vaxx-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

March 31, 2022

-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

001-41058

Vaxxinity, Inc.

(Exact name of registrant as specified in its charter)

Delaware

86-2083865

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

1717 Main St

Ste 3388

Dallas

75201

(

254

)

244-5739

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

__________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

Class A Common Stock, par value

$0.0001 per share

VAXX

The

Nasdaq

Global Market

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

☐

☒

Indicate by check mark whether the registrant has submitted

electronically every Interactive Data File required to be submitted

pursuant to Rule 405 of Regulation S-T

(§232.405 of this chapter) during the preceding 12 months (or

for such shorter period that the registrant was required

to submit such files). Yes

☒

☐

Indicate by check mark whether the registrant is a large accelerated

filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth

company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange

Act:

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☒

If an emerging growth company, indicate by check mark if the registrant has elected not to

use the extended transition period for complying with any

new or revised

financial accounting standards provided pursuant to Section 13(a)

of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company

(as defined in Rule 12b-2 of the Exchange Act).

☐

As of May 6, 2022, the registrant had

112,120,585

shares of $0.0001 par value Class A common stock

outstanding and

13,874,132

shares of $0.0001 par value Class B

common stock outstanding.

SPECIAL NOTE REGARDING FORWARD

-LOOKING STATEMENTS

This Quarterly Report on Form

10-Q contains forward-looking statements. Forward-looking statements are neither historical facts

nor

assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of

our

business,

future

plans

and

strategies

and

other

future

conditions.

some

cases,

you

can

identify

forward-looking

statements

because

they

contain

words

such

“anticipate,”

“believe,”

“estimate,”

“expect,”

“intend,”

“may,”

“predict,”

“project,”

“target,”

“potential,” “seek,” “will,” “would,” “could,” “should,” “continue,” “contemplate,” “plan,” other words and terms of similar meaning

and the negative of these words or similar terms.

Forward-looking statements

are subject to

known and unknown

risks and uncertainties,

many of which

may be beyond

our control.

caution you

that forward-looking

statements are not

guarantees of

future performance or

outcomes and that

actual performance

and outcomes may

differ materially

from those made

in or suggested

by the forward-looking

statements contained

in this Quarterly

Report. In addition, even if our results of

operations, financial condition and cash flows, and the development of the

markets in which

we operate, are consistent with the forward-looking statements contained in this Quarterly Report, those results or developments may

not be indicative of results or

developments in subsequent periods. New factors emerge from

time to time that may

cause our business

not to develop

as we expect,

and it is not

possible for us to

predict all of

them. Factors that

could cause actual

results and outcomes

to differ from those reflected

in forward-looking statements include, among others,

the following:

•

the prospects of UB-612

and other product candidates,

including the timing of

data from our clinical

trials for UB-612

and other product candidates and our ability

to obtain and maintain regulatory approval for our

product candidates;

•

our ability to develop and commercialize

new products and product candidates;

•

our ability to leverage our Vaxxine

Platform;

•

the rate and degree of market acceptance of our

products and product candidates;

•

our

status as

a clinical-stage

company

and

estimates

of our

addressable

market,

market

growth,

future

revenue,

expenses, capital requirements and our

needs for additional financing;

•

our ability to comply with multiple legal and regulatory systems relating to privacy, tax, anti-corruption and

other applicable laws;

•

our ability to hire and retain key personnel and to manage

our future growth effectively;

•

competitive companies and technologies

and our industry and our ability to compete;

•

our and our

collaborators’, including

United Biomedical’s

(“UBI”), ability

and willingness to

obtain, maintain,

defend

and enforce our

intellectual property protection

for our proprietary

and collaborative product

candidates, and the

scope

of such protection;

•

the

performance

third

party

suppliers

and

manufacturers

and

our

ability

find

additional

suppliers

and

manufacturers;

•

our ability

and the

potential to

successfully manufacture

our product

candidates for

pre-clinical use,

for clinical

trials

and on a larger scale for commercial

use, if approved;

•

the

ability

and

willingness

our

third-party

collaborators,

including

UBI,

continue

research

and

development

activities relating to our product candidates;

•

general economic, political, demographic and business conditions

in the United States, Taiwan

and other jurisdictions;

•

the potential effects of government

regulation, including regulatory developments

in the United

States and other jurisdictions;

•

ability to obtain additional financing

in future offerings;

•

expectations about market trends;

and

•

the

effects

the

Russia-Ukraine

conflict

and

the

COVID-19

pandemic

business

operations,

the

initiation,

development and operation of our clinical trials and patient enrollment of our

clinical trials.

discuss many

of these

factors in

greater detail

under Item

1A. “Risk

Factors” in

our Annual

Report on

Form 10-K

for the

year ended

December 31,

2021. These

risk factors

are not

exhaustive and

other sections

of this

report may

include additional

factors which

could adversely

impact our

business and

financial performance.

