What changed in this filing

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Item 1. Financial Statements

2021-11-09 compared with 2021-09-09 · 273 added, 163 removed, 553 unchanged (44% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2021

September 30, 2021

December 31, 2020

1 unchanged sentence

Cash and cash equivalents

Marketable securities

Accounts receivable

1 unchanged sentence

Total current assets

Marketable securities, non-current

Property and equipment, net

7 unchanged sentences

Long-term liabilities:

Lease liability, noncurrent

Lease liability, non-current

Total liabilities

1 unchanged sentence

Convertible preferred stock:

Series B preferred stock, $ 0.001 par value, 6,032,183 shares authorized, 6,032,145 and 3,619,292 shares issued and outstanding at June 30, 2021 and December 31, 2020

Series A preferred stock, $ 0.001 par value, 2,495,933 shares authorized, 2,495,933 shares issued and outstanding at June 30, 2021 and December 31, 2020

Series B preferred stock, $ 0.001 par value, 0 and 6,032,183 shares authorized at September 30, 2021 and December 31, 2020, 0 and 3,619,292 shares issued and outstanding at September 30, 2021 and December 31, 2020

Series A preferred stock, $ 0.001 par value, 0 and 2,495,933 shares authorized at September 30, 2021 and December 31, 2020, 0 and 2,495,933 shares issued and outstanding at September 30, 2021 and December 31, 2020

Total convertible preferred stock

Stockholders’ deficit:

Class A common stock, $ 0.001 par value, 22,026,200 shares authorized, 5,275,936 and 4,950,129 shares issued and outstanding at June 30, 2021 and December 31, 2020

Class B common stock, $ 0.001 par value, 6,032,183 shares authorized, 0 shares issued and outstanding at June 30, 2021 and December 31, 2020

Preferred stock, $ 0.001 par value;

10,000,000 and 0 shares authorized at September 30, 2021 and December 31, 2020, respectively;

No shares issued or outstanding

Class A common stock, $ 0.001 par value, 200,000,000 and 22,026,200 shares authorized at September 30, 2021 and December 31, 2020 respectively;

25,938,064 and 4,950,129 shares issued and outstanding at September 30, 2021 and December 31, 2020

Class B common stock, $ 0.001 par value, 20,000,000 and 6,032,183 shares authorized at September 30, 2021 and December 31, 2020 respectively;

0 shares issued and outstanding at September 30, 2021 and December 31, 2020

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

1 unchanged sentence

( 25,737,640 )

Total stockholders' deficit

( 35,185,780 )

Total stockholders' equity (deficit)

( 22,481,450 )

Total liabilities, convertible preferred stock and stockholders' deficit

Total liabilities, convertible preferred stock and stockholders' equity (deficit)

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

IMMUNEERING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended June 30,

Six Months Ended June 30,

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Three Months Ended September 30,

Nine Months Ended September 30,

Cost of revenue

8 unchanged sentences

( 11,246,099 )

Other income (expense)

Interest income

Other expense

( 8,534,073 )

4 unchanged sentences

Weighted-average common shares outstanding, basic and diluted

Other comprehensive loss:

Unrealized losses from marketable securities

Comprehensive Loss

( 8,538,824 )

( 4,399,079 )

( 22,756,140 )

( 11,203,961 )

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

IMMUNEERING CORPORATION

CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT )

Convertible Preferred Stock

Stockholders' Deficit

Stockholders' Equity (Deficit)

Accumulated other

Class A Common Stock

Class B Common Stock

comprehensive

Stockholders'

Preferred Stock

Equity (Deficit)

Balance at December 31, 2019

14 unchanged sentences

( 12,773,506 )

Stock-based compensation expense

( 4,399,079 )

Balance at September 30, 2020

( 19,901,703 )

( 16,862,120 )

Convertible Preferred Stock

Stockholders' Deficit

Stockholders' Equity (Deficit)

Accumulated other

Class A Common Stock

Class B Common Stock

comprehensive

Stockholders'

Preferred Stock

Equity (Deficit)

Balance at December 31, 2020

13 unchanged sentences

( 7,987,665 )

( 39,954,956 )

( 35,185,780 )

Balance at June 30, 2021

Conversion of Preferred Stock into common stock

( 6,032,145 )

( 61,772,761 )

( 2,495,933 )

( 21,119,940 )

( 82,892,701 )

Issuance of common stock upon exercise of stock options

Issuance of common stock upon initial public offering, net of issuance costs ( $ 2,124,317 )

Stock-based compensation expense

( 8,534,073 )

Other comprehensive loss

Balance at September 30, 2021

( 48,489,029 )

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

IMMUNEERING CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 and 2020

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 and 2020

Cash flows from operating activities:

5 unchanged sentences

Stock based compensation expense

Net amortization of premium (accretion of discount) on marketable securities

Change in assets and liabilities:

2 unchanged sentences

Prepaid expenses and other current assets

( 3,122,547 )

Increase (decrease) in:

6 unchanged sentences

Cash flows from investing activities:

Purchase of property and equipment

Purchases of property and equipment

Purchases of marketable securities

( 52,760,299 )

Net cash used in investing activities

( 52,808,033 )

Cash flows from financing activities:

1 unchanged sentence

Proceeds from the issuance of Series B preferred stock, net of issuance costs

Proceeds from initial public offering of common stock, net of commissions and underwriting

Payment of initial public offering costs

( 2,124,317 )

Proceeds from exercise of stock options

6 unchanged sentences

Supplemental disclosures of noncash information:

Conversion of convertible Series A and B preferred stock into common stock

Reclassification of liability for Series A preferred stock

Deferred offering costs included in accounts payable and accrued expenses

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

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On October 30, 2019, Immuneering formed a wholly owned subsidiary, Immuneering Securities Corporation (“ISC”), a Massachusetts securities corporation, for the sole purpose of buying, selling and holding securities on the Company’s behalf.

Immuneering and ISC are collectively referred to as “the Company” throughout these consolidated financial statements.

Immuneering and ISC are collectively referred to as “the Company” throughout these condensed consolidated financial statements.

Since inception, the Company has devoted substantially all of its efforts to business planning, service revenue generation, research and development, recruiting management and technical staff, and raising capital.

5 unchanged sentences

On August 3, 2021, the Company completed its initial public offering (“IPO”) pursuant to which it issued and sold 8,625,000 shares of its Class A common stock, inclusive of 1,125,000 shares of its Class A common stock sold pursuant to the full exercise of the underwriters’ option to purchase additional shares.

