What changed in this filing

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Item 1. Financial Statements

2024-08-14 compared with 2024-05-10 · 154 added, 85 removed, 272 unchanged (47% of the section changed)

3 unchanged sentences

(in thousands, except share and per share amounts)

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Assets (unaudited)

16 unchanged sentences

Commitments and contingencies (Note 11)

Stockholders' equity:

Stockholders' equity (deficit):

Common stock, 0.0001 par value;

250,000,000 shares authorized as of March 31, 2024 and December 31, 2023;

3,196,488 and 645,738 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

250,000,000 shares authorized as of June 30, 2024 and December 31, 2023;

801,914 and 49,663 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

Additional paid-in-capital 40,389 31,792

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(in thousands, except share and per share amounts)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Operating expenses:

4 unchanged sentences

Change in fair value of warrant liability 1 122 3 122

Interest income (expense), net 6 ( 1,162 )

Interest expense, net 6 ( 934 ) 13 ( 2,095 )

Net loss $ ( 2,250 ) $ ( 6,746 ) $ ( 4,137 ) $ ( 8,896 )

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(in thousands, except shares)

Common Stock Additional Paid-in Capital Accumulated Deficit Stockholders’ Deficit

Common Stock Additional Paid-in Capital Accumulated Deficit Stockholders’ Equity (Deficit)

Balance, December 31, 2022 10,987 $ — $ 16,871 $ ( 18,496 ) $ ( 1,625 )

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Balance, March 31, 2023 10,992 $ — $ 17,416 $ ( 20,646 ) $ ( 3,230 )

Stock-based compensation — — 13 — 13

Restricted stock vesting 1,802 — — — —

Warrant exercise 480 — 12 — 12

Issuance of common stock in pre-closing financing 13,350 — 11,721 — 11,721

Issuance of common stock for settlement of bridge note 596 — 3,333 — 3,333

Issuance of common stock for reverse recapitalization expenses 335 — 1,875 — 1,875

Issuance of common stock to Vallon stockholders in reverse recapitalization 4,930 — ( 2,940 ) — ( 2,940 )

Net loss — — — ( 6,746 ) ( 6,746 )

Balance, June 30, 2023 32,485 $ — $ 31,430 $ ( 27,392 ) $ 4,038

Common Stock Additional Paid-in Capital Accumulated Deficit Stockholders’ Equity

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Balance, March 31, 2024 245,875 $ — $ 36,218 $ ( 33,420 ) $ 2,798

Stock-based compensation — — 37 — 37

Fractional share adjustment ( 187 ) — — — —

Issuance of common stock and prefunded warrants in financing 353,892 — 4,134 — 4,134

Prefunded warrant exercise 202,334 — — — —

Net loss — — — ( 2,250 ) ( 2,250 )

Balance, June 30, 2024 801,914 $ — $ 40,389 $ ( 35,670 ) $ 4,719

See accompanying notes to unaudited interim consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Operating activities:

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Change in fair value of warrant liability ( 3 ) 63

Reduction in operating lease right of use assets 14 12

Change in operating right of use assets ( 127 ) 26

Change in operating assets and liabilities:

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Cash used in operating activities ( 4,344 ) ( 2,119 )

Investing activities:

Purchase of property and equipment — ( 8 )

Cash used in investing activities — ( 8 )

Financing activities:

1 unchanged sentence

Repayment of advances from employees — ( 195 )

Proceeds from issuance of common stock in financing 9,499 12,250

Proceeds from issuance of common stock under ATM 961 —

Proceeds from issuance of bridge promissory note — 1,250

Proceeds from issuance of common stock and prefunded warrants 5,500 —

Payment of stock issuance costs ( 1,014 ) ( 110 )

Proceeds from warrant exercise — 12

Net liabilities assumed in connection with reverse recapitalization — ( 2,939 )

Payment of reverse recapitalization costs — ( 2,984 )

Payment of deferred stock issuance costs ( 1,571 ) ( 517 )

Payment of debt issuance costs — ( 150 )

4 unchanged sentences

Supplemental disclosure of non-cash financing activities:

Issuance of stock for repayment of bridge promissory note $ — $ 3,333

Recognition of debt discount and additional paid-in-capital for issuance of warrants in connection with the

issuance of promissory notes $ — $ 532

Recognition of right of use assets and lease liabilities $ 152 $ —

Debt and stock issuance costs included in accounts payable $ 97 $ 45

Property and equipment purchases included in accounts payable $ — $ 8

Issuance of stock for payment of reverse recapitalization costs $ — $ 1,875

Issuance of warrants for payment of stock issuance costs $ — $ 18

Stock issuance costs in accounts payable and accrued expenses $ 367 $ —

Merger costs included in accounts payable $ — $ 72

See accompanying notes to unaudited interim consolidated financial statements.

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GRI Bio, Inc.

(GRI or the Company), based in La Jolla, CA, was incorporated in Delaware in May 2009.

(GRI or the Company), based in La Jolla, CA, was incorporated in Delaware in May 2009, which is the date of inception.

