What changed in this filing

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Item 1. Financial Statements

2021-08-11 compared with 2021-05-10 · 127 added, 81 removed, 263 unchanged (44% of the section changed)

2 unchanged sentences

Condensed Balance Sheets

June 30, 2021

December 31, 2020

Current Assets:

15 unchanged sentences

Operating lease liabilities

Note payable, non-current

Total Liabilities

2 unchanged sentences

2,500,000 shares authorized;

0 shares issued and outstanding as of March 31, 2021 and December 31, 2020

0 shares issued and outstanding as of June 30, 2021 and December 31, 2020

Common stock, $ 0.001 par value:

25,000,000 shares authorized;

12,287,896 and 10,299,822 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

12,654,898 and 10,299,822 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

7 unchanged sentences

Condensed Statements of Operations

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Operating expenses:

5 unchanged sentences

( 2,213,941 )

( 16,435,238 )

( 4,524,754 )

Other income (expense)

2 unchanged sentences

Loss on sale of fixed assets

Other income, net

Other income (expense), net

Net loss before income taxes

1 unchanged sentence

( 2,201,989 )

( 16,824,520 )

( 4,448,984 )

Income tax benefits

1 unchanged sentence

$ ( 2,201,989 )

$ ( 16,824,520 )

$ ( 4,448,984 )

Net loss per share, basic and diluted

1 unchanged sentence

See accompanying notes to the financial statements

Celcuity Inc.

Condensed Statements of Changes in Stockholders' Equity

Three Months Ended March 31, 2021

Three Months and Six Months Ended June 30, 2021

Additional Paid-In

11 unchanged sentences

$ ( 29,113,249 )

Stock-based compensation

Employee stock purchases

Exercise of common stock options, net of shares withheld for exercise price

Warrant issued - note payable

Issuance of common stock, licensing agreement

( 14,032,852 )

Balance at June 30, 2021 (unaudited)

$ ( 43,146,101 )

See accompanying notes to the financial statements

1 unchanged sentence

Condensed Statements of Changes in Stockholders' Equity

Three Months Ended March 31, 2020

Three Months and Six Months Ended June 30, 2020

Additional Paid-In

6 unchanged sentences

$ ( 19,094,401 )

Stock-based compensation

Employee stock purchases

Issuance of common stock in an at-the-market ("ATM") offering

Issuance costs associated with ATM offering

( 2,201,989 )

Balance at June 30, 2020 (unaudited)

$ ( 21,296,390 )

See accompanying notes to the financial statements

1 unchanged sentence

Condensed Statements of Cash Flows

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

3 unchanged sentences

Stock-based compensation

Issuance of common stock, licensing agreement

Amortization of debt issuance costs and discount

Loss on sale of fixed assets

13 unchanged sentences

Proceeds from exercise of common stock warrants

Proceeds from exercise of employee stock options

Proceeds from employee stock purchases

Proceeds from follow-on offering, net of underwriting discounts and offering costs

Proceeds from note payable, net of debt issuance costs and discount of $652,061

Gross proceeds from an ATM offering

1 unchanged sentence

Payments for finance leases

Net cash provided by (used for) financing activities

Net cash provided by financing activities

Net change in cash and cash equivalents

4 unchanged sentences

Supplemental disclosures of non-cash investing and financing activities:

Property and equipment included in accounts payable

Offering and registration statement costs included in accounts payable

Offering and registration statement costs included in accounts payable and accrued expenses

Issuance of common stock warrants and final fee recognized as discount to note payable

See accompanying notes to the financial statements

1 unchanged sentence

NOTES TO CONDENSED FINANCIAL STATEMENTS (unaudited)

(For the Three Months Ended March 31, 2021 and 2020)

(For the Three and Six Months Ended June 30, 2021 and 2020)

Nature of Business

8 unchanged sentences

The Company has not generated any revenues to date.

Summary of Significant Accounting Policies

Follow-on Offering

On July 1, 2021, the Company completed a follow-on offering whereby it sold 2,250,000 shares of common stock at a public offering price of $ 25.00 per share.