The aggregate net proceeds received by the Company from the IPO were $ 120,318,750 , after deducting underwriting discounts and commissions, but before deducting offering costs payable by the Company, which are estimated to be $ 2,000,000 .

Upon the closing of the IPO, all 8,528,078 shares of the Company’s convertible preferred stock then outstanding automatically converted into 11,939,281 shares of Class A common stock (see Note 11).

Upon the closing of the IPO, all 8,528,078 shares of the Company’s convertible preferred stock then outstanding automatically converted into 11,939,281 shares of Class A common stock.

Upon the conversion of the convertible preferred stock, the Company reclassified the carrying value of the convertible preferred stock to common stock (at par value) and additional paid-in capital (see Note 8).

To date, the Company has funded its operations through service revenues, and with proceeds from the sale of its capital stock and convertible notes and, most recently, with proceeds from the IPO.

The Company has incurred recurring losses over the past several years and as of June 30, 2021, the Company had an accumulated deficit of $ 39,954,956 .

The Company has incurred recurring losses over the past several years and as of September 30, 2021, the Company had an accumulated deficit of $ 48,489,029 .

The Company expects to continue to generate operating losses for the foreseeable future.

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If the Company is unable to raise additional funds when needed, it may be required to delay, reduce the scope of, or eliminate development programs, which may adversely affect its business and operations.

Management considers that there are no conditions or events, in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern and estimates that its cash and cash equivalents will be sufficient to fund its operating expenses and capital expenditure requirements for at least 12 months from the issuance date of the interim consolidated financial statements.

The full extent to which coronavirus (“COVID-19”) pandemic will directly or indirectly impact the Company’s business, results of operations and

financial condition, including expenses and research and development costs, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and its variants and the actions taken to contain or treat COVID-19 and its variants, as well as the economic impact on local, regional, national and international markets.

The full extent to

which coronavirus (“COVID-19”) pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition, including expenses and research and development costs, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and its variants and the actions taken to contain or treat COVID-19 and its variants, as well as the economic impact on local, regional, national and international markets.

The Company has considered potential impacts arising from the pandemic related to COVID-19 and its variants and is not presently aware of any events or circumstances that would require the Company to update its estimates, judgements or revise the carrying values of its assets or liabilities.

1 unchanged sentence

Basis of Presentation

The consolidated financial statements have been prepared in accordance with accounting standards set by the Financial Accounting Standards Board (“FASB”).

The FASB sets generally accepted accounting principles (“GAAP”) to ensure the consolidated financial statements are consistently reported.

The condensed consolidated financial statements have been prepared in accordance with accounting standards set by the Financial Accounting Standards Board (“FASB”).

The FASB sets generally accepted accounting principles (“GAAP”) to ensure the condensed consolidated financial statements are consistently reported.

References to GAAP issued by the FASB in these footnotes are to the FASB Accounting Standards Codifications (“ASC”).

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary.

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary.

All intercompany balances and transactions have been eliminated in consolidation.

2 unchanged sentences

Unaudited Interim Financial Information

The unaudited interim consolidated financial statements of the Company have been prepared, without audit, in accordance with GAAP and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting.

Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with GAAP have been omitted from the unaudited interim consolidated financial statements, as is permitted by such rules and regulations.

While we believe that the disclosures presented are adequate in order to make the information not misleading, these unaudited interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes for the year ended December 31, 2020.

The unaudited interim condensed consolidated financial statements of the Company have been prepared, without audit, in accordance with GAAP and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting.

Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with GAAP have been omitted from the unaudited interim condensed consolidated financial statements, as is permitted by such rules and regulations.

While we believe that the disclosures presented are adequate in order to make the information not misleading, these unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes for the year ended December 31, 2020.

It is management’s opinion that these financial statements include all normal and recurring adjustments necessary for a fair presentation of the Company’s financial position, operating results and cash flows.

Revenues and net loss for any interim period are not necessarily indicative of future or annual results.

Deferred Offering Costs

The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated.

After consummation of an equity financing, these costs are recorded as a reduction of the proceeds from the offering, either as a reduction of the carrying value of the preferred stock or in stockholder’s equity (deficit) as a reduction of additional paid-in capital generated as a result of the offering.

Should the in-process equity financing be abandoned, the deferred offering costs would be expensed immediately as a charge to operating expenses in the statements of operations and comprehensive loss.

There were no deferred offering costs as of December 31,2020.

As of June 30, 2021, deferred offering costs of $ 946,053 related to the IPO were recorded in the Company’s consolidated balance sheets.

On July 23, 2021, the Company approved a one -for-1.4 stock split which was consummated in connection with the Company’s IPO.

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These estimates and assumptions are based on current facts, historical experience and various other factors believe to be reasonable under the circumstances, the results of which form the basis for making judgements about the carrying values of assets liabilities and the recording of expenses that are not readily apparent from other sources.

Significant estimates reflected in these consolidated financial statements included but are not limited to, the research and development expenses, determination of fair value of stock-based awards, the valuation of common stock, and the right-to-use assets and operating lease liability.

Significant estimates reflected in these condensed consolidated financial statements included but are not limited to, the research and

development expenses, determination of fair value of stock-based awards, the valuation of common stock, and the right-to-use assets and operating lease liability.

Actual results may differ materially and adversely from these estimates.

5 unchanged sentences

The Company elected to avail itself of this extended transition period and, as a result, we will not be required to adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326):

In 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Statements.

3 unchanged sentences

2016-13, Financial Instruments - Credit Losses (Topic 326) will become effective for the Company on January 1, 2023.

The Company is currently assessing the impact of the adoption of this guidance on its consolidated financial statements.

The Company is currently assessing the impact of the adoption of this guidance on its condensed consolidated financial statements.

In December 2019, the FASB issued ASU No.

1 unchanged sentence

Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in the existing guidance for income taxes and making other minor improvements.

The amendments are effective for annual

reporting periods beginning after December 15, 2020 with early adoption permitted.

The Company is currently assessing the impact of the adoption of this guidance on its consolidated financial statements.

The amendments are effective for annual reporting periods beginning after December 15, 2020 with early adoption permitted.

The Company is currently assessing the impact of the adoption of this guidance on its condensed consolidated financial statements.

Note 3 – Marketable Securities

Our marketable securities are classified as available-for-sale pursuant to ASC 320, Investments – Debt and Equity Securities and are recorded at fair value.