GRI is a clinical-stage biopharmaceutical company focused on discovering, developing, and commercializing innovative therapies that target serious diseases associated with dysregulated immune responses leading to inflammatory, fibrotic and autoimmune disorders.

The Company’s goal is to be an industry leader in developing therapies to treat these diseases and to improve the lives of patients suffering from such diseases.

The Company’s lead product candidate, GRI-0621, is an oral inhibitor of type 1 Natural Killer T (iNKT) cells and is being developed for the treatment of severe fibrotic lung diseases such as idiopathic pulmonary fibrosis (IPF).

The Company’s lead product candidate, GRI-0621, is an oral inhibitor of type 1 Natural Killer T cells and is being developed for the treatment of severe fibrotic lung diseases such as idiopathic pulmonary fibrosis (IPF).

The Company’s product candidate portfolio also includes GRI-0803 and a proprietary library of 500+ compounds.

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Reverse Merger with Vallon Pharmaceuticals, Inc.

On April 21, 2023, pursuant to the Agreement and Plan of Merger, dated as of December 13, 2022, as amended on February 17, 2023 (the Merger Agreement), by and among the Company, GRI Bio Operations, Inc., formerly known as GRI Bio, Inc.

On April 21, 2023, pursuant to an Agreement and Plan of Merger, dated as of December 13, 2022, as amended on February 17, 2023 (the Merger Agreement), by and among the Company, GRI Bio Operations, Inc., formerly known as GRI Bio, Inc.

(GRI Operations), and Vallon Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company (Merger Sub), Merger Sub was merged with and into GRI Operations (the Merger), with GRI Operations surviving the Merger as a wholly owned subsidiary of the Company (Note 4).

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Recapitalization

In connection with the Merger, and immediately prior to the effective time of the Merger (the Effective Time), the Company effected a reverse stock split of its common stock, par value $ 0.0001 (Common Stock), at a ratio of 1-for-30 (the April 2023 Reverse Stock Split).

On January 29, 2024, the Company effected a reverse stock split of its Common Stock at a ratio of one-for-seven (the January 2024 Reverse Stock Split and together with the April 2023 Reverse Stock Split, the Reverse Stock Splits).

On January 29, 2024, the Company effected a reverse stock split of its Common Stock at a ratio of one-for-seven (the January 2024 Reverse Stock Split).

On June 17, 2024, the Company effected a reverse stock split of its Common Stock at a ratio of one-for-thirteen (the June 2024 Reverse Stock Split and together with the April 2023 Reverse Stock Split and the January 2024 Reverse Stock Split, the Reverse Stock Splits).

Unless otherwise noted, all references to share and per share amounts in these consolidated financial statements reflect the Reverse Stock Splits.

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The Company has not generated any significant revenues from operations since inception and does not expect to do so in the foreseeable future.

The Company has incurred operating losses since its inception in 2009 and, as a result, has incurred $ 33,420 in accumulated deficit through March 31, 2024.

The Company has incurred operating losses since its inception in 2009 and, as a result, has incurred $ 35,670 in accumulated deficit through June 30, 2024.

The Company has financed its working capital requirements to date through the issuance of equity and debt securities.

As of March 31, 2024, the Company had cash of approximately $ 4,091 .

As of June 30, 2024, the Company had cash of approximately $ 6,353 .

In connection with signing the Merger Agreement, the Company, GRI Operations and Altium Growth Fund, LP (Altium) entered into a Securities Purchase Agreement, dated December 13, 2022 (the Equity SPA), pursuant to which Altium agreed to invest $ 12,250 in cash and cancel any outstanding principal and accrued interest on the Bridge Notes (as defined below) in return for the issuance of shares of GRI Operations common stock (GRI Operations Common Stock) immediately prior to the consummation of the Merger.

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On May 8, 2023, in accordance with the terms of the Equity SPA, the Company and Altium authorized the escrow agent to, subject to beneficial ownership limitations, disburse to Altium all of the shares of the Company’s Common Stock issued in exchange for the Additional Shares.

On February 1, 2024, the Company entered into a securities purchase agreement (the Purchase Agreement), pursuant to which the Company agreed to issue and sell, in a public offering, (i) 330,450 shares (the Shares) of Common Stock, (ii) 4,669,550 pre-funded warrants (the Pre-Funded Warrants) exercisable for an aggregate of 4,669,550 shares of Common Stock, (iii) 5,000,000 Series B-1 common warrants (the Series B-1 Common Warrants) exercisable for an aggregate of 5,000,000 shares of Common Stock, and (iv) 5,000,000 Series B-2 common warrants (the Series B-2 Common Warrants, and together with the Series B-1 Common Warrants, the Common Warrants) exercisable for an aggregate of 5,000,000 shares of Common Stock for net proceeds of $ 4,389 , after deducting offering expenses of $ 1,110 .

The Common Warrants together with the Pre-Funded Warrants are referred to in this Quarterly Report on Form 10-Q as the “Warrants.” The securities were offered in combinations of (a) one Share or one Pre-Funded Warrant, together with (b) one Series B-1 Common Warrant and one Series B-2 Common Warrant, for a combined purchase price of $ 1.10 (less $ 0.0001 for each Pre-Funded Warrant).

