Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the financial statements and the related notes appearing elsewhere in this Form 10-K. This

Table of Contents

discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties, including those set forth under “Cautionary Statement About Forward-Looking Statements.” Actual results and experience could differ materially from the anticipated results and other expectations expressed in our forward-looking statements as a result of a number of factors, including but not limited to those discussed in this Item and in Item 1A - “Risk Factors.” Actual results and the timing of events could differ materially from those discussed in our forward-looking statements as a result of many factors, including those set forth under “Risk Factors” and elsewhere in this Form 10-K.

Overview

We are a development-stage biotechnology company focused on advancing novel antiviral therapies to treat diseases associated with a viral triggered abnormal immune response such as FM. Overactive immune response related to activation of tissue resident HSV-1 has been postulated to be a potential root cause of chronic illnesses such as FM, IBS, chronic fatigue syndrome and functional somatic syndrome, all of which are characterized by a waxing and waning manifestation of disease. While not completely understood, there is general agreement in the medical community that activation of HSV-1 is triggered by some form of environmental and/or health stressor. Our lead product, IMC-1, is a novel, proprietary, fixed dose combination of famciclovir and celecoxib. IMC-1 represents a novel combination, dual mechanism, antiviral therapy designed to synergistically suppress HSV-1 activation and replication, with the end goal of reducing viral mediated disease burden.

IMC-1 combines two specific mechanisms of action purposely designed to inhibit HSV-1 activation and replication, thereby keeping HSV-1 in a latent (dormant) state or “down-regulating” HSV-1 from a lytic (active) state back to latency. The famciclovir component of IMC-1 inhibits viral DNA replication. The celecoxib component of IMC-1 inhibits cyclooxegenase-2 (“COX-2”) and to a lesser degree COX-1, enzymes used by HSV-1 to amplify or accelerate its own replication. We are unaware of any other antivirals in development for the treatment of FM specifically used to inhibit both HSV-1 activation and subsequent HSV-1 replication, with the goal of keeping tissue resident HSV-1 tissue in a latent state. This novel approach was a germane consideration in FDA designating IMC-1 for fast-track review status for the treatment of FM. IMC-1 has also been granted a synergy patent based on the fact that neither of the individual components has proven effective in the management of fibromyalgia, yet the dual mechanism combination therapy generated a result that is greater than the sum of its parts.

On December 16, 2020, immediately prior to the effectiveness of our registration statement, we converted into a Delaware corporation pursuant to a statutory conversion, and changed our name from Virios Therapeutics, LLC to Virios Therapeutics, Inc., in what we call the “Corporate Conversion”. As a result of the Corporate Conversion, all of the membership interests held by the existing members of Virios Therapeutics, LLC converted into shares of common stock of Virios Therapeutics, Inc. Prior to the Corporate Conversion, we operated as an Alabama limited liability company.

We have never been profitable and have incurred losses since inception. Our net losses were $10,346,395 and $2,473,627 for the years ended December 31, 2020 and 2019, respectively, and our accumulated deficit at December 31, 2020 was $27,965,105. We expect to incur losses for the foreseeable future, and we expect these losses to increase as we continue to develop and seek regulatory approvals for our product candidate. Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability.

The development of our drug candidates could be disrupted and materially adversely affected in the future by the COVID-19 pandemic. We are still assessing our business plans and the impact COVID-19 may have on our ability to advance the development of our drug candidates, delays in starting or completing clinical trials, the suspension of clinical trials or to raise financing to support the development of our drug candidates, but no assurances can be given that this analysis will enable us to avoid part or all of any impact

Table of Contents

from the spread of COVID-19 or its consequences, including downturns in business sentiment generally or in our sector in particular.

Financial Operations Overview

The following discussion sets forth certain components of our statements of operations as well as factors that impact those items.

Research and Development Expenses

Our research and development expenses consist of expenses incurred in development and clinical studies relating to our product candidate, including:

● payments to third-party contract research organizations, or CROs;

● payments to contract laboratories and independent consultants.

We expense all research and development costs as incurred, to date all of which have been external. Clinical development expenses for our product candidate is a significant component of our current research and development expenses. Products in later stage clinical development generally have higher research and development expenses than those in earlier stages of development, primarily due to increased size and duration of the clinical trials. We track and record information regarding research and development expenses for each study or trial we conduct. We use third-party CROs, CMOs, contractor laboratories and independent contractors. All research and development costs incurred to date have been external and have been for our lead candidate, IMC-1. We recognize the expenses associated with third parties performing services for us in our clinical studies based on the percentage of each study completed at the end of each reporting period.

Research and development activities are central to our business model. We expect our research and development expenses in 2021 to be higher than in 2020 as a result of increased expenditures for our Phase 2b study in FM. These expenditures are subject to numerous uncertainties regarding timing and cost to completion. Completion of our clinical development and clinical trials may take several years or more. Because of the numerous risks and uncertainties associated with product development, we cannot determine with certainty the duration and completion costs of the current or future studies and clinical trials or if, when, or to what extent we will generate revenues from the commercialization and sale of our product candidates. We may never succeed in achieving regulatory approval for our product candidates. The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors, including:

● successful enrollment in, and completion of, clinical trials;

● receipt of marketing approvals from applicable regulatory authorities;

Table of Contents

● effectively competing with other therapies and treatment options;

● a continued acceptable safety profile following approval;

● achieving desirable medicinal properties for the intended indications.

A change in the outcome of any of these factors could mean a significant change in the costs and timing associated with the development of our current and future product candidates. For example, if the FDA, or another regulatory authority were to require us to conduct clinical trials beyond those that we currently anticipate will be required for the completion of clinical development, or if we experience significant delays in execution of or enrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development. We expect our research and development expenses to increase for the foreseeable future as we continue the development of IMC-1 and other potential product candidates.

General and Administrative Expenses

General and administrative expenses consist primarily of employee-related expenses, including salaries, benefits, and equity and share-based compensation, for personnel in executive, finance, operations and administrative functions. General and administrative expenses also include public company costs, directors and officer’s insurance professional fees for legal, including patent related expenses, consulting, auditing and tax services.

We anticipate that our general and administrative expenses will increase in the future to support continued research and development activities and potential commercialization of our product candidates and increased costs of operating as a public company. These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, lawyers and accountants, among other expenses.

Other (Expense) Income, Net

Other (expense) income, net, primarily consists of interest expense on the convertible promissory notes and amortization of related debt issuance costs that converted into membership interests at our Corporate Conversion.

Related Parties

The Company uses Tanner & Guin for general counsel legal services and for other administrative needs. Partners of the law firm are stockholders of the Company.

The Company uses Way, Ray, Shelton & Co., for tax accounting services. A retired partner of the firm is also a stockholder of the Company.

The Company uses Gendreau Consuling, LLC, for drug development, clinical trial design and planning, implementation and execution of contracted activies with CROs. The managing member of the firm is also the Company’s CMO effective January 1, 2021. The Company will continue to contract the CMO’s spouse as well as an administrative assistant through the firm to perform certain activities in connection with its planned clinical trial in FM.

Table of Contents

Upon the completion of the Corporate Conversion, our President, Richard Burch, resigned his position as President and was appointed to our board of directors.

For a full discussion of related party transactions see Note 9 to the Financial Statements included in this Annual Report on Form 10-K.

Income Taxes

The Company has estimated net operating loss carryforwards (“NOLs”) of $2,315,510 for both Federal income tax purposes and for Georgia income tax purposes as of December 31, 2020. These net operating losses can be carried forward and applied against future taxable income, if any. These losses currently have no expiration date and may be carried forward indefinitely. As the tax year ended December 31, 2020 is the Company’s initial tax year as a C-Corporation, there are no previously filed corporate returns open under statute.

The Company has recorded a full valuation allowance against its net deferred tax assets as of December 31, 2020 and 2019 because the Company has determined that it is more likely than not that these assets will not be fully realized due to historic net operating losses incurred. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which these temporary differences become deductible.

Critical Accounting Policies and Use of Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with U.S. generally accepted accounting principles. We believe that several accounting policies are important to understanding our historical and future performance. We refer to these policies as critical because these specific areas generally require us to make judgments and estimates about matters that are uncertain at the time we make the estimate, and different estimates — which also would have been reasonable — could have been used. On an ongoing basis, we evaluate our estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and other market-specific or other relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in the notes to our financial statements appearing elsewhere in this Annual Report on Form 10K, we believe the following accounting policies to be most critical to the judgments and estimates used in the preparation of our financial statements.

