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 June 30, 2016

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 website, 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 August 4, 2016, 43,715,401 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 June 30, 2016 (unaudited) and December 31, 2015

  1

 

Condensed Consolidated Statements of Operations for the three month and six month periods ended June 30, 2016 and 2015 (unaudited)     2

 

Condensed Consolidated Statements of Cash Flows for the six month periods ended June 30, 2016 and 2015 (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

12

     

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

 

 

   

June 30,

   

December 31,

 
   

2016

   

2015

 
    (unaudited)          

ASSETS

 

 

         

Current assets:

               

Cash and cash equivalents

  $ 215,130     $ 1,060,348  

Grant funds receivable

    -       119,978  

Prepaid expenses and other current assets

    43,695       56,649  
                 

Total current assets

    258,825       1,236,975  
                 

Property and equipment, net

    69,218       83,608  

Deposits

    11,010       11,010  
                 

Total assets

  $ 339,053     $ 1,331,593  
                 
                 

LIABILITIES AND STOCKHOLDERS’ EQUITY

               

Current liabilities:

               

Accounts payable

  $ 39,074     $ 100,935  

Accrued expenses (Note 6)

    90,245       4,055  

Amounts due to related party (Note 11)

    50,876       22,000  
                 

Total current liabilities

    180,195       126,990  
                 

Commitments (Note 7)

               
                 

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 June 30, 2016 and December 31, 2015

    76,095       76,095  

Series C convertible preferred stock, $1,000 stated value; 2,868 and 3,000 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively

    940,705       983,941  

Common stock, $.001 par value:

               

Authorized shares – 300,000,000 and 150,000,000 at June 30, 2016 and December 31, 2015, respectively

               

Issued and outstanding shares – 38,415,401 and 31,950,813 at June 30, 2016 and December 31, 2015, respectively

    38,415       31,951  

Additional paid-in capital

    33,450,684       32,587,543  

Accumulated deficit

    (34,347,041 )     (32,474,927 )
                 

Total stockholders’ equity

    158,858       1,204,603  
                 

Total liabilities and stockholders’ equity

  $ 339,053     $ 1,331,593  

 

 

See accompanying notes to condensed consolidated financial statements.

 

 
1

 

 

GEOVAX LABS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

   

Three Months Ended June 30,

   

Six Months Ended June 30,

 
   

2016

   

2015

   

2016

   

2015

 

Grant revenue

  $ 166,280     $ 71,474     $ 213,880     $ 174,898  
                                 

Operating expenses:

                               

Research and development

    397,576       384,653       835,580       788,282  

General and administrative

    344,818       364,889       1,251,323       766,330  

Total operating expenses

    742,394       749,542       2,086,903       1,554,612  
                                 

Loss from operations

    (576,114 )     (678,068 )     (1,873,023 )     (1,379,714 )
                                 

Other income:

                               

Interest income

    279       1,865       909       3,057  
                                 

Net loss

  $ (575,835 )   $ (676,203 )   $ (1,872,114 )   $ (1,376,657 )
                                 

Basic and diluted:

                               

Loss per common share

  $ (0.02 )   $ (0.02 )   $ (0.05 )   $ (0.04 )

Weighted averages shares outstanding

    37,425,291       31,950,813       36,012,458       31,950,813  

 

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

 
2

 

   

GEOVAX LABS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

   

Six Months Ended June 30,

 
   

2016

   

2015

 

Cash flows from operating activities:

               

Net loss

  $ (1,872,114 )   $ (1,376,657 )

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

               

Depreciation and amortization

    14,390       14,467  

Stock-based compensation expense

    497,171       33,590  

Changes in assets and liabilities:

               

Grant funds receivable

    119,978       40,041  

Prepaid expenses and other current assets

    12,954       4,609  

Accounts payable and accrued expenses

    53,205       (5,934 )

Total adjustments

    697,698       86,773  

Net cash used in operating activities

    (1,174,416 )     (1,289,884 )
                 

Cash flows from investing activities:

               

Purchase of property and equipment

    -       (15,850 )

Net cash used in investing activities

    -       (15,850 )
                 

Cash flows from financing activities:

               

Net proceeds from sale of preferred stock

    -       2,679,809  

Net proceeds from sale of common stock

    329,198       -  

Net cash provided by financing activities

    329,198       2,679,809  
                 

Net increase (decrease) in cash and cash equivalents

    (845,218 )     1,374,075  

Cash and cash equivalents at beginning of period

    1,060,348       1,101,651  
                 

Cash and cash equivalents at end of period

  $ 215,130     $ 2,475,726  

 

 

Supplemental disclosure of cash flow information:

During the six months ended June 30, 2016, 132 shares of Series C Convertible Preferred Stock were converted into 1,400,000 shares of common stock (Note 8).

 

 

See accompanying notes to condensed consolidated financial statements.

 

 
3

 

 

GEOVAX LABS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30 , 20 16

(unaudited)

 

 

1.           Description of Business

 

GeoVax Labs, Inc. (“GeoVax” or the “Company”), is a clinical-stage biotechnology company developing human vaccines using our novel vaccine platform. Our vaccine delivery technology generates virus-like particles (VLPs) that are effective at eliciting safe and effective immune responses. Our current development programs are focused on vaccines against Human Immunodeficiency Virus (HIV), hemorrhagic fever viruses (Ebola-Zaire, Ebola-Sudan, Marburg, and Lassa) and Zika virus. We also recently began programs to evaluate our technology for use in cancer immunotherapy and as a therapeutic for chronic Hepatitis B infections. We believe our technology and vaccine development expertise are well-suited for a variety of human infectious diseases and we intend to pursue further expansion of our product pipeline. Our HIV vaccine technology was developed in collaboration with Emory University, the National Institutes of Health (NIH), and the Centers for Disease Control and Prevention (CDC) and is exclusively licensed to us.

 

Our vaccine development activities have been, and continue to be, financially supported by the U.S. government. This support has been both in the form of research grants awarded directly to us, as well as indirect support for the conduct of preclinical animal studies and human clinical trials.

 

We operate in a highly regulated and competitive environment. The manufacturing and marketing of pharmaceutical products require approval from, and are subject to, ongoing oversight by the Food and Drug Administration (FDA) in the United States, by the European Medicines Agency (EMA) in the European Union, and by comparable agencies in other countries. Obtaining approval for a new pharmaceutical product is never certain and may take many years and may involve expenditure of substantial resources. Our goal is to build a profitable company by generating income from products we develop and commercialize, either alone or with one or more potential strategic partners.

 

GeoVax is incorporated under the laws of the State of Delaware and our principal offices are located in Smyrna, Georgia (metropolitan Atlanta area).

 

2.           Basis of Presentation

 

The accompanying condensed consolidated financial statements at June 30, 2016 and for the three month and six month periods ended June 30, 2016 and 2015 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 consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015. 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 these activities.

 

We believe that our existing cash resources and grant commitments will be sufficient to fund our planned operations into the fourth quarter of 2016 (see Note 12 for additional information related to this belief). 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. We also intend to secure additional funds through sales of our equity securities or the exercise of currently outstanding stock purchase warrants. Management believes that we will be successful in securing the additional capital required to continue the Company’s planned operations, but that our plans do not fully alleviate the substantial doubt about the Company’s ability to operate as a going concern. Additional funding may not be available on favorable terms or at all. If we fail to obtain additional capital when needed, we will 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.

 

 
4

 

 

3.          Significant Accounting Policies and Recent Accounting Pronouncements

 

We disclosed in Note 2 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015 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 March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which amends Accounting Standards Codification Topic 718, Compensation – Stock Compensation. ASU 2016-09 is an attempt to simplify several aspects of the accounting for stock-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for the Company beginning in 2017 and allows for early adoption. We are currently evaluating the impact of the adoption of ASU 2016-09 on our financial statements.

 

There have been no other recent accounting pronouncements or changes in accounting pronouncements during the six months ended June 30, 2016, as compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which we expect to have a material impact on our financial statements.

 

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 83.8 million and 79.0 million shares at June 30, 2016 and 2015, respectively.