Subject to certain ownership limitations, the Warrants became exercisable upon issuance.

Each Pre-Funded Warrant is exercisable for one share of Common Stock at a price per share of $ 0.0001 and does not expire.

On February 1, 2024, the Company entered into a securities purchase agreement (the February 2024 Purchase Agreement), pursuant to which the Company agreed to issue and sell, in a public offering, (i) 25,419 shares (the February 2024 Shares) of Common Stock, (ii) 359,196 pre-funded warrants (the February 2024 Pre-Funded Warrants) exercisable for an aggregate of 359,196 shares of Common Stock, (iii) 384,615 Series B-1 common warrants (the Series B-1 Common Warrants) exercisable for an aggregate of 384,615 shares of Common Stock, and (iv) 384,615 Series B-2 common warrants (the Series B-2 Common Warrants, and together with the Series B-1 Common Warrants, the Series B Common Warrants) exercisable for an aggregate of 384,615 shares of Common Stock for net proceeds of $ 4,389 , after deducting offering expenses of $ 1,110 .

The Series B Common Warrants together with the February 2024 Pre-Funded Warrants are referred to in this Quarterly Report on Form 10-Q as the “February 2024 Warrants.” The securities were offered in combinations of (a) one February 2024 Share or one February 2024 Pre-Funded Warrant, together with (b) one Series B-1 Common Warrant and one Series B-2 Common Warrant, for a combined purchase price of $ 14.30 (less $ 0.0013 for each February 2024 Pre-Funded Warrant).

Subject to certain ownership limitations, the February 2024 Warrants became exercisable upon issuance.

Each February 2024 Pre-Funded Warrant was exercisable for one share of Common Stock at a price per share of $ 0.0013 and expired when exercised in full.

Each Series B-1 Common Warrant is exercisable into one share of Common Stock at a price per share of $ 14.30 for a five-year period after February 6, 2024, the date of issuance.

Each Series B-2 Common Warrant is exercisable into one share of Common Stock at a price per share of $ 14.30 for an 18 -month period after February 6, 2024 the date of issuance.

In connection with the issuance of the Shares and Warrants pursuant to the Purchase Agreement, the exercise price of the Series A-1 Warrants was reduced to par, or $ 0.0001 , per share pursuant to the terms of the Series A-1 Warrants.

Based on the Company’s current operating plan, the Company believes that its existing cash and cash equivalents will be sufficient to fund its operating expenses and capital expenditure requirements into the third quarter of 2024.

As of June 30, 2024, all of the February 2024 Pre-Funded Warrants have been exercised.

In connection with the issuance of the February 2024 Shares and February 2024 Warrants pursuant to the February 2024 Purchase Agreement, the exercise price of the Series A-1 Warrants was reduced to par, or $ 0.0001 , per share pursuant to the terms of the Series A-1 Warrants.

On May 20, 2024, the Company entered into an At The Market Offering Agreement (the Sales Agreement) with H.C.

Wainwright & Co., LLC (Wainwright), pursuant to which the Company may sell and issue, subject to the limitations in the Sales Agreement, shares up to $ 10.0 million of Common Stock from time to time through Wainwright as its sales agent (the ATM Offering).

Under the Sales Agreement, Wainwright is entitled to compensation of 3.0 % of the gross offering proceeds of all shares of Common Stock sold through it pursuant to the Sales Agreement.

As of June 30, 2024, the Company has sold 293,892 shares of Common Stock in the ATM Offering at a weighted-average price of $ 3.27 per share, raising $ 961 of gross proceeds and net proceeds of $ 923 , after deducting commissions to the sales agent and other ATM Offering related expenses.

On July 26, 2024, the Company filed a prospectus supplement to its registration statement on Form S-1 (File No.

333-279348) to increase the amount of shares of Common Stock that the Company may offer and sell under the Sales Agreement and applicable registration statement to an aggregate offering price of up to $ 2,644 , which amount does not include the shares of Common Stock having an aggregate gross sales price of approximately $ 961 that have been sold under the ATM Offering.

On June 26, 2024, the Company entered into a securities purchase agreement (the June 2024 Purchase Agreement), pursuant to which the Company agreed to issue and sell, in a public offering (the June 2024 Offering), (i) 60,000 shares (the June 2024 Shares) of Common Stock, (ii) 2,125,793 pre-funded warrants (the June 2024 Pre-Funded Warrants) exercisable for an aggregate of 2,125,793 shares of Common Stock, (iii) 2,185,793 Series C-1 common warrants (the Series C-1 Common Warrants) exercisable for an aggregate of 2,185,793 shares of Common Stock, and (iv) 2,185,793 Series C-2 common warrants (the Series C-2 Common Warrants, and together with the Series C-1 Common Warrants, the Series C Common Warrants) exercisable for an aggregate of 2,185,793 shares of Common Stock for net proceeds of $ 3,172 , after deducting offering expenses of $ 1,057 .

