424B3

 

 

Filed Pursuant to Rule 424(b)(3)

Registration Statement No. 333-261496

 

Prospectus Supplement No.4

(to Prospectus dated April 29, 2022)

https://cdn.kscope.io/53f91354b3bc7071f61000a7ba0428aa-img231542136_0.jpg 

 

SAB Biotherapeutics, Inc.

Up to 14,434,301 Shares of Common Stock

Up to 5,958,600 Shares of Common Stock Issuable Upon Exercise of Warrants

 

 

 

 

 

 

This prospectus supplement is being filed to update and supplement the information contained in the prospectus dated April 29, 2022 (the “Prospectus”), related to: (a) the offer and sale from time to time of an aggregate of up to 14,434,301 shares of common stock, $0.0001 par value per share (the “Common Stock”), and (b) the offer and sale from time to time of an aggregate of up to 5,958,600 shares of Common Stock which consists of (i) the issuance of up to 208,600 shares of Common Stock upon exercise of 208,600 warrants issued in a private placement to Big Cypress Holdings LLC (the “Sponsor”), in connection with the initial public offering of Big Cypress Acquisition Corp. (the “Private Placement Warrants”), and (ii) the issuance of up to 5,750,000 shares of Common Stock issuable upon exercise of 5,750,000 warrants issued in the initial public offering of Big Cypress Acquisition Corp. (the “Public Warrants,” and, together with the Private Placement Warrants, the “Warrants”), with the information contained in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, filed with the Securities and Exchange Commission (“SEC”) on November 14, 2022 (the “Quarterly Report”). Accordingly, we have attached the Quarterly Report to this prospectus supplement.
 

This prospectus supplement updates and supplements the information in the Prospectus and is not complete without, and may not be delivered or utilized except in combination with, the Prospectus, including any amendments or supplements thereto. This prospectus supplement should be read in conjunction with the Prospectus and if there is any inconsistency between the information in the Prospectus and this prospectus supplement, you should rely on the information in this prospectus supplement.
 

The Common Stock and Public Warrants are listed on The Nasdaq Stock Market LLC (“Nasdaq”) under the symbols “SABS” and “SABSW”, respectively. On November 17, 2022, the last reported sales price of Common Stock was $1.10 per share and the last reported sales price of our Public Warrants was $0.08 per warrant.

 

 

 

 

 

We are an “emerging growth company” under federal securities laws and are subject to reduced public company reporting requirements. Investing in our Common Stock involves a high degree of risk. See the section entitled “Risk Factors” beginning on page 15 of the Prospectus and in any applicable prospectus supplement to read about factors you should consider before buying our securities.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus supplement November 18, 2022.

 


 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________ to ___________________

Commission File Number: 001-39871

 

SAB BIOTHERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

85-3899721

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

2100 East 54th Street North

Sioux Falls, South Dakota

57104

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (605) 679-6980

 

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

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common stock, 0.0001 par value per share

 

SABS

 

The Nasdaq Stock Market LLC

Warrants, each exercisable for one share of Common Stock at an exercise price of $11.50 per share

 

SABSW

 

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of November 3, 2022, the registrant had 43,030,885 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 

 


 

Table of Contents

 

 

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

2

 

 

 

Item 1.

Consolidated Financial Statements (Unaudited)

2

 

Consolidated Balance Sheets

2

 

Consolidated Statements of Operations

3

 

Consolidated Statements of Changes In Stockholders’ Equity

4

 

Consolidated Statements of Cash Flows

6

 

Notes to Unaudited Consolidated Financial Statements

7

Item 2.

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

27

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

42

Item 4.

Controls and Procedures

42

 

 

 

PART II.

OTHER INFORMATION

43

 

 

 

Item 1.

Legal Proceedings

43

Item 1A.

Risk Factors

43

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

45

Item 3.

Defaults Upon Senior Securities

45

Item 4.

Mine Safety Disclosures

45

Item 5.

Other Information

45

Item 6.

Exhibits

46

Signatures

47

 

i


 

PART I—FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (Unaudited).

