Notes to the Condensed Consolidated Financial Statements
1. Organization and Basis of Presentation
Revelation Biosciences, Inc. (collectively with its wholly-owned subsidiaries, the “Company” or “Revelation”), formerly known as Petra Acquisition, Inc. (“Petra”), was incorporated in Delaware on November 20, 2019. The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities. On August 29, 2021 Petra and Old Revelation signed an agreement and plan of merger (the “Business Combination Agreement”). On January 10, 2022 (the “Closing Date”) the Company consummated its business combination, with Revelation Biosciences Sub, Inc. (“Old Revelation” or “Revelation Sub”), the Company's wholly owned subsidiary (the “Business Combination”). Since the Business Combination, the Company is a clinical-stage biopharmaceutical company and has been focused on the development and commercialization of immunologic therapeutics and diagnostics.
Business Combination
The Business Combination was accounted for as a reverse recapitalization with Revelation Sub as the accounting acquirer and Petra as the acquired company for accounting purposes. Accordingly, all historical financial information presented in the consolidated financial statements represents the accounts of Revelation Sub as if Revelation Sub is the predecessor to the Company. The common stock and net loss per share, prior to the Merger, have been retroactively restated as common stock and net loss per share reflecting the exchange ratio established in the Business Combination (the “Common Stock Exchange Ratio”).
Petra’s Common Stock, Public Warrants and Units were historically listed on the Nasdaq Capital Market under the symbols “PAIC,” “PAICW” and “PAICU,” respectively. On January 10, 2022, the Company’s units, common stock and warrants were listed on the Nasdaq Capital Market under the symbols “REVBU”, “REVB” and “REVBW”, respectively.
Unit Separation
On January 13, 2023, the Company’s units were mandatorily separated into one share of common stock and one Public Warrant and ceased trading on the Nasdaq Capital Market (see Note 9).
Reverse Stock Split
On January 30, 2023, the Company filed a Certificate of Amendment of the Third Amended and Restated Certificate of Incorporation (the “Certificate of Amendment”) reflecting the change in authorized shares of common stock from 100,000,000 to 500,000,000 and effecting a reverse stock split as of 12:01 a.m. Eastern Standard Time on February 1, 2023 with a ratio of 1-for-35 (the “Reverse Split”). As a result of the Reverse Split, every 35 shares of the Company’s issued and outstanding common stock automatically converted into one share of common stock, without any change in the par value per share. No fractional shares were outstanding following the Reverse Split. Any holder who would have received a fractional share of common stock automatically received an additional fraction of a share of common stock to round up to the next whole share. In addition, effective as of the same time as the Reverse Split, proportionate adjustments were made to all then-outstanding equity awards and warrants with respect to the number of shares of common stock subject to such award or warrant and the exercise price thereof. Furthermore, the number of shares of common stock available for issuance under the Company’s equity incentive plans were proportionately adjusted for the Reverse Split ratio, such that fewer shares are subject to such plans. All share numbers and preferred stock conversion numbers included herein have been retroactively adjusted to reflect the 1-for-35 Reverse Split (see Note 10).
Regaining NASDAQ Compliance
As previously reported in 2022, Nasdaq issued delist letters based on the Company’s non-compliance with the bid price and stockholders’ equity requirements for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rules 5550(a)(2) and 5550(b)(1), respectively. The Company’s compliance plan was approved by a Nasdaq hearing panel giving the Company until April 18, 2023 to regain compliance. On February 16, 2023, the Company received formal notice from The Nasdaq Stock Market (“Nasdaq”) stating that the Company’s common stock will continue to be listed and traded on Nasdaq, due to the Company having regained compliance with the minimum bid price requirement and minimum stockholders’ equity requirement for continued listing on Nasdaq, and all applicable listing standards.
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Liquidity and Capital Resources
Going Concern
As of March 31, 2023, the Company had an accumulated deficit of $19.2 million, a stockholders’ equity of $10.0 million and available cash and cash equivalents of $17.7 million. The Company expects to continue to incur significant operating and net losses, as well as negative cash flows from operations, for the foreseeable future as it continues to complete all necessary product development or future commercialization efforts. The Company has never generated revenue and does not expect to generate revenue from product sales unless and until it successfully completes development and obtains regulatory approval for REVTx-300, REVTx-100, REVTx-200, REVTx-99b, REVDx-501 or other product candidates, which the Company expects will not be for at least several years, if ever. The Company does not anticipate that its current cash and cash equivalents balance will be sufficient to sustain operations within one year after the date that the Company’s unaudited financial statements for March 31, 2023 were issued, which raises substantial doubt about its ability to continue as a going concern.
To continue as a going concern, the Company will need, among other things, to raise additional capital resources. The Company plans to seek additional funding through public or private equity or debt financings. The Company may not be able to obtain financing on acceptable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of the Company’s stockholders. If the Company is unable to obtain funding, it could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect the Company’s business operations.
The unaudited consolidated financial statements for March 31, 2023, have been prepared on the basis that the Company will continue as a going concern, and does not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability for the Company to continue as a going concern.
Basis of Presentation
The accompanying financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). All inter-company transactions and balances have been eliminated in consolidation. Certain amounts previously reported in the financial statements have been reclassified to conform to the current year presentation. Such reclassifications did not affect net loss, stockholders’ equity or cash flows.
2. Summary of Significant Accounting Policies
Unaudited Interim Condensed Consolidated Financial Statements
The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited financial statements as of December 31, 2022 and for the year ended December 31, 2022 and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position. The financial data and the other financial information contained in these notes to the condensed consolidated financial statements related to the three months ended March 31, 2023 are unaudited. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any other future annual or interim period. The condensed consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December 31, 2022 included on Form 10-K, as filed with the SEC on March 30, 2023. The accompanying condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited balance sheet at December 31, 2022 contained in the above referenced Form 10-K.
