What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-03-06 compared with 2022-03-10 · 149 added, 175 removed, 589 unchanged (35% of the section changed)

5 unchanged sentences

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity

Consolidated Statements of Cash Flows

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Immuneering Corporation and its subsidiaries (the Company) as of December 31, 2021 and 2020, and the related consolidated statements of operations and comprehensive loss, convertible preferred stock and stockholders’ equity (deficit) and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements).

We have audited the accompanying consolidated balance sheets of Immuneering Corporation and its subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive loss, convertible preferred stock and stockholders’ equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

33 unchanged sentences

Right-of-use assets, net

Liabilities, convertible preferred stock and stockholders' equity (deficit)

Liabilities, convertible preferred stock and stockholders' equity

Current liabilities:

1 unchanged sentence

Accrued expenses

Other liabilities, current

Lease liabilities, current

4 unchanged sentences

Commitments and contingencies (Note 13)

Convertible preferred stock:

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

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

Total convertible preferred stock

Stockholders’ deficit:

Stockholders’ equity:

Preferred stock, $ 0.001 par value;

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

10,000,000 shares authorized at December 31, 2022 and December 31, 2021;

No shares issued or outstanding

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

26,320,199 and 4,950,129 shares issued and outstanding at December 31, 2021 and December 31, 2020

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

Class A common stock, $ 0.001 par value, 200,000,000 shares authorized at December 31, 2022 and December 31, 2021;

26,418,732 and 26,320,199 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively

Class B common stock, $ 0.001 par value, 20,000,000 shares authorized at December 31, 2022 and December 31, 2021 ;

0 shares issued and outstanding at December 31, 2022 and December 31, 2021

4 unchanged sentences

( 59,273,388 )

Total stockholders' equity (deficit)

( 22,481,450 )

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

Total stockholders' equity

Total liabilities, convertible preferred stock and stockholders' equity

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

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General and administrative

Amortization of intangible asset

Total operating expenses

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Interest income

Other expense

Other income (expense)

Loss before income taxes

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Other comprehensive loss:

Unrealized losses from marketable securities

Unrealized gain (losses) from marketable securities

Comprehensive Loss

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IMMUNEERING CORPORATION

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

CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2022 AND 2021

Convertible Preferred Stock

Stockholders' Equity (Deficit)

Stockholders' Equity

Accumulated other

4 unchanged sentences

Preferred Stock

Equity (Deficit)

Balance at December 31, 2020

1 unchanged sentence

( 22,481,450 )

Issuance of Series A convertible preferred stock, net of issuance costs

Issuance of Series B convertible preferred stock, net of issuance costs

Stock-based compensation expense

( 17,039,898 )

Balance at December 31, 2020

( 25,737,640 )

( 22,481,450 )

Issuance of Series B convertible preferred stock, net of issuance costs

Issuance of common stock upon exercise of stock options

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( 59,273,388 )

Issuance of common stock upon exercise of stock options

Stock-based compensation expense

( 50,513,568 )

Other comprehensive income

Balance at December 31, 2022

( 109,786,956 )

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

8 unchanged sentences

Right-of-use asset amortization

Amortization of intangibles

Stock-based compensation expense

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

Loss on disposal of fixed assets

Deferred tax benefit

8 unchanged sentences

Lease liability

Net cash used in operating activities

Other liabilities

Net cash provided by (used in) operating activities

( 44,101,265 )

4 unchanged sentences

( 50,104,515 )

( 75,625,529 )

Maturities of marketable securities

Cash acquired in business combination

Net cash used in investing activities

Net cash provided by (used in) investing activities

( 75,615,967 )

Cash flows from financing activities:

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

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

2 unchanged sentences

( 2,124,317 )

Payment of public offering costs

Proceeds from exercise of stock options

1 unchanged sentence

Net cash provided by financing activities

Net increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

( 2,251,259 )

Cash and cash equivalents at beginning of period

4 unchanged sentences

Class A common stock issued for business combination

Reclassification of liability for Series A preferred stock

Reduction of right-of-use asset and lease liability in connection with lease modification

Property and equipment in accounts payable/accrued expenses

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

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Immuneering Corporation, a Delaware corporation, (“Immuneering” or the “Company”) was incorporated in 2008.