Given these

uncertainties,

you should

not place

undue reliance on these forward-looking

statements.

You

should read

this Quarterly

Report and

the documents

that we reference

in this Quarterly

Report and

have filed as

exhibits

completely and with the understanding that our

actual future results may be materially different from what

we expect. We qualify

all of

the forward

-looking

statements

in this

Quarterly

Report

by these

cautionary

statements.

Except

as required

by law,

undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events

or otherwise.

As used

in this

Quarterly Report

on Form

10-Q, unless

otherwise specified

or the

context otherwise

requires, the

terms “we,”

“our,” “us,” the

“Company” refer to

Vaxxinity,

Inc. and

its subsidiaries.

All brand names

or trademarks

appearing in this

Quarterly

Report are the property of their respective owners.

Table of

Contents

Page

PART I—Financial Information

Item 1. Financial Statements

Condensed Consolidated Balance Sheets

Condensed Consolidated Statements of Operations

Condensed Consolidated Statements of Stockholders’ Equity and Convertible Preferred Stock

Condensed Consolidated Statements of Cash Flows

Notes to Condensed Consolidated Financial Statements

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Item 4. Controls and Procedures

PART II—Other Information

Item 1. Legal Proceedings

Item 1A. Risk Factors

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

Item 6. Exhibits

Signature

PART

I – FINANCIAL INFORMATION

Item 1. Financial Statements.

VAXXINITY,

INC.

CONDENSED CONSOLIDATED

BALANCE SHEETS

(in thousands, except share and per share amounts)

March 31,

December 31,

2022

2021

(Unaudited)

Assets

Current assets:

Cash and cash equivalents

124,766

144,885

Amounts due from related parties

399

393

Prepaid expenses and other current assets

8,183

8,851

Total current assets

133,348

154,129

Property and equipment, net

12,594

12,173

Long-term prepaid fixed assets

157

199

Long-term deposits

1,351

—

Restricted cash

172

Total assets

147,528

166,673

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

1,460

3,192

Amounts due to related parties

16,787

19,407

Accrued expenses and other current liabilities

5,784

4,519

Notes payable

380

376

Total current liabilities

24,411

27,494

Other liabilities

Notes payable, net of current portion

10,226

10,323

Other long-term liabilities

236

237

Total liabilities

34,873

38,054

Commitments and contingencies (Note 16)

Preferred stock: $

0.0001

par value,

50,000,000

shares authorized at March 31, 2022 and December 31,

2021

—

Stockholders’ equity:

Class A common stock, $

0.0001

par value;

1,000,000,000

shares authorized,

111,967,092

and

111,518,094

shares issued and

outstanding at March 31, 2022 and December 31, 2021,

respectively

278

Class B common stock, $

0.0001

par value;

100,000,000

shares authorized,

13,874,132

shares issued and outstanding at

March 31, 2022 and December 31, 2021

—

Additional paid-in capital

360,121

357,822

Accumulated deficit

(247,744)

(229,481)

Total stockholders’ equity

112,655

128,619

Total liabilities and stockholders’ equity

147,528

166,673

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

VAXXINITY,

INC.

CONDENSED CONSOLIDATED

STATEMENTS

OF OPERATIONS

(in thousands, except share and per share amounts)

(Unaudited)

Three Months Ended March 31,

2022

2021

Revenue

—

Cost of revenue

—

Gross profit

—

Operating expenses:

Research and development

11,478

11,688

General and administrative

6,686

8,584

Total operating expenses

18,164

20,272

Loss from operations

(18,164)

(20,256)

Other (income) expense:

Interest expense

105

511

Interest income

(5)

—

Change in fair value of convertible notes

—

2,667

Change in fair value of simple agreement for future equity

—

8,365

Change in fair value of warrant liability

—

214

(Gain) loss on foreign currency translation, net

(1)

Other (income) expense

11,765

Net loss

(18,263)

(32,021)

Net loss per share, basic and diluted

(0.15)

(0.47)

Weighted average

common shares outstanding, basic and diluted

125,709,613

68,550,993

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

VAXXINITY,

INC.

