GT Biopharma, Inc 10-Q/A for FY2020 Q2
GT Biopharma, Inc. (GTBP)
10-Q/A
2020-08-18
For: 2020-06-30
View Original
Added on
April 10, 2026
About this 10-Q/A
GT Biopharma, Inc filed this 10-Q/A on August 18, 2020, covering the quarter ended June 30, 2020 (FY2020 Q2).
Headline figures
Quarter ended June 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $8.78M
- compared with a net loss of $2.79M a year earlier
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q/A
(Amendment
No.1)
☑
Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934For
the quarterly period ended June 30, 2020.
☐
Transition report
pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number 0000-08092
GT BIOPHARMA, INC.
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of
incorporation or organization)
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94-1620407
(I.R.S. employer
identification number)
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9350 Wilshire Blvd. Suite 203
Beverly Hills, CA 90212
(Address of principal executive offices and zip
code)
(800) 304-9888
(Registrant’s telephone number, including area
code)
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N/A
(Former
name, former address and former fiscal year, if changed since last
report)
Securities
registered pursuant to Section 12(b) of the Act:
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Title of Each Class
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Trading Symbol
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Name of exchange on which registered
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N/A
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N/A
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N/A
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Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has
submitted electronically every Interactive Data File required to be
submitted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Yes ☑ No ☐
Indicate by check mark
whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer,
a smaller reporting company
or an
emerging growth company.
See the definitions of “large accelerated
filer,” “accelerated filer,” “smaller
reporting company” and
“emerging growth company” in Rule
12b-2 of the Exchange Act.
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Large
accelerated filer ☐
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Accelerated
filer ☐
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Non-accelerated
filer ☑
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Smaller
reporting company ☑
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Emerging
growth company ☐
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If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes ☐
No ☑
As of August
11,
2020, the issuer had 76,560,862 shares
of common stock
outstanding.
EXPLANATORY NOTE
We
are filing this Amendment No. 1 to the Quarterly Report
on Form 10-Q for the quarter ended June 30, 2020 of GT Biopharma,
Inc. (the “Original Form 10-Q”), as filed
with the Securities and Exchange Commission on August 14, 2020
to correct certain clerical errors in the Original Form 10-Q. The
Original Form 10-Q, as amended, reads in its entirety as set forth
below.
GT Biopharma, Inc. and Subsidiaries
FORM 10-Q
For the Quarter
Ended June 30,
2020
Table of Contents
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GT Biopharma, Inc. and Subsidiaries
as of June 30, 2020 and December 31, 2019
Consolidated Balance Sheets
(in Thousands, Except Par Value and Share Data)
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June 30,
2020
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December 31,
2020
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ASSETS
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(unaudited)
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Current
Assets:
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Cash
and cash equivalents
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$851
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$28
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Prepaid
expenses
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120
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246
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Total
Current Assets
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971
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274
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Intangible
assets
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0
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0
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Deposits
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12
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12
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Operating
lease right-to-use asset
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80
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110
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Fixed
assets, net
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-
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0
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Total
Other Assets
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92
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122
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TOTAL
ASSETS
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$1,063
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$396
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LIABILITIES AND STOCKHOLDERS’ DEFICIT
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Current
Liabilities:
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Accounts
payable
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$2,001
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$1,940
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Accrued
expenses
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1,313
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2,379
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Accrued
interest
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3,283
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2,029
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Operating
lease liability
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90
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120
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Line
of credit
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31
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31
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Convertible
notes
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21,844
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13,207
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Total
Current Liabilities
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28,562
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19,706
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Stockholders’
Deficit:
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Convertible
preferred stock - $0.01 par value; 15,000,000 shares
authorized:
|
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Series
C - 96,230 and 96,230 shares issued and outstanding at June 30,
2020 and December 31, 2019, respectively
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1
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1
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Series
J-1 – 2,353,548 shares issued and outstanding at June 30,
2020 and December 31, 2019, respectively
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24
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24
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Common
stock - $0.001 par value; 750,000,000 shares authorized; and
75,435,862 and 69,784,699 shares issued and outstanding at June 30,
2020 and December 31, 2019, respectively
|
75
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70
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Additional
paid-in capital
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550,389
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548,096
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Accumulated
deficit
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(577,819)
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(567,332)
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Noncontrolling
interest
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(169)
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(169)
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Total
Stockholders’ Deficit
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(27,499)
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(19,310)
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TOTAL
LIABILITIES AND STOCKHOLDERS’ DEFICIT
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$1,063
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$396
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The
accompanying notes are an integral part of these consolidated
financial statements.
1
GT BIOPHARMA, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
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Three Months
Ended June 30,
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Six Months Ended
June 30,
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2020
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2019
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2020
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2019
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Operating
expenses:
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|
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Research and
development
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12
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154
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336
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988
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Selling, general
and administrative expenses
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1,546
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2,125
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2,292
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5,347
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Total operating
expenses
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1,558
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2,279
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2,628
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6,335
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Loss from
operations
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(1,558)
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(2,279)
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(2,628)
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(6,335)
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Other
income (expense):
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Loss on disposal of
assets
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-
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(31)
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-
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(31)
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Settlement
expense
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(2,563)
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-
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(2,563)
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-
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Interest
expense
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(4,658)
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(479)
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(5,296)
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(933)
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Total other income
(expense)
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(7,221)
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(510)
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(7,859)
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(964)
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Loss before
provision for income taxes
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(8,779)
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(2,789)
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(10,487)
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(7,299)
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Provision for
income tax
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-
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-
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-
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-
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Net
loss
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(8,779)
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(2,789)
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(10,487)
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(7,299)
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Net loss per common
share – basic and diluted
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$(.12)
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$(.05)
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$(.15)
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$(0.14)
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Weighted average
common shares outstanding – basic and diluted
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71,899,937
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51,918,252
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70,978,579
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51,507,849
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The
accompanying notes are an integral part of these consolidated
financial statements.
2
GT Biopharma, Inc. and Subsidiaries
Consolidated Statement of Stockholders’ Deficit
(In thousands)
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Preferred Stock
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Common Stock
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Additional Paid-in
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Accumulated
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Shares
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Amount
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Shares
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Amount
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Capital
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Deficit
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Balance at January 1, 2020
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2,450
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$25
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69,785
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$70
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$548,096
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$(567,332)
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Issuance
of common stock for convertible notes
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1,065
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1
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212
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Beneficial
conversion feature of convertible notes
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3,500
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3
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26
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Issuance
of common stock for settlement of litigation
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1,086
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1
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1,909
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Issuance
of common stock for compensation
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146
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Net
loss
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(10,487)
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Balance at June 30, 2020
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2,450
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$25
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75,436
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$75
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$550,389
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$(577,819)
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Preferred Stock
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Common Stock
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Additional Paid-in
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Accumulated
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Shares
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Amount
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Shares
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Amount
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Capital
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Deficit
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Balance at January 1, 2019
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1,260
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$13
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50,650
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$51
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$540,160
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$(528,685)
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Issuance
of preferred stock
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1,190
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12
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1,128
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Issuance
of common stock for convertible notes
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1,994
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2
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1,040
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Beneficial
conversion feature of convertible notes
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158
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Issuance
of common stock for compensation
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2,565
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Net
loss
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|
|
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(7,299)
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Balance at June 30, 2019
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2,450
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$25
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52,644
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$53
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$545,051
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$(535,984)
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The accompanying notes are an integral part of these consolidated
financial statements.
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3
GT Biopharma, Inc. and Subsidiaries
Consolidated Statements of Cash
Flows
For the Six Months Ended June 30, 2020 and 2019
(in Thousands)
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2020
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2019
|
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(unaudited)
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(unaudited)
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CASH
FLOWS FROM OPERATING ACTIVITIES:
|
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Net
loss
|
$( 10,487)
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$( 7,299)
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Adjustments
to reconcile net loss to net cash used in operating
activities:
|
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Depreciation
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-
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10
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Stock
compensation expense for options and warrants issued to
employees and non-employees
|
147
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3,705
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Amortization
of debt discounts
|
1
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331
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Non-cash
interest expense
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3,955
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1,140
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Loss
on disposal of assets
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-
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31
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Settlement
expense
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2,363
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-
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Changes
in operating assets and liabilities:
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Other
assets
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126
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8
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Accounts
payable and accrued liabilities
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261
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26
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Net
cash used in operating activities
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( 3,634)
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( 2,048)
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CASH
FLOWS FROM INVESTING ACTIVITIES:
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Acquisition
of fixed assets
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-
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-
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Net
cash used by investing activities
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0
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0
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CASH
FLOWS FROM FINANCING ACTIVITIES:
|
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|
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Proceeds
from notes payable
|
4,457
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2,352
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Loan
costs
|
-
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-
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Repayment
of note payable
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-
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(100)
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Net
cash provided by financing activities
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4,457
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2,252
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Minority
interest
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-
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-
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NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
823
|
204
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CASH
AND CASH EQUIVALENTS - Beginning of period
|
28
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60
|
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CASH
AND CASH EQUIVALENTS - End of period
|
$851
|
$264
|
|
|
|
|
|
Supplemental
disclosures:
|
|
|
|
Interest
paid
|
$69
|
$-
|
|
Income
taxes paid
|
$-
|
$-
|
|
|
|
|
|
Supplemental
disclosures:
|
|
|
|
Issuance
of common stock upon conversion of convertible notes
|
$200
|
$1,035
|
|
Issuance
of common stock upon conversion of accrued interest
|
$12
|
$10
|
The
accompanying notes are an integral part of these consolidated
financial statements.
4
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
JUNE 30, 2020
(UNAUDITED)
1.
The Company and Summary of Significant Accounting
Policies
Business
In
1965, the corporate predecessor of GT Biopharma, Diagnostic Data,
Inc. was incorporated in the State of California. Diagnostic Data
changed its incorporation to the State of Delaware in 1972. and
changed its name to DDI Pharmaceuticals, Inc. in 1985. In 1994, DDI
Pharmaceuticals merged with International BioClinical, Inc. and
Bioxytech S.A. and changed its name to OXIS International, Inc. In
July 2017, the Company changed its name to GT Biopharma,
Inc.
The Company is a clinical stage biopharmaceutical company focused
on the development and commercialization of novel immuno-oncology
products based off our proprietary Tri-specific Killer Engager
(TriKE™), Tetra-specific Killer Engager (TetraKE™) and
bi-specific ligand-directed single-chain fusion protein technology
platforms. The Company’s TriKE and TetraKE platforms generate
proprietary therapeutics designed to harness and enhance the cancer
killing abilities of a patient’s own natural killer cells, or
NK cells. Once bound to an NK cell, the Company’s moieties
are designed to enhance the NK cell, and precisely direct it to one
or more specifically-targeted proteins expressed on a specific type
of cancer cell or virus infected cell, ultimately resulting in the
targeted cell’s death. TriKEs and TetraKEs are made up of
recombinant fusion proteins, can be designed to target any number
of tumor antigens on hematologic malignancies, sarcomas or solid
tumors and do not require patient-specific
customization.
Going Concern
The
Company’s current operations have focused on business
planning, raising capital, establishing an intellectual property
portfolio, hiring, and conducting preclinical studies and clinical
trials. The Company does not have any product candidates approved
for sale and has not generated any revenue from product sales. The
Company has sustained operating losses since inception and expects
such losses to continue over the foreseeable future.
The
financial statements of the Company have been prepared on a
goingconcern basis, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of
business. Accordingly, the financial statements do not include any
adjustments that might be necessary should the Company be unable to
continue in existence.
The
Company has incurred substantial losses and negative cash flows
from operations since its inception and has an accumulated deficit
of $578 million and cash of $851 thousand as of June 30, 2020. The
Company anticipates incurring additional losses until such time, if
ever, that it can generate significant sales of its products
currently in development. Substantial additional financing will be
needed by the Company to fund its operations and to commercially
develop its product candidates. These factors raise substantial
doubt about the Company’s ability to continue as a going
concern.
Management is currently evaluating different strategies to obtain
the required funding for future operations. These strategies may
include but are not limited to: public offerings of equity and/or
debt securities, payments from potential strategic research and
development, and licensing and/or marketing arrangements with
pharmaceutical companies. If
the Company is unable to secure
adequate additional funding, its business, operating results,
financial condition and cash flows may be materially and adversely
affected.
Use of Estimates
The financial statements and notes are
representations of the Company’s
management, which is responsible for their integrity and
objectivity. These accounting policies conform to accounting
principles generally accepted in the United States of America, and
have been consistently applied in the preparation of the financial
statements. The preparation of financial statements requires
management to make estimates and assumptions that affect the
reported amounts of assets, liabilities revenues and expenses and
disclosures of contingent assets and liabilities at the date of the
financial statements. Actual results could differ from those
estimates.
5
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(UNAUDITED)
Basis of Consolidation and Comprehensive Income
The accompanying consolidated financial statements include the
accounts of GT Biopharma, Inc. and its subsidiaries. All
intercompany balances and transactions have been eliminated.
The Company’s financial
statements are prepared using the accrual method of
accounting.
Basis of Presentation
The accompanying unaudited interim condensed consolidated financial
statements have been prepared in accordance with accounting
principles generally accepted in the U.S. (“U.S. GAAP”)
and the rules and regulations of the U.S. Securities and Exchange
Commission (“SEC”). Certain information and disclosures
required by U.S. GAAP for complete consolidated financial
statements have been condensed or omitted herein. The interim
condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements
and notes thereto included in
the Company’s Form 10-K
for the year ended December 31, 2019 filed with the SEC on March
27, 2020. The unaudited interim condensed consolidated financial
information presented herein reflects all normal adjustments that
are, in the opinion of management, necessary for a fair statement
of the financial position, results of operations and cash flows for
the periods presented. The Company is responsible for the unaudited interim
consolidated financial statements included in this
report. The results of operations of
any interim period are not necessarily indicative of the results
for the full year.
Cash and Cash Equivalents
The Company considers all
highly liquid investments with original maturities of three months
or less to be cash equivalents.
Concentrations of Credit Risk
The Company’s cash and
cash equivalents, marketable securities and accounts receivable are
monitored for exposure to concentrations of credit risk. The
Company maintains substantially all of
its cash balances in a limited number of financial
institutions. The balances are
each insured by the Federal Deposit Insurance Corporation up to
$250,000. The Company had a
balance of approximately $600,000 in excess of this limit at June
30, 2020.
Stock Based Compensation to Employees
The
Company accounts for its stock-based compensation for employees in
accordance with Accounting Standards Codification
(“ASC”) 718. The Company recognizes in the
statement of operations the grant-date fair value of stock options
and other equity-based compensation issued to employees and
non-employees over the related vesting period.
The
Company granted no stock options during the six months ended June
30, 2020 and 2019, respectively.
6
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(UNAUDITED)
Long-Lived Assets
Our
long-lived assets include property, plant and equipment,
capitalized costs of filing patent applications and other
indefinite lived intangible assets. We evaluate our long-lived
assets for impairment, other than indefinite lived intangible
assets, in accordance with ASC 360, whenever events or changes in
circumstances indicate that the carrying amount of such assets may
not be recoverable. Estimates of future cash flows and timing of
events for evaluating long-lived assets for impairment are based
upon management’s judgment. If any of our intangible or
long-lived assets are considered to be impaired, the amount of
impairment to be recognized is the excess of the carrying amount of
the assets over its fair value.
Applicable
long-lived assets are amortized or depreciated over the shorter of
their estimated useful lives, the estimated period that the assets
will generate revenue, or the statutory or contractual term in the
case of patents. Estimates of useful lives and periods of expected
revenue generation are reviewed periodically for appropriateness
and are based upon management’s judgment.
