Table of Contents

 

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, 2020

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 001-32954

 


 

CLEVELAND BIOLABS, INC.

(Exact name of registrant as specified in its charter)

 


 

DELAWARE

20-0077155

(State or other jurisdiction of incorporation or organization)

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

 

 

73 High Street, Buffalo, New York

14203

(Address of principal executive offices)

(Zip Code)

 

(716) 849-6810

(Registrant’s telephone number, including area code) 

 

N/A

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

 


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 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, a 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  ☒

 

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, par value $0.005

 

CBLI

 

NASDAQ Capital Market

 

As of July 24, 2020, there were 13,016,387 shares outstanding of the registrant’s common stock, par value $0.005 per share.

 

 

 

 

TABLE OF CONTENTS

 

 

PAGE

PART I – FINANCIAL INFORMATION

 

ITEM 1.

Consolidated Condensed Financial Statements

 

 

Consolidated Condensed Balance Sheets

3

 

Consolidated Condensed Statements of Operations

4

 

Consolidated Condensed Statements of Comprehensive Loss

5

 

Consolidated Condensed Statement of Stockholders’ Equity

6

 

Consolidated Condensed Statements of Cash Flows

7

 

Notes to Consolidated Condensed Financial Statements

8

ITEM 2.

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

15

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

20

ITEM 4.

Controls and Procedures

20

 

 

PART II – OTHER INFORMATION

 

ITEM 1.

Legal Proceedings

21

ITEM 1A.

Risk Factors

21

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

21

ITEM 3.

Defaults Upon Senior Securities

21

ITEM 4.

Mine Safety Disclosures

21

ITEM 5.

Other Information

21

ITEM 6.

Exhibits

22

Signatures

 

23

 

In this Quarterly Report on Form 10-Q, unless otherwise stated or the context otherwise requires, the terms "Cleveland BioLabs," the "Company," "CBLI," "we," "us" and "our" refer to Cleveland BioLabs, Inc. and its consolidated subsidiaries, BioLab 612, LLC and Panacela Labs, Inc. Our common stock, par value $0.005 per share, is referred to as "common stock."

 

 

 

 

CLEVELAND BIOLABS, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

 

 

   

June 30, 2020

   

December 31, 2019

 
   

(Unaudited)

         

ASSETS

               

Current assets:

               

Cash and cash equivalents

  $ 3,409,310     $ 1,126,124  

Short-term investments

    357,391       452,301  

Accounts receivable

    246,552       378,865  

Other current assets

    56,751       45,381  

Total current assets

    4,070,004       2,002,671  

Equipment, net

    9,233       15,514  

Other long-term assets

    -       18,667  

Total assets

  $ 4,079,237     $ 2,036,852  

LIABILITIES AND STOCKHOLDERS’ EQUITY

               

Current liabilities:

               

Accounts payable

  $ 301,618     $ 263,573  

Accrued expenses

    210,223       782,579  

Accrued warrant liability

    275,494       6,414  

Total current liabilities

    787,335       1,052,566  

Non-current liabilities

           

Total liabilities

    787,335       1,052,566  

Stockholders’ equity:

               

Preferred stock, $.005 par value; 1,000,000 shares authorized as of June 30, 2020 and December 31, 2019; 0 shares issued and outstanding as of June 30, 2020 and December 31, 2019

           

Common stock, $.005 par value; 25,000,000 shares authorized as of June 30, 2020 and December 31, 2019; 12,927,988 and 11,298,239 shares issued and outstanding as of June 30, 2020 and December 31, 2019

    64,163       56,487  

Additional paid-in capital

    166,503,441       163,161,523  

Accumulated other comprehensive loss

    (612,124 )     (568,030 )

Accumulated deficit

    (167,663,942 )     (166,705,572 )

Total Cleveland BioLabs, Inc. stockholders’ deficit

    (1,708,462 )     (4,055,592 )

Noncontrolling interest in stockholders’ equity

    5,000,364       5,039,878  

Total stockholders’ equity

    3,291,902       984,286  

Total liabilities and stockholders’ equity

  $ 4,079,237     $ 2,036,852  

 

See Notes to Consolidated Financial Statements

 

3

Table of Contents

 

 

CLEVELAND BIOLABS, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

   

For the Three Months Ended

   

For the Six Months Ended

 
   

June 30,

   

June 30,

 
   

2020

   

2019

   

2020

   

2019

 

Revenues:

                               

Grants and contracts

  $ 63,255     $ 276,967     $ 219,297     $ 474,886  

Operating expenses:

                               

Research and development

    170,007       599,578       388,215       1,112,999  

General and administrative

    485,439       448,991       867,605       923,661  

Total operating expenses

    655,446       1,048,569       1,255,820       2,036,660  

Loss from operations

    (592,191 )     (771,602 )     (1,036,523 )     (1,561,774 )

Other income (expense):

                               

Interest and other income

    508,811       25,930       511,711       18,282  

Foreign exchange loss

    (780 )     (388 )     (387 )     (1,059 )

Change in value of warrant liability

    (292,385 )     112,466       (453,074 )     17,645  

Total other income (expense)

    215,646       138,008       58,250       34,868  

Net loss

    (376,545 )     (633,594 )     (978,273 )     (1,526,906 )

Net loss attributable to noncontrolling interests

    6,707       16,766       19,903       37,135  

Net loss attributable to Cleveland BioLabs, Inc.

  $ (369,838 )   $ (616,828 )   $ (958,370 )   $ (1,489,771 )

Net loss attributable to common stockholders per share of common stock, basic and diluted

  $ (0.03 )   $ (0.05 )     (0.08 )     (0.13 )

Weighted average number of shares used in calculating net loss per share, basic and diluted

    11,947,364       11,298,239       11,651,761       11,298,239  

 

See Notes to Consolidated Financial Statements

 

4

Table of Contents

 

 

CLEVELAND BIOLABS, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

 

   

For the Three Months Ended

   

For the Six Months Ended

 
   

June 30,

   

June 30,

 
   

2020

   

2019

   

2020

   

2019

 

Net loss including noncontrolling interests

  $ (376,545 )   $ (633,594 )   $ (978,273 )   $ (1,526,906 )

Other comprehensive loss:

                               

Foreign currency translation adjustment

    44,395       14,580       (63,705 )     55,330  

Comprehensive loss including noncontrolling interests

    (332,150 )     (619,014 )     (1,041,978 )     (1,471,576 )
Comprehensive loss attributable to noncontrolling interests     (7,305 )     12,054       39,514       18,432  

Comprehensive loss attributable to Cleveland BioLabs, Inc.

  $ (339,455 )   $ (606,960 )   $ (1,002,464 )   $ (1,453,144 )

 

See Notes to Consolidated Financial Statements

 

5

Table of Contents

 

 

CLEVELAND BIOLABS, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

                                   

Additional

 
   

Common Stock

   

Treasury Stock

   

Paid-In

 
   

Shares

   

Amount

   

Shares

   

Amount

   

Capital

 

Balance at December 31, 2018

    11,298,239     $ 56,487           $     $ 163,161,523  

Exercise of warrants

                             

Net loss

                             

Unrealized loss on short-term investments

                             

Foreign currency translation

                             

Balance at March 31, 2019

    11,298,239     $ 56,487           $ -     $ 163,161,523  

Net loss

                             
Unrealized loss on short-term investments                              

Foreign currency translation

                             
Balance at June 30, 2019     11,298,239     $ 56,487           $     $ 163,161,523  
                                         

Balance at December 31, 2019

    11,298,239     $ 56,487           $ -     $ 163,161,523  
Exercise of warrants     105,000       53                   504,853  
Net loss                              
Unrealized loss on short-term investments                              
Foreign currency translation                              

Balance at March 31, 2020

    11,403,239     $ 56,540           $ -     $ 163,666,376  
Issuance of common stock, net of offering costs     1,515,878       7,579                   2,775,846  
Exercise of warrants     8,871       44                   61,219  
Net loss                              
Unrealized loss on short-term investments                              
Foreign currency translation                              
Balance at June 30, 2020     12,927,988     $ 64,163           $     $ 166,503,441  

 

    Accumulated Other Comprehensive Income (Loss)     Accumulated Deficit    

Noncontrolling Interests

   

Total

 

Balance at December 31, 2018

  $ (611,370 )   $ (164,058,585 )   $ 5,065,972     $ 3,614,027  

Exercise of warrants

                       

Net loss

          (872,943 )     (20,369 )     (893,312 )

Unrealized loss on short-term investments

                       

Foreign currency translation

    26,759             13,991       40,750  

Balance at March 31, 2019

  $ (584,611 )   $ (164,931,528 )   $ 5,059,594     $ 2,761,465  

Net loss

          (616,828 )     (16,766 )     (633,594 )
Unrealized loss on short-term investments                        

Foreign currency translation

    9,868             4,712       14,580  
Balance at June 30, 2019   $ (574,743 )   $ (165,548,356 )   $ 5,047,540     $ 2,142,451  
                                 

Balance at December 31, 2019

  $ (568,030 )   $ (166,705,572 )   $ 5,039,878     $ 984,286  
Exercise of warrants                       504,906  
Net loss           (588,532 )     (13,196 )     (601,728 )
Unrealized loss on short-term investments                        
Foreign currency translation     (74,477 )           (33,623 )     (108,100 )

Balance at March 31, 2020

  $ (642,507 )   $ (167,294,104 )   $ 4,993,059     $ 779,364  
Issuance of common stock, net of offering costs                       2,783,425  
Exercise of warrants                       61,263  
Net loss           (369,838 )     (6,707 )     (376,545 )
Unrealized loss on short-term investments                        
Foreign currency translation     30,383             14,012       44,395  
Balance at June 30, 2020   $ (612,124 )   $ (167,663,942 )   $ 5,000,364     $ 3,291,902  

 

See Notes to Consolidated Financial Statements

 

6

Table of Contents

 

 

CLEVELAND BIOLABS, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

    For the Six Months Ended June 30,  
   

2020

   

2019

 

Cash flows from operating activities:

               

Net loss

  $ (978,273 )   $ (1,526,906 )

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

               

Depreciation and amortization

    5,928       7,529  

Gain on equipment disposal

          (37,250 )

Accrued liability extinguishment

    (501,892 )      

Change in value of warrant liability

    453,074       (17,645 )

Changes in operating assets and liabilities:

               

Accounts receivable and other current assets

    120,157       (56,925 )

Other long-term assets

    18,667       11,849  

Accounts payable and accrued expenses

    (19,665 )     33,453  

Net cash used in operating activities

    (902,004 )     (1,585,895 )

Cash flows from investing activities:

               

Purchase of short-term investments

    (360,379 )     (382,598 )

Sale of short-term investments

    403,624       535,637  

Proceeds from sale of equipment

          37,250  

Net cash provided by investing activities

    43,245       190,289  

Cash flows from financing activities:

               
Issuance of common stock, net of offering costs     2,783,425        

Exercise of warrants

    382,215        

Net cash provided by financing activities

    3,165,640        

Effect of exchange rate change on cash and equivalents

    (23,695 )     16,189  

Increase (decrease) in cash and cash equivalents

    2,283,186       (1,379,417 )

Cash and cash equivalents at beginning of period

    1,126,124       3,617,234  

Cash and cash equivalents at end of period

  $ 3,409,310     $ 2,237,817  

 

See Notes to Consolidated Financial Statements

 

7

Table of Contents

 

CLEVELAND BIOLABS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

 

 

1. Description of Business

 

Cleveland BioLabs, Inc. ("CBLI" or the "Company") is an innovative biopharmaceutical company developing novel approaches to activate the immune system and address serious medical needs. Our proprietary platform of Toll-like immune receptor ("TLR") activators has applications in radiation protection and oncology. We combine our proven scientific expertise and our depth of knowledge about our products’ mechanisms of action into a passion for developing drugs to save lives. Our most advanced product candidate is entolimod, an immune-stimulatory agent, which we are developing as a medical radiation countermeasure and other indications in radiation oncology.

 

CBLI was incorporated in Delaware in June 2003 and is headquartered in Buffalo, New York. CBLI conducts business in the United States ("U.S.") directly and in the Russian Federation ("Russia") through two subsidiaries: one wholly owned subsidiary, BioLab 612, LLC ("BioLab 612"), which began operations in 2012 and which the Company at a September 2019 Board meeting decided to dissolve; and Panacela Labs, Inc. ("Panacela"), which was formed by us and Joint Stock Company "RUSNANO" ("RUSNANO"), our financial partner in the venture, in 2011. Unless otherwise noted, references to the "Company," "we," "us," and "our" refer to Cleveland BioLabs, Inc. together with its subsidiaries.

 

In addition, the Company has an investment in Genome Protection, Inc. ("GPI") that is recorded under the equity method of accounting in the accompanying financial statements. The Company has not recorded its 50% share of the losses of GPI through June 30, 2020 as the impact would have reduced the Company's equity method investment in GPI below zero, and there are no requirements to fund the Company's share of these losses or contribute additional capital as of the date of these statements. 

 

 

2. Summary of Significant Accounting Policies

 

Basis of Presentation and Consolidation

 

The accompanying unaudited consolidated condensed financial statements include the accounts of CBLI, BioLab 612, and Panacela. All significant intercompany balances and transactions have been eliminated in consolidation.

 

The consolidated condensed balance sheet as of December 31, 2019, which has been derived from audited financial statements, and the unaudited interim consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim consolidated financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These consolidated condensed financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC (the "2019 Form 10-K").

 

In the opinion of the Company’s management, any adjustments contained in the accompanying unaudited consolidated financial statements are of a normal recurring nature, and are necessary to fairly present the financial position of the Company as of June 30, 2020, along with its results of operations for the three and six month periods ended June 30, 2020 and 2019 and cash flows for the six-month periods ended June 30, 2020 and 2019. Interim results are not necessarily indicative of results that may be expected for any other interim period or for an entire year.

 

At June 30, 2020, we had cash, cash equivalents and short-term investments of $3.8 million in the aggregate. Management believes this capital will be sufficient to support operations beyond one year from this filing. To ensure continuing operations beyond that point, management is evaluating all opportunities, including seeking additional capital through debt or equity financing, the sale or license of drug candidates, the sale of certain of our tangible and/or intangible assets, the sale of interests in our subsidiaries or joint ventures, obtaining additional government research funding, or entering into other strategic transactions. Management believes that sufficient sources of financing will be available to support operations into the future, however there can be no assurances at this time. These financial statements have been prepared under the assumption that the Company will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty.

 

8

 

Recent Accounting Pronouncements

 

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") or other standard-setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption.

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Short-Term Investments

 

The Company’s short-term investments are classified as held to maturity and are recorded at amortized cost. Short-term investments consisted of $0.4 million in certificates of deposit owned by Panacela that have maturity dates falling beyond three months and less than one year. These investments are classified as held to maturity given the intent and ability to hold the investments to maturity. Realized gains and losses, and interest and dividends on short-term investments are recorded in our Consolidated Statement of Operations as Interest and Other Income. The cost of securities sold is based on the specific identification method.

