<HTML> <HEAD> <TITLE></TITLE> </HEAD> <BODY bgcolor="#FFFFFF"> <!-- PAGEBREAK --> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <DIV align="left"> <HR size="1" width="100%" align="left"> </DIV> <DIV align="left"> <HR size="1" width="100%" align="left"> </DIV> <P align="center"> <B><FONT size="5">SECURITIES AND EXCHANGE COMMISSION</FONT></B> <DIV align="center"> <B>Washington, D.C. 20549</B> </DIV> <P align="center"> <HR size="1" width="30%" align="center"> <P align="center"> <B>FORM 10-Q</B> <P align="center"> <B>QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE</B> <DIV align="center"> <B>SECURITIES EXCHANGE ACT OF 1934</B> </DIV> <CENTER> <TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="57%"> </TD> <TD width="3%"> </TD> <TD width="40%"> </TD> </TR> <TR> <TD align="center" valign="top"><FONT size="2"> For Quarter Ended</FONT></TD> <TD></TD> <TD align="center" valign="top"><FONT size="2"> Commission File No.</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="center" valign="top"><FONT size="2"> <B>March 31, 2000</B></FONT></TD> <TD></TD> <TD align="center" valign="top"><FONT size="2"> <B>0-26770</B></FONT></TD> </TR> </TABLE> </CENTER> <P align="center"> <B><FONT size="5">NOVAVAX, INC.</FONT></B> <DIV align="center"> (Exact name of registrant as specified in its charter) </DIV> <CENTER> <TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="57%"> </TD> <TD width="3%"> </TD> <TD width="40%"> </TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="center" valign="top"><FONT size="2"> <B>Delaware</B></FONT></TD> <TD></TD> <TD align="center" valign="top"><FONT size="2"> <B>22-2816046</B></FONT></TD> </TR> <TR> <TD align="center" valign="top"><FONT size="2"> (State or other jurisdiction of<BR> incorporation or organization)</FONT></TD> <TD></TD> <TD align="center" valign="top"><FONT size="2"> (I.R.S. Employer<BR> Identification No.)</FONT></TD> </TR> <TR> <TD colspan="3"> </TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="center" valign="top"><FONT size="2"> <B>8320 Guilford Road, Columbia, MD</B></FONT></TD> <TD></TD> <TD align="center" valign="top"><FONT size="2"> <B>21046</B></FONT></TD> </TR> <TR> <TD align="center" valign="top"><FONT size="2"> (Address of principal executive offices)</FONT></TD> <TD></TD> <TD align="center" valign="top"><FONT size="2"> (Zip code)</FONT></TD> </TR> </TABLE> </CENTER> <P align="center"> <B>(301) 854-3900</B> <DIV align="center"> <FONT size="2">Registrant’s telephone number, including area code</FONT> </DIV> <P align="left"> 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 [X] No [ ] <P align="left"> The number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: <P align="center"> Common Shares Outstanding at May 3, 2000 <DIV align="center"> 19,387,835 </DIV> <P align="left"> <HR size="1" width="100%" align="left"> <DIV align="left"> <HR size="1" width="100%" align="left"> </DIV> <!-- PAGEBREAK --> <P><HR noshade><P> <!-- TOC --> <A name="toc"><DIV align="CENTER"><U><B>TABLE OF CONTENTS</B></U></DIV></A> <P><CENTER> <TABLE border="0" width="90%" cellpadding="0" cellspacing="0"> <TR> <TD width="3%"></TD> <TD width="3%"></TD> <TD width="3%"></TD> <TD width="3%"></TD> <TD width="3%"></TD> <TD width="3%"></TD> <TD width="3%"></TD> <TD width="3%"></TD> <TD width="76%"></TD> </TR> <TR><TD></TD><TD colspan="8"><A HREF="#000">Item 2.</A></TD></TR> <TR><TD></TD><TD colspan="8"><A HREF="#001">Item 5. Quantitative and Qualitative Disclosures about Market Risk</A></TD></TR> <TR><TD colspan="9"><A HREF="#002">PART II OTHER INFORMATION</A></TD></TR> <TR><TD></TD><TD colspan="8"><A HREF="#003">Item 1 -- Legal Proceedings</A></TD></TR> <TR><TD></TD><TD colspan="8"><A HREF="#004">Item 2 -- Changes in Securities and Uses of Proceeds</A></TD></TR> <TR><TD></TD><TD colspan="8"><A HREF="#005">Item 3 -- Defaults upon Senior Securities</A></TD></TR> <TR><TD></TD><TD colspan="8"><A HREF="#006">Item 4 -- Submission of Matters to a Vote of Security Holders</A></TD></TR> <TR><TD></TD><TD colspan="8"><A HREF="#007">Item 5 -- Other Information</A></TD></TR> <TR><TD></TD><TD colspan="8"><A HREF="#008">Item 6 -- Exhibits and Reports on Form 8-K</A></TD></TR> <TR><TD></TD><TD colspan="8"><A HREF="#009">SIGNATURES</A></TD></TR> </TABLE> </CENTER> <!-- /TOC --> <P><HR noshade><P> <P align="center"><B>NOVAVAX, INC.</B> <P align="center"> <B>Form 10-Q</B> <DIV align="center"> <B>For the Quarter Ended March 31, 2000</B> </DIV> <P align="center"> <B>Index</B> <CENTER> <TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="9%"> </TD> <TD width="3%"> </TD> <TD width="74%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> <TD width="3%"> </TD> <TD width="4%"> </TD> </TR> <TR> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>Page No.</B></FONT></TD> </TR> <TR> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"><B>PART I. FINANCIAL INFORMATION</B></FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR> <TD align="left" valign="top"><FONT size="2"> Item 1.