 

SAB Biotherapeutics, Inc. and Subsidiaries

Consolidated Balance Sheets

 

 

 

September 30,
2022

 

 

December 31,
2021

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

8,332,188

 

 

$

33,206,712

 

Restricted cash

 

 

 

 

 

6,338,306

 

Accounts receivable, net

 

 

12,942,037

 

 

 

8,010,708

 

Prepaid expenses

 

 

907,865

 

 

 

864,513

 

Total current assets

 

 

22,182,090

 

 

 

48,420,239

 

Long-term prepaid insurance

 

 

501,388

 

 

 

 

Operating lease right-of-use assets

 

 

1,870,518

 

 

 

2,615,204

 

Financing lease right-of-use assets

 

 

3,921,589

 

 

 

4,019,322

 

Property, plant and equipment, net

 

 

24,031,908

 

 

 

24,314,455

 

Total assets

 

$

52,507,493

 

 

$

79,369,220

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

5,484,276

 

 

$

4,458,525

 

Forward share purchase liability

 

 

 

 

 

6,338,306

 

Notes payable

 

 

25,013

 

 

 

25,013

 

Operating lease liabilities, current portion

 

 

1,212,862

 

 

 

1,142,413

 

Finance lease liabilities, current portion

 

 

140,891

 

 

 

161,050

 

Due to related party

 

 

 

 

 

2,367

 

Deferred grant income

 

 

 

 

 

100,000

 

Accrued expenses and other current liabilities

 

 

10,238,212

 

 

 

12,455,888

 

Total current liabilities

 

 

17,101,254

 

 

 

24,683,562

 

Operating lease liabilities, noncurrent

 

 

762,775

 

 

 

1,653,185

 

Finance lease liabilities, noncurrent

 

 

3,662,541

 

 

 

3,762,430

 

Warrant liabilities

 

 

357,516

 

 

 

10,720,130

 

Total liabilities

 

 

21,884,086

 

 

 

40,819,307

 

Commitments and contingencies (Note 17)

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

Preferred stock; $0.0001 par value; 10,000,000 shares authorized, 0 shares issued
     and outstanding at September 30, 2022 and December 31, 2021, respectively

 

 

 

 

 

 

Common stock; $0.0001 par value; 490,000,000 shares authorized at
    September 30, 2022 and December 31, 2021; 43,577,543 and 43,487,279 shares
     issued, respectively, and 43,030,885 and 43,487,279 outstanding at September 30, 2022
     and December 31, 2021, respectively

 

 

4,358

 

 

 

4,349

 

Treasury stock, at cost; 546,658 and 0 shares held at September 30, 2022 and
     December 31, 2021, respectively

 

 

(5,521,246

)

 

 

 

Additional paid-in capital

 

 

76,135,447

 

 

 

67,674,515

 

Accumulated deficit

 

 

(39,995,152

)

 

 

(29,128,951

)

Total stockholders’ equity

 

 

30,623,407

 

 

 

38,549,913

 

Total liabilities and stockholders’ equity

 

$

52,507,493

 

 

$

79,369,220

 

See accompanying notes to the consolidated financial statements

2


 

SAB Biotherapeutics, Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Grant revenue

 

$

3,589,708

 

 

$

14,680,589

 

 

$

21,743,309

 

 

$

49,817,825

 

Total revenue

 

 

3,589,708

 

 

 

14,680,589

 

 

 

21,743,309

 

 

 

49,817,825

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

7,352,978

 

 

 

15,070,265

 

 

 

29,300,405

 

 

 

46,535,671

 

General and administrative

 

 

4,044,046

 

 

 

3,600,678

 

 

 

13,500,512

 

 

 

9,331,125

 

Total operating expenses

 

 

11,397,024

 

 

 

18,670,943

 

 

 

42,800,917

 

 

 

55,866,796

 

Loss from operations

 

 

(7,807,316

)

 

 

(3,990,354

)

 

 

(21,057,608

)

 

 

(6,048,971

)

Changes in fair value of warrant liabilities

 

 

782,962

 

 

 

 

 

 

10,362,614

 

 

 

 

Gain on debt extinguishment of Paycheck Protection Program SBA Loan

 

 

 

 

 

 

 

 

 

 

 

665,596

 

Other income

 

 

1,527

 

 

 

3,953

 

 

 

1,527

 

 

 

3,953

 

Interest expense

 

 

(70,626

)

 

 

