objectives, evaluation new business opportunities, and assisting with raising of private equity funds.

 

2.

Term of Agreement . The term of Employee’s employment under this Agreement commences on October 19, 2015 and shall end upon the termination of Employee’s employment with the Company as provided herein. The Company may terminate this Agreement upon at least 30 days prior written notice to Employee, and such termination shall be effective on the termination date described in such notice (or such earlier time as the Company and Employee may agree). Notwithstanding the foregoing, the termination of this Agreement shall not terminate the Company’s obligation to make any payments to Employee for services performed and expenses incurred prior to the date of such termination, or as set forth below; and shall not terminate Employee’s obligations under Section 14, 15 and 16 below.

 

3.

Base Salary. The Company shall pay Employee a base salary of $250,000 annually, payable in accordance with the Company’s standard payroll policy (currently semi-monthly), with annual reviews. Performance and salary reviews are at the discretion of the President/CEO and/or Board of Directors (BOD).

 

4.

Performance Reviews . Performance reviews will be conducted at least annually by the President/CEO or designee.

 

5.

Annual Bonus Potential . An annual fiscal year bonus will be considered and recommended, if appropriate, by the supervisor and President/CEO and must be BOD approved. The actual amount shall be at the discretion of the President/BOD based on Employee’s and the Company’s performance and achievement.

 

6 .

Special Signing Bonus . In exchange for expeditious acceptance of the offer of employment, the Company agrees to pay a special signing bonus of $10,000 to Employee. This amount will be added to Employee’s gross pay upon the first payroll date.

 

7 .

Equity Stock Incentive . The Company shall grant Employee a total of 40,000 stock options to be awarded on the effective date of this Agreement. These options will allow employee the right to purchase shares of the Company’s common stock at an exercise price per share equal to the closing market price of the Company’s common stock on the effective date of this Agreement. The options will have a life of ten years and will vest over a three year period from the date of grant. Additional option grants are performance based and at the discretion of the President/CEO based on Employee’s and the Company’s performance and achievement. Employee shall be eligible for an additional grant of stock options during the Company’s normal cycle in December 2015, with an amount as determined by the Compensation Committee of the BOD (minimum of 20,000 shares) and with an exercise price per share equal to the closing market price of the Company’s common stock on the effective date of the grant.

   

 
1

 

 

8 .

Moving Expenses . N/A

 

9 .

Temporary Living Expense . The Company recognizes Employee’s desire to defer a permanent relocation of his family to Atlanta. A monthly “nonaccountable” expense allowance of $1,500 will be provided to Employee (paid through payroll), as an offset for Employee’s temporary living expenses in Atlanta and any travel costs to/from Employee’s home in Boston. This arrangement will be reviewed again within 12 months from Employee’s start date.

 

10 .

Other Business Expenses . N/A

 

1 1 .

Benefits . Employee will be entitled to the following benefits in line with the company’s ongoing benefits program administered through a Professional Employer Organization (Insperity) or other company selected benefits administrator. Benefit details are provided in an information packet available from the Company.

 

 

a.

Life Insurance Benefits : As provided by Insperity.

 

 

b.

Long-Term Disability Insurance : As provided by Insperity.

 

 

c.

Medical & Dental Insurance : As provided by Insperity

 

 

d.

Vacation : Four (4) weeks paid vacation, accrued on a prorated basis, and subject to the Company’s paid-time-off policy as documented in the Employee Handbook

 

 

e.

Holidays : Nine (9) paid holidays.

 

 

f.

Retirement Plan : a Company 401(k) Retirement Plan, administered by Insperity, that allows Employee to contribute up to 15% of salary on a pre-tax basis up to a maximum as prescribed under federal law. Employer matching and/or profit contribution will be at the discretion of the Company. Employees are eligible after six months full time employment. See current plan for details.

 

1 2 .

Termination Provision---Non Voluntary

 

 

a.

With C ause . If Employee is terminated with cause, Employee’s employment, compensation and benefits will terminate immediately (unless otherwise provided by law), and Employee shall not receive any severance payments.

 

 

 

 

b.