Use of Estimates
The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions about future events that affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of expenses. These estimates and assumptions are based on the Company’s best estimates and judgment. The Company regularly evaluates its estimates and assumptions using historical and industry experience and other factors; however, actual results could differ materially from these estimates and could have an adverse effect on the Company’s condensed consolidated financial statements.
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Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. The Company maintains its cash in checking and savings accounts. Income generated from cash held in savings accounts is recorded as interest income. The carrying value of the Company’s savings accounts is included in cash and approximates the fair value.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents. Bank deposits are held by accredited financial institutions and these deposits may at times be in excess of federally insured limits. The Company limits its credit risk associated with cash and cash equivalents by placing them with financial institutions that it believes are of high quality. The Company has not experienced any losses on its deposits of cash or cash equivalents.
Deferred Offering Costs
The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of the equity financing, these costs are recorded as a reduction of the proceeds generated as a result of the offering. Should the planned equity financing be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the statements of operations.
Property and Equipment, Net
Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which is five years. Maintenance and repairs are charged to operating expense as incurred. When assets are sold, or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any gain or loss is included in other income (expense).
Leases
The Company determines if an arrangement is a lease at inception. Lease right-of-use assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. For operating leases with an initial term greater than 12 months, the Company recognizes operating lease right-of-use assets and operating lease liabilities based on the present value of lease payments over the lease term at the commencement date. Operating lease right-of-use assets are comprised of the lease liability plus any lease payments made and excludes lease incentives. Lease terms include options to renew or terminate the lease when the Company is reasonably certain that the renewal option will be exercised or when it is reasonably certain that the termination option will not be exercised. For an operating lease, if the interest rate used to determine the present value of future lease payments is not readily determinable, the Company estimates the incremental borrowing rate as the discount rate for the lease. The Company’s incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in similar economic environments. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for the development of the Company’s product candidates, REVTx-300, REVTx-100, REVTx-200, REVTx-99a/b and diagnostic product, REVDx-501. Research and development costs are charged to expense as incurred. The Company records accrued expenses for estimated preclinical, clinical study and research expenses related to the services performed but not yet invoiced pursuant to contracts with research institutions, contract research organizations, and clinical manufacturing organizations that conduct and manage preclinical studies, clinical studies, research services, and development services on the Company’s behalf. Payments for these services are based on the terms of individual agreements and payment timing may differ significantly from the period in which the services were performed. Estimates are based on factors such as the work completed, including the level of patient enrollment. The Company monitors patient enrollment levels and related activity to the extent reasonably possible and makes judgments and estimates in determining the accrued balance in each reporting period. The Company’s estimates of accrued expenses are based on the facts and circumstances known at the time. If the Company underestimates or overestimates the level of services performed or the costs of these services, actual expenses could differ from estimates. As actual costs become known, the Company adjusts accrued expenses. To date, the Company has not experienced significant changes in estimates of clinical study and development services accruals.
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Patent Costs
Legal costs in connection with approved patents and patent applications are expensed as incurred, as recoverability of such expenditures is uncertain. These costs are recorded in general and administrative expense in the statements of operations.
Stock-based Compensation
The Company recognizes compensation expense related to stock options, third-party warrants, and Restricted Stock Unit (“RSU”) awards granted, based on the estimated fair value of the stock-based awards on the date of grant. The fair value of employee stock options and third-party warrants are generally determined using the Black-Scholes option-pricing model using various inputs, including estimates of historic volatility, term, risk-free rate, and future dividends. The grant date fair value of the stock-based awards, which have graded vesting, is recognized using the straight-line method over the requisite service period of each stock-based award, which is generally the vesting period of the respective stock-based awards. The Company recognizes forfeitures as they occur.
Income Taxes
Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates applied to taxable income in the years in which those temporary differences are expected to be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or loss in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized. Interest and penalties related to unrecognized tax benefits are included within the provision of income tax. To date, there have been no unrecognized tax benefits balances.
Fair Value
Fair value is defined as the exchange price 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. The Company’s valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company follows a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. These levels of inputs are the following:
•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.
The Company has determined that the measurement of the fair value the Class C Common Stock Warrants is a Level 3 fair value measurement and uses the Monte-Carlo simulation model for valuation (see Note 12).
Warrant Liability
The Company reviews the terms of debt instruments, equity instruments, and other financing arrangements to determine whether there are embedded derivative features, including embedded conversion options that are required to be bifurcated and accounted for separately as a derivative financial instrument. Additionally, in connection with the issuance of financing instruments, the Company may issue freestanding options and warrants.
The Company accounts for its common stock warrants in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). Based upon the provisions of ASC 480 and ASC 815, the Company accounts for common stock warrants as current liabilities if the warrant fails the equity classification criteria. Common stock warrants classified as liabilities are initially recorded at fair value on the grant date and remeasured at each balance sheet date with the offsetting adjustments recorded in change in fair value of warrant liabilities within the statements of operations.
The Company values its and common stock warrants classified as liabilities using the Black-Scholes option pricing model or other acceptable valuation models, including the Monte-Carlo simulation model.
Basic and Diluted Net Earnings (Loss) per Share
Basic net earnings (loss) per share is calculated by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period, without consideration of potential shares of common stock. Diluted net earnings (loss)
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per share is calculated by dividing net income (loss) by the weighted-average number of shares of common stock outstanding plus potential shares of common stock. Convertible preferred stock on an as converted basis, RSU awards, warrants and stock options outstanding are considered potential shares of common stock and are included in the calculation of diluted net earnings (loss) per share using the treasury stock method when their effect is dilutive. Potential shares of common stock are excluded from the calculation of diluted net earnings (loss) per share when their effect is anti-dilutive.