 

5.           Property and Equipment

 

Property and equipment as shown on the accompanying Condensed Consolidated Balance Sheets is composed of the following as of June 30, 2016 and December 31, 2015:

 

   

June 30,

2016

   

December 31,

2015

 

Laboratory equipment

  $ 525,956     $ 525,956  

Leasehold improvements

    115,605       115,605  

Other furniture, fixtures & equipment

    28,685       28,685  

Total property and equipment

    670,246       670,246  

Accumulated depreciation and amortization

    (601,028 )     (586,638 )

Property and equipment, net

  $ 69,218     $ 83,608  

 

6.           Accrued Expenses

 

Accrued expenses as shown on the accompanying Condensed Consolidated Balance Sheets is composed of the following as of June 30, 2016 and December 31, 2015:

 

   

June 30,

2016

   

December 31,

2015

 

Accrued salaries

  $ 50,032     $ 1,305  

Accrued directors’ fees

    40,213       -  

Other

    -       2,750  

Total accrued expenses

  $ 90,245     $ 4,055  

 

7.           Commitments

 

Lease Agreement

 

We lease approximately 8,400 square feet of office and laboratory space located in Smyrna, Georgia (metropolitan Atlanta), pursuant to an operating lease which expires on December 31, 2016, with an additional 12-month renewal option. As of June 30, 2016, our future minimum lease payments for the current lease term (not including the renewal period) total $74,521 for the remainder of 2016.

 

 

 
5

 

 

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 June 30, 2016, we had approximately $543,000 of unrecorded outstanding purchase commitments to our vendors and subcontractors, all of which we expect will be due during the remainder of 2016 and the first half of 2017. We expect this entire amount to be reimbursable to us pursuant to currently outstanding government grants (See Note 10).

 

8.           Stockholders’ Equity

 

Preferred Stock Transactions

 

During January and February 2016 we issued an aggregate of 1,400,000 shares of our common stock related to conversions of 132 shares our Series C Convertible Preferred Stock. As of June 30, 2016, there are 100 shares of our Series B Convertible Preferred Stock outstanding, and 2,868 shares of our Series C Convertible Preferred Stock outstanding, convertible into 285,714 and 30,460,662 shares of our common stock, respectively.

 

Increase in Authorized Shares of Common Stock

 

At our annual meeting of stockholders held on June 14, 2016, our stockholders approved an amendment to our certificate of incorporation to increase our authorized shares of common stock from 150,000,000 shares to 300,000,000 shares. The amendment to our certificate of incorporation was filed with the Delaware Secretary of State on June 14, 2016.

 

Common Stock Transactions

 

In addition to the 1,400,000 shares of our common stock issued pursuant to the conversion of our Series C Convertible Preferred Stock discussed under “Preferred Stock Transactions” above, during the six months ended June 30, 2016, we issued an aggregate of 5,064,588 shares of common stock related to exercises of stock purchase warrants as discussed under “Stock Purchase Warrants” below.

 

Stock Options

 

In 2006 we adopted the GeoVax Labs, Inc. 2006 Equity Incentive Plan (the “2006 Plan”) and at our annual stockholders meeting on June 14, 2016, our stockholders approved the GeoVax Labs, Inc. 2016 Stock Incentive Plan (the “2016 Plan”) which provides the Board of Directors broad discretion in creating equity incentives for employees, officers, directors and consultants. We have reserved 1,722,529 shares of our common stock for issuances under the 2006 Plan, and 3,000,000 shares for issuance under the 2016 Plan. The 2016 Plan replaces the 2006 Plan, which expires September 28, 2016, and no further grants may be made under the 2006 Plan after that date. As such, the 2016 Plan will serve as the sole equity incentive compensation plan for the Company.

 

The following table presents a summary of our stock option transactions during the six months ended June 30, 2016:

 

   

 

Number of Shares

   

Weighted Average

Exercise Price

 

Outstanding at December 31, 2015

    1,705,500     $ 2.41  

Granted

    --       --  

Exercised

    --       --  

Forfeited or expired

    --       --  

Outstanding at June 30, 2016

    1,705,500     $ 2.41  

Exercisable at June 30, 2016

    918,061     $ 4.34  

 

Stock Purchase Warrants

 

The following table presents a summary of stock purchase warrant transactions during the six months ended June 30, 2016:

 

   

 

Number of Shares

   

Weighted Average

Exercise Price

 

Outstanding at December 31, 2015

    56,442,157     $ 0.14  

Granted

    --       --  

Exercised

    (5,064,588 )     0.065  

Forfeited or expired

    --       --  

Outstanding at June 30, 2016

    51,377,569     $ 0.14  

Exercisable at June 30, 2016

    39,775,491     $ 0.15  

 

 
6

 

 

On February 15, 2016, we entered into an agreement with certain warrant holders (the “Holders”) with respect to amending the terms of our Series E Warrants. Pursuant to the agreement, we agreed to extend the term of the Series E Warrants to August 27, 2016, and to the payment to each Holder of a warrant exercise fee of $0.02916 per share for each share purchased upon exercise of the Series E Warrants. The Holders agreed to promptly exercise an aggregate of 3,664,588 Series E Warrants, for which we received $238,198 in total net proceeds (after deduction of the warrant exercise fee). We recorded non-cash general and administrative expense of $469,799 associated with the warrant modifications. During May and June 2016, the warrant holders exercised warrants as to an additional 1,400,000 shares, for which we received total net proceeds of $91,000.

 

Stock-Based Compensation Expense

 

As described under “Stock Purchase Warrants” above, during the first quarter of 2016, we recorded $469,799 of stock-based compensation expense related to warrant modifications. During the three month and six month periods ended June 30, 2016, we recorded stock-based compensation expense related to stock options of $13,686 and $27,372, as compared to $16,903 and $33,590 for the three month and six month periods ended June 30, 2015, respectively. Stock-based compensation expense for 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 June 30, 2016, there was $67,972 of unrecognized compensation expense related to stock options, which we expect to recognize over a weighted average period of 1.8 years.

 

Common Stock Reserved

 

A summary of our common stock reserved for future issuance is as follows as of June 30, 2016:

 

Series B Convertible Preferred Stock

    285,714  

Series C Convertible Preferred Stock

    30,460,662  

Common Stock Purchase Warrants

    51,377,569  

Equity Incentive Plans

    4,722,529  

Total

    86,846,474  

 

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 will be subject to substantial annual limitations due to ownership change provisions of Section 382 of the Internal Revenue Code. The annual limitation will result in the expiration of net operating losses and credits before utilization.

 

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 six months ended June 30, 2016 and 2015 relate to grants from the NIH in support of our HIV vaccine development activities. As of June 30, 2016, there is an aggregate of $921,083 in approved grant funds available for use, which we anticipate recognizing as revenue during the remainder of 2016 and during the first half of 2017.

 

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 six month periods ended June 30, 2016, we recorded $15,876 and $73,877, respectively, of general and administrative expense associated with these patent cost reimbursements to Emory, as compared to $22,590 and $63,906, respectively, for the same periods in 2015.

 

12.         Subsequent Events

 

During July and August 2016 (through August 4), holders of certain of our stock purchase warrants exercised warrants as to 5,300,000 shares, for which we received aggregate net proceeds of $344,500.

 

In August 2016, the National Institute of Allergy and Infectious Diseases (NIAID) of the NIH awarded us a contract for the production of our preventive HIV vaccine for use in future clinical trials. The award includes a base contract of $199,442 for the initial twelve-month period beginning August 1, 2016 to support process development, as well as $7.6 million in additional development options that can be exercised by NIAID.

 

 
7

 

 

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, 2015, 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 HIV, hemorrhagic fever viruses (Ebola, Sudan, Marburg and Lassa), Zika virus, and cancer immunotherapy. We also recently began a program to develop a therapeutic vaccine for chronic Hepatitis B infections. 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 hemorrhagic fever and Zika vaccines, and our cancer immunotherapy program, are being developed with technology we expect to license 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, and we expect additional clinical trials for this program to be funded by the NIH. 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); this work is currently being supported by NIH grants.

 

Our hemorrhagic fever vaccine development effort began in 2014 and we are currently conducting preclinical animal studies through a collaboration with the NIH. Our cancer immunotherapy program began in late 2015 and we are currently constructing vaccines to be evaluated and tested in preclinical animal models. Our Zika virus vaccine development effort began in early 2016 and we are currently constructing vaccines to be evaluated and tested through collaborations with the University of Georgia and with the CDC.

 

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.