</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Financial Statements</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Statements of Operations for the three-month periods ended March 31, 2000 and 1999</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Balance Sheets as of March 31, 2000 and December 31, 1999</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Statements of Cash Flows for the three-month periods ended March 31, 2000 and 1999</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Notes to Financial Statements</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Item 2.</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Management’s Discussion and Analysis of Financial Condition and Results of Operations</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"><B>PART II. OTHER INFORMATION</B></FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD align="left" valign="top"><FONT size="2"> Item 6.</FONT></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Exhibits and Reports on Form 8-K</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2">SIGNATURES</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD> <TD></TD> </TR> </TABLE> </CENTER> <P align="center">1 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <P align="center"><B>NOVAVAX, INC. AND SUBSIDIARIES</B> <P align="center"> <B>CONSOLIDATED STATEMENTS OF OPERATIONS</B> <DIV align="center"> <B>(amounts in thousands, except share and per share information) </B> </DIV> <DIV align="center"> <B>(unaudited)</B> </DIV> <CENTER> <TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="3%"> </TD> <TD width="64%"> </TD> <TD width="3%"> </TD> <TD width="7%"> </TD> <TD width="1%"> </TD> <TD width="7%"> </TD> <TD width="3%"> </TD> <TD width="6%"> </TD> <TD width="1%"> </TD> <TD width="5%"> </TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD colspan="7"></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD align="center" nowrap colspan="7"><FONT size="2"><B>Three months ended</B></FONT></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD align="center" nowrap colspan="7"><FONT size="2"><B>March 31,</B></FONT></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD align="center" nowrap colspan="7"><HR size="1"></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>2000</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1999</B></FONT></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Revenues</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">710</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">76</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Operating expenses:</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> General and administrative</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">641</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">468</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Research and development</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,524</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">497</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Total operating expenses</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2,165</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">965</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Loss from operations</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(1,455</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(889</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Interest income, net</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">105</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Net loss</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(1,350</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(881</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Per share information: (basic and diluted)</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Net loss</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(.08</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(.07</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> <TR> <TD colspan="2" align="left" valign="top"><FONT size="2"> Weighted average number of common shares outstanding (basic and diluted)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">17,322,405</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">13,253,118</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="2"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> </TABLE> </CENTER> <P align="center"> The accompanying notes are an integral part of the consolidated financial statements. <P align="center">2 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <P align="center"><B>NOVAVAX, INC. AND SUBSIDIARIES</B> <P align="center"> <B>CONSOLIDATED BALANCE SHEETS</B> <DIV align="center"> <B>(amounts in thousands, except share and per share information) </B> </DIV> <DIV align="center"> <B>(unaudited)</B> </DIV> <CENTER> <TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="60%"> </TD> <TD width="3%"> </TD> <TD width="7%"> </TD> <TD width="1%"> </TD> <TD width="6%"> </TD> <TD width="3%"> </TD> <TD width="7%"> </TD> <TD width="1%"> </TD> <TD width="6%"> </TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>March 31,</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>December 