Impairment of Long-Lived Assets
The
Company evaluates indefinite lived intangible assets for impairment
at least annually and whenever impairment indicators are present in
accordance with ASC 350. When necessary, the Company records an
impairment loss for the amount by which the fair value is less than
the carrying value of these assets. The fair value of intangible assets other than
goodwill is typically determined using the “relief from
royalty method”, specifically the discounted cash flow
method utilizing Level 3 fair value inputs. Some of the more
significant estimates and assumptions inherent in this approach
include: the amount and timing of the projected net cash flows,
which includes the expected impact of competitive, legal and/or
regulatory forces on the projections and the impact of
technological risk associated with IPR&D assets, as well as the
selection of a long-term growth rate; the discount rate, which
seeks to reflect the various risks inherent in the projected cash
flows; and the tax rate, which seeks to incorporate the geographic
diversity of the projected cash flows.
The
Company performs impairment testing for all other long-lived assets
whenever impairment indicators are present. When necessary, the
Company calculates the undiscounted value of the projected cash
flows associated with the asset, or asset group, and compares this
estimated amount to the carrying amount. If the carrying amount is
found to be greater, we record an impairment loss for the excess of
book value over fair value.
Income Taxes
The Company accounts for income
taxes using the asset and liability approach, whereby deferred
income tax assets and liabilities are recognized for the estimated
future tax effects, based on current enacted tax laws, of temporary
differences between financial and tax reporting for current and
prior periods. Deferred tax assets are reduced, if necessary, by a
valuation allowance if the corresponding future tax benefits may
not be realized.
Net Income (Loss) per Share
Basic net income (loss) per share is computed by dividing the net
income (loss) for the period by the weighted average number of
common shares outstanding during the period. Diluted net income
(loss) per share is computed by dividing the net income (loss) for
the period by the weighted average number of common shares
outstanding during the period, plus the potential dilutive effect
of common shares issuable upon exercise or conversion of
outstanding, convertible notes and debentures (including shares
issuable upon conversion of accrued interest or other default
amounts with respect to such convertible notes or debentures),
stock options and warrants
during the period. The weighted
average number of potentially dilutive common shares excluded from
the calculation of net income (loss) per share totaled in
127,946,216 and 39,416,352 as of June 30, 2020 and 2019,
respectively.
Patents
Acquired patents are capitalized at their acquisition cost or fair
value. The legal costs, patent registration fees and models and
drawings required for filing patent applications are capitalized if
they relate to commercially viable technologies. Commercially
viable technologies are those technologies that are projected to
generate future positive cash flows in the near term. Legal costs
associated with patent applications that are not determined to be
commercially viable are expensed as incurred. All research and
development costs incurred in developing the patentable idea are
expensed as incurred. Legal fees from the costs incurred in
successful defense to the extent of an evident increase in the
value of the patents are capitalized.
7
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(UNAUDITED)
Capitalized cost for pending patents are amortized on a
straight-line basis over the remaining twenty year legal life of
each patent after the costs have been incurred. Once each patent is
issued, capitalized costs are amortized on a straight-line basis
over the shorter of the patent’s remaining statutory life, estimated
economic life or ten years.
Fixed Assets
Fixed assets are stated at cost. Depreciation is computed on a
straight-line basis over the estimated useful lives of the assets,
which are 3 to 10 years for machinery and equipment and the
shorter of the lease term or estimated economic life for leasehold
improvements.
Fair Value
The carrying amounts reported in the balance sheets for receivables
and current liabilities each qualify as financial instruments and
are a reasonable estimate of fair value because of the short period
of time between the origination of such instruments and their
expected realization and their current market rate of
interest. The three
levels are defined as follows:
●
Level 1 inputs to
the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active markets. The
Company’s Level 1 assets include cash equivalents, primarily
institutional money market funds, whose carrying value represents
fair value because of their short-term maturities of the
investments held by these funds.
●
Level 2 inputs to
the valuation methodology include quoted prices for similar assets
and liabilities in active markets, and inputs that are observable
for the asset or liability, either directly or indirectly, for
substantially the full term of the financial instrument. There were
not such liabilities at June 30, 2020.
●
Level 3 inputs to
the valuation methodology are unobservable and significant to the
fair value measurement. There were no such assets or liabilities as
of June 30, 2020.
Research and Development
Research and development costs are expensed as incurred and
reported as research and development expense. Research and
development costs totaled $0.3
million and $1 million for the six months ended June 30, 2020 and
2019, respectively.
Revenue Recognition
License Revenue
License
arrangements may consist of non-refundable upfront license fees,
exclusive licensed rights to patented or patent pending technology,
and various performance or sales milestones and future product
royalty payments. Some of these arrangements are multiple element
arrangements.
Non-refundable,
up-front fees that are not contingent on any future performance by
us, and require no consequential continuing involvement on our
part, are recognized as revenue when the license term commences and
the licensed data, technology and/or compound is
delivered. We defer recognition of non-refundable
upfront fees if we have continuing performance obligations without
which the technology, right, product or service conveyed in
conjunction with the non-refundable fee has no utility to the
licensee that is separate and independent of our performance under
the other elements of the arrangement. In addition, if we have
continuing involvement through research and development services
that are required because our know-how and expertise related to the
technology is proprietary to us, or can only be performed by us,
then such up-front fees are deferred and recognized over the period
of continuing involvement.
8
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(UNAUDITED)
Payments
related to substantive, performance-based milestones in a research
and development arrangement are recognized as revenue upon the
achievement of the milestones as specified in the underlying
agreements when they represent the culmination of the earnings
process. As of June 30, 2020, the Company has not generated any
licensing revenue.
2.
Debt
Convertible Notes/Debentures
As of
June 30, 2020, the Company had approximately $21.8 million
aggregate principal amount of convertible notes and debentures
(collectively, the “Convertible Notes”) outstanding
that were issued pursuant to securities purchase agreements (or, in
the case of the Settlement Notes (as defined herein), the
Settlement Agreement (as defined herein)) entered into with
numerous investors. The Company issued an additional approximately
$3.2 million aggregate principal amount of Convertible Notes on
July 7, 2020. See Note 6, Subsequent Events under the caption
“Convertible Notes.”
The
Convertible Notes are convertible at any time, at the
holder’s option, into shares of the Company’s common
stock at an initial conversion price, subject to certain beneficial
ownership limitations (which vary between maximum ownership of
between 4.99% and 9.99%). The conversion price of the Convertible
Notes is also generally subject to adjustment due to certain
events, including stock dividends, stock splits and in connection
with the issuance by the Company of common stock or common stock
equivalents at an effective price per share lower than the
conversion price then in effect. The conversion price for each of
the Company’s outstanding Convertible Notes is currently
$0.20 per share. In addition, approximately $5.2 million aggregate
principal amount of the Company’s Convertible Notes will be
subject to mandatory conversion in connection with the completion
of a future financing in the amount of at least $15 million,
subject to the beneficial ownership limitations described
above.
The
Convertible Notes generally have terms of six months to one year
and mature between August 2, 2019 and January 7, 2021, unless earlier converted or repurchased.
The Convertible Notes each accrue interest at a rate of 10% per
annum, subject to increase to 18% per annum upon and during the
occurrence of an event of default with respect to certain of the
Convertible Notes. Interest is payable in cash or, with respect to
certain of the Convertible Notes, and at the holder’s option,
in shares of common stock based on the conversion price then in
effect.
Pursuant
to the terms of the Settlement Notes, the Company is required to
make an offer to repurchase, at the holder’s option, the
Settlement Notes at price in cash equal to 100% of the aggregate
principal amount of the Settlement Note plus accrued and unpaid
interest, if any, to, but excluding, the date of repurchase
following the consummation by the Company of a financing
transaction, or a series of transactions, resulting in aggregate
gross proceeds to the Company in excess of $7.5 million. Generally,
the Company otherwise does not have the right to prepay any of the
Convertible Notes without the prior written consent of the holders
of such securities.
The
Convertible Notes contain a number of affirmative and negative
covenants and customary events of default. As of June 30, 2020,
approximately $13.2 aggregate principal amount of our Convertible
Notes were in default. See “Forbearance Agreements”
below.
The
securities purchase agreements and Settlement Agreement, as
applicable, also generally contain certain ongoing covenants of the
Company, including rights of participation in certain future
financing transactions, limitations on future variable rate
transactions and “at-the-market” offerings and
“most favored nation” provisions giving holders of
certain of the Convertible Notes the benefit of any terms or
conditions under which the Company agrees to issue or sell any
common stock or common stock equivalents that are more favorable to
an investor than the terms and conditions granted to such holder
under the applicable securities purchase agreement and the
transactions contemplated thereby.
9
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(UNAUDITED)
The
Convertible Notes are senior obligations of the Company. In
addition, approximately $8.9 million aggregate principal amount of
the Convertible Notes are secured by a first priority security
interest in substantially all of the assets of the Company and its
subsidiaries. Convertible Notes are also secured by individual
pledges by certain of our current and former officers and directors
of our common stock owned by such officer and
directors.
For
additional information about the Convertible Notes, see Note 4,
Debt to the Company’s
audited consolidated financial statements included in the
Company’s Form 10-K for the year ended December 31,
2019.
Forbearance Agreements
Effective as of June 23, 2020, the Company entered into Standstill
and Forbearance Agreements (collectively, the “Forbearance
Agreements”) with the holders of $13.2 million aggregate
principal amount of the Convertible Notes (the “Default
Notes”), which are currently in default. Pursuant to the
Forbearance Agreements, the holders of the Default Notes have
agreed to forbear from exercising their rights and remedies under
the Default Notes (including declaring such Default Notes (together
with any default amounts and accrued and unpaid interest)
immediately due and payable) until the earlier of (i) the date that
the Company completes a future financing in the amount of $15
million and, in connection therewith, commences listing on NASDAQ
(collectively, the “New Financing”) or (ii) October 1,
2020 (the “Termination Date”). As a result of the
ongoing default, the Default Notes are currently accruing interest
at the default rate of 18% per annum and have accrued additional
default amounts of approximately $3.9 million in the aggregate as
of June 30, 2020.
The obligations of the holders to forbear from exercising their
rights and remedies under the Default Notes pursuant to the
Forbearance Agreements will terminate on the earliest of (i) the
Termination Date, (ii) the date of any bankruptcy filing by the
Company or its subsidiaries, (iii) the date on which the Company
defaults on any of the terms and conditions of the Forbearance
Agreements or (iv) the date the Forbearance Agreements are
otherwise terminated or expire.
The Forbearance Agreements contain various customary and other
representations, warranties and covenants of the Company and the
holders of the Default Notes, including an agreement that the
Default Notes (together with default amounts and accrued and unpaid
interest) will be converted into common stock upon the closing of a
New Financing at a conversion price equal to the lesser of (i) the
conversion price in effect for the Default Notes on the date of
such New Financing or (ii) 75% of the lowest per share price at
which common stock is or may be issued in connection with such New
Financing, in each case, subject to certain beneficial ownership
limitations (with a maximum ownership limit of 9.99%). Shares of
the Company’s preferred stock, which are convertible into the
Company’s common stock, will be issued in lieu of common
stock to the extent that conversion of the Default Notes is
prohibited by such beneficial ownership limitations.
Settlement Notes
On June 19, 2020, the Company entered into a
settlement agreement (the “Settlement Agreement”)
with Empery Asset Master Ltd., Empery Tax Efficient, LP and Empery
Tax Efficient II, LP (collectively, the “Empery
Funds”), Anthony Cataldo and Paul Kessler resolving all
remaining disputes between the parties pertaining to certain
Convertible Notes and warrants to purchase common
stock of the Company (collectively, the “Original
Securities”) issued by the Company to the Empery Funds in
January 2018 pursuant to a securities purchase agreement. In
connection with the Settlement Agreement, the Company issued
Convertible Notes in an aggregate principal amount of $450,000 (the
“Settlement Notes”) to the Empery Funds on June 19,
2020. The Settlement Notes are convertible at any time, at
the holder’s option, into shares of our common stock at an
initial conversion price of $0.20 per share, subject to certain beneficial
ownership limitations (with a maximum ownership limit of
4.99%).
10
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(UNAUDITED)
The Settlement Notes mature on December 19, 2020, unless earlier
converted or repurchased. The terms of the Settlement Notes are
generally the same as the Company’s other Convertible Notes,
except that the Company is required to make an offer to repurchase,
at the option of each holder, the Settlement Notes at price in cash
equal to 100% of the aggregate principal amount of the Settlement
Notes plus accrued and unpaid interest, if any, to, but excluding,
the date of repurchase following the consummation by the Company of
a financing transaction, or a series of transactions, resulting in
aggregate gross proceeds to the Company in excess of $7.5
million.
Fiscal 2019 and Fiscal 2020 Convertible Notes
Transactions
On February 4, 2019, the Company entered into a securities purchase
agreement with certain purchasers pursuant to which it issued
secured Convertible Notes in an aggregate principal amount of
$1,352,224, consisting of gross proceeds of $1,052,224 and
settlement of existing debt of $300,000, which Convertible Notes
were convertible into common stock at an initial conversion price
of $0.60 per share.
On May
22, 2019, the Company entered into a securities purchase agreement
with certain purchasers pursuant to which the Company issued
Convertible Notes in an aggregate principal amount of $1,300,000,
which Convertible Notes were convertible into the Company’s
common stock at an initial conversion price of $0.35 per
share.
Between
July 31 and August 28, 2019,
the Company entered into a securities purchase agreement with
certain purchasers pursuant to which the Company issued Convertible
Notes in an aggregate principal amount of $975,000, which
Convertible Notes are convertible into the Company’s common
stock at an initial conversion price of $0.20 per
share.
On
December 19, 2019, the Company entered into a securities purchase
agreement with one purchaser pursuant to which the Company issued
Convertible Notes in an aggregate principal amount of $200,000,
which Convertible Notes are convertible into the Company’s
common stock at an initial conversion price of $0.20 per
share.
On
January 30, 2020, the Company entered into a securities purchase
agreement with one purchaser pursuant to which the Company issued
Convertible Notes in an aggregate principal amount of $200,000,
which Convertible Notes are convertible into the Company’s
common stock at an initial conversion price of $0.20 per
share.
Between
April 20 and May 7, 2020, the
Company entered into a securities purchase agreement with certain
purchasers pursuant to which the Company issued Convertible Notes
in an aggregate principal amount of $2,017,000, which Convertible
Notes are convertible into the Company’s common stock at an
initial conversion price of $0.20 per share.
On June 19, 2020, the Company entered into the Settlement Agreement
pursuant to which the Company issued the Settlement Notes in an
aggregate principal amount of $450,000, which Settlement
Notes are convertible into the Company’s common stock
at an initial conversion price of $0.20 per share.
On July 7, 2020, the Company entered into a securities
purchase agreement with certain purchasers pursuant to which the
Company issued Convertible Notes in an aggregate principal amount
of $3,190,000, which Convertible Notes are convertible into the
Company’s common stock at an initial conversion price of
$0.20 per share.
Gemini Financing Agreement
On
November 8, 2010, the Company entered into a financing arrangement
with Gemini Pharmaceuticals, Inc., a product development and
manufacturing partner of the Company, pursuant to which Gemini
Pharmaceuticals made a $250,000 strategic equity investment in the
Company and agreed to make a $750,000 purchase order line of credit
facility available to the Company. The outstanding principal of all
advances under the line of credit will bear interest at the rate of
interest of prime plus 2% per annum. There is $31,000 due on this
credit line at June 30, 2020.
11
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(UNAUDITED)
3.
Stockholders’
Equity
Common Stock
Our authorized capital stock consists of 750,000,000 shares
of common stock, par value
$0.001 per share, and 15,000,000 shares of preferred stock, par
value $0.01 per share. As of June 30, 2020, 75,435,862 shares of
common stock were issued and outstanding.
During the six months ended June 30, 2020, the Company issued
1,064,734 shares of common
stock upon conversion of $212,947 in principal and interest on
Convertible Notes.