Research and Development

Research and development costs are expensed as incurred and are comprised of external research and development expenses incurred under arrangements and contracts with third parties, such as contract research organizations (“CROs”), contract development and manufacturing organizations (“CMOs”) and consultants. As part of the process of preparing its financial statements, the Company may be required to estimate some of its expenses resulting from its obligations under these arrangements and contracts. The financial terms of these contracts are subject to negotiations which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided. The Company’s objective is to reflect the appropriate expenses in its financial statements by matching those expenses with the period in which services are rendered. The Company determines any accrual estimates based on account discussions with applicable personnel and outside service providers as to the progress or state of completion. The Company makes estimates of its accrued expenses as of each balance sheet date based on the facts and circumstances known at that time. The Company’s estimates are dependent upon the timely and accurate reporting of CROs, CMOs and other third-party vendors. At the end of each reporting

Table of Contents

period, the Company compares the payments made to each service provider to the estimated progress towards completion of the related project. Factors that the Company considers in preparing these estimates include the number of patients enrolled in studies, milestones achieved, and other criteria related to the efforts of its vendors. These estimates will be subject to change as additional information becomes available. Depending on the timing of payments to vendors and estimated services provided, the Company will record net prepaid or accrued expenses related to these costs.

Equity and Share-Based Compensation

The Company recognizes compensation expense relating to equity-based payments based on the fair value of the equity or liability instrument issued. For equity-based instruments, the expense is based upon the grant date fair value and recognized over the service period. For awards with a performance condition, compensation expense is recognized over the requisite service period if it is probable that the performance condition will be satisfied. For awards to non-employees, the Company recognizes compensation expense in the same manner as if the Company had paid cash for the goods or services. The Company esimates the fair value of options and warrants granted using an options pricing model. Expense is recognized within general and administrative expenses and forfeitures are recognized as they are incurred.

Results of Operations

Operating expenses and other (expense) income were comprised of the following:

Year Ended

December 31,

Operating expenses:

Other (expense) income:

Other income 43,221 —

Years Ended December 31, 2020 and 2019

Research and Development Expenses

Research and development expenses decreased by $0.6 million or 75.8%, to $0.2 million for the year ended December 31, 2020 from $0.8 million for the year ended December 31, 2019. The decrease was primarily due to decreases in expenses for our human PK study conducted in 2019. All of the research and development expenses for the years ended December 31, 2020 and 2019 were external.

General and Administrative Expenses

General and administrative expenses increased by $8.4 million, or 612.1%, to $9.8 million for the year ended December 31, 2020 from $1.4 million for the year ended December 31, 2019. The increase was primarily the result of non-cash expenses related to equity-based compensation of $2.0 million related to membership interests awarded to our founder and share-based compensation expense of $5.4 million related to stock options issued pursuant to executive employment agreements upon our IPO. Contributing further to the increase was an increase in expenses for salaries and benefits, legal and accounting fees and other costs

Table of Contents

associated with being a public company of $1.3 million offset by decreases in business development expenses of $0.3 million.

Other (Expense) Income

Other (expense) income increased by $0.05 million or 15.5% to $0.34 million for the year ended December 31, 2020 from $0.29 million for the year ended December 31, 2019. The increase was primarily due to the increase in interest expense of $0.09 million related to the issuance of convertible promissory notes in 2020 offset by an increase in other income of $0.04 million for a vendor concession.

Liquidity and Capital Resources

Since our inception in 2012, we have devoted most of our cash toresearch and development and general and administrative activities. We have financed our operations primarily with the proceeds from the sale memberhip interests, convertible promissory notes and with common stock through our recent IPO. To date, we have not generated any revenues from the sale of products, and we do not anticipate generating any revenues from the sales of products for the foreseeable future. We have incurred losses and generated negative cash flows from operations since inception. As of December 31, 2020 our principal source of liquidity was our cash, which totaled $29.8 million.

The COVID-19 global pandemic has resulted in travel restrictions and temporary shut-downs of non-essential businesses in many states in the U.S. We are able to remain open and all employees work from home. Due to many uncertainties, we are unable to estimate the pandemic’s financial impact or duration at this time.

Equity Financings

We closed our IPO on December 21, 2020, raising gross proceeds of $34.5 million and net proceeds of approximately $31.1 million, after deducting underwriting discounts, commissions and offering expenses.

Debt Financings

For the years ended December 31, 2020 and 2019, we received net proceeds from the sale of convertible promissory notes of $1.9 million and $2.4 million, respectively.

In 2019, we issued an aggregate of $3.7 million principal amount of convertible promissory notes, $1.2 million of which were related to the conversion of redeemable preferred convertible interests that were issued in 2018. All of these notes were outstanding for the year ended December 31, 2019. In 2020, we issued an aggregate of $2.0 million principal amount of convertible promissory notes. At the Corporate Conversion, these notes converted to common interests at the price of $400,000 per 1% of common interests. There was no debt outstanding for the year ended December 31, 2020.

Non-voting Preferred Members’ Interest

In 2018, we sold an aggregate of $1.3 million of redeemable preferred members’ interests. In 2019, $1.2 million of the redeemable preferred members’ interests were converted into convertible promissory notes. The remaining principle of the preferred members’ interests of $0.1 million was repaid upon the closing of our IPO. For the years ended December 31, 2020 and 2019, there were principle amounts outstanding of $0 and $0.1 million respectively.

Future Capital Requirements

We estimate our current cash of $29.8 million at December 31, 2020 is sufficient to fund our operations and capital requirements through the end of 2022. We believe that these available funds will be sufficient to

Table of Contents

complete our Phase 2b clinical trial for IMC-1 and commence the planning of our Phase 3 study in FM for this product candidate. However, it is difficult to predict our spending for our product candidate prior to obtaining FDA approval. Moreover, changing circumstances may cause us to expend cash significantly faster than we currently anticipate, and we may need to spend more cash than currently expected because of circumstances beyond our control.

To the extent that our capital resources are insufficient to meet our future operating and capital requirements, we will need to finance our cash needs through public or private equity offerings, debt financings, collaboration and licensing arrangements or other financing alternatives. We have no committed external sources of funds. Additional equity or debt financing or collaboration and licensing arrangements may not be available on acceptable terms, if at all.

Cash Flows

The following table summarizes our cash flows from operating, investing and financing activities.

Years Ended

December 31,

Statement of Cash Flows Data:

Total net cash (used in) provided by:

Years ended December 31, 2020 and 2019

Operating Activities

Of the net loss for the year ended December 31, 2020 of $10.3 million, the net cash used in operating activities was only $3.9 million with non-cash operating expense items of $7.4 million offset with a net change in operating assets and liabilities of $1.0 million. The net change in operating assets and liabilities included an increase in prepaid expenses of $1.7 million offset by a net increase in operating liabilities of $0.7 million. Non-cash items consisted primarily of equity and share-based compensation of $7.4 million. We expect cash used in operating activities to continue to increase in 2021 as compared to 2020 due to an expected increase in our operating losses associated with ongoing development of our product candidate and operating as a public company.

Net cash used in operating activities was $2.1 million for the year ended December 31, 2019 and consisted of a net loss of $2.5 million offset by a net change in operating assets and liabilities of $0.3 million and non-cash items of $0.1 million. The change in operating assets and liabilities included a net increase in in accounts payable and accrued expenses of $0.3 million. The net increase in accounts payable and accrued expenses is largely due to increases in accrued interest on convertible promissory notes issued in our Fourth Offering and an increase in accrued expenses for incurred but unbilled costs related to our human PK study. Non-cash items consisted of amortization of debt issuance costs of $0.1 million.

Financing Activities

Net cash provided by financing activities during the year ended December 31, 2020 was $33.4 million. We received cash proceeds from our IPO of $31.3 million, net of deal costs and other expenses, $1.9 million net proceeds from the issuance of convertible promissory notes and $0.2 million proceeds from the exercise of warrants to purchase our common stock.

Table of Contents

Net cash provided by financing activities the year ended December 31, 2019 was $2.4 million representing the net proceeds from the issuance of convertible promissory notes.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements or relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities.