31,</B></FONT></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>2000</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1999</B></FONT></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> <B>ASSETS</B></FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Current assets:</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Cash and cash equivalents</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">14,693</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">732</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Accounts receivable</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">776</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">341</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Prepaid expenses and other current assets</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">49</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">70</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Total current assets</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">15,518</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,143</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Property and equipment, net</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,142</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,053</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Patent costs, net</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,604</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,619</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Other assets, net</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">614</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">648</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Total assets</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">18,878</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">4,463</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> <B>LIABILITIES and STOCKHOLDERS’ EQUITY</B></FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Current liabilities:</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Debt obligations</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">74</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">111</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Accounts payable</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">614</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">637</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Accrued payroll</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">105</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">125</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Deferred revenue</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">613</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">750</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Total liabilities</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,406</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,623</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Commitments and contingencies</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Stockholders’ equity:</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Preferred stock, $.01 par value, 2,000,000 shares authorized; no shares issued and outstanding</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Common stock, $.01 par value, 30,000,000 shares authorized; 19,787,157 issued and 19,315,224 outstanding at March 31, 2000 and 15,173,688 issued and 15,167,166 outstanding at December 31, 1999</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">198</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">152</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Additional paid-in capital</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">66,356</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">45,622</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Accumulated deficit</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(44,244</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(42,894</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Deferred compensation on stock options granted</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(5</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Treasury stock, 471,933 and 6,522 shares, cost basis, at March 31, 2000 and December 31, 1999, respectively</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(4,835</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(35</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Total stockholders’ equity</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">17,472</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2,840</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="3" align="left" valign="top"><FONT size="2"> Total liabilities and stockholders’ equity</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">18,878</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">4,463</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="3"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> </TABLE> </CENTER> <P