 

 
8

 

 

Our significant accounting policies are summarized in Note 2 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015. 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 Securities and Exchange Commission’s (SEC) 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 2016 and 2015, 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 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

 

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 will continue to require substantial funds to continue these activities. Our primary sources of cash are from sales of our equity securities and from government grant funding. We believe that our existing cash resources, combined with the proceeds from the NIH grants discussed below will be sufficient to fund our planned operations into the fourth 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.

 

At June 30, 2016, we had cash and cash equivalents of $215,130 and working capital of $78,630, as compared to $1,060,348 and $1,109,985, respectively, at December 31, 2015. As of June 30, 2016, we had an accumulated deficit of $34.3 million and we expect 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 $1,174,416 and $1,289,884 for the six month periods ended June 30, 2016 and 2015, respectively.

 

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 expect the NIH to fund the cost of another Phase 1 trial (HVTN 114) of our preventive HIV vaccine (GOVX-B11), which will investigate the effect of adding a “protein boost” component to our vaccine. The Investigational New Drug (IND) application for HVTN 114 was filed by NIAID on June 28, 2016, and we expect the trial to begin patient enrollment in November 2016. Concurrently, an ongoing preclinical study in non-human primates is evaluating two additional proteins specifically chosen as boosting agents for GOVX-B11, and planning is underway for a phase 1 trial to evaluate the safety and immunogenicity of these proteins in humans. Based on the results from these studies, we expect NIAID would then be ready to support a large phase 2b efficacy trial. In July 2016, NIAID awarded us a contract for the production of the DNA vaccine component of GOVX-B11, which is intended for use in advanced clinical trials.

 

 
9

 

 

Our operations have been partially funded by NIH research grants for our HIV program. As of June 30, 2016, there was $921,083 of unused grant funds available for use during the remainder of 2016 and the first half of 2017. We are pursuing additional grants from the federal government for our vaccine development programs but cannot be assured of success.

 

Net cash used in investing activities was $-0- and $15,850 for the six month periods ended June 30, 2016 and 2015, respectively.

 

Net cash provided by financing activities was $329,198 and $2,679,809 for the six month periods ended June 30, 2016 and 2015, respectively. The cash provided by financing activities for the six month period ended June 30, 2016 is related to exercises of stock purchase warrants. The cash provided by financing activities for the six month period ended June 30, 2015 is related to the sale of shares of our Series C convertible preferred stock in February 2015.

 

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 June 30, 2016, we had noncancellable lease obligations and other firm purchase obligations totaling approximately $618,000, as compared to approximately $149,000 at December 31, 2015. Approximately $543,000 of the purchase commitments at June 30, 2016 relate to subcontracts associated with our government grants, which we expect will be fully reimbursed to us pursuant to those grants. 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, 2015.

 

Results of Operations

 

Net Loss

 

We recorded a net loss of $575,835 for the three months ended June 30, 2016, as compared to $676,203 for the three months ended June 30, 2015. For the six months ended June 30, 2016, we recorded a net loss of $1,872,114, as compared to a net loss of $1,376,657 for the six months ended June 30, 2015. 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.

 

Grant Revenue

 

During the three and six month periods ended June 30, 2016, we recorded aggregate grant revenues of $166,280 and $213,880, respectively, as compared to $71,474 and $174,898, respectively, during the comparable periods of 2015. 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. No revenues were recorded for this grant during the three and six month periods ended June 30, 2016, as compared to $14,836 and $75,464, respectively, during the comparable periods of 2015. There are no unrecognized grant funds remaining and available for use pursuant to this grant as of June 30, 2016.

 

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. No revenues were recorded for this grant during the three and six month periods ended June 30, 2016, as compared to $56,638 and $99,434, respectively during the comparable periods of 2015. All funding pursuant to this grant has been utilized as of June 30, 2016.

 

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. We recorded grant revenues of $47,600 and $100,469 for the three month and six month periods ended June 30, 2016, respectively, related to this grant. No revenues related to this grant were recorded during the three or six month periods ended June 30, 2015. In June 2016, the NIH awarded us $294,038 for the second year of the project period, beginning July 1, 2016.

 

 
10

 

 

In April 2016, the NIH awarded us an SBIR grant entitled “Enhancing Protective Antibody Responses for a DNA/MVA HIV Vaccine.” The initial grant award was $740,456 for the first year of a two year project period beginning April 15, 2016, with a total budget of $1,398,615. We recorded grant revenues of $113,411 for the three month and six month periods ended June 30, 2016 related to this grant and there is approximately $627,045 in approved grant funds available as of June 30, 2016.

 

Research and Development

 

During the three month and six month periods ended June 30, 2016, we recorded $397,576 and $835,580, respectively, of research and development expense as compared to $384,653 and $788,282, respectively, during the three month and six month periods ended June 30, 2015. Research and development expense for the three month and six month periods of 2016 includes stock-based compensation expense of $5,894 and $11,787 respectively, while the comparable periods of 2015 include stock-based compensation expense of $5,316 and $10,632, 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 clinical trials. 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 other vaccine development programs.

 

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.

 

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.

 

 
11

 

 

General and Administrative Expense

 

During the three month and six month periods ended June 30, 2016, we incurred general and administrative costs of $344,818 and $1,251,323, respectively, as compared to $364,889 and $766,330, respectively, during the comparable periods in 2015. 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 six month periods of 2016 include stock-based compensation expense of $7,792 and $485,384, respectively; while the comparable periods of 2015 include stock-based compensation expense of $11,587 and $22,958, respectively (see discussion under “Stock-Based Compensation Expense” below). Excluding stock-based compensation expense, general and administrative expenses were $337,026 and $765,939 during the three month and six month periods ended June 30, 2016, respectively, as compared to $353,302 and $743,372, respectively during the comparable periods of 2015.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

 

For the three month and six month periods ended June 30, 2016 and 2015, the components of stock-based compensation expense were as follows:

 

   

Three Months Ended June 30,

   

Six Months Ended June 30,

 
   

2016

   

2015

   

2016

   

2015

 

Stock option expense

  $ 13,686     $ 16,903     $ 27,372     $ 33,590  

Warrant modification expense

    -       -       469,799       -  

Total stock-based compensation expense

  $ 13,686     $ 16,903     $ 497,171     $ 33,590  

 

In general, stock-based compensation expense is allocated 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 six month periods ended June 30, 2016 and 2015 , stock-based compensation expense was allocated as follows:

 

   

Three Months Ended June 30,

   

Six Months Ended June 30,

 

Expense Allocated to:

 

2016

   

2015

   

2016

   

2015

 

General and administrative expense

  $ 7,792     $ 11,587     $ 485,384     $ 22,958  

Research and development expense

    5,894       5,316       11,787       10,632  

Total stock-based compensation expense

  $ 13,686     $ 16,903     $ 497,171     $ 33,590  

 

Other Income

 

Interest income for the three month and six month periods ended June 30, 2016 was $279 and $909, respectively, as compared to $1,865 and $3,057, respectively, for comparable periods of 2015. 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.

 

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.

 

 
12

 

 

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 June 30, 2016 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:     August 5, 2016 

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)

3.1.5

Certificate of Amendment to the Certificate of Incorporation of GeoVax Labs, Inc. filed June 14, 2016 (9)

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 Agreement to Amend and Exercise Series E Warrants and Related Matters dated February 15, 2016 (8)

10.2**

GeoVax Labs, Inc. 2016 Stock Incentive Plan (10)

10.3*,** Form of Employee Stock Option Agreement
10.4*,** Form of Non-Qualified Stock Option Agreement

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 June 30, 2016, formatted in Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets as of June 30, 2016 (unaudited) and December 31, 2015, (ii) Condensed Consolidated Statements of Operations (unaudited) for the three month and six month periods ended June 30, 2016 and 2015, (iii) Condensed Consolidated Statements of Cash Flows (unaudited) for the six month periods ended June 30, 2016 and 2015, and (iv) Notes to Condensed Consolidated Financial Statements (unaudited).

 

                                               

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

(8)

Incorporated by reference from the registrant’s Current Report on Form 8-K filed February 16, 2016.

(9)

Incorporated by reference from the registrant’s Current Report on Form 8-K filed June 16, 2016.

(10)

Incorporated by reference from the registrant’s definitive Proxy Statement filed April 29, 2016.