 

Significant Customers and Accounts Receivable

 

The following table presents our revenue by customer, on a proportional basis, for the three and six months ended June 30, 2020 and 2019.

 

   

Three Months Ended

 

Six Months Ended

   

June 30,

 

June 30,

Customer

 

2020

   

2019

   

Variance

   

2020

   

2019

   

Variance

 

Department of Defense

    86.8 %     51.3 %     35.5 %     77.5 %     43.3 %     -34.2 %

Incuron

    13.2 %     48.7 %     (35.5 )%     22.5 %     56.7 %     -34.2 %

Total

    100.0 %     100.0 %     %     100.0 %     100.0 %     %

 

Our current Department of Defense ("DoD") revenues come from development contracts that expire in 2020. Revenues from Incuron LLC, a company in which the Company previously owned an equity interest ("Incuron"), come from a service agreement.

 

Accounts receivable consist of amounts due under reimbursement contracts with these customers. The Company extends unsecured credit to the above customers under normal trade agreements, which generally require payment within 30 days.

 

Other Comprehensive Income (Loss)

 

The Company applies the Accounting Standards Codification ("Codification") on comprehensive income (loss) that requires disclosure of all components of comprehensive income (loss) on an annual and interim basis. Other comprehensive income (loss) is defined as the change in equity of a business enterprise during a period arising from transactions and other events and circumstances from non-owner sources. The following table presents the changes in accumulated other comprehensive loss for the six months ended June 30, 2020.

 

   

Gains and losses on foreign exchange translations

 

Beginning balance

  $ (568,030 )

Other comprehensive income (loss) before reclassifications

    (44,094 )

Amounts reclassified from accumulated other comprehensive loss

     

Ending balance

  $ (612,124 )

 

9

 

Accounting for Stock-Based Compensation

 

The Cleveland Biolabs, Inc. Equity Incentive Plan, adopted in 2018 (the "Plan"), authorizes CBLI to grant (i) options to purchase common stock, (ii) restricted or unrestricted stock units, and (iii) stock appreciation rights, so long as the exercise or grant price of each are at least equal to the fair market value of the stock on the date of grant. As of June 30, 2020, an aggregate of 597,557 shares of common stock were authorized for issuance under the Plan, of which a total of 507,644 shares of common stock remained available for future awards. In addition, a total of 89,913 shares of common stock reserved for issuance were subject to currently outstanding stock options granted under The Cleveland BioLabs, Inc. Equity Incentive Plan, as in effect prior to the 2018 amendment and restatement. A single participant cannot be awarded more than 100,000 shares annually. Awards granted under the Plan have a contractual life of no more than 10 years. The terms and conditions of equity awards (such as price, vesting schedule, term, and number of shares) under the Plan are specified in an award document, and approved by the Company’s board of directors or its management delegates.

 

The 2013 Employee Stock Purchase Plan (the "ESPP") provides a means by which eligible employees of the Company and certain designated related corporations may be given an opportunity to purchase shares of common stock. As of June 30, 2020, there are 725,000 shares of common stock reserved for purchase under the ESPP. The number of shares reserved for purchase under the ESPP increases on January 1 of each calendar year by the lesser of: (i) 10% of the total number of shares of common stock outstanding on December 31st of the preceding year, or (ii) 100,000 shares of common stock. The ESPP allows employees to use up to 15% of their compensation to purchase shares of common stock at an amount equal to 85% of the fair market value of the Company’s common stock on the offering date or the purchase date, whichever is less.

 

The Company utilizes the Black-Scholes valuation model for estimating the fair value of all stock options granted where the vesting period is based on length of service or performance, while a Monte Carlo simulation model is used for estimating the fair value of stock options with market-based vesting conditions. No options were granted during the six months ended June 30, 2020 and June 30, 2019.

 

Income Taxes

 

No income tax expense was recorded for the three and six months ended June 30, 2020 and 2019 as the Company does not expect to have taxable income for 2020 and did not have taxable income in 2019. A full valuation allowance has been recorded against the Company’s net deferred tax asset.

 

At June 30, 2020, the Company had U.S. federal net operating loss carryforwards of approximately $146.7 million, of which $139.7 million begins to expire if not utilized by 2023, and $7.0 million, which has no expiration, and approximately $4.2 million of tax credit carryforwards, which begin to expire if not utilized by 2024. The Company also has state net operating loss carryforwards of approximately $92.6 million, which begin to expire if not utilized by 2027, and state tax credit carryforwards of approximately $0.3 million, which begin to expire if not utilized by 2022. The purchase of 6,459,948 shares of common stock by David Davidovich on July 9, 2015 resulted in Mr. Davidovich owning 60.2% of the Company at that time. We therefore believe it highly likely that this transaction will be viewed by the U.S. Internal Revenue Service as a change of ownership as defined by Section 382 of the Internal Revenue Code. Consequently, our ability to utilize approximately $124.8 million of U.S. federal net operating loss carryforwards, $3.65 million of U.S. tax credit carryforwards, approximately $73.4 million of state net operating loss carryforwards, and $0.3 million of state tax credit carryforwards, all of which occurred prior to July 9, 2015, are limited. As such, a significant portion of these carryforwards will likely expire before they can be utilized, even if the Company is able to generate taxable income that, except for the foregoing transaction, would have been sufficient to fully utilize these carryforwards.

 

Earnings (Loss) per Share

 

Basic net loss per share of common stock excludes dilution for potential common stock issuances and is computed by dividing net loss by the weighted average number of shares outstanding for the period. Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Diluted net loss per share is identical to basic net loss per share as potentially dilutive securities have been excluded from the calculation of diluted net loss per common share because the inclusion of such securities would be antidilutive.

 

The Company has excluded the following securities from the calculation of diluted net loss per share because all such securities were antidilutive for the periods presented. Additionally, there were no dilutive securities outstanding as of June 30, 2020.

 

   

As of June 30,

 

Common Equivalent Securities

 

2020

   

2019

 

Warrants

    1,068,494       327,253  

Options

    89,913       136,813  

Total

    1,158,407       464,066  

 

Contingencies

 

From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business. The Company accrues for liabilities when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. The Company recorded a revenue loss contingency of $544,000 in the fourth quarter of 2019 related to deposits paid to a supplier in support of our JWMRP contract (as defined below) which the Company may have been responsible for repaying to the DoD.  This amount was recorded as an accrued expense in the December 31, 2019 Consolidated Balance Sheet.  During July 2020, the Company settled with the supplier for repayment of the deposit.  The Company used the proceeds from the return of the deposit to repay the DoD in settlement of any outstanding contingent event.  Accordingly, the Company recorded an extinguishment of the accrued liability to other income in the amount of $501,892 during June 2020. 

 

10

 

 

3. Fair Value of Financial Instruments

 

The Company measures and records warrant liabilities at fair value in the accompanying financial statements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, an exit price, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value, includes:

 

 

Level 1 – Observable inputs for identical assets or liabilities such as quoted prices in active markets;

 

 

Level 2 – Inputs other than quoted prices in active markets that are either directly or indirectly observable; and

 

 

Level 3 – Unobservable inputs in which little or no market data exists, which are therefore developed by the Company using estimates and assumptions that reflect those that a market participant would use.

 

Cash equivalents include United States Treasury Notes with original maturities of three months or less at time of purchase and money market funds. Short-term investments primarily include certificates of deposit at commercial banking institutions, with maturities of three months or more at time of purchase.

 

The valuation methodologies used to measure the fair value of the Company’s assets and instruments classified in stockholders’ equity are described as follows: Certificates of deposit are carried at amortized cost, which approximates fair value and are included within short-term investments as a Level 2 measurement in the table below.

 

The following tables represent the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis.

 

   

As of June 30, 2020

 
   

Level 1

   

Level 2

   

Level 3

   

Total

 

Assets:

                               

Cash and cash equivalents

  $     $     $     $  

Short-term investments

          357,391             357,391  

Total assets

  $     $ 357,391     $     $ 357,391  

Liabilities:

                               

Accrued warrant liability

  $     $     $ 275,494     $ 275,494  

    

   

As of December 31, 2019

 
   

Level 1

   

Level 2

   

Level 3

   

Total

 

Assets:

                               

Cash and cash equivalents

  $     $     $     $  

Short-term investments

          452,301             452,301  

Total assets

  $     $ 452,301     $     $ 452,301  

Liabilities:

                               

Accrued warrant liability

  $     $     $ 6,414     $ 6,414  

 

The Company uses the Black-Scholes model to measure the accrued warrant liability. The following are the assumptions used to measure the accrued warrant liability which were determined in a manner consistent with grants of options to purchase common stock:

        

   

June 30, 2020

 

December 31, 2019

Stock Price

 

$2.57

 

$0.60

Exercise Price

 

$2.03 - $20.40

 

$3.64 - $20.40

Term in years

 

0.54 - 1.10

 

1.04 - 1.60

Volatility

 

210.64 - 279.43%

 

84.59 - 98.24%

Annual rate of quarterly dividends

 

—%

 

—%

Discount rate- bond equivalent yield

 

0.09 - 0.16%

 

1.58 - 1.59%

 

11

 

The following table sets forth a summary of changes in the fair value of the Company’s Level 3 fair value measurements for the periods indicated:

 

   

Three Months Ended

   

Three Months Ended

 
   

June 30, 2020

   

June 30, 2019

 
    Accrued Warrant Liability     Accrued Warrant Liability  

Beginning Balance

  $ 44,412     $ 173,458  

Total (gains) or losses, realized and unrealized, included in earnings (1)

    292,385       (112,466 )

Issuances

           

Settlements

    (61,303 )      

Ending Balance

  $ 275,494     $ 60,992  

 

 

   

Six Months Ended

   

Six Months Ended

 
   

June 30, 2020

   

June 30, 2019

 
   

Accrued Warrant Liability

   

Accrued Warrant Liability

 
Beginning Balance   $ 6,414     $ 78,637  
Total (gains) or losses, realized and unrealized, included in earnings (1)     453,074       (17,645 )

Issuances

           

Settlements

    (183,994 )      

Ending Balance

  $ 275,494     $ 60,992  

 

(1)

Unrealized gains or losses related to the accrued warrant liability were included as change in value of accrued warrant liability. There were no realized gains or losses for the three and six months ended June 30, 2020 and 2019.

 

As of June 30, 2020 and December 31, 2019, the Company had no assets or liabilities that were measured at fair value on a nonrecurring basis.

 

The Company considers the accrued warrant liability to be Level 3 because some of the inputs into the measurements are neither directly nor indirectly observable. The accrued warrant liability uses management’s estimate for the expected term. As of June 30, 2020, the Black-Scholes pricing model was used as the valuation technique for the accrued warrant liability and used the unobservable input for the expected term of 0.54 – 1.10 years.

 

Management believes the value of the accrued warrant liability is more sensitive to a change in the Company’s stock price at the end of the respective reporting period as opposed to a change in the unobservable input described above.

 

The carrying amounts of the Company’s short-term financial instruments, which include cash and cash equivalents, accounts receivable and accounts payable, approximate their fair values due to their short maturities.

 

12

 

 

4. Stockholders’ Equity

 

During June 2020, the Company raised $2.8 million in net proceeds from the issuance of 1,515,878 shares of common stock and 871,630 stock warrants.  The stock warrants were recorded as a equity instrument and valued at $1.0 million at the date of issuance utilizing the following Black-Scholes assumptions.

 

   

June 3, 2020

Stock Price

 

$1.65

Exercise Price

 

$2.03 - $2.62

Term in years

 

5.00

Volatility

 

 98.20%

Annual rate of quarterly dividends

 

0%

Discount rate- bond equivalent yield

 

0.38%

 

Issuance costs amounted to $391,581. 

 

The Company has granted options to purchase shares of common stock. The following is a summary of option award activity during the six months ended June 30, 2020:

    

   

Total Stock Options Outstanding

    Weighted Average Exercise Price per Share  

December 31, 2019

    136,105     $ 40.07  

Granted

           

Vested

           

Forfeited, Canceled

    (46,192 )     54.64  

June 30, 2020

    89,913     $ 32.58  

 

 

The following is a summary of outstanding stock options as of June 30, 2020:

 

   

As of June 30, 2020

 
    Stock Options Outstanding     Vested Stock Options  

Quantity

    89,913       89,913  

Weighted Average Exercise Price

  $ 32.58     $ 32.58  

Weighted Average Remaining Contractual Term (in Years)

    3.43       3.43  

Intrinsic Value

  $     $  

 

For the six months ended June 30, 2020 and 2019, the Company granted no stock options. As of June 30, 2020 and 2019, the total fair value of options vested was $0.

 

As of June 30, 2020, there was no total compensation cost not yet recognized related to unvested stock options.

 

 

5. Warrants

 

In connection with previous sales of the Company’s common stock and the issuance of debt instruments, warrants were issued which presently have exercise prices ranging from $2.03 to $20.40. The warrants expire between one and seven years from the date of grant, and are subject to the terms applicable in each agreement.

 

The following table summarizes the activity in our outstanding warrants since December 31, 2019:

 

    Number of Warrants     Weighted Average Exercise Price  

December 31, 2019

    327,253     $ 8.89  

Granted

    871,630       2.11  

Exercised

    (130,389 )     2.03  

Forfeited, Canceled

           

June 30, 2020

    1,068,494     $ 3.85  

 

13

 

 

6. Significant Alliances and Related Parties

 

Roswell Park Cancer Institute

 

The Company has entered into several agreements with Roswell Park Cancer Institute ("RPCI"), including: various sponsored research agreements, an exclusive license agreement and clinical trial agreements for the conduct of the Phase 1 entolimod oncology study and the Phase 1 Curaxin CBL0137 ("Curaxin") intravenous administration study. Additionally, the Company’s Chief Scientific Officer, or CSO, Dr. Andrei Gudkov, is the Senior Vice President of Research Technology and Innovation at RPCI. The Company incurred $0 and $1,197, and $57,951 and $57,951 in research and development expense to RPCI for the three and six months ended June 30, 2020 and 2019, respectively. 

 

The Cleveland Clinic

 

CBLI has entered into an exclusive license agreement with The Cleveland Clinic pursuant to which CBLI was granted an exclusive license to The Cleveland Clinic’s research base underlying our therapeutic platform and certain product candidates licensed to Panacela. CBLI has the primary responsibility to fund all newly developed patents. However, The Cleveland Clinic retains ownership of those patents covered by the agreement. CBLI also agreed to use commercially diligent efforts to bring one or more products to market as soon as practical, consistent with sound and reasonable business practices and judgments. On August 6, 2018, CBLI sublicensed the intellectual property underlying entolimod's composition that CBLI licenses from The Cleveland Clinic to GPI. There were no milestone or royalty payments paid to The Cleveland Clinic during the three and six months ended June 30, 2020 and 2019.  The Company incurred $0 and $0, and $0 and $30,710 in research and development expense to The Cleveland Clinic during the three and six months ended June 30, 2020 and 2019, respectively.

