What changed in this filing

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Item 1. Financial Statements

2022-11-10 compared with 2022-08-15 · 153 added, 84 removed, 534 unchanged (31% of the section changed)

3 unchanged sentences

Balance Sheets

September 30,

Cash and cash equivalents

Prepaid expenses and other current assets

5 unchanged sentences

Stockholders’ Equity:

Common Stock, par value $ 0.0001 , 90,000,000 shares authorized, 10,102,214 and 8,328,629 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

Common Stock, par value $ 0.0001 , 250,000,000 shares authorized and 12,102,214 shares issued and outstanding as of September 30, 2022;

and 90,000,000 shares authorized and 8,328,629 shares issued and outstanding as of December 31, 2021, respectively

Additional paid-in capital

8 unchanged sentences

Statements of Operations

For the three months ended June 30,

For the six months ended June 30,

For the three months ended

September 30,

For the nine months ended

September 30,

Operating expenses:

8 unchanged sentences

Other income and expenses:

Interest expense, net

Interest (income) expense, net

$ ( 2,424,586 )

2 unchanged sentences

$ ( 5,349,621 )

Deemed dividend upon the redemption of 5,221,156 shares of Series 1c preferred stock (see Note 6)

Deemed dividend upon the amendment of terms of the Series 1d convertible preferred stock (see Note 6)

Net loss attributable to common stockholders

$ ( 2,424,586 )

$ ( 4,275,157 )

$ ( 7,941,311 )

$ ( 7,911,858 )

Net loss per share of common stock, basic and diluted

20 unchanged sentences

$ ( 41,498,999 )

Issuance of common stock upon exercise of pre-funded warrants

Issuance of restricted stock unit awards

Stock-based compensation

( 2,424,586 )

Balance at September 30, 2022

$ ( 43,923,585 )

The accompanying notes are an integral part of these financial statements.

1 unchanged sentence

(FORMERLY DERMATA THERAPEUTICS, LLC)

Statements of Stockholder's Equity

Statements of Stockholder’s Equity (Deficit)

Class A Common

4 unchanged sentences

Series 1b Preferred

Series 1c Preferred

Balance at December 31, 2020

11 unchanged sentences

$ ( 4,119,595 )

( 46,553,188 )

( 6,491,592 )

Conversion of Warrant Units to Preferred Stock Warrants

( 1,419,228 )

$ ( 723,431 )

Stock-based compensation

2 unchanged sentences

Balance at June 30, 2021

Redemption of Series 1c preferred shares

Conversion of Preferred Stock to Common Stock

Conversion of Preferred Stock Warrants to Common Stock Warrants

Conversion of Convertible Debt to Common Stock

Issuance of Common Stock and warrants, net issuance costs

Stock-based compensation

Balance at September 30, 2021

The accompanying notes are an integral part of these financial statements.

1 unchanged sentence

(FORMERLY DERMATA THERAPEUTICS, LLC)

Statements of Stockholder's Equity Unaudited - (Continued)

Statements of Stockholder’s and Member’s Equity (Deficit) Continued

Series 1c Preferred

Series 1d Preferred

Preferred Stock

Stock Warrants

Preferred Stock Warrants

Balance at December 31, 2020

2 unchanged sentences

Series 1d Preferred Units issued

Class B Common Units forfeited

Conversion of Common Units to Common Stock

2 unchanged sentences

$ ( 6,491,592 )

( 6,065,989 )

$ ( 5,034,801 )

Conversion of Warrant Units to Preferred Stock Warrants

10 unchanged sentences

$ ( 505,802 )

Redemption of Series 1c preferred shares

( 5,221,156 )

$ ( 1,000,000 )

Conversion of Preferred Stock to Common Stock

( 65,823,015 )

Conversion of Preferred Stock Warrants to Common Stock Warrants

( 1,419,228 )

Conversion of Convertible Debt to Common Stock

Issuance of Common Stock and warrants, net issuance costs

Stock-based compensation

$ ( 1,712,920 )

Balance at September 30, 2021

$ ( 33,429,418 )

The accompanying notes are an integral part of these financial statements.