Recent Accounting Pronouncements

In June 2018, the FASB issued ASU No. 2018-07, “Compensation Stock Compensation (Topic 718), improvements to Non-Employee Share-Based Payment Accounting.” Under legacy guidance, the accounting for non-employee share-based payments differs from that applied to employee awards, particularly with regard to the measurement date and the impact of performance conditions. ASU 2018-07 provides that existing employee guidance will apply to non-employee share-based transactions (as long as the transaction is not effectively a form of financing), with the exception of specific guidance related to the attributions of compensation cost. The cost of non-employee awards will continue to be recorded as if the grantor had paid cash for the goods or services. In addition, the contractual term will be able to be used in lieu of an expected term in the option-pricing model for non-employee awards. The Company has adopted this standard and applied the application of the new standard to the underwriters warrants.

In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (ASC 740): Simplifying the Accounting for Income Taxes." The standard eliminates the need for an organization to analyze whether the following apply in a given period: (1) the exception to the incremental approach for intraperiod tax allocation; (2) the exceptions to accounting for basis differences when there are ownership changes in foreign investments; and (3) the exception in interim periods income tax accounting for year-to-date losses that exceed anticipated losses. The ASU also is designed to improve financial statement preparers’ application of income tax-related guidance and simplify GAAP for (1) franchise taxes that are partially based on income, (2) transactions with a government that result in a step-up in the tax basis of goodwill, (3) separate financial statements of legal entities that are not subject to tax, (4) enacted changes in tax laws in interim periods and (5) certain income tax accounting for employee stock ownership plans and affordable housing projects. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company does not expect adoption to have a material impact on its financial statements.

In August 2020, the FASB issued ASU 2020-06, “Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40)”. ASU 2020-06 eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. The new guidance also modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those annual periods. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those annual periods. ASU 2020-06 allows companies to adopt the guidance through either a modified retrospective method of transition or a fully retrospective method of transition. The Company is still evaluating the impacts the ASU will have on its financial statements.

JOBS Act

On April 5, 2012, the Jumpstart Our Business Startups Act of 2012, or JOBS Act, was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for an “emerging growth company.” As an “emerging growth company,” we are electing to take advantage of the

Table of Contents

extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards.

Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we are not required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation. These exemptions will apply until the fifth anniversary of the completion of our initial public offering or until we no longer meet the requirements for being an “emerging growth company,” whichever occurs first.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

This item is not required.

Table of Contents

Item 8. Financial Statements and Supplementary Data

Index to Financial Statements

Reports of Independent Registered Public Accounting Firm 89

Statements of Operations for the years ended December 31, 2020 and 2019 91

Statements of Cash Flows for the years ended December 31, 2020 and 2019 93

Notes to Financial Statements 94

Table of Contents

Report of Independent Registered Public Accounting Firm

Shareholders and the Board of Directors

Virios Therapeutics, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Virios Therapeutics, Inc. (the "Company") as of December 31, 2020 and 2019, the related statements of operations, members’/stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Dixon Hughes Goodman LLP

We have served as the Company's auditor since 2020.

Atlanta, Georgia

March 23, 2021

Table of Contents

VIRIOS THERAPEUTICS, INC.

BALANCE SHEETS

December 31, December 31,

Assets

Current assets:

Prepaid expenses and other current assets 1,677,365 6,516

Liabilities and members’/stockholders equity (deficit)

Current liabilities:

Convertible promissory notes, net — 3,637,543

Commitments and contingencies (Note 10)

Preferred members’ interests, non-voting, net — 75,000

Members’ equity (deficit):

Members’ interests, non-voting — 12,601,201

Stockholders' equity (deficit):

Additional paid-in capital 57,905,164 —

See accompanying notes to the financial statements.

Table of Contents

VIRIOS THERAPEUTICS, INC.

STATEMENTS OF OPERATIONS

Year Ended

December 31, December 31,

Revenue $ — $ —

Operating expenses:

Other (expense) income:

Other income 43,221 —

Income tax provision (benefit) — —

Basic and diluted net loss per share (1) $ (2.10) $ (0.51)

See accompanying notes to the financial statements.

Table of Contents

VIRIOS THERAPEUTICS, INC.

STATEMENTS OF MEMBERS’/STOCKHOLDERS’ EQUITY/(DEFICIT)

Total Members'/

Voting Non-voting Stockholders'

Members' Members' Common Stock Additional Accumulated (Deficit)

Interests Interests Shares Par Paid-In Capital Deficit Equity

(2) These transactions occurred prior to the corporate conversion.

See accompanying notes to the financial statements.

Table of Contents

VIRIOS THERAPEUTICS, INC.

STATEMENTS OF CASH FLOWS

Year Ended

December 31, December 31,

Cash flows from operating activities

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

(Recovery)/provision for uncollectable receivables (15,020) 2,160

Gain on vendor concession (43,221)

Equity and share-based compensation expense 7,429,518 —

Changes in operating assets and liabilities:

(Increase) decrease:

Prepaid expenses and other current assets (1,655,829) 3,696

Cash flows from financing activities

Proceeds from initial public offering, net of costs 31,349,055 —

Proceeds from issuance of convertible promissory notes 1,994,133 2,430,000

Proceeds from the exercise of warrants 176,250 —

Payment of issuance costs for promissory notes (63,261) (58,492)

Payment of preferred members' interest (75,000) —

Supplemental disclosure of non-cash financing transactions:

Cash paid for interest $ 12,551 $ —

Non-cash financing transactions:

Accrued deferred issuance costs $ — $ 5,290

See accompanying notes to the financial statements.

Table of Contents

VIRIOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

1. Background and Organization

Virios Therapeutics, Inc. (the “Company”) was incorporated under the laws of the State of Delaware on December 16, 2020 through a corporate conversion (the “Corporate Conversion”) just prior to the Company’s initial public offering (“IPO”). The Company a.k.a. Virios Therapeutics, LLC and before that, Innovative Med Concepts, LLC, was originally formed as a limited liability corporation (“LLC”) under the laws of the State of Alabama on February 28, 2012. On July 23, 2020, the Company changed its name from Innovative Med Concepts, LLC to Virios Therapeutics, LLC.

The Company operates in one segment as a pre-revenue, clinical-stage biotechnology company focused on advancing novel antiviral therapies to treat diseases associated with a viral triggered abnormal immune response. The Company is developing its initial product, IMC-1, for people who are suffering from fibromyalgia. Research has shown that Herpes Simplex Virus-1 (“HSV-1”) could be a root cause of fibromyalgia. IMC-1 is a novel, proprietary, fixed dose combination of famciclovir and celecoxib, both of which are approved FDA drugs for other indications. IMC-1 combines these two specific mechanisms of action purposely designed to inhibit HSV-1 activation and replication, thereby keeping HSV-1 in a latent or dormant state. The famciclovir component of IMC-1 inhibits viral DNA replication, thus inhibiting upregulation of the HSV-1 virus. The celecoxib component of IMC-1 inhibits cyclooxegenase-2 (“COX-2”) enzymes used by HSV-1 to amplify or accelerate its own replication. IMC-1’s synergistic antiviral mechanism represents a first-in-class medicine designed specifically to inhibit both HSV-1 activation and subsequent HSV-1 replication, with the goal of keeping tissue resident HSV-1 tissue in a latent state.

Corporate Conversion

On December 16, 2020, immediately prior to the effectiveness of the Company’s registration statement, the Company converted into a Delaware corporation pursuant to a statutory conversion, and changed its name to from Virios Therapeutics, LLC to Virios Therapeutics, Inc., the “Corporate Conversion”. As a result of the Corporate Conversion, all of the membership interests held by the existing members of Virios Therapeutics, LLC converted into shares of common stock of Virios Therapeutics, Inc. The purpose of the Corporate Conversion was to reorganize the corporate structure so that the entity offering common stock to the public was a corporation rather than a limited liability company.

Table of Contents

Initial Public Offering

On December 16, 2020, the Company announced the pricing of its initial public offering (the “IPO”) of 3,000,000 shares of its common stock at an initial offering price of $10.00 per share. In addition, the Company granted the underwriters a 45-day option to purchase up to an additional 450,000 shares of common stock at the public offering price. The Company’s common stock commenced trading on the Nasdaq Capital Markets Exchange on December 17, 2020 under the ticker symbol “VIRI”. The IPO closed on December 21, 2020 at which time the underwriters exercised their option to purchase 450,000 additional shares of the Company’s common stock bringing the total number of shares of common stock sold by the Company to 3,450,000 shares. The gross proceeds from the IPO, including proceeds from the exercise of the underwriters’ option to purchase additional shares, were $34.5 million. The net proceeds of the IPO were approximately $31.1 million after deducting underwriting discounts, commissions and offering expenses payable by the Company, including offering costs accrued and unpaid as of December 31, 2020. In conjunction with the IPO, the Company granted the underwriters 172,500 warrants to purchase shares of Company common stock at an exercise price of $12.50 per share, which is 125% of initial public offering price.

