UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For
the quarterly period ended
For the transition period from ___________ to ___________
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
Commission File Number |
(IRS Employee Identification No.) |
(Address of Principal Executive Offices)
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of each class registered: | Trading symbol: | Name of each exchange on which registered: | ||
The
(Nasdaq Capital Market) |
Securities registered under Section 12(g) of the Exchange Act: None
Indicate
by check mark whether the issuer (1) 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.
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
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12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or smaller reporting company filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):
| Large Accelerated Filer ☐ | |
| 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
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The number of shares issued and outstanding of each of the issuer’s classes of common equity as of November 8, 2023 was .
GENELUX CORPORATION
FORM 10-Q
September 30, 2023
TABLE OF CONTENTS
| PART I— FINANCIAL INFORMATION | ||
| Item 1. | Condensed Financial Statements | 3 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 |
| Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 34 |
| Item 4. | Control and Procedures | 34 |
| PART II— OTHER INFORMATION | 35 | |
| Item 1 | Legal Proceedings | 35 |
| Item 1A | Risk Factors | 35 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 108 |
| Item 3. | Defaults Upon Senior Securities | 109 |
| Item 4. | Mine Safety Disclosures | 109 |
| Item 5. | Other Information | 109 |
| Item 6. | Exhibits | 109 |
| SIGNATURES | 110 | |
| 2 |
Genelux Corporation
Condensed Balance Sheets
(In thousands, except for share amounts and par value data)
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses and other current assets | ||||||||
| Total Current Assets | ||||||||
| Property and equipment, net | ||||||||
| Right of use assets | ||||||||
| Deferred offering costs | ||||||||
| Other assets | ||||||||
| Total Other Assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accrued payroll and payroll taxes | ||||||||
| Accrued interest payable | ||||||||
| Accrued interest payable - director and shareholders | ||||||||
| Deferred revenue | ||||||||
| Warrant liabilities | ||||||||
| Lease liability, current portion | ||||||||
| Notes payable - shareholders, net of debt discount of $ | ||||||||
| Convertible notes payable - shareholders, current portion, including $ | ||||||||
| Total Current Liabilities | ||||||||
| Long-term Liabilities | ||||||||
| Lease liability, long-term portion | ||||||||
| Convertible notes payable, net of debt discount of $ | ||||||||
| Total Long-term Liabilities | ||||||||
| Total Liabilities | ||||||||
| Shareholders’ Equity (Deficit) | ||||||||
| Preferred stock, Series A through K, par value $, shares authorized as of 9/30/2023 and authorized as of 12/31/2022; shares and shares issued and outstanding, respectively; | ||||||||
| Common stock, par value $, shares authorized; and shares issued and outstanding, respectively | ||||||||
| Treasury stock, shares, at cost | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Shareholders’ Equity (Deficit) | ( | ) | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) | $ | $ | ||||||
The accompanying notes are an integral part of these condensed financial statements.
| 3 |
Genelux Corporation
Condensed Statements of Operations
(in thousands, except for share amounts and per share data)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Income (loss) from operations | ( | ) | ( | ) | ||||||||||||
| Other income (expenses): | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ||||||||||
| Debt discount amortization | ( | ) | ( | ) | ( | ) | ||||||||||
| Financing costs | ( | ) | ( | ) | ||||||||||||
| Debt extinguishment costs | ( | ) | ||||||||||||||
| Gain on forgiveness of PPP loan payable | ||||||||||||||||
| Total other expenses, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income (loss) before provision for foreign income taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| Provision for foreign income taxes | ( | ) | ( | ) | ||||||||||||
| NET INCOME (LOSS) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| INCOME (LOSS) PER COMMON SHARE - BASIC | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING - BASIC | ||||||||||||||||
| INCOME (LOSS) PER COMMON SHARE - DILUTED | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING - DILUTED | ||||||||||||||||
The accompanying notes are an integral part of these condensed financial statements.