CONDENSED CONSOLIDATED

STATEMENTS

OF CONVERTIBLE PREFERRED STOCK

(in thousands, except share amounts)

(Unaudited)

Convertible Preferred Stock

Series Seed

Series Seed-1

Series Seed-2

Series A-1

Series A-2

Series A

Series B

Amount

Total

Balance at December 31, 2020

7,831,528

10,383

22,876,457

20,903

14,615,399

11,315

1,871,511

4,640

6,307,690

15,234

—

62,475

Exchange of Series Seed, Series Seed-1, Series Seed-2, Series

A-1 and Series A-2 for Series A

(7,831,528)

(10,383)

(22,876,457)

(20,903)

(14,615,399)

(11,315)

(1,871,511)

(4,640)

(6,307,690)

(15,234)

53,502,585

62,475

—

Conversion of convertible notes to Series A preferred stock,

net of debt issuance costs

—

3,624,114

27,545

—

27,545

Conversion of notes payable with related parties to Series A

convertible preferred

—

423,230

2,205

—

2,205

Conversion of Simple Agreement for Future Equity to Series A

convertible preferred

—

4,539,060

35,600

—

35,600

Conversion of warrant liability to Series A convertible

preferred

—

134,106

614

—

614

Issuance of Series B convertible preferred stock, net of

issuance costs of $

—

5,441,863

43,480

Balance at March 31, 2021

—

62,223,095

128,439

5,441,863

43,480

171,919

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

VAXXINITY,

INC.

CONDENSED CONSOLIDATED

STATEMENTS

OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

(Unaudited)

Common Stock-Class A

Common Stock-Class B

Treasury Stock

Amount

Additional Paid-in

Capital

Accumulated

Deficit

Stockholders’

Equity (Deficit)

Balance at December 31, 2021

111,518,094

278

13,874,132

—

357,822

(229,481)

128,619

Issuance of common stock upon exercise of stock options

448,998

—

121

—

121

Stock-based compensation expense

—

2,178

—

2,178

Net loss

—

(18,263)

Balance at March 31, 2022

111,967,092

278

13,874,132

—

360,121

(247,744)

112,655

Common Stock-Class A

Common Stock-Class B

Treasury Stock

Amount

Additional Paid-in

Capital

Accumulated

Deficit

Stockholders’

Equity (Deficit)

Balance at December 31, 2020

60,360,523

272

10,999,149

—

(3,169,093)

(23)

4,682

(92,306)

(87,375)

Issuance of common stock upon exercise of stock options

9,785

—

Vesting of restricted stock

15,405

—

Issuance of common stock upon stock grant

485,836

—

103

—

103

Retirement of treasury stock upon reorganization

(3,169,093)

—

3,169,093

(23)

—

Stock-based compensation expense

—

3,440

—

3,440

Net loss

—

(32,021)

Balance at March 31, 2021

57,702,456

272

10,999,149

—

8,206

(124,327)

(115,849)

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

VAXXINITY,

INC.

CONDENSED CONSOLIDATED

STATEMENTS

OF CASH FLOWS

(in thousands)

(Unaudited)

Three Months Ended March 31,

2022

2021

Cash flows from operating activities:

Net loss

(18,263)

(32,021)

Adjustments to reconcile net loss to net cash used in operating

activities:

Depreciation expense

333

282

Amortization of debt issuance costs

228

Stock-based compensation expense

2,178

3,440

Non-cash interest expense

—

Change in fair value of convertible notes

—

2,667

Change in fair value of warrant liability

—

214

Change in fair value of simple agreement for future equity

—

8,365

Changes in operating assets and liabilities:

Accounts receivable

—

Amounts due from related parties

(6)

(5)

Prepaid expenses and other current assets

667

(12,752)

Long-term deposits

(1,351)

—

Deferred offering costs

—

(

SEC Form 10-Q filed by Vaxxinity Inc.