Material Uncertainty

Since its founding, the Company has been engaged in organizational activities, including raising capital, and research and development activities. The Company has not generated any revenues to date. As such, the Company is subject to all of the risks associated with any clinical-stage biotechnology company that has substantial expenditures for research and development. Since inception, the Company has incurred losses and negative cash flows from operating activities. The Company does not expect to generate positive cash flows from operating activities in the near future.

For the years ended December 31, 2020 and 2019, the Company incurred net losses of $10,346,395 and $2,473,627, respectively, and had net cash flows used in operating activities of $3,895,195 and $2,092,150, respectively. As of December 31, 2020, the Company had an accumulated deficit of approximately $28.0 million and is expected to incur losses in the future as it continues its development activities. Since its inception, the Company has funded its losses primarily through issuance of members’ interests, convertible debt instruments and issuance of equity securities.

As of the date these financial statements are issued, management believes that the net proceeds from the Company’s IPO and the current cash are sufficient to fund operations and capital requirements for at least the next 12 months. The Company will need to raise additional capital to complete clinical development of and to commercially develop its product candidates. There is no assurance that such financing will be available when needed or on acceptable terms. The financial statements do not include any adjustments to reflect this uncertainty.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

Use of Estimates

The preparation of these financial statements and accompanying notes in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting

Table of Contents

period. The Company's significant estimates and assumptions include estimated work performed but not yet billed by contract manufacturers, engineers and research organizations, the valuation of equity and stock-based related instruments, and the valuation allowance related to deferred taxes. Some of these judgments can be subjective and complex, and, consequently, actual results could differ from those estimates. Although the Company believes that its estimates and assumptions are reasonable, they are based upon information available at the time the estimates and assumptions were made. Actual results could differ from those estimates.

Segment Information

The Company operates in one reportable segment based on management’s view of its business for purposes of evaluating performance and making operating decisions.

Concentrations of Credit Risk

Cash and cash equivalents are financial instruments that are potentially subject to concentrations of credit risk. The Company believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the cash is held.

Fair Value Measurements

ASC Topic 820, Fair Value Measurement, provides guidance on the development and disclosure of fair value measurements. Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

The accounting guidance classifies fair value measurements in one of the following three categories for disclosure purposes:

● Level 1 — Quoted prices in active markets for identical assets or liabilities.

The carrying amount of the Company’s financial instruments, including cash, accounts payable and accrued expenses approximate their fair values.

Cash

Cash is maintained in bank deposit accounts, which exceed the federally insured limits of $250,000. The Company does not have any cash equivalents.

Variable Interest Entities

When determining whether a legal entity should be consolidated, the Company first determines whether it has a variable interest in the legal entity. If a variable interest exists, the Company determines whether the legal entity is a variable interest entity (“VIE”) due to either: 1) a lack of sufficient equity to finance its activities, 2) its equity holders lacking the characteristics of a controlling financial interest, or 3) the legal entity

Table of Contents

being structured with non-substantive voting rights. If the Company concludes that the legal entity is a VIE, the Company next determines whether it is the primary beneficiary due to it possessing both: 1) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, and 2) the obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE which could be significant to the VIE. If the Company concludes that it is the primary beneficiary, it consolidates the entity.

Equity Method Investment

In 2017, the Company purchased a 25% ownership in Northriver Pharm, LLC (“NRP”) in the amount of $125,000 from existing investors of NRP. NRP is an entity with common ownership with the Company’s former Chief Executive Officer and Founder, who is also the Founder and sole voting member of NRP. The Company evaluated the ownership under VIE guidance and has determined that they do not have the power and economics to control the entity and are not the entity most closely associated with NRP.

The Company previously accounted for the investment under the equity method of accounting. However, consistent with equity method accounting guidance, the Company has now discontinued applying the equity method accounting as the investment has been reduced to zero and the Company has not committed to provide further financial support and there is no expected return to profitable operations by NRP.

Deferred Issuance Costs

Deferred issuance costs are netted against amounts outstanding for the convertible promissory notes or mezzanine preferred members’ interests when the offering is completed. Expenditures incurred prior to the closing are capitalized as deferred issuance costs in non-current assets. There were no amounts capitalized prior to an offering as of December 31, 2020 and 2019.

Upon closing, capitalized costs relating to debt offering are recognized into interest expense over the terms of the instruments using the effective interest method. The Company recognized interest expense related to the amortization of issuance costs for the convertible promissory notes and the mezzanine preferred members’ interests as follows:

December 31, December 31,

Mezzanine preferred members' interests — 36,516

Accrued Salaries

Accrued salaries represent outstanding guaranteed payments to the Company’s former President and former Chief Executive Officer and Founder and are recognized when incurred and considered payable.

Income Taxes

The Company provides for income taxes using the asset and liability approach. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company operated as an Alabama limited liability company until its Corporate Conversion. Therefore, the Company passed through all income and losses to its members until this point. As of December 31, 2020, the Company had a full valuation allowance against deferred tax assets.

Table of Contents

The Company is subject to the provisions of ASC 740, Income Taxes. Under ASC 740, consideration is given to the recognition and measurement of tax positions that meet a “more-likely-than-not” threshold. A tax position is a position taken in a previously filed tax return or a position expected to be taken in a future that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions include the Company’s status as a pass-through entity until December 16, 2020 and as a corporation thereafter. The recognition and measurement of tax positions taken for various jurisdictions consider the amounts and probabilities of outcomes that could be realized upon settlement using the facts, circumstances, and information available at the reporting date. The Company has determined that it does not have any material unrecognized tax benefits or obligations as of December 31, 2020 and 2019. The Company recognizes interest and penalties related to uncertain tax positions, if any, in income tax expense. The Company is not currently under examination by the Internal Revenue Service or by state tax authorities and the Company’s tax year remains subject to examination by the tax authorities.

Basic and Diluted Net Income (Loss) per Share

Basic net loss per common share (“EPS”) is computed in accordance with U.S. GAAP. Basic EPS is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted EPS reflects potential dilution and is computed by dividing net loss by the weighted average number of common shares outstanding during the period increased by the number of additional common shares that would have been outstanding if all potential common shares had been issued and were dilutive. However, potentially dilutive securities are excluded from the computation of diluted EPS to the extent that their effect is anti-dilutive. For the year ended December 31, 2020, the Company had 811,663 options and 276,583 warrants to purchase common shares outstanding that were anti-dilutive. There were no anti-dilutive securities outstanding for the year ended December 31, 2019.

EPS and weighted-average shares outstanding have been computed to give effect to the Corporate Conversion that occurred December 16, 2020 prior to the Company’s initial public offering. In conjunction with the Corporate Conversion, all of the Company’s outstanding members’ equity automatically converted into shares of common stock, based on the relative rights of the Company's pre-IPO equityholders.

Research and Development

Research and development costs are expensed as incurred. All research and development costs incurred to date have been external and have been for our lead candidate, IMC-1. The Company arranges and contracts with third-party contract research organizations (“CROs”), contract development and manufacturing organizations (“CMOs”), contractor laboratories and independent consultants. As part of the process of preparing its financial statements, the Company may be required to estimate some of its expenses resulting from its obligations under these arrangements and contracts. The financial terms of these contracts are subject to negotiations which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided. The Company’s objective is to reflect the appropriate expenses in its financial statements by matching those expenses with the period in which services are rendered. The Company determines any accrual estimates based on account discussions with applicable personnel and outside service providers as to the progress or state of completion. The Company makes estimates of its accrued expenses as of each balance sheet date based on the facts and circumstances known at that time. The Company’s estimates are dependent upon the timely and accurate reporting of CROs, CMOs and other third-party vendors. At the end of each reporting period, the Company compares the payments made to each service provider to the estimated progress towards completion of the related project. Factors that the Company considers in preparing these estimates include the number of patients enrolled in studies, milestones achieved, and other criteria related to the efforts of its vendors. These estimates will be subject to change as additional information becomes available. Depending on the timing of payments to vendors and estimated services provided, the Company will record net prepaid or accrued expenses related to these costs.

