10-Q 1 pali-20220630.htm 10-Q 10-Q
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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 June 30, 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: 001-33672

 

PALISADE BIO, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

52-2007292

(State or other jurisdiction of

incorporation or organization)

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

 

 

7750 El Camino Real, Suite 5200

Carlsbad, California

92009

(Address of principal executive offices)

(Zip Code)

(858) 704-4900

(Registrant’s telephone number, including area code)

 

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

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.01 par value

 

PALI

 

Nasdaq Capital 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 ☒ No ☐

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 ☒ No ☐

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 the 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). Yes ☐ No

As of August 11, 2022, there were 21,880,169 shares of common stock, $0.01 par value, outstanding.

 

 

 

 


 

Palisade Bio, Inc.

Table of Contents

 

 

 

Page

PART I -

FINANCIAL INFORMATION

1

 

 

 

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets

1

 

Condensed Consolidated Statements of Operations

2

 

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

3

 

Condensed Consolidated Statements of Cash Flows

7

 

Notes to Condensed Consolidated Financial Statements

8

Item 2.

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

23

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

34

Item 4.

Controls and Procedures

34

 

 

 

PART II -

OTHER INFORMATION

36

 

 

 

Item 1.

Legal Proceedings

36

Item 1A.

Risk Factors

36

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

67

Item 3.

Defaults Upon Senior Securities

67

Item 4.

Mine Safety Disclosure

67

Item 5.

Other Information

67

Item 6.

Exhibits

67

 

 

 

SIGNATURES

71

 

 

 

i


 

PART I

FINANCIAL INFORMATION

ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Palisade Bio, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

 

 

 

June 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

4,980

 

 

$

10,495

 

Prepaid expenses and other current assets

 

 

2,435

 

 

 

1,879

 

Total current assets

 

 

7,415

 

 

 

12,374

 

Restricted cash

 

 

26

 

 

 

26

 

Right-of-use asset

 

 

363

 

 

 

109

 

Property and equipment, net

 

 

2

 

 

 

3

 

Total assets

 

$

7,806

 

 

$

12,512

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,041

 

 

$

1,323

 

Accrued liabilities

 

 

1,034

 

 

 

463

 

Accrued compensation and benefits

 

 

76

 

 

 

511

 

Current portion of lease liability

 

 

98

 

 

 

112

 

Current portion of debt

 

 

611

 

 

 

87

 

Total current liabilities

 

 

2,860

 

 

 

2,496

 

Warrant liability

 

 

469

 

 

 

2,651

 

Lease liability, net of current portion

 

 

266

 

 

 

 

Total liabilities

 

 

3,595

 

 

 

5,147

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Series A Convertible Preferred Stock, 7,000,000 shares authorized, $0.01
par value;
200,000 issued and outstanding at
June 30, 2022 and December 31, 2021

 

 

2

 

 

 

2

 

Common stock, $0.01 par value; 300,000,000 shares
authorized as of June 30, 2022 and December 31, 2021,
21,880,169 and 14,239,177 shares issued and
outstanding at June 30, 2022 and December 31, 2021, respectively

 

 

220

 

 

 

143

 

Additional paid-in capital

 

 

105,180

 

 

 

101,862

 

Accumulated deficit

 

 

(101,191

)

 

 

(94,642

)

Total stockholders' equity

 

 

4,211

 

 

 

7,365

 

Total liabilities and stockholders' equity

 

$

7,806

 

 

$

12,512

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

1


 

Palisade Bio, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except share and per share amounts)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

1,317

 

 

$

314

 

 

$

2,276

 

 

$

1,006

 

In-process research and development

 

 

 

 

 

30,117

 

 

 

 

 

 

30,117

 

General and administrative

 

 

2,255

 

 

 

2,427

 

 

 

5,184

 

 

 

3,688

 

Total operating expenses

 

 

3,572

 

 

 

32,858

 

 

 

7,460

 

 

 

34,811

 

Loss from operations

 

 

(3,572

)

 

 

(32,858

)

 

 

(7,460

)

 

 

(34,811

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Gain on forgiveness of PPP loan

 

 

 

 

 

 

 

 

 

 

 

279

 

Loss on issuance of secured debt

 

 

 

 

 

 

 

 

 

 

 

(686

)

Gain on change in fair value of warrant liability

 

 

1,225

 

 

 

5,133

 

 

 

2,018

 

 

 

5,175

 

Gain on change in fair value of share liability

 

 

 

 

 

73

 

 

 

 

 

 

73

 

Interest expense

 

 

(5

)

 

 

(655

)

 

 

(6

)

 

 

(2,367

)

Other income

 

 

8

 

 

 

16

 

 

 

9

 

 

 

16

 

Loss on issuance of LBS Series 1 Preferred Stock

 

 

 

 

 

(1,881

)

 

 

 

 

 

(1,881

)

Loss on issuance of warrants

 

 

 

 

 

(1,574

)

 

 

(1,110

)

 

 

(1,574

)

Total other income (expense)

 

 

1,228

 

 

 

1,112

 

 

 

911

 

 

 

(965

)

Net loss

 

$

(2,344

)

 

$

(31,746

)

 

$

(6,549

)

 

$

(35,776

)

Loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.12

)

 

$

(3.59

)

 

$

(0.36

)

 

$

(6.17

)

Diluted

 

$

(0.12

)

 

$

(4.10

)

 

$

(0.36

)

 

$

(6.96

)

Weighted average shares used in computing loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

20,294,652

 

 

 

8,831,517

 

 

 

18,281,788

 

 

 

5,803,010

 

Diluted

 

 

20,294,652

 

 

 

8,984,198

 

 

 

18,281,788

 

 

 

5,879,351

 

Net loss attributable to common shares - basic

 

$

(2,344

)

 

$

(31,746

)

 

$

(6,549

)

 

$

(35,776

)

Net loss attributable to common shares - diluted

 

$

(2,344

)

 

$

(36,865

)

 

$

(6,549

)

 

$

(40,895

)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

2


 

Palisade Bio, Inc.

