2022 Q2 Form 10-Q Financial Statement

#000162828022012436 Filed on May 05, 2022

View on sec.gov

Income Statement

Concept 2022 Q2 2022 Q1 2021 Q1
Revenue $1.033M $1.173M $473.0K
YoY Change -69.21% 147.99% -82.82%
Cost Of Revenue $1.567M $720.0K $77.00K
YoY Change 1787.95% 835.06% 16.67%
Gross Profit -$534.0K $453.0K $396.0K
YoY Change -116.32% 14.39% -85.27%
Gross Profit Margin -51.69% 38.62% 83.72%
Selling, General & Admin $2.784M $11.68M $5.346M
YoY Change -62.4% 118.56% 59.44%
% of Gross Profit 2579.25% 1350.0%
Research & Development $8.510M $9.584M $2.500M
YoY Change -32.29% 283.36% -47.57%
% of Gross Profit 2115.67% 631.31%
Depreciation & Amortization $30.00K $67.00K $451.0K
YoY Change -93.42% -85.14% -0.44%
% of Gross Profit 14.79% 113.89%
Operating Expenses $11.29M $21.27M $7.846M
YoY Change -43.45% 171.07% -3.39%
Operating Profit -$11.83M -$20.85M -$30.58M
YoY Change -30.95% -31.81% -2.65%
Interest Expense -$1.154M -$1.169M $17.00K
YoY Change 382.85% -6976.47% 70.0%
% of Operating Profit
Other Income/Expense, Net -$1.154M -$1.189M $17.00K
YoY Change 372.95% -7094.12% -99.76%
Pretax Income -$12.98M -$22.04M -$30.56M
YoY Change -25.27% -27.88% 25.71%
Income Tax $5.000K $9.000K $11.00K
% Of Pretax Income
Net Earnings -$12.99M -$22.10M -$30.68M
YoY Change -24.07% -27.97% 45.29%
Net Earnings / Revenue -1257.21% -1884.06% -6486.26%
Basic Earnings Per Share -$1.38 -$2.35
Diluted Earnings Per Share -$1.381M -$2.346M -$4.157M
COMMON SHARES
Basic Shares Outstanding 112.8M shares 112.8M shares 89.10M shares
Diluted Shares Outstanding 9.401M shares 9.400M shares

Balance Sheet

Concept 2022 Q2 2022 Q1 2021 Q1
SHORT-TERM ASSETS
Cash & Short-Term Investments $11.25M $38.47M $38.29M
YoY Change -72.18% 0.46% 87.98%
Cash & Equivalents $11.20M $38.50M $38.29M
Short-Term Investments
Other Short-Term Assets $1.899M $2.782M $2.618M
YoY Change 6.03% 6.26% 211.67%
Inventory $23.00K $25.00K $0.00
Prepaid Expenses
Receivables $544.0K $938.0K $3.130M
Other Receivables $1.306M $1.445M $2.056M
Total Short-Term Assets $15.02M $43.66M $46.10M
YoY Change -68.29% -5.29% 80.87%
LONG-TERM ASSETS
Property, Plant & Equipment $2.567M $2.604M $1.530M
YoY Change 79.39% 70.2% 7.99%
Goodwill $14.41M $14.41M $14.41M
YoY Change 0.0% 0.0% 0.0%
Intangibles $0.00 $0.00 $1.161M
YoY Change -100.0% -100.0% -56.93%
Long-Term Investments
YoY Change
Other Assets $227.0K $1.227M $149.0K
YoY Change 52.35% 723.49% 35.45%
Total Long-Term Assets $17.20M $18.24M $17.25M
YoY Change 2.88% 5.75% -7.43%
TOTAL ASSETS
Total Short-Term Assets $15.02M $43.66M $46.10M
Total Long-Term Assets $17.20M $18.24M $17.25M
Total Assets $32.22M $61.90M $63.35M
YoY Change -49.72% -2.28% 43.58%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $2.164M $3.757M $11.91M
YoY Change -45.42% -68.46% 337.01%
Accrued Expenses $12.95M $13.70M $14.24M
YoY Change -26.47% -3.81% 130.02%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00 $0.00
YoY Change
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities $15.40M $17.89M $26.36M
YoY Change -28.97% -32.12% 71.95%
LONG-TERM LIABILITIES
Long-Term Debt $18.71M $33.18M $0.00
YoY Change 9.16%
Other Long-Term Liabilities $1.939M $2.358M $1.719M
YoY Change 24.45% 37.17% 57.09%
Total Long-Term Liabilities $1.939M $2.358M $1.719M
YoY Change 24.45% 37.17% 57.09%
TOTAL LIABILITIES
Total Short-Term Liabilities $15.40M $17.89M $26.36M
Total Long-Term Liabilities $1.939M $2.358M $1.719M
Total Liabilities $38.18M $55.56M $30.19M
YoY Change -10.17% 84.02% 62.92%
SHAREHOLDERS EQUITY
Retained Earnings -$297.2M -$284.2M -$208.5M
YoY Change 31.74% 36.31% 53.98%
Common Stock $9.000K $113.0K $89.00K
YoY Change -90.63% 26.97% 49.43%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity -$5.951M $6.342M $33.16M
YoY Change
Total Liabilities & Shareholders Equity $32.22M $61.90M $63.35M
YoY Change -49.72% -2.28% 43.58%