 

 

15

Exhibit 10.3

 

 

GEOVAX LABS, INC.

2016 STOCK INCENTIVE PLAN

 

Employee Stock Option Agreement

 

THIS AGREEMENT (together with Schedule A , attached hereto, the “Agreement”), effective as of the date specified as the “Grant Date” on Schedule A attached hereto, is between GEOVAX LABS, INC., a Delaware corporation (the “Corporation”), and the individual identified on Schedule A attached hereto, an Employee of the Corporation or an Affiliate (the “Participant”).

 

R E C I T A L S :

 

In furtherance of the purposes of the GeoVax Labs, Inc. 2016 Stock Incentive Plan, as it may be hereafter amended and/or restated (the “Plan”), and in consideration of the services of the Participant and such other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Corporation and the Participant hereby agree as follows:

 

1.      Incorporation of Plan . The rights and duties of the Corporation and the Participant under this Agreement shall in all respects be subject to and governed by the provisions of the Plan, a copy of which has been made available to the Participant and the terms of which are incorporated herein by reference. In the event of any conflict between the provisions in this Agreement and those of the Plan, the provisions of the Plan shall govern, unless the Administrator determines otherwise. Unless otherwise defined herein, capitalized terms in this Agreement shall have the same definitions as set forth in the Plan.

 

2.      Grant of Option; Term of Option . The Corporation hereby grants to the Participant pursuant to the Plan, as a matter of separate inducement and agreement in connection with his or her employment with or service to the Corporation, and not in lieu of any salary or other compensation for his or her services, the right and option (the “Option”) to purchase all or any part of such aggregate number of shares (the “Shares”) of common stock of the Corporation (the “Common Stock”) at a purchase price (the “Option Price”) as specified on Schedule A , attached hereto, and subject to such other terms and conditions as may be stated herein or in the Plan or on Schedule A . The Participant expressly acknowledges that the terms of Schedule A shall be incorporated herein by reference and shall constitute part of this Agreement. The Corporation and the Participant further acknowledge and agree that the signatures of the Corporation and the Participant on the Grant Notice contained in Schedule A shall constitute their acceptance of all of the terms of this Agreement and their agreement to be bound by the terms of this Agreement . The Option or any portion thereof shall be designated as an Incentive Option to the extent stated on Schedule A . To the extent that the Option or any portion thereof is designated as an Incentive Option, and such Option does not qualify as an Incentive Option, the Option or portion thereof shall be treated as a Nonqualified Option. Except as otherwise provided in the Plan or this Agreement, this Option will expire if not exercised in full by the Expiration Date specified on Schedule A .

 

3.      Exercise of Option . Subject to the terms of the Plan and this Agreement, the Option shall vest and become exercisable on the date or dates, and subject to such conditions, as are set forth on Schedule A . To the extent that the Option is exercisable but is not exercised, the Option shall accumulate and be exercisable by the Participant in whole or in part at any time prior to expiration of the Option, subject to the terms of the Plan and this Agreement. The Participant expressly acknowledges that the Option shall vest and be exercisable only upon such terms and conditions as are provided in this Agreement (including the terms set forth in Schedule A) and the Plan . Upon the exercise of the Option in whole or in part and payment of the Option Price in accordance with the provisions of the Plan and this Agreement, the Corporation shall, as soon thereafter as practicable, deliver to the Participant a certificate or certificates (or, in the case of uncertificated shares, other written notice of ownership in accordance with Applicable Law) for the Shares purchased. Payment of the Option Price may be made in the form of cash or cash equivalent; and, except where prohibited by the Administrator or Applicable Law (and subject to such terms and conditions as may be established by the Administrator), payment may also be made (i) by delivery (by either actual delivery or attestation) of shares of Common Stock owned by the Participant for such time period, if any, as may be determined by the Administrator; (ii) by shares of Common Stock withheld upon exercise; (iii) by delivery of written notice of exercise to the Corporation and delivery to a broker of written notice of exercise and irrevocable instructions to promptly deliver to the Corporation the amount of sale or loan proceeds to pay the Option Price; (iv) by such other payment methods as may be approved by the Administrator and which are acceptable under Applicable Law; and/or (v) by any combination of the foregoing methods. Shares delivered or withheld in payment of the Option Price shall be valued at their Fair Market Value on the date of exercise, determined in accordance with the terms of the Plan.

 

 

 
 

 

 

4.      No Right of Employment or Service; Forfeiture of Option; No Right to Future Awards . Neither the Plan, this Agreement, the grant of the Option, nor any other action related to the Plan shall confer upon the Participant any right to continue in the employment or service of the Corporation or an Affiliate or interfere in any way with the right of the Corporation or an Affiliate to terminate the Participant’s employment or service at any time. Except as otherwise provided in the Plan, this Agreement or as may be determined by the Administrator, all rights of the Participant with respect to the Option shall terminate upon the termination of the Participant’s employment or service with the Company or an Affiliate. The grant of the Option does not create any obligation to grant further awards.

 

5.      Termination of Employment . Except as may be otherwise provided in the Plan or this Agreement, the Option shall not be exercised unless the Participant is, at the time of exercise, an Employee and has been an Employee continuously since the date the Option was granted, subject to the following:

 

(a)     The employment relationship of the Participant shall be treated as continuing intact for any period that the Participant is on military or sick leave or other bona fide leave of absence, provided that the period of such leave does not exceed three months, or, if longer, as long as the Participant’s right to reemployment is guaranteed either by statute or by contract. The employment relationship of the Participant shall also be treated as continuing intact while the Participant is not in active service because of Disability. The Administrator shall have sole authority to determine whether the Participant is disabled under the Plan and, if applicable, the Participant’s Termination Date.

 

(b)     Except as may be otherwise provided in the Plan or this Agreement, if the employment of the Participant is terminated because of Disability or death, the Option may be exercised only to the extent vested and exercisable on the Participant’s Termination Date, and any unvested portion of the Option shall terminate on the Termination Date. The vested portion of the Option must be exercised, if at all, prior to the first to occur of the following, whichever shall be applicable: (X) the close of the period of one year next succeeding the Termination Date; or (Y) the close of the Option Period. In the event of the Participant’s death, the Option shall be exercisable by such person or persons as shall have acquired the right to exercise the Option by will or by the laws of intestate succession.

 

(c)     If the employment of the Participant is terminated for Cause (as defined in the Plan), the Option, whether vested or unvested, shall lapse and no longer be exercisable as of the Participant’s Termination Date, as determined by the Administrator.

 

 

 
 

 

 

(d)     Except as may be otherwise provided in the Plan or this Agreement, if the employment of the Participant is terminated for any reason other than Disability, death or for Cause (which are addressed in (b) and (c) above), the Option may be exercised to the extent vested and exercisable on his or her Termination Date, and any unvested portion of the Option shall terminate as of the Termination Date. The vested portion of the Option must be exercised, if at all, prior to the first to occur of the following, as applicable: (X) the close of the period of three months next succeeding the Termination Date; or (Y) the close of the Option Period. If the Participant dies following such termination of employment and prior to the earlier of the dates specified in (X) or (Y) of this subparagraph (d), the Participant shall be treated as having died while employed under subparagraph (b) above (treating for this purpose the Participant’s date of termination of employment as the Termination Date). In the event of the Participant’s death, the Option shall be exercisable by such person or persons as shall have acquired the right to exercise the Option by will or by the laws of intestate succession.

 

6.      Effect of Change of Control . The Administrator shall (taking into account any Code Section 409A considerations) have sole discretion to determine at any time the effect, if any, on the Option, including but not limited to the vesting and/or exercisability of the Option (in whole or in part), in the event of a Change of Control (as defined in the Plan). Without limiting the effect of the foregoing, the Administrator’s discretion shall include, but shall in no way be limited to, the discretion to determine with respect to all or any portion of an Option that (i) the Option shall vest and/or become exercisable upon a Change of Control; (ii) vesting and/or exercisability of the Option shall accelerate upon a Change of Control; (iii) exercise of the Option must occur, if at all, within time period(s) specified by the Administrator, after which time period(s) the Option shall, unless the Administrator determines otherwise, terminate; (iv) the Option shall be assumed or substituted for another award; (v) the Option shall be cancelled without the payment of consideration; (vi) the Option shall be cancelled in exchange for a cash payment or other consideration in an amount determined by the Administrator; (vii) the Option shall be subject to such treatment (including but not limited to cancellation, cashout, assumption or substitution) as is provided under the terms of the agreement or other instrument establishing terms of the Change of Control transaction (e.g., a merger agreement); and/or (viii) other actions (or no action) shall be taken with respect to the Option. Notwithstanding the foregoing, in the event that the Administrator determines to provide for acceleration of vesting and/or exercisability of the Option in the event of a Change of Control, such acceleration shall occur only if a Change of Control occurs and the Participant’s employment is terminated without Cause by the Corporation (or an Affiliate) within 12 months after the effective date of the Change of Control or the Participant resigns for Good Reason (as defined below) within 12 months after the effective date of the Change of Control.

