Celcuity Inc. 10-Q

ITEM 1. Financial Statements Celcuity Inc. Condensed Balance Sheets March 31, 2024 December 31, 2023 (unaudited) Assets Current Assets: Cash and cash equivalents $ 31,214,741 $ 30,662,774 Investments 146,447,843 149,919,974 Other current assets 9,860,535 10,007,849 Total current assets 187,523,119 190,590,597 Property and equipment, net 306,024 228,782 Operating lease right-of-use assets 351,911 400,019 Total Assets $ 188,181,054 $ 191,219,398 Liabilities and Stockholders’ Equity: Current Liabilities: Accounts payable $ 5,276,690 $ 5,076,699 Operating lease liabilities 181,882 184,950 Accrued expenses 11,237,509 8,927,094 Total current liabilities 16,696,081 14,188,743 Operating lease liabilities 182,079 225,922 Note payable, non-current 37,566,230 37,035,411 Total Liabilities 54,444,390 51,450,076 Commitments and Contingencies (Note 5) - - Stockholders’ Equity: Preferred stock, $ 0.001 par value: 2,500,000 shares authorized; 505,277 and 854,134 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively 505 854 Common stock, $ 0.001 par value: 65,000,000 shares authorized; 30,773,895 and 25,506,012 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively 30,774 25,506 Additional paid-in capital 315,393,843 299,818,965 Accumulated deficit ( 181,688,458 ) ( 160,076,003 ) Total Stockholders’ Equity 133,736,664 139,769,322 Total Liabilities and Stockholders’ Equity $ 188,181,054 $ 191,219,398 See accompanying notes to the financial statements 3 Celcuity Inc. Condensed Statements of Operations (unaudited) Three Months Ended March 31, 2024 2023 Operating expenses: Research and development $ 20,647,559 $ 11,278,493 General and administrative 1,846,276 1,269,044 Total operating expenses 22,493,835 12,547,537 Loss from operations ( 22,493,835 ) ( 12,547,537 ) Other income (expense) Interest expense ( 1,400,712 ) ( 1,242,012 ) Interest income 2,282,092 1,851,132 Other income, net 881,380 609,120 Net loss before income taxes ( 21,612,455 ) ( 11,938,417 ) Income tax benefits - - Net loss $ ( 21,612,455 ) $ ( 11,938,417 ) Net loss per share, basic and diluted $ ( 0.64 ) $ ( 0.55 ) Weighted average common shares outstanding, basic and diluted 33,612,054 21,680,877 See accompanying notes to the financial statements 4 Celcuity Inc. Statements of Changes in Stockholders’ Equity Three Months Ended March 31, 2024 Common Stock Preferred Stock Additional Paid-In Accumulated Shares Amount Shares Amount Capital Deficit Total Balance at December 31, 2023 25,506,012 $ 25,506 854,134 $ 854 $ 299,818,965 $ ( 160,076,003 ) $ 139,769,322 Stock-based compensation - - - - 1,331,346 - 1,331,346 Exercise of common stock warrants, net of shares withheld for exercise price 1,742,763 1,742 - - 14,007,409 - 14,009,151 Exercise of common stock options, net of shares withheld for exercise price 36,550 37 - - 239,263 - 239,300 Conversion of preferred to common stock 3,488,570 3,489 ( 348,857 ) ( 349 ) ( 3,140 ) - - Net loss - - - - - ( 21,612,455 ) ( 21,612,455 ) Balance at March 31, 2024 (unaudited) 30,773,895 $ 30,774 505,277 $ 505 $ 315,393,843 $ ( 181,688,458 ) $ 133,736,664 See accompanying notes to the financial statements 5 Celcuity Inc. Statements of Changes in Stockholders’ Equity Three Months Ended March 31, 2023 Common Stock Preferred Stock Additional Paid-In Accumulated Shares Amount Shares Amount Capital Deficit Total Balance at December 31, 2022 21,667,250 $ 21,667 1,120,873 $ 1,121 $ 230,045,566 $ ( 96,296,887 ) $ 133,771,467 Balance 21,667,250 $ 21,667 1,120,873 $ 1,121 $ 230,045,566 $ ( 96,296,887 ) $ 133,771,467 Stock-based compensation - - - - 1,273,282 - 1,273,282 Exercise of common stock options, net of shares withheld for exercise price 24,122 24 - - 127,898 - 127,922 Conversion of preferred to common stock 250,000 250 ( 25,000 ) ( 25 ) ( 225 ) - - Issuance costs associated with private placement offering - - - - ( 7,486 ) - ( 7,486 ) Net loss - - - - - ( 11,938,417 ) ( 11,938,417 ) Balance at March 31, 2023 (unaudited) 21,941,372 $ 21,941 1,095,873 $ 1,096 $ 231,439,035 $ ( 108,235,304 ) $ 123,226,768 Balance 21,941,372 $ 21,941 1,095,873 $ 1,096 $ 231,439,035 $ ( 108,235,304 ) $ 123,226,768 See accompanying notes to the financial statements 6 Celcuity Inc. Condensed Statements of Cash Flows (unaudited) Three Months Ended March 31, 2024 2023 Cash flows from operating activities: Net loss $ ( 21,612,455 ) $ ( 11,938,417 ) Adjustments to reconcile net loss to net cash used for operations: Depreciation 29,557 43,938 Stock-based compensation 1,331,346 1,273,282 Amortization of debt issuance costs and discount 65,309 57,004 PIK interest 465,510 438,184 Non-cash operating lease, net 1,197 438 Change in