The Company aims to improve patient outcomes by advancing a unique pipeline of oncology and neuroscience product candidates developed using the Company’s translational bioinformatics platform.

The Company has more than a decade of experience applying translational bioinformatics to generate insights into drug mechanism of action and patient treatment response.

Building on this experience, the Company’s disease-agnostic discovery platform enables the Company to create product candidates based on 1) biological insights that are both counterintuitive and deeply rooted in data, and 2) novel chemistry.

Immuneering is a clinical-stage oncology company developing medicines for broad populations of cancer patients with an initial aim to therapeutically address universal-RAS.

The company aims to achieve universal activity through deep cyclic inhibition of the MAPK pathway, impacting cancer cells while sparing healthy cells.

Immuneering’s lead product candidate, IMM-1-104, is in a Phase 1/2a study in patients with advanced solid tumors harboring RAS mutations.

The company’s development pipeline also includes IMM-6-415, which is designed to have an accelerated cadence relative to IMM-1-104, as well as several early-stage programs.

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.

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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).

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.

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.

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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 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.

Management considered whether or not there are conditions or events, in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern, and concluded that there are none as it estimates that its cash and cash equivalents and marketable securities will be

sufficient to fund its operating expenses and capital expenditure requirements for at least 12 months from the issuance date of the 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 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.

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The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses during the reporting periods.

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.

These estimates and assumptions are based on current facts, historical experience and various other factors believed 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 prior to the IPO, business combination, and the right-to-use assets and operating lease liability.

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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 consolidated balance sheets and statements of convertible preferred stock and stockholders’ equity (deficit) and a component of total comprehensive loss in the consolidated statements of comprehensive loss, until realized.

Unrealized gains/(losses) are included as a component of accumulated other comprehensive loss in the consolidated balance sheets and statements of convertible preferred stock and stockholders’ equity and a component of total comprehensive loss in the 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 year ended December 31, 2022.

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 year ended December 31, 2021.

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

There were no realized gains or losses on marketable securities for the year ended December 31, 2022 and 2021, respectively.

Fair Value Measurements

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The Company has not experienced any losses in such accounts.

The following customers comprised 10% or more of the Company’s total accounts receivable or revenues as of or for the period ended December 31, 2021 (customers with an asterisk are less than 10%):

The following customers comprised 10% or more of the Company’s total accounts receivable or revenues as of or for the period ended December 31, 2022 and 2021, respectively (customers with an asterisk are less than 10%):

Year Ended December 31, 2022

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In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods and services.

The core principle of the standard is to recognize revenue to depict the transfer of promised goods or services to customers in

an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

The core principle of the standard is to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

To achieve that core principle, the Company applies the following five-step model:

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The provision for income taxes includes the effects of any resulting tax reserves (i.e., unrecognized tax benefits) that are considered appropriate as well as the related net interest.

As of December 31, 2021 and 2020, the Company had uncertain tax positions of $ 380,902 and $ 174,950 .

As of December 31, 2022 and 2021, the Company had uncertain tax positions of $ 541,067 and $ 380,902 , respectively.

The Company has classified the unrecognized tax benefits as reductions of its tax credit carryforwards.

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Research and Manufacturing Contract Costs and Accruals

The Company has entered into various research, development and manufacturing contracts with research institutions and other companies in the United States.

The Company has entered into various research, development and manufacturing contracts with research institutions and other companies in and outside the United States.

These agreements are generally cancelable, and related costs are recorded as research and development expenses as incurred.

1 unchanged sentence

When billing terms under these contracts do not coincide with the timing of when the work is performed, the Company is required to make estimates of outstanding obligations to those third parties as of period end.

Any accrual estimates are based on a number of factors, including the Company’s knowledge of the progress towards completion of the research, development and manufacturing activities, invoicing to date under the contracts, communication from the research institutions and other companies of any actual costs incurred during the period that have not yet been invoiced and the costs included in the contracts.

Any accrual estimates are based on a number of factors, including the Company’s knowledge of the progress

towards completion of the research, development and manufacturing activities, invoicing to date under the contracts, communication from the research institutions and other companies of any actual costs incurred during the period that have not yet been invoiced and the costs included in the contracts.