| 4 |
Genelux Corporation
Condensed Statements of Shareholders’ Equity (Deficit) (Unaudited)
(in thousands, except share amounts)
| Accumulated | ||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Additional | Other | ||||||||||||||||||||||||||||||||||||||
| Series A through K | Common Stock | Treasury Stock | Paid-in | Comprehensive | Accumulated | |||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Income | Deficit | Total | |||||||||||||||||||||||||||||||
| Balance, June 30, 2023 (unaudited) | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||
| Stock compensation | - | - | - | |||||||||||||||||||||||||||||||||||||
| Issuance of common shares upon the closing of private financings, net of offering costs | - | - | ||||||||||||||||||||||||||||||||||||||
| Fair value of vested restricted stock units | - | - | ||||||||||||||||||||||||||||||||||||||
| Cost of stock option repricing | - | - | - | |||||||||||||||||||||||||||||||||||||
| Fair value of warrants issued in connection with the the conversion of convertible notes payable | - | - | - | |||||||||||||||||||||||||||||||||||||
| Issuance of common shares upon exercise of stock options | - | - | ||||||||||||||||||||||||||||||||||||||
| Issuance of common shares upon exercise of stock warrants | - | - | ||||||||||||||||||||||||||||||||||||||
| Net loss during the three months ended September 30, 2023 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, September 30, 2023 (unaudited) | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||
| Stock compensation | - | - | - | |||||||||||||||||||||||||||||||||||||
| Issuance of common shares upon the closing of the initial public offering, net of offering costs | - | - | ||||||||||||||||||||||||||||||||||||||
| Issuance of common shares upon the closing of private financings, net of offering costs | - | - | ||||||||||||||||||||||||||||||||||||||
| Issuance of common shares upon conversion of preferred stock | ( | ) | ( | ) | - | |||||||||||||||||||||||||||||||||||
| Issuance of common shares upon conversion of convertible notes payable, accrued interest and loan fees | - | - | ||||||||||||||||||||||||||||||||||||||
| Issuance of common shares upon conversion of preferred stock dividends payable | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Fair value of vested restricted stock units | - | - | ||||||||||||||||||||||||||||||||||||||
| Cost of stock option repricing | - | - | - | |||||||||||||||||||||||||||||||||||||
| Reclassification of warrant liabilities upon the closing of the initial public offering | - | - | - | |||||||||||||||||||||||||||||||||||||
| Fair value of warrants issued in connection with the the conversion of convertible notes payable | - | - | - | |||||||||||||||||||||||||||||||||||||
| Conversion of notes payable-shareholders and accrued interest | - | - | ||||||||||||||||||||||||||||||||||||||
| Issuance of common shares upon exercise of stock options | - | - | ||||||||||||||||||||||||||||||||||||||
| Issuance of common shares upon exercise of stock warrants | - | - | ||||||||||||||||||||||||||||||||||||||
| Net loss during the nine months ended September 30, 2023 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, September 30, 2023 (unaudited) | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||
| Balance, June 30, 2022 (unaudited) | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||
| Stock compensation | - | - | - | |||||||||||||||||||||||||||||||||||||
| Shares issued upon exercise of stock warrant | - | - | ||||||||||||||||||||||||||||||||||||||
| Net income during the three months ended September 30, 2022 | - | - | - | |||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2022 (unaudited) | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||
| Balance, December 31, 2021 | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||
| Stock compensation | - | - | - | |||||||||||||||||||||||||||||||||||||
| Shares issued upon exercise of stock warrants | - | - | ||||||||||||||||||||||||||||||||||||||
| Net loss during the nine months ended September 30, 2022 | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, September 30, 2022 (unaudited) | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed financial statements.
| 5 |
Genelux Corporation
Condensed Statements of Cash Flows
(In thousands)
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2023 | 2022 | |||||||
| (Unaudited) | ||||||||
| Cash Flows from Operating Activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation expense | ||||||||
| Right-of-use assets | ||||||||
| Amortization of debt discount | ||||||||
| Stock compensation | ||||||||
| Fair value of restricted stock units | ||||||||
| Cost of stock option repricing | ||||||||
| Debt extinguishment costs | ||||||||
| Fair value of warrants issued in connection with the the conversion of convertible notes payable | ||||||||
| Gain on forgiveness of PPP loan payable | ( | ) | ||||||
| Changes in Assets and Liabilities | ||||||||
| (Increase) Decrease in: | ||||||||
| Prepaid expenses and other assets | ( | ) | ||||||
| (Decrease) Increase in: | ||||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Accrued payroll and payroll taxes | ||||||||
| Accrued interest payable | ||||||||
| Deferred revenue | ( | ) | ( | ) | ||||
| Lease liability | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from notes payable - shareholders | ||||||||
| Repayment of notes payable - shareholders | ( | ) | ||||||
| Repayment of convertible notes payable - shareholders | ( | ) | ||||||
| Payment of deferred offering costs | ( | ) | ( | ) | ||||
| Proceeds from the exercise of stock options | ||||||||
| Proceeds from the exercise of stock warrants | ||||||||
| Proceeds from common stock issued for cash in connection with the closing of the IPO | ||||||||
| Proceeds from common stock issued for cash in connection with the closing of private financings | ||||||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental cash flows disclosures: | ||||||||
| Interest paid | $ | $ | ||||||
| Taxes paid | $ | $ | ||||||
| Supplemental non-cash financing disclosures: | ||||||||
| Effect of the extension of right-of-use assets and operating leases | $ | $ | ||||||
| Reclassification of deferred offering costs to shareholders’ equity | $ | $ | ||||||
| Reclassification of warrant liabilities to shareholders’ equity | $ | $ | ||||||
| Conversion of convertible notes payable, accrued interest and loan fees to shareholders’ equity | $ | $ | ||||||
| Conversion of preferred stock to common stock | $ | $ | ||||||
| Conversion of dividends payable to shareholders’ equity | $ | $ | ||||||
| Conversion of notes payable-shareholders and accrued interest to shareholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these condensed financial statements.
| 6 |
GENELUX CORPORATION
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(In thousands, except for share amounts and per share data)
NOTE 1 – BASIS OF PRESENTATION
Organization and Operations
Genelux Corporation (“Genelux” or the “Company”), a Delaware Corporation, incorporated on September 4, 2001, is a biomedical company located in Westlake Village, California. The Company is engaged in the research and development of diagnostic and therapeutic solutions for cancer for which there is no effective treatment today. The Company is focused on the development of therapeutic approaches for cancer that are designed to generate a personalized multi-prong attack to overwhelm a tumor’s sophisticated defense mechanisms.