The aggregate gross proceeds from the sale of shares in the follow-on offering was approximately $ 56.3 million before deducting underwriting discounts of approximately $ 3.4 million and offering expenses of approximately $ 0.1 million.

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Basis of Presentation

4 unchanged sentences

These unaudited condensed financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2020 and the related footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected during the remainder of the current year or for any future period.

Follow-on Offering

On February 26, 2021, the Company completed a follow-on offering whereby it sold 1,971,100 shares of common stock (including 257,100 shares of common stock in connection with the full exercise of the underwriters’ option to purchase additional shares) at a public offering price of $ 14.00 per share.

The aggregate gross proceeds from the sale of shares in the follow-on offering, including the sale of shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, was approximately $ 27.6 million before deducting underwriting discounts of approximately $ 1.6 million and offering expenses of approximately $ 0.2 million.

Operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected during the remainder of the current year or for any future period.

Accounting Estimates

18 unchanged sentences

As a result, the Company will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for public companies that are not emerging growth companies.

Recently Adopted Accounting Pronouncements

In August 2020, the FASB issued ASU No.

2020-06, Debt - Debt with Conversion and other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity ("ASU 2020-06"), which simplifies accounting for convertible instruments by removing major separation models required under current U.S.

ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for derivative scope exceptions and also simplifies the diluted earnings per share calculation in certain areas.

The standard is effective for public business entities, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years and interim periods within those fiscal years beginning after December 15, 2021.

For all other entities, the standard will be effective for fiscal years beginning after December 15, 2023.

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, and adoption must be as of the beginning of the Company’s annual fiscal year.

The Company’s early adoption of this accounting standard on April 8, 2021, in conjunction with the closing of a loan agreement, did not have an impact on the Company’s financial statements and related disclosures.

Net Loss Per Common Share

2 unchanged sentences

Therefore, the weighted-average shares outstanding used to calculate both basic and diluted loss per common share are the same.

For the three months ended March 31, 2021 and 2020, potentially dilutive securities excluded from the computations of diluted weighted-average shares outstanding were options to purchase 855,072 and 630,889 shares of common stock, respectively, warrants to purchase 352,400 and 353,585 shares of common stock, respectively, and 15,686 and 0 shares of restricted common stock, respectively.

For the three and six months ended June 30, 2021 and 2020, potentially dilutive securities excluded from the computations of diluted weighted-average shares outstanding were options to purchase 1,023,513 and 723,194 shares of common stock, respectively, warrants to purchase 378,442 and 353,585 shares of common stock, respectively, and 2,964 and 15,686 shares of restricted common stock, respectively.

Operating and Finance Leases

13 unchanged sentences

When an implicit rate is not provided, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments.

Supplemental balance sheet information consisted of the following at March 31, 2021:

Supplemental balance sheet information consisted of the following at June 30, 2021:

Operating Lease

10 unchanged sentences

Long term portion

Maturity analysis under lease agreements consisted of the following as of March 31, 2021:

Maturity analysis under lease agreements consisted of the following as of June 30, 2021:

Operating Leases

2 unchanged sentences

Present value discount

Amount representing services

Less amount representing services

Present value of net minimum lease payments

4 unchanged sentences

Finance lease

Lease costs for the period ended March 31, 2021:

Lease costs for the period ended June 30, 2021:

Three-month Period

Six-month Period

Operating lease cost

1 unchanged sentence

Variable lease cost

Supplemental cash flow information related to leases for the period ended March 31, 2021:

Supplemental cash flow information related to leases for the period ended June 30, 2021:

Three-month Period

Six-month Period

Cash paid for amounts included in operating and finance leases:

3 unchanged sentences

Clinical Research Studies

In May 2017, the Company entered into an agreement with a clinical research organization to conduct a clinical research study.

The Company made payments of approximately $ 275,000 and $ 100,000 in 2021 and 2020, respectively, and $ 600,000 prior to 2020.