On May 1, 2020, the Company issued 1,086,429 shares of
common stock for consulting services.
On June 19, 2020, the Company issued 3,500,000 shares of
common stock pursuant to the Settlement Agreement.
Preferred Stock
The 96,230 shares of Series C
preferred stock, par value $0.01 per share (the “Series C
Preferred Stock”), are convertible into 111 shares of
the Company’s
common stock at the option of the
holders at any time. The conversion ratio is based on the average
closing bid price of the common
stock for the fifteen consecutive trading days ending on the date
immediately preceding the date notice of conversion is given, but
cannot be less than 0.20 or
more than 0.2889 common shares
for each share of Series C Preferred Stock. The conversion ratio
may be adjusted under certain circumstances such as stock splits or
stock dividends. The Company has the right to automatically convert
the Series C Preferred Stock
into common stock if the
Company lists its shares of common stock on the Nasdaq National Market and the average closing bid
price of the Company’s common stock on the Nasdaq National Market for 15 consecutive trading
days exceeds $3,000.00. Each share of Series C Preferred Stock is entitled to the number
of votes equal to 0.26 divided
by the average closing bid price of the Company’s common stock during the fifteen consecutive
trading days immediately prior to the date such shares of
Series C Preferred Stock were
purchased. In the event of liquidation, the holders of the
Series C Preferred Stock shall
participate on an equal basis with the holders of the
common stock (as if the
Series C Preferred Stock had converted
into common stock) in any
distribution of any of the assets or surplus funds of the Company.
The holders of Series C
Preferred Stock are entitled to noncumulative dividends if and when
declared by the Company’s
board of directors (the “Board”). No dividends to
holders of the Series C Preferred Stock were issued or unpaid
through June 30, 2020.
On September 1, 2017, the Company designated 2,000,000 shares
of Series J preferred stock
(the “Series J Preferred Stock”). On
the same day, the Board
issued 1,513,548
shares of Series J Preferred
Stock in exchange for the
cancellation of certain
indebtedness. In the first quarter of 2019, it was discovered
that a certificate of designation with respect to the
Series J Preferred Stock had never
been filed with the Office of
the Secretary of State for the State of Delaware. Legal research determined that despite the
fact the Company had issued shares of Series J Preferred Stock, those shares had, in
fact, never existed.
To remedy the situation, on April 4, 2019, the Company filed a
certificate of designation with the Office of the Secretary State for the State of Delaware
designating a series of preferred stock as the Series J-1 preferred stock, par value $0.01 per share (the “Series J-1
Preferred Stock”). On April 19, 2019, the Company
issued 2,353,548 shares of Series J-1 Preferred
Stock. The issuance was
in lieu of the Series J Preferred Stock that should have been
issued on September 1, 2017, and in settlement for not receiving
preferred stock until 20 months after the debt for which the stock
was issued was cancelled. The
Company reflected an expense in general and administrative costs in
the quarter ended June 30, 2019 totaling
$1,140,000.
12
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(UNAUDITED)
Shares of the Series J-1 Preferred Stock are convertible at any
time, at the option of the holders, into shares of the
Company’s common stock at an effective conversion price of
$0.20 per share, subject to adjustment for, among other things,
stock dividends, stock splits, combinations, reclassifications of
our capital stock and mergers or consolidations, and subject to a
beneficial ownership limitation which prohibits conversion if such
conversion would result in the holder (together with its
affiliates) being the beneficial owner of in excess of 9.99% of the
Company’s common stock. Shares of the Series J-1 Preferred
Stock have the same voting rights a shares of the Company’s
common stock, with the holders of the Series J-1 Preferred Stock
entitled to vote on an as-converted-to-common stock basis, subject
to the beneficial ownership limitation described above, together
with the holders of the Company’s common stock on all matters
presented to the Company’s stockholders. The Series J-1
Preferred Stock are not entitled to any dividends (unless
specifically declared by the Board), but will participate on an
as-converted-to-common-stock basis in any dividends to the holders
of the Company’s common stock. In the event of the
Company’s dissolution, liquidation or winding up, the holders
of the Series J-1 Preferred Stock will be on parity with the
holders of the Company’s common stock and will participate,
on a on an as-converted-to-common stock basis, in any distribution
to holders of the Company’s common stock.
4.
Stock Options and Warrants
Stock Options
The
following table summarizes stock option transactions for the six
months ended June 30, 2020:
|
|
Number of
Options
|
Weighted Average
Exercise Price
|
|
Outstanding,
December 31, 2019
|
40
|
$877.50
|
|
Granted
|
-
|
-
|
|
Exercised
|
-
|
-
|
|
Expired
|
-
|
-
|
|
Outstanding, June
30, 2020
|
40
|
$877.50
|
|
Exercisable, June
30, 2020
|
40
|
$877.50
|
Common Stock Warrants
Warrant
transactions for the six months ended June 30, 2020 are as
follows:
|
|
Number of
Warrants
|
Weighted Average
Exercise Price
|
|
Outstanding at
December 31, 2019:
|
1,813,053
|
$0.20
|
|
Granted
|
5,500,000
|
$0.20
|
|
Forfeited/canceled
|
480,352
|
$0.20
|
|
Exercised
|
-
|
-
|
|
Outstanding at June
30, 2020
|
6,832,701
|
$0.20
|
|
Exercisable at June
30, 2020
|
6,832,701
|
$0.20
|
13
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(UNAUDITED)
Settlement Warrants
Pursuant to the Settlement Agreement, the Company issued
pre-funded warrants to purchase up to
an aggregate of 5,500,000 shares of common stock
(the “Settlement
Warrants”) at an exercise price of $0.20 per share, subject
to adjustment in certain circumstances. The Settlement Warrants
expire on June 19, 2025. The
aggregate exercise price of the Settlement Warrants was deemed to
be pre-funded to the Company in conjunction with exchange of
previously issued
warrants to purchase 480,352 shares of
common stock pursuant to the Settlement Agreement. Exercise of
the Settlement Warrant is
subject to certain additional terms and conditions, including
certain beneficial ownership limitations.
Forbearance Agreements
Pursuant to the Forbearance Agreements, (i) the exercise price of all warrants
to purchase common stock held by holders of the Default Notes will
be reduced to equal the conversion price of the Default Notes and
(ii) the number of shares of
common stock underlying such warrants shall be increased so that
the total exercise price of all such warrants after the decrease in
the exercise price equals the total exercise price of all such
warrants prior to the decrease in the exercise price. Further, the
expiration date of all such warrants shall be extended for three
years following the closing date of any New
Financing.
5.
Commitments and Contingencies
Leases
On October 1, 2018, the Company entered into a three-year lease
agreement for its office in Westlake Village, CA. In addition to
minimum rent, certain leases require payment of real estate taxes,
insurance, common area maintenance charges and other executory
costs. The Company recognizes rent expense under such arrangements
on a straight-line basis over the effective term of each
lease.
The following table summarizes the Company’s future minimum
lease commitments as of June 30, 2020:
|
Year ending
December 31:
|
|
|
2020
|
36,000
|
|
2021
|
61,000
|
|
Total minimum lease
payments
|
$97,000
|
Rent expense for the six months ended June 30,
2020 and 2019 was $35,000 and $35,000,
respectively.
6.
Subsequent Events
Convertible Notes
On July 7, 2020, the Company entered into a securities
purchase agreement with certain
purchasers pursuant to which the Company issued Convertible Notes in an aggregate principal
amount of $3,190,000
(the “July 2020
Notes”). The July 2020 Notes are convertible at any
time, at the holder’s option, into shares of our common stock
at an initial conversion price of $0.20 per share, subject to certain beneficial
ownership limitations (with a maximum ownership limit of
9.99%).
14
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
(UNAUDITED)
The July 2020 Notes mature on January 7, 2021, unless earlier
converted or repurchased. The terms of the July 2020 Notes are
generally the same as the Company’s other Convertible Notes,
except that the July 2020 Notes will be subject to mandatory
conversion in the event of the completion of a future financing in
the amount of at least $15 million at a conversion price equal
to the lesser of (i) the conversion price in effect for the
July 2020 Notes on the date of completion of such financing or (ii)
75% of the lowest per share price at which common stock may be
issued in connection with any conversion rights associated with the
financing, in each case, subject to the beneficial ownership
limitations described above. See Note 2, Debt under the caption “Convertible
Notes/Debentures” for additional information regarding the
terms of the Company’s Convertible Notes.
Common Stock
In July 2020, the Company issued 1,125,000 shares of
common stock upon conversion of
$225,000 aggregate principal amount of Convertible
Notes.
Warrant
On July 28, 2020, the Company issued a warrant to purchase up to an
aggregate of 1,000,000 shares of common stock at an exercise price
of $0.20 per share, subject to adjustment in certain circumstances.
The warrant expires on July 28, 2025. The warrant was issued as
compensation for certain services provided to the
Company.
Employment Agreements
Effective
August 11, 2020 (the “Effective Date”), the Company and
Anthony J. Cataldo (“Mr. Cataldo”) entered into an
employment agreement (the “Cataldo Agreement”) with
respect to Mr. Cataldo’s continued employment as Chief
Executive Officer of the Company. The term of the Cataldo Agreement
is three years (the “Initial Term”) with the option of
automatic one-year renewals thereafter. Mr. Cataldo will be paid a
cash salary of $30,000 per month, together with customary benefits,
expense reimbursement and the possibility of performance bonuses.
Mr. Cataldo will receive a stock grant equal to ten percent of the
fully diluted shares of common stock of the Company (calculated
with the inclusion of the current stock holdings of Mr. Cataldo)
upon conversion of options, warrants and Convertible Notes in
association with a national markets qualified financing as
consideration for entering into the Cataldo Agreement (with such
stock to vest and be delivered within 30 days after the national
markets qualified financing). Mr. Cataldo will be entitled to
certain additional severance payments and other benefits in
connection with a Change in Control Period Involuntary Termination
or a Non Change in Control Period Involuntary Termination (each as
defined in the Cataldo Agreement) or his resignation as a result of
a Change in Control Period Good Reason or Non Change in Control
Period Good Reason (each as defined in the Cataldo Agreement).
Following the Effective Date, Mr. Cataldo will also continue to
serve as the chairman of the board of the
Company.
Effective
August 11, 2020, the Company and Steven Weldon (“Mr.
Weldon”) entered into an employment agreement (the
“Weldon Agreement” and, together with the Cataldo
Agreement, the “Employment Agreements”) with respect to
Mr. Weldon's continued employment as the Chief Financial Officer of
the Company. The term of the Weldon Agreement is three years (the
“Initial Term”) with the option of automatic one-year
renewals thereafter. Mr. Weldon will be paid a cash salary of
$25,000 per month, together with customary benefits, expense
reimbursement and the possibility of performance bonuses. Mr.
Cataldo will receive a stock grant equal to seven percent of the
fully diluted shares of common stock of the Company (calculated
with the inclusion of the current stock holdings of Mr. Weldon)
upon conversion of options, warrants and Convertible Notes in
association with a national markets qualified financing as
consideration for entering into the Weldon Agreement (with such
stock to vest and be delivered within 30 days after the national
markets qualified financing). Mr. Weldon will be entitled to
certain additional severance payments and other benefits in
connection with a Change in Control Period Involuntary Termination
or a Non Change in Control Period Involuntary Termination (each as
defined in the Weldon Agreement) or his registration as a result of
a Change in Control Period Good Reason or Non Change in Control
Period Good Reason (each as defined in the Weldon Agreement).
Following the Effective Date, Mr. Weldon will also continue to
serve as the principal accounting officer and as a director of the
Company.
15
Item 2.
Management’s Discussion and
Analysis of Financial Condition and Results of
Operations.
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements in this Quarterly Report
on Form 10-Q are “forward-looking
statements” within the
meaning of the safe harbor from liability established by the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements include statements regarding our current beliefs, goals
and expectations about matters such as our expected financial
position and operating results, our business strategy and our
financing plans. The forward-looking statements in
this report
are not based on historical facts, but rather reflect the current
expectations of our management concerning future results and
events. The forward-looking statements generally can be identified
by the use of terms such as “believe,”
“expect,” “anticipate,”
“intend,” “plan,” “foresee,”
“may,”
“guidance,” “estimate,”
“potential,” “outlook,”
“target,” “forecast,” “likely”
or other similar words or phrases. Similarly, statements that
describe our objectives, plans or goals are, or may
be,
forward-looking statements. Forward-looking statements involve
known and unknown risks, uncertainties and other factors that may
cause our actual results, performance or achievements to be
different from any future results, performance and achievements
expressed or implied by these statements. We cannot guarantee that
our forward-looking statements will turn out to be correct or that
our beliefs and goals will not change. Our actual results could be
very different from and worse than our expectations for various
reasons. You should review carefully all information, including the
discussion of risk factors under “Part I. Item 1A: Risk
Factors” and “Part II. Item 7:
Management’s Discussion and Analysis
of Financial Condition and Results of Operations” of the Form
10-K for the year ended December 31, 2019. Any
forward-looking statements in the Form 10-Q are made only as of the
date hereof and, except as may be required by law, we do not have
any obligation to publicly update any forward-looking statements
contained in this Form 10-Q to reflect subsequent events or
circumstances.
Throughout this Quarterly Report on
Form 10-Q, the terms
“GTBP,” “we,”
“us,” “our,” “the
company” and
“our company” refer to
GT Biopharma, Inc., a Delaware corporation formerly known as Oxis
International, Inc., DDI Pharmaceuticals, Inc. and Diagnostic Data,
Inc, together with our subsidiaries.
Overview
We are
a clinical stage biopharmaceutical company focused on the
development and commercialization of novel immuno-therapeutic
products based on our proprietary Tri-specific Killer Engager
(TriKE™) and Tetra-specific Killer Engager (TetraKE™)
platform technologies. Our TriKE and TetraKE platforms generate
proprietary therapeutic candidates that are designed to harness and
enhance the immune response of a patient’s endogenous NK
cells. Once bound to an NK cell, our platform moieties are designed
to enhance the activity of NK cells, with targeted direction to one
or more proteins expressed on a specific type of cancer cell or
virus infected cell, ultimately resulting in targeted cell death.
We have constructed our TriKEs and TetraKEs of recombinant fusion
proteins that can be designed to target a wide array of tumor
antigen that may be located on hematologic malignancies, sarcomas
or solid tumors. Our TriKEs and TetraKEs do not require
patient-specific or autologous customization.
We are
using our TriKE and TetraKE platforms with the intent to bring to
market products that treat a range of hematologic malignancies,
sarcomas, solid tumors and selected infectious diseases. Our
platforms are scalable, and in addition to our first clinical
indication of our TriKE platform in relapsed or refractory acute
myelogenous leukemia, we are preparing investigational new drug
applications based on a specific TriKE or TetraKE design. We intend
to continue to advance into the clinic, on our own or through
potential collaborations with larger companies, multiple TriKE or
TetraKE product candidates. We believe our TriKEs and TetraKEs may
have the ability, if approved for marketing, to be used as
monotherapy, be dosed concomitantly with current monoclonal
antibody therapeutics, be used in conjunction with more traditional
cancer therapy, and potentially overcome certain limitations of
current chimeric antigen receptor therapy.
We are
also using our TriKE and TetraKE platforms to develop therapeutics
for the treatment of infectious diseases such as human
immunodeficiency virus (“HIV”) and COVID-19 infection.