For the three months ended March 31, 2023, there were 925,213 million potential common shares that were included in the calculation of diluted net earnings per share, which consists of: (i) 843,036 shares of common stock issuable upon the alternative cashless exercise of the Class C Common Stock Warrants; (ii) 74,887 Class C Pre-Funded Warrants; and (iii) 7,290 Rollover RSU awards.
As of March 31, 2022, there were 412,594 potential shares of common stock, (see Note 10), that were excluded from the calculation of diluted net loss per share because their effect was anti-dilutive.
The basic and diluted weighted-average shares used to compute net earnings (loss) per share in the unaudited consolidated statements of operations includes the shares issued from the reverse stock split fractional share round up.
Comprehensive Loss
The Company has no components of comprehensive loss other than net loss. Thus, comprehensive loss is the same as net loss for the periods presented.
Segment Reporting
Operating segments are defined as components of an entity about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources in assessing performance.
The Company has one operating segment. The Company’s chief operating decision maker, its Chief Executive Officer, manages the Company’s operations for the purposes of allocating resources and evaluating financial performance.
Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by the Company as of the specified effective date. The Company has evaluated recently issued accounting pronouncements and does not believe any will have a material impact on the Company’s condensed consolidated financial statements or related financial statement disclosures.
3. Balance Sheet Details
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
March 31,
2023 |
|
|
December 31,
2022 |
|
Prepaid insurance costs |
|
$ |
213,750 |
|
|
$ |
— |
|
Other prepaid expenses & current assets |
|
|
118,637 |
|
|
|
73,132 |
|
Total prepaid expenses & current assets |
|
$ |
332,387 |
|
|
$ |
73,132 |
|
Property and Equipment, Net
Property and equipment, net consisted of the following:
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|
|
|
|
|
|
|
|
|
|
March 31,
2023 |
|
|
December 31,
2022 |
|
Lab equipment |
|
$ |
131,963 |
|
|
$ |
131,963 |
|
Total property and equipment, gross |
|
|
131,963 |
|
|
|
131,963 |
|
Accumulated depreciation |
|
|
(48,093 |
) |
|
|
(41,830 |
) |
Total property and equipment, net |
|
$ |
83,870 |
|
|
$ |
90,133 |
|
Depreciation expense was $6,263 for the three months ended March 31, 2023 and $6,262 for the three months ended March 31, 2022.
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Accrued Expenses
Accrued expenses consisted of the following:
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|
|
|
|
|
|
|
|
|
|
March 31,
2023 |
|
|
December 31,
2022 |
|
Accrued payroll and related expenses |
|
$ |
708,450 |
|
|
$ |
618,014 |
|
Accrued clinical study expenses |
|
|
39,610 |
|
|
|
175,061 |
|
Accrued professional fees |
|
|
135,865 |
|
|
|
75,722 |
|
Accrued clinical development costs |
|
|
90,000 |
|
|
|
111,700 |
|
Accrued other expenses |
|
|
— |
|
|
|
5,000 |
|
Total accrued expenses |
|
$ |
973,925 |
|
|
$ |
985,497 |
|
Included in accrued other expenses as of December 31, 2022, was the $5,000 redemption price of the Series A Preferred Stock that automatically redeemed on January 30, 2023 upon the effectiveness of the Certificate of Amendment implementing the reverse stock split and an increase in the authorized shares of common stock of the Company (see Note 8).
4. Commitments and Contingencies
Lease Commitments
In February 2021, Revelation Sub entered into an agreement to lease 2,140 square feet of laboratory space located at 11011 Torreyana Road, Suite 102, San Diego, California (the “Lease”). In January 2023, the Company signed an amendment extending the Lease until December 31, 2023, with a base monthly rent equal to $9,630. The Company is required to maintain a security deposit of $5,564. The Lease contains customary default provisions, representations, warranties and covenants. In addition to rent, the Lease requires the Company to pay certain taxes, insurance and operating costs relating to the leased premises. The Company has applied the short-term lease exception as the amendment is less than twelve months. The Lease is classified as an operating lease.
Rent expense was $24,991 for the three months ended March 31, 2023 and $15,067 for the three months ended March 31, 2022, respectively.
Future minimum lease payments under the operating lease as of March 31, 2023 is $86,670.
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Convertible Note Financing
On January 4, 2022, Revelation Sub entered into a convertible note with AXA Prime Impact Master Fund I SCA SICAV-RAIF (“AXA”) for $2.5 million with a fixed 10% annual interest rate, the proceeds of which were to be used by Revelation Sub to purchase shares of Petra common stock from redeeming Petra stockholders who redeemed shares of Petra common stock in connection with the Business Combination (the “Convertible Note”).
On January 6, 2022, Old Revelation purchased 7,001 shares of Petra common stock with the proceeds from the Convertible Note. Repayment of the Convertible Note was made on January 6, 2022 in accordance with the exchange terms of the Convertible Note by which 7,001 shares of Petra common stock that had been purchased by Revelation Sub were transferred to AXA.
Total interest incurred under the Convertible Note was $14,383 during the three months ended March 31, 2022.
Commitments
The Company enters into contracts in the normal course of business with third party service providers and vendors. These contracts generally provide for termination on notice and, therefore, are cancellable contracts and not considered contractual obligations and commitments.
Contingencies
From time to time, the Company may become subject to claims and litigation arising in the ordinary course of business. The Company is not a party to any material legal proceedings, nor is it aware of any material pending or threatened litigation other than described below.
Legal Proceedings
On February 18, 2022, LifeSci Capital LLC filed an action against the Company in the U.S. District Court for the Southern District of New York seeking damages in the amount of approximately $2.7 million in cash and $2.6 million in equity for unpaid banking and advisory fees. These fees arise under contracts which were entered into prior to the Business Combination and the Company is disputing the amount owed under those contracts and has asserted affirmative defenses including the defense that the amount of the fees sought exceeded the $8.5 million cap on transaction expenses in the Business Combination Agreement. This action remains pending as of the date of this report. The court has set an August 2023 date for the completion of written discovery. It is expected that any trial in the proceeding wouldn’t occur until the second half of 2024.
