Filing summary
Period and entity: The supplied filing is NanoAntibiotics, Inc.’s unaudited Form 10-Q for the quarter and nine months ended March 31, 2016—not a 2015 Q3 filing. The company later changed its name to BioVie Inc. The filing’s statements reflect the pre-merger company; the LAT Pharma merger closed after the reporting date, on April 11, 2016.
Financial results and position
| Metric | Three months ended March 31, 2016 | Nine months ended March 31, 2016 | Comparable 2015 period |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Operating expenses | $57,854 | $162,409 | $49,042 and $178,523, respectively |
| Net loss | $57,810 | $162,254 | $48,954 and $178,215, respectively |
| Basic and diluted loss per share | $(0.00) | $(0.00) | $(0.00) in both comparable periods |
- At March 31, 2016, cash was $233,244, total assets $233,244, current liabilities $444,706, and stockholders’ deficit $211,462. Working capital was negative $211,462. Cash had been $267,481 at June 30, 2015.
- Nine-month operating cash outflow was $34,237, compared with $54,329 in 2015. There were no investing or financing cash flows reported. The filing reports no interest expense or cash interest paid.
- Current liabilities included $444,056 accrued payroll and $650 accounts payable. No debt balance is reported.
- Common shares outstanding at March 31 were 87,210,000. Weighted-average shares were unchanged from the comparable periods.
Changes, outlook, and material matters
- Nine-month net loss narrowed by about $16,000 year over year, while quarterly net loss increased by about $9,000. Quarterly professional fees rose to $14,949 from $5,605; nine-month total operating expenses declined to $162,409 from $178,523.
- On April 11, 2016, the company acquired LAT Pharma, LLC in exchange for 39,820,000 shares; certain existing holders retired an equal number of shares, leaving 87,210,000 shares outstanding. LAT holders owned approximately 46% after the transaction. The acquisition’s provisional purchase accounting recorded a $2,389,288 intangible asset; valuation was not complete.
- The combined company planned to prioritize LAT’s CIP Terlipressin Technology, including preclinical work and preparation for an FDA investigational new drug submission. Management said the program could enter clinical trials as early as 2017 if the submission is accepted. LAT had received FDA guidance following a pre-IND meeting. The company also described a minority interest in modified terlipressin compounds developed with PharmaIN.
- Management estimated $2 million of expenses over the next 12 months if financing is obtained and said approximately $2.5 million of additional net financing was needed. The filing states existing cash was expected to last only until June 30, 2016; the company lacked sufficient funds for planned development over the next 12 months.
- The company reported substantial doubt about its ability to continue as a going concern. It had no committed financing and warned that failure to raise capital could force reduced or halted development, licensing, a sale, or cessation of operations. Funding was expected primarily from equity or debt, with possible licensing or partnership proceeds; none was assured.
- Disclosure controls and procedures were reported ineffective as of March 31, 2016. Management reported no material change in internal control during the quarter. The filing reports no material litigation and no material off-balance-sheet arrangements.
- Other risks highlighted include drug-development and regulatory uncertainty, funding needs, and difficulty obtaining licenses for the legacy nanotechnology program. No product revenue or near-term revenue was expected.
Investor verification points
- Confirm the reporting-period mismatch: this is a quarter ended March 31, 2016 filing, despite the request metadata identifying 2015 Q3.
- Verify post-quarter merger completion, final purchase-price allocation and intangible-asset valuation, and the effects of the acquisition on consolidated results and share ownership.
- Check whether the company raised the stated additional financing and how long available cash ultimately supported operations.
- Track FDA submission progress and any evidence supporting the proposed clinical-trial timing for CIP Terlipressin Technology.
- Review subsequent filings for remediation of ineffective disclosure controls and changes in accrued payroll or other liabilities.