accrued interest income ( 153,845 ) ( 1,697,811 ) Changes in operating assets and liabilities: Other current assets 268,849 ( 15,809 ) Accounts payable 237,992 ( 8,545 ) Accrued expenses 2,298,379 ( 1,020,102 ) Net cash used for operating activities ( 17,068,161 ) ( 12,867,838 ) Cash flows from investing activities: Purchases of investments ( 121,435,343 ) ( 3,125,462 ) Proceeds from maturities of investments 125,061,320 25,000,000 Purchases of property and equipment ( 89,676 ) ( 6,987 ) Net cash provided by investing activities 3,536,301 21,867,551 Cash flows from financing activities: Proceeds from exercise of common stock warrants 14,009,151 - Proceeds from exercise of employee stock options 131,090 127,922 Payments for secondary registration statement costs ( 56,414 ) ( 55,789 ) Payments for debt issuance costs - ( 2,716 ) Payments for finance leases - ( 1,469 ) Net cash provided by financing activities 14,083,827 67,948 Net change in cash and cash equivalents 551,967 9,067,661 Cash and cash equivalents: Beginning of period 30,662,774 24,571,557 End of period $ 31,214,741 $ 33,639,218 Supplemental disclosure of cash flow information: Interest paid $ 869,893 $ 746,824 Supplemental disclosures of non-cash investing and financing activities: Offering and registration statement costs included in accounts payable $ 13,325 $ 2,402 Property and equipment included in accounts payable 18,702 - Property and equipment included in accrued expenses 12,036 - Exercise of stock options pending receipt of cash proceeds 108,210 - See accompanying notes to the financial statements 7 CELCUITY INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited) (For the Three Months Ended March 31, 2024 and 2023) 1. Organization Nature of Business Celcuity Inc., a Delaware corporation (the “Company”), is a clinical-stage biotechnology company pursuing development for oncology. The Company’s lead therapeutic candidate is gedatolisib, a potent pan-PI3K and mTOR inhibitor. Its mechanism of action and pharmacokinetic properties are highly differentiated from other currently approved and investigational therapies that target PI3K or mTOR alone or together. A Phase 3 clinical trial, VIKTORIA-1, evaluating gedatolisib in combination with fulvestrant with or without palbociclib in patients with HR+/HER2- advanced breast cancer is currently enrolling patients. A Phase 1b/2 clinical trial, CELC-G-201, evaluating gedatolisib in combination with darolutamide in patients with metastatic castration resistant prostate cancer, was initiated in the first quarter of 2024 and is currently enrolling patients. The Company’s CELsignia companion diagnostic platform is uniquely able to analyze live patient tumor cells to identify new groups of cancer patients likely to benefit from already approved targeted therapies. The Company was co-founded in 2012 by Brian F. Sullivan and Dr. Lance G. Laing and is based in Minnesota. The Company has not generated any revenues to date. 2. Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements Basis of Presentation The accompanying unaudited financial statements include the accounts of the Company and have been prepared in accordance with Article 10 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”). Accordingly, as permitted by Article 10, the unaudited financial statements do not include all of the information required by accounting principles generally accepted in the United States (“U.S. GAAP”). The balance sheet at December 31, 2023 was derived from the audited financial statements at that date and does not include all the disclosures required by U.S. GAAP. In the opinion of management, all adjustments which are of a normal recurring nature and necessary for a fair presentation have been reflected in the financial statements. These unaudited condensed financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2023 and the related footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected during the remainder of the current year or for any future period. Accounting Estimates Management uses estimates and assumptions in preparing these unaudited condensed financial statements in accordance with U.S. GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates and the difference could be material. Significant items subject to such estimates and assumptions include the valuation of stock-based compensation and prepaid or accrued clinical trial costs. Risks and Uncertainties The Company is subject to risks common to companies in the development stage including, but not limited to, dependency on the clinical and commercial success of its diagnostic tests, ability to obtain regulatory approval of its