Unrealized gains/(losses) are included as a component of accumulated other comprehensive loss in the condensed consolidated balance sheets and statements of convertible preferred stock and stockholders’ equity (deficit) and a component of total comprehensive loss in the condensed consolidated statements of comprehensive loss, until realized.

The Company assesses its available-for-sale marketable securities for impairment on a quarterly basis.

There were no impairments of the Company’s available-for-sale marketable securities measured and carried at fair value during the three and nine months ended September 30, 2021.

Realized gains and losses are included in other expense on a specific-identification basis.

There were no realized gains or losses on marketable securities for the three and nine months ended September 30, 2021 or 2020.

Marketable securities as of September 30, 2021 consisted of the following:

September 30, 2021

Amortized Cost

Unrealized Gains

Unrealized Losses

Government securities

Commercial Paper

Total Current

Government securities

Total Non-current

Total marketable securities

There were no marketable securities as of December 31, 2020.

Note 4 – Fair Value Measurements

We record cash equivalents and marketable securities at fair value.

ASC 820, Fair Value Measurements and Disclosures, establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and our own assumptions (unobservable inputs).

The hierarchy consists of three levels:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 – Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, directly or indirectly, for substantially the full term of the asset or liability.

Level 3 – Unobservable inputs that reflect our own assumptions about the assumptions market participants would use in pricing the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date.

The following table summarizes our cash equivalents and marketable securities measured at fair value on a recurring basis as of September 30, 2021:

Cash equivalents

Commercial paper

Total cash equivalents

Marketable securities:

Government securities

Commercial paper

Total marketable securities

Total cash equivalents and marketable securities

Cash equivalents and marketable securities have been initially valued at the transaction price and subsequently, at the end of each reporting period, valued utilizing third-party pricing services or other observable market data.

The pricing services utilize industry standard valuation models, including both income and market-based approaches, and observable market inputs to determine value.

After completing our validation procedures, we did not adjust or override any fair value measurements provided by the pricing services as of September 30, 2021.

There have been no changes to the valuation methods during the nine months ended September 30, 2021.

We have no financial assets or liabilities that were classified as Level 3 at any point during the nine months ended September 30, 2021.

There were no marketable securities as of December 31, 2020.

Note 5 – Property and Equipment, net

Property and equipment, net consisted of the following:

September 30,

Computer equipment

2 unchanged sentences

Property and equipment, net

Depreciation expense totaled $ 9,807 and $ 5,916 for the three months ended June 30, 2021 and 2020, respectively.

Depreciation expense totaled $ 18,674 and $ 11,223 for the six months ended June 30, 2021 and 2020, respectively.

Depreciation expense totaled $ 11,978 and $ 5,656 for the three months ended September 30, 2021 and 2020, respectively.

Depreciation expense totaled $ 30,652 and $ 16,879 for the nine months ended September 30, 2021 and 2020, respectively.

Note 6 – Accrued Expenses

Accrued expenses consisted of the following:

September 30,

Accrued professional services

1 unchanged sentence

Accrued contract research expenses

Accrued other

Note 7 – Convertible Preferred Stock

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Each holder of Series B Preferred Stock may elect to purchase their requisite shares of the second tranche at any time.

As of March 31, 2021, the Company has not met these development milestones nor did the Requisite Holders elect to purchase the second tranche prior to meeting these milestones and therefore no shares of the second tranche were issued.

As of March 31, 2021, the Company had not met these development milestones nor did the Requisite Holders elect to purchase the second tranche prior to meeting these milestones and therefore no shares of the second tranche were issued.

In April and May 2021, all 2,412,853 shares of the second tranche of Series B Preferred Stock were issued based on the voluntary election of substantially all of the holders of Series B Preferred Stock.

1 unchanged sentence

The Company incurred issuance costs of $ 10,935 in connection with the second tranche of Series B Preferred Stock.

As of June 30, 2021, the rights and preferences of the Series A Preferred Stock and Series B Preferred Stock (“Preferred Stock”) are as follows:

The rights and preferences of the Series A Preferred Stock and Series B Preferred Stock (“Preferred Stock”) are as described below:

Each share of Preferred Stock may be converted at any time, at the option of the holder, into shares of Class A common stock, subject to the applicable conversion rate as determined by dividing the original issue price by the conversion price.

2 unchanged sentences

Holders of Series B Preferred Stock that would beneficially own at least 9.9 % of any then outstanding class of equity securities may elect to receive a portion of their converted Series B Preferred Stock as Class B common stock upon conversion.

Upon the closing of the IPO on August 3, 2021, all 8,528,078 shares of the Company’s convertible preferred stock then outstanding automatically converted into 11,939,281 shares of Class A common stock (see Note 11).

Preferred Stockholders are entitled to receive per annum dividends of 7 % of the original issue price share, payable only when, as and if declared by the Board of Directors.

The right to receive these dividends is not cumulative, and therefore, if not declared in any year, the right to receive such dividends shall terminate and not carry forward into the next year.

As of June 30, 2021 and December 31, 2020, no dividends had been declared.

As of September 30, 2021 and December 31, 2020, no dividends had been declared.

Voting Rights

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Note 8 - Common Stock

As of June 30, 2021 and December 31, 2020, the Company has 22,026,200 authorized shares of Class A common stock, $ 0.001 par value per share, of which 5,275,936 and 4,950,129 are issued and outstanding , respectively.

The Company had 200,000,000 authorized shares of Class A common stock, $ 0.001 par value per share as of September 30, 2021 and 22,026,200 authorized shares of Class A common stock, $ 0.001 par value per share as of December 31, 2020, respectively, of which 25,938,064 and 4,950,129 were issued and outstanding , respectively.

The holders of Class A common stock are entitled one vote for each share of common stock.

Dividends may be paid when, and if declared by the Board of Directors, subject to the limitations, powers and preferences granted to the Preferred Stockholders and on a proportionate basis with holders of Class B common stock.

As of June 30, 2021 and December 31, 2020, the following number of shares of Class A common stock have been reserved:

As of September 30, 2021 and December 31, 2020, the following number of shares of Class A common stock have been reserved:

September 30,

Conversion of Series A Preferred

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Exercise of common stock options

As of June 30, 2021 and December 31, 2020, the Company has 6,032,183 authorized shares of Class B common stock, $ 0.001 par value per share, of which no shares have been issued nor are outstanding.