(78,558

)

 

 

(213,885

)

 

 

(228,184

)

Interest income

 

 

17,385

 

 

 

3,769

 

 

 

41,143

 

 

 

14,571

 

Total other income (expense)

 

 

731,248

 

 

 

(70,836

)

 

 

10,191,399

 

 

 

455,936

 

Loss before income taxes

 

 

(7,076,068

)

 

 

(4,061,190

)

 

 

(10,866,209

)

 

 

(5,593,035

)

Income tax expense (benefit)

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(7,076,068

)

 

$

(4,061,190

)

 

$

(10,866,209

)

 

$

(5,593,035

)

Loss per common share attributable to the
     Company’s shareholders

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted loss per common share

 

$

(0.16

)

 

$

(0.16

)

 

$

(0.25

)

 

$

(0.22

)

Weighted-average common shares outstanding – basic and diluted

 

 

43,030,885

 

 

 

25,973,406

 

 

 

43,042,379

 

 

 

25,973,406

 

See accompanying notes to the consolidated financial statements.

3


 

SAB Biotherapeutics, Inc. and Subsidiaries

Consolidated Statements of Changes In Stockholders’ Equity

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

 

 

 

Treasury Stock

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional
Paid-In Capital

 

 

Shares

 

 

Amount

 

 

Accumulated
Deficit

 

 

Total Stockholders’
Equity

 

Balance at December 31, 2021

 

 

 

43,487,279

 

 

$

4,349

 

 

$

67,674,515

 

 

 

 

 

$

 

 

$

(29,128,951

)

 

$

38,549,913

 

Issuance of common stock for exercise of
     stock options

 

 

 

14,500

 

 

 

1

 

 

 

7,829

 

 

 

 

 

 

 

 

 

 

 

 

7,830

 

Forward Share Purchase Agreement,
     final settlement

 

 

 

 

 

 

 

 

 

817,060

 

 

 

 

 

 

 

 

 

 

 

 

817,060

 

Repurchase of common stock pursuant to
     the Forward Share Purchase Agreement

 

 

 

 

 

 

 

 

 

5,521,246

 

 

 

(546,658

)

 

 

(5,521,246

)

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

897,600

 

 

 

 

 

 

 

 

 

 

 

 

897,600

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

985,863

 

 

 

985,863

 

Balance at March 31, 2022

 

 

 

43,501,779

 

 

$

4,350

 

 

$

74,918,250

 

 

 

(546,658

)

 

$

(5,521,246

)

 

$

(28,143,088

)

 

$

41,258,266

 

Issuance of common stock for exercise of
     stock options

 

 

 

75,764

 

 

 

8

 

 

 

69,133

 

 

 

 

 

 

 

 

 

 

 

 

69,141

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

569,861

 

 

 

 

 

 

 

 

 

 

 

 

569,861

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,775,996

)

 

 

(4,775,996

)

Balance at June 30, 2022

 

 

 

43,577,543

 

 

$

4,358

 

 

$

75,557,244

 

 

 

(546,658

)

 

$

(5,521,246

)

 

$

(32,919,084

)

 

$

37,121,272

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

578,203

 

 

 

 

 

 

 

 

 

 

 

 

578,203

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,076,068

)

 

 

(7,076,068

)

Balance at September 30, 2022

 

 

 

43,577,543

 

 

$

4,358

 

 

$

76,135,447

 

 

 

(546,658

)

 

$

(5,521,246

)

 

$

(39,995,152

)

 

$

30,623,407

 

See accompanying notes to the consolidated financial statements.

 

4


 

SAB Biotherapeutics, Inc. and Subsidiaries

Consolidated Statements of Changes In Stockholders’ Equity

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional
Paid-In Capital

 

 

 

Accumulated
Deficit

 

 

Total Stockholders’
Equity

 

Balance at December 31, 2020

 

 

 

25,973,406

 

 

$

2,598

 

 

$

50,989,657

 

 

 

$

(11,984,420

)

 

$

39,007,835

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

349,115

 

 

 

 

 

 

 

349,115

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

1,409,834

 

 

 

1,409,834

 

Balance at March 31, 2021

 

 

 

25,973,406

 

 

$

2,598

 

 

$

51,338,772

 