Additional payments will be due as certain milestones are met and clinical sites are added.

The maximum amount of these additional payments is estimated to be approximately $ 2,340,000 over the course of the agreement.

In October 2018, the Company entered into an agreement with a biopharmaceutical company and a cancer research center to conduct a clinical research study.

The Company made payments of approximately $ 70,000 prior to 2020.

Additional payments of approximately $ 112,000 will be due as certain milestones are met.

In December 2020, the Company entered into an agreement with a biopharmaceutical company and a cancer research center to conduct a clinical research study.

The Company made zero payments in 2021 and 2020.

Future payments of approximately $ 740,000 will be due as certain milestones are met.

In January 2021, the Company entered into an agreement with a biopharmaceutical company and a cancer research center to conduct a clinical research study.

The Company made zero payments in 2021.

Future payments of approximately $ 1,210,600 will be due as certain milestones are met.

In March 2021, the Company entered into an agreement with two biopharmaceutical companies and a cancer research center to conduct a clinical research study.

The Company made zero payments in 2021.

Future payments of approximately $ 1,548,000 will be due as certain milestones are met.

The Company enters into contracts in the normal course of business for clinical trials, preclinical studies, manufacturing and other services and products for operating purposes.

The Company currently has five Phase II clinical trial agreements in place to evaluate targeted therapies selected with one of our CELsignia tests.

The Company also has a license agreement in place with Pfizer to research, develop, manufacture and commercialize gedatolisib.

Timing of milestone payments 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.

Stockholders’ Equity

8 unchanged sentences

Sales of the Company’s common stock, if any, under this prospectus supplement were able to be made by any method deemed to be an “at the market offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended.

During the three months ended March 31, 2021, the Company sold 3,082 shares of common stock pursuant to the ATM Agreement, at an average selling price of $ 12.64 per share.

During the six months ended June 30, 2021, the Company sold 3,082 shares of common stock pursuant to the ATM Agreement, at an average selling price of $ 12.64 per share.

On February 23, 2021, in conjunction with the Company’s follow-on offering, the ATM Agreement was terminated.

Stock-Based Compensation

The following table summarizes the activity for all stock options outstanding for the three months ended March 31:

The following table summarizes the activity for all stock options outstanding for the six months ended June 30:

Weighted Average Exercise Price

1 unchanged sentence

Options outstanding at beginning of year

Balance at March 31

Options exercisable at March 31:

Balance at June 30

Options exercisable at June 30:

Weighted Average Grant Date Fair Value for options granted during the period:

The following table summarizes additional information about stock options outstanding and exercisable at March 31, 2021:

The following table summarizes additional information about stock options outstanding and exercisable at June 30, 2021:

Options Outstanding

2 unchanged sentences

Weighted Average Remaining Contractual Life

Weighted Average

Exercise Price

Weighted Average Exercise Price

Aggregate Intrinsic Value

2 unchanged sentences

Aggregate Intrinsic Value

The Company recognized stock-based compensation expense for stock options of $ 418,192 and $ 450,664 for the three months ended March 31, 2021 and 2020, respectively.

The Company recognized stock-based compensation expense for stock options of $ 520,361 and $ 414,272 for the three months ended June 30, 2021 and 2020, respectively and $ 938,553 and $ 864,937 for the six months ended June 30, 2021 and 2020, respectively.

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 on stock-based compensation was $ 13,449 and $ 0 for the three months ended March 31, 2021 and 2020, respectively.

The effect on stock-based compensation was $ 12,790 and $ 51,000 for the three months ended June 30, 2021 and 2020, respectively and $ 26,239 and $ 51,000 for the six months ended June 30, 2021 and 2020.

The effect on stock-based compensation over the remaining service period will be approximately $ 109,000 .

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:

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 six months ended June 30:

Risk-free interest rate

2 unchanged sentences

Expected volatility

76.6 % - 76.9 %

73.3 % - 74.4 %

Expected life (years)

9 unchanged sentences

In the event the Company terminates any of its consulting agreements, the unvested options issued in connection with the agreements would also be cancelled.