Of the LifeSci Capital LLC claim, $1.5 million relates to deferred underwriting fees from the Petra initial public offering (“IPO”). In addition, but separate from the claim, one of the underwriters in the Petra IPO who is not a participant in the litigation with LifeSci Capital LLC recently issued a demand letter seeking repayment for $655 thousand in fees owed from the Petra initial public offering that remain unpaid. Both of these amounts are recorded as a current liability in the financial statements as of March 31, 2023 under deferred underwriting commissions. No other liabilities are reflected in the financial statements as the amount of any additional liability cannot be determined at this time.
On September 27, 2022, A-IR Clinical Research Ltd. (“A-IR”) filed a claim against the Company in the High Court of Justice, in the Business and Property Courts of England and Wales, seeking £1.6 million in unpaid invoices, plus interest and costs, relating to the Company’s viral challenge study. The Company is disputing the claim because many of the invoices relate to work that was not performed and A-IR had misrepresented its qualifications to perform the contracted work. Since this proceeding is at a very early stage, no liability is reflected in the financial statements as the amount of any liability cannot be determined at this time.
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5. PIPE Investment
On January 25, 2022, the Company closed a private placement of 36,947 shares of unregistered common stock, 36,959 unregistered pre-funded warrants to purchase common stock with an exercise price of $0.0001, which did not have an expiration (the “Class A Pre-Funded Warrants”), and 73,905 unregistered warrants to purchase common stock with an exercise price of $115.15 per share of common stock which expire on July 25, 2027 (the “Class A Common Stock Warrants”) at a combined purchase price of $105.00 per share of common stock or $104.99965 per Class A Pre-Funded Warrant and associated Class A Common Stock Warrants to an institutional investor (the “PIPE Investment”). Net proceeds to the Company were $7.3 million.
Roth Capital Partners, LLC (“Roth”) was engaged by the Company to act as its exclusive placement agent for the private placement. The Company paid Roth a cash fee equal to 6.0% of the gross proceeds received by the Company in the private placement, totaling $465,600 and issued warrants to purchase up to 10,347 shares of common stock with an exercise price of $115.15 which expire on July 25, 2027 (the “Class A Placement Agent Common Stock Warrants”). The Class A Placement Agent Common Stock Warrants have substantially the same terms as the Class A Common Stock Warrants.
In connection with the private placement, the Company entered into a registration rights agreement with the institutional investor, pursuant to which the Company agreed to file a registration statement to register for resale of the shares of common stock, shares of common stock underlying the Class A Pre-Funded Warrants and shares of common stock underlying the Class A Common Stock Warrants. The company filed the registration statement with the SEC on Form S-1 (File No. 333-262410) on January 28, 2022 and it became effective on February 7, 2022.
On February 22, 2022, the Company received a notice of cash exercise for the total outstanding Class A Pre-Funded Warrants issued in connection with the PIPE Investment for 36,959 shares of common stock at a purchase price of $12.94.
Using the Black-Scholes option pricing model, the Class A Common Stock Warrants were valued in the aggregate at $3.6 million and the Class A Placement Agent Common Stock Warrants were valued in the aggregate at $0.5 million. Both were included in the issuance costs of the private placement and treated as equity (see Note 12).
6. 2022 Public Offering
On July 28, 2022, the Company closed a public offering of 238,096 shares of its common stock and 8,333,334 warrants to purchase up to 238,095 shares of its common stock with an exercise price of $21.00 per share which expire on July 28, 2027 (the “Class B Common Stock Warrants”) at a combined offering price of $21.00 per share and associated warrant (the “July 2022 Public Offering”). Net proceeds to the Company from the offering were $4.5 million.
Roth was engaged by the Company to act as its exclusive placement agent for the July 2022 Public Offering. The Company paid Roth a cash fee equal to 7.0% of the gross proceeds received by the Company in the public offering, totaling $350,000 and issued warrants to purchase up to 16,667 shares of common stock with an exercise price of $26.25 per share which expire on July 25, 2027 (the “Class B Placement Agent Common Stock Warrants”).
The shares of common stock, the shares of common stock underlying the Class B Common Stock Warrants and the shares of common stock underlying the Class B Placement Agent Common Stock Warrants were registered with the SEC on Form S-1 (File No. 333-266108), and was declared effective by the SEC on July 25, 2022.
Using the Black-Scholes option pricing model, the Class B Common Stock Warrants were valued in the aggregate at $4.5 million and the Class B Placement Agent Common Stock Warrants were valued in the aggregate at $0.3 million. Both were included in the issuance costs of the July 2022 Public Offering and treated as equity (see Note 12).
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7. 2023 Public Offering
On February 13, 2023, the Company closed a public offering of 2,888,600 shares of its common stock, 336,400 pre-funded warrants to purchase shares of common stock with an exercise price of $0.0001 which do not expire (the “Class C Pre-Funded Warrants”) and 6,450,000 warrants to purchase shares of common stock with an exercise price of $5.36 which expire on February 14, 2028 (the “Class C Common Stock Warrants”) at a combined offering price of $4.83 per share of common stock or $4.8299 per Class C Pre-Funded Warrant and associated Class C Common Stock Warrants (the “February 2023 Public Offering”). Net cash proceeds to the Company from the offering were $14.0 million.
Roth was engaged by the Company to act as its exclusive placement agent for the February 2023 Public Offering. The Company paid Roth a cash fee equal to 8.0% of the gross proceeds received by the Company in the public offering, totaling $1.2 million.
The shares of common stock, the shares of common stock underlying the Class C Pre-Funded Warrants and the shares of common stock underlying the Class C Common Stock Warrants were registered with the SEC on Form S-1 (File No. 333-268576), and was declared effective by the SEC on February 9, 2023.