 

 

$

(10,574,586

)

 

$

40,766,784

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

433,431

 

 

 

 

 

 

 

433,431

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,941,679

)

 

 

(2,941,679

)

Balance at June 30, 2021

 

 

 

25,973,406

 

 

$

2,598

 

 

$

51,772,203

 

 

 

$

(13,516,265

)

 

$

38,258,536

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

880,664

 

 

 

 

 

 

 

880,664

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,061,190

)

 

 

(4,061,190

)

Balance at September 30, 2021

 

 

 

25,973,406

 

 

$

2,598

 

 

$

52,652,867

 

 

 

$

(17,577,455

)

 

$

35,078,010

 

See accompanying notes to the consolidated financial statements.

5


 

SAB Biotherapeutics, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(10,866,209

)

 

$

(5,593,035

)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

 

 

 

 

 

 

Gain on debt extinguishment of Paycheck Protection Program SBA Loan

 

 

 

 

 

(665,596

)

Depreciation and amortization

 

 

2,270,621

 

 

 

868,630

 

Amortization of right-of-use assets

 

 

97,733

 

 

 

123,777

 

Stock-based compensation expense

 

 

2,045,664

 

 

 

1,663,210

 

Gain on sale of equipment

 

 

(15,793

)

 

 

(5,488

)

Changes in fair value of warrant liabilities

 

 

(10,362,614

)

 

 

 

Changes in operating assets and liabilities

 

 

 

 

 

 

Accounts receivable

 

 

(4,931,330

)

 

 

10,356,280

 

Prepaid expenses

 

 

(544,737

)

 

 

331,559

 

Operating lease right-of-use assets

 

 

(75,276

)

 

 

(45,964

)

Accounts payable

 

 

1,025,751

 

 

 

(3,273,848

)

Due to related party

 

 

(2,367

)

 

 

(2,727

)

Deferred grant income

 

 

(100,000

)

 

 

 

Accrued expense and other current liabilities

 

 

(2,217,676

)

 

 

3,108,244

 

Net cash (used in) provided by operating activities

 

 

(23,676,233

)

 

 

6,865,042

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Proceeds from the sale of equipment

 

 

76,390

 

 

 

 

Purchases of equipment

 

 

(2,048,660

)

 

 

(8,581,735

)

Net cash used in investing activities

 

 

(1,972,270

)

 

 

(8,581,735

)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Payments related to the Forward Share Purchase Agreement

 

 

(5,521,246

)

 

 

 

Principal payments on finance leases

 

 

(120,053

)

 

 

(142,928

)

Proceeds from exercise of stock options

 

 

76,972

 

 

 

 

Net cash used in financing activities

 

 

(5,564,327

)

 

 

(142,928

)

 

 

 

 

 

 

 

Net decrease in cash, cash equivalents, and restricted cash

 

 

(31,212,830

)

 

 

(1,859,621

)

Cash, cash equivalents, and restricted cash

 

 

 

 

 

 

Beginning of year

 

 

39,545,018

 

 

 

12,610,383

 

End of period

 

$

8,332,188

 

 

$

10,750,762

 

Supplemental disclosures:

 

 

 

 

 

 

Cash paid for interest

 

$

143,259

 

 

$

228,184

 

 

 

 

 

 

 

 

Supplemental information on non-cash investing and finance activities:

 

 

 

 

 

 

Right-of-use assets obtained in exchange for operating lease liabilities

 

$

65,088

 

 

$

260,682

 

See accompanying notes to the consolidated financial statements.

6


 

SAb Biotherapeutics, Inc. and subsidiaries

Notes to consolidated FINANCIAL statements (Unaudited)

 

(1) Nature of Business

On October 22, 2021 (the "Closing Date"), we consummated the business combination contemplated by the agreement and plan of merger, dated as of June 21, 2021, as amended on August 12, 2021, made by and among Big Cypress Acquisition Corp., a Delaware corporation (“BCYP”), Big Cypress Merger Sub Inc., a Delaware corporation (“Merger Sub”), SAB Biotherapeutics, Inc., a Delaware corporation (“SAB” or the “Company”), and Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as the representative, agent and attorney-in-fact of the SAB Stockholders. Upon closing of the Business combination, Big Cypress Merger Sub merged with SAB Biotherapeutics, with SAB Biotherapeutics as the surviving company of the merger. Upon closing of the business combination, Big Cypress Acquisition Corp. changed its name to “SAB Biotherapeutics, Inc.”.