Significant judgments and estimates may be made in determining the accrued balances at the end of any reporting period.

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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 31,2021 or December 31, 2020.

The Company capitalizes certain legal, professional, and other third-party charges related to ongoing equity financings as deferred offering costs until fully consummated.

These costs are to be recorded as a reduction of the offering’s proceeds which are recorded to additional paid-in capital within stockholders’ equity.

Should the Company choose not to initiate such financing, the deferred offering costs would be immediately expensed as operating expenses.

On August 10, 2022, the Company entered into an Equity Distribution Agreement (“the Sales Agreement”) with Piper Sandler & Co, (“the Sales Agent”) to sell shares of the Company’s common stock, par value $ 0.001 per share, with aggregate gross sales proceeds of up to $ 50 million, from time to time, through an “at the market” equity offering program.

Deferred offering costs associated with the Sales Agreement are reclassified to additional paid in capital on a pro-rata basis when the Company completes offerings under the Sales Agreement.

Any remaining deferred costs will be expensed to the statement of operations should the planned offering be abandoned.

The Company had approximately $ 0.3 million and $ 0 of deferred offering costs as of December 31, 2022 and 2021, respectively.

Net Income (Loss) per Share

7 unchanged sentences

Accordingly, in periods in which the Company reports a net loss, such losses are not allocated to such participating securities.

In periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

In periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common

stockholders is the same as basic net loss per share attributable to common stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

Subsequent to the closing of its IPO, the Company only has one class of shares outstanding and basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding for the period.

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Black-Scholes requires the Company to make assumptions and judgments about the variables used in the calculation including the expected term of its stock option, the volatility of the Company’s common stock, and an assumed risk-free interest rate.

The Company uses the simplified calculation of expected life and volatility is based on an average of the historical volatility of a group of publicly traded companies in a similar industry that the Company believes would be considered a peer group had it been a publicly held company for the duration of the expected life of the award.

The Company uses the simplified calculation of expected life and volatility, which is based on an average of the historical volatility of a group of publicly traded companies in a similar industry that the Company believes would be considered a peer group had it been a publicly held company for the duration of the expected life of the award.

The risk-free rate is based on the U.S.

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The assumptions underlying these valuations represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgement.

In accordance with ASU No.

2018-07, Compensation-Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting, compensation expense for stock-based awards granted to nonemployees is recognized over the period during which services are rendered by such nonemployees.

The new standard largely aligns the accounting for share-based payment awards issued to employees and nonemployees by expanding the scope of ASC 718 to apply to nonemployee share-based transactions, as long as the transaction is not effectively a form of financing.

There was no adjustment to the financial statements upon adoption of this standard as of January 1, 2020.

As there had been no public market for the Company’s common stock prior to the IPO, the estimated fair value of its common stock has been determined by its board of directors as of the date of each option grant, with input from management, considering the Company’s most recently available third-party valuations of common stock and its board of directors’ assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent valuation through the date of the grant.

These third-party valuations were performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation.

Each valuation methodology includes estimates and assumptions that require the Company’s judgment.

These estimates and assumptions include a number of objective and subjective factors, including external market conditions, the prices at which the Company sold shares of preferred stock, the superior rights and preferences of securities senior to the Company’s common stock at the time of, and the likelihood of, achieving a liquidity event, such as an initial public offering or sale.

The assumptions underlying these valuations represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment.

Each valuation methodology included estimates and assumptions that required the Company’s judgment.

These estimates and assumptions included a number of objective and subjective factors, including external market conditions, the prices at which the Company sold shares of preferred stock, the superior rights and preferences of securities senior to the Company’s common stock at the time of, and the likelihood of, achieving a liquidity event, such as an initial public offering or sale.

The assumptions underlying these valuations represented management’s best estimates, which involved inherent uncertainties and the application of management’s judgment.

As a result, if the Company had used different assumptions or estimates, the fair value of its common stock and its stock-based compensation expense could be materially different.

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If such events or changes in circumstances were deemed to have occurred, the Company would perform an impairment test of goodwill as of the end of the quarter and record any noted impairment loss.