diagnostic tests, the clinical and commercial success of its initial drug product, gedatolisib, the need for substantial additional financing to achieve its goals, uncertainty of broad adoption of its approved products, if any, by physicians and consumers, and significant competition. Clinical Trial Costs The Company records prepaid assets or accrued expenses for prepaid or estimated clinical trial costs conducted by third-party service providers, which includes the conduct of preclinical studies and clinical trials. These costs can be a significant component of the Company’s research and development expenses. The Company primarily relies on a compilation of progress reports from third-party service providers, including the respective invoicing, to record actual expenses, along with determining changes to prepaid assets and accrued liabilities. To date, the Company believes utilization of third-party reports most accurately reflects expenses incurred. As the current VIKTORIA-1 Phase 3 and CELC-G-201 Phase 1b/2 trials ramp up site activation and patient enrollment, the Company’s estimated expenses in future periods and actual services performed may vary from these estimates, and these estimates may become more significant. Changes in these estimates that result in material changes to the Company’s prepaid assets or accrued expenses could materially affect the Company’s results of operations. 8 3. Net Loss Per Common Share Basic and diluted net loss per common share is determined by dividing net loss attributable to common stockholders by the weighted-average common shares outstanding during the period. For all periods presented, the common shares underlying the preferred stock, options, warrants, and restricted stock have been excluded from the calculation because their effect would be anti-dilutive. Therefore, the weighted-average shares outstanding used to calculate both basic and diluted loss per common share are the same. The following table summarizes the potentially-dilutive shares excluded from the diluted weighted-average shares outstanding: Schedule of Potentially-Dilutive Shares Excluded from Diluted Weighted-Average Shares Outstanding March 31, 2024 2023 Preferred stock on an as-if-converted to common stock basis 5,052,770 10,958,730 Options to purchase common stock 3,049,387 2,068,458 Warrants to purchase common stock 5,517,725 7,266,102 Restricted common stock 1,958 3,273 Total 13,621,840 20,296,563 Pre-funded warrant shares of 5,747,787 and zero are included in the computation of basic and diluted net loss per share for the periods ended March 31, 2024, and March 31, 2023, respectively, as the pre-funded warrants are exercisable for nominal consideration. 4. Investments Debt securities for which the Company has the positive intent and ability to hold to maturity are classified as held-to-maturity and reported at historical cost adjusted for amortization of premiums and accretion of discounts. Expected credit losses, if any, are recorded through the establishment of an allowance for credit losses. All of the Company’s held-to-maturity investment securities are U.S. Treasury and agencies securities that are guaranteed or otherwise supported by the United States government and have no history of credit losses. Accordingly, the Company does not expect to incur any credit losses on held-to-maturity investment securities and has no allowance for credit losses recorded for these securities. The following tables summarize the Company’s held-to-maturity investment securities at amortized cost as of March 31, 2024 and December 31, 2023: Schedule of Investment March 31, 2024 Amortized Cost, as Adjusted Gross Unrealized Holding Gains Gross Unrealized Holding Losses Estimated Fair Value U.S. Treasury Bills $ 146,447,843 $ - $ ( 2,059 ) $ 146,445,784 Total $ 146,447,843 $ - $ ( 2,059 ) $ 146,445,784 December 31, 2023 Amortized Cost, as Adjusted Gross Unrealized Holding Gains Gross Unrealized Holding Losses Estimated Fair Value U.S. Treasury Bills $ 149,919,974 $ 30,995 $ - $ 149,950,969 Total $ 149,919,974 $ 30,995 $ - $ 149,950,969 The fair value of the Company’s held-to-maturity debt securities is determined based upon inputs, other than the quoted prices in active markets, that are observable either directly or indirectly and are classified as level 2 fair value instruments. 