SAB Biotherapeutics, Inc. is a clinical-stage biopharmaceutical company focused on the development and commercialization of a portfolio of products from its proprietary immunotherapy platform to produce fully targeted human polyclonal antibodies, without using human plasma or serum. SAB’s novel DiversitAb platform enables the rapid production of large amounts of targeted human polyclonal antibodies, leveraging transchromosomic cattle (Tc Bovine) that have been genetically designed to produce human antibodies (immunoglobulin G) rather than bovine in response to an antigen. Animal antibodies have been made in rabbits, sheep and horses. However, SAB's platform is the first to produce fully human antibodies in large animals.

The COVID-19 pandemic continues to evolve, and the extent to which it may impact the Company’s business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions and social distancing in the U.S. and other countries, business closures or business disruptions, and the effectiveness of actions taken in the U.S. and other countries to contain and treat the disease. The Company is following, and will continue to follow, recommendations from the U.S. Centers for Disease Control and Prevention, as well as federal, state, and local governments. To date, the Company has not experienced material business disruptions, but it cannot be certain of the future impact of the COVID-19 pandemic on its business and consolidated financial statements.

Going Concern

As of September 30, 2022, the Company has experienced net losses, negative cash flows from operations and had an accumulated deficit of $40 million. The Company anticipates to continue to generate losses for the foreseeable future, and expects the losses to increase as the Company continues the development of, and seek regulatory approvals for, product candidates, and begin commercialization of products. As a result, the Company will require additional capital to fund operations in order to support long-term plans, in particular, following the JPEO Rapid Response Contract Termination. These factors raise substantial doubt about the Company’s ability to continue as a going concern for the one-year period following the date that these financial statements were issued.

To continue as a going concern, the Company will need, among other things, to raise additional capital resources. The Company plans to seek additional funding through a combination of equity or debt financings, or other third-party financing, collaborative or other funding arrangements. Should the Company seek additional financing from outside sources, the Company may not be able to raise such financing on terms acceptable to the Company or at all. If the Company is unable to raise additional capital when required or on acceptable terms, the Company may be required to scale back or discontinue the advancement of product candidates, reduce headcount, liquidate our assets, file for bankruptcy, reorganize, merge with another entity, or cease operations.

The unaudited consolidated financial statements as of September 30, 2022, have been prepared on the basis that the Company will continue as a going concern, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability for the Company to continue as a going concern.
 

(2) Summary of Significant Accounting Policies

A summary of the significant accounting policies applied in preparation of the accompanying consolidated financial statements is set forth below.

Basis of presentation

The financial statements have been prepared in conformity with U.S. Generally Accepted Accounting Principles ("GAAP") and include all adjustments necessary for the fair presentation of the Company’s financial position for the periods presented.

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The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. GAAP (the “Reverse Recapitalization”). Under this method of accounting, BCYP is treated as the “acquired” company and SAB Biotherapeutics is treated as the acquirer for financial reporting purposes. Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of SAB Biotherapeutics issuing stock for the net assets of BCYP, accompanied by a recapitalization. The net assets of BCYP are stated at historical cost, with no goodwill or other intangible assets recorded. SAB Biotherapeutics was determined to be the accounting acquirer based on the following predominant factors:

SAB Biotherapeutics’ shareholders have the largest portion of voting rights in the Company;
the Board and Management are primarily composed of individuals associated with SAB Biotherapeutics;
the operations of SAB comprise the ongoing operations of the Company.

The consolidated assets, liabilities and results of operations prior to the Reverse Recapitalization are those of SAB Biotherapeutics. At the Closing Date, and subject to the terms and conditions of the Merger Agreement, each share of SAB Biotherapeutics common stock, par value $0.0001 per share, and each share of the SAB Biotherapeutics convertible preferred stock that was convertible into a share of SAB Biotherapeutics common stock at a one-to-one ratio, was converted into Common Stock equal to approximately 0.4653 (the "Exchange Ratio"). The shares and corresponding capital amounts and losses per share, prior to the Business Combination, have been retroactively restated based on shares reflecting the Exchange Ratio established in the Business Combination.