Table of Contents

Equity and Share-Based Compensation

The Company recognizes compensation expense relating to equity-based payments based on the fair value of the equity or liability instrument issued. For equity-based instruments, the expense is based upon the grant date fair value and recognized over the service period. For awards with a performance condition, compensation expense is recognized over the requisite service period if it is probable that the performance condition will be satisfied. For awards to non-employees, the Company recognizes compensation expense in the same manner as if the Company had paid cash for the goods or services. The Company estimates the fair value of options and warrants granted using an options pricing model, see Note 11. Expense is recognized within general and administrative expenses and forfeitures are recognized as they are incurred.

Emerging Growth Company Status

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that is (i) no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided by the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

Recent Accounting Pronouncements

In June 2018, the FASB issued ASU No. 2018-07, “Compensation Stock Compensation (Topic 718), improvements to Non-Employee Share-Based Payment Accounting.” Under legacy guidance, the accounting for non-employee share-based payments differs from that applied to employee awards, particularly with regard to the measurement date and the impact of performance conditions. ASU 2018-07 provides that existing employee guidance will apply to non-employee share-based transactions (as long as the transaction is not effectively a form of financing), with the exception of specific guidance related to the attributions of compensation cost. The cost of non-employee awards will continue to be recorded as if the grantor had paid cash for the goods or services. In addition, the contractual term will be able to be used in lieu of an expected term in the option-pricing model for non-employee awards. The Company adopted the standard as of and applied the application of the new standard to the underwriters warrants in Note 11.

Table of Contents

accounted for as derivatives because of specific settlement provisions. The new guidance also modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those annual periods. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those annual periods. ASU 2020-06 allows companies to adopt the guidance through either a modified retrospective method of transition or a fully retrospective method of transition. The Company is still evaluating the impacts the ASU will have on its financial statements.

Reclassifications

In certain instances, amounts reported in prior period financial statements have been reclassified from research and development expenses to general and administrative expenses to conform to the current financial statement presentation. Such reclassifications had an effect on previously reported expenses on the statement of operations of $35,555 for the year ended December 31, 2019.

3. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following:

December 31, December 31,

Prepaid insurance $ 1,586,042 $ —

Prepaid CRO costs 85,270 —

Prepaid data room hosting services 5,729 5,731

Miscellaneous receivables 324 785

Total prepaid expenses and other assets $ 1,677,365 $ 6,516

4. License Agreement

The Company entered into a Know-How License Agreement (the “Agreement”) with the University of Alabama (“UA”) in 2012. In consideration for the Agreement, UA received a 10% non-voting membership interest in the Company. Upon the adoption of the May 1, 2020 Second Amended and Restated Operating Agreement, the non-voting membership interest converted to a voting membership interest as discussed in Note 7 below. Upon the Corporate Conversion, voting membership interest was converted into shares of common stock. The Agreement is in effect for 25 years and will terminate on June 1, 2037.

5. Accrued Expenses

Accrued expenses consist of the following:

December 31, December 31,

Accrued compensation $ 573,479 $ —

Accrued interest on preferred members’ interests 188,085 188,085

Accrued interest on promissory notes — 163,123

Accrued CRO and CMO costs — 149,178

100

Table of Contents

6. Convertible Promissory Notes, Net

On March 31, 2020, the Company completed and closed its first round of its fifth offering (the “Fifth Offering”) subscription for the issuance of convertible promissory notes (collectively with the promissory notes of the Fourth Offering, the “Notes”) for convertible preferred membership interests (collectively with the convertible preferred membership interests from the Fourth Offering, the “Convertible Interests”). The Company received $1,162,500 worth of subscriptions. On June 10, 2020, the Company completed and closed its second round of its Fifth Offering having received $706,633 worth of subscriptions. On August 21, 2020, the Company completed and closed its third round of its Fifth Offering having received $125,000 worth of subscriptions. The terms of both the First Round and Second Round were substantially identical to those of the Third Round, except that the Third Round allowed the investors to convert the cash interest component into additional equity.

Such option was given to the investors in the First Round and Second Round through a separate Interest Conversion Agreement. The same conversion option was given to all of the investors in all rounds of the Fourth Offering. The Company accounted for the changes in accordance with debt modification guidance under ASC 470 “Debt” and determined that the cash flows did not change as a result of the modifications.

The Fifth Offering was considered to be on a pari passu basis with the Fourth Offering, discussed below, such that all subscriptions received were considered part of one offering, not diluting the interests issued in the Fourth Offering, regardless of the date of conversion of interests granted in the Fourth offering or the Fifth Offering.

During 2019, the Company completed and closed its fourth offering (the “Fourth Offering”) subscription for the issuance of convertible promissory notes for convertible preferred membership interests. The Fourth Offering consisted of three rounds. The first round completed and closed on January 18, 2019, having received $925,000 worth of subscriptions. The second round completed and closed on May 31, 2019, having received another $925,000 worth of subscriptions. The third round completed and closed on November 30, 2019, having received $580,000 worth of subscriptions.

The Notes bore interest at 8% per annum, with a maximum term of 18 months. If investors executed an Interest Conversion Agreement, as discussed above, or if part of the third round of the Fifth Offering, then any accrued interest converted into common membership interests (“Common Interests”) at maturity, otherwise the accrued interest was paid in cash. Per the original terms of the Notes, the principal portion of the instrument was only payable through conversion into Common Interests of the Company upon the earlier of (i) the completion of an equity raise sufficient to fund the Company’s Phase IIb or Phase III, or (ii) 18 months from the closing date of each round. The Company recognized interest expense related to the Notes as follows:

December 31, December 31,

Fifth Offering 98,634 —

Also per the original terms of the Notes, the Convertible Interests were to convert to Common Interests that resulted in the greater ownership percentage of the price issued in connection with the next equity raise sufficient to fund the Company’s Phase IIb or Phase III, or at the price of $400,000 per 1% of Common Interests. If no equity raise was completed within the 18-month term, the Convertible Interests automatically converted into Common Interests at the price of $400,000 per 1% of Common Interests.

The Company determined the conversion feature of the Notes did not require bifurcation as the embedded conversion option required physical cash settlement and did not provide for net settlement.

101

Table of Contents

Further, the Company determined that the conversion feature of the Notes were not in the money at issuance and thereby did not represent a beneficial conversion feature.

In addition, each Convertible Interest included warrant coverage of 25% of the principal value of the Note, which provided an option to purchase additional Common Interests in cash at the same price as the conversion of the Note. The warrant coverage was exercisable on the conversion date, or within 30 days post conversion. If not exercised within this 30 day period the warrant coverage was forfeited.

The warrant coverage was evaluated to determine whether the arrangements were embedded or free-standing (i.e., to determine whether they needed to be bifurcated and accounted for as a separate financial instrument). However, since the warrants were only exercisable at the time of conversion or within 30 days post conversion of the Convertible Interests, and there were restrictions on transfer, they were considered to be non-detachable and did not require to be accounted for separately from the hybrid instrument.

The Notes were unsecured obligations and did not contain any financial covenants or restrictions on the payments to members, the incurrence of indebtedness, or the issuance or repurchase of securities by the Company.

In connection with the Fourth Offering, investors who acquired Preferred Membership Interests in the Third Offering (Note 7), were offered an option to convert the principal of their Preferred Membership Interests into Convertible Interests. In the first and third round of the Fourth Offering, $540,000 and $705,000, respectively, of Preferred Membership Interests were converted into Convertible Interests.

On July 20, 2020 the first round of the Fourth Offering Notes matured. As a result, the outstanding principle amount of $1,465,000 plus accrued interest of $172,800 converted into membership interests based on the carrying value of the convertible debt with no gain or loss recognized. Accrued interest of $3,000 was paid in cash. None of the outstanding warrants of $366,250 were exercised within the 30-day exercise period post maturity and thus were forfeited.

On November 30, 2020 the second round of the Fourth Offering Notes matured. As a result, the outstanding principle amount of $925,000 plus accrued interest of $111,000 converted into membership interests based on the carrying value of the convertible debt with no gain or loss recognized. No accrued interest was paid in cash. At the Corporate Conversion outstanding warrants of $231,250 were converted into 29,629 exercisable warrants of the Company’s common stock, of which 21,620 warrants were exercised within the 30-day exercise period post maturity and the remaining 8,009 were forfeited.