The Company’s market capitalization has declined which may be an indicator of impairment.

The Company will continue to assess the impact of its market capitalization and any other indicators of potential impairment.

It is possible that if the Company’s market capitalization decline is more than temporary, or if other indicators of impairment are identified, an interim impairment analysis may be necessary, which could result in an impairment of goodwill, intangible assets and other long-lived assets in future periods.

The goodwill test is performed at least annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired.

The Company performs its annual impairment test during the fourth quarter of each fiscal year.

There were no impairments in 2021.

There were no impairments during the years ended December 31, 2022 or 2021.

Intangible Assets

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From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date.

The Company is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended (“JOBS Act”).

The Company is an “emerging growth company” as defined in the JOBS act.

The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards.

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

In 2016, the FASB issued Accounting Standards Update (“ASU”) No.

2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Statements.

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The targeted transition relief standard allows filers an option to irrevocably elect the fair value option of ASC 825-10, Financial Instruments - Overall, applied on an instrument-by-instrument basis for eligible instruments.

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.

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

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 adoption of this standard did not have a material impact to the financial statements.

In January 2017, the FASB issued ASU No.

ASU 2017-04, Intangibles—Goodwill and Other (Topic 350 ) , which eliminates Step 2 from the goodwill impairment test.

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

The Company is currently evaluating the new guidance and assessing the potential impact on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350 ) , which eliminates Step 2 from the goodwill impairment test.

Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill.

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Note 3 – Marketable Securities

Marketable securities as of December 31, 2021 consisted of the following:

Marketable securities consisted of the following as of December 31, 2022 and 2021, respectively:

December 31, 2022

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Commercial Paper

Total marketable securities

December 31, 2021

Amortized Cost

Unrealized Gains

Unrealized Losses

Government securities

Commercial Paper

Total Current

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Total marketable securities

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

There were no impairments of the Company’s available-for-sale marketable securities measured and carried at fair value during the year ended December 31, 2021.

There were no impairments of the Company’s available-for-sale marketable securities measured and carried at fair value during the year ended December 31, 2022 or December 31, 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 year ended December 31, 2021.

There were no realized gains or losses on marketable securities for the years ended December 31, 2022 and 2021.

Note 4 – Fair Value Measurements

The following table summarizes our cash equivalents and marketable securities measured at fair value on a recurring basis as of December 31, 2021:

The following table summarizes our cash equivalents and marketable securities measured at fair value on a recurring basis as of December 31, 2022 and 2021, respectively:

December 31, 2022

Cash equivalents

Commercial paper

Government securities

Total cash equivalents

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Total cash equivalents and marketable securities

There were no transfers between Level 1 and Level 2 and we had no financial assets or liabilities that were classified as Level 3 at any point during the year ended December 31, 2021.

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

December 31, 2021

Cash equivalents

Commercial paper

Total cash equivalents

Marketable securities:

Government securities

Commercial paper

Total marketable securities

Total cash equivalents and marketable securities

There were no transfers between Level 1 and Level 2 and we had no financial assets or liabilities that were classified as Level 3 at any point during the years ended December 31, 2022 and 2021.

Note 5 – Property and Equipment, net

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Property and equipment, net

Depreciation expense totaled $ 45,467 and $ 24,328 for the year ended December 31, 2021 and 2020, respectively.

Depreciation expense totaled $ 247,199 and $ 45,467 for the years ended December 31, 2022 and 2021, respectively.

Note 6 – Business Combination

BioArkive Acquisition

On December 22, 2021, the Company completed the acquisition of all outstanding shares of capital stock of BioArkive, Inc., a California corporation (“BioArkive”), for a market value of $ 8.75 million.

On December 22, 2021, the Company completed the acquisition of all outstanding shares of capital stock of BioArkive, Inc., a California corporation, for a market value of $ 8.75 million.

BioArkive is a San Diego based contract research organization that has previously provided preclinical research services and biosample storage to the Company and other biotechnology companies.

BioArkive is in the process of being fully integrated into the Company to exclusively support the Company's internal preclinical research activities for its oncology pipeline.

BioArkive has been fully integrated into the Company to exclusively support the Company's internal preclinical research activities for its oncology pipeline.