For example, while the use of anti-retroviral drugs has
substantially improved the morbidity and mortality of individuals
infected with HIV, these drugs are designed to suppress virus
replication and to help modulate progression to AIDS and to limit
further transmission of the virus. Despite the use of
anti-retroviral drugs, infected individuals retain reservoirs of
latent HIV-infected cells that, upon cessation of anti-retroviral
drug therapy, can reactivate and reestablish an active HIV
infection. Destruction of these latent HIV infected cells is the
primary objective of curative therapy. Our HIV-TriKE contains the
antigen binding fragment (Fab) from a broadly-neutralizing antibody
targeting the HIV-Env protein. The HIV-TriKE is designed to target
HIV while redirecting NK cell killing specifically to actively
replicating HIV infected cells. The HIV-TriKE induced NK cell
proliferation and demonstrated the ability in vitro to reactivate
and kill HIV-infected T-cells. These findings indicate a potential
role for the HIV-TriKE in the reactivation and elimination of the
latently infected HIV reservoir cells by harnessing the NK
cell’s ability to mediate the antibody-directed cellular
cytotoxicity.
16
We have
licensed the exclusive rights from the University of Minnesota to
the TriKE and TetraKE platforms.
Recent Developments
Collaboration Agreement
On March 10, 2020, we entered into a collaboration
agreement with
Cytovance® Biologics,
a USA-based contract development and manufacturing organization and
a subsidiary of Hepalink, to provide development
services for a TriKE
therapeutic for the treatment of the coronavirus infection. Under
the terms of the collaboration agreement, the companies will focus on preparing
sufficient quantities of our coronavirus TriKE drug product for preclinical evaluation
using Cytovance’s E. coli-based
Keystone Expression
System™ and
subsequently, will scale-up production using Cytovance’s GMP microbial
manufacturing platform for evaluation of TriKE in humans to treat the
coronavirus infection.
Bridge Financing
Between
April 20 and July 7, 2020, we entered into securities purchase
agreements pursuant to which we issued Convertible Notes (including
the July 2020 Notes) in an aggregate principal amount of
approximately $5.2 million (collectively, the “Bridge
Notes”), which, together with an additional $0.4 million
aggregate principal amount of Convertible Notes issued between
December 2019 and January 2020, completed our previously announced
bridge financing (the “Bridge Financing”) resulting in
gross proceeds to us of approximately $5.6 million. The Bridge
Notes are convertible at any time, at the holder’s option,
into shares of our common stock at an initial conversion price of
$0.20 per share, subject to
certain beneficial ownership limitations (with a maximum
ownership limit of 9.99%).
The
Bridge Notes each have a term of six months and mature between
August 20, 2020 and January 7, 2021, unless earlier converted or
repurchased. The terms of the Bridge
Notes are generally the same as the Company’s other
Convertible Notes, except that the Bridge Notes will be subject to
mandatory conversion in the event of the completion of a future
financing in the amount of at least $15 million at
a conversion price equal to the lesser of (i)
the conversion price in effect for the Bridge Notes on the
date of completion of such financing or (ii) 75% of the lowest per
share price at which common stock may be issued in connection
with any conversion rights associated with the financing, in each
case, subject to the beneficial ownership limitations described
above.
The
additional $0.4 million aggregate principal amount of Convertible
Notes issued between December 2019 and January 2020 as part of the
Bridge Financing have the same terms as the Bridge Notes, except
that they are not subject to mandatory conversion in connection
with a subsequent financing.
See Note 2, Debt under the caption “Convertible
Notes/Debentures” for additional information regarding the
terms of the Company’s Convertible Notes.
Forbearance Agreements
Effective as of June 23, 2020, we entered into the Forbearance
Agreements with the holders of approximately $13.2 million
aggregate principal amount of the Default Notes, which are
currently in default. Pursuant to the Forbearance Agreements, the
holders of the Default Notes have agreed to forbear from exercising
their rights and remedies under the Default Notes (including
declaring such Default Notes (together with default amounts and
accrued and unpaid interest) immediately due and payable) until the
earlier of (i) the date that we complete a New Financing or (ii) the
Termination
Date.
17
Pursuant to the Forbearance Agreement, the holders of the Default
Notes have also agreed that the Default Notes (together with
default amounts and accrued and unpaid interest) will be converted
into common stock
upon the closing of a New Financing at a conversion price equal to the lesser of
(i) the conversion
price in effect for the Default Notes on the date of such
New Financing or (ii) 75%
of the lowest per share price at which common stock is or may be issued in
connection with such New Financing, in each case, subject to
certain beneficial ownership limitations (with a maximum ownership
limit of 9.99%). Shares of our preferred stock, which
are convertible into the Company’s common stock, will be issued in lieu
of common stock to
the extent that conversion of the Default Notes is prohibited by
such beneficial ownership limitations.
In addition, to the extent that any holders of the Default Notes
also hold warrants to purchase shares of the Company’s common
stock, the exercise price, number of underlying shares and
expiration date of such warrants will also be subject to adjustment
upon closing of a New Financing in accordance with the terms of the
Forbearance Agreements.
Settlement with Empery Funds
Settlement Agreement
On June 19, 2020, we entered into the Settlement Agreement with the
Empery Funds, Anthony Cataldo and Paul Kessler resolving
all remaining disputes
between the parties pertaining to the Original Securities. See Part
II, Item 1. “Legal Proceedings.”
As a result of the Settlement Agreement, the Company paid
the Empery Funds
cash payments in an aggregate amount of $0.2 million. In addition,
pursuant to the Settlement Agreement, the Company issued to
the Empery Funds,
solely in exchange for the outstanding Original Securities, (i) an aggregate
of 3.5 million shares of common stock, (ii) pre-funded
warrants to purchase an
aggregate of 5.5 million shares of common stock and (iii)
Convertible Notes in
an aggregate principal amount of $0.45 million.
Settlement Notes
The Settlement Notes
are convertible at any time, at the holder’s option, into
shares of common
stock at an initial conversion price of $0.20 per share, subject to
certain beneficial ownership limitations (with a maximum
ownership limit of 4.99%). The Settlement Notes mature on December 19,
2020. The terms of the
Settlement Notes are generally the same as the Company’s
other Convertible Notes, except that the Company is required to
make an offer to repurchase, at the holder’s option, the
Settlement Notes at
price in cash equal to 100% of the aggregate principal amount of
the Settlement Notes
plus accrued and unpaid interest, if any, to, but excluding, the
date of repurchase following the consummation by the Company of a
financing transaction, or a series of transactions, resulting in
aggregate gross proceeds to the Company in excess of $7.5
million.
Settlement Warrants
The Settlement Warrants provide for the purchase of up to an
aggregate of 5.5 million shares of common stock at an exercise price of
$0.20 per share, subject to adjustment in certain circumstances,
and expire on June 19, 2025. Exercise of the warrant is subject to certain
additional terms and conditions, including certain beneficial
ownership limitations (with a maximum ownership limit of
4.99%).
18
Results of Operations
Comparison of the Three Months Ended June 30, 2020 and
2019
Research and Development Expenses
During the three months ended June 30, 2020 and 2019, we incurred
$12 thousand and $154 thousand of research and development
expenses, respectively.
Research and development costs decreased due primarily to the
reduction of employee, consultant and preclinical expenses. We
anticipate our direct clinical costs will increase in the second
half of 2020 with the continuation of our Phase I clinical trial of
our most advanced TriKe product candidate, GTB-3550.
Selling, general and administrative expenses
During the three months ended June 30, 2020 and 2019, we incurred
$1.5 million and $2.1 million of selling, general and
administrative expenses,
respectively. The decrease in selling, general and
administrative expenses is primarily attributable the reduction of
payroll and stock compensation expenses.
Interest Expense
Interest expenses were $4.6
million and $0.5 million for the
three months ended June 30, 2020 and 2019,
respectively. The
increase is primarily due to the accrual of default
interest under the Default
Notes.
Comparison of the Six Months Ended June 30, 2020 and
2019
Research and Development Expenses
During the six months ended June 30, 2020 and 2019, we incurred
$336 thousand and $1 million of research and development
expenses, respectively.
Research and development costs decreased due primarily to the
reduction of employee, consultant and preclinical expenses. We
anticipate our direct clinical costs will increase in the second
half of 2020 upon the continuation of our Phase I clinical trial of
our most advanced TriKe product candidate, GTB-3550.
Selling, general and administrative expenses
During the six months ended June 30, 2020 and 2019, we incurred
$2.3 million and $5.3 million of selling, general and
administrative expenses,
respectively. The decrease in selling, general and
administrative expenses is primarily attributable the reduction of
payroll and stock compensation expenses.
Interest Expense
Interest expenses were $5.3
million and $0.9 million for the six
months ended June 30, 2020 and 2019 respectively. The
increase is primarily due to the accrual of default
interest under the Default
Notes..
Liquidity and Capital Resources
The
Company’s current operations have focused on business
planning, raising capital, establishing an intellectual property
portfolio, hiring, and conducting preclinical studies and clinical
trials. The Company does not have any product candidates approved
for sale and has not generated any revenue from product sales. The
Company has sustained operating losses since inception and expects
such losses to continue over the foreseeable future. During the six
months ended June 30, 2020, the Company raised $4.5 million through
a series of issuances of Convertible Notes. We anticipate that cash utilized for
selling, general and administrative expenses will range between $1
and $2 million in the coming quarters, while research and
development expenses will vary depending on clinical activities.
The Company is pursuing several alternatives to address this
situation, including the raising of additional funding through
equity or debt financings. In order to finance existing operations
and pay current liabilities over the next 12 months, the Company
will need to raise an additional $15 million of capital in
2020.
The
financial statements of the Company have been prepared on a
going-concern basis, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of
business. Accordingly, the financial statements do not include any
adjustments that might be necessary should the Company be unable to
continue in existence.
19
The
Company has incurred substantial losses and negative cash flows
from operations since its inception and has an accumulated deficit
of $577 million and cash of $851 thousand as of June 30, 2020. The
Company anticipates incurring additional losses until such time, if
ever, that it can generate significant sales or revenue from
out-licensing of its products currently in development. Substantial
additional financing will be needed by the Company to fund its
operations and to commercially develop its product candidates.
These factors raise substantial doubt about the Company’s
ability to continue as a going concern.
Management
is currently evaluating different strategies to obtain the required
funding for future operations. These strategies may include but are
not limited to: public offerings of equity and/or debt securities,
payments from potential strategic research and development,
licensing and/or marketing arrangements with pharmaceutical
companies. Management has also implemented cost saving efforts,
including reduction in executive salaries and reduced travel.
Management believes that these ongoing and planned financing
endeavors, if successful, will provide adequate financial resources
to continue as a going concern for at least the next six months
from the date the financial statements are issued; however, there
can be no assurance in this regard. If the Company is unable to
secure adequate additional funding, its business, operating
results, financial condition and cash flows may be materially and
adversely affected.
Critical Accounting Policies
We consider the following accounting policies to be critical given
they involve estimates and judgments made by management and are
important for our investors’ understanding of our operating
results and financial condition.
Basis of Consolidation
The consolidated financial statements contained in this
report
include the accounts of GT Biopharma, Inc. and its
subsidiaries. All intercompany
balances and transactions have been eliminated.
Long-Lived Assets
Our long-lived assets include property, plant and equipment,
capitalized costs of filing patent applications and goodwill and
other assets. We
evaluate our long-lived assets for impairment in accordance
with ASC 360, whenever
events or changes in circumstances indicate that the carrying
amount of such assets may not be recoverable. Estimates
of future cash flows and timing of events for evaluating long-lived
assets for impairment are based upon management’s
judgment. If any of
our intangible or long-lived assets are considered to be impaired,
the amount of impairment to be recognized is the excess of the
carrying amount of the assets over its fair
value.
Applicable long-lived assets are amortized or depreciated over the
shorter of their estimated useful lives, the estimated period that
the assets will generate revenue, or the statutory or contractual
term in the case of patents. Estimates
of useful lives and periods of expected revenue generation are
reviewed periodically for appropriateness and are based upon
management’s judgment. Goodwill
and other assets are not amortized.
Certain Expenses and Liabilities
On an ongoing basis, management evaluates its estimates related to
certain expenses and accrued liabilities. We base
our estimates on historical experience and on various other
assumptions that we believe to be reasonable under the
circumstances, the results of which form the basis for making
judgments about the carrying values of liabilities that are not
readily apparent from other sources. Actual
results may differ materially from these estimates under different
assumptions or conditions.
Inflation
We believe that inflation has not had a material adverse impact on
our business or operating results during the periods
presented.
20
Off-balance
Sheet
Arrangements
We have no off-balance sheet arrangements as of June 30,
2020.
Item 3. Quantitative and
Qualitative Disclosures About Market Risk
This company qualifies as a
smaller reporting company, as defined in
17 C.F.R. §229.10(f)(1) and is not required to provide
information by this Item.
Item 4. Controls and
Procedures
Evaluation of Disclosure Controls and Procedures
Our
principal executive officer and principal financial officer
evaluated the effectiveness of our “disclosure controls and
procedures” (as such term is defined in Rules 13a-15(e) and
15d-15(e) of the United States Securities Exchange Act of 1934, as
amended (the “Exchange Act”), as of June 30,
2020. Based on that evaluation we have concluded that
our disclosure controls and procedures were not effective as of
June 30, 2020 as a result of material weaknesses in internal
control over financial reporting due to (i) inadequate segregation
of duties, (ii) risks of executive override and (iii) insufficient
written policies and procedures for accounting and financial
reporting with respect to the requirements and application of both
U.S. GAAP and SEC regulation, in each case, as described in "Item
9A. Controls and Procedures" in the Company's Form 10-K for the
year ended December 31, 2019.
The
Company is taking steps, and intends to take additional steps, to
mitigate the issues identified and implement a functional system of
internal control over financial reporting. Such measures will
include, but not be limited to: hiring of additional employees in
our finance and accounting department; preparation of risk-control
matrices to identify key risks and develop and document policies to
mitigate those risks; and identification and documentation of
standard operating procedures for key financial and SEC reporting
activities.
Changes in Internal Control over Financial Reporting
Except
for the ongoing remediation of the material weaknesses in internal
controls over financial reporting noted above, no changes in our
internal control over financial reporting were made during our most
recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, our internal control over
financial reporting.
PART
II. OTHER
INFORMATION
Item 1. Legal
Proceedings
On
December 24, 2018, the Empery Funds filed in the N.Y. Supreme
Court, Index No. 656408/2018, alleging causes of action against the
Company for Breach of Contract, Liquidated Damages, Damages, and
Indemnification. The claims arose out of a securities purchase
agreement entered into between the Empery Funds and the Company
pursuant to which the Company issued the Original Securities to the
Empery Funds in or around January 2018. On June 19, 2020, the Company and
the Empery Funds,
among others, entered into the Settlement Agreement
resolving all
remaining disputes between the parties pertaining to the
Original Securities.
See “
Part I, Item 2.
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations—“under the caption”
Recent
Developments—Settlement with Empery Funds.”
On
August 28, 2019, a complaint was filed in the Superior Court
of California, County of Los Angeles, West Judicial
District, Santa Monica Courthouse, Unlimited Civil
Division by Jeffrey Lion and Daniel Vallera. Lion and Vallera are
referred to jointly as the “Plaintiffs.” The complaint
was filed against the Company and its subsidiary Oxis Biotech, Inc.
(either of them or jointly, the “Defendant”).
The Plaintiffs allege breach of a license agreement
between the Plaintiffs and the Defendant entered into on
or about September 3, 2015. Lion alleges breach of
a consulting agreement between Lion and the Defendant
entered into on or about September 1, 2015. Vallera alleges breach
of a consulting agreement between Vallera and
the Defendant entered into in or around October, 2018. The
complaint seeks actual damages of $1,670,000, for the fair market
value of the number of shares of the Company’s common
stock that at the time of judgment represent 15,000,000 shares of
such stock as of September 1, 2015, and that the Company issue Lion
the number of common shares the Company’s common stock
that at the time of judgment represent 15,000,000 such shares as of
September 1, 2015.