Without C ause . If Employee is terminated without cause, Employee must be given 30 days notice, and his salary will continue to be paid for 1 week for each full year of service.

 

1 3 .

Termination Provision---Voluntary . Employee may voluntarily terminate his employment on 60 day written notice to the Company, and Employee’s employment, compensation and benefits will terminate on the effective date of termination (unless otherwise provided by law), and Employee shall not receive any severance payments.

 

1 4 .

Record Keeping and Payment . Employee shall keep and file with the Company an expense report for all business expenses for which Employee seeks reimbursement, and Employee shall be reimbursed for such documented business expenses within thirty (30) days of submitting a request for reimbursement.

   

 
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1 5 .

Restrictive Covenants. Employee acknowledges that the restrictions contained herein are reasonable and necessary to protect the legitimate business interests of the Company, and will not impair or infringe upon his right to work or earn a living after his employment with the Company ends. The restrictions imposed herein shall apply during Employee’s employment with the Company and, except for the longer period specified below for the protection of Trade Secrets , thereafter for a period of two (2) years after the termination of employment for any reason (the “ Restricted Period”).

 

 

a.

Trade Secrets and Confidential Information . Employee represents and warrants that: (i) he is not subject to any agreement that would prevent him from performing Employee’s Duties for the Company or otherwise complying with this Agreement, and (ii) he is not subject to or in breach of any non-disclosure agreement, including any agreement concerning trade secrets or confidential information owned by any other party.

     
    Employee agrees that he will not: (i) use, disclose, or reverse engineer the Trade Secrets or the Confidential Information (as defined below), except as authorized by the Company; (ii) or during his employment with the Company, use, disclose, or reverse engineer (a) any confidential information or trade secrets of any former employer or third party, or (b) any works of authorship developed in whole or in part by him during any former employment or for any other party, unless authorized in writing by the former employer or third party; or (iii) upon his resignation or termination (a) retain Trade Secrets or Confidential Information , including any copies existing in any form (including electronic form), which are in his possession or control, or (b) destroy, delete, or alter the Trade Secrets or Confidential Information without the Company’s consent. Notwithstanding the above, such information may be disclosed to authorized representatives of the US government in federal grant applications and to third parties in connection with licensing, financing and other commercial agreements, in each case to the extent the failure to provide such information would materially prejudice the Company’s ability to secure the grant or enter into the desired commercial relationship, and provided that in each case Employee uses his best efforts to cause the person(s) receiving such information to protect its confidentiality and limit its use, including securing a written confidentiality agreement where possible.
     
    The obligations under this subsection 15.a shall: (i) with regard to the Trade Secrets , remain in effect as long as the information constitutes a trade secret under applicable law, and (ii) with regard to the Confidential Information , remain in effect during the Restricted Period.

 

 

b .

Confidential Information ” means information of the Company, to the extent not considered a Trade Secret under applicable law, that (i) relates to the business of the Company, (ii) possesses an element of value to the Company, (iii) is not generally known to the Company’s competitors, and (iv) would damage the Company if disclosed. Confidential Information includes, but is not limited to, (i) future business plans, (ii) the composition, description, schematic or design of products, future products or equipment of the Company, (iii) communication systems, audio systems, system designs and related documentation, (iv) advertising or marketing plans, (v) information regarding independent contractors, employees, clients and customers of the Company, and (vi) information concerning the Company’s financial structure and methods and procedures of operation. Confidential Information shall not include any information that (i) is or becomes generally available to the public other than as a result of an unauthorized disclosure, (ii) has been independently developed and disclosed by others without violating this Agreement or the legal rights of any party, or (iii) otherwise enters the public domain through lawful means.

 

 

c.

Trade Secrets means information of the Company, and its licensors, suppliers, clients and customers, without regard to form, including, but not limited to, technical or non-technical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans, or a list of actual or potential customers or suppliers which is not commonly known by or available to the public and which information (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

   

 
3

 

 

 

d.