align="center"> The accompanying notes are an integral part of the consolidated financial statements. <P align="center">3 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <P align="center"><B>NOVAVAX, INC. AND SUBSIDIARIES</B> <P align="center"> <B>CONSOLIDATED STATEMENTS OF CASH FLOWS</B> <DIV align="center"> <B>(amounts in thousands)</B> </DIV> <DIV align="center"> <B>(unaudited)</B> </DIV> <CENTER> <TABLE width="70%" align="center" cellspacing="0" cellpadding="0" border="0"> <TR> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="65%"> </TD> <TD width="3%"> </TD> <TD width="6%"> </TD> <TD width="1%"> </TD> <TD width="6%"> </TD> <TD width="3%"> </TD> <TD width="3%"> </TD> <TD width="1%"> </TD> <TD width="3%"> </TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD colspan="7"></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD align="center" nowrap colspan="7"><FONT size="2"><B>Three months ended</B></FONT></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD align="center" nowrap colspan="7"><FONT size="2"><B>March 31,</B></FONT></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD align="center" nowrap colspan="7"><HR size="1"></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>2000</B></FONT></TD> <TD></TD> <TD align="center" nowrap colspan="3"><FONT size="2"><B>1999</B></FONT></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> <TD></TD> <TD align="center" nowrap colspan="3"><HR size="1"></TD> </TR> <TR> <TD colspan="4" align="left" valign="top"><FONT size="2"> Cash flows from operating activities:</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="3" align="left" valign="top"><FONT size="2"> Net loss</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(1,350</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(881</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="3" align="left" valign="top"><FONT size="2"> Reconciliation of net loss to net cash used by operating activities:</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Non-cash compensation expense</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Depreciation and amortization</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">102</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">70</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD></TD> <TD colspan="2" align="left" valign="top"><FONT size="2"> Changes in operating assets and liabilities:</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Accounts receivable</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(435</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">123</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Prepaid expenses and other assets</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(3</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Accounts payable and accrued payroll</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(43</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">46</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD></TD> <TD></TD> <TD align="left" valign="top"><FONT size="2"> Deferred revenue</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(137</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD></TD> <TD colspan="3" align="left" valign="top"><FONT size="2"> Net cash used by operating activities</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(1,840</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(642</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="4" align="left" valign="top"><FONT size="2"> Cash flows from investing activities:</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="3" align="left" valign="top"><FONT size="2"> Capital expenditures</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(133</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(21</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="3" align="left" valign="top"><FONT size="2"> Deferred patent costs</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(9</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(34</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="4" align="left" valign="top"><FONT size="2"> Net cash used by investing activities</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(142</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(55</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="4" align="left" valign="top"><FONT size="2"> Cash flows from financing activities:</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="3" align="left" valign="top"><FONT size="2"> Payment of debt obligations</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(37</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(10</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="3" align="left" valign="top"><FONT size="2"> Issuance of common stock</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">11,255</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="3" align="left" valign="top"><FONT size="2"> Offering costs of common stock</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(757</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD></TD> <TD