21
Item 1A. Risk
Factors
Information regarding risk factors appears under
“Risk Factors”
included in Part I. Item 1A. Risk Factors. of our Annual Report on Form 10-K for the year ended December
31, 2019. There have been no material changes from the risk factors
previously disclosed in the above-mentioned periodic
report.
Item 2. Unregistered Sales of
Securities and Use of Proceeds
The Company made the following issuances of its unregistered equity
securities pursuant exemptions contained in Section 4(a)(2) or
3(a)(9) of the Securities Act of 1933, as amended (the
“Securities Act”) and/or Rule 506 of Regulation D
promulgated thereunder that have not previously been
reported:
●
On May 1, 2020, the Company issued
1,086,429 shares of common stock for consulting
services.
●
In
July 2020, the Company issued 1,125,000 shares of common stock upon
conversion of $225,000 aggregate principal amount of Convertible
Notes.
●
On
July 28, 2020, the Company issued a warrant to purchase up to an
aggregate of 1,000,000 shares of common stock at an exercise price
of $0.20 per share, subject to adjustment in certain circumstances.
The warrant was issued as compensation for certain services
provided to the Company.
Item 3. Defaults Upon Senior
Securities.
As of June 30, 2020, convertible notes totaling
approximately $13.2 million are in default.
Item 4. Mine Safety
Disclosures
Not applicable.
Item 5. Other
Information.
Effective
August 11, 2020, the Company and Mr. Cataldo entered into the
Cataldo Agreement with respect to Mr. Cataldo’s continued
employment as Chief Executive Officer of the Company. The Initial
Term of the Cataldo Agreement is three years with the option of
automatic one-year renewals thereafter. Mr. Cataldo will be paid a
cash salary of $30,000 per month, together with customary benefits,
expense reimbursement and the possibility of performance bonuses.
Mr. Cataldo will receive a stock grant equal to ten percent of the
fully diluted shares of common stock of the Company (calculated
with the inclusion of the current stock holdings of Mr. Cataldo)
upon conversion of options, warrants and Convertible Notes in
association with a national markets qualified financing as
consideration for entering into the Cataldo Agreement (with such
stock to vest and be delivered within 30 days after the national
markets qualified financing). Mr. Cataldo will be entitled to
certain additional severance payments and other benefits in
connection with a Change in Control Period Involuntary Termination
or a Non Change in Control Period Involuntary Termination (each as
defined in the Cataldo Agreement) or his resignation as a result of
a Change in Control Period Good Reason or Non Change in Control
Period Good Reason (each as defined in the Cataldo Agreement).
Following the Effective Date, Mr. Cataldo will also continue to
serve as the chairman of the board of the
Company.
Effective
August 11, 2020, the Company and Mr. Weldon entered into the Weldon
Agreement with respect to Mr. Weldon's continued employment as the
Chief Financial Officer of the Company. The Initial Term of the
Weldon Agreement is three years with the option of automatic
one-year renewals thereafter. Mr. Weldon will be paid a cash salary
of $25,000 per month, together with customary benefits, expense
reimbursement and the possibility of performance bonuses. Mr.
Cataldo will receive a stock grant equal to seven percent of the
fully diluted shares of common stock of the Company (calculated
with the inclusion of the current stock holdings of Mr. Weldon)
upon conversion of options, warrants and Convertible Notes in
association with a national markets qualified financing as
consideration for entering into the Weldon Agreement (with such
stock to vest and be delivered within 30 days after the national
markets qualified financing). Mr. Weldon will be entitled to
certain additional severance payments and other benefits in
connection with a Change in Control Period Involuntary Termination
or a Non Change in Control Period Involuntary Termination (each as
defined in the Weldon Agreement) or his registration as a result of
a Changein Control Period Good Reason or Non Change in Control
Period Good Reason (each as defined in the Weldon Agreement).
Following the Effective Date, Mr. Weldon will also continue to
serve as the principal accounting officer and as a director of the
Company.
The summary description of the Employment Agreements set forth
above does not purport to be complete and is qualified in its
entirety by the Employment Agreements, which are filed with this
Quarterly Report on Form 10-Q.
22
Item 6. Exhibits
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Incorporated by
Reference
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Exhibit
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Description
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Herewith
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Form
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Number
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SEC File
No.
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Filing
Date
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Form Securities Purchase Agreement
among GT Biopharma, Inc. and the purchaser named therein (executed
in April/May 2020)
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10-Q
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10.4
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000-08092
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05/15/20
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Form of Registration Rights
Agreement among GT Biopharma, Inc. and the purchaser named therein
(executed in April/May 2020)
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10-Q
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10.5
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000-08092
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05/15/20
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Form of Convertible Note (related
to Securities Purchase Agreement executed in April/May
2020)
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10-Q
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10.6
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000-08092
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05/15/20
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Securities Purchase Agreement,
dated July 7, 2020, among GT Biopharma, Inc. and the purchaser
named therein
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8-K
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10.1
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000-08092
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07/09/20
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Registration Rights Agreement,
dated July 7, 2020, among GT Biopharma, Inc. and the purchaser
named therein
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8-K
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10.3
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000-08092
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07/09/20
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Form of Convertible Note (related
to Securities Purchase Agreement, dated July 7,
2020)
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8-K
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4.1
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000-08092
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07/09/20
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Form of Standstill and Forbearance
Agreement, dated June 23, 2020, between the Company and certain
holders of Convertible Notes
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8-K
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10.1
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000-08092
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06/23/20
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Settlement Agreement, dated June
19, 2020, among GT Biopharma, Inc., Empery Asset Master Ltd.,
Empery Tax Efficient, LP and Empery Tax Efficient II, LP, Anthony
Cataldo and Paul Kessler
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8-K
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10.1
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000-08092
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06/19/20
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Form of Convertible Note, dated
June 19, 2020 (related to Settlement Agreement, dated June 19,
2020)
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8-K
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10.2
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000-08092
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06/19/20
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Form of Pre-Funded Warrant to
Purchase Common Stock, dated June 19, 2020 (related to Settlement
Agreement, dated June 19, 2020)
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8-K
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10.3
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000-08092
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06/19/20
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Employment agreement with Anthony
Cataldo
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X
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Employment agreement with Steven
Weldon
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X
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Certification of Principal
Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
promulgated under the Securities and Exchange Act of 1934, as
amended.
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X
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Certification of Principal
Financial Officer pursuant to Rule 13a-14 and Rule 15d 14(a),
promulgated under the Securities and Exchange Act of 1934, as
amended.
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X
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32.1*
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Certification pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (Chief Executive
Officer).
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X
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32.2*
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Certification pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (Chief Financial
Officer).
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X
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101.INS
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Inline XBRL Instance
Document.
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X
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101.SCH
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Inline XBRL Taxonomy Extension
Schema Document.
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X
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101.CAL
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Inline XBRL Taxonomy Extension
Calculation Linkbase Document.
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X
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101.DEF
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Inline XBRL Taxonomy Extension
Definition Linkbase Document.
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X
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101.LAB
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Inline XBRL Taxonomy Extension
Label Linkbase Document.
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X
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101.PRE
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Inline XBRL Taxonomy Extension
Presentation Linkbase Document.
|
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X
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*
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This certification shall not be deemed “filed” for
purposes of Section 18 of the Exchange Act, or otherwise
subject to the liability of that Section, nor shall it be deemed to
be incorporated by reference into any filing under the Securities
Act or the Exchange Act.
|
23
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
|
Dated:
August 17, 2020
|
GT
Biopharma, Inc.
By: /s/
Anthony
Cataldo
Anthony
Cataldo
Chief
Executive Officer and Chairman of the Board
|
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Dated:
August 17, 2020
|
By: /s/
Steven
Weldon
Steven
Weldon
Chief
Financial Officer
|
24
Exhibit 10.11
EMPLOYMENT
AGREEMENT
This
Employment Agreement (the “Agreement”) is made and
entered into by and among GT Biopharma, Inc. and Anthony J. Cataldo
("Executive") as August 11, 2020 (the "Effective
Date").
WHEREAS, each Company is desirous of employing Executive,
and Executive wishes to be employed by each Company in accordance
with the terms and conditions set forth in this
Agreement.
NOW,
THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND PROMISES
AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT OF WHICH IS
HEREBY ACKNOWLEDGED, IT IS MUTUALLY AGREED AS FOLLOWS:
1. Position and
Duties: Executive shall be employed by each Company as its
Chief Executive Officer ("CEO") reporting to the Board
of Directors of each Company. CEO agrees to devote the
necessary business time, energy and skill to his duties at each
Company, and will be permitted engage in outside consulting and/or
employment provided said services do not materially interfere with
Executive’s obligations to each Company under the terms of
this Agreement. These duties of Executive under this Agreement
shall include all those duties customarily performed by a
CEO as well as providing advice and consultation on
general corporate matters and other projects as may be assigned by
the Company’s Board of Directors on an as needed basis.
During the term of Executive's employment, Executive shall be
permitted to serve on boards of directors of for-profit or
not-for-profit entities provided such service does not adversely
affect the performance of Executive's duties to the Company under
this Agreement, and are not in conflict with the interests of the
Company.
Executive shall be
nominated to stand for election to the Board of Directors of each
Company of its scheduled shareholders meeting so long as Executive
remains as CEO of either Company. As a member of each
Company's Board, Executive shall continue to be subject to the
provisions of each Company's bylaws and all applicable general
corporation laws relative to her position on the Board. In addition
to each Company's bylaws, as a member of the Board, Executive shall
also be subject to the statement of powers, both specific and
general, set forth in each Company's Articles of
Incorporation.
1
2.
Term of Employment: This
Agreement shall remain in effect for a period of three years from
the Effective Date, and thereafter will automatically renew for
successive one year periods unless either party provides ninety
days' prior written notice of termination. In the event either
Company elects to terminate the Agreement, such termination shall
be considered to be an Involuntary Termination, and Executive shall
be provided benefits as provided in this Agreement. Upon the
termination of Executive's employment for any reason, neither
Executive nor the Companies shall have any further obligation or
liability under this Agreement to the other, except as set forth
below.
3.
Compensation: Executive
shall be compensated by the Parent for his services to the
Companies as follows:
(a)
Base Salary: Executive shall
be paid a monthly Base Salary of $360,000.00 per year. The monthly
cash payment will be subject to applicable withholding, in
accordance with the Parent’s normal payroll procedures.
Executive's salary shall be reviewed on at least an annual basis
and may be adjusted as appropriate, but in no event shall it be
reduced to an amount below Executive’s salary then in effect.
In the event of such an adjustment, that amount shall become
Executive's Base Salary. Furthermore, during the term of this
Agreement, in no event shall Executive's compensation be less than
any other officer or employee of either Company or any
subsidiary.
(b)
Benefits: Executive shall
have the right, on the same basis as other senior executives of
either Company, to participate in and to receive benefits under any
of either Company's employee benefit plans, medical insurance
(which extends to Executives immediate family), as such plans may
be modified from time to time, and provided that in no event shall
Executive receive less than (4) four weeks paid vacation per annum,
(6) six paid sick days per annum, and (5) five paid personal days
per annum.
(c)
Performance Bonus: Executive
shall have the opportunity to earn a performance bonus in
accordance with the Parent's Performance Bonus Plan if in effect
(“Target Bonus”); if the Parent does not have a Bonus
Plan in effect at any given time during the term of this Agreement,
then the Parent’s Compensation Committee or Board of
Directors shall have discretion as to determining bonus
compensation for Executive.
(d)
General Grant: Executive (or
an entity or affiliates designated by Executive) shall be granted
10% (calculated with the inclusion of Executive’s stock
holdings) of the fully diluted shares of common stock in the
Company (the “Stock Grant”) upon conversion of options,
warrants and notes in association with a national markets qualified
financing as consideration for entering into this Agreement. Such
stock shall vest and be delivered to Executive within thirty (30)
days following the national markets qualified
financing.
(e)
Expenses: Parent shall
reimburse Executive for reasonable travel, lodging, entertainment
and meal expenses incurred in connection the performance of
services within this Agreement. Executive shall be entitled to fly
Business Class on any flight longer than four (4) hours and receive
full reimbursement for such flight from the Parent.
2
(f)
Travel: Executive shall
travel as necessary from time to time to satisfy his performance
and responsibilities under this Agreement.
4.
Effect of Termination of
Employment:
(a)
Voluntary Termination: In
the event of Executive's voluntary termination from employment with
the Companies, other than for Good Reason pursuant to Sections 5(d)
or 5(e), Executive shall be entitled to no compensation or benefits
from the Companies other than those earned under Section 3 through
the date of his termination and, in the case of each stock option,
restricted stock award or other Company stock-based award granted
to Executive, the extent to which such awards are vested through
the date of his termination. In the event that Executive's
employment terminates as a result of his death or disability,
Executive shall be entitled to a pro-rata share of the
performance-based bonus for which Executive is then-eligible
pursuant to Section 3(c) (presuming performance meeting, but not
exceeding, target performance goals) in addition to all
compensation and benefits earned under Section 3 through the date
of termination.
(b)
Termination for Cause: If
Executive's employment is terminated by the Companies for Cause,
Executive shall be entitled to no compensation or benefits from the
Companies other than those earned under Section 3 through the date
of his termination and, in the case of each stock option,
restricted stock award or other Company stock-based award granted
to Executive, the extent to which such awards are vested through
the date of his termination. In the event that the Companies
terminate Executive's employment for Cause, the Companies shall
provide written notice to Executive of that fact prior to, or
concurrently with, the termination of employment. Failure to
provide written notice that the Companies contend that the
termination is for Cause shall constitute a waiver of any
contention that the termination was for Cause, and the termination
shall be irrebuttably presumed to be an Involuntary
Termination.
(c)
Involuntary Termination During
Change in Control Period: If Executive's employment with the
Companies terminates as a result of a Change in Control Period
Involuntary Termination, then, in addition to any other benefits
described in this Agreement, Executive shall receive the
following:
(i)
all compensation and benefits earned under Section 3 through the
date of Executive's termination of employment;
(ii)
a lump sum payment equivalent to the greater of (a) the bonus paid
or payable to Executive for the year immediately prior to the year
in which the Change in Control occurred and (b) the Target Bonus
under the Performance Bonus Plan in effect immediately prior to the
year in which the Change in Control occurs;
(iii)
a lump sum payment equivalent to the remaining Base Salary (as it
was in effect immediately prior to the Change in Control) due
Executive from the date of Involuntary Termination to the end of
the term of this Agreement or one-half of Executive’s Base
Salary then in effect, whichever is the greater; and
3
(iv)
reimbursement for the cost of medical, life, disability insurance
coverage at a level equivalent to that provided by the Companies
for a period expiring upon the earlier of: (a) one year; or (b) the
time Executive begins alternative employment wherein said insurance
coverage is available and offered to Executive. It shall be the
obligation of Executive to inform the Parent that new employment
has been obtained.
Unless
otherwise agreed to by Executive at the time of Involuntary
Termination, the amount payable to Executive under subsections (i)
through (iii), above, shall be paid to Executive in a lump sum
within thirty (30) days following Executive's termination of
employment. The amounts payable under subsection (iv) shall be paid
monthly during the reimbursement period.
(d)
Termination Without Cause in the
Absence of Change in Control: In the event that Executive's
employment terminates as a result of a Non Change in Control Period
Involuntary Termination, then Executive shall receive the following
benefits:
(i)
all compensation and benefits earned under Section 3 through the
date of the Executive's termination of employment;
(ii)
a lump sum payment equivalent to the greater of (a) the bonus paid
or payable to Executive for the year immediately prior to the year
in which the Change in Control occurred and (b) the Target Bonus
under the Performance Bonus Plan in effect immediately prior to the
year in which the Change in Control occurs;
(iii)
a lump sum payment equivalent to the remaining Base Salary (as it
was in effect immediately prior to the Change in Control) due
Executive to the end of the term of this Agreement or one-half of
Executive’s Base Salary then in effect, whichever is the
greater; and
(iv)
reimbursement for the cost of medical, life and disability
insurance coverage at a level equivalent to that provided by the
Companies for a period of the earlier of: (a) one year; or (b) the
time Executive begins alternative employment wherein said insurance
coverage is available and offered to Executive. It shall be the
obligation of Executive to inform the Parent that new employment
has been obtained.