On February 14, 2023, the Company received a notice of cash exercise for the Class C Pre-Funded Warrants issued in connection with the February 2023 Public Offering for 33,000 shares of common stock at purchase price of $3.30.
On March 2, 2023, the Company received a notice of cash exercise for the Class C Pre-Funded Warrants issued in connection with the February 2023 Public Offering for 160,000 shares of common stock at purchase price of $16.00.
As of March 31, 2023, there were 143,400 Class C Pre-Funded Warrants outstanding.
Using a Monte-Carlo simulation model, the Class C Common Stock Warrants were valued in the aggregate at $14.0 million and included in the issuance costs of the February 2023 Public Offering and treated as a liability (see Note 12).
8. Preferred Stock
Revelation Authorized Preferred Stock
The third amended and restated certificate of incorporation of the Company authorizes up to 5,000,000 shares of preferred stock, $0.001 par value per share, which may be issued as designated by the Board of Directors without stockholder approval. As of March 31, 2023 and as of the date of this Report, there were no shares of preferred stock issued and outstanding.
Series A Preferred Stock
On December 19, 2022, the Company closed the sale of one share of the Company’s Series A Preferred Stock, par value $0.001 per share, to its Chief Executive Officer for $5,000.00. The outstanding share of Series A Preferred Stock was automatically redeemed for $5,000.00 on January 30, 2023 upon the effectiveness of the Certificate of Amendment implementing the reverse stock split and the increase in authorized shares of common stock of the Company.
The Series A Preferred Stock had 50,000,000 votes and voted together with the outstanding shares of the Company’s common stock as a single class exclusively with respect to any proposal to amend the Company’s Restated Certificate of Incorporation to effect a reverse stock split of the Company’s common stock and to increase the number of authorized shares of common stock of the Company. The Series A Preferred Stock voted, without action by the holder, on any such proposal in the same proportion as shares of common stock voted. The Series A Preferred Stock otherwise had no voting rights except as otherwise required by the General Corporation Law of the State of Delaware.
9. Units
In connection with the Petra's IPO, in October of 2020, Petra issued unit's that consisted of one share of common stock and one warrant exercisable for 1/35 of a share of common stock with an exercise price of $402.50 per share which expire on January 10, 2027 (the “Public Warrants”), which traded on the Nasdaq Capital Market under the ticker symbol REVBU.
As disclosed in Note 1, on January 13, 2023, the Company’s units were mandatorily separated, ceased to exist and stopped trading on the Nasdaq Capital Market. At the time of separation there were 1,688,598 units separated, which represented 48,246 shares of common stock and 1,688,598 Public Warrants. No new shares of common stock or Public Warrants were issued in connection with the separation.
13
10. Common Stock
The Company is authorized under its articles of incorporation, as amended, to issue 500,000,000 shares of common stock, par value $0.001 per share.
Reverse Split
As disclosed in Note 1, on January 30, 2023, the Company filed the Certificate of Amendment reflecting the change in authorized shares of common stock from 100,000,000 to 500,000,000 and effecting a reverse stock split as of 12:01 a.m. Eastern Standard Time on February 1, 2023 with a ratio of 1-for-35. As a result of the Reverse Split, every 35 shares of the Company’s issued and outstanding common stock automatically converted into one share of common stock, without any change in the par value per share. No fractional shares were outstanding following the Reverse Split. Any holder who would have received a fractional share of common stock automatically received an additional fraction of a share of common stock to round up to the next whole share. In addition, effective as of the same time as the Reverse Split, proportionate adjustments were made to all then-outstanding equity awards and warrants with respect to the number of shares of common stock subject to such award or warrant and the exercise price thereof. Furthermore, the number of shares of common stock available for issuance under the Company’s equity incentive plans were proportionately adjusted for the Reverse Split ratio, such that fewer shares will be subject to such plans.
Common Stock Issuance due to the Business Combination
On the Closing Date, the Company issued an aggregate of 282,039 shares of common stock in exchange for all outstanding Revelation Sub stock. Net proceeds from the Business Combination were $11.9 million, of which $7.7 million was escrowed pursuant to a forward share purchase agreement entered into by Petra and an institutional investor and $4.2 million was released to Revelation.
Common Stock Issuance during the year ended December 31, 2022
On January 23, 2022, the Company issued 36,947 shares of common stock in connection with the PIPE Investment. The Company received net proceeds of $7.3 million.
On January 31, 2022, the Company issued 8,572 shares of common stock as collateral to Loeb & Loeb, LLP as part of a payment deferral of legal fees in connection with the Business Combination.
On February 2, 2022, the Company issued 54 shares of common stock in connection with a notice of cash exercise for the Company’s Rollover Warrants with a total purchase price of $5,073.
On February 4, 2022, the Company cancelled 21,429 shares in connection with the exercise of the forward share purchase agreement and approximately $7.7 million that was in escrow was paid to an institutional investor.
On February 22, 2022, the Company issued 36,959 shares of common stock in connection with a notice of cash exercise for the Class A Pre-Funded Warrants issued in connection with the PIPE Investment with a total purchase price of $12.94.
On July 28, 2022, the Company issued 238,096 shares of its common stock in connection with the July 2022 Public Offering. The Company received net proceeds of $4.5 million.
On July 29, 2022, the Company issued 3,435 shares of common stock in connection with vested Rollover RSU awards.
Common Stock Issuance during the three months ended March 31, 2023
On February 13, 2023, the Company issued 2,888,600 shares of its common stock in connection with the February 2023 Public Offering. The Company received net cash proceeds of $14.0 million.
On February 14, 2023, the Company issued 33,000 shares of common stock in connection with a notice of cash exercise for Class C Pre-Funded Warrants issued in connection with the February 2023 Public Offering with a total purchase price of $3.30.