 

For purposes of this Section 6, “Good Reason” shall occur if during the Participant’s employment, the Participant’s employment is materially and adversely altered by the Company, without the Participant’s consent, by:

 

(a)      a material reduction in the Participant’s base salary;

 

(b)      the assignment to the Participant of duties or responsibilities materially inconsistent with, or a material diminution in, the Participant’s position, authority, duties or responsibilities; or

 

(c)      the relocation of the Participant’s principal place of employment by more than 30 miles from the location at which the Participant is stationed.

 

 

 
 

 

 

An event or condition that would otherwise constitute “Good Reason” shall constitute Good Reason only if the Corporation fails to rescind or cure such event or condition within 30 days after receipt from the Participant of written notice of the event which constitutes Good Reason, and Good Reason shall cease to exist for any event or condition described herein on the 60 th day following the later of the occurrence or the Participant’s knowledge thereof, unless the Participant has given the Corporation written notice thereof prior to such date.

 

7.      Notice of Disposition . To the extent that this Option is designated as an Incentive Option, if Shares of Common Stock acquired upon exercise of the Option are disposed of within two years following the date of grant or one year following the transfer of such Shares to the Participant upon exercise, the Participant shall, promptly following such disposition, notify the Corporation in writing of the date and terms of such disposition and provide such other information regarding the disposition as the Administrator may reasonably require.

 

8.      Limitation on Incentive Options . In no event shall there first become exercisable by the Participant in any one calendar year Incentive Options granted by the Corporation or any Parent or Subsidiary with respect to shares having an aggregate Fair Market Value (determined at the time an Incentive Option is granted) greater than $100,000. To the extent that any Incentive Options are first exercisable by the Participant in excess of such limitation, the excess shall be considered a Nonqualified Option.

 

9.      Nontransferability of Option . To the extent that this Option is designated as an Incentive Option, this Option shall not be transferable (including by sale, assignment, pledge or hypothecation) other than transfers by will or the laws or intestate succession or, in the Administrator’s discretion, such transfers as may otherwise be permitted in accordance with Treasury Regulation Section 1.421-1(b)(2) or Treasury Regulation Section 1.421-2(c). To the extent that this Option is treated as a Nonqualified Option, this Option shall not be transferable (including by sale, assignment, pledge or hypothecation) other than by will or the laws of intestate succession, except for transfers if and to the extent permitted by the Administrator in a manner consistent with the registration provisions of the Securities Act of 1933, as amended (the “Securities Act”). Except as may be permitted by the preceding sentences, this Option shall be exercisable during the Participant’s lifetime only by him or her or by his or her guardian or legal representative or a permitted transferee as provided in this Section 9. The designation of a beneficiary in accordance with the Plan does not constitute a transfer.

 

10.      Superseding Agreement; Binding Effect . This Agreement supersedes any statements, representations or agreements of the Corporation with respect to the grant of the Option, any other equity-based awards or any related rights, and the Participant hereby waives any rights or claims related to any such statements, representations or agreements. This Agreement does not supersede or amend any confidentiality agreement, non-solicitation agreement, non-competition agreement, employment agreement or any other similar agreement between the Participant and the Corporation, including, but not limited to, any restrictive covenants contained in such agreements. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective executors, administrators, heirs, successors and assigns.

 

11.      Governing Law . Except as otherwise provided in the Plan or herein, this Agreement shall be construed and enforced according to the laws of the State of Georgia, without regard to the conflict of laws provisions of any state, and in accordance with applicable federal laws of the United States.

 

12.      Amendment and Termination; Waiver . Any amendment or modification to this Agreement shall be made in accordance with the terms of the Plan. Without limiting the foregoing, the Administrator shall have unilateral authority to amend the Plan and this Agreement (without Participant consent) to the extent necessary to comply with Applicable Law or changes to Applicable Law (including but in no way limited to Code Section 409A, Code Section 422 and federal securities laws). The waiver by the Corporation of a breach of any provision of this Agreement by the Participant shall not operate or be construed as a waiver of any subsequent breach by the Participant.

 

 

 
 

 

 

13.      No Rights as Shareholders . The Participant and his or her legal representatives, legatees or distributees shall not be deemed to be the holder of any Shares subject to the Option and shall not have any rights of a shareholder unless and until certificates for such Shares have been issued and delivered to him or her or them (or, in the case of uncertificated shares, other written evidence of ownership in accordance with Applicable Law shall have been provided).

 

14.      Withholding; Tax Matters .

 

(a)     The Participant acknowledges that the Administrator and/or Corporation shall require the Participant to pay the Corporation in cash the amount of any local, state, federal, foreign or other tax or other amount required by any governmental authority to be withheld and paid over by the Corporation to such authority for the account of the Participant, and the Participant agrees, as a condition to the grant of the Option and delivery of the Shares or any other benefit, to satisfy such obligations. Notwithstanding the foregoing, the Administrator may in its discretion establish procedures to permit the Participant to satisfy such obligations in whole or in part, and any local, state, federal, foreign or other income tax obligations relating to the Option, by electing (the “election”) to have the Corporation withhold shares of Common Stock from the Shares to which the Participant is otherwise entitled. The number of Shares to be withheld shall have a Fair Market Value as of the date that the amount of tax to be withheld is determined as nearly equal as possible to (but not exceeding) the amount of such obligations being satisfied. Each election must be made in writing to the Administrator in accordance with election procedures established by the Administrator.

 

(b)     The Participant acknowledges that he or she is solely responsible and liable for the satisfaction of all taxes and penalties that may arise in connection with the Option (including but not limited to any taxes arising under Code Section 409A), and the Corporation shall not have any obligation to indemnify or otherwise hold the Participant harmless from any or all such taxes. The Participant further acknowledges that the Corporation has made no warranties or representations to the Participant with respect to the tax consequences (including, but not limited to, income tax consequences) related to the transactions contemplated by this Agreement, and the Participant is in no manner relying on the Corporation or its representatives for an assessment of such tax consequences. The Participant acknowledges that there may be adverse tax consequences upon the grant of the Option and/or the acquisition or disposition of the Shares subject to the Option and that the Participant has been advised that he or she should consult with his or her own attorney, accountant, and/or tax advisor regarding the decision to enter into this Agreement and the consequences thereof. The Participant also acknowledges that the Corporation has no responsibility to take or refrain from taking any actions in order to achieve a certain tax result for the Participant.

 

15.      Administration . The authority to construe and interpret this Agreement and the Plan, and to administer all aspects of the Plan, shall be vested in the Administrator, and the Administrator shall have all powers with respect to this Agreement as are provided in the Plan, including, but not limited to, the sole authority to determine whether and to what degree the Option has vested. Any interpretation of this Agreement by the Administrator and any decision made by it with respect to this Agreement is final and binding.

 

16.      Notices . Except as may be otherwise provided by the Plan or determined by the Administrator, any written notices provided for in this Agreement or the Plan shall be in writing and shall be deemed sufficiently given if either hand delivered or if sent by fax or overnight courier, or by postage paid first class mail. Notices sent by mail shall be deemed received three business days after mailed but in no event later than the date of actual receipt. Notices shall be directed, if to the Participant, at the Participant’s address indicated on Schedule A (or such other address as may be designated by the Participant in a manner acceptable to the Administrator), or, if to the Corporation, at the Corporation’s principal office, attention Chief Financial Officer, GeoVax Labs, Inc. Notice may also be provided by electronic submission, if and to the extent permitted by the Administrator.