 

Buffalo BioLabs and Incuron

 

Our CSO, Dr. Andrei Gudkov, has business relationships with Buffalo BioLabs, LLC ("BBL"), where Dr. Gudkov was a founder and currently serves as its uncompensated Principal Scientific Advisor. The Company recognized no research and development expense to BBL for the three and six months ended June 30, 2020 and 2019, respectively. The Company also recognized $0 and $0, and $9,255 and $20,808 from BBL as sublease and other income for the three and six months ended June 30, 2020 and June 30, 2019, respectively. Pursuant to our real estate sublease and equipment lease with BBL, the Company had gross accounts receivables of $6,285 and $224,491, and net accounts receivables of $6,285 and $22,340 from BBL at June 30, 2020 and 2019, respectively.

 

Dr. Gudkov is also an uncompensated member of the board of directors for Incuron. Pursuant to master service and development agreements we have with Incuron, the Company performs various research, business development, clinical advisory, and management services for Incuron. The Company recognized revenue of $8,347 and $49,357, and $134,964 and $269,031 for the three and six months ended June 30, 2020 and 2019, respectively. In addition, the Company recognized $0 and $0, and $1,134 and $2,268 from Incuron for sublease and other income for the three and six months ended June 30, 2020 and 2019, respectively. Pursuant to these agreements, the Company had accounts receivable of $139,357 and $135,720 from Incuron at June 30, 2020 and 2019, respectively.

 

Genome Protection

 

GPI incurred $13,440 and $26,880, and $47,425 and $94,850 in consultant expenses with members of the Company's Board of Directors and management team during the three and six months ended June 30, 2020 and 2019, respectively. The Company also recognized $0 and $0, and $0 and $3,031 in sublease and other income from GPI during the three and six months ended June 30, 2020 and 2019, respectively.

 

14

 

 

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

 

This management’s discussion and analysis of financial condition and results of operations and other portions of this quarterly report on Form 10-Q contain forward-looking statements that involve risks and uncertainties. All statements other than statements of current or historical fact contained in this quarterly report, including statements regarding our future financial position, business strategy, new products, budgets, liquidity, cash flows, projected costs, regulatory approvals, or the impact of any laws or regulations applicable to us, and plans and objectives of management for future operations, are forward-looking statements. The words "anticipate," "believe," "continue," "should," "estimate," "expect," "intend," "may," "plan," "project," "will," and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements on our current expectations about future events. While we believe these expectations are reasonable, such forward-looking statements are inherently subject to risks and uncertainties, many of which are beyond our control. Our actual future results may differ materially from those discussed here for various reasons. We discuss many of these risks in Item 1A under the heading "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2019. Factors that may cause such differences include, but are not limited to, our need for additional financing to meet our business objectives; our history of operating losses; our ability to successfully develop, obtain regulatory approval for, and commercialize our products in a timely manner; our plans to research, develop and commercialize our product candidates; our ability to attract collaborators with development, regulatory and commercialization expertise; our plans and expectations with respect to future clinical trials and commercial scale-up activities; our reliance on third-party manufacturers of our product candidates; the size and growth potential of the markets for our product candidates, and our ability to serve those markets; the rate and degree of market acceptance of our product candidates; regulatory requirements and developments in the United States, the European Union and foreign countries; the performance of our third-party suppliers and manufacturers; the success of competing therapies that are or may become available; our ability to attract and retain key scientific or management personnel; our reliance on government funding for a significant portion of our operating costs and expenses; government contracting processes and requirements; the exercise of control over our company by our majority stockholder; our current noncompliance with the continued listing requirements of the NASDAQ Capital Market; the impact of the novel coronavirus ("COVID-19") pandemic on our business, operations and clinical development; the geopolitical relationship between the United States and the Russian Federation as well as general business, legal, financial and other conditions within the Russian Federation; our ability to obtain and maintain intellectual property protection for our product candidates; our potential vulnerability to cybersecurity breaches; and other factors discussed below and in our other SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2019.

 

Given these uncertainties, you should not place undue reliance on these forward-looking statements. The forward-looking statements included in this quarterly report are made only as of the date hereof. We do not undertake any obligation to update any such statements or to publicly announce the results of any revisions to any of such statements to reflect future events or developments. This management’s discussion and analysis of financial condition and results of operations should be read in conjunction with our financial statements and the related notes included elsewhere in this filing and with our historical consolidated financial statements and the related notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2019.

 

OVERVIEW

 

We are an innovative biopharmaceutical company developing novel approaches to activate the immune system and address serious medical needs. Our proprietary platform of Toll-like immune receptor activators has applications in mitigation of radiation injury and radiation oncology. We combine our proven scientific expertise and our depth of knowledge about our products’ mechanisms of action into a passion for developing drugs to save lives. Our most advanced product candidate is entolimod, an immune-stimulatory agent, which we are developing as a radiation countermeasure and other indications in radiation oncology. We conduct business in the U.S. directly and in Russia through two subsidiaries, one of which is wholly owned, BioLab 612 (which the Company has decided to dissolve), and one of which is owned in collaboration with a financial partner, Panacela. In addition, we conduct business with a former subsidiary, Incuron, which will pay us a 2% royalty on future commercialization, licensing, or sale of certain technology we sold to Incuron. We also partner in a joint venture, GPI, with Everon Biosciences, Inc ("Everon").

 

Recent Developments

 

NASDAQ Listing Status

 

As previously disclosed, on February 18, 2020, the Company received written notification from the Listing Qualifications Staff (the "Staff") of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, based upon the Company’s continued non-compliance with Nasdaq Listing Rule 5550(b), which requires an issuer to maintain a minimum of $2,500,000 in stockholders’ equity (the "Rule"), the Company’s common stock would be delisted from the NASDAQ Capital Market on February 27, 2020 unless the Company timely requested a hearing before the Nasdaq Hearings Panel (the "Panel"). The Company appealed Nasdaq’s determination at a hearing before the Panel on April 2, 2020. On May 1, 2020, the Panel granted the Company a further extension to August 17, 2020 in which to regain compliance with the Rule. If the Company does not regain compliance with the Rule by August 17, 2020, then Nasdaq will delist the Company’s common stock from The Nasdaq Capital Market.  As a result of the proceeds generated from the sale of the Issued Shares on June 1, 2020, the Company is reporting stockholders’ equity in excess of $2.5 million in the financial statements included in this Quarterly Report on Form 10-Q.  Accordingly, the Company believes that it is demonstrating compliance with the Rule.  However, there can be no assurance that the Company will otherwise be determined to be compliant with the Rule or other listing standards for the Nasdaq Capital Market.

 

Registered Direct Offering

 

On June 1, 2020, we entered into a Securities Purchase Agreement (the "Purchase Agreement") with several institutional and accredited investors for the sale by the Company of 1,515,878 shares (the "Issued Shares") of the Company’s common stock at a purchase price of $2.0945 per share, in a registered direct offering. Concurrently with the sale of the Issued Shares, the Company also sold to the investors warrants to purchase up to an aggregate of 757,939 shares of common stock (the "Issued Warrants") under the Purchase Agreement. Subject to certain ownership limitations, the Issued Warrants are immediately exercisable at an exercise price equal to $2.033 per share of common stock, subject to customary adjustments as provided under the terms of the Issued Warrants. The Issued Warrants are exercisable for five years from the issuance date. The Company also issued warrants to purchase up to 113,691 shares of common stock to designees of H.C. Wainwright & Co., LLC, which served as placement agent for the offering (the "Placement Agent Warrants"). The Placement Agent Warrants have substantially the same terms as the Issued Warrants, except that the Placement Agent Warrants have an exercise price of $2.6181 per share and have a term of exercise of five years from the effective date of the offering. The closing of the sales of these securities under the Purchase Agreement occurred on June 3, 2020.

 

We received net proceeds of $2.8 million from the transaction, after deducting the placement agent’s fees and other estimated offering expenses, and excluding the proceeds, if any, from the cash exercise of the Issued Warrants. We intend to use the net proceeds from the offering for general corporate purposes, including sales and marketing expenses associated with our product candidates, funding of our development programs, payment of milestones pursuant to our license agreements, general and administrative expenses, acquisition or licensing of additional product candidates or businesses and working capital.

 

The Issued Shares (but not the Issued Warrants or shares of common stock issuable upon exercise of the Issued Warrants) were offered and sold by the Company under a prospectus supplement and accompanying prospectus filed with the SEC pursuant to an effective shelf registration statement on Form S-3, which was filed on May 21, 2020 and subsequently declared effective on May 29, 2020 (File No. 333-238578) (the "Form S-3 Registration Statement").

 

The Issued Warrants and the shares issuable upon exercise of the Issued Warrants are being sold and issued without registration under the Securities Act of 1933, as amended (the "Securities Act"), in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as transactions not involving a public offering and Rule 506 promulgated under the Securities Act as sales to accredited investors, and in reliance on similar exemptions under applicable state laws.

 

 

COVID-19 Pandemic

 

The COVID-19 pandemic has continued to affect multiple countries, including the United States, where a national emergency was declared, and several European and Asian countries. The continued spread of COVID-19 in the United States and worldwide, as well as the government-ordered shutdown and shelter-in-place orders imposed to counter the pandemic, have led to severe disruptions to the global economy. In this connection, on March 20, 2020, the Governor of New York announced that 100% of the workforce of all businesses, excluding essential services, must stay home. During the effectiveness of this order , we have implemented a work-from-home policy for all employees based in our Buffalo, New York headquarters.  Under new applicable state orders, our offices may be occupied at 50% of their normal capacity if other safety precautions are taken, however, generally very few of our employees have returned to the office.  We are continuing to monitor the situation and will take such further action  as may be required by federal, state or local authorities, or that we determine are in the best interests of our employees.  COVID-19 and the governmental responses to it may cause us to experience disruptions that could severely impact our business, operations, preclinical studies and clinical trials The global outbreak of COVID-19 continues to rapidly evolve and has begun to have indeterminable adverse effects on general commercial activity and the world economy. The extent to which COVID-19 may impact our business, research and development efforts, preclinical studies, clinical trials, prospects for regulatory approval of our drug candidates, and operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, the extent and duration of travel restrictions and social distancing in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease. In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect our business prospects and the value of our common stock.  Furthermore, if we or any of the third parties with whom we engage were to experience shutdowns or other business disruptions, our ability to conduct our business in the manner and on the timelines presently planned could be materially and negatively impacted, which could have a material adverse effect on our business, financial condition and results of operations.

 

Financial Overview

 

Our discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect our reported amounts of assets, liabilities, revenues, and expenses.

 

On an ongoing basis, we evaluate our estimates and judgments, including those related to accrued expenses, income taxes, stock-based compensation, investments, and in-process research and development. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the reported amounts of revenues and expenses that are not readily apparent from other sources. Actual results may differ from these estimates.

 

Our revenue, operating results, and profitability have varied, and we expect that they will continue to vary on a quarterly basis, primarily due to the timing of work completed under new and existing grants, development contracts, and collaborative relationships.

 

15

Table of Contents

 

Revenue

 

Our revenue originates from grants and contracts from both United States ("U.S.") federal government sources and service contracts with Incuron. U.S. federal grants and contracts are provided to advance research and development of entolimod, our lead product candidate, which we believe is of interest for potential sale to the DoD, or the Biomedical Advanced Research and Development Authority of the U.S. Department of Health and Human Services ("BARDA"). We provide various research, management, business development, and clinical advisory services to Incuron.

 

Research and Development Expenses

 

Research and development ("R&D") costs are expensed as incurred. Advance payments are deferred and expensed as performance occurs. R&D costs include the cost of our personnel (which consists of salaries and incentive and stock-based compensation), out-of-pocket pre-clinical and clinical trial costs usually associated with contract research organizations, drug product manufacturing and formulation, and a pro-rata share of facilities expense and other overhead items.

 

General and Administrative Expenses

 

General and administrative ("G&A") functions include executive management, finance and administration, government affairs and regulations, corporate development, human resources, and legal and compliance. The specific costs include the cost of our personnel consisting of salaries, incentive and stock-based compensation, out-of-pocket costs usually associated with attorneys (both corporate and intellectual property), bankers, accountants, and other advisors and a pro-rata share of facilities expense and other overhead items.

 

Other Income and Expenses

 

Other recurring income and expenses primarily consists of interest income on our investments, changes in the market value of our derivative financial instruments, and foreign currency transaction gains or losses.

 

Critical Accounting Policies and Significant Estimates

 

Our critical accounting policies and significant estimates are detailed in our Annual Report on Form 10-K for the year ended December 31, 2019. Other than as set forth below, our critical accounting policies and significant estimates have not changed substantially from those previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019.

 

Fair Value of Financial Instruments

 

We use the held-to-maturity accounting method to determine the fair value of certain cash equivalents and short-term investments in U.S. Treasury Notes or certificates of deposit. As of June 30, 2020, we held approximately $0.4 million in certificates of deposit which we classified as Level 2.

 

We use the Black-Scholes model to determine the fair value of certain common stock warrants on a recurring basis, and classify such warrants as Level 3 in the fair value hierarchy. The Black-Scholes model utilizes inputs consisting of: (i) the closing price of our common stock; (ii) the expected remaining life; (iii) the expected volatility using a weighted average of historical volatilities of CBLI common stock and a group of comparable companies; and (iv) the risk-free market rate.

 

As of June 30, 2020, we held approximately $0.3 million in accrued expenses related to warrants to purchase common stock, which we classified as Level 3.

 

16

Table of Contents

 

Three Months Ended June 30, 2020 Compared to Three Months Ended June 30, 2019

 

Revenue

 

Revenue decreased from approximately $0.28 million for the three months ended June 30, 2019 to approximately $0.06 million for the three months ended June 30, 2020, representing a decrease of approximately $0.22 million, or 77.2%. This decrease is primarily due to decreases in revenues from our service contract with Incuron and decreases in revenue from our JWMRP contract with the DoD for continued preclinical development of entolimod, offset in part by an increase in revenues from our PRMRP contract (as defined below) with the DoD for continued clinical development of entolimod. The decrease in Incuron service contract revenue is due to delays in clinical trial activities being undertaken by Incuron. Differences in our revenue sources, by program, between the years are set forth in the following table. 

 

     

Three Months Ended June 30,

         

Funding Source

Program

 

2020

   

2019

   

Variance

 

DoD

JWMRP Contract (1)

  $ 44,544     $ 140,223     $ (95,679 )

DoD

PRMRP Contract (2)

    10,364       1,780       8,584  

Incuron

Service contract

    8,347       134,964       (126,617 )
      $ 63,255     $ 276,967     $ (213,712 )

 

(1)

The Congressionally Directed Medical Research Programs (CDMRP) Joint Warfighter Medical Research Program (JWMRP) contract was awarded on September 1, 2015.

(2)

The CDMRP Peer Reviewed Medical Research Program (PRMRP) grant was awarded effective as of September 30, 2015.