At the Corporate Conversion, the third round of the Fourth Offering Notes and all rounds of the Fifth Offering Notes matured. As a result, the aggregate outstanding principle amount of $3,279,133 plus accrued interest through the conversion date of December 16, 2020 of $196,769 converted into memberships interests based on the carrying value of the convertible debt, net of unamortized deferred offering costs of $41,445 with no gain or loss recognized. Accrued interest of $9,551 was paid in cash. Warrants totaling $820,033 were converted into 105,044 exercisable warrants of the Company’s common stock, of which 961 warrants were exercised and 104,083 were outstanding as of December 31, 2020. See Note 13 for further information of the exercise and expiration of these remaining warrants subsequent to 2020.

7. Members’ Equity (Deficit)

On May 1, 2020, the Company adopted its Second Amended and Restated Operating Agreement (the “Amended Operating Agreement”). The Amended Operating Agreement changed the Company’s classes of membership from two classes (voting and non-voting) to one class of membership and gave the Board the rights to make all decisions concerning the business, affairs and properties of the Company. Under the Amended Operating Agreement, the members have the right to vote on the dissolution and termination of the Company, the removal of existing directors, the appointment of new directors, and any amendment to the

102

Table of Contents

LLC Agreement itself, which would include any plan of conversion or merger into a different form of legal entity. As such, all members have the same rights, privileges and powers and are considered as voting members’ interests in the accompanying balance sheet and statement of members’ interest/members’ deficit.

At December 31, 2019, the Company was authorized to issue two classes of membership interests, voting and non-voting. Dr. William Pridgen, the Founder, held the only voting membership interest of the Company. There was no value assigned to voting membership interest on the balance sheet as of December 31, 2019, as the Founder’s membership interest was granted for contributed patents that were not assigned a value under U.S. GAAP.

On July 17, 2020, the Company’s board approved a 0.5% membership interest bonus to be issued to Dr. Pridgen in recognition of his efforts in helping the Company raise capital during its Fifth Offering. In addition, the Company’s operating agreement provides for a 4.5% membership interest to be issued to Dr. Pridgen upon a successful sale or license of the Company’s patents. On August 19, 2020, the Company’s Board approved the issuance of a 4.5% membership interest to Dr. Pridgen to preserve the intent originally set forth in the Company’s operating agreement. These issuances were considered equity-based compensation award grants that do not have any future service conditions. As a result, all compensation expense was recognized upon issuance. In order to determine the amount of compensation expense to record, the Company leveraged recent observable prices under the terms of its Fifth Offering. For the year ended December 31, 2020, the Company recognized $2,000,000 of compensation expense for these issuances.

In conjunction with the Corporate Conversion, all of the Company’s outstanding membership interests converted into shares of common stock.

Preferred Members’ Interest, Net

From January 2018 through August 2018, the Company entered into its third offering (the “Third Offering”) to sell non-voting preferred membership interests (“Preferred Membership Interests”) at the price of $1,000,000 per 1% of membership interest in the Company. The Company raised a total of $1,320,000, less issuance costs of $69,532, in its Third Offering.

The Preferred Membership Interests bore interest at 12% per annum, with a cap on total interest earned of 18%. Interest was guaranteed to each investor from the date of investment until the earlier of (i) the sale or exchange of the Company, (ii) 18 months, or (iii) the raising of sufficient funds to complete a Phase III trial. Interest has accumulated and will be paid upon the earlier of the sale or exchange of the Company. The Principal will be repaid upon the earlier of the Company raising funds to complete a Phase III trial or either a sale or exchange of the Company. The Preferred Membership Interests participate in any profits or losses identically as with the other existing membership interests, except that the maximum total return on a Preferred Membership Interest shall be 300% of the original investment. There was no interest expense recognized during the year ended December 31, 2020. The Company recognized $68,828 of interest expense for the year ended December 31, 2019, relating to the Preferred Membership Interests.

Pursuant to the terms of the Third Offering Subscription Agreement, the principal portion of the investment is to be repaid upon the earlier of (i) the Company raising funds to complete a Phase III trial or (ii) either a sale or exchange of the Company (for avoidance of doubt, raising of funds through an initial public offering shall be considered raising sufficient funds to complete a Phase III trial, but not a sale or exchange of the Company). As the Company closed its IPO on December 21, 2020, raising funds sufficient to complete a Phase III trial, the outstanding principal portion of $75,000 was repaid to the holders of the Preferred Membership Interests. As shown in Note 5, the accrued interest remains unpaid as neither triggering event for payment has occurred as of December 31, 2020.

For the year ended December 31, 2019, the Preferred Membership Interests are recorded as mezzanine equity, net of issuance cost, on the balance sheet because they are redeemable upon a change in control.

103

Table of Contents

The Company did not believe a change in control is considered probable until it occurs and other contingent events requiring redemption are in control of the Company.

In 2019, in connection with the Fourth Offering, Preferred Membership interest holders were provided an opportunity to convert their ownership into Convertible Promissory Notes. $1,245,000 of the Preferred Membership Interests were converted into Convertible Interests in connection with the Fourth Offering (Note 6). The Company reclassified the securities from equity to liabilities at the fair value as of the date of the reclassification, recognizing no gain or loss.

8.Stockholders’ Equity (Deficit)

The Company’s certificate of incorporation adopted on December 16, 2020, authorizes the issuance of two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock”. The total number of shares which the Company is authorized to issue is 45,000,000, each with a par value of $0.0001 per share. Of these shares, 43,000,000 shall be Common Stock and 2,000,000 shall be Preferred Stock.

Common Stock

Dividends

Subject to the rights of holders of all classes of Company stock outstanding having rights that are senior to or equivalent to holders of the Common Stock are entitled to receive dividends when and as declared by the Board.

Liquidation

Subject to the rights of holders of all classes of stock outstanding having rights that are senior to or equivalent to the holders of Common Stock as to liquidation, upon liquidation, dissolution or winding up of the Company, the assets of the Company will be distributed to the holders of the Common Stock.

Voting

The holders of the Common Stock are entitled to one vote for each share of Common Stock held. There is no cumulative voting.

Preferred Stock

Preferred Stock may be issued from time to time by the Board in one or more series.

9. Related Parties

The Company uses Tanner & Guin, a law firm, for general counsel legal services and for administrative needs in connection with the Company’s offerings. As of December 31, 2020, partners of the law firm are stockholders of the Company and as of December 31, 2019 these partners were non-voting members as well as convertible promissory note holders of the Company. The Company paid the firm $349,107 and $217,129 during 2020 and 2019, respectively, and had accounts payable of $30,645 and $14,150 to the firm as of December 31, 2020 and 2019, respectively.

The Company uses Way, Ray, Shelton & Co., an accounting firm, for tax accounting services. As of December 31, 2020, a retired partner of the accounting firm is a stockholder of the Company and as of December 31, 2019, the partner was a non-voting member as well as a convertible promissory note holder of the Company. The Company paid the firm $22,100 and $19,098 during 2020 and 2019, respectively, and had accounts payable of $12,826 and $0 to the firm as of December 31, 2020 and 2019, respectively.

104

Table of Contents

The Company uses Create Group, NYC, an advertising agency, for website and presentation design and development. The Director of Account Services is the Company’s former President’s daughter. The Company paid the firm $23,059 during 2020.

The Company uses Gendreau Consulting, LLC, a consulting firm, for drug development, clinical trial design, and planning, implementation and execution of contracted activities with CROs. The managing member of the firm is also the Company’s CMO effective January 1, 2021. The Company will continue to contract the services of the CMO’s spouse through the firm to perform certain activities in connect with its upcoming clinical trial in FM. The Company paid the firm $450 and $18,467 during 2020 and 2019, respectively, and had accounts payable of $7,916 and $0 to the firm as of December 31, 2020 and 2019, respectively.