Cashflow Statement

Concept 2022 Q2 2022 Q1 2021 Q1
OPERATING ACTIVITIES
Net Income -$12.99M -$22.10M -$30.68M
YoY Change -24.07% -27.97% 45.29%
Depreciation, Depletion And Amortization $30.00K $67.00K $451.0K
YoY Change -93.42% -85.14% -0.44%
Cash From Operating Activities -$12.47M -$16.10M -$18.32M
YoY Change -35.01% -12.1% 219.15%
INVESTING ACTIVITIES
Capital Expenditures -$56.00K $0.00 $21.00K
YoY Change -100.0%
Acquisitions
YoY Change
Other Investing Activities
YoY Change
Cash From Investing Activities -$56.00K $0.00 -$21.00K
YoY Change -100.0% -98.32%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -14.78M $0.00 $37.83M
YoY Change -169.66% -100.0% 315.75%
NET CHANGE
Cash From Operating Activities -12.47M -$16.10M -$18.32M
Cash From Investing Activities -56.00K $0.00 -$21.00K
Cash From Financing Activities -14.78M $0.00 $37.83M
Net Change In Cash -27.31M -$16.07M $19.49M
YoY Change -1444.51% -182.45% 824.48%
FREE CASH FLOW
Cash From Operating Activities -$12.47M -$16.10M -$18.32M
Capital Expenditures -$56.00K $0.00 $21.00K
Free Cash Flow -$12.41M -$16.10M -$18.34M
YoY Change -35.3% -12.2% 219.52%

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Business <div style="text-align:justify"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:107%">Avalo Therapeutics, Inc. (the “Company” or “Avalo”) is a leading clinical-stage precision medicine company that discovers, develops, and commercializes targeted therapeutics for patients with significant unmet clinical need in immunology and rare genetic diseases. The Company has built a diverse portfolio of innovative therapies to deliver meaningful medical impact for patients in urgent need. Avalo’s clinical candidates commonly have a proven mechanistic rationale, biomarkers and/or an established proof-of-concept to expedite and increase the probability of success. </span></div><div style="text-align:justify"><span><br/></span></div><div style="text-align:justify"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:107%">Avalo was incorporated in Delaware and commenced operation in 2011, and completed its initial public offering in October 2015. </span></div><div style="text-align:justify"><span><br/></span></div><div style="text-align:justify"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-style:italic;font-weight:700;line-height:120%">Liquidity</span></div><div style="text-align:justify"><span><br/></span></div><div style="text-align:justify"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:115%">In order to meet its cash flow needs, the Company applies a disciplined decision-making methodology as it evaluates the optimal allocation of the Company’s resources between investing in the Company’s existing pipeline assets and acquisitions or in-licensing of new assets. As of March 31, 2022, Avalo had $38.5 million in cash and cash equivalents. For the three months ended March 31, 2022, Avalo generated a net loss of $22.1 million and negative cash flows from operations of $16.1 million. As of March 31, 2022, Avalo had an accumulated deficit of $284.2 million.</span></div><div style="text-align:justify"><span><br/></span></div><div style="text-align:justify"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern; however, losses are expected to continue as the Company continues to invest in its research and development pipeline assets. The Company will require additional financing to fund its operations and to continue to execute its business strategy at least one year after the date the condensed consolidated financial statements included herein were issued. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.</span></div><div style="text-align:justify"><span><br/></span></div><div style="text-align:justify"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">To mitigate these conditions and to meet the Company’s capital requirements, management plans to use its current cash on hand along with some combination of the following: (i) dilutive and/or non-dilutive financings, (ii) federal and/or private grants, (iii) other out-licensing or strategic alliances/collaborations of its current pipeline assets, and (iv) out-licensing or sale of its non-core assets. If the Company raises additional funds through collaborations, strategic alliances or licensing arrangements with third parties, the Company might have to relinquish valuable rights to its technologies, future revenue streams, research programs or product candidates. Subject to limited exceptions, our venture debt financing agreement prohibits us from incurring certain additional indebtedness, making certain asset dispositions, and entering into certain mergers, acquisitions or other business combination transactions without prior consent of the Lenders. Additionally, our venture debt financing agreement contains certain covenants and certain other specified events that could result in an event of default, which if not cured or waived, could result in the immediate acceleration of all or a substantial portion of the Notes (as defined in Note 9). As of the filing date of this Quarterly Report on Form 10-Q, the Company was not aware of any breach of covenants or occurrence of material adverse change, nor had it received any notice of event of default from the Lenders (refer to Note 9 for more information).</span></div><div style="text-align:justify"><span><br/></span></div><div style="text-align:justify"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">If the Company requires but is unable to obtain additional funding, the Company may be forced to make reductions in spending, delay, suspend, reduce or eliminate some or all of its planned research and development programs, or liquidate assets where possible. Due to the uncertainty regarding future financing and other potential options to raise additional funds, management has concluded that substantial doubt exists with respect to the Company’s ability to continue as a going concern within one year after the date that the financial statements in this Quarterly Report on Form 10-Q were issued. </span></div>Over the long term, the Company’s ultimate ability to achieve and maintain profitability will depend on, among other things, the development, regulatory approval, and commercialization of its pipeline assets, and the potential receipt and sale of any priority review vouchers it receives.
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