Basis of Presentation of Unaudited Financial Information
The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.
Liquidity and Capital Resources
The accompanying condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.
During
the year ended December 31, 2022, the Company incurred a net loss of $
During
the nine months ended September 30, 2023, the Company closed its initial public offering (“IPO”) and the two Private
Placements (see Note 9) and received $
The ability to continue as a going concern is dependent on the Company attaining and maintaining profitable operations in the future and raising additional capital to meet its obligations and repay its liabilities arising from normal business operations when they come due. Since inception, the Company has funded its operations primarily through equity and debt financings, and licensing income, and it expects to continue to rely on these sources of capital in the future.
No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in case of equity financing, or grant unfavorable terms in licensing future licensing agreements.
| 7 |
Reverse Stock Split
In
August 2022, the Company effected a
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of the financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. Significant estimates are used in the valuation of accruals for potential liabilities, valuations of stock-based compensation, and realization of deferred tax assets, among others. Actual results could differ from these estimates.
Basic loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of outstanding common shares during the period. Diluted loss per share is computed by dividing the net loss applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued.
For the nine months ended September 30, 2023 and 2022, the basic and diluted shares outstanding were the same, as potentially dilutive shares were considered anti-dilutive. The potentially dilutive securities consisted of the following:
| September 30, 2023 | September 30, 2022 | |||||||
| Convertible notes payable | ||||||||
| Common stock equivalent of Series A through K convertible preferred stock | ||||||||
| Stock options | ||||||||
| Stock warrants | ||||||||
| Restricted stock units | ||||||||
| Stock warrants, issuable in connection with convertible notes payable | ||||||||
| Total | ||||||||
Revenue Recognition
The Company records revenue under the guidance of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (Topic 606) which requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services.
The Company determines revenue recognition through the following steps:
| ● | Identification of the contract, or contracts, with a customer | |
| ● | Identification of the performance obligations in the contract |
| 8 |
| ● | Determination of the transaction price | |
| ● | Allocation of the transaction price to the performance obligations in the contract | |
| ● | Recognition of revenue when, or as, we satisfy a performance obligation. |
Under certain of the Company’s licensing, supply and collaboration agreements, it is entitled to receive payment upon the achievement of contingent milestone events or the performance of obligations. The Company recognizes revenue based on guidance in ASC 606. In evaluating revenue recognition under a license agreement, the Company uses a two-step process for determining whether a promised good or service (including a license of intellectual property) is distinct and, therefore, is a performance obligation: (1) consideration of the individual good or service (i.e., whether the good or service is capable of being distinct); and (2) consideration of whether the good or service is separately identifiable from other promises in the contract (i.e., whether the promise to transfer the good or service is distinct in the context of the contract). Amounts received prior to satisfying the revenue recognition criteria are recorded as deferred revenue on the Company’s balance sheet. Amounts expected to be recognized as revenue in the next 12 months following the balance sheet date are classified as current liabilities.
During
the year ended December 31, 2022, the Company, under its Newsoara agreement, invoiced and collected $
Cash Equivalents
During
the three and nine months ended September 30, 2023, the Company invested cash into money market funds. The total amount held in the money
market funds at September 30, 2023 was $
Deferred Offering Costs
The
Company capitalizes certain legal, professional, accounting and other third-party fees that are directly associated with in-process equity
issuances as deferred offering costs until such equity issuances are consummated. After consummation of the equity issuance, these costs
are recorded as a reduction in the capitalized amount associated with the equity issuance. Should the equity issuance be delayed or abandoned,
the deferred offering costs will be expensed immediately as a charge to operating expenses in the Statement of Operations. As of December
31, 2022, the Company incurred $
Fair Value of Financial Instruments
The Company determines the fair value of its assets and liabilities based on the exchange price in U.S. dollars that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company uses a fair value hierarchy with three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair value:
| ● | Level 1 — Quoted prices in active markets for identical assets or liabilities. | |
| ● | Level 2 — Inputs, other than Level 1, that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |
| ● | Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
| 9 |
Money market funds were valued by the Company using quoted prices in active markets for similar securities, which represent a Level 2 measurement within the fair value hierarchy. Cash equivalents consisted of money market funds at September 30, 2023.
The
carrying amount of the Company’s warrant liabilities of $
The Company measures all stock options and other stock-based awards granted based on the fair value of the award on the date of the grant and recognizes compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective award. The Company has elected to recognize forfeitures as they occur. The reversal of compensation cost previously recognized for an award that is forfeited because of a failure to satisfy a service or performance condition is recognized in the period of the forfeiture. Generally, the Company issues stock options with only service-based vesting conditions and records the expense for these awards using the straight-line method over the requisite service period.