 

We anticipate our revenue over the next quarter will be derived solely from the active government grants and contracts, the funding for which will expire in the next quarter. We anticipate that DoD revenue will increase slightly in the next quarter compared to the current quarter as no further studies will be initiated under the active contracts and the Company works to complete the final reports for studies completed during the period of performance of the JWMRP and PRMRP Contracts. We anticipate a decrease in Incuron revenue as the service contract has not been extended. The following table sets forth information regarding our currently active grants and contracts:

 

                     

As of June 30, 2020

 

Funding Source

Program

  Total Award Value    

Funded Award Value

   

Cumulative Revenue

    Funded Backlog     Unfunded Backlog  

DoD

JWMRP Contract

  $ 9,226,455     $ 4,162,866     $ 4,003,931     $ 158,935     $  

DoD

PRMRP Contract

    6,573,992       221,686       214,345       7,341        
      $ 15,800,447     $ 4,384,552     $ 4,218,276     $ 166,276     $  

 

As previously disclosed, contract modification with the DoD entered into during July 2020 that reduced the JWMRP and PRMRP funded awards from an aggregate of $15,800,447 to an aggregate of $4,384,552 has been reflected in the table above. 

 

Research and Development Expenses

 

R&D expenses decreased from $0.60 million for the three months ended June 30, 2019 to $0.17 million for the three months ended June 30, 2020, representing a decrease of $0.43 million, or 71.6%. Variances in individual development programs are noted in the table below. The net decrease is primarily attributable to a $0.27 million decrease in R&D spending for biodefense applications of entolimod, and a $0.16 decrease in R&D spending on Curaxins. The decrease in spending for biodefense applications of entolimod is primarily due to comparison against the second quarter of  2019 during which certain studies that were completed in 2019 were still ongoing, as well as a reduction in personnel costs. The remaining variances are not significant.

 

   

Three Months Ended June 30,

         
   

2020

   

2019

   

Variance

 

Entolimod for Biodefense Applications

  $ 163,505     $ 431,740     $ (268,235 )

CBLB612

          (161 )     161  

Entolimod for Oncology Indications

          92       (92 )
      163,505       431,671       (268,166 )

Curaxins

    1,146       159,404       (158,258 )

Panacela product candidates

    5,356       8,503       (3,147 )

Total research & development expenses

  $ 170,007     $ 599,578     $ (429,571 )

 

General and Administrative Expenses

 

G&A expenses increased from $0.45 million for the three months ended June 30, 2019 to $0.49 million for the three months ended June 30, 2020, representing an increase of $0.04 million, or 8.1%. This increase consisted primarily of an increase of $0.20 million in professional fees in part due to the filing of the Company's Form S-3 Registration Statement, the capital-raising transaction that was consummated shortly thereafter, as well as other activities, offset in part by a $0.13 million decrease in personnel and consulting costs, a $0.02 million decrease in facilities costs, and a $0.01 million decrease in other costs.

 

Other Income and Expenses

 

Other income increased from $0.14 million of other income for the three months ended June 30, 2019 to $0.22 million of other income for the three months ended June 30, 2020, representing an other income increase of $0.08 million, or 56.3%. This increase was primarily related to an increase in other income of $0.5 million relating to the extinguishment of an accrued liability, offset by an increase in the non-cash loss related to the change in valuation of our warrant liability as a result of stock price changes.

 

17

 

Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

 

Revenue

 

Revenue decreased from approximately $0.47 million for the six months ended June 30, 2019 to approximately $0.22 million for the six months ended June 30, 2020, representing a decrease of approximately $0.25 million, or 53.8%. This decrease is primarily due to decreases in revenues from our service contract with Incuron and JWMRP contract with the DoD for continued preclinical development of entolimod, offset in part by an increase in revenues from our PRMRP contract with the DoD for continued clinical development of entolimod. The decrease in Incuron service contract revenue is due to delays in clinical trial activities being undertaken by Incuron. Differences in our revenue sources, by program, between the years are set forth in the following table. 

 

     

Six Months Ended June 30,

         

Funding Source

Program

 

2020

   

2019

   

Variance

 

DoD

JWMRP Contract (1)

  $ 113,555     $ 203,059     $ (89,504 )

DoD

PRMRP Contract (2)

    56,385       2,797       53,588  

Incuron

Service contract

    49,357       269,030       (219,673 )
      $ 219,297     $ 474,886     $ (255,589 )

 

(1)

The Congressionally Directed Medical Research Programs (CDMRP) Joint Warfighter Medical Research Program (JWMRP) contract was awarded on September 1, 2015.

(2)

The CDMRP Peer Reviewed Medical Research Program (PRMRP) grant was awarded effective as of September 30, 2015.

 

Research and Development Expenses

 

R&D expenses decreased from $1.11 million for the six months ended June 30, 2019 to $0.39 million for the six months ended June 30, 2020, representing a decrease of $0.72 million, or 65.1%. Variances in individual development programs are noted in the table below. The net decrease is primarily attributable to a $0.45 million decrease in R&D spending for biodefense applications of entolimod, and a $0.27 decrease in R&D spending on Curaxins. The decrease in spending for biodefense applications of entolimod is primarily due to comparison against the first six months of  2019 during which certain studies that were completed in 2019 were still ongoing, as well as a reduction in personnel costs. The remaining variances are not significant.

 

   

Six Months Ended June 30,

         
   

2020

   

2019

   

Variance

 

Entolimod for Biodefense Applications

  $ 364,460     $ 801,924     $ (437,464 )

CBLB612

          6,440       (6,440 )

Entolimod for Oncology Indications

          8,474       (8,474 )
      364,460       816,838       (452,378 )

Curaxins

    12,690       280,817       (268,127 )

Panacela product candidates

    11,065       15,344       (4,279 )

Total research & development expenses

  $ 388,215     $ 1,112,999     $ (724,784 )

 

General and Administrative Expenses

 

G&A expenses decreased from $0.92 million for the six months ended June 30, 2019 to $0.87 million for the six months ended June 30, 2020, representing a decrease of $0.05 million, or 6.1%. This decrease consisted primarily of a $0.28 million decrease in personnel and consulting costs, and a $0.05 reduction in facilities costs, partially offset by a $0.19 million increase in professional fees associated with the filing of the Company's Form S-3 Registration Statement, the capital-raising transaction that was consummated shortly thereafter, as well as other activities and a $0.8 million increase in CBLI's property taxes compared to the quarter ended June 30, 2019, when we received a property tax refund.

 

Other Income and Expenses

 

Other income increased from $0.03 million of other income for the six months ended June 30, 2019 to $0.06 million of other income for the six months ended June 30, 2020, representing an increase in other income of $0.03 million, or 67.1%. This increase was primarily related to an increase in other income of $0.5 million relating to the extinguishment of an accrued liability, offset by an increase in the non-cash loss related to the change in valuation of our warrant liability as a result of stock price changes.

 

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Table of Contents

 

Liquidity and Capital Resources

 

We have incurred net losses of approximately $169 million from our inception through June 30, 2020. Historically, we have not generated, and do not expect to generate in the immediate future, revenue from sales of product candidates. Since our founding in 2003, we have funded our operations through a variety of means:

 

•     From inception through June 30, 2020, we have raised $147.9 million of net equity capital, including amounts received in connection with our June 2020 registered direct offering and from the exercise of options and warrants. We have also received $7.3 million in net proceeds from the issuance of long-term debt instruments;

 

 •     DoD and BARDA have funded grants and contracts totaling $49 million for the development of entolimod for its biodefense indication;

 

 •     The government of the Russian Federation has funded a series of our contracts totaling $17.3 million, based on the exchange rates in effect on the date of funding. These contracts included a requirement for us to contribute matching funds, which we have satisfied;

 

 •     We have been awarded $4.0 million in grants and contracts not described above, all of which have been recognized at June 30, 2020;

 

 •     Incuron was formed to develop and commercialize the Curaxins product line, including its lead oncology drug candidate CBL0137. In 2015, we sold our ownership interest in Incuron for approximately $4.0 million and retain a 2% royalty interest in the CBL0137 technology;

 

 •    Panacela was formed to develop and commercialize preclinical compounds, which were transferred to Panacela through assignment and lease agreements. RUSNANO contributed $9.0 million to Panacela and CBLI contributed $3.0 million plus intellectual property to Panacela. As of the date of this filing, CBLI owns 67.57% of Panacela; and

 

 •    The Company formed its GPI joint venture with Everon. GPI, which is currently 50% owned by the Company and 50% owned by Everon, is undertaking a research and development program aimed at clinical testing of entolimod and GP532 (a variant of our entolimod drug candidate) and the development of medications with anti-aging and other indications associated with genome damage. GPI has been funded by an initial investment of $10.5 million from venture capital fund Norma Investments Limited.

 

As discussed above, the Company filed the Form S-3 Registration Statement on May 21, 2020, which was subsequently declared effective on May 29, 2020 (File No. 333-238578).  The Form S-3 Registration Statement allows the Company to raise an aggregate of $50,000,000 of common stock, preferred stock, warrants and/or units, subject to the limitations on the use thereof by certain smaller public companies, giving the Company greater flexibility to access capital markets quickly.

 

We have incurred cumulative net losses and expect to incur additional losses related to our R&D activities. We do not have commercial products and have limited capital resources. At June 30, 2020, we had cash, cash equivalents and short-term investments of $3.8 million, which represents a increase of $2.2 million or 138.6% since the end of our last fiscal year. This increase was caused by our capital raise and warrant exercises, offset by our net cash used in operations of $0.9 million during the six months ended June 30, 2020. We expect our cash, cash equivalents, and short-term investments, along with the active government contracts described above, to fund our projected operating requirements and allow us to fund our operating plan, in each case, into August 2021. However, until we are able to commercialize our product candidates at a level that covers our cash expenses, we will need to raise substantial additional capital, which we may be unable to raise in sufficient amounts, when needed and at acceptable terms. Our plans with regard to these matters may include seeking additional capital through debt or equity financing, the sale or license of drug candidates, the sale of certain of our tangible and/or intangible assets, the sale of interests in our subsidiaries or joint ventures, obtaining additional government research funding, or entering into other strategic transactions. There can be no assurance that we will be able to obtain future financing on acceptable terms, obtain additional government financing for our operations, or enter into other strategic transactions. In addition, the recent outbreak of the novel coronavirus known as COVID-19 has significantly disrupted world financial markets, negatively impacted U.S. market conditions and may reduce opportunities for us to seek out additional funding. If we are unable to raise adequate capital and/or achieve profitable operations, future operations might need to be scaled back or discontinued. The financial statements do not include any adjustments relating to the recoverability of the carrying amount of recorded assets and liabilities that might result from the outcome of these uncertainties.

 

Cash Flows

 

The following table provides information regarding our cash flows for the six months ended June 30, 2020 and 2019:

 

    For the Six Months Ended June 30,  
   

2020

   

2019

   

Variance

 

Cash flows used in operating activities

  $ (902,004 )   $ (1,585,895 )   $ 683,891  

Cash flows provided by investing activities

    43,245       190,289       (147,044 )

Cash flows provided by financing activities

    3,165,640             3,165,640  

Effect of exchange rate change on cash and equivalents

    (23,695 )     16,189       (39,884 )

Increase (decrease) in cash and cash equivalents

    2,283,186       (1,379,417 )     3,662,603  

Cash and cash equivalents at beginning of period

    1,126,124       3,617,234       (2,491,110 )

Cash and cash equivalents at end of period

  $ 3,409,310     $ 2,237,817     $ 1,171,493  

 

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Table of Contents

 

Operating Activities

 

Net cash used in operating activities decreased by $0.7 million to $0.9 million for the six months ended June 30, 2020 from $1.6 million for the six months ended June 30, 2019. Net cash used in operating activities for the period ending June 30, 2020 consisted of a reported net loss of $0.98 million, which was increased by $0.05 million of net non-cash operating activities, and offset by $0.1 million of changes in operating assets and liabilities. The $0.05 million of net non-cash operating activities was due primarily to $0.5 million of other income from an accrued liability extinguishment offset by a $0.45 million change in the valuation of our warrant liability. The $0.1 million of changes in operating assets and liabilities consisted primarily of a $0.1 million decrease in accounts receivable.

 

Net cash used in operating activities for the six months ended June 30, 2019 of $1.6 million consisted of a reported net loss of $1.5 million, which was increased by $0.05 million of net non-cash operating activities, and further increased by $0.01 million of changes in operating assets and liabilities. The $0.05 million of net non-cash operating activities was due primarily to changes in the valuation of our warrant liability and a gain on disposal of equipment. The $0.01 million of changes in operating assets and liabilities consisted primarily of a $0.06 million increase in accounts receivable offset by a $0.03 million increase in accounts payable and accrued expenses.

 

Investing Activities

 

Net cash provided by investing activities decreased by $0.15 million to $0.04 million for the six months ended June 30, 2020 from $0.19 million for the six months ended June 30, 2019. The net cash provided by investing activities for the six months ended June 30, 2020 consisted of $0.04 million of net sales of short-term investments. Net cash provided by investing activities for the six months ended June 30, 2019 consisted of $0.15 million of net sales of short-term investments and $0.04 million from the sale of equipment.

 

Financing Activities

 

Net cash provided by financing activities increased by $3.2 million for the six months ended June 30, 2020 from $0.00 million for the six months ended June 30, 2019 due to an issuance of common stock and a cash payment from the exercise of warrants during the six months ended June 30, 2020.

 

Impact of Exchange Rate Fluctuations

 

Our reported financial results are affected by changes in foreign currency exchange rates between the U.S. dollar and the Russian ruble. Between January 1, 2020 and June 30, 2020, this rate fluctuated by 13.0%. For calendar year 2019, this rate fluctuated by 10.9%. Translation gains or losses result primarily from the impact of exchange rate fluctuations on the reported U.S. dollar equivalent of ruble-denominated cash and cash equivalents, and short-term investments. Variances in the exchange rate for these items have not been realized; as such the resulting gains or losses are recorded as other comprehensive income or loss in the equity section of the balance sheet.

 

Off-Balance Sheet Arrangements

 

We have not entered into any off-balance sheet arrangements.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not required for smaller reporting company filers.

 

Item 4. Controls and Procedures

 

Effectiveness of Disclosure

 

Our management, with the participation of our Vice President of Finance (performing the functions of the Company's principal executive officer and principal financial officer), evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of June 30, 2020. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of June 30, 2020, our Vice President of Finance (performing the functions of the Company's principal executive officer and principal financial officer) concluded that, as of such date, our disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in reports that we file or submit under the 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 our management, including our Vice President of Finance (performing the functions of the Company's principal executive officer and principal financial officer), as appropriate to allow timely decisions regarding required disclosure due to the material weakness described below.

 

Material Weaknesses in Internal Control Over Financial Reporting

 

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.  As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019, we identified material weaknesses in our accounting for revenue transactions. Specifically, the Company does not have adequate controls in place to monitor revenue recognition with respect to specific elements of contracts. In addition, controls to prevent or detect material misstatements on a timely basis related to contract compliance and proper revenue recognition are not operating effectively.