9 5. Commitments Operating and Finance Leases The Company leases its corporate space in Minneapolis, Minnesota, with an operating lease in place through April 30, 2026. The lease provides for monthly rent, real estate taxes, and operating expenses. Rent expense is recorded on a straight-line basis over the lease term. Clinical Research Studies The Company enters into contracts in the normal course of business to conduct research and development programs internally and through third parties that include, among others, arrangements with vendors, consultants, CMO’s, and CRO’s. The Company currently has three Phase 2 clinical trial agreements in place to evaluate targeted therapies selected with one of our CELsignia tests. Timing of milestone payments related to the Phase 2 clinical trials are uncertain and the contracts generally provide for termination following a certain period after notice, therefore the Company believes that non-cancelable obligations under the agreements are not material. The Company also has a license agreement in place with Pfizer to research, develop, manufacture and commercialize gedatolisib. In conjunction with the license agreement, the Company continued a Phase 1b study – B2151009 related to gedatolisib. These patients subsequently transitioned to an Expanded Access study – CELC-G-001. Contracts related to the Phase 1B and the Expanded Access studies are generally based on time and material. In addition, contracts related to the Company’s Phase 3 clinical study (VIKTORIA-1) and Phase 1b/2 clinical study (CELC-G-201) are generally cancelable with reasonable notice within 120 days and the Company’s obligations under these contracts are primarily based on services performed through termination dates plus certain cancelation charges, if any, as defined in each of the respective agreements. In addition, these agreements may, from time to time, be subjected to amendments as a result of any change orders executed by the parties. As of March 31, 2024, the Company had two material non-cancelable contractual commitments with respect to these arrangements, which totaled approximately $ 2.0 million. 6. Stockholders’ Equity Capital Stock At December 31, 2023, the Company’s authorized capital stock consisted of 65,000,000 shares of $ .001 par value common stock, of which 25,506,012 shares were outstanding, and 2,500,000 shares of $ .001 par value preferred stock, of which 854,134 shares were outstanding. On January 15, 2024, one of the Company’s preferred shareholders elected to convert 224,244 shares of Series A Convertible Preferred Stock into 2,242,440 shares of Common Stock, in accordance with the Securities Purchase Agreement dated May 15, 2022. The cost basis of the shares transferred is $ 5.75 per share. On March 14, 2024, one of the Company’s preferred shareholders elected to convert 50,000 shares of Series A Convertible Preferred Stock into 500,000 shares of Common Stock, in accordance with the Securities Purchase Agreement dated May 15, 2022. The cost basis of the shares transferred is $ 5.75 per share. On March 15, 2024, one of the Company’s investors exercised 1,739,080 of common stock warrants at an exercise price of $ 8.05 , which generated approximately $ 14 million in cash. The warrants were issued pursuant to the Securities Purchase Agreement dated May 15, 2022, that closed and was funded on December 9, 2022. Additional common stock warrants of 3,683 from several investors were exercised, which generated approximately $ 9,000 in cash in the first quarter of 2024. The 3,683 common stock warrants were net of shares withheld for exercise price. On March 19, 2024, one of the Company’s preferred shareholders elected to convert 43,913 shares of Series A Convertible Preferred Stock into 439,130 shares of Common Stock, in accordance with the Securities Purchase Agreement dated May 15, 2022. The cost basis of the shares transferred is $ 5.75 per share. On March 26, 2024, one of the Company’s preferred shareholders elected to convert 30,700 shares of Series A Convertible Preferred Stock into 307,000 shares of Common Stock, in accordance with the Securities Purchase Agreement dated May 15, 2022. The cost basis of the shares transferred is $ 5.75 per share. At March 31, 2024, the Company’s authorized capital stock consisted of 65,000,000 shares of common stock, of which 30,773,895 shares were outstanding, and 2,500,000 shares of preferred stock, including 1,850,000 shares designated as Series A Preferred Stock, of which 505,277 shares were outstanding. As of March 31, 2024, no dividends have been declared on the Company’s capital stock. 