The Series C Common Warrants together with the June 2024 Pre-Funded Warrants are referred to in this Quarterly Report on Form 10-Q as the “June 2024 Warrants.” The securities were offered in combinations of (a) one June 2024 Share or one June 2024 Pre-Funded Warrant, together with (b) one Series C-1 Common Warrant and one Series C-2 Common Warrant, for a combined purchase price of $ 1.83 (less $ 0.0001 for each June 2024 Pre-Funded Warrant).

The June 2024 Pre-Funded Warrants are exercisable for one share of Common Stock at a price per share of $ 0.0001 , are exercisable immediately and will expire when exercised in full.

Each Series C Common Warrant is exercisable into one share of Common Stock at a price per share of $ 1.83 and are exercisable beginning on the effective date of stockholder approval of the issuance of the shares upon exercise of the Series C Common Warrants (Warrant Stockholder Approval).

The Series C-1 Common Warrants will expire on the five-year anniversary of the Warrant Stockholder Approval.

The Series C-2 Common Warrants will expire on the 18 -month anniversary of the Warrant Stockholder Approval.

The Company’s ability to continue as a going concern is dependent on its ability to raise additional capital to fund its business activities, including its research and development program.

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The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial periods and pursuant to the rules of the Securities and Exchange Commission (the SEC).

Any reference in the accompanying unaudited interim financial statements to “authoritative guidance” is

meant to refer to GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Updates (ASU) of the Financial Accounting Standards Board (FASB).

Any reference in the accompanying unaudited interim financial statements to “authoritative guidance” is meant to refer to GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Updates (ASU) of the Financial Accounting Standards Board (FASB).

The December 31, 2023 balance sheet was derived from the Company’s audited consolidated financial statements.

In the opinion of management, the unaudited interim consolidated financial statements furnished herein include all normal and recurring adjustments considered necessary to present fairly the Company’s financial position as of March 31, 2024, and the consolidated results of operations and consolidated stockholders’ equity for the three months ended March 31, 2024 and 2023 and consolidated cash flows for the three months ended March 31, 2024 and 2023.

Consolidated results of operations for the three months ended March 31, 2024, are not necessarily indicative of the consolidated operating results that may be expected for the year ending December 31, 2024.

In the opinion of management, the unaudited interim consolidated financial statements furnished herein include all normal and recurring adjustments considered necessary to present fairly the Company’s financial position as of June 30, 2024, and the consolidated results of operations and consolidated stockholders’ deficit for the three and six months ended June 30, 2024 and 2023 and consolidated cash flows for the three and six months ended June 30, 2024 and 2023.

Consolidated results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2024.

The unaudited interim consolidated financial statements, presented herein, do not contain the required disclosures under GAAP for annual consolidated financial statements.

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The three levels of fair value hierarchy defined by ASC 820 are described below:

Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Pricing inputs that are generally unobservable inputs and not corroborated by market data.

As of March 31, 2024, the Company’s financial instruments included cash, cash equivalents, prepaid expenses and other current assets, accounts payable, accrued expenses and certain liability classified warrants.

The carrying amounts reported in the balance sheets for cash, prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair value based on the short-term maturity of these instruments.

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liabilities.

Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

As of June 30, 2024, the Company’s financial instruments included cash, cash equivalents, prepaid expenses and other current assets, accounts payable, accrued expenses and certain liability classified warrants.

The carrying amounts reported in the balance sheets for cash, cash equivalents, prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair value based on the short-term maturity of these instruments.

The Company recognizes transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer.

At March 31, 2024, there were no financial assets or liabilities measured at fair value on a recurring basis other than the liability classified warrants.

At June 30, 2024, there were no financial assets or liabilities measured at fair value on a recurring basis other than the liability classified warrants.

In May 2022, Vallon Pharmaceuticals, Inc.

(Vallon) issued warrants in connection with a securities purchase agreement.

Vallon evaluated the warrants in accordance with ASC 815-40, Derivatives and Hedging — Contracts in Entity’s Own Equity (ASC 815-40), and concluded that a provision in the warrants related to the reduction of the exercise price in certain circumstances precluded the warrants from being accounted for as components of equity.

As a result, the warrants were recorded as a liability on the balance sheet.

Vallon recorded the fair value of the warrants upon issuance using a Black-Scholes valuation model.

The Company is required to revalue the warrants at each reporting date with any changes in fair value recorded in its statement of operations.

The valuation of the warrants is considered under Level 3 of the fair value hierarchy due to the need to use assumptions in the valuation that are both significant to the fair value measurement and unobservable.

The change in the fair value of the Level 3 warrants liabilities is reflected in the statement of operations for the three months ended March 31, 2024.

(Vallon) issued warrants (the May 2022 Warrants) in connection with a securities purchase agreement.

Vallon evaluated the May 2022 Warrants in accordance with ASC 815-40, Derivatives and Hedging — Contracts in Entity’s Own Equity (ASC 815-40), and concluded that a provision in the May 2022 Warrants related to the reduction of the exercise price in certain circumstances precluded the May 2022 Warrants from being accounted for as components of equity.