colspan="3" align="left" valign="top"><FONT size="2"> Proceeds from the exercise of stock options and warrants</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">5,482</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">—</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="4" align="left" valign="top"><FONT size="2"> Net cash provided from (used by) financing activities</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">15,943</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(10</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="4" align="left" valign="top"><FONT size="2"> Net change in cash and cash equivalents</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">13,961</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">(707</FONT></TD> <TD align="left" valign="bottom" nowrap><FONT size="2">)</FONT></TD> </TR> <TR><TD><TR><TD><TR><TD><TR><TD> <TR> <TD colspan="4" align="left" valign="top"><FONT size="2"> Cash and cash equivalents at beginning of period</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">732</FONT></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">1,031</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="1"></TD> <TD></TD> </TR> <TR> <TD colspan="4" align="left" valign="top"><FONT size="2"> Cash and cash equivalents at end of period</FONT></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">14,693</FONT></TD> <TD></TD> <TD></TD> <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD> <TD align="right" valign="bottom" nowrap><FONT size="2">324</FONT></TD> <TD></TD> </TR> <TR> <TD colspan="4"></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> <TD></TD> <TD></TD> <TD align="left"><HR size="4" noshade></TD> <TD></TD> </TR> </TABLE> </CENTER> <P align="center"> The accompanying notes are an integral part of the consolidated financial statements. <P align="center">4 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <P align="center"><B>NOVAVAX, INC. AND SUBSIDIARIES</B> <DIV align="center"> <B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B> </DIV> <P align="left"><B>1. BASIS OF PRESENTATION</B> <P align="left"> Novavax, Inc., a Delaware corporation, (“Novavax” or the “Company”), is a biopharmaceutical company focused on the research and development of proprietary topical and oral delivery technologies and applications of those technologies. The accompanying consolidated financial statements include the accounts of Novavax and its wholly owned subsidiaries Micro-Pak, Inc., Micro Vesicular Systems, Inc. and Lipovax, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation. These statements have been prepared by Novavax, Inc., without audit, pursuant to the rules and regulations of the Securities and Exchange Commission, and reflect all adjustments, which, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature. <P align="left"> Certain information in footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles has been condensed or omitted pursuant to such rules and regulations, although the Company believes the disclosures are adequate to make the information presented not misleading. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 1999. <P align="left"><B>2. FINANCING REQUIREMENTS</B> <P align="left"> Past spending levels are not necessarily indicative of future spending. The Company will seek to establish one or more collaborations with industry partners to defray the costs of clinical trials and other related activities. Novavax will also seek to obtain additional funds through public or private equity or debt financings, collaborative arrangements with pharmaceutical companies or from other sources. If adequate funds are not available, Novavax may be required to significantly delay, reduce the scope of or eliminate one or more of its research or development programs, or seek alternative measures. As of May 4, 2000, Novavax estimates that the money received from the most recent sale of common stock, (see Notes 3 and 4), and its existing cash resources will be sufficient to finance its operations at current and projected levels of development activity for the next 18 to 24 months. <P align="left"><B>3. SUPPLEMENTAL CASH FLOW INFORMATION</B> <P align="left"> During the three month period ended March 31, 2000, the Company received $4,007,000 from the exercise of common stock warrants that had been issued in connection with earlier private placements of Novavax’s common stock. Included in this amount was $3,600,000 received from Anaconda Opportunity Fund, a principal of which is a director of Novavax. In connection with additional warrants granted to and exercised by Anaconda, the Company issued 193,680 shares of its common stock in a ‘cashless’ exercise where Novavax accepted 465,410 shares of its common stock, valued at $4,800,000. These shares are included as treasury stock in the accompanying consolidated balance sheets. Additionally, the Company received approximately $1,475,000 from the exercise of common stock options. <P align="left"><B>4. FINANCING TRANSACTION</B> <P align="left"> In January 2000, the Company