Unless
otherwise agreed to by Executive, the amount payable to Executive
under subsections (i) through (iii) above shall be paid to
Executive in a lump sum within thirty (30) days following
Executive's termination of employment. The amounts payable under
subsection (iv) shall be paid monthly during the reimbursement
period.
4
(e)
Resignation with Good Reason During
Change in Control Period: If Executive resigns his
employment with the Companies as a result of a Change in Control
Period Good Reason, then, in addition to any other benefits
described in this Agreement, Executive shall receive the
following.
(i)
all compensation and benefits earned under Section 3 through the
date of the Executive's termination of employment;
(ii)
a lump sum payment equivalent to the greater of (a) the bonus paid
or payable to Executive for the year immediately prior to the year
in which the Change in Control occurred and (b) the Target Bonus
under the Performance Bonus Plan in effect immediately prior to the
year in which the Change in Control occurs;
(iii)
a lump sum payment equivalent to the remaining Base Salary (as it
was in effect immediately prior to the Change in Control) due
Executive from the date of Involuntary Termination to the end of
the term of this Agreement or one-half of Executive’s Base
Salary then in effect, whichever is the greater; and
(iv)
reimbursement for the cost of medical, life and disability
insurance coverage at a level equivalent to that provided by the
Companies for a period of the earlier of: (a) one year; or (b) the
time Executive begins alternative employment wherein said insurance
coverage is available and offered to Executive. It shall be the
obligation of Executive to inform the Parent that new employment
has been obtained.
Unless
otherwise agreed to by Executive, the amount payable to Executive
under subsections (i) through (iii) above shall be paid to
Executive in a lump sum within thirty (30) days following
the
Executive's
termination of employment. The amounts payable under subsection
(iv) shall be paid monthly during the reimbursement
period.
(f)
Resignation with Good Reason in the
Absence of Change in Control: If Executive resigns his
employment with the Companies as a result of a Non Change in
Control Period Good Reason, then, in addition to any other benefits
described in this Agreement, Executive shall receive the
following.
(i)
all compensation and benefits earned under Section 3 through the
date of the Executive's termination of employment;
(ii)
a lump sum payment equivalent to the greater of (a) the bonus paid
or payable to Executive for the year immediately prior to the year
in which the Change in Control occurred and (b) the Target Bonus
under the Performance Bonus Plan in effect immediately prior to the
year in which the Change in Control occurs;
(iii)
a lump sum payment equivalent to the remaining Base Salary (as it
was in effect immediately prior to the Change in Control) due
Executive from the date of Involuntary Termination to the end of
the term of this Agreement or one-half of Executive’s Base
Salary then in effect, whichever is the greater; and
5
(iv)
reimbursement for the cost of medical, life and disability
insurance coverage at a level equivalent to that provided by the
Companies for a period of the earlier of: (a) one year; or (b) the
time Executive begins alternative employment wherein said insurance
coverage is available and offered to Executive. It shall be the
obligation of Executive to inform the Parent that new employment
has been obtained.
Unless
otherwise agreed to by Executive, the amount payable to Executive
under subsections (i) through (iii) above shall be paid to
Executive in a lump sum within thirty (30) days following
the
Executive's
termination of employment. The amounts payable under subsection
(iv) shall be paid monthly during the reimbursement
period.
(g)
Resignation from Positions:
In the event that Executive's employment with the Companies is
terminated for any reason, on the effective date of the termination
Executive shall simultaneously resign from each position he holds
on the Board and/or the Board of Directors of any of the
Companies’ affiliated entities and any position Executive
holds as an officer of the Companies or any of the Companies’
affiliated entities.
5.
Certain Definitions: For the
purpose of this Agreement, the following capitalized terms shall
have the meanings set forth below:
(a)
"Cause" shall mean any of the following occurring on or after the
date of this Agreement :
(i)
Executive's theft, dishonesty, breach of fiduciary duty for
personal profit, or falsification of any employment or Company
record;
(ii)
Executive's willful violation of any law, rule, or regulation
(other than traffic violations, misdemeanors or similar offenses)
or final cease-and-desist order, in each case that involves moral
turpitude;
(iii)
any material breach by Executive of either Company's Code of
Professional Conduct, which breach shall be deemed "material" if it
results from an intentional act by Executive and has a material
detrimental effect on either Company's reputation or business;
or
(iv)
any material breach by Executive of this Agreement, which breach,
if curable, is not cured within thirty (30) days following written
notice of such breach from the applicable Company.
(b)
"Change in Control" shall mean the occurrence of any of the
following events:
(i)
the Parent is party to a merger or consolidation which results in
the holders of the voting securities of the Parent outstanding
immediately prior thereto failing to retain immediately after such
merger or consolidation direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of
the securities entitled to vote generally in the election of
directors of the Parent or the surviving entity outstanding
immediately after such merger of consolidation.
6
(ii)
a change in the composition of the Board of Directors of the Parent
occurring within a period of twenty-four (24) consecutive months,
as a result of which fewer than a majority of the directors are
Incumbent Directors;
(iii)
effectiveness of an agreement for the sale, lease or disposition by
the Parent of all or substantially all of the Parent’s
assets; or
(iv)
a liquidation or dissolution of the Parent.
(c)
"Change in Control Period" shall mean the period commencing on
the
date
sixty (60) days prior to the date of consummation of the Change of
Control
and
ending one hundred eighty (180) days following consummation of the
Change of Control.
(d)
"Change in Control Period Good Reason" shall mean Executive's
resignation for any of the following conditions, first occurring
during a Change in Control Period and occurring without Executive's
written consent:
(i)
a decrease in Executive's Base Salary, a decrease in Executive's
Target Bonus (as a multiple of Executive's Base Salary) under the
Performance Bonus Plan, or a decrease in employee benefits, in each
case other than as part of any across-the-board reduction applying
to all senior executives of either Company which does not have
adverse effect on the Executive disproportionate to similarly
situated executives of an acquirer;
(ii)
a material, adverse change in Executive's title, authority,
responsibilities, as measured against Executive's title, authority,
responsibilities or duties immediately prior to such
change.
(iii)
a change in the Executive's ability to maintain his principal
workplace in Beverly Hills, CA;
(iv)
any material breach by either Company of any provision of this
Agreement, which breach is not cured within thirty (30) days
following written notice of such breach from
Executive;
(v)
any failure of the Parent to obtain the assumption of this
Agreement by any of the Parent’s successors or assigns by
purchase, merger, consolidation, sale of assets or
otherwise.
(vi)
any purported termination of Executive's employment for "material
breach of contract" which is purportedly effected without providing
the "cure" period, if applicable, described in Section 5(iv),
above.
7
The
effective date of any resignation from employment by the Executive
for Change in Control Period Good Reason shall be the date of
notification to the Parent of such resignation from employment by
the Executive.
(e)
"Non Change in Control Period Good Reason" shall mean the
Executive's resignation within six months of any of the following
conditions first occurring outside of a Change in Control Period
and occurring without Executive's written consent:
(i)
a decrease in Executive's total cash compensation opportunity
(adding Base Salary and Target Bonus) of greater than ten percent
(10%);
(ii)
a material, adverse change in Executive's title, authority,
responsibilities or duties, as measured against Executive's title,
authority, responsibilities or duties immediately prior to such
change;
(iii)
any material breach by either Company of a provision of this
Agreement, which breach is not cured within thirty (30) days
following written notice of such breach from
Executive;
(iv)
a change in the Executive's ability to maintain his principal
workplace in Beverly Hills, CA;
(v)
any purported termination of Executive's employment for "material
breach of contract" which is purportedly effected without providing
the "cure" period, if applicable, described in Section 5(iv),
above.
The
effective date of any resignation from employment by the Executive
for Non Change in Control Period Good Reason shall be the date of
notification to the Parent of such resignation from employment by
the Executive.
(f)
"Incumbent Directors" shall mean members of the Board who either
(a) are members of the Board as of the date hereof, or (b) are
elected, or nominated for election, to the Board with the
affirmative vote of at least a majority of the Incumbent Directors
at the time of such election or nomination (but shall not include
an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of
members of the Board).
(g)
"Change in Control Period Involuntary Termination" shall mean
during a Change in Control Period the termination by the Companies
of Executive's employment with the Companies for any reason,
including termination as a result of death or disability of
Executive, but excluding termination for Cause. The effective date
of any Change in Control Period Involuntary Termination shall be
the date of notification to the Executive of the termination of
employment by the Companies; or
8
(h)
"Non Change in Control Period Involuntary Termination" shall mean
outside a Change in Control Period the termination by the Companies
of Executive's employment with the Companies for any reason,
including termination by as a result of death or disability of
Executive, but excluding termination for Cause. The effective date
of any Non Change in Control Period Involuntary Termination shall
be the date of notification to the Executive of the termination of
employment by the Companies.
6.
Dispute Resolution: In the
event of any dispute or claim relating to or arising out of this
Agreement (including, but not limited to, any claims of breach of
contract, wrongful termination or age, sex, race or other
discrimination), Executive and the Companies agree that all such
disputes shall be fully addressed and finally resolved by binding
arbitration conducted by the American Arbitration Association in
New York City, in the State of New York in accordance with its
National Employment Dispute Resolution rules. In connection with
any such arbitration, the Parent shall bear all costs not otherwise
borne by a plaintiff in a court proceeding. Each Company agrees
that any decisions of the Arbitration Panel will be binding and
enforceable in any state that either Company conducts the operation
of its business.
7.
Attorneys' Fees: The
prevailing party shall be entitled to recover from the losing party
its attorneys' fees and costs incurred in any action brought to
enforce any right arising out of this Agreement.
8.
Restrictive
Covenants:
(a)
Nondisclosure. During the
term of this Agreement and following termination of the Executive's
employment with the Companies, Executive shall not divulge,
communicate, use to the detriment of the Companies or for the
benefit of any other person or persons, or misuse in any way, any
Confidential Information (as hereinafter defined) pertaining to the
business of the Companies. Any Confidential Information or data now
or hereafter acquired by the Executive with respect to the business
of the Companies (which shall include, but not be limited to,
confidential information concerning each Company's financial
condition, prospects, technology, customers, suppliers, methods of
doing business and promotion of each Company's products and
services) shall be deemed a valuable, special and unique asset of
each Company that is received by the Executive in confidence and as
a fiduciary. For purposes of this Agreement "Confidential
Information" means information disclosed to the Executive or known
by the Executive as a consequence of or through his employment by
each Company (including information conceived, originated,
discovered or developed by the Executive) prior to or after the
date hereof and not generally known or in the public domain, about
each Company or its business. Notwithstanding the foregoing,
nothingnone of the
following information shall be treated as Confidential
Information: (i) information which is known to the public at the
time of disclosure to Executive, (ii) information which becomes
known to the public by publication or otherwise after disclosure to
Executive, (iii) information which Executive can show by written
records was in his possession at the time of disclosure to
Executive, (iv) information which was rightfully received by
Executive from a third party without violating any non-disclosure
obligation owed to or in favor of the Companies, or (v) information
which was developed by or on behalf of Executive independently of
any disclosure hereunder as shown by written records.
Nothing herein shall be deemed to restrict
the Executive from disclosing Confidential Information to the
extent required by law or by any court.
9
(b)
Non-Competition. The
Executive shall not, while employed by either Company and for a
period of one year following the date of termination for Cause, or
resignation other than for Good Reason pursuant to Sections 5(d) or
5(e), engage or participate, directly or indirectly (whether as an
officer, director, employee, partner, consultant, or otherwise), in
any business that manufactures, markets or sells products that
directly compete with any product of either Company that is
significant to such Company's business based on sales and/or
profitability of any such product as of the date of termination of
Executive's employment with such Company. Nothing herein shall
prohibit Executive from being a passive owner of less than 5% stock
of any entity directly engaged in a competing
business.
(c)
Property Rights; Assignment of
Inventions. With respect to information, inventions and
discoveries or any interest in any copyright and/or other property
right developed, made or conceived of by Executive, either alone or
with others, during his employment by each Company arising out of
such employment and pertinent to any field of business or research
in which, during such employment, each Company is engaged or (if
such is known to or ascertainable by Executive) is considering
engaging, Executive hereby agrees:
(i)
that all such information, inventions and discoveries or any
interest in any copyright and/or other property right, whether or
not patented or patentable, shall be and remain the exclusive
property of the Companies;
(ii)
to disclose promptly to an authorized representative of the Parent
all such information, inventions and discoveries or any copyright
and/or other property right and all information in Executive's
possession as to possible applications and uses
thereof;
(iii)
not to file any patent application relating to any such invention
or discovery except with the prior written consent of an authorized
officer of the Parent (other than Executive);
(iv)
that Executive hereby waives and releases any and all rights
Executive may have in and to such information, inventions and
discoveries, and hereby assigns to Executive and/or its nominees
all of Executive's right, title and interest in them, and all
Executive's right, title and interest in any patent, patent
application, copyright or other property right based thereon.
Executive hereby irrevocably designates and appoints the Parent and
each of its duly authorized officers and agents as his agent and
attorney-in-fact to act for his and on his behalf and in his stead
to execute and file any document and to do all other lawfully
permitted acts to further the prosecution, issuance and enforcement
of any such patent, patent application, copyright or other property
right with the same force and effect as if executed and delivered
by Executive; and
(v)
at the request of the Parent, and without expense to Executive, to
execute such documents and perform such other acts as the Parent
deems necessary or appropriate, for the Companies to obtain patents
on such inventions in a jurisdiction or jurisdictions designated by
the Parent, and to assign to the Companies or their respective
designees such inventions and any and all patent applications and
patents relating thereto.
10
9.
General:
(a)
Successors and Assigns: The
provisions of this Agreement shall inure to the benefit of and be
binding upon the Companies, Executive and each and all of their
respective heirs, legal representatives, successors and assigns.
The duties, responsibilities and obligations of Executive under
this Agreement shall be personal and not assignable or delegable by
Executive in any manner whatsoever to any person, corporation,
partnership, firm, company, joint venture or other entity.
Executive may not assign, transfer, convey, mortgage, pledge or in
any other manner encumber the compensation or other benefits to be
received by his or any rights which he may have pursuant to the
terms and provisions of this Agreement.
(b)
Amendments; Waivers: No
provision of this Agreement shall be modified, waived or discharged
unless the modification, waiver or discharge is agreed to in
writing and signed by Executive and by an authorized officer of the
Parent (other than Executive). No waiver by either party of any
breach of, or of compliance with, any condition or provision of
this Agreement by the other party shall be considered a waiver of
any other condition or provision or of the same condition or
provision at another time.
(c)
Notices: Any notices to be
given pursuant to this Agreement by either party may be effected by
personal delivery or by overnight delivery with receipt requested.
Mailed notices shall be addressed to the parties at the addresses
stated below, but each party may change its or his/her address by
written notice to the other in accordance with this subsection (c).
Mailed notices to Executive shall be addressed as
follows:
Anthony
J. Cataldo
E-mail:
ajc@gtbiopharma.com
Mailed
notices to the Companies shall be addressed as
follows:
GT Biopharma,
Inc.
9350
Wilshire Blvd., Suite 203
Beverly
Hills, CA 90212
(d)
Entire Agreement: This
Agreement constitutes the entire employment agreement among
Executive and the Companies regarding the terms and conditions of
his employment, with the exception of (a) the agreement described
in Section 7 and (b) any stock option, restricted stock or other
Company stock-based award agreements among Executive and the
Companies to the extent not modified by this Agreement. This
Agreement (including the other documents referenced in the previous
sentence) supersedes all prior negotiations, representations or
agreements among Executive and the Companies, whether written or
oral, concerning Executive's employment by the
Companies.