 

 

 
 

 

 

17.      Severability . The provisions of this Agreement are severable and if any one or more provisions may be determined to be illegal or otherwise unenforceable in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

 

18.      Restrictions on Option and Shares . The Corporation may impose such restrictions on the Option and the Shares or other benefits underlying the Option as it may deem advisable, including without limitation restrictions under the federal securities laws, the requirements of any stock exchange or similar organization and any blue sky, state or foreign securities laws or other laws applicable to such Option or Shares. Notwithstanding any other provision in the Plan or this Agreement to the contrary, the Corporation shall not be obligated to issue, deliver or transfer shares of Common Stock, to make any other distribution of benefits, or to take any other action, unless such delivery, distribution or action is in compliance with Applicable Law (including but not limited to the requirements of the Securities Act). The Corporation is under no obligation to register the Shares with the Securities and Exchange Commission or to effect compliance with the exemption, registration, qualification or listing requirements of any state or foreign securities laws, stock exchange or similar organization, and the Corporation will have no liability for any inability or failure to do so. The Corporation may cause a restrictive legend or legends to be placed on any certificate for Shares issued pursuant to the exercise of the Option in such form as may be prescribed from time to time by Applicable Law or as may be advised by legal counsel.

 

19.      Effect of Changes in Duties or Status . Notwithstanding the other terms of the Plan or this Agreement, the Administrator has the sole discretion to determine (taking into account any Code Section 409A considerations), at any time, the effect, if any, of change in the Participant’s status as an employee, including but not limited to a change from full-time to part-time, or vice versa, or other similar changes in the nature or scope of the Participant’s employment. In addition, unless otherwise determined by the Administrator in its discretion, for purposes of the Plan, a Participant shall be considered to have terminated employment or service and to have ceased to be an Employee if his employer was an Affiliate at the time of grant and such employer or other party ceases to be an Affiliate, even if he continues to be employed by or provide services to such employer or party.

 

20.      Rules of Construction . Headings are given to the sections of this Agreement solely as a convenience to facilitate reference. The reference to any statute, regulation or other provision of law shall (unless the Administrator determines otherwise) be construed to refer to any amendment to or successor of such provision of law.

 

21.      Right of Offset . Notwithstanding any other provision of the Plan or this Agreement, the Corporation may at any time (subject to any Code Section 409A considerations), reduce the amount of any payment or benefit otherwise payable to or on behalf of the Participant by the amount of any obligation of the Participant to or on behalf of the Corporation or an Affiliate that is or becomes due and payable, and Participant shall be deemed to have consented to such reduction.

 

22.      Compliance with Recoupment, Ownership and Other Policies or Agreements . As a condition to receiving this Option, the Participant agrees that he or she shall abide by all provisions of any equity retention policy, stock ownership guidelines, compensation recovery policy and/or other policies adopted by the Corporation, each as in effect from time to time and to the extent applicable the Participant. In addition, the Participant shall be subject to such compensation recovery, recoupment, forfeiture or other similar provisions as may apply to him or her under Applicable Law.

 

23.      Counterparts; Further Instruments . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The parties hereto agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Agreement.

 

 

 

[Signatures of the Corporation and the Participant follow on Schedule A /Grant Notice.]

 

 
 

 

 

 

GEOVAX LABS, INC.

2016 STOCK INCENTIVE PLAN
Employee Stock Option Agreement

Schedule A/Grant Notice

 

1.     Pursuant to the terms and conditions of the Corporation’s 2016 Stock Incentive Plan as it may be hereafter amended (the “Plan”), you (the “Participant”) have been granted an option (the “Option”) to purchase ________ shares (the “Shares”) of our Common Stock as outlined below.

 

 

Name of Participant: 

 

 

 

  Address:       
         
         
  Grant Date:     , 20  
  Number of Shares Subject to Option:      
  Option Price:   $  
  Type of Option:       

 

Expiration Date (Last day of Option Period):

 

 

 , 20

 

 

Vesting Schedule/Conditions:

 

 

 

 

 

2.     By my signature below, I, the Participant, hereby acknowledge receipt of this Grant Notice and the Option Agreement (the “Agreement”) dated __________ ___, 20__, between the Participant and GeoVax Labs, Inc. which is attached to this Grant Notice. I understand that the Grant Notice and other provisions of Schedule A herein are incorporated by reference into the Agreement and constitute a part of the Agreement. By my signature below, I further agree to be bound by the terms of the Plan and the Agreement, including but not limited to the terms of this Grant Notice and the other provisions of Schedule A contained herein. The Corporation reserves the right to treat the Option and the Agreement as cancelled, void and of no effect if the Participant fails to return a signed copy of the Grant Notice within 30 days of grant date stated above.

 

Signature:

 

 

Date:

 

 

 

Participant

 

 

 

 

 

 

 

 

 

 

 

      Agreed to by:  
           
      GEOVAX LABS, INC.  

 

      By:  
        [Name]  
        [Title]  

 

Attest:  

 

 

 

[Name]

 

[Title]

 

 

Note: If there are any discrepancies in the name or address shown above, please make the appropriate corrections on this form and return to GeoVax Labs, Inc., Attention [___________] . Please retain a copy of the Agreement, including a signed copy of this Grant Notice, for your files.

Exhibit 10.4

 

GEOVAX LABS, INC.

2016 STOCK INCENTIVE PLAN

 

Nonqualified Stock Option Agreement

(Nonemployee Directors and Independent Contractors)

 

 

THIS AGREEMENT (together with Schedule A , attached hereto, the “Agreement”), effective as of the date specified as the “Grant Date” on Schedule A attached hereto, is between GEOVAX LABS, INC., a Delaware corporation (the “Corporation”), and a Director of the Corporation or an individual in service to the Corporation or an Affiliate, as identified on Schedule A attached hereto (the “Participant”).

 

R E C I T A L S :

 

In furtherance of the purposes of the GeoVax Labs, Inc. 2016 Stock Incentive Plan, as it may be hereafter amended and/or restated (the “Plan”), and in consideration of the services of the Participant and such other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Corporation and the Participant hereby agree as follows:

 

1.      Incorporation of Plan . The rights and duties of the Corporation and the Participant under this Agreement shall in all respects be subject to and governed by the provisions of the Plan, a copy of which has been made available to the Participant and the terms of which are incorporated herein by reference. In the event of any conflict between the provisions in this Agreement and those of the Plan, the provisions of the Plan shall govern, unless the Administrator determines otherwise. Unless otherwise defined herein, capitalized terms in this Agreement shall have the same definitions as set forth in the Plan.

 

2.      Grant of Option; Term of Option . The Corporation hereby grants to the Participant pursuant to the Plan, as a matter of separate inducement and agreement in connection with his or her employment with or service to the Corporation, and not in lieu of any salary or other compensation for his or her services, the right and option (the “Option”) to purchase all or any part of such aggregate number of shares (the “Shares”) of common stock of the Corporation (the “Common Stock”) at a purchase price (the “Option Price”) as specified on Schedule A , attached hereto, and subject to such other terms and conditions as may be stated herein or in the Plan or on Schedule A . The Participant expressly acknowledges that the terms of Schedule A shall be incorporated herein by reference and shall constitute part of this Agreement. The Corporation and the Participant further acknowledge and agree that the signatures of the Corporation and the Participant on the Grant Notice contained in Schedule A shall constitute their acceptance of all of the terms of this Agreement and their agreement to be bound by the terms of this Agreement . The Option shall be designated as a Nonqualified Option. Except as otherwise provided in the Plan or this Agreement, this Option will expire if not exercised in full by the Expiration Date specified on Schedule A .