The Company classifies stock-based compensation expense in its statements of operations in the same manner in which the award recipient’s payroll costs are classified or in which the award recipients’ service payments are classified.
The Company was a private company until the completion of its IPO on January 30, 2023. In 2022 and prior, the Company estimated the fair value of common stock using an appropriate valuation methodology, in accordance with the framework of the American Institute of Certified Public Accountants’ Technical Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation. Each valuation methodology includes estimates and assumptions that require the Company’s judgment. These estimates and assumptions include a number of objective and subjective factors, including external market conditions, guideline public company information, the prices at which the Company sold its common stock to third parties in arms’ length transactions, the rights and preferences of securities senior to the Company’s common stock at the time, and the likelihood of achieving a liquidity event such as an initial public offering or sale. Significant changes to the assumptions used in the valuations could result in different fair values of stock options at each valuation date, as applicable.
The fair value of each stock option grant is estimated using the Black-Scholes option-pricing model. The Company was a private company and lacked company-specific historical and implied volatility information. Therefore, it estimated its expected stock volatility based on the historical volatility of a publicly traded set of peer companies within the biotechnology industry with characteristics similar to the Company. The expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The expected term of stock options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is zero, based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, Credit Losses—Measurement of Credit Losses on Financial Instruments (“ASC 326”). The standard significantly changes how entities will measure credit losses for most financial assets, including accounts and notes receivables. The standard will replace today’s “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than incurred losses. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The standard is effective for the Company beginning January 1, 2023. The adoption of ASU 2016-13 did not have a material impact on the Company’s financial position, results of operations, and cash flows.
| 10 |
In May 2021, the FASB issued 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. ASU 2021-04 provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. An issuer measures the effect of a modification or exchange as the difference between the fair value of the modified or exchanged warrant and the fair value of that warrant immediately before modification or exchange. ASU 2021-04 introduces a recognition model that comprises four categories of transactions and the corresponding accounting treatment for each category (equity issuance, debt origination, debt modification, and modifications unrelated to equity issuance and debt origination or modification). ASU 2021-04 is effective for all entities for fiscal years beginning after December 15, 2021. The adoption of ASU 2021-04 did not have a material impact on the Company’s financial statements or disclosures.
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at September 30, 2023 and December 31, 2022:
| September 30, 2023 | December 31, 2022 | |||||||
| Furniture and office equipment | $ | $ | ||||||
| Laboratory equipment | ||||||||
| Computer equipment | ||||||||
| Leasehold improvements | ||||||||
| Construction-in-progress | ||||||||
| Less: accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation
expense for the nine months ended September 30, 2023 and 2022 was $
NOTE 4 – ACCRUED PAYROLL AND PAYROLL TAXES
As
of December 31, 2022, the Company had accrued compensation owed to the Company’s Chief Executive Officer, another employee and
two former employees that had accrued over a several year period in the amount of $
| 11 |
NOTE 5 – LEASE LIABILITIES
Operating Leases
The
Company accounts for leases in accordance with ASC 842, which requires a lessee to record a right-of-use asset and a corresponding lease
liability at the inception of the lease initially measured at the present value of the lease payments. In July 2018, the Company entered
into a long-term non-cancellable lease agreement for its manufacturing facility that requires aggregate average monthly payments of $
In
December 2020, the Company entered into a long-term non-cancellable lease agreement for a laboratory facility that requires aggregate
average monthly payments of $
In
July 2021, the Company entered into a long-term non-cancellable lease agreement for its new corporate headquarters that requires aggregate
average monthly payments of $
During
the nine months ended September 30, 2023 and 2022, the Company made combined aggregate payments of $
ASC
842 requires recognition in the statement of operations of a single lease cost, calculated so that the cost of the lease is allocated
over the lease term, generally on a straight-line basis. During the nine months ended September 30, 2023 and 2022, the Company reflected
combined amortization of the right of use assets of $
Other Leases
In
November 2019, the Company entered into a short-term lease agreement for one of its office facilities, which was subsequently extended
until December 2022 and is currently on a month-to-month basis. Rent expense was $
| 12 |
During
the year ended December 31, 2022, the Company, in anticipation of closing its IPO, entered into note payable agreements with several
shareholders totaling $
During
the nine months ended September 30, 2023, the Company extended the due date on the notes until April 30, 2023. During the nine months
ended September 30, 2023, the Company borrowed an additional $
In
consideration for the notes issued in 2022, the
| Exercise price | $ | |||
| Expected dividends | ||||
| Expected volatility | % | |||
| Risk free interest rate | % | |||
| Life of the warrants |