 

Remediation of Previously Reported Material Weakness

 

Management has been implementing changes to strengthen our internal controls over the monitoring of revenue recognition and the prevention or detection of material misstatements on a timely basis related to contract compliance and proper revenue recognition.  These changes are intended to address the identified material weaknesses and to enhance our overall control environment and include the ongoing activities described below.

 

Management has performed a comprehensive review of all contracts to which the Company is party, including a review of underlying schedules, to ensure a more complete understanding of these agreements to ensure compliance and proper application of revenue recognition principles. Upon completion of this review, management  implemented certain system controls to ensure compliance and prevent the recognition of revenue in excess of specific elements of the contract agreements. In addition, new processes have been implemented related to periodic invoicing and revenue recognition analysis designed to detect any potential issues and correct as applicable.

 

We believe the measures described above will facilitate the remediation of the control deficiencies we have identified and strengthen our internal control over financial reporting. However, these material weaknesses will not be considered remediated until the applicable remediated controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We are committed to continuing to improve our internal control processes and will continue to review, optimize and enhance our financial reporting controls and procedures. As we continue to evaluate and work to improve our internal control over financial reporting, we may take additional measures to address control deficiencies, or we may modify, or, in appropriate circumstances, not complete, certain of the remediation measures described above.

 

Changes in Internal Control over Financial Reporting

 

Other than the mitigating controls referenced above, there was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) during the fiscal quarter ended June 30, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

20

Table of Contents

 

PART II – Other Information

 

Item 1. Legal Proceedings

 

In the ordinary course of business, we may periodically become subject to legal proceedings and claims arising in connection with ongoing business activities. The results of litigation and claims cannot be predicted with certainty, and unfavorable resolutions are possible and could materially affect our results of operations, cash flows, or financial position. In addition, regardless of the outcome, litigation could have an adverse impact on us because of defense costs, diversion of management resources, and other factors.

 

While the outcome of these proceedings and claims cannot be predicted with certainty, there are no matters, as of June 30, 2020, that, in the opinion of management, might have a material adverse effect on our financial position, results of operations or cash flows, or that are required to be disclosed under the rules of the SEC.

 

Item 1A. Risk Factors

 

Not required for smaller reporting company filers.

 

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

 

On June 29, 2020, the Company issued 8,871 shares of its common stock upon the exercise of previously outstanding warrants to purchase an aggregate of 25,389 shares of common stock.  The exercise was made on a “cashless” basis pursuant to the terms of the warrants, and accordingly, the Company did not receive any proceeds upon such exercise. The exercise of the warrants did not involve any underwriters, underwriting discounts or commissions, or any public offering, and the Company believes that such transactions were exempt from the registration requirements of the Securities Act in reliance on Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering.

 

On July 15, 2020, the Company issued 82,399 shares of its common stock upon the exercise of previously outstanding warrants to purchase an aggregate of 94,404 shares of common stock.  In connection with such exercise, the Company amended the warrant to lower the exercise price thereof pursuant to that certain Settlement and General Release Agreement (the “Release Agreement”) between the Company and the holder of such warrant. The parties to the Release Agreement also each released one another from any liabilities arising out of the warrants. The exercise was made on a “cashless” basis pursuant to the terms of the warrants and the Release Agreement, and accordingly, the Company did not receive any proceeds upon such exercise. The exercise of the warrants did not involve any underwriters, underwriting discounts or commissions, or any public offering, and the Company believes that such transactions were exempt from the registration requirements of the Securities Act in reliance on Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

None.

 

Item 5. Other Information

 

None.

 

21

Table of Contents

 

Item 6. Exhibits

 

 

(a)

The following exhibits are included as part of this report:

 

Exhibit

Number

 

Description of Document

 

 

 

3.1

 

Restated Certificate of Incorporation filed with the Secretary of State of Delaware on March 18, 2010 (Incorporated by reference to Exhibit 3.1 to Form 10-K for the year ended December 31, 2009, filed on March 22, 2010).

 

 

 

3.2

 

Certificate of Amendment to the Restated Certificate of Incorporation, filed with the Secretary of State of Delaware on June 20, 2013 (Incorporated by reference to Exhibit 3.1 to Form 10-Q for the period ended June 30, 2013, filed on August 9, 2013).

 

 

 

3.3

 

Certificate of Amendment of Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Form 8-K filed on January 27, 2015).

 

 

 

3.4

 

Certificate of Amendment to Restated Certificate of Incorporation, filed with the Secretary of State of Delaware on April 20, 2016 (incorporated by reference to Exhibit 3.4 to Form 10-Q for the period ended March 31, 2016, filed May 16, 2016.

 

 

 

3.5

 

Certificate of Amendment to Restated Certificate of Incorporation, filed with the Secretary of State of Delaware on April 21, 2017 (incorporated by reference to Exhibit 3.5 to Form 10-Q for the period ended March 31, 2017, filed May 15, 2017.

 

 

 

3.6

 

Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to Form 8-K filed on February 9, 2015).

 

 

 

3.7

 

Certificate of Amendment of Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.2 to Form 8-K filed on February 9, 2015).

 

 

 

3.8

 

Second Amended and Restated By-Laws (Incorporated by reference to Exhibit 3.1 to Form 8-K filed on December 5, 2007).

 

 

 

3.9

 

Amendment to Second Amended and Restated By-Laws of Cleveland BioLabs, Inc. (Incorporated by reference to Exhibit 3.1 to Form 8-K filed on May 18, 2015).

     
   4.1   Form of Warrant (Incorporated by reference to Exhibit 4.1 to Form 8-K filed on June 3, 2020).
     
   4.2   Form of Placement Agent Warrant (Incorporated by reference to Exhibit 4.2 to Form 8-K filed on June 3, 2020).
     
   4.3*   Settlement and General Release Agreement, dated as of July 15, 2020, between Cleveland BioLabs, Inc. and Alpha Capital Anstalt
     
   10.1   Form of Securities Purchase Agreement, dated as of June 1, 2020, between Cleveland BioLabs, Inc. and the purchasers named therein (Incorporated by reference to Exhibit 10.1 to Form 8-K filed on June 3, 2020).
     
   10.2   Award/Contract W81XWH-15-0101 modification dated July 31, 2020 issued by USA Med Research ACQ Activity (Incorporated by reference to Exhibit 10.1 to Form 8-K filed on July 31, 2020).
     
   10.3*   Award/Contract W81XWH-15-0570 modification dated July 31, 2020 issued by USA Med Research ACQ Activity

 

 

 

31.1*

 

Rule 13a-14(a)/15d-14(a) Certification of Christopher Zosh.

 

 

 

32.1*

 

Certification pursuant to 18 U.S.C. Section 1350.

 

 

 

101.1

 

The following information from CBLI’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Condensed Balance Sheets as of June 30, 2020 and December 31, 2019; (ii) Consolidated Condensed Statements of Operations for the Three and Six Months Ended June 30, 2020 and 2019; (iii) Consolidated Condensed Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2020 and 2019; (iv) Consolidated Condensed Statement of Stockholders’ Equity for the Six Months Ended June 30, 2020 and 2019; (v) Consolidated Condensed Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019; and (vi) Notes to Consolidated Condensed Financial Statements.

 

 

 

*

 

Filed herewith.

 

22

Table of Contents

 

Signatures

 

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

CLEVELAND BIOLABS, INC.

 

 

 

Dated: August 14, 2020

By:

/s/ CHRISTOPHER ZOSH

 

 

Christopher Zosh

 

 

Vice President of Finance

 

 

(Principal Executive and Principal Financial Officer)

 

 

 

 

 

23

ex_198052.htm

Exhibit 4.3

 

 

SETTLEMENT AND GENERAL RELEASE AGREEMENT

 

 

 

This Settlement And General Release Agreement (the “Agreement”), dated as of July 15, 2020 (the “Effective Date”), is made by and between Cleveland BioLabs, Inc., a Delaware corporation (the “Company”), and Alpha Capital Anstalt (“Alpha”).  The Company and Alpha are referred to herein from time to time as a “Party” and collectively as the “Parties.”

 

 

 

W I T N E S S E T H:

 

 

 

            WHEREAS, the Company previously issued the Series A Common Stock Purchase Warrant, No. 2015A-1, dated February 16, 2015 (the “Warrant”) to Alpha pursuant to Alpha’s purchase of certain securities of the Company under that certain Securities Purchase Agreement, dated as of February 4, 2015 (the “Securities Purchase Agreement”), by and among the Company, Alpha and certain other parties thereto;

 

WHEREAS, in connection with the issuance of the Warrant, the Company entered into a Registration Rights Agreement, dated as of February 4, 2015 (the “Registration Rights Agreement”), with Alpha under which, among other things, the Company would register the resale of the shares of common stock of the Company, par value $0.005 per share (“Common Stock”), underlying the Warrants (the “Warrant Shares”) for public resale on a registration statement filed with the Securities and Exchange Commission (the “SEC”) and keep such registration statement continually effective and available for use by the holder of each Warrant to sell the Warrant Shares without restriction;

 

WHEREAS, the Company’s registration statement registering the resale of the Warrant Shares became ineffective on or about April 14, 2020;

 

WHEREAS, the Warrant represents Alpha’s right to acquire 94,404 Warrant Shares at $2.033 per Warrant Share prior to the Effective Date;

 

            WHEREAS, a dispute has arisen between the parties regarding Alpha’s ability to exercise the Warrant and sell the Warrant Shares; and

 

 

 

            WHEREAS, the Parties now seek to fully and completely resolve all existing and potential claims arising under contract, state, or federal law, and any other existing and potential disputes, actions, lawsuits, charges, and claims that the Parties may have against each other arising out of the Warrant, the Securities Purchase Agreement and the Registration Rights Agreement to the fullest extent permitted at law;

 

 

 

            NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties execute this Agreement to reflect and memorialize the terms and conditions of their settlement, and agree as follows:

 

 

 

 

 

 

 

 

1.

Amendment to Warrant.

 

 

 

 

a.

Exercise Price Amendment.  The Parties agree that, subject to and in accordance with the terms of this Agreement, including the general release described herein, the Company and Alpha hereby agree that Section 2(b) of the Warrant shall be amended and restated as follows:

 

 

 

The exercise price per share of the Common Stock under

 

this Warrant shall be $0.38276, subject to adjustment hereunder (the “Exercise Price”).

 

 

 

 

b.

Immediate Exercise.  Annexed hereto and accepted by the Company is a completed Notice of Exercise effectuating Alpha’s exercise of the Warrant as of the Effective Date for all Warrant Shares acquirable thereunder on a cashless basis pursuant to Section 2(c) of the Warrant, after giving effect to the Exercise Price amendment described in Section 1(a) above.  The Company agrees to deliver 82,399 Warrant Shares in the manner, form and time periods required pursuant to the Warrant without any legend, as free-trading shares in reliance on Rule 144 under the Securities Act of 1933, without further transfer restrictions.  In the event the Company does not timely comply with its obligations under this Section 1(b), then Alpha may, at its discretion, upon three days prior written notice to the Company, declare this Agreement and releases herein null and void, ab initio, and of no force and effect or enforce Alpha’s rights hereunder.

 

 

 

 

2.

Mutual Release of Claims

 

 

a.

As of the Effective Date of this Agreement, for the consideration expressed herein, the Company, on behalf of itself and its respective past and present parents, subsidiaries, related companies, affiliates, officers, directors, shareholders, members, partners, trustees, agents, employees, consultants, experts, advisors, insurers, re-insurers, attorneys and other professionals, and each of their respective heirs, predecessors, successors, administrators, servants, legal representatives and assigns (the “Company Releasors”) does hereby fully, finally and completely remise, release, waive, acquit and discharge Alpha, along with its respective past and present parents, subsidiaries, related company affiliates, officers, directors, shareholders, members, partners, trustees, agents, employees, consultants, experts, advisors, insurers, attorneys and other professionals, and each of their respective heirs, predecessors, successors, administrators, servants, legal representatives and assigns from any and all manner of action and actions, cause and causes of action, claims, liabilities, counterclaims, suits, debts, sums of money, accounts, covenants, contracts, controversies, damages, judgments, expenses, executions, liens, claims of costs, claims of lien, penalties, attorneys’ fees or any other compensation, recovery or relief on account of any liability, obligation, demand or cause of action of whatever nature, whether accrued or not accrued, known or unknown, contingent or vested, arising out of, in connection with, or relating to the Warrant, the Registration Rights Agreement and the Securities Purchase Agreement (the “Released Claims”).

 

 

b.

As of the Effective Date of this Agreement, for the consideration expressed herein, Alpha, on behalf of itself and its respective past and present parents, subsidiaries, related companies, affiliates, officers, directors, shareholders, members, partners, trustees, agents, employees, consultants, experts, advisors, insurers, re-insurers, attorneys and other professionals, and each of their respective heirs, predecessors, successors, administrators, servants, legal representatives and assigns (the “Alpha Releasors”) do hereby fully, finally and completely remise, release, waive, acquit and discharges the Company along with its respective past and present parents, subsidiaries, related company affiliates, officers, directors, shareholders, members, partners, trustees, agents, employees, consultants, experts, advisors, insurers, attorneys and other professionals, and each of their respective heirs, predecessors, successors, administrators, servants, legal representatives and assigns from any and all manner of action and actions, cause and causes of action, claims, liabilities, counterclaims, suits, debts, sums of money, accounts, covenants, contracts, controversies, damages, judgments, expenses, executions, liens, claims of costs, claims of lien, penalties, attorneys’ fees or any other compensation, recovery or relief on account of any liability, obligation, demand or cause of action of whatever nature, whether accrued or not accrued, known or unknown, contingent or vested, arising out of, in connection with, or relating to the Released Claims, including, without limitation, the Alpha Releasors’ rights to claim liquidated damages.

 

 

c.

The Parties acknowledge and agree that they may be unaware of or may discover facts or defenses in addition to or different from those which they now know, anticipate or believe to be true related to or concerning the Released Claims.  The Parties know that such presently unknown or unappreciated facts or defenses could materially affect the claims or defenses of a Party or Parties.  It is nonetheless the intent of the parties to give a full, complete and final release and discharge of the Released Claims.  In furtherance of this intention, the releases herein given shall be and remain in effect as full and complete releases with regard to the Released Claims, notwithstanding the discovery or existence of any such additional or different claim, fact, or defense.

 

 

d.

 Notwithstanding the above, nothing herein shall serve to release the rights, duties and obligations created by this Agreement.

 

 

3.