closed a private placement of 2,813,850 shares of its Common Stock to accredited investors (the “2000 Private Placement”). The issuance price of the Common Stock was $4.00 per share. Each share was sold together with a non-transferable warrant for the purchase of .25 additional shares at an exercise price of $6.75. The warrants have a three-year term. Gross proceeds from the 2000 Private Placement were $11,255,400. Placement agent fees were approximately $675,000, which was paid in cash. Additionally, non-transferable warrants for the purchase of 281,385 shares of the Company’s Common Stock, with an exercise price of $6.75 per share and a three-year term, were issued to the placement agent. Other <P align="center">5 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <DIV align="center"> <B>NOVAVAX, INC. AND SUBSIDIARIES</B> </DIV> <DIV align="center"> <B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)</B> </DIV> <P align="left"> costs connected with the 2000 Private Placement, including legal, stock exchange listing and registration fees, were approximately $82,000. Net proceeds to the Company from the 2000 Private Placement were approximately $10,500,000. <P align="center">6 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <!-- link2 "Item 2." --> <DIV align="left"><A NAME="000"></A></DIV> <P align="left"><B>Item 2.</B> <P align="center"><B>NOVAVAX, INC. AND SUBSIDIARIES</B> <DIV align="center"> <B>MANAGEMENT’S DISCUSSION AND ANALYSIS</B> </DIV> <DIV align="center"> <B>OF FINANCIAL CONDITION AND RESULTS OF OPERATION</B> </DIV> <P align="left"> The following discussion may contain statements that are not purely historical. Certain statements contained herein or as may otherwise be incorporated by reference herein constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include but are not limited to statements regarding future product development and related clinical trials and statements regarding future research and development. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. <P align="left"> Such factors include, among other things, the following: general economic and business conditions; competition; unexpected changes in technologies and technological advances; ability to obtain rights to technology; ability to obtain and enforce patents; ability to commercialize and manufacture products; statements regarding establishment of commercial-scale manufacturing capabilities; statements regarding future collaboration with industry partners; results of pre-clinical studies; research and development activities; business abilities and judgment of personnel; availability of qualified personnel; changes in, or failure to comply with, governmental regulations; ability to obtain adequate financing in the future; and other factors referenced herein. <P align="left"> All forward-looking statements contained in this document are based on information available to the Company on the date hereof, and the Company assumes no obligation to update any such forward-looking statements. Accordingly, past results and trends should not be used to anticipate future results or trends. <P align="left"> The following is a discussion of the historical consolidated financial condition and results of operations of Novavax, Inc. and its subsidiaries and should be read in conjunction with the consolidated financial statements and notes thereto set forth in this Form 10-Q. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company’s SEC filings, including, but not limited to, the Company’s Annual Report on Form 10-K for the year ended December 31, 1999. <P align="left"><B>Results of Operations</B> <P align="left"> The Company has incurred net losses since its inception from the development of its technologies for human pharmaceuticals, vaccines and vaccine adjuvants. Novavax expects the losses to increase in the near-term as it conducts additional human clinical trials and seeks regulatory approval for its product candidates. The Company also expects to continue to incur substantial operating losses over the extensive time period required to develop the Company’s products, or until such time as revenues, to offset the costs, are sufficient to fund its operations. <P align="left"><B>Three months ended March 31, 2000 compared to 1999</B> <P align="left"> The net loss was $1,350,000, compared to $881,000 for 1999. Revenues of $710,000 were recognized during the three months ended March 31, 2000, compared to $76,000 for the same period in the prior year. Revenues included $250,000 from a license agreement entered into in October 1999 with Parkedale Pharmaceuticals, a wholly-owned subsidiary of King Pharmaceuticals, Inc. The license agreement included a non-refundable license payment of $1,000,000. Novavax recognized $250,000 under this agreement in the fourth quarter of 1999. The remaining $500,000 has been recorded in the accompanying balance sheet as Deferred Revenue and will be recognized as revenue during the remainder of 2000. Additional revenues were recognized under contracts with the National Institute of Health and other government agencies. Quarterly <P align="center">7 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <DIV align="center"> <B>NOVAVAX, INC. AND SUBSIDIARIES</B> </DIV> <DIV align="center"> <B>MANAGEMENT’S DISCUSSION AND ANALYSIS</B> </DIV> <DIV align="center"> <B>OF FINANCIAL CONDITION AND RESULTS OF OPERATION — (Continued)</B> </DIV> <P align="left"> fluctuations in revenues result from numerous factors including the timing of contracts with industry partners and completion of research and products due under these contracts. <P align="left"> General and administrative expenses were $641,000 for the three months ended March 31, 2000, compared to $468,000 incurred for the same period in 1999. The $173,000 or 37% increase in these expenses relate to increased salaries expense due to an increase in the number of employees as well as fees related to financing and other transactions. The Company expects to further increase the number of administrative employees during the remainder of 2000. <P align="left"> Research and development expenses were $1,524,000 and $497,000 for the three months ended March 31, 2000 and 1999, respectively. This $1,027,000 or 207% increase in these expenses relates principally to $583,000 in costs incurred by the Biomedical Services Division, which was acquired in August 1999. The remaining increase of $444,000 relates primarily to costs associated with the Company’s Phase III clinical trial for its ESTRASORB product. Novavax expects costs related to its clinical trials to increase during the remainder of 2000. <P align="left"> Net interest income was $105,000 and $8,000 for the three months ended March 31, 2000 and 1999, respectively. The increase in the interest income relates to higher average cash balances during the first quarter of 2000 compared to the same period in the prior year. <P align="left"><B>Liquidity and Capital Resources</B> <P align="left"> Novavax’s capital requirements depend on numerous factors, including but not limited to the progress of its research and development programs, the progress of pre-clinical and clinical testing, the time and costs involved in obtaining regulatory approvals, the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights, competing technological and market developments, and changes in Novavax’s development and commercialization activities and arrangements. The Company has three products in clinical trials. Future activities including clinical development and the establishment of commercial-scale manufacturing capabilities are subject to the Company’s ability to raise funds through equity financing, or collaborative arrangements with industry partners. <P align="left"> In January 2000, the Company closed a private placement of 2,813,850 shares of its Common Stock to accredited investors (the “2000 Private Placement”). The issuance price of the Common Stock was $4.00 per share. Each share was sold together with a non-transferable warrant for the purchase of .25 additional shares at an exercise price of $6.75. The warrants have a three-year term. Gross proceeds from the 2000 Private Placement were $11,255,400. Placement agent fees were approximately $675,000, which was paid in cash. Additionally, non-transferable warrants for the purchase of 281,385 shares of the Company’s Common Stock, with an exercise price of $6.75 per share and a three-year term, were issued to the placement agent. Other costs connected with the 2000 Private Placement, including legal, stock exchange listing and registration fees, were approximately $82,000. Net proceeds to the Company from the 2000 Private Placement were approximately $10,500,000. <P align="left"> During the three month period ended March 31, 2000, the Company received $4,007,000 from the exercise of common stock warrants that had been issued in connection with earlier private placements of Novavax’s common stock. Included in this amount was $3,600,000 received from Anaconda Opportunity Fund, a principal of which is a director of Novavax. In connection with additional warrants granted to and exercised by Anaconda, the Company issued 193,680 shares of its common stock in a “cashless’ exercise where Novavax accepted 465,410 shares of its common stock, valued at $4,800,000. These shares are included as treasury stock in the accompanying consolidated balance sheets. Additionally, the Company received approximately $1,475,000 from the exercise of common stock options. <P align="center">8 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <DIV align="center"> <B>NOVAVAX, INC. AND SUBSIDIARIES</B> </DIV> <DIV align="center"> <B>MANAGEMENT’S DISCUSSION AND ANALYSIS</B> </DIV> <DIV align="center"> <B>OF FINANCIAL CONDITION AND RESULTS OF OPERATION — (Continued)</B> </DIV> <DIV> </DIV> <DIV align="left"> <B>Liquidity and Capital Resources, continued</B> </DIV> <P align="left"> The Company used $1,982,000 during the three month period ended March 31, 2000 to fund the activities of its research and development programs and costs associated with obtaining regulatory approvals, pre-clinical and clinical testing. These amounts were funded by cash balances