Emerging growth company status

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Principles of consolidation

The accompanying consolidated financial statements include the results of the Company and its wholly owned subsidiaries, SAB Capra, LLC and Aurochs, LLC. Intercompany balances and transactions have been eliminated in consolidation.

Significant risks and uncertainties

The Company’s operations are subject to a number of factors that can affect its operating results and financial condition. Such factors include, but are not limited to, the results of research and development efforts, clinical trial activities of the Company’s product candidates, the Company’s ability to obtain regulatory approval to market its product candidates, competition from products manufactured and sold or being developed by other companies, and the Company’s ability to raise capital.

The Company currently has no commercially approved products and there can be no assurance that the Company’s research and development will be successfully commercialized. Developing and commercializing a product requires significant time and capital and is subject to regulatory review and approval as well as competition from other biotechnology and pharmaceutical companies. The Company operates in an environment of rapid change and is dependent upon the continued services of its employees and obtaining and protecting intellectual property.

Funding from government grants is not guaranteed to cover all costs, and additional funding may be needed to cover operational costs as the Company moves forward with our efforts to develop a commercially approved product. The company believes its existing cash

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reserves and anticipated cash receipts will not be sufficient to fund operations for the twelve months following the date these financials are made available for issuance.

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent assets and liabilities in the financial statements. The Company has used significant estimates in its determination of stock-based compensation assumptions, determination of the fair value of the Company’s common stock, determination of the fair value of the Private Placement Warrant liabilities, determination of the incremental borrowing rate (“IBR”) used in the calculation of the Company’s right of use assets and lease liabilities, and the valuation allowance on deferred tax assets. Actual amounts realized may differ from these estimates.

Cash, cash equivalents, and restricted cash

Cash equivalents include short-term, highly liquid instruments, consisting of money market accounts and short-term investments with original maturities at the date of purchase of 90 days or less.

Amounts held in escrow by the Company pursuant to the Forward Share Purchase Agreement were reported as restricted cash on the consolidated balance sheet as of December 31, 2021. There were no amounts held in escrow by the Company pursuant to the Forward Share Purchase Agreement as of September 30, 2022.

The reconciliation of cash, cash equivalents and restricted cash reported within the applicable balance sheet line items that sum to the total of the same such amount shown in the consolidated statements of cash flows is as follows:

 

 

September 30,
2022

 

 

September 30,
2021

 

Cash and cash equivalents

 

$

8,332,188

 

 

$

10,750,762

 

Restricted cash

 

 

 

 

 

 

Total cash, cash equivalents, and restricted cash

 

$

8,332,188

 

 

$

10,750,762

 

Accounts receivable

Accounts receivable are carried at original invoice amount, less an allowance for doubtful accounts. The Company estimates an allowance for doubtful accounts for potential credit losses that are expected to be incurred, based on management’s assessment of the collectability of specific accounts, the aging of the accounts receivable, historical information and other currently available evidence. Receivables are written off when deemed uncollectible. To date, no receivables have been written off. The Company had no allowance for doubtful accounts as of September 30, 2022 and December 31, 2021.

Concentration of credit risk

The Company maintains its cash and cash equivalent balances in the form of business checking accounts and money market accounts, the balances of which, at times, may exceed federally insured limits. Exposure to credit risk is reduced by placing such deposits in high credit quality federally insured financial institutions.

The Company received 100% of its total revenue through grants from government organizations during the three and nine months ended September 30, 2022 and 2021.

Lease liabilities and right-of-use assets

The Company is party to certain contractual arrangements for equipment, lab space, and an animal facility, which meet the definition of leases under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC 842”). In accordance with ASC 842, the Company recorded right-of-use assets and related lease liabilities for the present value of the lease payments over the lease terms. The Company’s IBR was used in the calculation of its right-of-use assets and lease liabilities.

The Company elected not to apply the recognition requirements of ASC 842 to short-term leases, which are deemed to be leases with a lease term of twelve months or less. Instead, the Company recognized lease payments in the Consolidated Statements of Operations on a straight-line basis over the lease term and variable payments in the period in which the obligation for these payments was incurred. The Company elected this policy for all classes of underlying assets.