On March 2, 2023, the Company issued 160,000 shares of common stock in connection with a notice of cash exercise for the Class C Pre-Funded Warrants issued in connection with the February 2023 Public Offering with a total purchase price of $16.00.
From March 13, 2023 to March 31, 2023, the Company issued 965,357 shares of common stock in connection with notices of alternative cashless exercise for the Class C Common Stock Warrants issued in connection with the February 2023 Public Offering.
As of March 31, 2023 and December 31, 2022, 4,729,839 and 682,882 shares of common stock were issued and outstanding, respectively. As of March 31, 2023, no cash dividends have been declared or paid.
14
The total shares of common stock reserved for issuance are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
March 31,
2023 |
|
|
March 31,
2022 |
|
Public Warrants (exercise price of $402.50 per share) |
|
|
300,332 |
|
|
|
300,332 |
|
Class A Common Stock Warrants (exercise price of $115.15 per share) |
|
|
73,905 |
|
|
|
73,905 |
|
Class A Placement Agent Common Stock Warrants (exercise price of $115.15 per share) |
|
|
10,347 |
|
|
|
10,347 |
|
Class B Common Stock Warrants (exercise price of $21.00 per share) |
|
|
238,096 |
|
|
|
— |
|
Class B Placement Agent Common Stock Warrants (exercise price of $26.25 per share) |
|
|
16,667 |
|
|
|
— |
|
Class C Pre-Funded Warrants (exercise price of $0.0001 per share) |
|
|
143,400 |
|
|
|
— |
|
Class C Common Stock Warrants (exercise price of $5.36 per share) |
|
|
4,036,610 |
|
|
|
— |
|
Rollover Warrants (exercise price of $93.80 per share) |
|
|
4,738 |
|
|
|
4,738 |
|
Rollover RSU awards outstanding |
|
|
7,290 |
|
|
|
13,154 |
|
Stock options outstanding |
|
|
9,581 |
|
|
|
10,118 |
|
Shares reserved for issuance |
|
|
4,840,966 |
|
|
|
412,594 |
|
Shares available for future stock grants under the 2021 Equity Incentive Plan |
|
|
58,707 |
|
|
|
58,170 |
|
Total common stock reserved for issuance |
|
|
4,899,673 |
|
|
|
470,764 |
|
11. Stock-Based Compensation
2021 Equity Incentive Plan
In January 2022, in connection with the Business Combination, the Board of Directors and the Company’s stockholders adopted the 2021 Equity Incentive Plan (the “2021 Plan”) and reserved 36,983 authorized shares of common stock for issuance under the plan. The 2021 Plan is administered by the Board of Directors. Vesting periods and other restrictions for grants under the 2021 Plan are determined at the discretion of the Board of Directors. Grants to employees, officers, directors, advisors, and consultants of the Company typically vest over one to four years. In addition, the number of shares of stock available for issuance under the 2021 Plan will be automatically increased each January 1, and began on January 1, 2022, by 10% of the aggregate number of outstanding shares of our common stock from the first day of the preceding calendar year to the first day of the current calendar year or such lesser number as determined by our board of directors. On January 1, 2023, after effecting the Reverse Split the total shares available for issuance under the 2021 Equity Plan was increased to 68,288 authorized shares of common stock.
Under the 2021 Plan, stock options and stock appreciation rights are granted at exercise prices determined by the Board of Directors which cannot be less than 100% of the estimated fair market value of the common stock on the grant date. Incentive stock options granted to any stockholders holding 10% or more of the Company's equity cannot be granted with an exercise price of less than 110% of the estimated fair market value of the common stock on the grant date and such options are not exercisable after five years from the grant date.
As of March 31, 2023, there were 58,707 shares available for future grant under the 2021 Plan.
Restricted Stock Units
At the Closing Date of the Business Combination, all Revelation Sub RSU award holders received a Rollover RSU award in exchange for each RSU award of Revelation Sub that vest in accordance with the original terms of the award. The Company determined this to be a Type I modification but did not record any incremental stock-based compensation expense since the fair value of the modified awards immediately after the modification was not greater than the fair value of the original awards immediately before the modification.
The Rollover RSU awards have time-based and milestone-based vesting conditions. Under time-based vesting conditions, the Rollover RSU awards vest quarterly over one year for grants to the Board of Directors and quarterly over four years or 25% on the one year anniversary and the remainder vesting monthly thereafter for grants to officers, employees and consultants. The milestone-based vesting conditions vested on the Closing Date of the Business Combination.
As of March 31, 2023 and December 31, 2022, the Company has a total of 7,290 Rollover RSU awards for shares of common stock outstanding. As of March 31, 2023, 5,053 Rollover RSU awards have fully vested but are unissued and no Rollover RSU awards have been forfeited. As of March 31, 2023, 2,237 Rollover RSU awards will vest and be issued over the next 1.9 years. Each Rollover RSU award converts to one share of common stock.
15
Stock Options
The Company has granted stock options which vest 25% on the one year anniversary of the grant date or the employees hiring date, with the remainder vesting quarterly thereafter for grants to officers and employees. Stock options have a maximum term of 3 and 10 years.