10 7. Stock-Based Compensation The following table summarizes the activity for all stock options outstanding for the three months ended March 31: Schedule of Stock Options Activity 2024 2023 Shares Weighted Average Exercise Price Shares Weighted Average Exercise Price Options outstanding at beginning of year 2,815,392 $ 7.95 1,976,586 $ 6.34 Granted 285,795 15.29 119,985 11.36 Exercised ( 36,550 ) 6.55 ( 24,122 ) 5.30 Forfeited ( 15,250 ) 9.05 ( 3,991 ) 6.55 Balance at March 31 3,049,387 $ 8.65 2,068,458 $ 6.65 Options exercisable at March 31: 1,569,614 $ 6.55 1,114,767 $ 5.91 Weighted Average Grant Date Fair Value for options granted during the period: $ 10.53 $ 7.81 The following table summarizes additional information about stock options outstanding and exercisable at March 31, 2024: Schedule of Stock Options Outstanding and Exercisable Options Outstanding Options Exercisable Options Outstanding Weighted Average Remaining Contractual Life Weighted Average Exercise Price Aggregate Intrinsic Value Options Exercisable Weighted Average Exercise Price Aggregate Intrinsic Value 3,049,387 7.95 $ 8.65 $ 39,506,833 1,569,614 $ 6.55 $ 23,646,843 The Company recognized stock-based compensation expense for stock options of $ 1,290,193 and $ 1,222,328 for the three months ended March 31, 2024 and 2023, respectively. In May 2022, the Company modified the exercise price on 776,324 stock option awards to $ 5.50 , the closing market price on the Nasdaq Capital Market on May 17, 2022. The effect of this modification on stock-based compensation was $ 26,719 and $ 39,612 for the three months ending March 31, 2024 and 2023, respectively. The effect of this modification on stock-based compensation over the remaining service period will be approximately $ 137,000 . In December 2021, the Company modified the exercise price on 311,000 stock option awards to $ 13.44 , the closing market price on the Nasdaq Capital Market on December 15, 2021. No director or officer awards were modified. The effect of this modification on stock-based compensation was $ 15,764 and $ 16,924 for the three months ended March 31, 2024 and 2023, respectively. The effect of this modification on stock-based compensation over the remaining service period will be approximately $ 82,000 . In May 2020, the Company modified the exercise price on 203,750 stock option awards to $ 5.10 , the closing market price on the Nasdaq Capital Market on May 14, 2020. No director or officer awards were modified. The effect of this modification on stock-based compensation was $ 696 and $ 7,108 for the three months ended March 31, 2024 and 2023, respectively. The effect of this modification on stock-based compensation over the remaining service period will be $ 0 . The Black-Scholes option-pricing model was used to estimate the fair value of equity-based awards with the following weighted-average assumptions for the three months ended March 31: Schedule of Assumptions for Fair Value of Equity-based Awards 2024 2023 Risk-free interest rate 3.94 % - 4.33 % 3.64 % - 4.14 % Expected volatility 76.1 % 79.8 % Expected life (years) 5.25 to 6.08 5.25 to 6.08 Expected dividend yield 0 % 0 % The inputs for the Black-Scholes valuation model require management’s significant assumptions. Prior to the Company’s initial public offering, the price per share of common stock was determined by the Company’s board based on recent prices of common stock sold in private offerings. Subsequent to the initial public offering, the price per share of common stock is determined by using the closing market price on the Nasdaq Capital Market on the grant date. The risk-free interest rates are based on the rate for U.S. Treasury securities at the date of grant with maturity dates approximately equal to the expected life at the grant date. The expected life is based on the simplified method in accordance with the SEC Staff Accounting Bulletin Nos. 107 and 110. The expected volatility is estimated based on historical volatility information of peer companies that are publicly available in combination with the Company’s calculated volatility since being publicly traded. All assumptions used to calculate the grant date fair value of non-employee options are generally consistent with the assumptions used for options granted to employees. In the event the Company terminates any of its consulting agreements, the unvested options issued in connection with the agreements would also be cancelled. 