Non- Solicitation of Customers and Business Partners . During the Restricted Period, Employee will not solicit any customer of the Company, or any for-profit or not-for-profit enterprise in a commercial or research relationship with the Company, on his own behalf or on behalf of any other person or entity, for the purpose of providing any goods or services competitive with the business of the Company as described in the Company’s Business Plan or thereafter (the “Business”), or for the purpose of diverting the benefits of any such relationship away from the Company. The restrictions set forth in this Section apply only to the customers and enterprises with whom Employee had interaction (i) in an effort to establish, maintain, and/or further a business relationship on behalf of the Company, and (ii) which occurs during the last year of Employee’s employment with the Company (or during his employment if employed less than a year).

 

 

e.

Non-Recruitment of Employees. During the Restricted Period, Employee will not, directly or indirectly, solicit, recruit or induce any employee of the Company or any affiliate of the Company either to terminate his or her employment relationship with the Company, or work for any other person or entity engaged in a business like the Business.

 

1 6 .

Work Product . Employee’s Duties may include creation of inventions in areas directly or indirectly related to the business of the Company or to a line of business that the Company may reasonably be interested in pursuing. All Work Product (as defined below) shall constitute work made for hire. If (i) any of the Work Product may not be considered work made for hire, or (ii) ownership of all right, title, and interest to the legal rights in and to the Work Product will not vest exclusively in the Company, then, without further consideration, Employee assigns all presently-existing Work Product to the Company, and agrees to assign, and automatically assigns, all future Work Product to the Company.

 

The Company will have the right to obtain and hold in its own name copyrights, patents, design registrations, proprietary database rights, trademarks, rights of publicity, and any other protection available in the Work Product. At the Company's request, Employee will perform, during or after his employment with the Company, any acts to transfer, perfect and defend the Company's ownership of the Work Product, including, but not limited to: (i) executing all documents (including a formal assignment to the Company) necessary for filing an application or registration for protection of the Work Product (an "Application"), (ii) explaining the nature of the Work Product to persons designated by the Company, (iii) reviewing Applications and other related papers, or (iv) providing any other assistance reasonably required for the orderly prosecution of Applications. Employee will provide the Company with a written description of any Work Product in which he is involved (solely or jointly with others) and the circumstances surrounding the creation of such Work Product.

 

" Work Product" means (a) any data, databases, materials, documentation, computer programs, inventions (whether or not patentable), designs, and/or works of authorship, including but not limited to, discoveries, ideas, concepts, properties, formulas, compositions, methods, programs, procedures, systems, techniques, products, improvements, innovations, writings, pictures, and artistic works, and (b) any subject matter protected under patent, copyright, proprietary database, trademark, trade secret, rights of publicity, confidential information, or other property rights, including all worldwide rights therein, that is or was conceived, created or developed in whole or in part by Employee while employed by the Company and that either (i) is created within the scope of his employment, (ii) is based on, results from, or is suggested by any work performed within the scope of his employment, (iii) is directly or indirectly related to the business of the Company or a line of business that the Company may reasonably be interested in pursuing, (iv) has been or will be paid for by the Company, or (iv) was created or improved in whole or in part by using the Company's time, resources, data, facilities, or equipment.

 

1 7.

Arbitration .

 

 

a.

Any controversy, claim or dispute arising from, out of or relating to this Agreement, or any breach thereof, including but not limited to any dispute concerning the scope of this arbitration clause, claims based in tort or contract, claims for discrimination under federal, state or local law, and/ or claims for violation of any federal, state or local law (any such controversy, claim or dispute being referred to herein as a “Claim”) shall be resolved in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association then in effect. Such arbitration shall take place in Atlanta, Georgia. The arbitrator’s award shall be final and binding upon both parties.

   

 
4

 

 

 

b.

A demand for arbitration shall be made within a reasonable time after the Claim has arisen. In no event shall the demand for arbitration be made after the date when an institution of legal and/or equitable proceedings based on such Claim would be barred by the applicable statute of limitations. Each party to the arbitration will be entitled to be represented by counsel and shall have the right to subpoena witnesses and documents for the arbitration hearing. The arbitrator shall be experienced in employment arbitration and licensed to practice law in the state of Georgia. The arbitrator shall have the authority to hear and grant a motion to dismiss and/ or motion for summary judgment, applying the standards governing such motions under the Federal Rules of Civil Procedure.