As a result, the May 2022 Warrants were recorded as a liability on the balance sheet.

Vallon recorded the fair value of the May 2022 Warrants upon issuance using a Black-Scholes valuation model.

The Company is required to revalue the May 2022 Warrants at each reporting date with any changes in fair value recorded in its statement of operations.

The valuation of the May 2022 Warrants is considered under Level 3 of the fair value hierarchy due to the need to use assumptions in the valuation that are both significant to the fair value measurement and unobservable.

The change in the fair value of the Level 3 warrant liability is reflected in the statement of operations for the six months ended June 30, 2024.

Deferred Stock Issuance Costs

Deferred stock issuance costs represent incremental costs incurred that are directly attributable to proposed offerings of securities.

The costs are charged against the gross proceeds of the respective offering upon closing.

Net Loss Per Common Share

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Diluted net loss per common share is computed based on the weighted average number of shares of common stock outstanding during each year, plus the dilutive effect of options considered to be outstanding during each year, in accordance with ASC 260, Earnings Per Share .

As the Company had a net loss in each of the three months ended March 31, 2024 and 2023, diluted net loss per common share is the same as basic net loss per common share for the period because the effects of potentially dilutive securities are antidilutive.

As the Company had a net loss in each of the three and six months ended June 30, 2024 and 2023, diluted net loss per common share is the same as basic net loss per common share for the period because the effects of potentially dilutive securities are antidilutive.

Common stock equivalents excluded from the diluted net loss per common share calculations are as follows:

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Warrants 5,302,813 40,253

Restricted stock with repurchase rights — 23,433

5,305,316 41,347

Recent Accounting Pronouncements

The Company considered the applicability and impact of all ASUs issued during the quarter ended March 31, 2024 and each was determined to be either not applicable or expected to have minimal impact on these consolidated financial statements.

The Company considered the applicability and impact of all ASUs issued during the quarter ended June 30, 2024 and each was determined to be either not applicable or expected to have minimal impact on these financial statements.

MERGER WITH VALLON

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(c) Each warrant to purchase shares of GRI Operations Common Stock (the GRI Operations Warrants) outstanding immediately prior to the Effective Time was assumed by the Company and converted into a warrant to purchase shares of Common Stock (the Assumed Warrants) and thereafter (i) each Assumed Warrant became exercisable solely for shares of the Common Stock;

(ii) the number of shares of Common Stock subject to each Assumed Warrant was determined by multiplying (A) the number of shares of GRI Operations Common Stock that were subject to such GRI Operations Warrant, as in effect immediately prior to the Effective Time, by (B) the Exchange Ratio, and rounding the resulting number down to the nearest whole number of shares of Common Stock;

(iii) the per share exercise price for shares of Common Stock issuable upon exercise of each Assumed Warrant was determined by dividing (A) the exercise price per share of GRI Operations Common Stock subject to such GRI Operations Warrant, as in effect immediately prior to the Effective Time, by (B) the Exchange Ratio, and rounding the resulting exercise price up to the nearest whole cent.

whole number of shares of Common Stock;

and (iii) the per share exercise price for shares of Common Stock issuable upon exercise of each Assumed Warrant was determined by dividing (A) the exercise price per share of GRI Operations Common Stock subject to such GRI Operations Warrant, as in effect immediately prior to the Effective Time, by (B) the Exchange Ratio, and rounding the resulting exercise price up to the nearest whole cent.

(d) The Bridge Warrants (Note 8) were exchanged for warrants (the Exchange Warrants) to purchase an aggregate of 4,632 shares of the Company’s Common Stock.

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(i) the equity holders of GRI Operations immediately prior to the Merger owned, or held rights to acquire, in the aggregate approximately 85 % of the outstanding shares of the Company’s Common Stock and the Company’s stockholders immediately prior to the Merger owned approximately 15 % of the outstanding shares of the Company’s Common Stock (ii) GRI Operations holds the majority (4 out of 5) of board seats of the combined company, and (iii) GRI Operations’ management holds the majority of key positions in the management of the combined company.

Immediately after the Merger, there were 422,333 shares of the Company’s Common Stock outstanding.

The following table shows the net liabilities assumed in the Merger:

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The Company applies the guidance in ASC 820 to account for financial assets and liabilities measured on a recurring basis.

Fair value is measured as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market

participants at the measurement date.

Fair value is measured as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability.

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The Company evaluates its hierarchy disclosures each reporting period.

There were no transfers between Level 1, 2 and 3 during the three months ended March 31, 2024.

The following table presents, for each of the fair value hierarchy levels required under ASC 820, the Company’s liabilities that are measured at fair value on a recurring basis at March 31, 2024:

There were no transfers between Level 1, 2 and 3 during the six months ended June 30, 2024.