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Research and development expenses

Expenses incurred in connection with research and development activities are expensed as incurred. These include licensing fees to use certain technology in the Company’s research and development projects, fees paid to consultants and various entities that perform certain research and testing on behalf of the Company, and expenses related to salaries, benefits, and stock-based compensation granted to employees in research and development functions.

During the three and nine months ended September 30, 2022 and 2021, the Company had contracts with multiple contract research organizations (“CRO”) to complete studies as part of research grant agreements. In the case of SAB-185, the CRO has been contracted and paid by the US government—as of September 30, 2022 there is no active CRO engaged by the Company in work on SAB-185. For SAB-176, PPD Development, LP acting as the CRO oversaw the Phase 1 safety study. The terms of that agreement are subject to confidentiality, and the status of the agreement is that it is current, in good standing and approximately 90% of the contract has been paid as of September 30, 2022. SAB has also contracted with hVIVO Services Limited to conduct the Phase 2a influenza study on SAB-176. The terms of that agreement are subject to confidentiality, and the status of the agreement is that it is current, in good standing and approximately 90% of the contract has been paid as of September 30, 2022.

Equipment

The Company records equipment at cost less depreciation. Depreciation is calculated using straight-line methods over the following estimated useful lives:

Animal facility equipment

7 years

Laboratory equipment

7 years

Leasehold improvements

Shorter of asset life or lease term

Office furniture & equipment

5 years

Vehicles

5 years

Repairs and maintenance expenses are expensed as incurred.

Impairment of long-lived assets

The Company reviews the recoverability of long-lived assets, including the related useful lives, whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. If necessary, the Company compares the estimated undiscounted future net cash flows to the related asset’s carrying value to determine whether there has been an impairment. If an asset is considered impaired, the asset is written down to fair value, which is based either on discounted cash flows or appraised values in the period the impairment becomes known. The Company believes that long-lived assets are recoverable, and no impairment was deemed necessary, during the three and nine months ended September 30, 2022 and 2021.

Stock-based compensation

FASB ASC Topic 718, Compensation – Stock Compensation, prescribes accounting and reporting standards for all share-based payment transactions in which employee and non-employee services are acquired. The Company recognizes compensation cost relating to stock-based payment transactions using a fair-value measurement method, which requires all stock-based payments to employees, directors, and non-employee consultants, including grants of stock options, to be recognized in operating results as compensation expense based on fair value over the requisite service period of the awards. Prior to the Business Combination, the grant date fair value of the Company's common stock was typically determined by the Company's board of directors with the assistance of management and a third-party valuation specialist.

Subsequent to the Business Combination, the board of directors elected to determine the fair value of our post-merger common stock based on the closing market price at closing on the date of grant. In determining the fair value of stock-based awards, the Company utilizes the Black-Scholes option-pricing model, which uses both historical and current market data to estimate fair value. The Black-Scholes option-pricing model incorporates various assumptions, such as the value of the underlying common stock, the risk-free interest rate, expected volatility, expected dividend yield, and expected life of the options. For awards with performance-based vesting criteria, the Company estimates the probability of achievement of the performance criteria and recognizes compensation expense related to those awards expected to vest. No awards may have a term in excess of ten years. Forfeitures are recorded when they occur. Stock-based compensation expense is classified in the consolidated statements of operations based on the function to which the related services are provided. The company recognizes stock-based compensation expense over the expected term.

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Income taxes

Deferred income taxes reflect future tax effects of temporary differences between the tax and financial reporting basis of the Company’s assets and liabilities measured using enacted tax laws and statutory tax rates applicable to the periods when the temporary differences will affect taxable income. When necessary, deferred tax assets are reduced by a valuation allowance, to reflect realizable value, and all deferred tax balances are reported as long-term on the consolidated balance sheet. Accruals are maintained for uncertain tax positions, as necessary.

Income tax expense includes the current tax liability from operations and the change in deferred income taxes during the year. Current tax liabilities or receivables are recognized for estimated income tax payable and/or refundable for the current year.

The Company uses a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return. The Company has elected to treat interest and penalties related to income taxes, to the extent they arise, as a component of income taxes.