2 unchanged sentences

Statements of Cash Flows

For the six months ended

For the nine months ended

September 30,

Cash flows from operating activities:

6 unchanged sentences

Prepaid expenses and other current assets

( 1,007,393 )

Accounts payable

5 unchanged sentences

Proceeds from issuance of common stock and warrants, net of issuance costs

Proceeds from issuance of common stock upon exercise of pre-funded warrants

Proceeds from issuances of common stock upon exercises of pre-funded warrants

Redemption of Series 1c preferred stock

( 1,000,000 )

Payments on debt

2 unchanged sentences

Net cash provided by financing activities:

Net decrease in cash

Cash at beginning of period

Cash at end of period

Net increase (decrease) in cash and cash equivalents

( 2,731,984 )

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Supplemental disclosures:

2 unchanged sentences

Non-cash financing activities:

Conversion of convertible subordinated promissory notes to Series 1d Preferred Units

Conversion of common and preferred units and warrants to common and preferred stock and warrants

Conversion of convertible subordinated promissory notes to Series 1d preferred units

Deemed dividend upon amendment to the terms of the Series 1d convertible preferred stock

Conversion of convertible subordinated promissory notes and accrued interest to common shares at IPO

Conversion of preferred stock to common stock at IPO

The accompanying notes are an integral part of these financial statements.

29 unchanged sentences

Since its inception, the Company has devoted substantially all of its resources to research and development activities and has not generated any revenue or commercialized any product candidates.

As of June 30, 2022, cash totaled $ 10.6 million and the Company had an accumulated deficit of $ 41.5 million.

For the six months ended June 30, 2022 and the year ended December 31, 2021, the Company used cash of $ 4.4 million and $ 5.7 million, respectively, in operations.

As of September 30, 2022, cash and cash equivalents totaled $ 8.1 million and the Company had an accumulated deficit of $ 43.9 million.

For the nine months ended September 30, 2022 and the year ended December 31, 2021, the Company used cash of $ 7.0 million and $ 5.7 million, respectively, in operations.

The Company’s cash balances are expected to fund operations into the third quarter of 2023.

39 unchanged sentences

Upon the completion of the IPO in August 2021, approximately $ 2.6 million of offering costs related to the IPO were reclassified to additional paid-in capital.

As of December 31, 2021, the Company had deferred financing costs of $ 0.06 million and as of June 30, 2022, the Company had no deferred financing costs.

As of December 31, 2021, the Company had deferred financing costs of $ 0.06 million and as of September 30, 2022, the Company had no deferred financing costs.

Cash and Cash Equivalents

The Company deposits its cash with reputable financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”).

This cash is held in checking and savings accounts.

This cash is held in checking, cash sweep, and money market accounts.

At times, deposits held may exceed the amount of insurance provided by the FDIC.

The Company has not experienced any losses in its cash and believes they are not exposed to any significant credit risk.

The Company maintains an insured cash sweep account in which cash from its main operating checking account is invested overnight in highly liquid, short-term investments.

The Company considers all highly liquid investments with a maturity date of 90 days or less at the date of purchase to be cash equivalents.

The Company has not experienced any losses in its cash and cash equivalents and believes they are not exposed to significant credit risk.

Fair Value Measurement

3 unchanged sentences

and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The Company believes the carrying amount of cash, accounts payable, accrued expenses and debt approximate their estimated fair values due to the short-term maturities of these financial instruments.

The Company believes the carrying amount of cash and cash equivalents, accounts payable, accrued expenses and debt approximate their estimated fair values due to the short-term maturities of these financial instruments.

Interest Income

Interest income consists of interest income earned on cash equivalents from interest bearing demand accounts.

Patent costs related to obtaining and maintaining patent protection in both the United States and other countries are expensed as incurred.

27 unchanged sentences

Comprehensive loss includes net loss and other comprehensive income (loss) for the periods presented.

The Company did not have other comprehensive income (loss) items such as unrealized gains and losses and so for the three and six months ended June 30, 2022, and June 30, 2021, comprehensive loss were equal to the net loss.

The Company did not have other comprehensive income (loss) items such as unrealized gains and losses and so for the three and nine months ended September 30, 2022, and September 30, 2021, comprehensive loss was equal to the net loss.

Net Loss Per Common Unit/Share

4 unchanged sentences

Net loss per share for periods prior to the conversion to a C-corporation refers to net loss per common unit.

Basic net loss per unit/share is calculated by dividing net loss attributable to common unitholders or shareholders by the weighted-average number of units or shares outstanding during the period, including pre-funded warrants because their exercise requires only nominal consideration for the delivery of shares, without consideration of common unit or share equivalents.

Diluted net loss per unit or share is calculated by adjusting weighted-average shares outstanding for the dilutive effect of common unit or share equivalents outstanding for the period.

Basic net loss per unit/share is calculated by dividing net loss attributable to common unitholders or shareholders by the weighted-average number of units or shares outstanding during the period, contingently issuable restricted stock units for which no future service is required as a condition to the delivery of the underlying common stock, and pre-funded warrants because their exercise requires only nominal consideration for the delivery of shares (collectively, “basic shares”), without consideration of common unit or share equivalents.