11 No restricted stock awards were granted during the three months ended March 31, 2024 and 2023. The Company had 1,958 and 3,273 shares of restricted stock outstanding as of March 31, 2024 and 2023, respectively, and 0 shares of restricted stock vested during the three months ended March 31, 2024 and 2023. The Company recognized stock-based compensation expense for restricted stock of $ 4,849 and $ 4,642 for the three months ended March 31, 2024 and 2023, respectively. The Company initially reserved a maximum of 750,000 shares of common stock for issuance under the 2017 Amended and Restated Stock Incentive Plan (the “2017 Plan”). The number of shares reserved for issuance was automatically increased by 102,998 , 149,189 , 216,673 , and 255,060 shares on January 1, 2021, 2022, 2023, and 2024, respectively, and will increase automatically on January 1 of each year from 2025 through 2028 by the number of shares equal to 1.0% of the aggregate number of outstanding shares of Company common stock as of the immediately preceding December 31. However, the Company’s board may reduce the amount of the increase in any particular year. At the annual meeting held on May 12, 2021 and May 12, 2022, the stockholders approved a one-time, 500,000 increase each year for a total of 1,000,000 increase, to the number of shares reserved for issuance under the 2017 Plan. At the Annual Meeting held on May 11, 2023, the stockholders approved a one-time, 1,500,000 increase to the number of shares reserved for issuance under the 2017 Plan. The total remaining shares available for grant under the Company’s 2017 Plan as of March 31, 2024 was 1,003,414 . Total unrecognized compensation cost related to stock options and restricted stock is estimated to be recognized at March 31, 2024: Schedule of Unrecognized Compensation Cost 2024 $ 3,661,229 2025 3,483,405 2026 2,496,276 2027 1,501,013 2028 48,146 Total estimated compensation cost to be recognized $ 11,190,069 The Company recognized stock-based compensation expense related to its employee stock purchase plan of $ 36,304 and $ 46,312 for the three months ended March 31, 2024 and 2023, respectively. The Company initially reserved a total of 100,000 shares for issuance under the employee stock purchase plan. The number of shares reserved for issuance was automatically increased by 51,499 , 74,594 , 108,337 , and 127,530 shares on January 1, 2021, 2022, 2023, and 2024, respectively, and will increase automatically on each subsequent January 1 by the number of shares equal to 0.5% of the total outstanding number of shares of Company common stock as of the immediately preceding December 31. However, the Company’s board may reduce the amount of the increase in any particular year. The total remaining shares available for issuance under the employee stock purchase plan as of March 31, 2024 was 394,165 . The Company recognized total stock-based compensation expense as follows for the three months ended March 31: Schedule of Stock-based Compensation Expense 2024 2023 Three Months Ended March 31, 2024 2023 Stock-based compensation expense in operating expenses: Research and development $ 832,180 $ 654,471 General and administrative 499,166 618,811 Total $ 1,331,346 $ 1,273,282 12 8. Debt On April 8, 2021, the Company entered into a loan and security agreement (the “Loan Agreement”) with Innovatus Life Sciences Lending Fund I, LP, a Delaware limited partnership (“Innovatus”) in its capacity as Collateral Agent and sole Lender. On August 9, 2022, the Company amended the Loan Agreement. Under the amended Loan Agreement, Innovatus, as Lender, has agreed to loan up to $ 75 million, a $ 50 million increase from the original Loan Amount. As of March 31, 2024, term loans totaling $ 35 million are outstanding under the Loan Agreement, including the initial Term A loan of $ 15 million which was funded on April 8, 2021, and a $ 20 million Term B loan which was funded on December 22, 2022. On March 29, 2024, the Company entered into a second amendment to its existing Loan Agreement to extend the date through which the Company may draw on the Term C Loan from April 1, 2024 to June 1, 2024. Other than as set forth in the second amendment, the amended Loan Agreement shall continue in full force and effect without alteration or amendment. Long-term debt consisted of the following at March 31, 2024 and December 31, 2023: Schedule of Long-term Debt March 31, 2024 December 31, 2023 Note payable $ 35,000,000 $ 35,000,000 Add: PIK interest (added to principal) 3,031,170 2,565,660 Less: unamortized debt issuance costs ( 419,921 ) ( 480,810 ) Less: unamortized debt discount ( 45,019 ) ( 49,439 ) Total long-term debt $ 37,566,230 $ 37,035,411 Future principal payments, including the incurred PIK interest, are as follows: Schedule of Long Term Debt Future Principal Payments Years Ending December 31, 2025 $ 14,261,689 2026 19,015,585 2027 4,753,896 Total $ 38,031,170 9. Subsequent Event Subsequent to March 31, 2024, pursuant to an Open Market Sale Agreement SM with Jefferies LLC, as agent, the Company sold 435,414 shares of common stock at an average selling price of $ 17.55 per share, generating gross proceeds of $ 7.6 million before deducting commissions and other offering expenses of $ 0.2 million. 13