In connection with the acquisition, the Company has assumed the obligations under BioArkive’s three lease agreements.

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The number of shares of common stock issued was calculated using a value based on the average of the daily volume weighted average prices of the common stock on the Nasdaq Stock Exchange for the 30 -trading day period ending on and including the trading day immediately prior to the closing date.

The sellers of BioArkive are restricted from selling these shares for a 6 month period from the date of the acquisition.

The sellers of BioArkive were restricted from selling these shares for a six-month period from the date of the acquisition.

As such, we estimated that there was an approximate 10 % discount for the lack of marketability of the shares.

The fair value of the purchase price in the acquisition has been preliminarily estimated to be $ 7,875,000 .

Prior to the acquistion, Brett Hall, Chief Scientific Officer of Immuneering and the Founder and Chairman of the board of directors of BioArkive, held the majority of the outstanding shares of BioArkive capital stock.

The fair value of the purchase price in the acquisition was $ 7,875,000 .

Prior to the acquisition, Brett Hall, Chief Scientific Officer of Immuneering and the Founder and Chairman of the board of directors of BioArkive, held the majority of the outstanding shares of BioArkive capital stock.

BioArkive provided contract services to the Company.

Research and development expenses in the consolidated statement of operations include the cost of services provided by BioArkive to the Company which amounted to $ 4,548,780 in 2021 through date of the acquisition and $ 2,744,051 in 2020.

As of December 31, 2020, $ 279,153 was owed to BioArkive and is included in accounts payable or accrued contract research expenses in the consolidated balance sheets.

The results of BioArkive’s operations are included in the consolidated balance sheets.

Assets Acquired and Liabilities Assumed at Fair Value

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This method requires that assets acquired and liabilities assumed in a business combination to be recognized at their fair values as of the acquisition date.

As of December 31, 2021, certain amounts relating to working capital have not been finalized.

The finalization of these matters could result in changes to goodwill.

As of March 31, 2022, the purchase accounting had been finalized, and there was an immaterial measurement period adjustment related to accrued expenses and goodwill.

No other adjustments were identified.

Intangible Assets

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Preliminary Valuation

Final Valuation

Weighted Average Life

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Note 8 – Convertible Preferred Stock

Series A Preferred Stock

In September 2019, the Company authorized the sale and issuance of up to 1,987,979 shares of Series A Preferred Stock, $ 0.001 par value per share, at an original issuance price of $ 8.5514 per share.

In January 2020, the number of shares authorized for the Series A Preferred Stock was increased to 2,495,933 shares.

The Series A Preferred Stock financing was structured to be issued in rolling closes during 2019 and 2020.

On September 20, 2019, the Company issued an additional 1,122,458 shares of Series A Preferred Stock for gross cash proceeds of $ 9,598,847 and issued 785,706 shares of Series A Preferred Stock in conjunction with the conversion of the outstanding amount of the Convertible Notes.

In 2019, the Company incurred issuance costs of $ 200,587 in connection with this offering.

The Company received funds for issuance of an additional 468,315 shares of Series A Preferred Stock for gross cash proceeds of $ 4,004,975 through December 31, 2019.

Of these shares, 410,436 shares of Series A Preferred Stock for gross cash proceeds of $ 3,509,802 exceeded the authorized amount allowed by the articles of incorporation, resulting in a liability of $ 3,509,802 and a total of 1,966,043 shares of Series A Preferred Stock outstanding at December 31, 2019.

In January 2020, the shares that were previously classified as a liability as of December 31, 2019 were reclassified to temporary equity upon the approved increase to authorized shares of Series A Preferred Stock.

In January 2020, the Company issued 119,454 additional shares of Series A Preferred Stock for gross cash proceeds of $ 1,021,413 .

The Company incurred issuance costs of $ 23,610 in connection with the financing in January 2020.

Series B Preferred Stock

In December 2020, the Company authorized the sale and issuance of up to 6,032,183 shares of Series B Preferred Stock, $ 0.001 par value per share, at an original issuance price of $ 10.2782 per share.

The Series B Preferred Stock financing was structured to close in two tranches.