The Company had 20,000,000 authorized shares of Class B common stock, $ 0.001 par value per share as of September 30, 2021 and 6,032,183 authorized shares of Class B common stock, $ 0.001 par value per share as of December 31, 2020, of which no shares have been issued nor are outstanding.

The holders of Class B common stock have no voting rights.

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During June 2021, all warrant holders exercised their warrants to purchase an aggregate of 308,308 shares of common stock.

As of June 30, 2021, there were no warrants outstanding.

As of September 30, 2021, there were no warrants outstanding.

Initial Public Offering

On August 3, 2021, the Company completed its initial public offering pursuant to which it issued and sold 8,625,000 shares of its Class A common stock, inclusive of 1,125,000 shares of its Class A common stock sold pursuant to the full exercise of the underwriters’ option to purchase additional shares.

Upon the closing of the IPO, all 8,528,078 shares of the Company’s convertible preferred stock then outstanding automatically converted into 11,939,281 shares of Class A common stock.

Upon the conversion of the convertible preferred stock, the Company reclassified the carrying value of the convertible preferred stock to common stock (at par value) and additional paid-in capital.

On August 3, 2021 in connection with the closing of the IPO, the Company filed a restated certificate of incorporation, which amended and restated the Company’s certificate of incorporation to, among other things:

(i) increase the number of authorized shares of common stock to 200,000,000 shares of Class A common stock, 20,000,000 shares of Class B common stock, par value $ 0.001 per share, and (ii) authorize 10,000,000 shares of Preferred Stock;

and (iii) authorize the Board to establish the rights, preferences and restrictions on any unissued series of Preferred Stock.

Note 9 - Net Loss Per Share Attributable to Common Stockholders

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The Company has reported net losses for all periods presented, therefore diluted net loss per common share attributable to common stockholders is the same as basic net loss per common share attributable to common stockholders, because potentially dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

Basic and diluted net loss per share attributable to common stockholders was calculated at June 30, 2021 and 2020 as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Basic and diluted net loss per share attributable to common stockholders was calculated at September 30, 2021 and 2020 as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

( 8,534,073 )

5 unchanged sentences

Net loss per share - basic and diluted

The following table sets forth the potentially dilutive securities that have been excluded from the calculation of diluted net loss per share because to include them would be anti-dilutive (in common stock equivalent shares) at June 30, 2021 and 2020:

Series A Preferred

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The options typically vest over a four-year period.

As of June 30, 2021, the maximum number of shares available for issuance under the Incentive Plan was 2,825,173 shares.

As of June 30, 2021, the number of shares available for future grants under the Incentive Plan was 137,947 shares.

As of September 30, 2021, the maximum number of shares available for issuance under the Incentive Plan was 2,825,173 shares.

As of September 30, 2021, the number of shares available for future grants under the Incentive Plan was 137,950 shares.

However, from and after the effectiveness of the Company’s 2021 Incentive Award Plan, no additional awards will be granted under the Incentive Plan.

During the three and six months ended June 30, 2021, the Company recognized stock-based compensation expense of $ 351,009 and $ 533,234 , respectively.

During the three and six months ended June 30, 2020, the Company recognized stock-based compensation expense of $ 287,554 and $ 559,697 , respectively As of June 30, 2021, compensation expense remaining to be recognized for outstanding stock options was $ 6,765,850 and to be recognized over a weighted-average period of 2.4 years.

On July 23, 2021, the Company’s board of directors adopted, and on July 23, 2021 its stockholders approved, the 2021 Incentive Award Plan (the “2021 Plan”), which became effective on July 29, 2021.

The 2021 Plan provides for the grant of incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other stock-based awards.

The number of shares reserved for issuance under the 2021 Plan is initially equal to 2,590,000 plus an annual increase on the first day of each calendar year, beginning on January 1, 2022 and ending on and including January 1, 2031, equal to the lesser of (i) 4 % of the aggregate number of shares of Class A common stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares of Class A common stock as determined by the Board of Directors.

No more than 15,350,000 shares of Class A

common stock may be issued under the 2021 Plan upon the exercise of incentive stock options.

Shares issued under the 2021 Plan may be authorized but unissued shares, shares purchased on the open market or treasury shares.

If an award under the 2021 Plan expires, lapses or is terminated, exchanged for or settled in cash, surrendered, repurchased, cancelled without having been fully exercised/settled or forfeited, any unused shares subject to the award will, as applicable, become or again be available for new grants under the 2021 Plan.

In addition, shares subject to stock options issued under the Incentive Plan may become available for issuance under the 2021 Plan to the extent such stock options are canceled, forfeited, exchanged, settled in cash or otherwise terminated.

As of September 30, 2021, there were 2,397,232 shares available for future issuance under the 2021 Plan.

On July 23, 2021, the Company’s board of directors adopted, and on July 23, 2021 its stockholders approved, the 2021 Employee Stock Purchase Plan (the “2021 ESPP”), which became effective on July 29, 2021.

A total of 250,000 shares of Class A common stock were initially reserved for issuance under this plan.

The number of shares of Class A common stock that may be issued under the 2021 ESPP will automatically increase on the first day of each calendar year, beginning on January 1, 2022 and ending on and including January 1, 2031, equal to the lesser of (i) 1 % of the shares of Class A common stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares of Class A common stock as determined by the board of directors, provided that not more than 3,340,000 shares of Class A common stock may be issued under the 2021 ESPP.

As of September 30, 2021, no shares had been issued under the 2021 ESPP.

During the three and nine months ended September 30, 2021, the Company recognized stock-based compensation expense of $ 636,806 and $ 1,170,040 , respectively.

During the three and nine months ended September 30, 2020, the Company recognized stock-based compensation expense of $ 310,465 and $ 870,162 , respectively.

As of September 30, 2021, compensation expense remaining to be recognized for outstanding stock options was $ 7,990,487 and to be recognized over a weighted-average period of 3.07 years.

The fair value of options granted is calculated on the grant date using the Black-Scholes option valuation model.

For the six months ended June 30, 2021, the Company granted 1,160,894 shares of stock options at a weighted-average grant date fair value of $ 8.66 .

For the six months ended June 30, 2020, the Company granted 285,740 shares at a weighted-average grant date fair value of $ 3.01 .

The Company used the following assumptions in its application of the Black-Scholes option pricing model for grants during the six months ended June 30, 2021 and 2020:

Six Months Ended June 30,

The Company historically has been a private company and lacks company-specific historical and implied volatility information.

Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer public companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price.

For the nine months ended September 30, 2021, the Company granted 1,353,662 shares of stock options at a weighted-average grant date fair value of $ 9.56 .

For the nine months ended September 30, 2020, the Company granted 336,626 shares at a weighted-average grant date fair value of $ 3.02 .

The Company used the following assumptions in its application of the Black-Scholes option pricing model for grants during the nine months ended September 30, 2021 and 2020:

Nine Months Ended September 30,

Weighted-average risk-free interest rate

0.885 %- 1.71 %

0.36 % - 1.21 %

Expected term (in years)

5.83 - 10 years

5.92 - 10 years

Expected dividend yield

1 unchanged sentence

68.92 % - 80.99 %

The following table summarizes the stock option activity during the six months ended June 30, 2021 under the Plan:

67.30 % - 77.08 %

The following table summarizes the stock option activity during the nine months ended September 30, 2021 under the Plan:

Exercise Price

2 unchanged sentences

Outstanding at of December 31, 2020

Outstanding at June 30, 2021

Vested and exercisable at June 30, 2021

Vested and expected to vest at June 30, 2021

For the three and six months ended June 30, 2021 and 2020, the Company recognized share-based compensation expense recognized on the accompanying condensed consolidated statements of operations as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Outstanding at September 30, 2021

Vested and exercisable at September 30, 2021

Vested and expected to vest at September 30, 2021

For the three and nine months ended September 30, 2021 and 2020, the Company recognized share-based compensation expense recognized on the accompanying condensed consolidated statements of operations as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Cost of revenue

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The Cambridge and San Francisco leases are on a month-to-month basis, requiring one month’s notice before termination.

The New York lease is renewable on a quarterly basis and the last renewal was on June 15, 2021 which extended the lease term until September 30, 2021.

The New York lease is renewable on a quarterly basis and the last renewal was on August 3, 2021 which extended the lease term until December 31, 2021.

These lease agreements include payments for lease and non-lease components and the Company has elected to not separate such components and these payments were recognized as rent expense.

As of June 30, 2021, total future minimum lease payments for its short-term leases in Cambridge, Massachusetts, New York, New York and San Francisco, California was $ 26,040 due in 2021 and $ 11,040 due in 2022.

As of September 30, 2021, total future minimum lease payments for its short-term leases in Cambridge, Massachusetts, New York, New York and San Francisco, California was $ 23,620 due in 2021 and $ 11,040 due in 2022.

The Company leases storage space for its electronic data equipment in Somerville, Massachusetts.

This lease is renewable on an annual basis effective every March 1st.

Prior to June 30, 2021, the Company renewed the lease through March 31, 2022.

As of June 30, 2021, total future minimum lease payments for this lease were $ 10,708 due in 2021 and $ 3,569 due in 2022.

Prior to September 30, 2021, the Company renewed the lease through March 31, 2022.

As of September 30, 2021, total future minimum lease payments for this lease were $ 5,354 due in 2021 and $ 3,569 due in 2022.

In July 2019, the Company entered into an office lease in San Diego, California (“2019 San Diego Lease”) with a lease term of 24 months with no escalations and variable costs based on additional number of employees using the facility.

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At the lease commencement date, a right-to-use asset and lease liability was recognized by the Company for $ 637,863 .

Maturities of the lease liabilities due under the Company’s 2020 San Diego Lease as of June 30, 2021 are as follows:

Maturities of the lease liabilities due under the Company’s 2020 San Diego Lease as of September 30, 2021 are as follows:

Remainder of 2021

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Total lease liability

Quantitative information regarding the Company’s leases for the six months ended June 30, 2021 and 2020 is as follows:

Quantitative information regarding the Company’s leases for the nine months ended September 30, 2021 and 2020 is as follows:

September 30,

Operating lease cost

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An officer of the Company is a board member of a contract research organization (“CRO”) that provides contract services to the Company.

Research and development expenses in the accompanying condensed consolidated statement of operations include the cost of services provided by the CRO to the Company which amounted to $ 2,096,425 and $ 1,212,433 for the six months ended June 30, 2021 and 2020, respectively.

As of June 30, 2021 and December 31, 2020, $ 352,642 and $ 279,153 , respectively, was owed to the CRO and is included in accounts payable or accrued contract research expenses in the accompanying consolidated balance sheets.

Note 11 – Subsequent Events

Initial Public Offering

On August 3, 2021, the Company completed its IPO, pursuant to which it issued and sold 8,625,000 shares of its Class A common stock, inclusive of 1,125,000 shares of its Class A common stock sold pursuant to the full exercise of the underwriters’ option to purchase additional shares.

The aggregate net proceeds received by the Company from the IPO were approximately $ 120,318,750 , after deducting underwriting discounts and commissions, but before deducting offering costs payable by the Company, which are estimated to be $ 2,000,000 .

Upon the closing of the IPO, all of the 8,528,078 shares of the Company’s convertible preferred stock then outstanding automatically converted into 11,939,281 shares of Class A common stock.

Upon the conversion of the convertible preferred stock, the Company reclassified the carrying value of the convertible preferred stock to common stock (at par value) and additional paid-in capital.

Increase in Authorized Number of Shares of Common Stock and Changes in Authorized Preferred Stock

On July 23, 2021, in connection with the closing of the IPO, the Company filed a restated certificate of incorporation, which amended and restated the Company’s certificate of incorporation to, among other things:

(i) increase the number of authorized shares of common stock to 200,000,000 shares of Class A common stock, 20,000,000 shares of Class B common stock, par value $ 0.001 per share (the “Class B Common Stock”), and (ii) authorize 10,000,000 shares of Preferred Stock;

and (iii) authorize the Board to establish the rights, preferences and restrictions on any unissued series of Preferred Stock.

2021 Incentive Award Plan

The 2021 Plan provides for the grant of incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other stock-based awards.

No more than 15,350,000 shares of Class A common stock may be issued under the 2021 Plan upon the exercise of incentive stock options.

Shares issued under the 2021 Plan may be authorized but unissued shares, shares purchased on the open market or treasury shares.

2021 Employee Stock Purchase Plan

A total of 250,000

shares of Class A common stock were initially reserved for issuance under this plan.

Research and development expenses in the accompanying condensed consolidated statement of operations include the cost of services provided by the CRO to the Company which amounted to $ 3,274,393 and $ 1,950,415 for the nine months ended September 30, 2021 and 2020, respectively.