The
Company recognized a liability and recorded a debt discount at the date of issuance in 2022 in the amount of $
Convertible notes payable to shareholders consisted of the following as of September 30, 2023 and December 31, 2022:
| September 30, 2023 | December 31, 2022 | |||||||
| Convertible notes payable - shareholders (a) | $ | $ | ||||||
| Convertible note payable - shareholder (b) | ||||||||
| Convertible notes payable – shareholders (c) | ||||||||
| Convertible notes payable - shareholders (d) | ||||||||
| Less: current portion | ( | ) | ( | ) | ||||
| Convertible notes payable – shareholders – long - term portion | $ | $ | ||||||
| (a) |
| 13 |
| As of December 31, 2022, the principal amount due on the notes aggregated to $ and total accrued and unpaid interest of $ was owed on the notes. During the nine months ended September 30, 2023, $ of principal and $ of accrued and unpaid interest were paid on the notes, and the notes accrued interest of $. On January 30, 2023, the date of the closing of the IPO, total principal of $ and total accrued and unpaid interest of $ was owed on the notes. | |
| Upon the closing of the IPO, all of the principal plus accrued and unpaid interest, except for $ of principal and $ of accrued and unpaid interest, automatically converted into shares of the Company’s common stock based on the conversion price of $ per share. | |
| During the nine months ended September 30, 2023, the Company repaid $ of principal and $ of accrued interest on the notes payable. As of September 30, 2023, total principal of $ and total accrued and unpaid interest of $ was owed on the notes. The remaining note accrues interest at % per annum, is unsecured and is past due and payable on demand. | |
| (b) | |
| As of December 31, 2022, total principal of $ and total accrued and unpaid loan fees of $ was owed on the note. During the nine months ended September 30, 2023, the note accrued loan fees of $, and on January 30, 2023, the date of the closing of the IPO, total principal of $ and total accrued and unpaid loan fees of $ was owed on the notes. | |
| Upon the closing of the IPO, all of the principal plus accrued and unpaid loan fees automatically converted into shares of the Company’s common stock based on the conversion price of $. As of September 30, 2023, no principal, interest or loan fees was due on the notes. |
| (c) | |
| As of December 31, 2022, total principal of $ and total accrued and unpaid interest of $ was owed on the notes. During the nine months ended September 30, 2023, the notes accrued interest of $, and on January 30, 2023, the date of the closing of the IPO, total principal of $ and total accrued and unpaid interest of $ was owed on the notes. | |
| Upon the closing of the IPO, all of the principal plus accrued and unpaid interest automatically converted into shares of the Company’s common stock based on the conversion price of $, which was % of the IPO closing price. As of September 30, 2023, no principal or interest was due on the notes. | |
| (d) | |
| As of December 31, 2022, total principal of $ and total accrued and unpaid interest of $ was owed on the notes. During the nine months ended September 30, 2023, the notes accrued interest of $, and on January 30, 2023, the date of the closing of the IPO, total principal of $ and total accrued and unpaid interest of $ was owed on the notes. |
| 14 |
| Upon the closing of the IPO, all of the principal plus accrued and unpaid interest automatically converted into shares of the Company’s common stock based on the conversion price of $, which was % of the IPO closing price. As of September 30, 2023, no principal or interest was due on the notes. During the nine months ended September 30, 2023, the Company issued the shareholders stock warrants to purchase up to shares of the Company’s common stock at exercise prices of $ and $. All of the warrant shares were exercised during the nine months ended September 30, 2023, except for shares (see Note 9). |
NOTE 8 – CONVERTIBLE NOTES PAYABLE
Convertible notes payable consisted of the following as of September 30, 2023 and December 31, 2022:
| September 30, 2023 | December 31, 2022 | |||||||
| Convertible note payable | $ | $ | ||||||
| Less: debt discount | ( | ) | ||||||
| Convertible notes payable, net | $ | $ | ||||||
During
the years ended December 31, 2020 and 2021, the Company entered into convertible note payable agreements with an investing group under
which the Company borrowed an aggregate amount of $
As
of December 31, 2022, the Company owed $
The
Company calculated the relative fair value of the warrants issued to the noteholder and recognized a debt discount at the date of issuance.
The note discount is being amortized over the term of the note and the unamortized portion is recognized as a reduction to the carrying
amount of the note (a valuation debt discount). As of December 31, 2022, the notes had an unamortized debt discount balance of $
Upon
the closing of the IPO, all of the principal plus accrued and unpaid interest automatically converted into shares of the Company’s
common stock based on the conversion price of $
| 15 |
NOTE 9 - SHAREHOLDERS’ EQUITY
Preferred Stock
As of December 31, 2022, authorized shares and shares issued and outstanding of the Company’s preferred stock by series were as follows:
| Authorized Shares | Issued and Outstanding | Par Value | ||||||||||
| Series A Preferred Stock | ||||||||||||
| Series B Preferred Stock | ||||||||||||
| Series C Preferred Stock | ||||||||||||
| Series D Preferred Stock | ||||||||||||
| Series E Preferred Stock | ||||||||||||
| Series F Preferred Stock | ||||||||||||
| Series H Preferred Stock | ||||||||||||
| Series I Preferred Stock | ||||||||||||
| Series J Preferred Stock | ||||||||||||
| Series K Preferred Stock | ||||||||||||
| Total | ||||||||||||
Upon the closing of the Company’s IPO on January 30, 2023, all of the Company’s outstanding shares of Series A through Series K preferred stock automatically converted into shares of common stock, of which shares were attributable to conversion price adjustments based on a weighted-average anti-dilution formula.