Diluted net loss per unit or share is calculated by adjusting basic shares outstanding for the dilutive effect of common unit or share equivalents outstanding for the period.

For purposes of the diluted net loss per unit or share calculation, preferred units or shares, profit interests, and warrants to purchase preferred units or shares are considered to be common unit or share equivalents but are excluded from the calculation of diluted net loss per common unit or share if their effect would be anti-dilutive.

As the Company has reported a net loss for the periods presented, diluted net loss per common unit or share is the same as the basic net loss per common unit or share for the periods presented.

Three Months Ended

Six Months Ended

Three Months Ended September 30,

Nine Months Ended September 30,

$ ( 2,424,586 )

2 unchanged sentences

$ ( 5,349,621 )

Weighted-average basic and diluted common units/shares

Deemed dividend upon redemption of 5,221,156 shares of Series 1c convertible preferred stock

Deemed dividend upon amendment of the terms to the

Series 1d convertible preferred stock

Net loss attributable to common stockholders

$ ( 2,424,586 )

$ ( 4,275,157 )

$ ( 7,941,311 )

$ ( 7,911,858 )

Basic and diluted net loss per common unit/share

Weighted-average basic and diluted common units/shares

The common unit or share equivalents that are not included in the calculation of diluted net loss per common unit or share but could potentially dilute basic earnings per share in the future are as follows:

As of June 30,

Series 1 Preferred Units/Shares

Series 1a Preferred Units/Shares

Series 1a Preferred Warrant

Series 1b Preferred Units/Shares

Series 1c Preferred Units/Shares

Series 1d Preferred Units/Shares

As of September 30,

Common stock options

6 unchanged sentences

The following provides certain balance sheet details:

September 30,

Prepaid expenses and other current assets

2 unchanged sentences

Prepaid other

Interest receivable

Deferred offering costs

5 unchanged sentences

Accrued board compensation

Accrued other

Total accrued and other current liabilities

6 unchanged sentences

The Notes were recorded upon issuance net of debt discount costs of $ 28,301 .

The Company recognized $ 13,970 of amortized debt discount costs during the six months ended June 30, 2021.

The Company recognized $ 14,126 of amortized debt discount costs during the nine months ended September 30, 2021.

On January 27, 2021, the Company amended the terms of the Notes to increase the maximum amount of convertible promissory notes to be issued from $ 3,000,000 to $ 5,000,000 , to allow for the conversion of the convertible promissory notes into shares of common stock upon a Qualified Initial Public Offering with aggregate gross proceeds to the Company of at least $ 10,000,000 at a 20 % discount to the lowest price per share paid by investors for that financing and to extend the maturity date to December 31, 2021 .

7 unchanged sentences

Upon this conversion, since the conversion contained a 20 % discount, the Company measured the beneficial conversion feature and determined that it was not material to the financial statements.

As of December 31, 2021, and June 30, 2022, the Company had no promissory notes outstanding.

As of December 31, 2021, and September 30, 2022, the Company had no promissory notes outstanding.

Long-Term Debt

10 unchanged sentences

The Company also paid the final payment fee of $ 225,000 in February 2021 and the amendment fee of $ 100,000 in March 2021.

For the six months ended June 30, 2021, the Company paid a total of $ 556,482 to SVB as final payments for its long-term debt.

As of December 31, 2021, and June 30, 2022, the Company had no long-term debt outstanding.

For the nine months ended September 30, 2021, the Company paid a total of $ 556,482 to SVB as final payments for its long-term debt.

As of December 31, 2021, and September 30, 2022, the Company had no long-term debt outstanding.

Equity Securities

20 unchanged sentences

The PIPE Common Warrant related to this private placement will expire on May 12, 2027.

During the quarter ended June 30, 2022, 875,000 of the Pre-funded Warrants were exercised, reducing the outstanding Pre-funded Warrants to 2,000,000 as of June 30, 2022.

The Company’s total common stock issued and outstanding was 10,102,214 and 8,328,629 shares as of June 30, 2022, and December 31, 2021, respectively.

During the quarter ended June 30, 2022, 875,000 of the Pre-funded Warrants were exercised.

Further, during the quarter ended September 30, 2022, 2,000,000 of the Pre-funded Warrants were exercised.

No Pre-Funded Warrants were outstanding as of September 30, 2022.

The Company’s total common stock issued and outstanding was 12,102,214 and 8,328,629 shares as of September 30, 2022, and December 31, 2021, respectively.

Series 1 Preferred Units

2 unchanged sentences