The first tranche closed in December 2020 and the Company issued 3,619,292 shares of Series B Preferred Stock for gross cash proceeds of $ 37,199,929 .

The Company incurred issuance costs of $ 216,019 in connection with the financing in December 2020.

The Company determined the right of the investors to purchase 2,412,853 shares of Series B Preferred Stock in the second tranche does not meet the definition of a freestanding financial instrument as it is not separable from the Series B Preferred Stock issued in the first tranche.

The issuance of the second tranche is subject to the Company meeting certain development milestones or at the election of the holders of at least a majority of the then outstanding shares of Series B Preferred Stock which must include one specific shareholder (the “Requisite Holders”).

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 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.

In April and May 2021, 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.

The Company received gross proceeds of $ 24,799,786 .

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

The rights and preferences of the Series A Preferred Stock and Series B Preferred Stock (“Preferred Stock”) were 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.

The conversion price for the Series A Preferred Stock and Series B Preferred Stock (as may be adjusted for certain customary dilutive events) is $ 6.1081 and $ 7.3416 , respectively.

The Preferred Stock automatically convert into shares of Class A common stock at the then effective conversion rate upon the closing of a public offering of the Company’s securities with gross proceeds to the Company of at least $ 75,000,000 and a share price of at least $ 7.3416 or at the election of the holders of the Requisite Holders.

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.

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 December 31, 2021 and December 31, 2020, no dividends had been declared.

Voting Rights

Preferred Stock and common stock vote together as one class on an as converted basis.

Common stock voting rights on certain matters are subject to the powers, preferences, and rights of the Preferred Stock.

Preferred Stockholders are entitled to vote on all matters and shall have the number of votes equal to the number of shares of common stock into which the shares of Preferred Stock held by such holder are then convertible.

As long as 2,132,029 shares of Preferred Stock are outstanding, certain actions such as mergers, acquisition, liquidation, dissolution, wind up of business, and deemed liquidation events, must be approved by the holders of at least a majority of the then-outstanding shares of Preferred Stock.

Liquidation Preference

Upon liquidation, dissolution, or winding up of business, holders of Preferred Stock are entitled to receive a liquidation preference in priority to holders of common stock at the original respective Preferred Stock issue price for such series.

If assets available for distribution are insufficient to satisfy the liquidation payment to holders of Preferred Stock in full, assets available for distribution will be allocated among holders of Preferred Stock on a pari passu basis at an amount per share equal to the greater of the respective original Preferred Stock issue price for such series plus any declared but unpaid dividends or such amount had all shares been converted to common stock.

When holders of Preferred Stock are satisfied in full, any excess assets available for distribution will be allocated ratably among common stock holders based on their pro rata shareholdings.

Upon a deemed liquidation event, as defined in the articles of incorporation, holders have the option to redeem their shares at the liquidation payment amounts summarized above.

Other than described above, the shares of Preferred Stock are not redeemable.

Upon the closing of the IPO on August 3, 2021, all 8,528,078 shares of the Company’s convertible Series A and B Preferred Stock then outstanding automatically converted into 11,939,281 shares of Class A common stock.

Note 9 - Common Stock

The Company had 200,000,000 authorized shares of Class A common stock, $ 0.001 par value per share as of December 31, 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 26,320,199 and 4,950,129 were 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 December 31, 2022 and December 31, 2021 of which 26,418,732 and 26,320,199 were issued and outstanding , respectively.

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

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As of December 31, 2022 and December 31, 2021, the following number of shares of Class A common stock have been reserved:

Conversion of Series A Preferred

Conversion of Series B Preferred

Exercise of common stock warrants

Exercise of common stock options

The Company had 20,000,000 authorized shares of Class B common stock, $ 0.001 par value per share as of December 31, 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 Company had 20,000,000 authorized shares of Class B common stock, $ 0.001 par value per share as of December 31, 2022 and December 31, 2021 of which no shares have been issued nor are outstanding.

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

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 A common stock.

Common Stock Warrants

During 2019, the Company issued warrants to purchase an aggregate of 308,308 shares of Class A common stock at an exercise price of $ 3.01 per share to several advisors, including 200,984 shares to entities related to members of the Board of Directors of the Company, in lieu of cash payments.