In addition to the Company’s investment for ownership interest in NRP, the Company paid certain legal and administrative costs for the benefit of NRP of $100 and $2,160 during 2020 and 2019, respectively. When the payments were made, the Company recognized a receivable on its balance sheet within other current assets for the total amounts paid. Management had previously determined the collectability of this receivable was not probable, thus fully reserving for the outstanding receivable and recognizing a bad debt expense for any additions to the receivable balance during the periods. In May 2020, the Company reached a settlement with the Manager of NRP who is the former Company CEO and Founder, whereby the outstanding receivable balance of $20,161 due to the Company at that time by NRP would be settled by his personal contribution of 75% of the amount owed, or $15,120, by way of reduction in the amount owed to him by the Company. The remaining 25% or $5,041 was deemed a capital contribution to NRP by the Company to maintain its 25% ownership in NRP and was simultaneously written off against the reserve for uncollectible accounts. For the year ended December 31, 2020, the Company recognized a net recovery of bad debt expense in the amount of $15,020. For the year ended December 31, 2019, the Company recognized bad debt expense in the amount of $2,160. The receivable due from NRP was $0 and $20,061 as of December 31, 2020 and December 31, 2019, respectively.

10. Commitments and Contingencies

Litigation

The Company is subject, from time to time, to claims by third parties under various legal disputes. The defense of such claims, or any adverse outcome relating to any such claims, could have a material adverse effect on the Company’s liquidity, financial condition and cash flows. At December 31, 2020 and 2019, the Company dd not have any pending legal actions.

Employment Agreement and Deferred Compensation Plan

In April 2020, the Company entered into three employment agreements with its new CEO, VP of Operations and VP of Finance (the “Executives”), effective April 5, 2020. Per the terms of the agreements and upon the establishment of a bonus program approved by the Board, each Executive is entitled to receive a cash bonus with a target amount of no less than 50% for the CEO and 20% for the VP of Operations and the VP of Finance of the then-current base salary. The bonuses are subject to achievement of annual bonus metrics set by the Board. Upon termination of the agreement by the Company for any reason other than for cause, death or disability or by one of the Executives for good reason, the Company shall pay to the Executive his or her current salary for a period of one year.

105

Table of Contents

On July 15, 2020, the Company entered into an agreement with Dr. William L. Pridgen, former Chief Executive Officer of the Company, for the payment and satisfaction of salary accrued and owed to Dr. Pridgen as of that date in the amount of $549,046. Promptly after the closing of the Company’s IPO, the Company paid the accrued salary in a combination of cash and equity. A salary advance of $100,000 paid to Dr. Pridgen in 2014 and 2015, offset the cash portion paid the equity portion at the option of Dr. Pridgen. Prior to the pricing of the Company’s IPO, the split between the equity portion paid. Prior to the pricing of the IPO, the Company issued members interest for repayment of $336,880 of accrued salary. The remaining balance of $212,166 less the salary advance of $100,000 that will be paid in cash was outstanding as of December 31, 2020.

On August 22, 2020, the Company amended the President’s executive employment agreement to provide for an equity bonus in the form of non-qualified stock options upon the completion of an IPO, in lieu of cash and in-kind bonuses that were provided for in the original agreement. In addition to the equity bonus, the President shall participate in the Company’s executive bonus program alongside and to the same extent the other executives are awarded and paid such bonuses at a target rate of 50% of his base salary. A previously paid bonus advance of $150,000 offset the equity bonus options granted. The Company also owed the President accrued salary in the amount of $466,667. The President was issued members interest for repayment of $200,000 of accrued salary just prior to the pricing of the IPO on December 16, 2020. The remaining balance of $266,667 that will be paid in cash was outstanding as of December 31, 2020. Upon the pricing of the Company’s IPO, the President resigned and was appointed to the Company’s board of directors.

On September 10, 2020, the Company entered into an employment agreement setting forth the terms of employment for the Company’s Chief Medical Officer (the “CMO”), commencing fifteen days after the Company converts to a Delaware Corporation in connection with its IPO (the “Commencement Date”). Per the terms of the agreement and upon the establishment of a bonus program approved by the Board, the CMO is entitled to receive a cash bonus with a target amount of no less than 35% of his then-current base salary. In addition to the cash bonus, on the Commencement Date, the CMO will be issued options. See Note 13 for the options grant provided in 2021. The term of the agreement will continue in effect until notice is provided for termination by either party. Upon termination of the agreement by the Company for any reason other than for cause, death or disability or by the CMO for good reason, the Company shall pay the CMO 25% of his current then current annual salary plus a prorated portion of his cash bonus for the year over a period of three months and health benefits for a period of 12 months unless Dr. Gendreau becomes eligible for health benefits under another employer. In the event of termination in connection with a change in control, in lieu of the severance payment discussed above, Dr. Gendreau is entitled to receive a cash payment equal to 1.0 times his then-current annual base salary plus 1.0 times his cash bonus for the year in which the termination occurs. The Commencement Date was determined to be January 1, 2021.

Strategic Advisor Engagement

In May 2017, the Company entered into an agreement with Torreya Capital (“Torreya”), a division of the Financial West Investment Group, to engage Torreya as the Company’s advisor to (1) assist in a financing transaction which would involve raising capital for the Company or (2) facilitate a strategic transaction to sale the Company or its intellectual property, merge the Company with another player, or alternatively, secure a partnership whereby a third party would agree to share development costs and/or assume commercialization rights to one of the Company’s products in development. As compensation for Torreya’s services, the Company agreed to pay Torreya the following:

106

Table of Contents

The Company has not recognized any expense or associated liability in connection with either the financing transaction fee or the strategic transaction fee as they are not considered probable as of December 31, 2020 and 2019.

11. Share-based compensation

Equity Incentive Plan

Effective upon the closing of the Company’s IPO on December 21, 2020, the Company’s 2020 Equity Incentive Plan (the “Plan”) became effective. Under 2020 Plan, 812,500 shares are authorized to be issued. As of December 31, 2020, 293,337 shares were available for future grants.

The Plan provides for grants to employees, members of the Board, consultants and advisors to the Company, in the form of stock awards, options, and other equity-based awards. The amount and terms of grants are determined by the Board. Stock options have a maximum term of 10 years after date of grant and are exercisable in cash or as otherwise determined by the Board. The maximum aggregate number of shares of shares during any calendar year for an individual is limited to 500,000.

As of December 31, 2020, options to purchase common shares of the Company outstanding under the Plan were as follows:

Weighted

Average

Weighted Remaining

Average Contractual

Number of Exercise Term

Shares Price (Years)

Outstanding at December 31, 2019 — $ — —

Exercised — — —

Forfeited — — —

As of December 31, 2020 the aggregate intrinsic value of options outstanding and exercisable was $0.

Upon the closing of the Company’s IPO on December 21, 2020, the Company granted to employees, pursuant to their individual employment agreements as discussed above, 519,163 options to purchase the Company’s Common Stock with an exercise price of $10.00 per share and a term of 10 years. The options were 100% vested at the grant date. The options had an aggregate grant date fair value of $3,441,687 that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option pricing model include: (1) discount rate of 0.39% based on the daily yield curve rates for U.S. Treasury obligations, (2) expected life of 5.0 years based on the simplified method provided in Staff Accounting

107

Table of Contents

Bulletin, (3) expected volatility of 88.3% based on the average historical volatility of comparable companies' stock, (4) no expected dividends and (5) fair market value of the Company's stock of $9.80 per share.

The Company recognized share-based compensation expense of $3,441,687 during 2020 related to stock options. As of December 31, 2020, there was no unrecognized compensation expense related to stock options as the options were 100% vested upon issuance.

Underwriters Warrants

In conjunction with the IPO, the Company granted the underwriters 172,500 warrants to purchase shares of the Company’s common stock at an exercise price of $12.50 per share, which is 125% of the initial public offering price. The warrants have a five-year term and are not exercisable prior to December 21, 2021.

The Company has accounted for the warrants as equity-based awards issued to a non-employee. The warrants had an aggregate grant date fair value of $1,108,785 that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option pricing model include: (1) discount rate of 0.37% based on the daily yield curve rates for U.S. Treasury obligations, (2) expected life of 5.0 years, (3) expected volatility of 88.3% based on the average historical volatility of comparable companies' stock, (4) no expected dividends and (5) fair market value of the Company's stock of $10.00 per share.

There was no net impact recognized by the Company in the accompanying financial statements as the warrants were equity-based awards issued for services rendered by the underwriter for the IPO that was offset by the Company recognizing the fair value of the warrants as a direct and incremental costs associated with the IPO by reducing paid-in capital for the same amount. There is no unrecognized compensation expense for these awards as of December 31, 2020.