Revenue recognition

The Company’s revenue is primarily generated through grants from government and other (non-government) organizations.

Grant revenue is recognized during the period that the research and development services occur, as qualifying expenses are incurred or conditions of the grants are met. The Company concluded that payments received under these grants represent conditional, nonreciprocal contributions, as described in ASC 958, Not-for-Profit Entities, and that the grants are not within the scope of ASC 606, Revenue from Contracts with Customers, as the organizations providing the grants do not meet the definition of a customer. Expenses for grants are tracked by using a project code specific to the grant, and the employees also track hours worked by using the project code.

Comprehensive income (loss)

The Company had no items of comprehensive income (loss) other than its net income (loss).

Litigation

From time to time, the Company is involved in legal proceedings, investigations and claims generally incidental to its normal business activities. In accordance with U.S. GAAP, the Company accrues for loss contingencies when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Legal costs in connection with loss contingencies are expensed as incurred.

Earnings per share

In accordance with ASC 260, Earnings per Share (“ASC 260”), basic net income (loss) per share attributable to common stockholders is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of common stock outstanding during the period. Diluted net income (loss) per share attributable to common stockholders is computed by dividing the diluted net income (loss) attributable to common stockholders by the weighted-average number of common stock outstanding for the period including potential dilutive common shares such as stock options.

Segment reporting

In accordance with ASC 280, Segment Reporting, the Company’s business activities are organized into one reportable segment, as only the Company’s operating results in their entirety are regularly reviewed by the Company’s chief operating decision maker to make decisions about resources to be allocated and to assess performance.

Common stock valuations

Prior to the Business Combination, the Company was required to periodically estimate the fair value of its common stock with the assistance of an independent third-party valuation firm, as discussed above, when issuing stock options and computing estimated stock-based compensation expense. The assumptions underlying these valuations represented the Company's best estimates, which involved inherent uncertainties and the application of significant levels of judgment. In order to determine the fair value of its common stock, the Company considered, among other items, previous transactions involving the sale of our securities, our business, financial condition and results of operations, economic and industry trends, the market performance of comparable publicly traded companies, and the lack of marketability of our common stock.

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Subsequent to the Business Combination, the Company now determines the fair value of common stock based on the closing market price at closing on the date of grant.

Compensation expense related to stock-based transactions is measured and recognized in the financial statements at fair value of the post-merger common stock based on the closing market price at closing on the date of grant. Stock-based compensation expense is measured at the grant date based on the fair value of the equity award and is recognized as expense over the requisite service period, which is generally the vesting period, on the straight-line method. The Company estimates the fair value of each stock option award on the date of grant using the Black-Scholes option-pricing model. Determining the fair value of stock option awards at the grant date requires judgment, including estimating the expected volatility, expected term, risk-free interest rate, and expected dividends.

(3) New accounting standards

Recently-adopted standards

In May 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The amendments in ASU 2021-04 provide guidance to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in this ASU 2021-04 are effective for all entities for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, including interim periods within those fiscal years. The Company adopted ASU 2021-04 at January 1, 2022, and the adoption did not have a material impact on its consolidated financial statements.

In July 2021, the FASB issued ASU 2021-05, Leases (Topic 842) Lessors - Certain Leases with Variable Lease Payments, to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities as well as disclosing key information about leasing transactions. This guidance is effective for all entities for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years for public business entities. The Company adopted ASU 2021-05 at January 1, 2022, and the adoption did not have a material impact on its consolidated financial statements.

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. This ASU increases the transparency of government assistance to include the disclosure of (1) the types of assistance, (2) an entity's accounting for the assistance, and (3) the effect of the assistance on an entity's financial statements. The guidance in ASU 2021-10 is effective for financial statements of all entities, including private companies, for annual periods beginning after December 15, 2021, with early application permitted. Entities are required to provide the new disclosures prospectively for all transactions with a government entity that are accounted for under either a grant or a contribution accounting model and are reflected in the financial statements at the date of initially applying the new amendments, and to new transactions entered into after that date. The Company adopted ASU 2021-10 at January 1, 2022, and the adoption did not have a material impact on its consolidated financial statements.

Recently-issued standards

In July 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires the measurement of all expected credit losses of financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. In addition, the ASU amends the accounting fo