No Admissions Neither this Agreement nor anything contained in it shall constitute or be construed to constitute an admission or as evidence of any wrongdoing or liability whatsoever by any of the Parties or any of their respective employees, officers, or directors.  This Agreement is entered into solely for the purpose of settling and resolving disputes between the Parties.  This Agreement shall not constitute, or be asserted by any Party to constitute, evidence of the existence or non-existence, validity or invalidity of any right, claim or obligation, except as expressly provided for herein.  Neither this Agreement, nor anything contained in it, shall be introduced or admissible in any proceeding except to enforce this Agreement or to defend against any claim relating to the subject matter of the releases contained herein or as required by court order, subpoena or other legal process.  Such introduction under these exceptions shall be pursuant to an appropriate order protecting its confidentiality.

 

 

4.

Confidentiality.

 

 

a.

The Parties agree that this Agreement and its terms, including all prior drafts and any settlement discussions leading up to this Agreement, are strictly confidential.  Except as otherwise authorized by this Agreement, the Parties hereby warrant and agree that they shall not disclose or cause to be disclosed, directly or indirectly, to any person any of the terms and conditions of this Agreement, or any facts or other information relating to the Parties’ settlement or the negotiation or execution of this Agreement.  For the avoidance of doubt, the Parties agree that neither they nor their representatives will disclose the existence of the Agreement or the compromises set forth in or comprising this Agreement to anyone, except as provided for in this Agreement.

 

                        (b)       Nothing contained in Section 4(a) shall prohibit the disclosure of any term of this Agreement: (i) to the extent necessary to comply with any law, including the federal securities laws, or to enforce or defend against claims arising from this Agreement; or (ii) if necessary, to the Parties’ attorneys or auditors, provided such disclosure is made under an agreement or arrangement to keep and treat such information as strictly confidential.  In any event, each Party shall remain responsible for any direct or indirect disclosure.

 

                        (c)       Except as provided in Section 4(d) below, any of the Parties may disclose the terms and conditions of this Agreement if such Party receives a subpoena or other process or order to produce this Agreement, provided that such Party shall, prior to any disclosure to any third party, promptly notify only the other Party to this Agreement so that each Party has a reasonable opportunity to respond to such subpoena, process or order.  The Party receiving a subpoena, process or order shall (in the first instance) take no action contrary to the confidentiality provisions set forth above, and shall make reasonable efforts to respond only subject to a confidentiality designation available under a protective order in litigation.  The Party objecting shall have the burden of defending against such subpoena, process or order.  The Party receiving the subpoena, process or order shall be entitled to comply with it, except to the extent that any other Party is successful in obtaining an order modifying or quashing it.

 

                        (d)       Notwithstanding anything to the contrary in this Agreement, nothing herein will restrict any Party from disclosing this Agreement to a state or governmental entity or self-regulatory body pursuant to a formal or informal request of such entity, or pursuant to its examination or inspection procedures, nor shall any Party have any obligation to inform the other Party of such disclosure prior to, or following, such disclosure

 

 

5.

Non-Disparagement.

 

 

a.

The Parties further agree that they shall not directly (or through any other person or entity) make or cause to make any statements (whether orally or in writing), or take any action, related to any other Party that are intended to or that could foreseeably disparage the other or their respective parents, subsidiaries, affiliates, businesses, activities, operations, affairs, reputations or prospects or any of their respective directors, officers, executives, employees, partners, associates, agents, and successors.

 

 

 

 

b.

Nothing in this Section 5 shall preclude a Party from making truthful statements that are reasonably necessary to comply with applicable laws, regulations or legal processes, or to defend or enforce a Party’s rights under this Agreement.

 

 

6.

Dispute Resolution.

 

(a)       Any dispute, claim, or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation, or validity thereof, including but not limited to, the determination of the scope or applicability of this agreement to arbitrate, shall be resolved by confidential binding arbitration by a single neutral arbitrator to be selected from the AAA panel in the Southern District of New York, and shall be administered by AAA pursuant to its Commercial Arbitration Rules in place at the time any arbitration demand is filed.  The sole and exclusive venue for any such arbitration shall be New York County, New York.  The arbitrator shall be entitled, without limitation, to grant temporary or permanent injunctive relief or specific performance to enjoin a threatened or actual breach of this Agreement. 

 

(b)       The fees associated with commencing any such arbitration will be borne solely by the Party commencing the arbitration.  The arbitrators’ fees for any such arbitration shall be borne by the Party prosecuting the arbitration, subject to reallocation by the Arbitrator based on the merits of the dispute as set forth in Section 9 of this Agreement.  However, before any such arbitration is commenced, the Parties are required to meet and confer in good faith to attempt to resolve any such dispute, claim or controversy.

 

(c)       Except as may be necessary to enter judgment upon the award or to the extent required by applicable law, all claims, defenses, and proceedings (including without limitation the existence of the controversy and the fact that there is an arbitration proceeding) shall be treated in a confidential manner by the arbitrator, the Parties, and their counsel, agents, and employees, and all others acting on behalf of or in concert with them.  Without limiting the foregoing, no one shall divulge to any third party or person not directly involved in the arbitration the contents of the pleadings, filings, papers, orders, hearings, proceedings, or awards in any arbitration proceeding, except as may be necessary to enter judgment upon an award as required by applicable law.  Any court proceedings relating to the arbitration hereunder, including without limitation to prevent or compel arbitration or to confirm, correct, vacate, or otherwise enforce and arbitration award, shall be filed under seal with the court, to the extent permitted by law.

 

(d)       Any and all service of process and any other notice in any such claims shall be effective against any Party if given personally or by registered or certified mail, return receipt requested, or by any other means of mail that requires a signed receipt, postage prepaid, mailed to such Party as herein provided.  Nothing herein contained shall be deemed to affect the right of any Party to serve process in any manner permitted by law.

 

(e)       EACH PARTY TO THIS AGREEMENT HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY, OR OTHERWISE.  EACH PARTY TO THIS AGREEMENT HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION WILL BE DECIDED THROUGH AAA ARBITRATION AND THAT THE PARTIES TO THIS AGREEMENT MAY SUBMIT AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL.

 

(f)        Each Party agrees that a final judgment in any proceeding described in this Section 6 after the expiration of any period permitted for appeal and subject to any stay during appeal shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable laws.

 

 

7.

Entire Agreement This Agreement contains the entire agreement between and among the Parties relating to the subject matter hereof and supersedes any and all other negotiations, representations, understandings and agreements.  All prior and contemporaneous negotiations, understandings and agreements between the Parties are deemed abandoned and waived to the extent that they are not stated in this Agreement.  This Agreement may be amended only by written agreement signed by both Parties, and a breach of this Agreement may be waived only by a written waiver signed by the Party granting the waiver.  The waiver of any breach of this Agreement shall not operate or be construed as a waiver of any other similar or prior or subsequent breach of this Agreement.  No Party to this Agreement has relied on any representation or promise not included in this Agreement.

 

 

8.

Binding Effect.  The terms hereof are contractual and not merely recitals and all agreements, representations, warranties, covenants, terms, conditions, and provisions of this Agreement shall survive the execution hereof and be deemed by the Parties to be fully binding upon them. 

 

 

9.

Attorneys’ Fees and Costs.  The Parties stipulate and agree that each Party shall bear its own attorneys’ fees.  However, in the event of a breach of this Agreement, the prevailing Party or Parties in a suit or proceeding to enforce this Agreement shall be entitled to recover, in addition to any other relief awarded by a court or arbitration panel of competent jurisdiction, reasonable and necessary costs and attorneys’ fees incurred in the successful prosecution or defense of that litigation or arbitration, as the case may be.

 

 

10.

Governing Law.  The rights and obligations of the parties hereunder shall be construed and enforced in accordance with, and shall be governed by, the laws of the State of New York, without regard to principles of conflict of laws.

 

 

11.

Cooperation The Parties agree to cooperate fully and execute any and all supplementary documents and to take all additional actions which may be necessary and appropriate to give full force and effect to this Agreement.

 

 

12.

Miscellaneous.

 

 

a.

The headings of the paragraphs of this Agreement are inserted for convenience of reference only and shall not control or affect the meaning, intention, construction or effect of this Agreement or any such paragraph. 

 

 

b.

This Agreement shall be construed as if the parties jointly prepared it and any uncertainty or ambiguity shall not be interpreted against any one party because of the manner in which this Agreement was drafted or prepared.

 

 

13.

Counterparts This Agreement may be executed for all purposes in any number of identical counterparts, and each Party may execute any such counterpart, each of which shall be deemed an original for all purposes.  A photocopy or facsimile copy of this Agreement, and any signature to this Agreement, shall be deemed to be as effective as the original for all purposes.

 

 

14.

Third-Party Beneficiaries The Parties specifically intend the entities and individuals released under this Agreement are third party beneficiaries of this Agreement for the sole purpose of being able to enforce the releases provided herein.

 

 

 

(Signature Page Follows)

 

 

IN WITNESS WHEREOF, and intending to be legally bound, each of the Parties hereto has caused this Agreement to be executed as of the date first set forth above.

 

 

 

                                                                        CLEVELAND BIOLABS, INC.

 

 

                                                                        By:      /s/ Christopher Zosh

                                                                                    Christopher Zosh, Vice President of Finance

 

 

                                                                      ALPHA CAPITAL ANSTALT

 

                                                                       

                                                                        By:      /s/ Nicola Feuerstein                                     

 

                                                                       

                                                                      Name: Nicola Feuerstein                                          

 

                                                                      

                                                                  Title:   Directo                                                                                                                                   

 

           

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Settlement Agreement]

 

 
ex_198095.htm

Exhibit 10.3       

 

 

 

AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT

1. CONTRACT ID CODE

S

P AGE OF P AGES

   

1

29

2. AMENDMENT/MODIFICATION NO.

P00003

3. EFFECTIVE DATE

 

29-Jul-2020

4. REQUISITION/P URCHASE REQ. NO.

0010705626-0001

5. P ROJECT NO.(If applicable)

6. ISSUED BYCODE

W81XWH

7. ADMINISTERED BY (If other than item 6)CODE

 

 

USA MED RESEARCH ACQ ACTIVITY

820 CHANDLER ST

FORT DETRICK MD 21702-5014

 

See Item 6

8. NAME AND ADDRESS OF CONT RACT OR  (No., St reet , Count y, St at e and Zip Code)

CLEVELAND BIOLABS, INC. CLEVELAND BIOLABS

73 HIGH ST STE 203A BUFFALO NY 14203-1149

 

9A. AMENDMENT OF SOLICIT AT ION NO.

   

9B. DAT ED (SEE IT EM 11)

 

 

X

10A. MOD. OF CONT RACT /ORDER NO.

W81XWH-15-1-0570

 

 

X

10B. DAT ED  (SEE IT EM 13)

30-Sep-2015

CODE  3MWX2

FACILIT Y CODE

   

11. T HIS IT EM ONLY AP P LIES T O AMENDMENT S OF SOLICIT AT IONS

The above numbered solicitation is amended as set forth in Item 14. The hour and date specified for receipt of Offeris extended,is not extended.

 

Offer must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended by one of the following methods:

(a) By completing Items 8 and 15, and returning  copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted;

or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT THE P LACE DESIGNATED FOR THE RECEIP T OF OFFERS P RIOR TO THE HOUR AND DATE SP ECIFIED MAY RESULT IN

REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified.

12. ACCOUNT ING AND AP P ROP RIAT ION DAT A (If required)

13. T HIS IT EM AP P LIES ONLY T O MODIFICAT IONS OF CONT RACT S/ORDERS.

IT MODIFIES T HE CONT RACT /ORDER NO. AS DESCRIBED IN IT EM 14.

 

A. T HIS CHANGE ORDER IS ISSUED P URSUANT T O:  (Specify aut horit y) T HE CHANGES SET FORT H IN IT EM 14 ARE MADE IN T HE CONT RACT ORDER NO. IN IT EM 10A.

 

B. T HE ABOVE NUMBERED CONT RACT /ORDER IS MODIFIED T O REFLECT T HE ADMINIST RAT IVE CHANGES (such as changes in paying office, appropriat ion dat e, et c.) SET FORT H IN IT EM 14, P URSUANT T O T HE AUT HORIT Y OF FAR 43.103(B).

 

C. T HIS SUP P LEMENT AL AGREEMENT IS ENT ERED INT O P URSUANT T O AUT HORIT Y OF:

X

D. OT HER (Specify t ype of modificat ion and aut horit y)

USAMRAA Terms & Conditions - Request dated: 29 July 2020

E. IMP ORT ANT :  Cont ract orX  is not ,is required t o sign t his document and ret urncopies t o t he issuing office.

14. DESCRIP T ION OF AMENDMENT /MODIFICAT ION  (Organized by UCF sect ion headings, including solicit at ion/cont ract subject mat t er where feasible.)

Modificat ion Cont rol Number:csanchez204126

PROJECT TITLE: Entolimod: A Medical Countermeasure to Reduce the Risk of Death Follow ing Radiation Exposure

PRINCIPAL INVESTIGATOR: Dr. Langdon Miller

PERIOD OF PERFORMANCE: 30 September 2015 – 29 September 2020

AWARD AMOUNT: $ 6,573,992.40 - OBLIGATED AMOUNT: $ 6,573,992.40

 

The purpose of this modif ication is to allow Invoicing Options f or Cost Reimbursement and Advanced Payments, per the recipient's request dated: 29 July 2020. All other terms and conditions remain unchanged.

 

 

 

 

 

Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains unchanged and in full force and effect.

15A. NAME AND T IT LE OF SIGNER (T ype or print )

16A. NAME AND T IT LE OF CONT RACT ING OFFICER (T ype or print )

CHRIS BAKER / GRANT OFFICER

TEL:  (301) 619-2332EMAIL:  christopher.l.baker132.civ@mail.mil

15B. CONT RACT OR/OFFEROR

 

 

(Signat ure of person authorized to sign)

15C. DAT E SIGNED

16B. UNIT ED ST AT ES OF AMERICA

 

BY  (Signat ure of Cont ract ing Officer)

/s/Christopher.L.Baker

16C. DAT E SIGNED

 

31-Jul-2020

 

 

 

SECTION SF 30 BLOCK 14 CONTINUATION PAGE

 

 

SUMMARY OF CHANGES

 

 

SECTION 00010 - SOLICITATION CONTRACT FORM The contractor organization has changed from

CLEVELAND BIOLABS, INC

73 HIGH ST

BUFFALO NY 14203-1149 to

CLEVELAND BIOLABS, INC. CLEVELAND BIOLABS

73 HIGH ST STE 203A BUFFALO NY 14203-1149

 

SECTION 00800 - SPECIAL CONTRACT REQUIREMENTS The following have been modified:

 

U.S. ARMY MEDICAL RESEARCH AND MATERIEL COMMAND (USAMRMC) U. S. ARMY MEDICAL RESEARCH ACQUISITION ACTIVITY (USAMRAA)

 

TERMS AND CONDITIONS FOR ASSISTANCE AGREEMENTS WITH FOR-PROFIT ORGANIZATIONS

 

Effective February 2015

 

 

SEE the highlighted section for the payment option change. AWARD SPECIFIC TERMS AND CONDITIONS

This award is a grant made under the authority of 10 U.S.C. 2358 and 10 U.S.C. 2371. The recipient's statement of work and the revised budget dated 16 July 2015 for the application submitted in response to the Fiscal Year 2014

Department of Defense (DoD) Peer Reviewed Medical Research Program, Clinical Trial Award Announcement (Funding Opportunity Announcement Number W81XWH-14-PRMRP-CTA, which closed 17 October 2014) are incorporated herein by reference.