11
(e)
Withholding Taxes: All
payments made under this Agreement shall be subject to reduction to
reflect taxes required to be withheld by law.
(f)
Counterparts: This Agreement
may be executed by the Companies and Executive in counterparts,
each of which shall be deemed an original and which together shall
constitute one instrument.
(g)
Headings: Each and all of
the headings contained in this Agreement are for reference purposes
only and shall not in any manner whatsoever affect the construction
or interpretation of this Agreement or be deemed a part of this
Agreement for any purpose whatsoever.
(h)
Savings Provision: To the
extent that any provision of this Agreement or any paragraph, term,
provision, sentence, phrase, clause or word of this Agreement shall
be found to be illegal or unenforceable for any reason, such
paragraph, term, provision, sentence, phrase, clause or word shall
be modified or deleted in such a manner as to make this Agreement,
as so modified, legal and enforceable under applicable laws. The
remainder of this Agreement shall continue in full force and
effect.
(i)
Construction: The language
of this Agreement and of each and every paragraph, term and
provision of this Agreement shall, in all cases, for any and all
purposes, and in any and all circumstances whatsoever be construed
as a whole, according to its fair meaning, not strictly for or
against Executive or the Companies, and with no regard whatsoever
to the identity or status of any person or persons who drafted all
or any portion of this Agreement.
(j)
Further Assurances: From
time to time, at the Companies' request and without further
consideration, Executive shall execute and deliver such additional
documents and take all such further action as reasonably requested
by the Companies to be necessary or desirable to make effective, in
the most expeditious manner possible, the terms of this Agreement
and to provide adequate assurance of Executive's due performance
hereunder.
(k) Governing Law: Executive
and the Companies agree that this Agreement shall be interpreted in
accordance with and governed by the laws of the State of
Delaware.
(l)
Board Approval: Each Company
warrants to Executive that the Board of Directors of such Company
has ratified and approved this Agreement, and that the Parent will
cause the appropriate disclosure filing to be made with the
Securities and Exchange Commission in a timely manner.
12
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year written below.
EXECUTIVE:
Date:
August 11, 2020
/s/Anthony J.
Cataldo
Anthony
J. Cataldo
GT BIOPHARMA, INC.
Date:
August 11, 2020
/s/ Steve
Weldon
Chief
Financial Officer
13
Exhibit 10.12
EMPLOYMENT
AGREEMENT
This
Employment Agreement (the “Agreement”) is made and
entered into by and among GT Biopharma, Inc. and Steven Weldon
("Executive") as of August 11, 2020 (the "Effective
Date").
WHEREAS, each Company is desirous of employing Executive,
and Executive wishes to be employed by each Company in accordance
with the terms and conditions set forth in this
Agreement.
NOW,
THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND PROMISES
AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT OF WHICH IS
HEREBY ACKNOWLEDGED, IT IS MUTUALLY AGREED AS FOLLOWS:
1.
Position and Duties:
Executive shall be employed by the Company as it’s Chief
Financial Officer ("CFO") reporting to the Company's Board of
Directors. CFO agrees to devote the necessary business time, energy
and skill to his duties at each Company, and will be permitted
engage in outside consulting and/or employment provided said
services do not materially interfere with Executive’s
obligations to each Company under the terms of this Agreement.
These duties of Executive under this Agreement shall include all
those duties customarily performed by a CFO as well as providing
advice and consultation on general corporate matters and other
projects as may be assigned by the Company’s Board of
Directors on an as needed basis. During the term of Executive's
employment, Executive shall be permitted to serve on boards of
directors of for-profit or not-for-profit entities provided such
service does not adversely affect the performance of Executive's
duties to the Company under this Agreement, and are not in conflict
with the interests of the Company.
2.
Term of Employment: This
Agreement shall remain in effect for a period of three years from
the Effective Date, and thereafter will automatically renew for
successive one year periods unless either party provides ninety
days' prior written notice of termination. In the event either
Company elects to terminate the Agreement, such termination shall
be considered to be an Involuntary Termination, and Executive shall
be provided benefits as provided in this Agreement. Upon the
termination of Executive's employment for any reason, neither
Executive nor the Companies shall have any further obligation or
liability under this Agreement to the other, except as set forth
below.
3.
Compensation: Executive
shall be compensated by the Parent for his services to the
Companies as follows:
(a)
Base Salary: Executive shall
be paid a monthly Base Salary of $300,000.00 per year. The monthly
cash payment will be subject to applicable withholding, in
accordance with the Parent’s normal payroll procedures.
Executive's salary shall be reviewed on at least an annual basis
and may be adjusted as appropriate, but in no event shall it be
reduced to an amount below Executive’s salary then in effect.
In the event of such an adjustment, that amount shall become
Executive's Base Salary. Furthermore, during the term of this
Agreement, in no event shall Executive's compensation be less than
any other officer or employee of either Company or any
subsidiary.
1
(b)
Benefits: Executive shall
have the right, on the same basis as other senior executives of
either Company, to participate in and to receive benefits under any
of either Company's employee benefit plans, medical insurance, as
such plans may be modified from time to time, and provided that in
no event shall Executive receive less than (4) four weeks paid
vacation per annum, (6) six paid sick days per annum, and (5) five
paid personal days per annum.
(c)
Performance Bonus: Executive
shall have the opportunity to earn a performance bonus in
accordance with the Parent's Performance Bonus Plan if in effect
(“Target Bonus”); if the Parent does not have a Bonus
Plan in effect at any given time during the term of this Agreement,
then the Parent’s Compensation Committee or Board of
Directors shall have discretion as to determining bonus
compensation for Executive.
(d)
General Grant: Executive (or
an entity or affiliates designated by Executive) shall be granted
7% (calculated with the inclusion of Executive’s stock
holdings) of the fully diluted shares of common stock in the
Company (the “Stock Grant”) upon conversion of options,
warrants and notes in association with a national markets qualified
financing as consideration for entering into this Agreement. Such
stock shall vest and be delivered to Executive within thirty (30)
days following the national markets qualified
financing.
(e) Expenses: Parent shall reimburse
Executive for reasonable travel, lodging, entertainment and meal
expenses incurred in connection the performance of services within
this Agreement. Executive shall be entitled to fly Business Class
on any flight longer than four (4) hours and receive full
reimbursement for such flight from the Parent.
(f) Travel: Executive shall
travel as necessary from time to time to satisfy his performance
and responsibilities under this Agreement.
4.
Effect of Termination of
Employment:
(a)
Voluntary Termination: In
the event of Executive's voluntary termination from employment with
the Companies, other than for Good Reason pursuant to Sections 5(d)
or 5(e), Executive shall be entitled to no compensation or benefits
from the Companies other than those earned under Section 3 through
the date of his termination and, in the case of each stock option,
restricted stock award or other Company stock-based award granted
to Executive, the extent to which such awards are vested through
the date of his termination. In the event that Executive's
employment terminates as a result of his death or disability,
Executive shall be entitled to a pro-rata share of the
performance-based bonus for which Executive is then-eligible
pursuant to Section 3(c) (presuming performance meeting, but not
exceeding, target performance goals) in addition to all
compensation and benefits earned under Section 3 through the date
of termination.
2
(b)
Termination for Cause: If
Executive's employment is terminated by the Companies for Cause,
Executive shall be entitled to no compensation or benefits from the
Companies other than those earned under Section 3 through the date
of his termination and, in the case of each stock option,
restricted stock award or other Company stock-based award granted
to Executive, the extent to which such awards are vested through
the date of his termination. In the event that the Companies
terminate Executive's employment for Cause, the Companies shall
provide written notice to Executive of that fact prior to, or
concurrently with, the termination of employment. Failure to
provide written notice that the Companies contend that the
termination is for Cause shall constitute a waiver of any
contention that the termination was for Cause, and the termination
shall be irrebuttably presumed to be an Involuntary
Termination.
(c)
Involuntary Termination During
Change in Control Period: If Executive's employment with the
Companies terminates as a result of a Change in Control Period
Involuntary Termination, then, in addition to any other benefits
described in this Agreement, Executive shall receive the
following:
(i)
all compensation and benefits earned under Section 3 through the
date of Executive's termination of employment;
(ii)
a lump sum payment equivalent to the greater of (a) the bonus paid
or payable to Executive for the year immediately prior to the year
in which the Change in Control occurred and (b) the Target Bonus
under the Performance Bonus Plan in effect immediately prior to the
year in which the Change in Control occurs;
(iii)
a lump sum payment equivalent to the remaining Base Salary (as it
was in effect immediately prior to the Change in Control) due
Executive from the date of Involuntary Termination to the end of
the term of this Agreement or one-half of Executive’s Base
Salary then in effect, whichever is the greater; and
(iv)
reimbursement for the cost of medical, life, disability insurance
coverage at a level equivalent to that provided by the Companies
for a period expiring upon the earlier of: (a) one year; or (b) the
time Executive begins alternative employment wherein said insurance
coverage is available and offered to Executive. It shall be the
obligation of Executive to inform the Parent that new employment
has been obtained.
Unless
otherwise agreed to by Executive at the time of Involuntary
Termination, the amount payable to Executive under subsections (i)
through (iii), above, shall be paid to Executive in a lump sum
within thirty (30) days following Executive's termination of
employment. The amounts payable under subsection (iv) shall be paid
monthly during the reimbursement period.
3
(d)
Termination Without Cause in the
Absence of Change in Control: In the event that Executive's
employment terminates as a result of a Non Change in Control Period
Involuntary Termination, then Executive shall receive the following
benefits:
(i)
all compensation and benefits earned under Section 3 through the
date of the Executive's termination of employment;
(ii)
a lump sum payment equivalent to the greater of (a) the bonus paid
or payable to Executive for the year immediately prior to the year
in which the Change in Control occurred and (b) the Target Bonus
under the Performance Bonus Plan in effect immediately prior to the
year in which the Change in Control occurs;
(iii)
a lump sum payment equivalent to the remaining Base Salary (as it
was in effect immediately prior to the Change in Control) due
Executive to the end of the term of this Agreement or one-half of
Executive’s Base Salary then in effect, whichever is the
greater; and
(iv)
reimbursement for the cost of medical, life and disability
insurance coverage at a level equivalent to that provided by the
Companies for a period of the earlier of: (a) one year; or (b) the
time Executive begins alternative employment wherein said insurance
coverage is available and offered to Executive. It shall be the
obligation of Executive to inform the Parent that new employment
has been obtained.
Unless
otherwise agreed to by Executive, the amount payable to Executive
under subsections (i) through (iii) above shall be paid to
Executive in a lump sum within thirty (30) days following
Executive's termination of employment. The amounts payable under
subsection (iv) shall be paid monthly during the reimbursement
period.
(e)
Resignation with Good Reason During
Change in Control Period: If Executive resigns his
employment with the Companies as a result of a Change in Control
Period Good Reason, then, in addition to any other benefits
described in this Agreement, Executive shall receive the
following.
(i)
all compensation and benefits earned under Section 3 through the
date of the Executive's termination of employment;
(ii)
a lump sum payment equivalent to the greater of (a) the bonus paid
or payable to Executive for the year immediately prior to the year
in which the Change in Control occurred and (b) the Target Bonus
under the Performance Bonus Plan in effect immediately prior to the
year in which the Change in Control occurs;
(iii)
a lump sum payment equivalent to the remaining Base Salary (as it
was in effect immediately prior to the Change in Control) due
Executive from the date of Involuntary Termination to the end of
the term of this Agreement or one-half of Executive’s Base
Salary then in effect, whichever is the greater; and
4
(iv)
reimbursement for the cost of medical, life and disability
insurance coverage at a level equivalent to that provided by the
Companies for a period of the earlier of: (a) one year; or (b) the
time Executive begins alternative employment wherein said insurance
coverage is available and offered to Executive. It shall be the
obligation of Executive to inform the Parent that new employment
has been obtained.
Unless
otherwise agreed to by Executive, the amount payable to Executive
under subsections (i) through (iii) above shall be paid to
Executive in a lump sum within thirty (30) days following
the
Executive's
termination of employment. The amounts payable under subsection
(iv) shall be paid monthly during the reimbursement
period.
(f)
Resignation with Good Reason in the
Absence of Change in Control: If Executive resigns his
employment with the Companies as a result of a Non Change in
Control Period Good Reason, then, in addition to any other benefits
described in this Agreement, Executive shall receive the
following.
(i)
all compensation and benefits earned under Section 3 through the
date of the Executive's termination of employment;
(ii)
a lump sum payment equivalent to the greater of (a) the bonus paid
or payable to Executive for the year immediately prior to the year
in which the Change in Control occurred and (b) the Target Bonus
under the Performance Bonus Plan in effect immediately prior to the
year in which the Change in Control occurs;
(iii) a lump sum payment equivalent to the remaining Base Salary
(as it was in effect immediately prior to the Change in Control)
due Executive from the date of Involuntary Termination to the end
of the term of this Agreement or one-half of Executive’s Base
Salary then in effect, whichever is the greater; and
(iv)
reimbursement for the cost of medical, life and disability
insurance coverage at a level equivalent to that provided by the
Companies for a period of the earlier of: (a) one year; or (b) the
time Executive begins alternative employment wherein said insurance
coverage is available and offered to Executive. It shall be the
obligation of Executive to inform the Parent that new employment
has been obtained.
Unless
otherwise agreed to by Executive, the amount payable to Executive
under subsections (i) through (iii) above shall be paid to
Executive in a lump sum within thirty (30) days following
the Executive's
termination of employment. The amounts payable under subsection
(iv) shall be paid monthly during the reimbursement
period.
5
(g)
Resignation from Positions:
In the event that Executive's employment with the Companies is
terminated for any reason, on the effective date of the termination
Executive shall simultaneously resign from each position he holds
on the Board and/or the Board of Directors of any of the
Companies’ affiliated entities and any position Executive
holds as an officer of the Companies or any of the Companies’
affiliated entities.
5.
Certain Definitions: For the
purpose of this Agreement, the following capitalized terms shall
have the meanings set forth below:
(a)
"Cause" shall mean any of the following occurring on or after the
date of this Agreement :
(i)
Executive's theft, dishonesty, breach of fiduciary duty for
personal profit, or falsification of any employment or Company
record;
(ii)
Executive's willful violation of any law, rule, or regulation
(other than traffic violations, misdemeanors or similar offenses)
or final cease-and-desist order, in each case that involves moral
turpitude;
(iii)
any material breach by Executive of either Company's Code of
Professional Conduct, which breach shall be deemed "material" if it
results from an intentional act by Executive and has a material
detrimental effect on either Company's reputation or business;
or
(iv)
any material breach by Executive of this Agreement, which breach,
if curable, is not cured within thirty (30) days following written
notice of such breach from the applicable Company.
(b)
"Change in Control" shall mean the occurrence of any of the
following events:
(i)
the Parent is party to a merger or consolidation which results in
the holders of the voting securities of the Parent outstanding
immediately prior thereto failing to retain immediately after such
merger or consolidation direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of
the securities entitled to vote generally in the election of
directors of the Parent or the surviving entity outstanding
immediately after such merger of consolidation.
(ii)
a change in the composition of the Board of Directors of the Parent
occurring within a period of twenty-four (24) consecutive months,
as a result of which fewer than a majority of the directors are
Incumbent Directors;
(iii)
effectiveness of an agreement for the sale, lease or disposition by
the Parent of all or substantially all of the Parent’s
assets; or
(iv)
a liquidation or dissolution of the Parent.