As of September 30, 2021 and December 31, 2020, $ 458,660 and $ 279,153 , respectively, was owed to the CRO and is included in accounts payable or accrued contract research expenses in the accompanying condensed consolidated balance sheets.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our final prospectus for our initial public offering filed pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, or the Securities Act, with the Securities and Exchange Commission, or SEC, on July 30, 2021 (the “Prospectus”).

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our final prospectus for our initial public offering filed pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, or the Securities Act, with the Securities and Exchange Commission, or SEC, on July 30, 2021 (the “Prospectus”).

Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties.

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We plan to submit an Investigational New Drug, or IND, for IMM-1-104 to the U.S.

Food and Drug Administration, or the FDA, in the first quarter of 2022.

Food and Drug Administration (“FDA”), in the first quarter of 2022.

In addition, we anticipate filing at least two additional INDs for our other oncology programs, one in each of 2023 and 2024.

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On August 3, 2021, we completed our IPO pursuant to which we issued and sold 8,625,000 shares of Class A common stock, inclusive of 1,125,000 shares sold by us pursuant to the full exercise of the underwriters’ option to purchase additional shares.

We received aggregate net proceeds of approximately $120.3 million from the IPO, after deducting underwriting discounts and commissions, but before deducting offering costs payable by us, which are estimated to be $2.0 million.

Since inception, we have had significant annual operating losses.

Our net loss was approximately $14.2 million, for the six months ended June 30, 2021 and $17 million for the year ended December 31, 2020.

As of June 30, 2021, we had an accumulated deficit of approximately $40.0 million and approximately $50.2 million in cash and cash equivalents.

Our net loss was approximately $22.8 million, for the nine months ended September 30, 2021 and $17 million for the year ended December 31, 2020.

As of September 30, 2021, we had an accumulated deficit of approximately $48.5 million and approximately $159.6 million in cash and cash equivalents and marketable securities.

Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our accounts payable and accrued expenses.

We expect to continue to incur net losses for the foreseeable future, and we expect our research and development expenses, general and administrative expenses, and capital expenditures will continue to increase.

In particular, we expect our expenses to increase as we continue our development of, and seek regulatory approvals for, our internally developed product candidates as well as add operational, financial and management

informational systems and personnel to support our product development as well as support our transition to a public company.

In particular, we expect our expenses to increase as we continue our development of, and seek

regulatory approvals for, our internally developed product candidates as well as add operational, financial and management informational systems and personnel to support our product development as well as support our transition to a public company.

In addition, if and when we seek and obtain regulatory approval to commercialize any product candidate, we will also incur increased expenses in connection with commercialization and marketing of any such product.

Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities.

Based upon our current business plans, we believe that our existing cash and cash equivalents, inclusive of the net proceeds from the IPO, will be sufficient to fund our development activities and other operations into 2024.

Based upon our current business plans, we believe that our existing cash and cash equivalents and marketable securities will be sufficient to fund our development activities and other operations into 2024.

We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.

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We expense research and development costs as incurred.

Our direct research and development expenses are not currently tracked on a program-by-program basis, but we anticipate tracking costs on a program-by-program basis at the time IMM-1-104 enters clinical trials, which we expect to occur in the first half of 2022.

We use our personnel and infrastructure resources across multiple research and development programs directed toward identifying and developing product candidates.

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As a result, we expect our research and development expenses to increase as our product candidates advance into later stages of clinical development.

As of the date of this prospectus, we cannot reasonably determine or accurately project total program-specific expenses through commercialization.

As of the date of this Quarterly Report on Form 10-Q, we cannot reasonably determine or accurately project total program-specific expenses through commercialization.

There are numerous factors associated with the successful commercialization of any of our product candidates, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development.

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As we expand our operations, we also expect to incur increased expenses associated with operating as a public company, including costs related to accounting, audit, legal, regulatory, and tax-related services associated with maintaining compliance with exchange listing and rules and regulations of the SEC, Sarbanes-Oxley Act, director and officer insurance costs, and investor and public relations costs.

Other Income (Expense), Net

Other income (expense), net consists primarily of interest income earned on our cash and cash equivalents carried at fair value, and interest expense related to the conversion of notes payable and a loss on the extinguishment of the convertible note.

Other Income (Expense)

Interest income

Interest income consists of interest earned on our cash and cash equivalents balances and our marketable securities.

The primary objective of our investment policy is capital preservation.

Other expense

Other expense consists of the amortization of premiums or accretion of discounts related to our marketable securities.

Results of Operations

Comparison of the Three Months Ended June 30, 2021 and 2020

Comparison of the Three Months Ended September 30, 2021 and 2020

The following table summarizes our results of operations for the periods indicated:

Three Months Ended June 30,

Three Months Ended September 30,

(in thousands, except percentages)

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Loss from operations

Other income (expense)

Interest income

Other expense

N/M – Not meaningful

The following table summarizes the revenue recognized for the periods indicated:

Three Months Ended June 30,

Three Months Ended September 30,

(in thousands, except percentages)

Revenue increased by approximately $0.2 million, or 37%, to approximately $0.7 million for the three months ended June 30, 2021 compared to approximately $0.5 million for the three months ended June 30, 2020.

The increase in revenue was due to an increase of approximately $0.3 million of revenue from new customers in 2021 and, growth in existing customers of $0.1 million which was partially offset by approximately $0.2 million decrease due to customer agreements that were completed in 2020.

Revenue decreased by approximately $0.2 million, or 29.4%, to approximately $0.5 million for the three months ended September 30, 2021 compared to approximately $0.7 million for the three months ended September 30, 2020.

The decrease in revenue was due to approximately $0.2 million received from customer agreements that were completed in 2020, offset by a $0.1 million decrease in existing customers in the three months ended September 30, 2020, further offset by a $0.1 million increase in new customers in the three months ended September 30, 2021.

Cost of Revenue

The following table summarizes the components of cost of revenue expenses for the periods indicated:

Three Months Ended June 30,

Three Months Ended September 30,

(in thousands, except percentages)

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Total cost of revenue

Cost of revenue increased by approximately $0.1 million, or 34.6%, to approximately $0.3 million for the three months ended June 30, 2021 compared to approximately $0.2 million for the three months June 30, 2020.

The increase was primarily due to increased employee related costs of approximately $0.1 million, partially offset by a decrease in equity-based compensation and facilities.