 

3.      Exercise of Option . Subject to the terms of the Plan and this Agreement, the Option shall vest and become exercisable on the date or dates, and subject to such conditions, as are set forth on Schedule A . To the extent that the Option is exercisable but is not exercised, the Option shall accumulate and be exercisable by the Participant in whole or in part at any time prior to expiration of the Option, subject to the terms of the Plan and this Agreement. The Participant expressly acknowledges that the Option shall vest and be exercisable only upon such terms and conditions as are provided in this Agreement (including the terms set forth in Schedule A) and the Plan. Upon the exercise of the Option in whole or in part and payment of the Option Price in accordance with the provisions of the Plan and this Agreement, the Corporation shall, as soon thereafter as practicable, deliver to the Participant a certificate or certificates (or, in the case of uncertificated shares, other written notice of ownership in accordance with Applicable Law) for the Shares purchased. Payment of the Option Price may be made in the form of cash or cash equivalent; and, except where prohibited by the Administrator or Applicable Law (and subject to such terms and conditions as may be established by the Administrator), payment may also be made (i) by delivery (by either actual delivery or attestation) of shares of Common Stock owned by the Participant for such time period, if any, as may be determined by the Administrator; (ii) by shares of Common Stock withheld upon exercise; (iii) by delivery of written notice of exercise to the Corporation and delivery to a broker of written notice of exercise and irrevocable instructions to promptly deliver to the Corporation the amount of sale or loan proceeds to pay the Option Price; (iv) by such other payment methods as may be approved by the Administrator and which are acceptable under Applicable Law; and/or (v) by any combination of the foregoing methods. Shares delivered or withheld in payment of the Option Price shall be valued at their Fair Market Value on the date of exercise, determined in accordance with the terms of the Plan.

 

 

 
 

 

 

4.      No Right of Employment or Service; Forfeiture of Option; No Right to Future Awards. Neither the Plan, this Agreement, the grant of the Option, nor any other action related to the Plan shall confer upon the Participant any right to continue in the employ or service of the Corporation or an Affiliate or interfere in any way with the right of the Corporation or an Affiliate to terminate the Participant’s employment or service at any time. Except as otherwise provided in the Plan, this Agreement or as may be determined by the Administrator, all rights of the Participant with respect to the Option shall terminate upon the termination of the Participant’s employment or service with the Company or an Affiliate. The grant of the Option does not create any obligation to grant further awards.

 

5.      Termination of Employment or Service . In the event of the Participant’s termination of service, the Option may be exercised only to the extent vested and exercisable on the Participant’s Termination Date (unless the termination was for Cause), and the Option must be exercised, if at all, prior to the first to occur of the following, as applicable: (X) the close of the period of three months next succeeding the Termination Date; or (Y) the close of the Option Period. If the services of the Participant are terminated for Cause, his or her Option shall lapse and no longer be exercisable as of his or her Termination Date, as determined by the Administrator. Any portion of the Option that is not vested as of the Participant’s Termination Date shall terminate on the Termination Date.

 

6.      Effect of Change of Control . The Administrator shall (taking into account any Code Section 409A considerations) have sole discretion to determine at any time the effect, if any, on the Option, including but not limited to the vesting and/or exercisability of the Option (in whole or in part), in the event of a Change of Control (as defined in the Plan). Without limiting the effect of the foregoing, the Administrator’s discretion shall include, but shall in no way be limited to, the discretion to determine with respect to all or any portion of an Option that (i) the Option shall vest and/or become exercisable upon a Change of Control; (ii) vesting and/or exercisability of the Option shall accelerate upon a Change of Control; (iii) exercise of the Option must occur, if at all, within time period(s) specified by the Administrator, after which time period(s) the Option shall, unless the Administrator determines otherwise, terminate; (iv) the Option shall be assumed or substituted for another award; (v) the Option shall be cancelled without the payment of consideration; (vi) the Option shall be cancelled in exchange for a cash payment or other consideration in an amount determined by the Administrator; (vii) the Option shall be subject to such treatment (including but not limited to cancellation, cashout, assumption or substitution) as is provided under the terms of the agreement or other instrument establishing terms of the Change of Control transaction (e.g., a merger agreement); and/or (viii) other actions (or no action) shall be taken with respect to the Option. Notwithstanding the foregoing, in the event that the Administrator determines to provide for acceleration of vesting and/or exercisability of the Option in the event of a Change of Control, such acceleration shall occur only if a Change of Control occurs and the Participant’s employment or service is terminated without Cause by the Corporation (or an Affiliate) within 12 months after the effective date of the Change of Control or the Participant resigns for Good Reason (as defined below) within 12 months after the effective date of the Change of Control.

 

 

 
2

 

 

For purposes of this Section 6, “Good Reason” shall occur upon the Participant’s termination of employment or service resulting from the Participant’s (i) termination for “Good Reason” as defined under the Participant’s employment, change of control, consulting or other similar agreement with the Corporation or an Affiliate, if any, or (ii) if the Participant has not entered into any agreement (or, if any such agreement does not define “Good Reason”), then, a Participant’s termination shall be for “Good Reason” if termination results due to any of the following without the Participant’s consent: (A) a material reduction in the Participant’s base salary as in effect immediately prior to the date of the Change of Control, (B) the assignment to the Participant of duties or responsibilities materially inconsistent with, or a material diminution in, the Participant’s position, authority, duties or responsibilities as in effect immediately prior to the Change of Control, or (C) the relocation of the Participant’s principal place of employment by more than 30 miles from the location at which the Participant was stationed immediately prior to the Change of Control. Notwithstanding the foregoing, with respect to Directors, unless the Administrator determines otherwise, a Director’s termination from service on the Board shall be for “Good Reason” if the Participant ceases to serve as a Director, or, if the Corporation is not the surviving company in the Change of Control event, a member of the board of directors of the surviving entity, in either case, due to the Participant’s failure to be nominated to serve as a director of such entity or the Participant’s failure to be elected to serve as a director of such entity, but not due to the Participant’s decision not to continue service on the Board of Directors of the Corporation or the board of directors of the surviving entity, as the case may be. An event or condition that would otherwise constitute “Good Reason” shall constitute Good Reason only if the Corporation fails to rescind or cure such event or condition within 30 days after receipt from the Participant of written notice of the event which constitutes Good Reason, and Good Reason shall cease to exist for any event or condition described herein on the 60th day following the later of the occurrence or the Participant’s knowledge thereof, unless the Participant has given the Corporation written notice thereof prior to such date.

 

7.      Nontransferability of Option . The Option shall not be transferable (including by sale, assignment, pledge or hypothecation) other than by will or the laws of intestate succession, except for transfers if and to the extent permitted by the Administrator in a manner consistent with the registration provisions of the Securities Act of 1933, as amended (the “Securities Act”). Except as may be permitted by the preceding sentence, this Option shall be exercisable during the Participant’s lifetime only by him or her or by his or her guardian or legal representative or a permitted transferee as provided in this Section 7. The designation of a beneficiary in accordance with the Plan does not constitute a transfer.

 

8.      Superseding Agreement; Binding Effect . This Agreement supersedes any statements, representations or agreements of the Corporation with respect to the grant of the Option, any other equity-based awards or any related rights, and the Participant hereby waives any rights or claims related to any such statements, representations or agreements. This Agreement does not supersede or amend any confidentiality agreement, non-solicitation agreement, non-competition agreement, employment agreement or any other similar agreement between the Participant and the Corporation, including, but not limited to, any restrictive covenants contained in such agreements. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective executors, administrators, heirs, successors and assigns.

 

9.      Governing Law . Except as otherwise provided in the Plan or herein, this Agreement shall be construed and enforced according to the laws of the State of Georgia, without regard to the conflict of laws provisions of any state, and in accordance with applicable federal laws of the United States.

 

10.      Amendment and Termination; Waiver . Any amendment or modification to this Agreement shall be made in accordance with the terms of the Plan. Without limiting the foregoing, the Administrator shall have unilateral authority to amend the Plan and this Agreement (without Participant consent) to the extent necessary to comply with Applicable Law or changes to Applicable Law (including but in no way limited to Code Section 409A and federal securities laws). The waiver by the Corporation of a breach of any provision of this Agreement by the Participant shall not operate or be construed as a waiver of any subsequent breach by the Participant.

 

 

 
3

 

 

11.      No Rights as Shareholders . The Participant and his or her legal representatives, legatees or distributees shall not be deemed to be the holder of any Shares subject to the Option and shall not have any rights of a shareholder unless and until certificates for such Shares have been issued and delivered to him or her or them (or, in the case of uncertificated shares, other written evidence of ownership in accordance with Applicable Law shall have been provided).