(c)
"Change in Control Period" shall mean the period commencing on the
date sixty (60) days prior to the date of consummation of the
Change of Control and ending one hundred eighty (180) days
following consummation of the Change of Control.
6
(d)
"Change in Control Period Good Reason" shall mean Executive's
resignation for any of the following conditions, first occurring
during a Change in Control Period and occurring without Executive's
written consent:
(i)
a decrease in Executive's Base Salary, a decrease in Executive's
Target Bonus (as a multiple of Executive's Base Salary) under the
Performance Bonus Plan, or a decrease in employee benefits, in each
case other than as part of any across-the-board reduction applying
to all senior executives of either Company which does not have
adverse effect on the Executive disproportionate to similarly
situated executives of an acquirer;
(ii)
a material, adverse change in Executive's title, authority,
responsibilities, as measured against Executive's title, authority,
responsibilities or duties immediately prior to such
change.
(iii)
a change in the Executive's ability to maintain his principal
workplace in Tampa, FL;
(iv)
any material breach by either Company of any provision of this
Agreement, which breach is not cured within thirty (30) days
following written notice of such breach from
Executive;
(v)
any failure of the Parent to obtain the assumption of this
Agreement by any of the Parent’s successors or assigns by
purchase, merger, consolidation, sale of assets or
otherwise.
(vi)
any purported termination of Executive's employment for "material
breach of contract" which is purportedly effected without providing
the "cure" period, if applicable, described in Section 5(iv),
above.
The
effective date of any resignation from employment by the Executive
for Change in Control Period Good Reason shall be the date of
notification to the Parent of such resignation from employment by
the Executive.
(e)
"Non Change in Control Period Good Reason" shall mean the
Executive's resignation within six months of any of the following
conditions first occurring outside of a Change in Control Period
and occurring without Executive's written consent:
(i)
a decrease in Executive's total cash compensation opportunity
(adding Base Salary and Target Bonus) of greater than ten percent
(10%);
(ii)
a material, adverse change in Executive's title, authority,
responsibilities or duties, as measured against Executive's title,
authority, responsibilities or duties immediately prior to such
change;
(iii)
any material breach by either Company of a provision of this
Agreement, which breach is not cured within thirty (30) days
following written notice of such breach from
Executive;
7
(iv)
a change in the Executive's ability to maintain his principal
workplace in Tampa, FL;
(v)
any purported termination of Executive's employment for "material
breach of contract" which is purportedly effected without providing
the "cure" period, if applicable, described in Section 5(iv),
above.
The
effective date of any resignation from employment by the Executive
for Non Change in Control Period Good Reason shall be the date of
notification to the Parent of such resignation from employment by
the Executive.
(f)
"Incumbent Directors" shall mean members of the Board who either
(a) are members of the Board as of the date hereof, or (b) are
elected, or nominated for election, to the Board with the
affirmative vote of at least a majority of the Incumbent Directors
at the time of such election or nomination (but shall not include
an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of
members of the Board).
(g)
"Change in Control Period Involuntary Termination" shall mean
during a Change in Control Period the termination by the Companies
of Executive's employment with the Companies for any reason,
including termination as a result of death or disability of
Executive, but excluding termination for Cause. The effective date
of any Change in Control Period Involuntary Termination shall be
the date of notification to the Executive of the termination of
employment by the Companies; or
(h)
"Non Change in Control Period Involuntary Termination" shall mean
outside a Change in Control Period the termination by the Companies
of Executive's employment with the Companies for any reason,
including termination by as a result of death or disability of
Executive, but excluding termination for Cause. The effective date
of any Non Change in Control Period Involuntary Termination shall
be the date of notification to the Executive of the termination of
employment by the Companies.
6.
Dispute Resolution: In the
event of any dispute or claim relating to or arising out of this
Agreement (including, but not limited to, any claims of breach of
contract, wrongful termination or age, sex, race or other
discrimination), Executive and the Companies agree that all such
disputes shall be fully addressed and finally resolved by binding
arbitration conducted by the American Arbitration Association in
New York City, in the State of New York in accordance with its
National Employment Dispute Resolution rules. In connection with
any such arbitration, the Parent shall bear all costs not otherwise
borne by a plaintiff in a court proceeding. Each Company agrees
that any decisions of the Arbitration Panel will be binding and
enforceable in any state that either Company conducts the operation
of its business.
7.
Attorneys' Fees: The
prevailing party shall be entitled to recover from the losing party
its attorneys' fees and costs incurred in any action brought to
enforce any right arising out of this Agreement.
8
8.
Restrictive
Covenants:
(a)
Nondisclosure. During the
term of this Agreement and following termination of the Executive's
employment with the Companies, Executive shall not divulge,
communicate, use to the detriment of the Companies or for the
benefit of any other person or persons, or misuse in any way, any
Confidential Information (as hereinafter defined) pertaining to the
business of the Companies. Any Confidential Information or data now
or hereafter acquired by the Executive with respect to the business
of the Companies (which shall include, but not be limited to,
confidential information concerning each Company's financial
condition, prospects, technology, customers, suppliers, methods of
doing business and promotion of each Company's products and
services) shall be deemed a valuable, special and unique asset of
each Company that is received by the Executive in confidence and as
a fiduciary. For purposes of this Agreement "Confidential
Information" means information disclosed to the Executive or known
by the Executive as a consequence of or through his employment by
each Company (including information conceived, originated,
discovered or developed by the Executive) prior to or after the
date hereof and not generally known or in the public domain, about
each Company or its business. Notwithstanding the foregoing,
nothingnone of the
following information shall be treated as Confidential
Information: (i) information which is known to the public at the
time of disclosure to Executive, (ii) information which becomes
known to the public by publication or otherwise after disclosure to
Executive, (iii) information which Executive can show by written
records was in his possession at the time of disclosure to
Executive, (iv) information which was rightfully received by
Executive from a third party without violating any non-disclosure
obligation owed to or in favor of the Companies, or (v) information
which was developed by or on behalf of Executive independently of
any disclosure hereunder as shown by written records.
Nothing herein shall be deemed to restrict
the Executive from disclosing Confidential Information to the
extent required by law or by any court.
(b)
Non-Competition. The
Executive shall not, while employed by either Company and for a
period of one year following the date of termination for Cause, or
resignation other than for Good Reason pursuant to Sections 5(d) or
5(e), engage or participate, directly or indirectly (whether as an
officer, director, employee, partner, consultant, or otherwise), in
any business that manufactures, markets or sells products that
directly compete with any product of either Company that is
significant to such Company's business based on sales and/or
profitability of any such product as of the date of termination of
Executive's employment with such Company. Nothing herein shall
prohibit Executive from being a passive owner of less than 5% stock
of any entity directly engaged in a competing
business.
(c)
Property Rights; Assignment of
Inventions. With respect to information, inventions and
discoveries or any interest in any copyright and/or other property
right developed, made or conceived of by Executive, either alone or
with others, during his employment by each Company arising out of
such employment and pertinent to any field of business or research
in which, during such employment, each Company is engaged or (if
such is known to or ascertainable by Executive) is considering
engaging, Executive hereby agrees:
9
(i)
that all such information, inventions and discoveries or any
interest in any copyright and/or other property right, whether or
not patented or patentable, shall be and remain the exclusive
property of the Companies;
(ii)
to disclose promptly to an authorized representative of the Parent
all such information, inventions and discoveries or any copyright
and/or other property right and all information in Executive's
possession as to possible applications and uses
thereof;
(iii)
not to file any patent application relating to any such invention
or discovery except with the prior written consent of an authorized
officer of the Parent (other than Executive);
(iv)
that Executive hereby waives and releases any and all rights
Executive may have in and to such information, inventions and
discoveries, and hereby assigns to Executive and/or its nominees
all of Executive's right, title and interest in them, and all
Executive's right, title and interest in any patent, patent
application, copyright or other property right based thereon.
Executive hereby irrevocably designates and appoints the Parent and
each of its duly authorized officers and agents as his agent and
attorney-in-fact to act for his and on his behalf and in his stead
to execute and file any document and to do all other lawfully
permitted acts to further the prosecution, issuance and enforcement
of any such patent, patent application, copyright or other property
right with the same force and effect as if executed and delivered
by Executive; and
(v)
at the request of the Parent, and without expense to Executive, to
execute such documents and perform such other acts as the Parent
deems necessary or appropriate, for the Companies to obtain patents
on such inventions in a jurisdiction or jurisdictions designated by
the Parent, and to assign to the Companies or their respective
designees such inventions and any and all patent applications and
patents relating thereto.
9.
General:
(a)
Successors and Assigns: The
provisions of this Agreement shall inure to the benefit of and be
binding upon the Companies, Executive and each and all of their
respective heirs, legal representatives, successors and assigns.
The duties, responsibilities and obligations of Executive under
this Agreement shall be personal and not assignable or delegable by
Executive in any manner whatsoever to any person, corporation,
partnership, firm, company, joint venture or other entity.
Executive may not assign, transfer, convey, mortgage, pledge or in
any other manner encumber the compensation or other benefits to be
received by his or any rights which he may have pursuant to the
terms and provisions of this Agreement.
(b)
Amendments; Waivers: No
provision of this Agreement shall be modified, waived or discharged
unless the modification, waiver or discharge is agreed to in
writing and signed by Executive and by an authorized officer of the
Parent (other than Executive). No waiver by either party of any
breach of, or of compliance with, any condition or provision of
this Agreement by the other party shall be considered a waiver of
any other condition or provision or of the same condition or
provision at another time.
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(c)
Notices: Any notices to be
given pursuant to this Agreement by either party may be effected by
personal delivery or by overnight delivery with receipt requested.
Mailed notices shall be addressed to the parties at the addresses
stated below, but each party may change its or his/her address by
written notice to the other in accordance with this subsection (c).
Mailed notices to Executive shall be addressed as
follows:
Steve
Weldon
E-mail:
sww@gtbiopharma.com
Mailed
notices to the Companies shall be addressed as
follows:
GT Biopharma,
Inc.
9350
Wilshire Blvd., Suite 203
Beverly
Hills, CA 90212
(d)
Entire Agreement: This
Agreement constitutes the entire employment agreement among
Executive and the Companies regarding the terms and conditions of
his employment, with the exception of (a) the agreement described
in Section 7 and (b) any stock option, restricted stock or other
Company stock-based award agreements among Executive and the
Companies to the extent not modified by this Agreement. This
Agreement (including the other documents referenced in the previous
sentence) supersedes all prior negotiations, representations or
agreements among Executive and the Companies, whether written or
oral, concerning Executive's employment by the
Companies.
(e)
Withholding Taxes: All
payments made under this Agreement shall be subject to reduction to
reflect taxes required to be withheld by law.
(f)
Counterparts: This Agreement
may be executed by the Companies and Executive in counterparts,
each of which shall be deemed an original and which together shall
constitute one instrument.
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(g)
Headings: Each and all of
the headings contained in this Agreement are for reference purposes
only and shall not in any manner whatsoever affect the construction
or interpretation of this Agreement or be deemed a part of this
Agreement for any purpose whatsoever.
(h)
Savings Provision: To the
extent that any provision of this Agreement or any paragraph, term,
provision, sentence, phrase, clause or word of this Agreement shall
be found to be illegal or unenforceable for any reason, such
paragraph, term, provision, sentence, phrase, clause or word shall
be modified or deleted in such a manner as to make this Agreement,
as so modified, legal and enforceable under applicable laws. The
remainder of this Agreement shall continue in full force and
effect.
(i)
Construction: The language
of this Agreement and of each and every paragraph, term and
provision of this Agreement shall, in all cases, for any and all
purposes, and in any and all circumstances whatsoever be construed
as a whole, according to its fair meaning, not strictly for or
against Executive or the Companies, and with no regard whatsoever
to the identity or status of any person or persons who drafted all
or any portion of this Agreement.
(j)
Further Assurances: From
time to time, at the Companies' request and without further
consideration, Executive shall execute and deliver such additional
documents and take all such further action as reasonably requested
by the Companies to be necessary or desirable to make effective, in
the most expeditious manner possible, the terms of this Agreement
and to provide adequate assurance of Executive's due performance
hereunder.
(k) Governing Law: Executive
and the Companies agree that this Agreement shall be interpreted in
accordance with and governed by the laws of the State of
Delaware.
(l)
Board Approval: Each Company
warrants to Executive that the Board of Directors of such Company
has ratified and approved this Agreement, and that the Parent will
cause the appropriate disclosure filing to be made with the
Securities and Exchange Commission in a timely manner.
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IN
WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year written below.
EXECUTIVE:
Date:
August 11, 2020
/s/ Steve
Weldon
Steve
Weldon
GT BIOPHARMA, INC.
Date:
August 11, 2020
/s/ Anthony Cataldo
Anthony
Cataldo
Chairman &
CEO
13
Exhibit 31.1
CERTIFICATIONS
I, Anthony Cataldo, certify that:
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1.
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2.
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Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the
period covered by this report;
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3.
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Based
on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
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4.
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The
registrant’s other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and
internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have for
the registrant and have:
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a)
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Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the
registrant, including
its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report
is being prepared;
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b)
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Designed
such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
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c)
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Evaluated
the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
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d)
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Disclosed
in this report any change in the registrant’s internal
control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over
financial reporting; and
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5.
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The
registrant’s other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and
the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions):
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a)
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All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial
information; and
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b)
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Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s
internal control over financial reporting.
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Date:
August 17, 2020
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/s/ Anthony
Cataldo
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Anthony
Cataldo
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Chief
Executive Officer, Chairman, and Director
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Exhibit 31.2
CERTIFICATIONS
I, Steven Weldon, certify that:
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1.
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I have
reviewed this Amendment No. 1 to the
quarterly report on Form 10-Q/A of GT Biopharma,
Inc.;
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2.
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3.
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Based
on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
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4.
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The
registrant’s other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and
internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have for
the registrant and have:
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|
|
a)
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Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the
registrant, including
its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report
is being prepared;
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b)
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Designed
such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
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c)
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Evaluated
the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
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d)
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Disclosed
in this report any change in the registrant’s internal
control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over
financial reporting; and
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5.
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The
registrant’s other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and
the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions):
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a)
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All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial
information; and
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b)
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Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s
internal control over financial reporting.
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Date: August
17, 2020
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/s/ Steven
Weldon
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Steven
Weldon
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CFO,
Chief Accounting Officer, and Director
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Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the
Amendment No. 1 to the Quarterly Report on Form
10-Q/A of GT Biopharma, Inc. (the
“Company”),
for the quarterly period ended June 30, 2020, as filed with the
Securities and Exchange Commission on the date hereof (the
“Report”),
I, Anthony Cataldo, Chief Executive Officer of the Company,
pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, do hereby certify, to my
knowledge that:
(1) The
Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or
780(d)); and
(2) The
information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Company.
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Date:
August 17, 2020
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/s/
Anthony Cataldo
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Anthony
Cataldo
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Chief
Executive Officer, Chairman, and Director
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A signed original of this written statement required by Section 906
has been provided to GT Biopharma, Inc. and will be retained by GT
Biopharma, Inc. and furnished to the Securities and Exchange
Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the
Amendment No. 1 to the Quarterly Report on Form
10-Q/A of GT Biopharma, Inc. (the
“Company”),
for the quarterly period ended June 30, 2020, as filed with the
Securities and Exchange Commission on the date hereof (the
“Report”),
I, Steven Weldon, Chief Financial Officer of the Company, pursuant
to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, do hereby certify, to my knowledge
that:
(1)
The Report fully
complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or
780(d)); and
(2)
The information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Company.
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Date:
August 17, 2020
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/s/ Steven
Weldon
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Steven
Weldon
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CFO,
Chief Accounting Officer, and Director
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A signed original of this written statement required by Section 906
has been provided to GT Biopharma, Inc. and will be retained by GT
Biopharma, Inc. and furnished to the Securities and Exchange
Commission or its staff upon request.