 

 

CATALOG OF FEDERAL DOMESTIC ASSISTANCE NUMBER: 12.420

 

TERMS AND CONDITIONS INCORPORATED BY REFERENCE

 

This award is governed by provisions of Chapter I, Subchapter C of Title 32, Code of Federal Regulations (CFR), “DoD Grant and Agreement Regulations” (DoDGARs), other than Parts 32 and 33, incorporated herein by reference, with applicability as stated in those provisions.

 

Also, the guidance in 2 CFR Part 200, “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards,” as modified and supplemented by the Department of Defense’s (DoD) interim implementation found at 2 CFR Part 1103, “Interim Grants and Cooperative Agreements Implementation of Guidance in 2 CFR Part 200” (79 FR 76047, December 19, 2014), are incorporated herein by reference, with applicability as stated in those provisions.

 

 

 

 

For commercial organizations and those nonprofit organizations identified in Appendix VIII to 2 CFR Part 200, “Nonprofit Organizations Exempted From Subpart E – Cost Principles,” the cost principles in Part 31 of Chapter 1 of Title 48, CFR, “Federal Acquisition Regulation” (FAR), and Part 231 of Chapter 2 of Title 48, “Department of Defense FAR Supplement,” are incorporated herein by reference, with applicability as stated in those provisions.

 

Copies of the above can be obtained from: Office of Management and Budget

EOP Publications Office

New Executive Office Building

725 17th Street, NW, Room 2200

Washington, DC 20503

Telephone: (202) 395-7332

Website: http://www.whitehouse.gov/omb/

 

 

ORDER OF PRECEDENCE

 

Any inconsistencies in the requirements of this award shall be resolved in the following order:

 

a.     Federal statutes

b.     Federal regulations

c.     2 CFR Part 200, as modified and supplemented by DoD’s interim implementation found at 2 CFR Part 1103 d.     Award-specific terms and conditions

 

ACCEPTANCE OF AWARD

 

The recipient is not required to countersign this award. In case of disagreement with any requirements of this award, the recipient shall contact the USAMRAA Grants Officer in order to resolve the issue(s). The recipient shall not assess any costs to the award or accept any payments until the issue(s) is resolved.

 

 

RECIPIENT RESPONSIBILITY

 

In addition to the responsibilities of the recipient as defined in the award or incorporated by reference herein:

 

a.     The recipient will bear primary responsibility for the conduct of the research and will exercise sound judgment within the limits of the award's terms and conditions.

 

b.     The Principal Investigator (PI) specified in the award document will be continuously responsible for the conduct of the research project and will be closely involved with the research effort. The PI, in coordination with

the recipient’s Office of Sponsored Projects/Business Office, is in the best position to determine the means by which the research may be conducted most effectively.

 

RESEARCH INTEGRITY AND MISCONDUCT

 

The recipient shall comply with the requirements of DoD Instruction 3210.7, “Research Integrity and Misconduct,” Enclosure 4, “Requirements for Extramural Research Institutions” (available at: http://www.dtic.mil/whs/directives/corres/pdf/321007p.pdf), incorporated herein by reference.

 

 

AWARD MODIFICATION

 

The only method by which this award may be modified is by a formal, written modification signed by the USAMRAA Grants Officer. No other communications, whether oral or in writing, are valid to change the terms and conditions of this award.

 

 

 

PRIOR APPROVAL REQUIREMENTS

 

a.     Administrative Requirements. Prior approvals required by DoDGAR 34.15 are waived except those identified below. Recipients shall request prior written approval from the USAMRAA Grants Officer for:

 

(1) Change in the scope or the objectives of the project as stated in the approved Statement of Work or approved modifications thereto, such as a change in the phenomenon(a) under study, even if there is no associated budget revision.

 

(2) The need for additional Federal funding.

 

(3) Change in the PI or any key personnel specified in the award document.

 

(4) The absence for more than 3 months, or a 25 percent reduction in time devoted to the project, by the approved PI or Project Director.

 

(5) The inclusion of pre-award costs.

 

(6) The subaward, transfer, or contracting out of any work not approved under the original award. This provision does not apply to the purchase of supplies, materials, equipment, or general support services, except that procurement of equipment or other capital items of property always is subject to the USAMRAA Grants Officer’s prior approval under DoDGAR 34.21(a) or DoDGAR 34.13(a)(7).

 

(7) Expenditures for individual items of general-purpose equipment and specific-purpose equipment, costing $5,000 or more, unless identified in the budget that is incorporated as part of the award.

 

(8) The transfer of funds among direct cost categories, functions and activities for awards in which the Federal share of the project exceeds $100,000 and the cumulative amount of such transfers exceeds or is expected to exceed 10 percent of the total budget as last approved by the USAMRAA Grants Officer. A transfer that would cause any Federal appropriation or part thereof to be used for purposes other than those consistent with the original intent of the appropriation is prohibited.

 

b.     Cost Principles. Recipients shall request prior written approval from the USAMRAA Grants Officer for the inclusion of costs that require prior approval in accordance with 48 CFR Parts 31 and 231, 2 CFR Part 200

Subpart E, and 45 CFR Part 74 Appendix E, as applicable. In accordance with those cost principles, the recipient must request prior written approval from the USAMRAA Grants Officer for: (1) those selected items of cost requiring prior approval; and (2) the incurrence of special or unusual costs.

 

CHANGE IN PERFORMANCE PERIOD

 

In accordance with the DoDGAR 34.15(c)(2)(v), the recipient may initiate, without prior approval, a one-time extension without funds to the expiration date of the award, as long as the extension without funds does not involve a change in the approved objectives or scope of the project. The recipient shall notify the USAMRAA Grants Officer in writing at least 10 calendar days prior to the expiration date of the award. The notification shall state:

the additional time needed, up to a maximum of 12 months; the reasons for the extension; and the work to be completed during the extension period. The recipient must be current with all financial and technical reporting requirements and be in compliance with all other terms and conditions of the award. This one-time extension without funds may not be exercised merely for the purpose of using unobligated balances. An official modification to the award document must be issued by the USAMRAA Grants Officer to extend the period of performance.

 

 

UNOBLIGATED BALANCES

 

The recipient is authorized to carry forward unobligated balances to subsequent funding periods of the award agreement without prior written approval.

 

 

 

MAXIMUM OBLIGATION

 

The maximum obligation of the Government for support of this award will not exceed the amount specified in the award, as modified. Awards will not be modified to provide additional funds for such purposes as reimbursement for unrecovered indirect costs resulting from the establishment of final negotiated rates or for increases in salaries, fringe benefits, and other costs.

 

 

FEE AND PROFIT

 

In accordance with 32 CFR 22.205(b), fee or profit is not an allowable cost for the recipient or under a subaward at any tier.

 

DISALLOWED COSTS

 

Funds shall not be used for the support of any costs disallowed by the Funding Opportunity Announcement, either as a direct or an indirect cost.

 

SUPPORTING INFORMATION

 

Information such as subawards, consultant agreements, vendor quotes, and personnel work agreements may be required in order to support proposed costs or to determine the employment status of personnel. The Government’s receipt of this information does not constitute approval or acceptance of any term or condition included therein.

 

FINANCIAL INSTABILITY, INSOLVENCY, BANKRUPTCY OR RECEIVERSHIP

 

a.     The recipient shall immediately notify the USAMRAA Grants Officer of the occurrence of the following events: (1) the recipient’s financial instability that would negatively impact performance of this award; (2) the recipient’s or recipient’s parent's filing of a voluntary case seeking liquidation or reorganization under the Bankruptcy Act; (3) the recipient’s consent to the institution of an involuntary case under the Bankruptcy Act against the organization or organization’s parent; (4) the filing of any similar proceeding for or against the recipient or recipient’s parent, or its consent to, the dissolution, winding-up or readjustment of the recipient’s debts,

appointment of a receiver, conservator, trustee, or other officer with similar powers over the organization, under any other applicable state or federal law; or (5) the recipient’s insolvency due to its inability to pay its debts generally as they become due.

 

b.     Such notification shall be in writing and shall: (1) specifically set out the details of the occurrence of an event referenced in paragraph “a”; (2) provide the facts surrounding that event; and (3) provide the impact such event will have on the project being funded by this award.

 

c.     Upon the occurrence of any of the five events described in paragraph “a” above, the Government reserves the right to conduct a review of this award to determine the recipient’s compliance with the required elements of the award (including such items as cost share, progress towards technical project objectives, and submission of required reports). If the USAMRAA Grants Officer’s review determines that there are significant deficiencies or concerns with the recipient’s performance under the award, the Government reserves the right to impose additional requirements, as needed, including (1) change the payment method; (2) institute payment controls, and (3) require additional reporting requirements.

 

d.     Failure of the recipient to comply with this term may be considered a material failure by the recipient to comply with the terms of this award and may result in termination.

 

PROPERTY STANDARDS

 

The recipient shall manage, use and dispose of property in accordance with the requirements established in

DoDGAR 34.20 through 34.24.

 

 

 

TITLE TO REAL PROPERTY AND EQUIPMENT

The purchase of real property or equipment acquired in whole or in part with Federal funds requires prior approval

of the USAMRAA Grants Officer. Title to such real property or equipment vests in the recipient upon acquisition, subject to the conditions of DoDGAR 34.21.

 

FEDERALLY OWNED PROPERTY

 

Title to Federally-owned property vests in the Federal Government. DoDGAR 34.22 governs the requirements for

Federally-owned property.

 

 

PROPERTY MANAGEMENT SYSTEM

 

The recipient’s property management system for property that is Federally-owned and for equipment that is acquired in whole or in part with Federal funds, or that is used as matching share, is subject to the requirements of DoDGAR

34.23.

 

 

SUPPLIES

 

Title to supplies acquired with Federal funds under this award vests in the recipient upon acquisition. Upon completion or termination of the project, disposition of supplies shall be handled in accordance with DoDGAR

34.24.

 

INTANGIBLE PROPERTY - DATA AND SOFTWARE REQUIREMENTS

 

Rights in technical data, patents, inventions, and computer software are subject to the requirements of DoDGAR

34.25. All software and data first produced under the award are subject to the Federal Purpose license in accordance with applicable DoDGAR requirements. The recipient grants to the Government all necessary and appropriate licenses as a condition of this award.

 

PATENTS AND INVENTIONS REPORTING REQUIREMENTS

 

a.     iEdison and annual reporting. The recipient shall electronically file Invention Disclosures and Patent Applications using the Interagency Edison (iEdison) system through the National Institutes of Health (https://s- edison.info.nih.gov/iEdison) within the times specified for reporting. In addition, inventions made during the year shall also be reported annually (within 30 days of the anniversary date of the award) on a DD Form 882, “Report of Inventions and Subcontracts.” If there are no inventions during the year, no annual DD Form 882 is required. The DD Form 882 can be accessed at https://www.usamraa.army.mil.

 

 

b.     Closeout report. A final DD Form 882 is required. The form shall be submitted electronically within 90 days of end of the term of award. List all inventions made during the term of the award, or state “none,” as applicable. The award will NOT be closed until all reporting requirements have been met.

 

c.     All reports shall be sent electronically to usarmy.detrick.medcom-usamraa.mbx.aa2@mail.mil.

 

 

FINANCIAL REPORTING REQUIREMENTS

 

The recipient shall use the Standard Form (SF) 425, “Federal Financial Report,” for reporting individual awards. Quarterly and final reports are required for those awards receiving advance payments. Annual and final reports are required for those awards receiving cost reimbursement payments.

 

The Federal Financial Reporting period end dates fall on the end of the calendar quarter for quarterly reports (3/31,

6/30, 9/30, 12/31), end of the calendar year for annual reports (12/31), and the end date of the term of award for the final report. Quarterly reports shall be submitted no later than 30 days after the end of each quarter. Annual reports shall be submitted no later than 90 days after the end of the calendar year. Final reports shall be submitted no later than 90 days after the end date of the term of award.

 

 

 

 

Submission Instructions:

 

a.     All SF425 reports must be submitted electronically through the web site https://www.usamraa.army.mil/pages/sf425. The form and instructions can be obtained on this site.

 

 

b.     Do not report multiple awards on one report. Each award must be reported separately on its own SF425.

 

Do not combine multiple SF425s into one submission. Each form must be saved as a separate PDF and submitted individually.

 

AUDITS

 

Any recipient that expends $500,000 or more in a year under Federal awards shall have an audit made by an independent auditor in accordance with the requirements of DoDGAR 34.16. The recipient shall make the auditor’s report available upon request.

 

CLINICAL TRIAL REGISTRY

 

Certain clinical trials are required by U.S. law to be registered on the National Institutes of Health database entitled “ClinicalTrials.gov.” For those trials required to be registered (see http://prsinfo.clinicaltrials.gov/, “Support Materials, including Data Element Definitions”), PIs shall register clinical trials individually on http://www.clinicaltrials.gov. PIs shall use a Secondary Protocol ID number designation of “(enter CDMRP- CDMRP Log Number)” (e.g., CDMRP-BC151111). If several protocols exist under the same application, the Secondary Protocol ID number must be designated “CDMRP-CDMRP Log Number-A, B, C, etc.” (e.g., CDMRP- BC151111-A). Clinical trials must be registered prior to enrollment of the first patient. Failure to do so may result in a civil monetary penalty and/or the withholding or recovery of award funds as per U.S. Public Law 110-85.

 

QUARTERLY TECHNICAL REPORTING REQUIREMENTS

 

For each year of the entire performance period of the award, the PI shall submit a Quarterly Technical Progress Report covering research results (positive and negative data) during each of the first three quarters. A Quarterly Technical Progress Report for the fourth quarter is not required, as the Annual Technical Report shall incorporate all four quarters of progress.

 

Quarterly reports are the most immediate and direct contact between the PI and the Grants Officer’s Representative (GOR). The reports provide the means for keeping the USAMRMC advised of developments and problems as the research effort proceeds. The reports also provide a measure against which funding decisions are made.

 

The Quarterly Technical Progress Report Format, available on web site https://www.usamraa.army.mil, is required. Each item of the report format shall be completed.

 

Each report shall be submitted electronically, within 15 days after the end of each quarter, to the Grants Specialist and the GOR at the e-mail addresses specified below. Name your file with your award number, followed by Year X Quarter Y Report (example: W81XWH-15-1-0000 Year 1 Quarter 1 Report.) If you have questions, contact the GOR.