These warrants vested immediately upon issuance, became exercisable on January 9, 2021 and have a 10-year term set to expire on January 9, 2030.

The Company evaluated the terms of these warrants and determined that equity classification was appropriate.

As of December 31, 2020, no warrants had been exercised.

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

As of December 31, 2021, there were no warrants outstanding.

Initial Public Offering

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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;

(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 of Directors to establish the rights, preferences and restrictions on any unissued series of Preferred Stock.

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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 December 31, 2022 and 2021:

Series A Preferred

Series B Preferred

Warrants to purchase common stock

Options to purchase common stock

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Upon the effectiveness of the Company’s 2021 Incentive Award Plan, the Company ceased granting awards under the Incentive Plan.

However, the Incentive Plan continues to goven awards outstanding thereunder.

However, the Incentive Plan continues to govern awards outstanding thereunder.

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.

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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.

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 again be available for new grants under the 2021 Plan.

As of December 31, 2022, there were 2,553,210 shares available for future issuance under the 2021 Plan.

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As of December 31, 2022, no shares had been issued under the 2021 ESPP.

During the year ended December 31, 2021 and 2020, the Company recognized stock-based compensation expense of $ 1,802,623 and $ 1,086,769 , respectively.

During the years ended December 31, 2022 and 2021, the Company recognized stock-based compensation expense of $ 4,064,446 and $ 1,802,623 , respectively.

As of December 31, 2022, compensation expense remaining to be recognized for outstanding stock options was $ 9,830,063 and to be recognized over a weighted-average period of 2.47 years.

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

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

The Company was a private company until its initial public offering in August 2021 and continues to lack 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.

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5.83 - 10 years

5.92 - 10 years

Expected dividend yield

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Stock-based compensation expense

Research expenses

Unrealized losses

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The Company recorded a deferred tax liability of $ 304,485 on the acquisition of BioArkive.

It had pre-existing deferred tax assets for which there was a fuill valuation allowance.

As a result of the taxable temporary differences recognized in the business combination, the Company released $ 304,485 of its valuation allowance and recognized the income tax benefit in the income statement at the acquisition date in accordance with ASC 740 There was no income tax expense or benefit in 2020.

It had pre-existing deferred tax assets for which there was a full valuation allowance.

There was no income tax expense or benefit in 2022.

The Company has provided a valuation allowance for the full amount of the net deferred tax assets as, based on all available evidence, it is considered more likely than not that all the recorded deferred tax assets will not be realized in a future period.

At December 31, 2021, the Company has federal and state NOLs of $ 56,544,731 and $ 51,310,112 ,

respectively all generated after the tax year ended December 31, 2017.

At December 31, 2022, the Company has federal and state NOLs of $ 77,015,618 and $ 76,232,037 , respectively all generated after the tax year ended December 31, 2017.

At December 31, 2022, the Company has federal and state research and development credit carryforwards, $ 3,802,780 and $ 435,533 , respectively, that start to expire beginning in 2025.

As the Company has not yet achieved profitable operations, management believes the tax benefits as of December 31, 2022 did not satisfy the realization criteria set forth in ASC Topic 740, Income Taxes and, therefore, has recorded a full valuation allowance for the entire deferred tax asset.

The valuation allowance increased in 2021 by $ 10,550,451 due to the increase in the deferred tax assets by the same amount, primarily due to NOL and research and development credit carryforwards.

The valuation allowance increased in 2022 by $ 14,362,049 due to the increase in the deferred tax assets by the same amount, primarily due to NOL and research and development expenses.

Utilization of the U.S.

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Any limitation may result in expiration of a portion of the net operating loss carryforwards or research and development tax credit carryforwards before utilization.

Further, until a study is completed by the Company and any limitation is known, some amounts are being presented as an uncertain tax position.

As of December 31, 2021 and 2020, the Company had uncertain tax positions of $ 380,902 and $ 174,950 which have been classified as reductions of its tax carrforwards.

Further, until a study is completed by the Company and any limitation is known, no amounts are being presented as an uncertain tax position.

As of December 31, 2022 and 2021, the Company had uncertain tax positions of $ 541,067 and $ 380,902 .