The following table presents, for each of the fair value hierarchy levels required under ASC 820, the Company’s liabilities that are measured at fair value on a recurring basis at June 30, 2024:

Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Other Unobservable Inputs (Level 3)

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Change in valuation ( 3 )

Fair value as of March 31, 2024 $ 1

The Black-Scholes valuation model was used to estimate the fair value of the warrants with the following weighted-average assumptions:

March 31, 2024 December 31, 2023

Fair value as of June 30, 2024

The Black-Scholes valuation model was used to estimate the fair value of the May 2022 Warrants with the following weighted-average assumptions:

June 30, 2024 December 31, 2023

Volatility 172.8 % 171.0 %

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PROPERTY AND EQUIPMENT

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Computer equipment $ 21 $ 21

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Accumulated depreciation ( 28 ) ( 26 )

Depreciation expense related to property and equipment was $ 1 for each of the three months ended March 31, 2024 and 2023 .

Depreciation expense related to property and equipment was $ 2 for each of the six-month periods ended June 30, 2024 and 2023.

ACCRUED EXPENSES

Accrued expenses consist of the following:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Research and development $ 236 $ 93

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The Bridge Notes were accounted for as share-settled debt under the accounting guidance in ASC 835-30 and, as such, the initial net carrying amounts were accreted to the redemption amounts using the effective interest method.

The Company incurred $ 295 of debt issuance costs related to its issuance of debt under the Bridge SPA, of which $ 90 was incurred during the three months ended March 31, 2023.

Interest expense stemming from amortization of debt discounts and issuance costs was $ 1,161 for the three months ended March 31, 2023.

The Company incurred $ 205 of debt issuance costs related to its issuance of debt under the Bridge SPA, of which $ 90 was incurred during the six months ended June 30, 2023 related to its issuance of debt under the Bridge SPA.

Interest expense stemming from amortization of debt discounts and issuance costs was $ 1,161 and $ 2,104 for the three and six months ended June 30, 2023, respectively.

STOCKHOLDERS’ EQUITY

Equity Securities Purchase Agreement

In connection with signing the Merger Agreement, the Company, GRI Operations and Altium entered the Equity SPA pursuant to which Altium agreed to invest $ 12,250 in cash and cancel any outstanding principal and accrued interest on the Bridge Notes in return for the issuance of shares of GRI Operations’ Common Stock immediately prior to the consummation of the Merger.

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On May 8, 2023, in accordance with the terms of the Equity SPA, the Company and Altium authorized the escrow agent to, subject to beneficial ownership limitations, disburse to Altium all of the shares of the Common Stock issued in exchange for the Additional Shares.

On February 1, 2024, the Company entered into the Purchase Agreement, pursuant to which the Company agreed to issue and sell, in the Offering, (i) 330,450 Shares of the Common Stock, (ii) 4,669,550 Pre-Funded Warrants exercisable for an aggregate of 4,669,550 shares of Common Stock, (iii) 5,000,000 Series B-1 Common Warrants exercisable for an aggregate of 5,000,000 shares of Common Stock, and (iv) 5,000,000 Series B-2 Common Warrants exercisable for an aggregate of 5,000,000 shares of Common Stock for net proceeds of $ 4,389 , after deducting offering expenses of $ 1,110 .

The securities were offered in combinations of (a) one Share or one Pre-Funded Warrant, together with (b) one Series B-1 Common Warrant and one Series B-2 Common Warrant, for a combined purchase price of $ 1.10 (less $ 0.0001 for each Pre-Funded Warrant).

Subject to certain ownership limitations, the Warrants were exercisable upon issuance.

Each Pre-Funded Warrant is exercisable for one Share of Common Stock at a price per share of $ 0.0001 and does not expire.

February 2024 Securities Purchase Agreement

On February 1, 2024, the Company entered into the February 2024 Purchase Agreement, pursuant to which the Company agreed to issue and sell, in the February 2024 Offering, (i) 25,419 February 2024 Shares, (ii) 359,196 February 2024 Pre-Funded Warrants exercisable for an aggregate of 359,196 shares of Common Stock, (iii) 384,615 Series B-1 Common Warrants exercisable for an aggregate of 384,615 shares of Common Stock and (iv) 384,615 Series B-2 Common Warrants exercisable for an aggregate of 384,615 shares of Common Stock for net proceeds of $ 4,389 , after deducting offering expenses of $ 1,110 .

The securities were offered in combinations of (a) one February 2024 Share or one February 2024 Pre-Funded Warrant, together with (b) one Series B-1 Common Warrant and one Series B-2 Common Warrant, for a combined purchase price of $ 14.30 (less $ 0.0013 for each February 2024 Pre-Funded Warrant).

Subject to certain ownership limitations, the February 2024 Warrants were exercisable upon issuance.

Each February 2024 Pre-Funded Warrant was exercisable for one share of Common Stock at a price per share of $ 0.0013 and expired when exercised in full.

Each Series B-1 Common Warrant is exercisable into one share of Common Stock at a price per share of $ 14.30 for a five-year period after February 6, 2024, the date of issuance.

Each Series B-2 Common Warrant is exercisable into one share of Common Stock at a price per share of $ 14.30 for an 18 -month period after February 6, 2024, the date of issuance.

The Warrants were classified as equity and the allocated fair value of $ 4,279 is included in additional paid in capital.

The Company determined that the amount paid for the Pre-Funded Warrants approximates their fair value.