 

Grants Specialist E-mail: usarmy.detrick.medcom-usamraa.mbx.aa2@mail.mil

 

 

GOR E-mail: usarmy.detrick.medcom-cdmrp.mbx.cdmrp-reporting@mail.mil

 

 

The Quarterly Technical Progress Report shall be brief, factual, and informal, and shall be prepared in accordance with the following:

 

(1) FRONT COVER:

 

 

 

 

(a)     Award Number: (b)     Log Number:

(c)     Project Title:

(d)     Principal Investigator Name:

(e)     Principal Investigator Organization and Address: (f)     Principal Investigator Phone and Email:

(g)     Report Date: (h)     Report Period:

 

(2) SECTION 1 -- Accomplishments: The PI is reminded that the recipient organization is required to obtain prior written approval from the USAMRAA Grants Officer whenever there are significant changes in the project or its direction.

 

•     What were the major goals of the project?

•     What was accomplished under these goals?

•     Describe the Regulatory Protocol and Activity Status (if applicable).

•     What do you plan to do during the next reporting period to accomplish the goals and objectives?

 

 

What were the major goals of the project?

 

List the major goals of the project as stated in the approved SOW. If the application listed milestones/target dates for important activities or phases of the project identify these dates and show actual completion dates or the percentage of completion.

 

 

What was accomplished under these goals?

 

For this quarterly reporting period only describe: 1) major activities; 2) specific objectives; 3) significant results or key outcomes, including major findings, developments, or conclusions (both positive and negative); and/or 4) other achievements. Include a discussion of stated goals not met. Description shall include pertinent data and graphs in sufficient detail to explain any significant results achieved. A succinct description of the methodology used shall be provided.

 

 

Describe the Regulatory Protocol and Activity Status (if applicable).

 

Describe the Protocol and Activity Status for sections a-c, as applicable, using the format described for

each section. If there is nothing significant to report during this reporting period, state “Nothing to Report.”

 

 

(a) Human Use Regulatory Protocols

 

TOTAL PROTOCOL(S): State the total number of human use protocols required to complete this project (e.g., “5 human subject research protocols will be required to complete the Statement of Work”). If not applicable, write “No human subjects research will be performed to complete the Statement of Work.”

 

PROTOCOL(S): List the identifier and title for all human use protocols needed to complete the project. Include information about the approved target number for clinical significance, type of submission, type of approval with associated dates, and performance status.

 

 

The following format shall be used:

 

Protocol _of_ total:

Human Research Protection Office (HRPO) assigned A-number:

Title:

Target required for clinical significance:

 

 

 

Target approved for clinical significance:

Submitted to and Approved by: Provide a bullet point list of protocol development, submission, amendments, and approvals (include IRB in addition to HRPO).

Status: Report on activity status: (i) progress on subject recruitment, screening, enrollment, completion, and numbers of each compared to original planned target(s), e.g., number of subjects enrolled versus total number proposed (ii) amendments submitted to the IRB and USAMRMC HRPO for review; and (iii) any adverse event/unanticipated problems involving risks to subjects or others and actions or plans for mitigation.

 

(b) Use of Human Cadavers for Research Development Test & Evaluation (RDT&E), Education or Training

 

“Cadaver” is defined as a deceased person or portion thereof, and is synonymous with the terms “human cadaver” and “post-mortem human subject” or “PMHS.” The term includes organs, tissues, eyes, bones, arteries or other specimens obtained from an individual upon or after death. The term “cadaver” does not include portions of an individual person, such as organs, tissue or blood, that were removed while the individual was alive (for example, if a living person donated tissue for use in future research protocols, that tissue is not considered a “cadaver” under this policy, regardless of whether the donor is living or deceased at the time of tissue use).

 

TOTAL ACTIVITIES: State the total number of RDT&E, education or training activities that will involve cadavers. If not applicable, write “No RDT&E, education or training activities involving human cadavers will be performed to complete the Statement of Work (SOW).”

 

 

ACTIVITIES: Provide the following information in a bulleted list for all RDT&E, education or training activities involving human cadavers conducted or supported during the quarter:

 

•     Title of the RDT&E, education or training activity

•     SOW task/aim associated with the activity

•     Date the activity was conducted

 

Identification of the organization’s responsible individual (e.g., PI or individual primarily responsible for the activity’s conduct)

 

Brief description of the use(s) of cadavers in the activity and the total number of cadavers used during the reporting period

•     Brief description of the Department of Army organization’s involvement in the activity

•     Status of document submission and approvals

 

Problems encountered in the procurement, inventory, use, storage, transfer, transportation and disposition of cadavers used for RDT&E, education or training. Examples of problems include but are not limited to: loss of confidentiality of cadaveric donors, breach of security,

significant deviation from the approved protocol, failure to comply with state laws and/or institutional policies and public relations issues.

 

(c) Animal Use Regulatory Protocols

 

TOTAL PROTOCOL(S): State the total number of animal use protocols required to complete this project (e.g., “2 animal use research protocols will be required to complete the Statement of Work”). If not applicable, write “No animal use research will be performed to complete the Statement of Work.”

 

 

PROTOCOL(S): List the identifier and title for all animal use protocols needed to complete the project. Include information about the approved target number for statistical significance, type of submission, type of approval with associated dates, and performance status.

 

The following format shall be used:

 

 

 

Protocol_ of_ total:

Animal Care and Use Review Office (ACURO) assigned Number:

Title:

Target required for statistical significance: Target approved for statistical significance:

Submitted to and Approved by: Provide a bullet point list of protocol development,

submission, amendments, and approvals (include Institutional Animal Care and Use

Committee (IACUC) in addition to ACURO).

Status: Provide a bullet point list of performance and/or progress status relating to the above protocol and discuss any administrative, technical, or logistical issues that may impact performance or progress of the study (e.g., animal use protocol needs revision to minimize animal suffering, animal protocol modification to include additional staff) for the above ACURO approved protocol.

 

 

What do you plan to do during the next reporting period to accomplish the goals and objectives?

 

Describe briefly what you plan to do during the next reporting period to accomplish the goals and objectives in accordance with the approved SOW.

 

(3) SECTION 2 Products: List any products resulting from the project during the reporting period. If there are no products to report for the current quarter, state “Nothing to report.”

 

Examples of products include:

•     publications, conference papers, and presentations;

•     website(s) or other Internet site(s);

•     technologies or techniques;

•     inventions, patent applications, and/or licenses; and

 

other products, such as data or databases, biospecimen collections, germplasm, audio or video products, software, models, educational aids or curricula, instruments or equipment, data and research material, clinical or educational interventions, or new business creation.

 

 

(4) SECTION 3 - Participants & Other Collaborating Organizations

 

What individuals have worked on the project?

 

Provide the following information for: (1) PDs/PIs; and (2) each person who has worked at least one person month per year on the project during the reporting period, regardless of the source of compensation (a person month equals approximately 160 hours of effort).

 

Provide the name and identify the role the person played in the project. Indicate the nearest whole person month (Calendar, Academic, Summer) that the individual worked on the project. Show the most senior role in which the person worked on the project for any significant length of time. For example, if an undergraduate student graduated, entered graduate school, and continued to work on the project, show that person as a graduate student, preferably explaining the change in involvement.

 

Describe how this person contributed to the project. If information is unchanged from a previous submission, provide the name only and indicate “no change”.

 

 

Example:

Name:     Mary Smith Project Role:     Graduate Student Researcher Identifier (e.g., ORCID ID):     1234567

Nearest person month worked:     5

 

Contribution to Project:

Ms. Smith has performed work in the area of combined error-control and constrained coding

 

 

 

 

(5) SECTION 4Changes/Problems: The PD/PI is reminded that the recipient organization is required to obtain prior written approval from the awarding agency Grants Officer whenever there are significant changes in the project or its direction. If not previously reported in writing, provide the following additional information or state, “Nothing to Report,” if applicable:

 

1.     Actual Problems or delays and actions to resolve them

Provide a description of current problems or issues that may impede performance or progress of this project

along with proposed corrective action. Also describe changes during the reporting period that may have had a significant impact on expenditures, for example, delays in hiring staff or favorable developments that enable meeting objectives at less cost than anticipated.

 

For an award that includes the recruitment of human subjects for clinical research or a clinical trial, discuss any problems or barriers encountered, if applicable, and what has been done to mitigate those issues. Discussion may highlight enrollment problems, retention problems, and actions taken to increase enrollment and/or improve retention.

 

2.     Anticipated Problems/Issues

Provide a description of anticipated problems or issues that have a potential to impede performance or

progress. Also provide course of actions planned to mitigate problems or to take should the problem materialize.

 

(6) SECTION 5 – Special Reporting Requirements:

 

Quad Charts: The Quad Chart (available on https://www.usamraa.army.mil) shall be updated and submitted as an attachment to the Quarterly Technical Report.

 

ANNUAL/FINAL TECHNICAL REPORTING REQUIREMENTS

 

Format Requirements:

 

a. Annual reports shall be prepared in accordance with the Research Performance Progress Report (RPPR). The RPPR is the uniform format for reporting performance progress on Federally-funded research projects and research-related activities. Annual reports shall provide a complete summary of the research results (positive or negative) to date in direct alignment to the approved Statement of Work (SOW). The importance of the report to decisions relating to continued support of the research cannot be over-emphasized. An annual report shall be submitted within 30 calendar days of the anniversary date of the award for the preceding 12 month period. If the award period of performance is extended by the USAMRAA Grants Officer, then an annual report shall still be submitted within 30 days of the anniversary date of the award. A final report will be due upon completion of the extended performance date that describes the entire research effort.

 

b. A final report shall also be prepared in accordance with the RPPR and shall be submitted within 90 calendar days of the award performance end date. The report shall summarize the entire research effort, citing data in the annual reports and appended publications.

 

Although there is no page limitation for the reports, each report shall be of sufficient length to provide a thorough description of the accomplishments with respect to the approved SOW. Reports, in electronic format (PDF or Word file only), shall be submitted to https://ers.amedd.army.mil.

 

 

All reports shall have the following elements, in this order:

 

FRONT COVER:

 

 

 

Sample front cover is provided at http://mrmc.amedd.army.mil/index.cfm?pageid=researcher_resources.technical_reporting. The Accession Document (AD) Number should remain blank.

 

Distribution: Reports must include one of two distribution statements:

 

(1) Unlimited Distribution: If the distribution will be unlimited (i.e., approved for public release), choose the form entitled “Award/Contract Front Cover – Unlimited Distribution A.” Results of fundamental research should be public distribution except in rare and exceptional circumstances.

 

(2) Limited Distribution: If the distribution is to be limited, choose the form entitled “Award/Contract Cover – Limited Distribution B.” After report submission, the GOR will review the appropriateness of using this distribution statement. The GOR has the right to challenge the validity of any restrictive markings. Reports that may be eligible for limited distribution may be ones that contain proprietary data that is not to be released to the public. If so, mark the cover page as “Proprietary”. DO NOT USE THE WORD "CONFIDENTIAL" WHEN MARKING DOCUMENTS. The recipient shall maintain records sufficient to justify the validity of any restrictive markings. REPORTS NOT PROPERLY MARKED WILL BE DISTRIBUTED AS APPROVED FOR PUBLIC RELEASE.

 

For additional information regarding distribution statements, see DOD Instruction 5230.24 (available at http://www.dtic.mil/whs/directives).

 

 

For general information regarding report preparation, access the Research Resources, Technical Reporting, website at https://mrmc.amedd.army.mil/index.cfm?pageid=researcher_resources.technical_reporting.

 

 

STANDARD FORM 298: Sample SF 298 is provided at http://mrmc.amedd.army.mil/index.cfm?pageid=researcher_resources.technical_reporting. The abstract shall be provided in Block 14 and shall state the purpose, scope, and major findings and be an up-to-date report of the progress in terms of results and significance. Abstracts will be submitted to the Defense Technical Information Center (DTIC) and shall not contain proprietary information. Subject terms are keywords that may have been previously assigned to the proposal abstract or are keywords that may be significant to the research.

 

Pages shall be numbered. The number of pages shall include all pages that have printed data (including the front cover, SF 298, table of contents, and all appendices). Page numbers must match the numbering shown on the Table of Contents.

 

TABLE OF CONTENTS: Sample table of contents is provided at http://mrmc.amedd.army.mil/index.cfm?pageid=researcher_resources.technical_reporting.

 

 

 

Example Table of Contents

 

1. Introduction

2. Keywords

3. Accomplishments

4. Impact

5. Changes/Problems

6. Products

7. Participants & Other Collaborating Organizations

8. Special Reporting Requirements

9. Appendices

 

Page No.

 

 

 

1.     INTRODUCTION: Narrative that briefly (one paragraph) describes the subject, purpose and scope of the research.

 

2.     KEYWORDS: Provide a brief list of keywords (limit to 20 words).

 

 

 

 

3.     ACCOMPLISHMENTS: The PI is reminded that the recipient organization is required to obtain prior written approval from the USAMRAA Grants Officer whenever there are significant changes in the project or its direction.

 

• What were the major goals and objectives of the project?

• What was accomplished under these goals?

• What opportunities for training and professional development did the project provide?

• How were the results disseminated to communities of interest?

• What do you plan to do during the next reporting period to accomplish the goals and objectives?

 

What were the major goals of the project?

 

List the major goals of the project as stated in the approved SOW. If the application listed milestones/target dates for important activities or phases of the project, identify these dates and show actual completion dates or the percentage of completion.

 

Generally, the goals will not change from one reporting period to the next and are unlikely to change during the final reporting period. However, if the awarding agency approved changes to the goals during the reporting period, list

the revised goals and objectives. Also explain any significant changes in approach or methods from the agency approved application or plan.

 

What was accomplished under these goals?

 

For this reporting period describe: 1) major activities; 2) specific objectives; 3) significant results or key outcomes, including major findings, developments, or conclusions (both positive and negative); and/or 4) other achievements. Include a discussion of stated goals not met. Description shall include pertinent data and graphs in sufficient detail to explain any significant results achieved. A succinct description of the methodology used shall be provided. As the project progresses to completion, the emphasis in reporting in this section should shift from reporting activities to reporting accomplishments.

 

 

What opportunities for training and professional development has the project provided?

 

If the project was not intended to provide training and professional development opportunities or there is nothing significant to report during this reporting period, state “Nothing to Report.”

 

Describe opportunities for training and professional development provided to anyone who worked on the project or anyone who was involved in the activities supported by the project. “Training” activities are those in which individuals with advanced professional skills and experience assist others in attaining greater proficiency. Training activities may include, for example, courses or one-on-one work with a mentor. “Professional development” activities result in increased knowledge or skill in one’s area of expertise and may include workshops, conferences, seminars, study groups, and individual study. Include participation in conferences, workshops, and seminars not listed under major activities.

 

 

How were the results disseminated to communities of interest?

 

If there is nothing significant to report during this reporting period, state “Nothing to Report.”

 

Describe how the results were disseminated to communities of interest. Include any outreach activities that were undertaken to reach members of communities who are not usually aware of these project activities, for the purpose of enhancing public understanding and increasing interest in learning and careers in science, technology, and the humanities.

 

 

What do you plan to do during the next reporting period to accomplish