As
of January 30, 2023, earned but undeclared and unpaid Series H dividends were $
In January 2023, the Company’s Certificate of Incorporation with the state of Delaware was amended to change the number of authorized preferred shares from to .
Common Stock
Authorized Shares
The Company’s Certificate of Incorporation authorizes the Company to issue up to of its common shares. Holders of shares of common stock have full voting rights, one vote for each share held of record. Shareholders are entitled to receive dividends as may be declared by the Board out of funds legally available therefore and share pro rata in any distributions to shareholders upon liquidation. Shareholders have no conversion, pre-emptive or subscription rights. All outstanding shares of common stock are fully paid and non-assessable. As of September 30, 2023 and December 31, 2022, there were and shares of common stock issued and outstanding, respectively.
In January 2023, the Company’s Certificate of Incorporation with the state of Delaware was amended to change the number of authorized common shares from to .
Common Stock Issued for Cash Upon Closing of the Company’s IPO
On
January 30, 2023, the Company completed its underwritten IPO of its common stock, in which the Company issued and sold shares
of its common stock at a public offering price of $ per share. In February 2023, the Company sold an additional shares of
common stock at $ per share pursuant to the underwriters’ partial exercise of their option to purchase additional shares of
common stock. The total gross proceeds of the IPO were $
| 16 |
Common Stock Issued for Cash Upon Closing of the Company’s Private Placements
On
May 12, 2023, the Company entered into a securities purchase agreement (the “PIPE 1 SPA”) with certain investors (the “PIPE
1 Purchasers”), pursuant to which the Company agreed to sell and issue shares of its common stock in a private placement
transaction (the “First Private Placement”). The purchase price per share of common stock was $ per share. The initial
closing of the First Private Placement occurred in May 2023 (the “PIPE 1 Initial Closing”) subject to customary closing conditions.
The total gross proceeds to the Company at the PIPE 1 Initial Closing from the First Private Placement are expected to be approximately
$
On
June 9, 2023, the Company entered into another securities purchase agreement (the “PIPE 2 SPA”, and, together with the PIPE
1 SPA, the “Purchase Agreements”) with certain investors (the “PIPE 2 Purchasers”), pursuant to which the Company
agreed to sell and issue shares of the Company’s common stock in a private placement transaction (the “Second Private
Placement”, and, together with the First Private Placement, the “Private Placements”). The purchase price per share
of Common Stock was $ per share. The initial closing of this Second Private Placement occurred in June 2023 (the “PIPE 2 Initial
Closing”), subject to customary closing conditions. The total gross proceeds to the Company from the Second Private Placement are
expected to be approximately $
As
of September 30, 2023, the Company sold
shares of its common stock under the Purchase Agreements resulting in the total gross and net proceeds to the Company from the First
Private Placement and the Second Private Placement of $
In November 2023, we agreed to extend the funding deadline for $
Grant of Restricted Stock Units
The following table summarizes restricted common stock activity during the nine months ended September 30, 2023:
| Weighted | ||||||||||||
| Number of | Average Grant | |||||||||||
| Restricted | Date Fair | |||||||||||
| Shares | Fair Value | Value | ||||||||||
| Non-vested, December 31, 2022 | $ | |||||||||||
| Granted | ||||||||||||
| Vested | ( | ) | ( | ) | ||||||||
| Forfeited | ||||||||||||
| Non-vested, September 30, 2023 | $ | $ | ||||||||||
On February 17, 2023, the Company’s Board of Directors approved the issuance of a combined total of restricted shares (RSU) of the Company’s common stock to certain of its officers, directors and consultants. The fair value of the shares on the date of grant was $. All of the shares vested and were issued to the RSU holders during the three and nine months ended September 30, 2023. The RSU shares were granted under the Company’s 2022 Equity Incentive Plan.
| 17 |
During the nine months ended September 30, 2023, the Company’s Board of Directors approved the issuance of a combined total of restricted shares of the Company’s common stock to certain of its employees and directors. The fair value of the shares on the date of grant was $. All of the shares vest in one to four years. The RSU shares were granted under the Company’s 2022 Equity Incentive Plan. As none of the shares vested during the nine months ended September 30, 2023, no shares were issued relating to the grant.
During the nine months ended September 30, 2023, the Company recorded $ of stock compensation for the fair value vesting of restricted common stock, and as of September 30, 2023, $ of unamortized compensation remained.
Stock Options
In August 2009, the Company’s Board of Directors approved the adoption of the 2009 Equity Incentive Plan (“the 2009 Plan”). The 2009 Plan was initiated to encourage and enable employees, directors and consultants of the Company to acquire and retain a proprietary interest in the Company by ownership of its common stock. A total of of the authorized shares of the Company’s common stock may be subject to, or issued pursuant to, the terms of the plan. As of September 30, 2023 and December 31, 2022, no shares were available for grant under the 2009 plan.