The February 2024 Warrants were classified as equity and the allocated fair value of $ 4,279 is included in additional paid in capital.

As of June 30, 2024, all of the February 2024 Pre-Funded Warrants have been exercised.

The Company determined that the amount paid for the February 2024 Pre-Funded Warrants approximates their fair value.

The Black-Scholes option-pricing model was used to estimate the fair value of the Series B-1 Common and Series B-2 Common Warrants with the following weighted-average assumptions:

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Risk-free interest rate 4.65 %

In connection with the issuance of the securities pursuant to the Purchase Agreement, the exercise price of the Series A-1 Warrants issued in connection with the Merger was reduced to par, or $ 0.0001 , per share pursuant to the terms of the Series A-1 Warrants.

As of March 31, 2024, the Company had the following warrants outstanding to purchase Common Stock.

In connection with the issuance of the securities pursuant to the February 2024 Purchase Agreement, the exercise price of the Series A-1 Warrants issued in connection with the Merger was reduced to par, or $ 0.0001 , per share pursuant to the terms of the Series A-1 Warrants.

May 2024 At The Market Offering

On May 20, 2024, the Company entered into the Sales Agreement with Wainwright, pursuant to which the Company may sell and issue, subject to the limitations in the Sales Agreement, shares up to $ 10.0 million of Common Stock from time to time in the ATM Offering.

Under the Sales Agreement, Wainwright is entitled to compensation of 3.0 % of the gross offering proceeds of all shares of Common Stock sold through it pursuant to the Sales Agreement.

On July 26, 2024, the Company filed a prospectus supplement to its registration statement on Form S-1 (File No.

June 2024 Securities Purchase Agreement

On June 26, 2024, the Company entered into the June 2024 Purchase Agreement, pursuant to which the Company agreed to issue and sell, in the June 2024 Offering, (i) 60,000 June 2024 Shares, (ii) 2,125,793 June 2024 Pre-Funded Warrants exercisable for an aggregate of 2,125,793 shares of Common Stock, (iii) 2,185,793 Series C-1 Common Warrants exercisable for an aggregate of 2,185,793 shares of Common Stock, and (iv) 2,185,793 Series C-2 Common Warrants, exercisable for an aggregate of 2,185,793 shares of Common Stock for net proceeds of $ 3,172 , after deducting offering expenses of $ 1,057 .

The securities were offered in combinations of (a) one June 2024 Share or one June 2024 Pre-Funded Warrant, together with (b) one Series C-1 Common Warrant and one Series C-2 Common Warrant, for a combined purchase price of $ 1.83 (less $ 0.0001 for each June 2024 Pre-Funded Warrant).

The June 2024 Pre-Funded Warrants are exercisable for one share of Common Stock at a price per share of $ 0.0001 , are exercisable immediately and expire when exercised in full.

Each Series C Common Warrant is exercisable into one share of Common Stock at a price per share of $ 1.83 and are exercisable beginning on the effective date of the Warrant Stockholder Approval.

The Series C-1 Common Warrants will expire on the five-year anniversary of the Warrant Stockholder Approval.

The Series C-2 Common Warrants will expire on the 18 -month anniversary of the Warrant Stockholder Approval.

The June 2024 Pre-Funded Warrants and the Series C Common Warrants were classified as equity and the allocated fair value of $ 2,908 is included in additional paid in capital.

Pursuant to an engagement agreement (the Engagement Agreement) with Wainwright, the Company, in connection with the June 2024 Offering, agreed to issue to Wainwright, or its designees, warrants to purchase up to an aggregate of 153,006 shares of Common Stock (the Placement Agent Warrants).

The Placement Agent Warrants have an exercise price of $ 2.2875 per share, will expire on June 26, 2029 and are exercisable following the Warrant Stockholder Approval.

The Placement Agent Warrants were classified as equity and the fair value of $ 229 is included in additional paid in capital.

The Company determined that the amount paid for the June 2024 Pre-Funded Warrants approximates their fair value.

The Black-Scholes option-pricing model was used to estimate the fair value of the Series C-1 Common Warrants, the Series C-2 Common Warrants and the Placement Agent Warrants with the following weighted-average assumptions:

Volatility 159.1 %

Expected term in years 1.65

Dividend rate 0.0 %

Risk-free interest rate 4.92 %

As of June 30, 2024, the Company had the following warrants outstanding to purchase Common Stock.

Number of Shares Exercise Price per Share Expiration Date

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26 $ 5,586.49 April 2028

181,316 $ 0.0001 December 2028

384,615 $ 14.30 February 2029

153,006 $ 2.29 June 2029

2,185,793 $ 1.83 18 months after the Warrant Stockholder Approval

2,185,793 $ 1.83 60 months after the Warrant Stockholder Approval

STOCK-BASED COMPENSATION

2015 Equity Incentive Plan

GRI Operations adopted the GRI Operations Plan, that provided GRI Operations with the ability to grant stock options, restricted stock awards and other equity-based awards to employees, directors, and consultants.