Cost of revenue decreased by approximately $0.1 million, or 30.5%, to approximately $0.2 million for the three months ended September 30, 2021 compared to approximately $0.3 million for the three months September 30, 2020.

The decrease was primarily due to decreased employee related costs of approximately $0.1 million.

Research and Development

The following table summarizes the components of our research and development expenses for the periods indicated:

Three Months Ended June 30,

Three Months Ended September 30,

(in thousands, except percentages)

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Total research and development

Research and development expenses increased by approximately $3.8 million, or 117.0%, to approximately $7.0 million for the three months ended June 30, 2021 as compared to approximately $3.2 million for the three months ended June 30, 2020.

The increase of approximately $3.8 million was primarily due to approximately $2.9 million of outside contract research services for our preclinical candidates due to an increased number of discovery programs and increased spending on later stage preclinical efforts.

The increase also includes approximately $0.8 million of additional employee related costs, primarily due to an increase in headcount.

Research and development expenses increased by approximately $2.1 million, or 52.5%, to approximately $6.2 million for the three months ended September 30, 2021 compared to approximately $4.1 million for the three months ended September 30, 2020.

The increase of approximately $2.1 million was primarily due to approximately $1.5 million of

outside contract research services for our preclinical candidates resulting from an increased number of discovery programs and increased spending on later stage preclinical efforts.

The increase also includes approximately $0.5 million of additional employee-related costs, primarily due to an increase in headcount and approximately $0.2 million increase for equity-based compensation expense.

General and Administrative

The following table summarizes the components of our general and administrative expenses for the periods indicated:

Three Months Ended June 30,

Three Months Ended September 30,

(in thousands, except percentages)

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Total general and administrative

General and administrative expenses increased by approximately $0.7 million, or 113%, to approximately $1.3 million for the three months ended June 30, 2021 compared to approximately $0.6 million for the three months ended June 30, 2020.

The increase of approximately $0.7 million was primarily due to increased employee related costs of approximately $0.3 million, increased professional fees incurred for accounting, auditing, legal, public relations and tax services of approximately $0.3 million.

Other Income, Net

Other income decreased by approximately $1,000, or 50% due to a decrease in interest rates earned from our cash and cash equivalents balances due to changes in interest rates.

Comparison of the Six Months June 30, 2021 and 2020

General and administrative expenses increased by approximately $1.9 million, or 271.8%, to approximately $2.6 million for the three months ended September 30, 2021 compared to approximately $0.7 million for the three months ended September 30, 2020.

The increase of approximately $1.9 million was primarily due to increased employee related costs of approximately $1.2 million, increased professional fees incurred for accounting, auditing, legal, public relations and tax services of approximately $0.5 million, increased facilities expenses of approximately $0.1 million and approximately $0.1 million increase in equity-based compensation expense.

Other Income (expense)

Interest income increased by approximately $16,250 due to the interest earned on our cash and cash equivalents and marketable securities balances due to the higher balances as a result of the IPO proceeds.

Other expense increased by $8,089 as a result of the amortization of premiums related to our marketable securities.

Comparison of the Nine Months September 30, 2021 and 2020

The following table summarizes our results of operations for the periods indicated:

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands, except percentages)

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Loss from operations

Other income (expense)

Interest income

Other income (expense)

N/M – Not meaningful

The following table summarizes the revenue recognized for the periods indicated:

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands, except percentages)

Revenue increased by approximately $0.4 million, or 46%, to approximately $1.4 million for the six months ended June 30, 2021 compared to approximately $1.0 million for the six months ended June 30, 2020.

Revenue increased by approximately $0.2 million, or 14.8%, to approximately $1.9 million for the nine months ended September 30, 2021 compared to approximately $1.7 million for the nine months ended September 30, 2020.

The increase in revenue was due to an increase by approximately $0.3 million from new customers during 2021 and, a $0.2 million increase in existing customers partially offset by an approximately $0.3 million decrease due to customer agreements that were completed in 2020.

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The following table summarizes the components of cost of revenue expenses for the periods indicated:

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands, except percentages)

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Total cost of revenue

Cost of revenue increased by approximately $0.2 million, or 48%, to approximately $0.7 million for the six months ended June 30, 2021 compared to approximately $0.5 million for the six months ended June 30, 2020.

The increase was primarily due to increased employee related costs of approximately $0.3 million, partially offset by decreases in equity-based compensation, facilities, depreciation, and outside contract research services.

Cost of revenue increased by approximately $0.1 million, or 17.3%, to approximately $0.9 million for the nine months ended September 30, 2021 compared to approximately $0.8 million for the nine months ended September 30, 2020.

The increase was primarily due to increased employee related costs of approximately $0.2 million, partially offset by decreases in facilities expenses.

Research and Development

The following table summarizes the components of research and development expenses for the periods indicated:

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands, except percentages)

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Total research and development

Research and development expenses increased by approximately $6.3 million, or 104.9%, to approximately $12.4 million for the six months ended June 30, 2021 as compared to approximately $6.0 million for the year ended June 30, 2020.

The increase of approximately $6.3 million was primarily due to approximately $4.8 million of outside contract research

services for our preclinical candidates due to an increased number of discovery programs and increased spending on later stage preclinical efforts.

Research and development expenses increased by approximately $8.5 million, or 83.8%, to approximately $18.6 million for the nine months ended September 30, 2021 as compared to approximately $10.1 million for the year ended September 30, 2020.

The increase of approximately $8.5 million was primarily due to approximately $6.3 million of outside contract research services for our preclinical candidates due to an increased number of discovery programs and increased spending on later stage preclinical efforts.

The increase also includes approximately $1.9 million of additional employee related costs, primarily due to higher headcount and increased equity-based compensation and facilities and other allocated expense of approximately $0.3 million.

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The following table summarizes the components of general and administrative expenses for the periods indicated:

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands, except percentages)

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Total general and administrative

General and administrative expenses increased by approximately $1.3 million, or 98.3%, to approximately $2.5 million for the six months ended June 30, 2021 compared to approximately $1.3 million for the six months ended June 30, 2020.

The increase of approximately $1.3 million was primarily due to increased employee related costs of approximately $0.6 million, increased professional fees incurred for accounting, auditing, legal, and tax services of approximately $06 million, increased public relation costs of approximately $0.1 million, partially offset by a decrease in equity-based compensation expense..

Other Income (Expense), Net

Other income decreased by approximately $31,000, or 77% due to a decrease in interest rates earned from our cash and cash equivalents balances due to changes in interest rates.