The activity related to stock options, during the three months ended March 31, 2023 is summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
Weighted-average Exercise Price |
|
|
Weighted-average Remaining Contractual Term (Years) |
|
Outstanding at December 31, 2022 |
|
|
9,581 |
|
|
$ |
31.91 |
|
|
|
|
Granted |
|
|
— |
|
|
|
— |
|
|
|
|
Exercised |
|
|
— |
|
|
|
— |
|
|
|
|
Expired and forfeited |
|
|
— |
|
|
|
— |
|
|
|
|
Outstanding at March 31, 2023 |
|
|
9,581 |
|
|
$ |
31.91 |
|
|
|
5.1 |
|
Exercisable at March 31, 2023 |
|
|
6,590 |
|
|
$ |
24.15 |
|
|
|
3.3 |
|
For the three months ended March 31, 2023, the weighted-average Black-Scholes value per stock option was $25.67. The fair value of the stock options was estimated using the Black-Scholes option pricing model with the following weighted-average assumptions:
|
|
|
|
|
Volatility |
|
|
96.5 |
% |
Expected term (years) |
|
|
5.00 |
|
Risk-free interest rate |
|
|
2.27 |
% |
Expected dividend yield |
|
|
0.0 |
% |
Expected volatility is based on the historical volatility of shares of the Company’s common stock. In determining the expected term of stock options, the Company uses the “simplified” method. Under this method, the expected term is presumed to be the midpoint between the average vesting date and the end of the contractual term. The risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the stock options in effect at the time of the grants. The dividend yield assumption is based on the expectation of no future dividend payments by the Company. In addition to assumptions used in the Black-Scholes model, the Company reduces stock-based compensation expense based on actual forfeitures in the period that each forfeiture occurs.
Stock-Based Compensation Expense
For the three months ended March 31, 2023 and 2022, the Company recorded stock-based compensation expense for the period indicated as follows:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, |
|
|
|
2023 |
|
|
2022 |
|
General and administrative: |
|
|
|
|
|
|
RSU awards |
|
$ |
22,383 |
|
|
$ |
57,079 |
|
Stock Options |
|
|
7,216 |
|
|
|
23,005 |
|
General and administrative stock-based compensation expense |
|
|
29,599 |
|
|
|
80,084 |
|
Research and development: |
|
|
|
|
|
|
RSU awards |
|
|
1,898 |
|
|
|
16,792 |
|
Stock Options |
|
|
598 |
|
|
|
41,016 |
|
Research and development stock-based compensation expense |
|
|
2,496 |
|
|
|
57,808 |
|
Total stock-based compensation expense |
|
$ |
32,095 |
|
|
$ |
137,892 |
|
As of March 31, 2023, there was $179,748 and $90,819 of unrecognized stock-based compensation expense related to Rollover RSU awards and stock options, respectively. The unrecognized stock-based compensation expense is expected to be recognized over a period of 1.9 years and 2.9 years for Rollover RSU’s and stock options, respectively.
16
12. Warrants
Public Warrants
In connection with the Petra's IPO, Petra issued 10,511,597 Public Warrants to purchase an aggregate of 300,332 shares of common stock with an exercise price of $402.50 per share which expire on January 10, 2027. The Public Warrants trade on the Nasdaq Capital Market under the ticker symbol REVBW.
The Company may redeem the Public Warrants at a price of $0.01 per Public Warrant upon not less than 30 days’ prior written notice of redemption if, and only if, the reported last sale price of the Company’s common stock equals or exceeds $630.00 per share for any 20 trading days within a 30-trading day period ending on the third business day prior to the notice of redemption to the Public Warrant holders; and if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying the Public Warrants. If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.
Rollover Warrants
Prior to the Merger, Revelation Sub issued warrants to a placement agent to purchase up to 4,792 shares of common stock with an exercise price of $93.80 per share which expire on January 31, 2027, valued on the issuance date in the aggregate at $326,675. At the Closing Date of the Business Combination, all warrant holders received a Rollover Warrant, which was exercisable in accordance with its original issuance.
On February 2, 2022, the Company received a notice of cash exercise for the Company’s Rollover Warrants for 54 shares of common stock at a purchase price of $5,073. As of March 31, 2023, there were 4,738 Rollover Warrants remaining to be exercised or exchanged.
The fair value of the Rollover Warrants were estimated using the Black-Scholes option pricing model with the following assumptions:
|
|
|
|
|
Volatility |
|
|
115 |
% |
Expected term (years) |
|
|
6 |
|
Risk-free interest rate |
|
|
0.85 |
% |
Expected dividend yield |
|
|
0.0 |
% |
Class A Pre-Funded Warrants
In connection with the PIPE Investment, the Company issued pre-funded warrants to an institutional investor to purchase up to 36,959 shares of common stock at an exercise price of $0.00035 per share.
On February 22, 2022, the Company received a notice of cash exercise for the Class A Pre-Funded Warrants issued in connection with the PIPE Investment for 36,959 shares of common stock at purchase price of $12.94. As of March 31, 2023 there were no Class A Pre-Funded Warrants outstanding.
Class A Common Stock Warrants
In connection with the PIPE Investment, the Company issued warrants to an institutional investor to purchase up to 73,905 shares of common stock at an exercise price of $115.15 per share, valued on the PIPE Investment purchase date in the aggregate at $3,634,262 and included in the issuance costs of the PIPE Investment. The warrants were exercisable immediately upon issuance, provide for a cash or cashless exercise right and expire on July 25, 2027.
The fair value of the Class A Common Stock Warrants were estimated using the Black-Scholes option pricing model with the following assumptions:
|
|
|
|
|
Volatility |
|
|
47 |
% |
Expected term (years) |
|
|
5 |
|
Risk-free interest rate |
|
|
1.54 |
% |
Expected dividend yield |
|
|
0.0 |
% |
17
Class A Placement Agent Common Stock Warrants
In connection with the PIPE Investment, the Company issued warrants to Roth to purchase an aggregate of 10,347 shares of common stock at an exercise price of $115.15 per share, valued on the PIPE Investment purchase date in the aggregate at $508,797 and included in the issuance costs of the PIPE Investment. The warrants were exercisable immediately upon issuance, provide for a cash or cashless exercise right and expire on July 25, 2027.