GRI Operations adopted the GRI Operations Plan, which provided GRI Operations with the ability to grant stock options, restricted stock awards and other equity-based awards to employees, directors, and consultants.

Upon completion of the Merger, the Company assumed the GRI Operations Plan and 982 outstanding and unexercised options issued thereunder, and ceased granting awards under the GRI Operations Plan.

As of March 31, 2024, no options remain outstanding under the GRI Operations Plan.

As of June 30, 2024, no options remain outstanding under the GRI Operations Plan.

Amended and Restated 2018 Equity Incentive Plan

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The A&R 2018 Plan had previously been approved by the Company’s board of directors, subject to stockholder approval.

The A&R 2018 Plan became effective on April 21, 2023, with the stockholders approving the amendment to the A&R 2018 Plan to, among other things, (i) to increase the aggregate number of shares by 24,129 shares to 30,952 shares of the Company’s Common Stock for issuance as awards under the A&R 2018 Plan, (ii) to extend the term of the A&R 2018 Plan through January 1, 2033, (iii) to prohibit any action that would be treated as a “repricing” of an award without further approval by the stockholders of Company, and (iv) to revise the limits on awards to non-employee directors.

The A&R 2018 Plan became effective on April 21, 2023, with the stockholders approving an amendment to the A&R 2018 Plan to, among other things, (i) to increase the aggregate number of shares by 1,856 shares to 2,381 shares of the Company’s Common Stock for issuance as awards under the A&R 2018 Plan, (ii) to extend the term of the A&R 2018 Plan through January 1, 2033, (iii) to prohibit any action that would be treated as a “repricing” of an award without further approval by the stockholders of Company and (iv) to revise the limits on awards to non-employee directors.

The A&R 2018 Plan provides the Company with the ability to grant stock options, restricted stock and other equity-based awards to employees, directors and consultants.

Stock options granted by the Company under the A&R 2018 Plan generally have a contractual life of up to 10 years.

As of March 31, 2024, awards granted under the A&R 2018 Plan representing the right to purchase or contingent right to receive up to an aggregate of 32,642 shares of the Company's Common Stock were outstanding and 56,781 shares of the Company’s Common Stock were reserved for issuance under the A&R 2018 Plan.

As of June 30, 2024, awards granted under the A&R 2018 Plan representing the right to purchase or contingent right to receive up to an aggregate of 2,503 shares of the Company's Common Stock were outstanding and 4,367 shares of the Company’s Common Stock were reserved for issuance under the A&R 2018 Plan.

The number of shares reserved for issuance under the A&R 2018 Plan may be increased pursuant to the A&R 2018 Plan’s “evergreen” provision on the first day of each calendar year beginning January 1, 2024 and ending on and including January 1, 2033, by a number of shares not to exceed 4 % of the aggregate number of shares of the Company’s Common Stock outstanding on the final day of the immediately preceding calendar year.

The Company recorded stock-based compensation related to equity-based awards issued under the GRI Operations Plan and the A&R 2018 Plan in the following expense categories of its accompanying consolidated statements of operations for the three months ended March 31, 2024 and 2023:

For the Three Months Ended March 31,

For the Three Months Ended June 30, For the Six Months Ended June 30,

2024 2023 2024 2023

Research and development $ — $ — $ — $ —

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The measurement date for service-based equity awards is the date of grant, and

equity-based compensation costs are recognized as expense over the requisite service period.The Company records expense for performance-based awards if the Company concludes that it is probable that the performance condition will be achieved.

The table below represents the activity of stock options granted to employees and non-employees for the three months ended March 31, 2024:

equity-based compensation costs are recognized as expense over the requisite service period.

The Company records expense for performance-based awards if the Company concludes that it is probable that the performance condition will be achieved.

The table below represents the activity of stock options granted to employees and non-employees for the six months ended June 30, 2024:

Number of options Weighted average exercise price Weighted average remaining contractual term (years)

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Forfeited/Cancelled —

Outstanding at March 31, 2024 32,642 $ 37.41 9.30

Exercisable at March 31, 2024 5,958 $ 133.34 8.78

Vested and expected to vest at March 31, 2024 32,642 $ 37.41 9.30

As of March 31, 2024, all of the outstanding and exercisable stock options were out of the money and therefore had no intrinsic value.

At March 31, 2024, the unrecognized compensation cost related to unvested stock options expected to vest was $ 350 .

Outstanding at June 30, 2024 2,503 $ 471.45 9.06

Exercisable at June 30, 2024 456 $ 1,655.14 8.56

Vested and expected to vest at June 30, 2024 2,503 $ 471.45 9.06

As of June 30, 2024, all of the outstanding and exercisable stock options were out of the money and therefore had no intrinsic value.

At June 30, 2024, the unrecognized compensation cost related to unvested stock options expected to vest was $ 313 .

This unrecognized compensation is expected to be recognized over a weighted-average amortization period of 2.47 years

No equity-based awards were granted during the three months ended March 31, 2024 and 2023.

No equity-based awards were granted during each of the three-month periods ended June 30, 2024 and 2023.

COMMITMENTS AND CONTINGENCIES

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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