General and administrative expenses increased by approximately $3.1 million, or 159.8%, to approximately $5.1 million for the nine months ended September 30, 2021 compared to approximately $2.0 million for the nine months ended September 30, 2020.

The increase of approximately $3.1 million was primarily due to increased employee related costs of approximately $1.8 million, increased professional fees incurred for accounting, auditing, legal, and tax services of approximately $1.0 million, increased public relation costs, equity-based compensation, outside consultants, facilities and other allocated expenses and other costs of approximately $0.3 million.

Other Income (expense)

Interest income decreased by approximately $15,124 due to the lower interest rates and lower cash balance up until the Company’s IPO in July.

Other expense increased by $8,089 as a result of the amortization of premiums related to our marketable securities.

Liquidity and Capital Resources

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Since our inception, we have financed our operations through service revenues, the issuance of convertible notes payable, convertible preferred stock, common stock, and the exercise of stock options.

As of June 30, 2021, we had an accumulated deficit of $40.0 million and $50.2 million in cash and cash equivalents.

As of September 30, 2021, we had an accumulated deficit of $48.5 million and $159.5 million in cash and cash equivalents and marketable securities.

Cash and cash equivalents are comprised of deposits at major financial banking institutions and highly liquid investments with an original maturity of three months or less at the date of purchase.

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To date, our operations have been financed primarily by service revenues and aggregate net proceeds of approximately $81.4 million from the issuance of convertible notes payable, convertible preferred stock including gross proceeds of approximately $24.8 million from the issuance of shares in the second tranche of Series B Preferred in April and May 2021, common stock, the exercise of stock options and most recently, the proceeds from our IPO.

In August, 2021,

we completed our IPO pursuant to which we issued and sold 8,625,000 shares of Class A common stock, inclusive of 1,150,000 shares sold by us pursuant to the full exercise of the underwriters’ option to purchase additional shares.

In August, 2021, we completed our IPO pursuant to which we issued and sold 8,625,000 shares of Class A common stock, inclusive of 1,150,000 shares sold by us pursuant to the full exercise of the underwriters’ option to purchase additional shares.

The following table summarizes our sources and uses of cash for the periods indicated:

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

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Net Cash Used in Operating Activities

During the six months ended June 30, 2021, operating activities used approximately $12.6 million of cash, primarily resulting from our net loss of approximately $14.2 million and cash provided by changes in our operating assets and liabilities of approximately $1.0 million, partially offset by equity-based compensation expense of approximately $0.5 million.

During the six months ended June 30, 2020, operating activities used approximately $5.7 million of cash, primarily resulting from our net loss of approximately $6.8 million, partially offset by equity-based compensation expense of approximately $0.6 million and cash provided by changes in our operating assets and liabilities of approximately $0.6 million.

During the nine months ended September 30, 2021, operating activities used approximately $21.6 million of cash, primarily resulting from our net loss of approximately $22.8 million and cash provided by changes in our operating assets and liabilities of approximately $0.1 million, partially offset by equity-based compensation expense of approximately $1.2 million.

During the nine months ended September 30, 2020, operating activities used approximately $9.2 million of cash, primarily resulting from our net loss of approximately $11.2 million, partially offset by equity-based compensation expense of

approximately $0.9 million and cash provided by changes in our operating assets and liabilities of approximately $1.0 million.

Net Cash Used in Investing Activities

During the six months ended June 30, 2021 and 2020, investing activities used approximately $36,388, and $9,754 respectively, for the purchase of property and equipment.

During the nine months ended September 30, 2021 and 2020, investing activities used approximately $52.8 million, and $15,357 respectively primarily resulting for the purchases of marketable securities in 2021 of approximately $52.8 million and for the purchases of property and equipment of $15,357 in 2020.

Net Cash Provided by Financing Activities

During the six months ended June 30, 2021, net cash provided by financing activities was approximately $25.8 million, consisting primarily of approximately $24.8 million in net proceeds received from the issuance of Series B preferred stock and approximately $1.0 million in net proceeds from the exercise of warrants and approximately $52,625 from the exercise of stock options.

During the six months ended June 30, 2020, net cash provided by financing activities was approximately $1.0 million, consisting primarily of proceeds received from the issuance of Series A preferred stock, net of issuance costs.

During the nine months ended September 30, 2021, net cash provided by financing activities was approximately $144.3 million, consisting primarily of approximately $24.8 million in net proceeds received from the issuance of Series B preferred stock, approximately $118.2 million from the proceeds from our initial public offering, approximately $1.0 million in net proceeds from the exercise of warrants and approximately $0.3 million from the exercise of stock options.

During the nine months ended September 30, 2020, net cash provided by financing activities was approximately $1.0 million, consisting primarily of proceeds received from the issuance of Series A preferred stock, net of issuance costs.

Future Funding Requirements

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● the costs of operating as a public company.

We believe that our existing cash, cash equivalents and marketable securities, including the net proceeds from our IPO, will enable us to fund our operating expenses and capital expenditure requirements into 2024.

We believe that our existing cash, cash equivalents and marketable securities, will enable us to fund our operating expenses and capital expenditure requirements into 2024.

We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect.

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There have been no material changes from the contractual commitments and obligations previously disclosed in the Prospectus.

Critical Accounting Policies and Use of Estimates

Our financial statements are prepared in accordance with generally accepted accounting principles in the United States.

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There have been no significant changes to our critical accounting policies from those described in the Prospectus.

Recently Adopted Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

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We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.

As a result, our consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

We may remain classified as an EGC until the end of the fiscal year following the fifth anniversary of this offering, although if the market value of our common stock that is held by non-affiliates exceeds $700 million as of June 30 of any year before that time, or if we have annual gross revenues of $1.07 billion or more in any fiscal year, we would cease to be an EGC as of December 31 of the applicable year.

As a result, our condensed consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

We may remain classified as an EGC until the end of the fiscal year following the fifth anniversary of our IPO, although if the market value of our common stock that is held by non-affiliates exceeds $700 million as of September 30 of any year before that time, or if we have annual gross revenues of $1.07 billion or more in any fiscal year, we would cease to be an EGC as of December 31 of the applicable year.

We also would cease to be an EGC if we issue more than $1.0 billion of non-convertible debt over a three-year period.

Quantitative and Qualitative Disclosures about Market Risk

As a smaller reporting company, as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, we are not required to provide this information.

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