available to the Company. <P align="left"> Cash and cash equivalents on March 31, 2000 totaled $14,693,000. Novavax estimates that based on historical levels of spending and revenues, existing cash resources will be sufficient to finance its operations for approximately 18 to 24 months from March 31, 2000. Past spending levels are not necessarily indicative of future spending. Future expenditures for product development especially related to outside testing and human clinical trials are discretionary and, accordingly, can be adjusted to available cash. As the Company continues to progress in its clinical development activities and commercial scale-up of product manufacturing, it anticipates increases in spending associated with these activities. Moreover, the Company will seek to establish one or more collaborations with industry partners to defray the costs of clinical trials and other related activities. Novavax will also consider sources of additional funds through public or private equity or debt financing, collaborative arrangements with pharmaceutical companies or from other sources. There can be no assurance that additional funding or bank financing will be available at all or on acceptable terms to permit successful commercialization of Novavax’s technologies and products. If adequate funds are not available, Novavax may be required to significantly delay, reduce the scope of or eliminate one or more of its research or development programs, or seek alternative measures including arrangements with collaborative partners or others that may require Novavax to relinquish rights to certain of its technologies, product candidates or products. <!-- link2 "Item 5. Quantitative and Qualitative Disclosures about Market Risk" --> <DIV align="left"><A NAME="001"></A></DIV> <P align="left"><B>Item 5. Quantitative and Qualitative Disclosures about Market Risk</B> <P align="left"> Not Applicable. <P align="center">9 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <P align="center"><B>NOVAVAX, INC. AND SUBSIDIARIES</B> <DIV> </DIV> <!-- link1 "PART II OTHER INFORMATION" --> <DIV align="left"><A NAME="002"></A></DIV> <DIV align="center"> <B>PART II OTHER INFORMATION</B> </DIV> <!-- link2 "Item 1 -- Legal Proceedings" --> <DIV align="left"><A NAME="003"></A></DIV> <P align="left"><B>Item 1 — Legal Proceedings</B> <P align="left"> The Company is not a party to any material pending legal proceedings. <!-- link2 "Item 2 -- Changes in Securities and Uses of Proceeds" --> <DIV align="left"><A NAME="004"></A></DIV> <P align="left"><B>Item 2 — Changes in Securities and Uses of Proceeds</B> <P align="left"> None <!-- link2 "Item 3 -- Defaults upon Senior Securities" --> <DIV align="left"><A NAME="005"></A></DIV> <P align="left"><B>Item 3 — Defaults upon Senior Securities</B> <P align="left"> None <!-- link2 "Item 4 -- Submission of Matters to a Vote of Security Holders" --> <DIV align="left"><A NAME="006"></A></DIV> <P align="left"><B>Item 4 — Submission of Matters to a Vote of Security Holders</B> <P align="left"> None <!-- link2 "Item 5 -- Other Information" --> <DIV align="left"><A NAME="007"></A></DIV> <P align="left"><B>Item 5 — Other Information</B> <P align="left"> None <!-- link2 "Item 6 -- Exhibits and Reports on Form 8-K" --> <DIV align="left"><A NAME="008"></A></DIV> <P align="left"><B>Item 6 — Exhibits and Reports on Form 8-K </B> <P> <TABLE width="100%" border="0" cellpadding="0" cellspacing="0"> <TR> <TD width="3%"></TD> <TD width="4%"></TD> <TD width="93%"></TD> </TR> <TR valign="top"> <TD> </TD> <TD>(a) </TD> <TD align="left"> Exhibits: <BR> Exhibit 27 — Financial Data Schedule</TD> </TR> <TR> <TD> </TD> </TR> <TR valign="top"> <TD> </TD> <TD>(b) </TD> <TD align="left"> Reports on Form 8-K <BR> None</TD> </TR> </TABLE> <P align="center">10 <!-- PAGEBREAK --> <P><HR noshade><P> <H5 align="left"><A HREF="#toc">Table of Contents</A></H5><P> <P align="center"><B>NOVAVAX, INC. AND SUBSIDIARIES</B> <DIV> </DIV> <!-- link2 "SIGNATURES" --> <DIV align="left"><A NAME="009"></A></DIV> <DIV align="center"> <B>SIGNATURES</B> </DIV> <P align="left"> 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 duly authorized. <P> <TABLE width="100%" border="0" cellpadding="0" cellspacing="0"> <TR> <TD width="38%"></TD> <TD width="62%"></TD> </TR> <TR valign="top"> <TD> </TD> <TD align="left"> NOVAVAX, INC.</TD> </TR> <TR valign="top"> <TD> </TD> <TD align="left"> (Registrant)</TD> </TR> </TABLE> <P align="left"> Date: May 12, 2000 <P> <TABLE width="100%" border="0" cellpadding="0" cellspacing="0"> <TR> <TD width="38%"></TD> <TD width="2%"></TD> <TD width="60%"></TD> </TR> <TR valign="top"> <TD> </TD> <TD>By: </TD> <TD align="left"> /s/ DONALD J. MACPHEE <BR> <HR size="1" align="left"></TD> </TR> </TABLE> <TABLE width="100%" border="0" cellpadding="0" cellspacing="0"> <TR> <TD width="38%"></TD> <TD width="62%"></TD> </TR> <TR valign="top"> <TD> </TD> <TD align="left"> Donald J. MacPhee <BR> Vice President and Treasurer <BR> Chief Financial Officer <BR> (Principal Financial and Accounting Officer)</TD> </TR> </TABLE> <P align="center">11 </BODY> </HTML>