The Company has classified the unrecognized tax benefits as reductions of its tax carryforwards.

The Company has elected to recognize interest and penalties related to income tax matters as a component of income tax expense, of which no interest or penalties were recorded for the years ended December 31, 2022 and 2021.

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Operating Leases

The Company leases office space in Cambridge, Massachusetts, New York, New York and as of July 2021, San Francisco, California, pursuant to short-term arrangements.

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 extended the lease term until March 31, 2022.

The Company leases office space in Cambridge, Massachusetts, New York, New York and San Francisco, California, pursuant to short-term arrangements.

The Cambridge lease is on a month-to-month basis, requiring one month’s notice before termination.

The New York and San Francisco lease is renewable on a yearly basis and the last renewal extended the lease term until February 28, 2024 and July 31, 2023 respectively.

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 December 31, 2022, total future minimum lease payments for its short-term leases in Cambridge, Massachusetts, New York, New York and San Francisco, California was $ 36,827 due in 2023.

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 December 31, 2021, the Company renewed the lease through March 31, 2022.

As of December 31, 2021, total future minimum lease payments for this lease were $ 3,569 due in 2022.

In October 2020, the Company entered into an office lease in San Diego, California with a lease term of 67 months .

In October 2020, the Company entered into an office lease (“Via Frontera Lease”) in San Diego, California with a lease term of 67 months.

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

As part of the BioArkive acquisition, the Company assumed the obligations of three leases in San Diego, California, one is for 38,613 square feet of office and laboratory space, under a lease that terminates on April 30, 2032, a second is a 6,100 square feet of office and laboratory space under a lease that terminates on December 31, 2022, and third is a lease for 4,760 square feet of office and laboratory space under a lease that terminates on March 31, 2024.

As a result, we recorded right-to-use assets and lease liabilities of $ 4,824,700 on the acquisition date of December 22, 2021.

In January 2022, the Company exercised its option to terminate the Via Frontera Lease 20 months early.

The lease will terminate on October 1, 2023.

This was accounted for as a lease modification which reduces the term of the existing lease and the Company adjusted the value of its right-of-use asset and operating lease liability by $ 347,739 using an incremental borrowing rate of approximately 6 % .

The modification is reflected as a non-cash operating activity in the statement of cash flows for the year ended December 31, 2022.

The Company subsequently entered into a sublease of the Via Frontera Lease, the term of which commenced in March 2022 and continues through the full remaining obligation.

Sublease income will be accounted for as a reduction of rent expense in the statement of operations.

As part of the BioArkive acquisition, the Company assumed the obligations of three leases in San Diego, California.

One is for 38,613 square feet of office and laboratory space, under a lease that terminates on April 30, 2032, the second is for a 6,100 square feet of office and laboratory space under a lease that terminates on December 31, 2022 (the “Site 2 Lease”), and the third is for a lease for 4,760 square feet of office and laboratory space under a lease that terminates on March 31, 2024 (the “Site 3 Lease”).

As a result, the Company recorded right-to-use assets and lease liabilities of $ 4,824,700 on the acquisition date of December 22, 2021.

In February 2022, the Company entered into a sublease of the Site 2 Lease, the term of which continues through the remaining term of the Site 2 Lease.

In August 2022, the Company terminated the Site 2 lease and sublease early as the building was sold.

As such, the remaining right-of-use asset and lease liability were written off during the year ended December 31, 2022.

This is reflected as a non-cash operating activity in the statement of cash flows for the year ended December 31, 2022.

In February 2023, the Company entered into a sublease of the Site 3 Lease, the term of which continues through the remaining term of the Site 3 Lease.

Future minimum lease payments for operating leases with initial or remaining terms in excess of one year at December 31, 2022 were as follows:

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From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities and may be exposed to litigation in connection with its products and operations.

The Company’s policy is to assess the likelihood of any adverse judgments or outcomes related to legal matters, as well as ranges of probable losses.

The Company’s policy is to

assess the likelihood of any adverse judgments or outcomes related to legal matters, as well as ranges of probable losses.

When it is probable that future expenditures will be made and can be reasonably estimated the Company will accrue a liability for such matters.

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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-K

Item 8. Financial Statements and Supplementary Data