In September 2018, the Company’s Board of Directors approved the adoption of the 2019 Equity Incentive Plan (“the 2019 Plan”). The 2019 Plan was initiated to encourage and enable employees, directors and consultants of the Company to acquire and retain a proprietary interest in the Company by ownership of its common stock. The 2019 Plan allows for the following types of awards: (i) Incentive Stock Options; (ii) Nonstatutory Stock Options; (iii) Stock Appreciation Rights; (iv) Restricted Stock Awards; (v) Restricted Stock Unit Awards; (vi) Other Stock Awards. The maximum number of shares of our common stock that may be issued under our 2019 Plan is shares. Outstanding stock awards granted under the 2009 Plan that (i) expire or terminate for any reason prior to exercise or settlement; (ii) are forfeited because of failure to meet a contingency or condition required to vest such shares or otherwise return to us; or (iii) are required or withheld (or not issued) to satisfy a tax withholding obligation in connection with an award or to satisfy the purchase price or exercise price of a stock award can be added to the authorized shares as Returning Shares, not to exceed shares. The maximum number of shares of our common stock under our 2019 Plan that may be issued is shares. As of September 30, 2023, a total of shares were available for grant under the 2019 plan.
In June 2022, the Company’s Board of Directors approved the adoption of the 2022 Equity Incentive Plan (“the 2022 Plan”). The 2022 Plan provides for the grant of incentive stock options (ISOs), to employees, including employees of any parent or subsidiary, and for the grant of nonstatutory stock options (NSOs), stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other forms of stock awards to employees, directors, and consultants, including employees and consultants of our affiliates. The 2022 Plan is a successor to the 2019 Plan. No further grants will be made under the 2019 Plan. The maximum number of shares of the Company’s common stock under the 2022 Plan that may be issued is shares. In addition, the number of shares of the Company’s common stock reserved for issuance under the 2022 Plan will automatically increase on January 1 of each calendar year, starting on January 1, 2024 and continuing through and including January 1, 2032, in an amount equal to % of the total number of shares of our common stock outstanding on the last day of the calendar month before the date of each automatic increase, or a lesser number of shares determined by the Company’s Board of Directors. During the nine months ended September 30, 2023, a total of option shares of the Company’s common stock, with a fair value of $, were granted under the 2022 Plan, along with RSU shares. As of September 30, 2023, a total of shares were available for grant under the 2022 plan.
In September 2023, the Company’s Board of Directors approved the adoption of the Company’s 2023 Inducement Plan (the “Inducement Plan”) to reserve shares of the Company’s common stock to be used exclusively for grants of awards to individuals that were not previously employees or directors of the Company as an inducement material to the individual’s entry into employment with the Company. The Inducement Plan provides for the grant of nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance-based cash and stock awards, and other stock-based awards. In addition, forms of (i) Stock Option Grant Notice, Stock Option Agreement and Notice of Exercise and (ii) Restricted Stock Unit Grant Notice and Restricted Stock Unit Award Agreement, for both (a) executive officers and (b) employees at or below the vice president level, were adopted and approved for use with the Inducement Plan. The terms and conditions of the Inducement Plan are substantially similar to the Company’s stockholder-approved 2022 Equity Incentive Plan. During the nine months ended September 30, 2023, a total of shares of the Company’s common stock, with a fair value of $, were granted under the Inducement Plan. As of September 30, 2023, a total of shares were available for grant under the Inducement plan.
| 18 |
Option exercise prices are set forth in the Grant Notice, without commission or other charge, provided however, that the price per share of the shares subject to the option shall not be less than the greater of Options to employees, directors and consultants generally vest and become exercisable over a period not exceeding four years. Options typically expire ten years after date of grant.
The Company’s policy is to recognize compensation cost for awards with only service conditions on a straight- line basis over the requisite service period for the entire award. Additionally, the Company’s policy is to issue new shares of common stock to satisfy stock option exercises. The Company applied fair value accounting for all share-based payments awards. The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model.
Stock Option Grants during the Nine Months Ended September 30, 2023
During the nine months ended September 30, 2023, under its 2022 Plan and Inducement Plan, the Company’s Board of Directors approved the granting of options to certain employees and directors to purchase shares of its common stock with an exercise price of $ per share. The options and had an aggregate fair value of $ at the date of grant.
| Exercise price | $ | |||
| Expected dividends | ||||
| Expected volatility | % | |||
| Risk free interest rate | % | |||
| Expected life of options | - |
During the nine months ended September 30, 2023, the Company recorded $ of stock compensation for the value of all options vesting during the period. As of September 30, 2023, unvested compensation of $ remained that will be amortized over the remaining vesting periods, through September 2027. The aggregate intrinsic value for option shares outstanding at September 30, 2023 was $.