As of December 31, 2020, underwriters warrants to purchase common shares of the Company outstanding were as follows:

Weighted

Average

Weighted Remaining

Average Contractual

Number of Exercise Term

Shares Price (Years)

Outstanding at December 31, 2019 — $ — —

Exercised — — —

Forfeited — — —

As of December 31, 2020, the aggregate intrinsic value of warrants outstanding and exercisable was $0.

Non-qualified Stock Options

In conjunction with the IPO and the President’s executive employment agreement, the Company granted to the President 292,500 of non-qualified stock options as an equity bonus in lieu of cash and in-kind bonuses provided for in the President’s original employment agreement. As part of the amended employment agreement dated August 22, 2020, the President received non-qualified stock options equal to 6.0% of the outstanding shares of the Company immediately prior to the IPO at a strike price equal to the pre-money valuation of the Company which was $10.00 per share. A previously paid bonus advance of $150,000 offset

108

Table of Contents

the equity bonus at the time of grant. The options are exercisable within 10 years of the date of grant and were 100% vested at the grant date.

The options had an aggregate grant date fair value of $1,987,831 that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option pricing model include: (1) discount rate of 0.37% based on the daily yield curve rates for U.S. Treasury obligations, (2) expected life of 5.0 years based on the simplified method provided in Staff Accounting Bulletin, (3) expected volatility of 88.3% based on the average historical volatility of comparable companies' stock, (4) no expected dividends and (5) fair market value of the Company's stock of $10.00 per share. The Company recognized share-based compensation expense of $1,987,831 during 2020 related to stock options. As of December 31, 2020, there was no unrecognized compensation expense related to these options as they were 100% vested upon issuance.

These options are for unregistered securities, and the option agreement does not include a registration rights agreement. Consequently, the Company has not recognized a contingent liability associated with registering the securities for the arrangement.

As of December 31, 2020, the unregistered options to purchase common shares of the Company outstanding were as follows:

Weighted

Average

Weighted Remaining

Average Contractual

Number of Exercise Term

Shares Price (Years)

Outstanding at December 31, 2019 — $ — —

Exercised — — —

Forfeited — — —

As of December 31, 2020 the aggregate intrinsic value of the unregistered options outstanding and exercisable was $0.

12. Income Taxes

Prior to the Company’s Corporate Conversion, the Company operated as an Alabama limited liability company that passes through income and losses to its members. As a result, the Company was not subject to any U.S. federal or U.S. state income taxes as the related tax consequences are reported by the individual members. Upon the Corporate Conversion, the Company converted to a Delaware corporation and is now subject to filing U.S. federal and various U.S. state income tax returns. This, in conjunction with the Company’s losses for the short period between the Corporate Conversion and year end, there is no income tax expense or benefit for years ended December 31, 2020 and 2019.

109

Table of Contents

A reconciliation of the U.S. federal income tax rate to the Company’s effective tax rate is as follows:

Year Ended

December 31,

U.S. federal statutory income tax rate 21.00 %

Permanent differences (1.56) %

State taxes, net of federal benefit 4.20 %

Other adjustments 0.27 %

Change in valuation allowance (23.91) %

Effective Income Tax rate — %

Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The significant components of the Company’s deferred tax assets are comprised of the following:

As of December 31,

Deferred tax assets:

Net operating loss carryforwards $ 591,439 $ —

Amortization 17,467 —

Allowance for uncollectible receivable — 5,243

Deferred tax liabilities:

Debt issuance costs (8,407)

Net deferred taxes $ — $ —

The Company experienced a net change in valuation allowance of $1,387,078 in the year ended December 31, 2020.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES Act”) Act was enacted and signed into law. The CARES Act included a number of income tax law changes, including modifications

110

Table of Contents

to the interest limitation under IRC §163(j) and reinstatement of the ability to carry back net operating losses. The income tax items in the CARES Act do not have an impact on the Company’s 2020 income tax provision.

13. Subsequent Events

On January 1, 2021, the Commencement Date of the CMO’s employment, the Company granted options to purchase 41,734 shares of the Company’s common stock for a term of 10 years, at an exercise price equal to the fair value of the stock at the close of market of $7.51, and a vesting period of 33.333% after one year and 66.667% in 24 monthly installments, thereafter. The options had an aggregated grant date fair value of $228,412 that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) a discount rate of 0.505% based on the daily yield curve rates for U.S. Treasury obligations, (2) expected life of 6 years based on the simplified method (vesting plus contractual term divided by two), (3) expected volatility of 89.04% based on the historical volatility of comparable companies' stock, (4) no expected dividends and (5) fair market value of the Company's stock of $7.51 per share.

In January 2021, of the outstanding 104,083 warrants related to the conversion of the promissory notes at the Company’s Corporate Conversion, 25,315 warrants were exercised for $197,561. The remaining unexercised warrants of 78,768 expired on January 20, 2021.

Subsequent to year-end, the Company entered into an employment agreement with its new Director of Clinical Operations (the “Director”), effective February 1, 2021. Per the term of the agreement and upon the establishment of a bonus program approved by the Board, the Director is entitled to receive a cash bonus of no less than 20% of the then-current base salary. The bonus is subject to achievement of annual bonus metrics set by the Board. The term of the agreement will continue in effect until notice is provided for termination by either party. If the termination of the agreement is related to a change of control, the Director is entitled to receive a change of control termination payment equal to 50% of her then current base salary and 50% of the bonus for the year in which the termination occurs.

On February 1, 2021, the Company granted options to the Director to purchase 21,000 shares of the Company’s common stock for a term of 10 years, at an exercise price equal to the fair market value of the stock at the close of market of $6.75, and a vesting period of 33.333% after one year and 66.667% in 24 monthly installments, thereafter. The options had an aggregated grant date fair value of $104,240 that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) a discount rate of 0.59% based on the daily yield curve rates for U.S. Treasury obligations, (2) expected life of 6 years based on the simplified method (vesting plus contractual term divided by two), (3) expected volatility of 90.16% based on the historical volatility of comparable companies' stock, (4) no expected dividends and (5) fair market value of the Company's stock of $6.75 per share.

111

Table of Contents

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

Our management, with the participation of our Chief Executive Officer and SVP of Finance, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. 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 upon that evaluation and the material weakness in our internal control over financial reporting discussed below, our Chief Executive Officer and SVP of Finance concluded that, as of the end of the period covered by this Annual Report on Form 10-K, our disclosure controls and procedures were not effective at a reasonable assurance level in ensuring that material information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules, regulations and forms of the SEC, including ensuring that such material information is accumulated by and communicated to our management, including our Chief Executive Officer and SVP of Finance, as appropriate to allow timely decisions regarding required disclosure.

In the preparation of our consolidated financial statements to meet the requirements of our IPO and for the period covered by this Annual Report on Form 10-K, we determined that a material weakness in our internal control over financial reporting arose because we did not maintain effective segregation of duties, financial statement reporting and general technology controls. Inability to fully segregate responsibilities can result in error and create opportunity for fraud. Similarly, the use of information technology can affect the manner in which transactions are initiated, authorized, recorded, processed, and reported. Failure to properly secure the access rights to significant applications can result in errors and/or irregularities in the course of performing day-to-day activities and enable unauthorized personnel to retrieve and modify financial statement data. Our structure and size does not enable us to fully segregate financial statement accounting and operational functions, including financial statements and critical supporting schedules. Further, we currently do not have automated technology controls that ensure proper segregation of duties exists, including but not limited to, general ledger access, vendor management, and the ability to authorize and release wire transactions and other payments.

We cannot assure you that the steps and measures we will implement to remediate our material weakness will be sufficient to prevent future material weaknesses or significant deficiencies in our internal control over financial reporting from occurring.

Management’s Report on Internal Control Over Financial Reporting

This Annual Report on Form 10-K does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(f) of the Exchange Act that occurred during the quarter

112

Table of Contents

ended December 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers, and Corporate Governance

We incorporate the information required by this Item 10 by reference to the definitive proxy statement for our 2021 annual meeting of shareholders, to be filed with the SEC.

DWTX US Equity

DWTX · 10-K · period ended 2020-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8. Financial Statements and Supplementary Data

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

Item 9B. Other Information

Item 10. Directors, Executive Officers, and Corporate Governance

Item 11. Executive Compensation

DWTX US Equity☆

DWTX · 10-K · period ended 2020-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8. Financial Statements and Supplementary Data

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

Item 9B. Other Information

Item 10. Directors, Executive Officers, and Corporate Governance

Item 11. Executive Compensation

DWTX US Equity