Condensed Consolidated Statements Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands, except share amounts)

(Unaudited)

 

 

 

Three Months Ended June 30, 2022

 

 

 

Series C Convertible
Preferred Stock

 

 

 

Preferred Stock

 

 

Common Stock

 

 

Additional
Paid-in
Capital

 

 

Accumulated
Deficit

 

 

Total
Stockholders'
Equity (Deficit)

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2022

 

 

 

 

$

 

 

 

 

200,000

 

 

$

2

 

 

 

18,233,479

 

 

$

183

 

 

$

103,454

 

 

$

(98,847

)

 

$

4,792

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,344

)

 

 

(2,344

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

336

 

 

 

 

 

 

336

 

Issuance of common stock and warrants in direct registered offering, net of issuance costs of $634 (Note 5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,646,690

 

 

 

37

 

 

 

1,390

 

 

 

 

 

 

1,427

 

Balance, June 30, 2022

 

 

 

 

$

 

 

 

 

200,000

 

 

$

2

 

 

 

21,880,169

 

 

$

220

 

 

$

105,180

 

 

$

(101,191

)

 

$

4,211

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

3


 

Palisade Bio, Inc.

Condensed Consolidated Statements Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands, except share amounts)

(Unaudited)

 

 

 

 

Three Months Ended June 30, 2021

 

 

 

Series C Convertible
Preferred Stock

 

 

 

Preferred Stock

 

 

Common Stock

 

 

Additional
Paid-in
Capital

 

 

Accumulated
Deficit

 

 

Total
Stockholders'
Equity (Deficit)

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2021

 

 

11,674,131

 

 

$

9,503

 

 

 

 

 

 

$

 

 

 

2,774,502

 

 

$

28

 

 

$

51,965

 

 

$

(72,056

)

 

$

(20,063

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(31,746

)

 

 

(31,746

)

Issuance of common stock to vendor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

118,833

 

 

 

1

 

 

 

1,183

 

 

 

 

 

 

1,184

 

Issuance of common stock warrants related to promissory note

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16

 

 

 

 

 

 

16

 

Issuance of LBS Series 1 Preferred shares upon conversion of senior secured debt

 

 

 

 

 

 

 

 

 

786,957

 

 

 

 

 

 

 

 

 

 

 

 

2,421

 

 

 

 

 

 

2,421

 

Issuance of LBS Series 1 Preferred shares

 

 

 

 

 

 

 

 

 

4,516,611

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of LBS Series 1 Preferred stock to common shares upon Merger

 

 

 

 

 

 

 

 

 

(5,303,568

)

 

 

 

 

 

5,303,568

 

 

 

53

 

 

 

(53

)

 

 

 

 

 

 

Conversion of LBS Series C Preferred shares to common shares upon Merger

 

 

(11,674,131

)

 

 

(9,503

)

 

 

 

 

 

 

 

 

 

317,420

 

 

 

3

 

 

 

9,500

 

 

 

 

 

 

9,503

 

Issuance of common shares to former shareholders of Seneca upon Merger

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,884,375

 

 

 

29

 

 

 

28,699

 

 

 

 

 

 

28,728

 

Acquisition of Seneca Series A Convertible Preferred Stock upon Merger

 

 

 

 

 

 

 

 

 

200,000

 

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

Restricted stock units vested upon Merger

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

41

 

 

 

 

 

 

41

 

Equity warrant put rights activated upon Merger

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(51

)

 

 

 

 

 

(51

)

Expiration of put rights on equity classified warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26

 

 

 

 

 

 

26

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

495

 

 

 

 

 

 

495

 

Balance, June 30, 2021

 

 

 

 

$

 

 

 

 

200,000

 

 

$

2

 

 

 

11,398,698

 

 

$

114

 

 

$

94,242

 

 

$

(103,802

)

 

$

(9,444

)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

4


 

Palisade Bio, Inc.

Condensed Consolidated Statements Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands, except share amounts)

(Unaudited)

 

 

 

Six Months Ended June 30, 2022

 

 

 

Series C Convertible
Preferred Stock

 

 

 

Preferred Stock

 

 

Common Stock

 

 

Additional
Paid-in
Capital

 

 

Accumulated
Deficit

 

 

Total
Stockholders'
Equity (Deficit)

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2021

 

 

 

 

$

 

 

 

 

200,000

 

 

$

2

 

 

 

14,239,177

 

 

$

143

 

 

$

101,862

 

 

$

(94,642

)

 

$

7,365

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,549

)

 

 

(6,549

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

694

 

 

 

 

 

 

694

 

Issuance of common stock upon warrant exercises