At the time of the issuances of stock options, the Company believed the Company’s estimates of the fair value for financial reporting purposes of the Company’s common stock were reasonable and consistent with the Company’s understanding of how similarly situated companies in the industry were valued.
| Exercise | Weighted | |||||||||||
| Number of | Price Range | Average | ||||||||||
| Option Shares | Per Share | Exercise Price | ||||||||||
| Balance, December 31, 2022 | $ | - | $ | |||||||||
| Granted | ||||||||||||
| Cancelled | ||||||||||||
| Exercised | ( | ) | – | |||||||||
| Expired | ||||||||||||
| Balance, September 30, 2023 | $ | - | $ | |||||||||
| Vested and exercisable, September 30, 2023 | $ | - | $ | |||||||||
| Unvested, September 30, 2023 | $ | – | $ | |||||||||
| Options Outstanding | Options Exercisable | |||||||||||||||||||||||||
| Average | Average | |||||||||||||||||||||||||
| Remaining | Weighted | Remaining | Weighted | |||||||||||||||||||||||
| Range of Exercise | Number | Contractual Life | Average
| Number | Contractual Life | Average | ||||||||||||||||||||
| Prices | Outstanding | (in years) | Price | Exercisable | (in years) | Price | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||||||
| - | ||||||||||||||||||||||||||
| — | ||||||||||||||||||||||||||
| $ | - | $ | $ | |||||||||||||||||||||||
| 19 |
Stock Option Repricing
In
September 2022, the Company’s Board of Directors approved a stock option repricing whereby the exercise prices of previously granted
and unexercised options held by certain employees, directors and key advisers with exercise prices between $ and $ per share,
would be adjusted (the “Stock Option Repricing”) to equal the initial offering price, contingent and effective upon the completion
of the Company’s IPO. In connection with the closing of the IPO, the Stock Option Repricing was completed and the options to purchase
shares of the Company’s common stock, with exercise prices previously between $ and $, were repriced to the
initial offering price of $ per share, of which a total of shares of Common Stock are held by executive officers and directors.
The total cost of the repricing was $
Stock Option Exercises
During the nine months ended September 30, 2023, a total of option shares were exercised for total proceeds
of $
Stock Warrants
The table below summarizes the Company’s warrants activities for the nine months ended September 30, 2023:
| Exercise | Weighted | |||||||||||
| Number of | Price Range | Average | ||||||||||
| Warrant Shares | Per Share | Exercise Price | ||||||||||
| Balance, December 31, 2022 | $ | - | $ | |||||||||
| Granted | - | |||||||||||
| Cancelled | ( | ) | ||||||||||
| Exercised | ( | ) | – | |||||||||
| Expired | ( | ) | ||||||||||
| Balance, September 30, 2023 | $ | - | $ | |||||||||
| Vested and exercisable, September 30, 2023 | $ | - | $ | |||||||||
| 20 |
The following table summarizes information concerning outstanding and exercisable warrants as of September 30, 2023:
| Warrants Outstanding | Warrants Exercisable | |||||||||||||||||||||||||
| Average | Average | |||||||||||||||||||||||||
| Remaining | Weighted | Remaining | Weighted | |||||||||||||||||||||||
| Range of Exercise | Number | Contractual Life | Average Exercise | Number | Contractual Life | Average Exercise | ||||||||||||||||||||
| Prices | Outstanding | (in years) | Price | Exercisable | (in years) | Price | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||||||
| – | ||||||||||||||||||||||||||
| $ | – | $ | $ | |||||||||||||||||||||||
Upon
the closing of the IPO and the overallotment exercises, the Company agreed to issue the underwriters warrants entitling them to purchase
up to
During
the nine months ended September 30, 2023, the Company granted warrants to certain of its lenders to purchase up to
During
the nine months ended September 30, 2023, the Company granted warrants to certain of its lenders to purchase up to
During
the nine months ended September 30, 2023, a warrant holder completed a cashless exercise of a warrant to purchase
The aggregate intrinsic value for warrant shares outstanding at September 30, 2023 was $.
NOTE 10 - LEGAL MATTERS
As of September 30, 2023, we were involved in one pending litigation. Although the results of legal proceedings could not be predicted with certainty as of that date, we did not believe that there was a reasonable possibility that the final outcome of this matter would have a material adverse effect on our business or financial results.
Subsequently, on October 27, 2023, the Los Angeles County Superior Court granted the Company’s motion for summary judgment on all outstanding claims with prejudice. On November 6, 2023, the court issued an order and final judgment confirming its ruling.
In the future, we may be involved in additional actual and/or threatened legal proceedings, claims, investigations and government inquiries arising in the ordinary course of our business, including legal proceedings, claims, investigations and government inquiries involving intellectual property, data privacy and security, other torts, illegal or objectionable content, consumer protection, securities, employment, contractual rights, civil rights infringement, false or misleading advertising, or other legal claims relating to our business.
NOTE 11 - SUBSEQUENT EVENTS
In November 2023, in relation to the Company’s Private Placements
(see Note 9) the Company agreed to extend the funding deadline for $
Subsequent to September 30, 2023, the Company entered into a long-term
non-cancellable lease agreement for a new manufacturing facility that requires aggregate average monthly payments of $
Subsequent
to September 30, 2023, an underwriter of the Company’s IPO completed a cashless exercise of their warrant to purchase
Subsequent
to September 30, 2023, a warrant holder completed a cashless exercise of their warrant to purchase
Subsequent to September 30, 2023, an option holder exercised their options to purchase