 

 

c .

Except as otherwise awarded by the arbitrator, each party shall pay the fees of its respective attorneys, the expenses of its witnesses and any other expenses connected with presenting its Claim or defense. To the extent permitted by law, the prevailing party shall be entitled to receive, in addition to all other relief, payment of all expenses of litigation and arbitration, including attorney’s fees.

 

 

d.

The parties indicate their acceptance of the foregoing arbitration requirement by initialing below:

 

 

 

 

 

 

For the Company

 

Employee

                                                                                                            

 

18.

Miscellaneous . This Agreement constitutes the entire agreement between the Parties concerning the subject matter of this Agreement. This Agreement supersedes any prior communications, agreements or understandings, whether oral or written, between the Parties relating to the subject matter of this Agreement. This Agreement may not be amended or modified except in writing signed by both Parties. This Agreement shall be assignable to, and shall inure to the benefit of, the Company's successors and assigns, including, without limitation, successors through merger, consolidation, or sale of a majority of the Company's assets. Employee shall not have the right to assign Employee’s rights or obligations under this Agreement, except as permitted under the laws of descent and distribution. The laws of the State of Georgia shall govern this Agreement.

 

 

The Parties hereto have executed this Agreement as of the day and year first written below.

 

GEOVAX, INC.

 

 

By: 

 

 

Date:

 

 

Robert T. McNally Ph. D. / President & CEO

 

 

 

 

 

EMPLOYEE

 

 

 By: 

 

 

 Date:

 

 

Farshad Guirakhoo, Ph.D.

 

 

 

 

 

5

Exhibit 31.1

 

CERTIFICATION

PURSUANT TO RULE 13a-14(a) or 15d-14(a)

OF THE

SECURITIES EXCHANGE ACT OF 1934

 

I, Robert T. McNally, President and Chief Executive Officer of GeoVax Labs, Inc. certify that:

 

 

(1)

I have reviewed this quarterly report on Form 10-Q of GeoVax Labs, Inc.;

 

 

(2)

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

 

(3)

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

 

(4)

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b.

Designed such internal control over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c.

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d.

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

 

(5)

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

a.

All significant deficiencies or material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b.

A ny fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Dated: November 12, 2015 

 

/s/ Robert T. McNally

 

 

 

Robert T. McNally

 

 

 

President & Chief Executive Officer

 

                        

 

 

1

Exhibit 31.2

 

CERTIFICATION

PURSUANT TO RULE 13a-14(a) or 15d-14(a)

OF THE

SECURITIES EXCHANGE ACT OF 1934

 

I, Mark W. Reynolds, Chief Financial Officer of GeoVax Labs, Inc. certify that:

 

 

(1)

I have reviewed this quarterly report on Form 10-Q of GeoVax Labs, Inc.;

 

 

(2)

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

 

(3)

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

 

(4)

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b.

Designed such internal control over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c.

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d.

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

 

(5)

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

a.

All significant deficiencies or material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b.

A ny fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Dated: November 12, 2015

 

/s/ Mark W. Reynolds

 

 

 

Mark W. Reynolds

 

 

 

Chief Financial Officer

 

                       

 

 

1

Exhibit 32.1

 

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the quarterly report of GeoVax Labs, Inc. (the "Company") on Form 10-Q for the three months ended September 30, 2015, I, Robert T. McNally, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002, that to the best of my knowledge:

 

1. The quarterly report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

 

2. The information contained in the quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

Dated: November 12, 2015

 

/s/ Robert T. McNally

 

 

 

Robert T. McNally

 

 

 

President & Chief Executive Officer

 

 

 

 

1

Exhibit 32.2

 

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the quarterly report of GeoVax Labs, Inc. (the "Company") on Form 10-Q for the three months ended September 30, 2015, I, Mark W. Reynolds, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002, that to the best of my knowledge:

 

1. The quarterly report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

 

2. The information contained in the annual report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

Dated: November 12, 2015 

 

/s/ Mark W. Reynolds

 

 

 

Mark W. Reynolds

 

 

 

Chief Financial Officer

 

 

 

 

1