No restricted stock awards were granted during the three months ended March 31, 2021 and 2020.

The Company had 15,686 and 0 shares of restricted stock outstanding as of March 31, 2021 and 2020, respectively, and 0 shares of restricted stock vested during the three months ended March 31, 2021 or 2020.

The Company recognized stock-based compensation expense for restricted stock of $ 20,456 and $ 0 for the three months ended March 31, 2021 and 2020, respectively.

Restricted stock awards were granted to two members of the Company’s board during the three months ended June 30, 2021 and 2020.

The Company had 2,964 and 15,686 shares of restricted stock outstanding as of June 30, 2021 and 2020, respectively, and 15,686 and 0 shares of restricted stock vested during the three months ended June 30, 2021 and 2020.

The Company recognized stock-based compensation expense for restricted stock of $ 18,112 and $ 10,912 for the three months ended June 30, 2021 and 2020, respectively and $ 38,567 and $ 10,912 for the six months ended June 30, 2021 and 2020.

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 102,540 shares on January 1, 2020 and by 102,998 shares on January 1, 2021 and will increase automatically on January 1 of each of 2022 through 2027 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.

At the Annual Meeting held on May 12, 2021, the stockholders approved a one-time, 500,000 increase to the number of shares reserved for issuance under the 2017 Plan.

However, the Company’s board may reduce the amount of the increase in any particular year.

The total remaining shares available for grant under the Company’s 2017 Plan as of March 31, 2021 was 266,800 .

The total remaining shares available for grant under the Company’s 2017 Plan as of June 30, 2021 was 585,772 .

Total unrecognized compensation cost related to stock options and restricted stock is estimated to be recognized as follows:

Total estimated compensation cost to be recognized

The Company recognized stock-based compensation expense related to its employee stock purchase plan of $ 10,450 and $ 13,985 for the three months ended March 31, 2021 and 2020, 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 51,270 shares on January 1, 2020 and 51,499 shares on January 1, 2021 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.

The Company recognized stock-based compensation expense related to its employee stock purchase plan of $ 1,844 and ($ 1,991 ) for the three months ended June 30, 2021 and 2020, respectively and $ 12,295 and $ 11,993 for the six months ended June 30, 2021 and 2020, 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 51,270 shares on January 1, 2020 and 51,499 shares on January 1, 2021 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, 2021 was 163,710 .

The Company recognized total stock-based compensation expense as follows for the three months ended March 31:

The total remaining shares available for issuance under the employee stock purchase plan as of June 30,2021 was 158,214 .

The Company recognized total stock-based compensation expense as follows for the three and six months ended June 30:

Three Months Ended

Six Months Ended

Stock-based compensation expense in operating expenses:

1 unchanged sentence

General and administrative

Subsequent Events

On April 8, 2021, the Company entered into a license agreement (the “License Agreement”) with Pfizer, Inc.

(“Pfizer”), pursuant to which the Company acquired exclusive (including as to Pfizer) worldwide sublicensable rights to research, develop, manufacture, and commercialize gedatolisib, a potent, well-tolerated, reversible dual inhibitor that targets PI3K and mTOR, for the treatment, diagnosis and prevention of all diseases.

Pursuant to the License Agreement, the Company is obligated to use commercially reasonable efforts to develop and seek regulatory approval for at least one product in the United States and if regulatory approval is obtained, to commercialize such product in the United States and at least one international major market.

The Company paid Pfizer a $ 5.0 million upfront fee upon execution of the License Agreement and, pursuant to an Equity Grant Agreement, issued to Pfizer $ 5.0 million of shares of the Company’s common stock.

The number of shares issued was 349,406 and was calculated by dividing $5.0 million by $ 14.31 , the closing price of a share of the Company’s common stock on the Nasdaq Capital Market on April 8, 2021.