The fair value of the Class A Placement Agent Common Stock Warrants were estimated using the Black-Scholes option pricing model with the following assumptions:
|
|
|
|
|
Volatility |
|
|
47 |
% |
Expected term (years) |
|
|
5 |
|
Risk-free interest rate |
|
|
1.54 |
% |
Expected dividend yield |
|
|
0.0 |
% |
Class B Common Stock Warrants
In connection with the July 2022 Public Offering, the Company issued 8,333,334 warrants to purchase an aggregate of 238,095 shares of common stock at an exercise price of $21.00 per share, valued on the public offering purchase date in the aggregate at $4,490,457 and included in the issuance costs of the public offering. The warrants were exercisable immediately upon issuance, provide for a cash or cashless exercise right and expire on July 28, 2027.
The fair value of the Class B Common Stock Warrants were estimated using the Black-Scholes option pricing model with the following assumptions:
|
|
|
|
|
Volatility |
|
|
144 |
% |
Expected term (years) |
|
|
5 |
|
Risk-free interest rate |
|
|
2.69 |
% |
Expected dividend yield |
|
|
0.0 |
% |
Class B Placement Agent Common Stock Warrants
In connection with the July 2022 Public Offering, the Company issued warrants to the Placement Agent to purchase up to 16,667 shares of common stock at an exercise price of $26.25 per share, valued on the public offering purchase date in the aggregate at $310,137 and included in the issuance costs of the public offering. The warrants were exercisable immediately upon issuance, provide for a cash or cashless exercise right and expire on July 25, 2027.
The fair value of the Class B Placement Agent Common Stock Warrants were estimated using the Black-Scholes option pricing model with the following assumptions:
|
|
|
|
|
Volatility |
|
|
144 |
% |
Expected term (years) |
|
|
5 |
|
Risk-free interest rate |
|
|
2.69 |
% |
Expected dividend yield |
|
|
0.0 |
% |
Class C Pre-Funded Warrants
In connection with the February 2023 Public Offering, the Company issued pre-funded warrants to purchase up to 336,400 shares of common stock at an exercise price of $0.0001 per share.
On February 14, 2023, the Company received a notice of cash exercise for the Class C Pre-Funded Warrants issued in connection with the February 2023 Public Offering for 33,000 shares of common stock at purchase price of $3.30.
On March 2, 2023, the Company received a notice of cash exercise for the Class C Pre-Funded Warrants issued in connection with the February 2023 Public Offering for 160,000 shares of common stock at purchase price of $16.00.
As of March 31, 2023 there were 143,400 Class C Pre-Funded Warrants outstanding.
18
Class C Common Stock Warrants
In connection with the February 2023 Public Offering, the Company issued warrants to purchase up to 6,450,000 shares of common stock at an exercise price of $5.36 per share, valued on the public offering purchase date in the aggregate at $13,996,500 and included in the issuance costs of the public offering. The warrants were exercisable immediately upon issuance, provide for a cash, cashless exercise right or an alternative cashless exercise right for 0.4 shares of common stock per Class C Common Stock Warrant and expire on February 14, 2028.
The Company accounted for the Class C Common Stock Warrants as current liabilities based upon the guidance of ASC 480 and ASC 815. The Company evaluated the Class C Common Stock Warrants under ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity (“ASC 815-40”), and concluded that they do not meet the criteria to be classified in stockholders’ equity.
The Company concluded that the multiplier of 0.4 shares of common stock per Class C Common Stock Warrant used in the alternative cashless exercise, precludes the Class C Common Stock Warrants from being considered indexed to the Company’s stock. The Company recorded the Class C Common Stock Warrants as current liabilities on the balance sheet at fair value, with subsequent changes in their respective fair values recognized in the statement of operations and comprehensive loss at each reporting date.
Estimating fair values of liability-classified financial instruments requires the development of estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques are highly volatile and sensitive to changes in the trading market price of the Company’s common stock. Because liability-classified financial instruments are initially and subsequently carried at fair value, the Company’s financial results will reflect the volatility in these estimate and assumption changes. Changes in fair value are recognized as a component of other income (expense) in the statement of operations.
At the date of issuance, the Company valued the Class C Common Stock Warrants using a Monte-Carlo simulation model with a fair value of $14 million.
As of March 31, 2023, the Company received notices of alternative cashless exercises for 2,413,390 Class C Common Stock Warrants issued in connection with the February 2023 Public Offering for 965,357 shares of common stock.
As of March 31, 2023, the Company re-valued 4,036,610 outstanding Class C Common Stock Warrants using a Monte-Carlo simulation model with a fair value of $3.5 million. The gain of $7.7 million resulting from the change in the fair value of the liability for the unexercised warrants was recorded as a change in fair value of the warrant liability in the accompanying statements of operations for the three months ended March 31, 2023.
13. Income Taxes
The quarterly provision for or benefit from income taxes is computed based upon the estimated annual effective tax rate and the year-to-date pre-tax income (loss) and other comprehensive income. The Company did not record a provision or benefit for income taxes during the three months ended March 31, 2023 and 2022, respectively.
For the period ending March 31, 2023 the Company recorded non-taxable income of $7.7 million related to a change in the fair value of a warrant liability. The Company incurred taxable losses in 2022 and projects further taxable losses for 2023. The Company did not record a benefit from income taxes because, based on evidence involving its ability to realize its deferred tax assets, the Company recorded a full valuation allowance against its deferred tax assets.
14. Subsequent Events
Class C Pre-Funded Warrant Exercise
On April 6, 2023, the Company received a notice of cash exercise for the remaining Class C Pre-Funded Warrants issued in connection with the February 2023 Public Offering for 143,400 shares of common stock at purchase price of $14.34.
Class C Common Stock Warrant Exercise
From March 31, 2023 to May 16, 2023, the Company received notices of alternative cashless exercises for 2,927,550 Class C Common Stock Warrants issued in connection with the February 2023 Public Offering for 1,175,624 shares of common stock. As of May 16, 2023, there are 1,108,260 Class C Common Stock Warrants outstanding.
19