 

12.      Withholding; Tax Matters .

 

(a)     The Participant acknowledges that the Administrator and/or Corporation shall require the Participant to pay the Corporation in cash the amount of any local, state, federal, foreign or other tax or other amount required by any governmental authority to be withheld and paid over by the Corporation to such authority for the account of the Participant, and the Participant agrees, as a condition to the grant of the Option and delivery of the Shares or any other benefit, to satisfy such obligations. Notwithstanding the foregoing, the Administrator may in its discretion establish procedures to permit the Participant to satisfy such obligations in whole or in part, and any local, state, federal, foreign or other income tax obligations relating to the Option, by electing (the “election”) to have the Corporation withhold shares of Common Stock from the Shares to which the Participant is otherwise entitled. The number of Shares to be withheld shall have a Fair Market Value as of the date that the amount of tax to be withheld is determined as nearly equal as possible to (but not exceeding) the amount of such obligations being satisfied. Each election must be made in writing to the Administrator in accordance with election procedures established by the Administrator.

 

(b)     The Participant acknowledges that he or she is solely responsible and liable for the satisfaction of all taxes and penalties that may arise in connection with the Option (including but not limited to any taxes arising under Code Section 409A), and the Corporation shall not have any obligation to indemnify or otherwise hold the Participant harmless from any or all such taxes. The Participant further acknowledges that the Corporation has made no warranties or representations to the Participant with respect to the tax consequences (including, but not limited to, income tax consequences) related to the transactions contemplated by this Agreement, and the Participant is in no manner relying on the Corporation or its representatives for an assessment of such tax consequences. The Participant acknowledges that there may be adverse tax consequences upon the grant of the Option and/or the acquisition or disposition of the Shares subject to the Option and that the Participant has been advised that he or she should consult with his or her own attorney, accountant, and/or tax advisor regarding the decision to enter into this Agreement and the consequences thereof. The Participant also acknowledges that the Corporation has no responsibility to take or refrain from taking any actions in order to achieve a certain tax result for the Participant.

 

13.      Administration . The authority to construe and interpret this Agreement and the Plan, and to administer all aspects of the Plan, shall be vested in the Administrator, and the Administrator shall have all powers with respect to this Agreement as are provided in the Plan, including, but not limited to, the sole authority to determine whether and to what degree the Option has vested. Any interpretation of this Agreement by the Administrator and any decision made by it with respect to this Agreement is final and binding.

 

14.      Notices . Except as may be otherwise provided by the Plan or determined by the Administrator, any written notices provided for in this Agreement or the Plan shall be in writing and shall be deemed sufficiently given if either hand delivered or if sent by fax or overnight courier, or by postage paid first class mail. Notices sent by mail shall be deemed received three business days after mailed but in no event later than the date of actual receipt. Notices shall be directed, if to the Participant, at the Participant’s address indicated on Schedule A (or such other address as may be designated by the Participant in a manner acceptable to the Administrator), or, if to the Corporation, at the Corporation’s principal office, attention Chief Financial Officer, GeoVax Labs, Inc. Notice may also be provided by electronic submission, if and to the extent permitted by the Administrator.

 

 

 
4

 

 

15.      Severability . The provisions of this Agreement are severable and if any one or more provisions may be determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

 

16.      Restrictions on Option and Shares . The Corporation may impose such restrictions on the Option and the Shares or other benefits underlying the Option as it may deem advisable, including without limitation restrictions under the federal securities laws, the requirements of any stock exchange or similar organization and any blue sky, state or foreign securities laws or other laws applicable to such Option or Shares. Notwithstanding any other provision in the Plan or this Agreement to the contrary, the Corporation shall not be obligated to issue, deliver or transfer shares of Common Stock, to make any other distribution of benefits, or to take any other action, unless such delivery, distribution or action is in compliance with Applicable Law (including but not limited to the requirements of the Securities Act). The Corporation is under no obligation to register the Shares with the Securities and Exchange Commission or to effect compliance with the exemption, registration, qualification or listing requirements of any state or foreign securities laws, stock exchange or similar organization, and the Corporation will have no liability for any inability or failure to do so. The Corporation may cause a restrictive legend or legends to be placed on any certificate for Shares issued pursuant to the exercise of the Option in such form as may be prescribed from time to time by Applicable Law or as may be advised by legal counsel.     

 

17.      Rules of Construction . Headings are given to the sections of this Agreement solely as a convenience to facilitate reference. The reference to any statute, regulation or other provision of law shall (unless the Administrator determines otherwise) be construed to refer to any amendment to or successor of such provision of law.

 

18.      Right of Offset . Notwithstanding any other provision of the Plan or this Agreement, the Corporation may at any time (subject to any Code Section 409A considerations), reduce the amount of any payment or benefit otherwise payable to or on behalf of the Participant by the amount of any obligation of the Participant to or on behalf of the Corporation or an Affiliate that is or becomes due and payable, and Participant shall be deemed to have consented to such reduction.

 

19.      Effect of Changes in Duties or Status . Notwithstanding the other provisions of the Plan or this Agreement, the Administrator has discretion to determine, at the time of grant of the Option or at any time thereafter, the effect, if any, on the Option (including but not limited to the vesting and/or exercisability of the Option) of any changes in the Participant’s status as a Director or Independent Contractor (other than termination).

 

20.      Compliance with Recoupment, Ownership and Other Policies or Agreements . As a condition to receiving this Option, the Participant agrees that he or she shall abide by all provisions of any equity retention policy, stock ownership guidelines, compensation recovery policy and/or other policies adopted by the Corporation, each as in effect from time to time and to the extent applicable the Participant. In addition, the Participant shall be subject to such compensation recovery, recoupment, forfeiture or other similar provisions as may apply to him or her under Applicable Law.

 

21.      Counterparts; Further Instruments . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The parties hereto agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Agreement.

 

 

 

[Signatures of the Corporation and the Participant follow on Schedule A /Grant Notice.]

 

 
5

 

 

 

GEOVAX LABS, INC.

2016 STOCK INCENTIVE PLAN

Nonqualified Stock Option Agreement

(Nonemployee Directors and Independent Contractors)

Schedule A/Grant Notice

 

1.     Pursuant to the terms and conditions of the Corporation’s 2016 Stock Incentive Plan, as it may be hereafter amended (the “Plan”), you (the “Participant”) have been granted an option (the “Option”) to purchase ________ shares (the “Shares”) of our Common Stock as outlined below.

 

 

Name of Participant: 

 

 

 

  Address:       
         
         
  Grant Date:     , 20  
  Number of Shares Subject to Option:      
  Option Price:   $  
  Type of Option:    Nonqualified Stock Option

 

Expiration Date (Last day of Option Period):

 

 

 , 20

 

 

Vesting Schedule/Conditions:

 

 

 

 

 

2.     By my signature below, I, the Participant, hereby acknowledge receipt of this Grant Notice and the Option Agreement (the “Agreement”) dated __________ ___, 20__, between the Participant and GeoVax Labs, Inc. (the “Corporation”) which is attached to this Grant Notice. I understand that the Grant Notice and other provisions of Schedule A herein are incorporated by reference into the Agreement and constitute a part of the Agreement. By my signature below, I further agree to be bound by the terms of the Plan and the Agreement, including but not limited to the terms of this Grant Notice and the other provisions of Schedule A contained herein. The Corporation reserves the right to treat the Option and the Agreement as cancelled, void and of no effect if the Participant fails to return a signed copy of the Grant Notice within 30 days of grant date stated above .

 

Signature:

 

 

Date:

 

 

 

Participant

 

 

 

 

 

 

 

 

 

 

 

      Agreed to by:  
           
      GEOVAX LABS, INC.  

 

      By:  
        [Name]  
        [Title]  

 

Attest:  

 

 

 

[Name]

 

[Title]

 

   

Note: If there are any discrepancies in the name or address shown above, please make the appropriate corrections on this form and return to GeoVax Labs, Inc., Attention [_____________]. Please retain a copy of the Agreement, including a signed copy of this Grant Notice, for your files.

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: August 5, 2016

 

/s/  Robert T. McNally

 

 

 

Robert T. McNally

 

 

 

President & Chief Executive Officer

 

                    

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: August 5, 2016

 

/s/  Mark W. Reynolds

 

 

 

Mark W. Reynolds

 

 

 

Chief Financial Officer

 

 

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 June 30, 2016, 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: August 5, 2016

 

/s/  Robert T. McNally

 

 

 

Robert T. McNally

 

 

 

President & Chief Executive Officer

 

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 June 30, 2016, 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: August 5, 2016

 

/s/  Mark W. Reynolds

 

 

 

Mark W. Reynolds

 

 

 

Chief Financial Officer