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.The Lender agreed to loan up to $ 25 million in three tranches consisting of (i) a $ 15.0 million non-contingent term A loan that was funded on April 8, 2021, (ii) a $ 5 million term B loan to be funded upon request of the Company no later than March 31, 2022, and (iii) a $ 5 million term C loan to be funded upon request of the Company no later than March 31, 2023 (collectively the “Term Loans”).

Funding of the term B and C loan is subject to the Company’s ability to achieve certain milestones.

The Innovatus Loan Agreement is secured by a lien covering substantially all assets of the Company.

The loan agreement also contains certain events of default, warranties and covenants of the Company.

In connection with each funding of the Term Loans, the Company is required to issue Innovatus a warrant (the “Warrants”) to purchase a number of shares of the Company’s stock equal to 2.5% of the principal amount of the relevant Term Loan funded divided by the exercise price, which will be based on the lower of (i) $ 14.40 per share or (ii) the volume weighted price per share of the Company’s stock for the five-trading day period ending on the last trading day immediately preceding the funding date of the Term B or Term C Loan, as applicable.

The warrants may be exercised on a cashless basis and are immediately exercisable through the tenth anniversary of the applicable funding date.

In connection with the first tranche of the Term Loans, the Company issued a warrant to Innovatus to purchase 26,042 shares of the Company’s common stock at an exercise price of $14.40 per share.

The Company evaluated the warrant under ASC470, debt, and recognized an additional debt discount of approximately $ 0.3 million based on the relative fair value of the base instruments and warrants.

The Company calculated the fair value of the warrant using the Black-Scholes model.

The Company is also required to maintain a minimum cash balance in agreement with the term loans’ default terms.

The Company is entitled to make interest-only payments for thirty-six months, or up to forty-eight months if certain conditions are met.

The Term Loans will mature on the fifth anniversary of the initial funding date and will bear interest at a rate equal to sum of (a) the greater of (i)Prime Rate (as defined in the loan agreement) or (ii) 3.25%, plus (b) 5.70%.

The effective interest rate is 11.36% .

Additionally, the Company elected to make 2.7% of the interest rate as payable in kind, which shall accrue as principal monthly.

The Company is obligated to pay the Lender (i) a non-refundable facility fee in the amount of 1.00% of each term loan that is funded (the “Facility Fee”), and (ii) a final fee equal to 4.50% of the aggregate amount of the term loans funded (the “Final Fee”).

In connection with the funding of the first tranche of the Term Loans, a final fee of approximately $ 0.7 million was recorded as additional principal and as a debt discount, and a facility fee of approximately $ 0.1 million was recorded as additional debt discount.

The Company has the option to prepay the loan at any time following the first anniversary of the loan closing, with tiered prepayment fees ranging from 0 – 2% based on when the prepayment would occur.

Innovatus also has the right, at its election, after June 1, 2021 and until the third anniversary of the Loan Agreement, to convert up to 20% of the outstanding principal amount of all Terms Loans made under the Loan Agreement into shares of the Company’s common stock at a price per share equal to the volume weighted average closing price of the Company’s stock for the 5-trading day period ending on the last trading day immediately preceding the execution of the Loan Agreement (the “Conversion Right”).

In connection with the loan agreement and the funding of the first tranche of the Term Loans, the Company incurred debt issuance costs of approximately $ 0.5 million.

The debt issuance costs, and the debt discount are amortized to interest expense using the effective interest method over the life of the Term Loans.

The carrying value of the debt approximates fair value as of June 30, 2021.

Long-term debt consisted of the following:

June 30, 2021

PIK interest (added to principal)

unamortized debt issuance costs

unamortized debt discount

( 1,068,847 )

Total long-term debt

Future principal payments, including the final fee, are as follows:

License Agreement

On April 8 th , the Company entered into a license agreement with Pfizer to research, develop, manufacture and commercialize gedatolisib, a potent, well-tolerated, reversible dual inhibitor that targets PI3K and mTOR, for the treatment, diagnosis and prevention of all diseases.

The Company paid Pfizer $ 5.0 million in upfront fees and issued to Pfizer $ 5.0 million of shares of the Company’s common stock pursuant to an Equity Grant Agreement.

The upfront payment and the issuance of shares were expensed to research & development in full for the three months ending June 30, 2021.

The Company is also required to make milestone payments to Pfizer upon achievement of certain development and commercial milestone events, up to an aggregate of $ 335.0 million.

6 unchanged sentences

In addition, either the Company or Pfizer may terminate the License Agreement in the event of specified insolvency events involving the other party.

Also, 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”), as collateral agent and the Lenders listed on Schedule 1.1 thereto, pursuant to which Innovatus, as a Lender, has agreed to make certain term loans to the Company in the aggregate principal amount of up to $ 25.0 million (the “Term Loans”).

Funding of the first $ 15.0 million tranche occurred on April 8, 2021.

The Company will be eligible to draw on a second tranche of $ 5.0 million upon achievement of certain milestones, including meeting the primary end points of either the FACT-1 or FACT-2 clinical trials and receipt of unrestricted net cash proceeds of at least $ 50.0 million from the issuance and sale of the Company’s equity securities.

The Company will be eligible to draw on a third tranche of $ 5.0 million upon the achievement of certain additional milestones, including commencement of certain Phase 3 clinical trials and the receipt of unrestricted net cash proceeds of at least $ 75.0 million from the issuance and sale of the Company’s equity securities.

Innovatus has the right, at its election, after June 1, 2021 and until the third anniversary of the Loan Agreement, to convert up to 20% of the outstanding principal amount of all Terms Loans made under the Loan Agreement into shares of the Company’s common stock at a price per share equal to the volume weighted average closing price of the Company’s stock for the 5-trading day period ending on the last trading day immediately preceding the execution of the Loan Agreement (the “Conversion Right”).

The Company is entitled to make interest-only payments for thirty-six months, or up to forty-eight months if certain conditions are met.

The Term Loans will mature on the fifth anniversary of the initial funding date and will bear interest at a rate equal to sum of (a) the greater of (i) Prime Rate (as defined in the Loan Agreement) or (ii) 3.25%, plus (b) 5.70%.

Additionally, the Company elected to make 2.7% of the interest rate as payable in-kind, which shall accrue as principal monthly.

Other fees include a 1.0% facility fee on the funded loan amount, paid at closing and a final fee of 4.5% of the funded loan amount due at the maturity date or earlier if the Company prepays the loan.

The Loan Agreement is secured by all assets of the Company.

Proceeds will be used for working capital purposes and to fund the Company’s general business requirements.

The Loan Agreement contains customary representations and warranties and covenants, subject to customary carve outs, and includes financial covenants related to liquidity and trailing twelve months revenue.

In connection with each funding of the Term Loans, the Company is required to issue to Innovatus a warrant (the “Warrants”) to purchase a number of shares of the Company’s common stock equal to 2.5% of the principal amount of the relevant Term Loan funded divided by the exercise price, which will be based on the lower of (i) the volume weighted average closing price of the Company’s stock for the 5-trading day period ending on the last trading day immediately preceding the execution of the Loan Agreement or (ii) the closing price on the last trading day immediately preceding the execution of the Loan Agreement.

For the second and third tranches only the exercise price will be based on the lower of (i) the exercise price for the first tranche or (ii) the volume weighted average closing price of the Company’s stock for the 5-trading day period ending on the last trading day immediately preceding the relevant Term Loan funding.

The Warrants may be exercised on a cashless basis and are exercisable through the 10 th anniversary of the applicable funding date.

The number of shares of common stock for which each Warrant is exercisable and the associated exercise price are subject to certain proportional adjustments as set forth in such Warrant.

Subsequent Events

As noted in footnote 2, on July 1, 2021, the Company completed a follow-on offering whereby it sold 2,250,000 shares of common stock at a public offering price of $ 25.00 per share.

On July 19, 2021, the Company signed an amendment to exercise the option to extend the lease for a period of one year.

The commencement of the extended period is May 1, 2022 and will terminate on April 30, 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements