Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Mar. 28, 2022 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-K | |
Document Annual Report | true | |
Document Transition Report | false | |
Document Period End Date | Dec. 31, 2021 | |
Entity File Number | 001-41096 | |
Entity Registrant Name | AeroClean Technologies, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 45-3213164 | |
Entity Address State Or Province | FL | |
Entity Address, Address Line One | 10455 Riverside Dr | |
Entity Address, City or Town | Palm Beach Gardens | |
Entity Address, Postal Zip Code | 33410 | |
City Area Code | 833 | |
Local Phone Number | 652-5326 | |
Title of 12(b) Security | Common Stock, $0.01 Par Value | |
Trading Symbol | AERC | |
Security Exchange Name | NASDAQ | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Public Float | $ 0 | |
Entity Common Stock, Shares Outstanding | 13,877,636 | |
Entity Central Index Key | 0001872356 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | FY | |
Amendment Flag | false | |
Auditor Name | CITRIN COOPERMAN & COMPANY, LLP | |
Auditor Firm ID | 2468 | |
Auditor Location | New York, New York |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash | $ 19,629,649 | $ 2,333,117 |
Accounts receivable | 177,064 | |
Prepaid expenses and other current assets | 1,124,998 | 304,836 |
Subscription receivable | 100,543 | |
Inventories | 645,942 | |
Total current assets | 21,577,653 | 2,738,496 |
Property and equipment, net | 2,123,428 | 454,679 |
Other assets | 21,667 | |
Total assets | 23,722,748 | 3,193,175 |
Current liabilities: | ||
Accounts payable | 927,194 | 332,072 |
Accrued expenses and other current liabilities | 583,885 | 333,236 |
Total current liabilities | 1,511,079 | 665,308 |
Long-term Liabilities | ||
Deferred tax liability | 501,254 | |
Total Liabilities | 2,012,333 | 665,308 |
Members' equity | 2,527,867 | |
Stockholders' equity: | ||
Common stock, $.01 par value per share; 110,000,000 shares authorized; 13,877,636 issued as of December 31, 2021 | 138,776 | |
Additional paid-in capital | 23,319,499 | |
Accumulated deficit | (1,747,860) | (8,223,407) |
Total members'/stockholders' equity | 21,710,415 | 2,527,867 |
Total liabilities and members' equity | $ 23,722,748 | $ 3,193,175 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) | Dec. 31, 2021$ / sharesshares |
BALANCE SHEETS | |
Common stock, par value | $ / shares | $ 0.01 |
Common stock, shares authorized | 110,000,000 |
Common stock, shares issued | 13,877,636 |
Common Stock, Shares, Outstanding | 13,877,636 |
Preferred Stock, Par or Stated Value Per Share | $ / shares | $ 0.01 |
Preferred Stock, Shares Authorized | 11,000,000 |
Preferred Stock, Shares Issued | 0 |
Preferred Stock, Shares Outstanding | 0 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
STATEMENTS OF OPERATIONS | ||
Product revenues | $ 616,511 | |
Cost of sales | 338,896 | |
Gross profit | 277,615 | |
Operating Expenses: | ||
Selling, general and administrative | 4,327,998 | $ 1,131,385 |
Research and development | 4,193,362 | 2,191,696 |
Total operating expenses | 8,521,360 | 3,323,081 |
Loss before income tax benefit | (8,243,745) | (3,323,081) |
Income tax benefit | 320,138 | |
Net loss | $ (7,923,607) | $ (3,323,081) |
Loss Per Common Share | ||
Basic | $ (0.74) | $ (1.02) |
Diluted | $ (0.74) | $ (1.02) |
Weighted-average common shares outstanding: | ||
Basic | 10,675,765 | 3,250,980 |
Diluted | 10,675,765 | 3,250,980 |
STATEMENTS OF CHANGES IN MEMBER
STATEMENTS OF CHANGES IN MEMBERS' EQUITY (DEFICIT)STOCKHOLDERS' EQUITY - USD ($) | Common Stock | Accumulated Deficit | Member Units [Member]Class A | Additional Paid-in Capital | Total |
Balance, beginning of the period at Dec. 31, 2019 | $ (4,900,326) | $ 4,669,696 | $ (230,630) | ||
Balance, beginning of the period (in shares) at Dec. 31, 2019 | 2,000,000 | ||||
Issuance of equity units | $ 6,081,578 | 6,081,578 | |||
Issuance of equity units (In shares) | 6,081,578 | ||||
Net loss | (3,323,081) | (3,323,081) | |||
Balance, end of the period (in shares) at Dec. 31, 2020 | 8,081,578 | ||||
Balance, end of the period at Dec. 31, 2020 | (8,223,407) | $ 10,751,274 | 2,527,867 | ||
Issuance of equity units | 5,073,056 | 5,073,056 | |||
Reclassification of accumulated deficit | 8,223,407 | $ (8,223,407) | |||
Issuance of equity units (In shares) | 5,073,056 | ||||
Initial public offering of common stock, net of underwriting discounts and commissions (in shares) | 2,514,000 | ||||
Deferred offering costs | $ (25,140) | $ (21,641,265) | (21,666,404) | ||
Corporate conversion | $ 113,636 | $ (1,528,222) | 1,414,586 | ||
Corporate conversion (in shares) | 11,363,636 | (13,428,948) | |||
Stock compensation expense | $ 924,438 | 263,648 | 1,188,087 | ||
Stock compensation (in shares) | 274,314 | ||||
Net loss | (926,468) | $ (6,997,139) | (7,923,607) | ||
Balance, end of the period (in shares) at Dec. 31, 2021 | 13,877,636 | ||||
Balance, end of the period at Dec. 31, 2021 | $ 138,776 | (1,747,860) | $ 23,319,499 | 21,710,415 | |
Corporate conversion tax-effect | $ (821,392) | $ (821,392) |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (7,923,607) | $ (3,323,081) |
Adjustments to reconcile net loss to net cash flows used in operating activities | ||
Deferred tax benefit | (320,138) | |
Depreciation and amortization | 79,646 | |
Equity-based compensation | 1,188,086 | 62,359 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (177,064) | |
Inventories | (645,942) | |
Other current and non-current assets | (841,836) | (304,836) |
Accounts payable | 595,119 | 187,346 |
Accrued expenses and other current liabilities | 250,649 | 333,236 |
Due to related parties | (25,000) | |
Net cash flows used in operating activities | (7,795,087) | (3,069,976) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (1,748,392) | (454,679) |
Net cash flows used in investing activities | (1,748,392) | (454,679) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of equity units | 5,173,599 | 5,856,976 |
Proceeds from issuance of common stock from initial public offering, net of issuance costs of $3,473,588 | 25,140,000 | |
Payment of issuance costs | (3,473,588) | |
Proceeds from loan from related party | 1,000,000 | |
Repayment of loan from related party | (1,000,000) | |
Net cash flows provided by financing activities | 26,840,011 | 5,856,976 |
Net increase in cash | 17,296,532 | 2,332,321 |
Cash, beginning of period | 2,333,117 | 796 |
Cash, end of period | 19,629,649 | 2,333,117 |
Supplemental Disclosure of cash flow information: | ||
Cash paid for interest | $ 7,465 | |
Supplemental schedule of non-cash activities: | ||
Subscription receivable | 100,543 | |
Equity units issued to related party | $ 61,700 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2021 | |
Description of Business | |
Description of Business | 1. Description of Business AeroClean Technologies, Inc. (“AeroClean” or the “Company”) was initially formed as CleanCo Bioscience Group LLC (“CBG”) in the State of Florida on September 2, 2011. Subsequent to its formation, CBG established a team of scientists, engineers and medical experts to provide solutions for the challenges posed by harmful airborne pathogens and resultant hospital acquired infections. On September 15, 2020, CBG converted into AeroClean Technologies, LLC as a Delaware limited liability company and is headquartered in Palm Beach Gardens, Florida. On November 23, 2021, AeroClean Technologies, LLC incorporated in the state of Delaware as AeroClean Technologies, Inc. See Note 3, Public Offering for a discussion of the Company’s recent initial public offering (the “Public Offering”). AeroClean is an interior space air purification technology company with an immediate objective of initiating full-scale commercialization of its high-performance interior air sterilization and disinfection products for the eradication of coronavirus and other harmful airborne pathogens. AeroClean was established to develop technology-driven, medical-grade air purification solutions for hospitals and other healthcare settings. Liquidity and Capital Resources The provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 205-40, Presentation of Financial Statements — Going Concern The Company incurred a net loss of $7,923,607 during the year ended December 31, 2021 and had working capital of $20,066,574 and an accumulated deficit of $1,747,860 at December 31, 2021. The Company’s net cash used in operating activities was $7,795,087 for the year ended December 31, 2021. For the year ended December 31, 2020, the Company incurred a net loss of $3,323,081 and had an accumulated deficit of $8,223,407, and net cash used in operating activities was $3,069,976 at December 31, 2020. The Company is an early-stage company and has begun generating revenues through the commercial production and sale of its Pūrgo air purification device. The Company first shipped units to customers in July 2021 and generated revenues of $616,511 through December 31, 2021. The Company’s ability to fund its operations is dependent upon management’s plans, which include generating sufficient revenues and controlling the Company’s expenses. A failure to generate sufficient revenues or control expenses, among other factors, will adversely impact the Company’s ability to meet its financial obligations as they become due and payable and to achieve its intended business objectives. On November 29, 2021, the Company completed the Public Offering resulting in aggregate gross proceeds of $25,140,000 and net proceeds of $21,640,000 after deducting underwriting fees and closing costs of approximately $3,500,000. See Note 3, Public Offering. The accumulated deficit from the inception of the Company through December 31, 2021 is substantially less than the amount raised through the Public Offering. Further, the Company’s investment into research and development, engineering and other product development costs has been decreasing following the product launch, and as discussed, the Company is now generating revenues and margins from the sale of its Pūrgo device. Operating costs associated with revenue generation can also be managed as the Company increases revenues. Based on the available cash balance and management’s plan as described above, management believes that it has the ability to fund the Company’s operation for one year after the financial statements are issued. COVID-19 Pandemic The Company continues to monitor the outbreak of COVID-19 and its variants, including the most recent Omicron variant, which continue to spread throughout the world and adversely impact global commercial activity and contribute to significant declines and volatility in financial markets. The Company’s on-going research and development activities, including development of product prototypes and manufacturing activities, are all conducted in the United States, and as a result, the Company has been able to mitigate some of the adverse impact of the COVID-19 pandemic on its global supply chain. The Company continues to actively monitor the situation and may take further actions that impact operations as may be required by federal, state or local authorities or that the Company determines is in the best interests of its employees, customers, suppliers and stockholders. As of the date of issuance of these financial statements, the pandemic presents uncertainty and risk as the Company cannot reasonably determine or predict the nature, duration or scope of the overall impact the COVID-19 pandemic will have on its business, results of operations, liquidity or capital resources. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2021 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Basis of Presentation The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). The Company is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to avail itself of this exemption from new or revised accounting standards and, therefore, the financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of the public company effective dates. Use of Estimates The preparation of the Company’s financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses and related disclosure of contingent assets and liabilities. Significant estimates in these financial statements include those related to the fair value of equity-based compensation and revenue recognition. On an ongoing basis, the Company evaluates its estimates, judgments and methodologies. The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Due to the inherent uncertainty involved in making estimates, actual results could differ materially from those estimates. Cash and Cash Equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash and cash equivalents. The Company did not have any cash equivalents as of December 31, 2021. Revenue Recognition The Company recognizes revenues related to sales of products upon the customer obtaining control of promised goods, in an amount that reflects the consideration that is expected to be received in exchange for those goods. To determine revenue recognition for arrangements within the scope of ASC Topic 606, Revenue from Contracts with Customers ( Warranty Costs The Company provides a three-year warranty on its Pūrgo device from the date of sale to its customers. The Company’s policy is to record a provision for estimated future costs related to warranty expense when they are probable and reasonably estimable, which is when revenue is recognized. There was no warranty accrual as of December 31, 2021 and 2020, respectively. Research & Development Expenses Research and development expenses are expensed as incurred and consist principally of contract labor and third-party engineering, product development and testing costs related to the development of medical grade air purification devices and related components as well as concepts for future product development. Income Taxes Prior to the Public Offering, the Company was a limited liability company and was treated as a partnership for federal and state income tax purposes. Therefore, no provision for income taxes had been included in the financial statements since taxable income or loss was allocated to members, who were responsible for any taxes thereon, in accordance with the provisions of the operating agreement. On November 23, 2021 in conjunction with the Public Offering, the Company incorporated in the State of Delaware. The Company recognizes and measures its unrecognized tax benefit in accordance with FASB ASC 740, Income Taxes. The Company provides deferred income taxes for temporary differences between the amounts of assets and liabilities recognized for financial reporting purposes and such amounts recognized for income tax purposes. Deferred income taxes are computed using enacted tax rates that are expected to be in effect when the temporary differences reverse. Under that guidance, management assesses the likelihood that tax positions will be sustained upon examination based on the facts, circumstances and information available at the end of each period, including the technical merits of those positions. The measurement of unrecognized tax benefits is adjusted when new information is available or when an event occurs that requires a change. For the years ended December 31, 2021, and 2020, the Company did not identify any uncertain tax positions taken or expected to be taken in an income tax return that would require adjustment to, or disclosure in, its financial statements. Accounts Receivable Trade accounts receivable are stated net of an allowance for doubtful accounts. We estimate the allowance for doubtful accounts based on review and analysis of specific customer balances that may not be collectible and how recently payments have been received. Accounts are considered for write-off when they become past due and when it is determined that the probability of collection is remote. As of December 31, 2021, there was no allowance for doubtful accounts. Inventories The Company values inventories at the lower of cost or net realizable value using the first-in, first-out or weighted average cost method. Net realizable value is the estimated selling price in the ordinary course of business, less reasonable predictable costs of completion, disposal and transportation. Inventories on hand at December 31, 2021 consisted primarily of spare parts and finished goods. Property and Equipment Property and equipment are stated at cost and depreciated generally under the straight-line method over their estimated useful lives (or the lesser of the term of the lease for leasehold improvements, as appropriate), except for tooling, which is depreciated utilizing the units-of-production method. The Company periodically reviews long-lived assets for impairment whenever events or changes in business circumstance indicate that the carrying value of the assets may not be recoverable. Under those circumstances, if the fair value were less than the carrying amount of the asset, the Company would recognize a loss for the difference. The Company has determined that long-lived assets were not impaired during the years ended December 31, 2021 and 2020. Offering Costs The Company capitalizes certain legal, accounting and other third-party fees directly associated with in-process equity financing as deferred offering costs. Deferred offering costs were offset against the proceeds from the Public Offering. Common Stock Equivalents The Company has potential common stock equivalents related to its outstanding restricted stock units. These potential common stock equivalents are not included in diluted loss per share for any period presented in which there is a net loss because the effect would have been anti-dilutive. Share-based Payments The Company accounts for share-based payments to employees and non-employees in accordance with the provisions of FASB ASC 718, Compensation — Stock Compensation (“ASC 718”). Under ASC 718, the Company measures the share-based compensation cost on the date of grant, based on the fair value of the award, and expense is recognized over the requisite service period. Compensation cost recognized during the year ended December 31, 2021 related to the issuance of Class A Units and grants of restricted stock units. Fair Value Measurements Certain assets and liabilities are carried at fair value in accordance with U.S. GAAP. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants at the measurement date. A three-tier fair value hierarchy that prioritizes the inputs used in the valuation methodologies, is as follows: Level 1 Level 2 Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs observable or that can be corroborated by observable market data. Level 3 Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. At December 31, 2021 and 2020, the carrying amounts of the Company’s financial instruments, including cash, prepaid expenses and other current assets, accounts payable and accrued liabilities approximated their respective fair value due to the short-term nature of these instruments. Operating Segment The Company operates in one segment. All of the Company’s assets are in the United States of America. Concentrations of Credit Risk The Company maintains its cash at a major financial institution with high credit quality, and at times, the balance in its cash deposits may exceed the Federal Deposit Insurance Corporation limits of $250,000. The Company has not experienced and does not anticipate any losses on deposits with commercial banks and financial institutions that exceed federally insured limits. The Company’s suppliers and vendors include engineering firms and consultants, research and development companies, testing laboratories, contract manufacturers and other suppliers required to design, test and manufacture its products. The Company obtains some of its services from a limited group of vendors; however, the Company has neither experienced any significant disruptions nor expects any significant disruptions to its operations due to supplier concentration. The Company’s largest supplier accounted for 13% and 12% of total expenditures for the years ended December 31, 2021 and 2020, respectively, while its second largest supplier accounted for 11% and 33% of total expenditures for the years ended December 31, 2021 and 2020, respectively. Significant customers may change from year to year depending on the overall level of activity and the sales of the Company’s products to each customer. During the year ended December 31, 2021, the Company’s largest and second largest customers accounted for approximately 45% and 12% of the Company’s revenues, respectively. JOBS Act Accounting Election The Company is an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to avail itself of this exemption from new or revised accounting standards and, therefore, the financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of the public company effective dates. Recent Accounting Standards The Company has reviewed recent accounting pronouncements and, with the exception of the below, concluded they are either not applicable to the business or no material effect is expected on the financial statements as a result of future adoption. In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses, which was subsequently amended by ASU No. 2018-19 and ASU No. 2019-10, and which requires the measurement of expected credit losses for financial instruments carried at amortized cost held at the reporting date based on historical experience, current conditions and reasonable forecasts. The updated guidance also amends the current other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. In addition, the length of time a security has been in an unrealized loss position will no longer impact the determination of whether a credit loss exists. The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The standard is effective for the fiscal year beginning after December 15, 2022. The Company will continue to assess the possible impact of this standard, but it currently does not expect that the adoption of this standard will have a significant impact on its financial statements and its limited history of bad debt expense relating to trade accounts receivable. In February 2016, the FASB issued ASU 2016-02, Leases (“Topic 842”), which supersedes ASC Topic 840, Leases. Topic 842 requires lessees to recognize a lease liability and a lease asset for all leases, including operating leases, with a term greater than 12 months on its balance sheet. The update also expands the required quantitative and qualitative disclosures surrounding leases. Topic 842 will be applied using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. In November 2019, FASB deferred the effective date for implementation of Topic 842 by one year and, in June 2020, FASB deferred the effective date by an additional year. The guidance under Topic 842 is effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. Earlier adoption is permitted. The Company only has one operating lease in place as of December 31, 2021 related to its warehouse, distribution facility and corporate headquarters for a 10-year term. The Company’s remaining lease payments of approximately $2,675,000 will be discounted to record its lease liability using its incremental borrowing rate and to record the corresponding right of use asset. |
Public Offering
Public Offering | 12 Months Ended |
Dec. 31, 2021 | |
Public Offering | |
Public Offering | 3. On November 29, 2021, the Company completed the Public Offering of 2,514,000 shares of its common stock, which included the partial exercise of the underwriters’ overallotment option, at a public offering price of $10.00 per share for aggregate gross proceeds of $25,140,000 and net proceeds of approximately $21,640,000 after deducting underwriting fees of approximately $2,200,000 and other offering costs of approximately $1,300,000.The Company issued a purchase option to the underwriters (“UPO”) exercisable within five years of the Public Offering for 5.0% of the shares of common stock issued, or 125,700 shares of common stock, at an exercise price of $12.50 per share. The Company’s common stock is listed on The Nasdaq Capital Market under the symbol “AERC.” In connection with the Public Offering, on November 23, 2021, the Company converted from a Delaware limited liability company into a Delaware corporation (the “Corporate Conversion”) and changed its name to AeroClean Technologies, Inc. In connection with the Corporate Conversion, the outstanding member units of 13,428,948 were converted into 11,363,636 shares of common stock at a conversion ratio of 0.8462. The Corporate Conversion has been adjusted retroactively for the purposes of calculating basis and diluted earnings per share. The Company’s certificate of incorporation authorizes 110,000,000 shares of common stock and 11,000,000 of shares preferred stock. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 12 Months Ended |
Dec. 31, 2021 | |
Prepaid Expenses and Other Current Assets | |
Prepaid Expenses and Other Current Assets | 4. Prepaid expenses and other current assets consist primarily of prepaid insurance premiums and amounts paid to suppliers and vendors for inventories and retainers for engineering, product development, testing and other services to be performed. Prepaid expenses and other current assets were $1,124,988 |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2021 | |
Inventories | |
Inventories | 5. Inventories Inventory consists of the following: December 31, 2021 2020 Raw materials $ 475,767 $ — Finished goods 170,175 — Total inventories $ 645,942 $ — |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2021 | |
Property and Equipment | |
Property and Equipment | 6. Property and equipment consisted of the following: Useful Life December 31, (Years) 2021 2020 Leasehold improvements Lesser of useful life or lease term $ 847,217 $ — Machinery and tooling 7 1,123,391 454,679 Furniture and equipment 3 - 10 232,466 — 2,203,074 454,679 Less accumulated depreciation 79,646 — $ 2,123,428 $ 454,679 Property and equipment are stated at cost and depreciated generally under the straight-line method over their estimated useful lives (or the lesser of the term of the lease for leasehold improvements, as appropriate), except for tooling, which is depreciated utilizing the units-of-production method. Depreciation expense was $79,646 for the year ended December 31, 2021. There was no |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2021 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | 7. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following as of: December 31, 2021 2020 Accrued wages and bonus $ 408,418 $ — Research and development 35,708 271,800 Professional and consulting fees 13,120 33,345 Legal fees 29,512 10,000 Customer advance deposits — 6,000 Other accrued liabilities 97,127 12,091 Total accrued expenses and other current liabilities $ 583,885 $ 333,236 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 8. Commitments and Contingencies Lease Commitments Years ending December 31, 2022 $ 266,500 2023 273,163 2024 279,992 2025 286,991 2026 294,166 Thereafter 1,273,734 Total $ 2,674,546 Legal Proceedings Indemnities, Commitments and Guarantees Registration Rights Agreement |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions | |
Related Party Transactions | 9. Related Party Transactions The Company recorded an aggregate of $80,000 of revenues for units sold to related parties of which $63,290 was included in accounts receivable as of December 31, 2021. Bridge Loans – |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2021 | |
Stockholders' Equity | |
Stockholders' Equity | 10. Stockholders’ Equity Common Stock The Company is authorized to issue up to 110,000,000 shares of common stock with a par value of $0.01. In November 2021, the Company completed its Public Offering and sold 2,514,000 shares of common stock for net proceeds of approximately $21,640,000. See Note 3, Public Offering. Dividend Rights Voting Rights Liquidation Other Rights Preference Shares The Company is authorized to issue up to 11,000,000 shares of preferred stock with a par value of $0.01. Under the Company’s certificate of incorporation and subject to the limitations prescribed by law, our Board of Directors may issue the Company’s preferred stock in one or more series and may establish from time to time the number of shares to be included in such series and may fix the designation, the voting powers, if any, and preferences and relative participating, optional or other rights, if any, of the shares of each such series and any qualifications, limitations or restrictions thereof. When and if the Company issues any shares of preferred stock, the Board of Directors will establish the number of shares and designation of such series and the voting powers, if any, and preferences and relative participating, optional or other special rights, and the qualifications, limitations and restrictions thereof, for the particular preferred stock series. Long-term Incentive Plan In conjunction with the Public Offering, on November 23, 2021, the Company adopted the Employee Stock Purchase Plan, the 2021 Incentive Award Plan (“Long-Term Incentive Plan” or “LTIP”) and the Non-Employee Directors Stock and Deferred Compensation Plan (collectively, the “Plans”). Accordingly, the Company reserved 1,802,273 shares, collectively, for issuance or sale under the Plans. On November 29, 2021, at the closing of the Public Offering, the Company granted 443,269 restricted stock units to members of management (See Note 7, Commitments and Contingencies) and 182,999 restricted stock units to members of the Board under the Incentive Award Plan. The Company maintains an LTIP under which the Company’s Compensation Committee has the authority to grant stock options; stock appreciation rights; restricted stock; restricted stock units; performance stock, performance units; and other forms of equity-based or equity-related awards. During the year ended December 31, 2021, the Company granted restricted stock to members of the Company’s Board of Directors and certain members of management. Restricted stock grants vest over periods ranging from two Stock-based compensation expense of $263,648 was recorded in selling, general and administrative expense for the year ended December 31, 2021. Unrecognized compensation cost related to restricted stock awards made by the Company was $5,999,032 at December 31, 2021, which is expected to be recognized over the weighted average remaining life of 2.35 years at the grant date fair value of $10.00 per share. The following is the restricted stock unit activity for the year ended December 31, 2021: Outstanding January 1, 2021 — Granted 626,268 Vested — Forfeited — Outstanding January 1, 2021 626,268 Members’ Units Prior to the completion of the Public Offering (See Note 3, Public Offering), the Board was authorized to issue Class A Units (“Units”), which entitled unitholders to allocations of profits and losses and other items and distributions of cash and other property as was set forth in the Company’s operating agreement, as amended. The Board had the right at any time and from time to time to authorize and cause the Company to create and/or issue equity securities to any person, in which event, all units of a class, group or series would have been diluted in an equal manner as to the other units of such class, group or series, and the Board had the power to amend the operating agreement to allow for such additional issuances and dilution and to make any such other amendments necessary or desirable to reflect such issuances. The holder of each Unit had the right to one vote per Unit on all matters to be voted on by the Members. At December 31, 2020, the Company recorded a subscription receivable for $100,543 relating to the purchase of Units in December 2020 for which cash was received in February of 2021. In May 2020, the Board approved an action to effectuate a reverse stock split of the Units, which reduced each unit holder’s number of Units on a pro-rata basis. Each unit holder’s proportional voting power remained unchanged, and the rights and privileges of the holders of Units were substantially unaffected by the reverse stock split. The number of Units outstanding and footnotes have been adjusted to reflect the aforementioned reverse stock split. Between January 1, 2021 and the Public Offering, the Company sold an additional 5,073,056 Units to existing members resulting in gross proceeds of $5,073,056. Effective April 1, 2021, the Board approved the issuance of an aggregate of 274,314 Units, of which 140,085 Units were issued to independent contractors and 134,229 Units were issued to Board members as compensation for services provided. Certain of the Units were issued to independent contractors as consideration for services pursuant to existing agreements, which provided for payment of fifty percent in cash and fifty percent in equity (See Note 7, Commitments and Contingencies). The subscription agreements issued to the contractors included a provision that no payments for services rendered after March 31, 2021 will be in the form of equity. Equity-based compensation expense of $924,438 related to these issuances was recognized and is included in selling, general and administrative expenses in the Company’s statement of operations for the year ended December 31, 2021. The fair value of $3.37 for each Unit was determined utilizing the income-based approach, which relies on the discounted cash flow method and considers future cash flows discounted at an appropriate discount rate, or weighted average cost of capital. The discounted cash flow method is affected by assumptions regarding complex and subjective variables, including future levels of revenue growth, operating margins and working capital needs as well as the weighted average cost of capital, which was determined by evaluating the rates of return required for other companies of a similar size and stage of development. |
Loss Per Common Share
Loss Per Common Share | 12 Months Ended |
Dec. 31, 2021 | |
Loss Per Common Share | |
Loss Per Common Share | 11. Loss Per Common Share Basic net loss per common share is computed using the weighted average common shares outstanding during the year. Diluted net loss per common share reflects the potential dilution from assumed conversion of all dilutive securities such as unvested restricted stock units and UPO using the treasury stock method. When the effects of the outstanding restricted stock units and UPO are anti-dilutive, they are not included in the calculation of diluted net loss per common share. The following table sets forth the computation of basic and diluted net loss per share for the years ended December 31, 2021 and 2020: Year Ended December 31, 2021 2020 Net (loss) earnings $ (7,923,607) $ (3,323,081) Basic weighted average common shares 10,675,765 3,250,980 Diluted weighted average common shares 10,675,765 3,250,980 Basic net (loss) earnings per common share $ (0.74) $ (1.02) Diluted net (loss) earnings per common share $ (0.74) $ (1.02) |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2021 | |
Income Taxes. | |
Income Taxes | 12. Income Taxes Income tax benefit consisted of the following: December 31, 2021 Current Expense: Federal $ — State — — Deferred Benefit: Federal 266,278 State 53,860 320,138 Total Income Tax Benefit $ 320,138 The significant components of the Company’s deferred tax assets and liabilities at December 31, 2021 are as follows: December 31, 2021 Federal Net Operating Loss $ 205,018 State Net Operating Loss 42,419 Capitalized Costs (536,567) Tax credits 5,968 Stock Compensation 66,822 Accrued Expenses and Other (284,914) Total gross deferred tax assets/(liabilities) (501,254) Less valuation allowance — Net deferred tax assets/(liabilities) (501,254) The income tax benefit for the years ended December 31, 2021 differed from the amounts computed by applying the U.S. federal income tax rate of 21% to loss before tax benefit as a result of non-deductible expenses, tax credits generated, and utilization of net operating loss carryforwards. Since the Company is in a deferred tax liability position, a valuation allowance is not required. December 31, 2021 Federal Statutory Rate $ (261,788) Permanent Differences 1,253 Research and Development (5,968) State Income Tax (53,860) Change in tax status — Effective Tax (320,363) At December 31, 2021, the Company had available operating loss carryforwards of approximately $976,277 for federal income tax purposes, all of which was generated after 2017 and can be carried forward indefinitely under the Tax Cuts and Jobs Act. At December 31, 2021, the Company had approximately $5,968 of federal Research and Development (R&D) tax credit carry-forwards. If not utilized, the federal R&D credits will begin to expire in 2041. At December 31, 2021, the Company had available operating loss carryforwards for state tax purposes of approximately $976,277 which were generated during 2021 that do not expire. Sections 382 and 383 of the Internal Revenue Code, and similar state regulations, contain provisions that may limit the NOL carryforwards available to be used to offset income in any given year upon the occurrence of certain events, including changes in the ownership interests of significant stockholders. In the event of a cumulative change in ownership in excess of 50% over a three-year period, the amount of the NOL carryforwards that the Company may utilize in any one year may be limited. Although the Company has not undertaken a formal analysis, it is unlikely that such an ownership change occurred during 2021. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2021 | |
Subsequent Events | |
Subsequent Events | 13. Subsequent Events The Company has evaluated subsequent events through the date the financial statements were available to be issued and, except as otherwise noted herein, has concluded there were no material subsequent events that required recognition or disclosure in the financial statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). The Company is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to avail itself of this exemption from new or revised accounting standards and, therefore, the financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of the public company effective dates. |
Use of Estimates | Use of Estimates The preparation of the Company’s financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses and related disclosure of contingent assets and liabilities. Significant estimates in these financial statements include those related to the fair value of equity-based compensation and revenue recognition. On an ongoing basis, the Company evaluates its estimates, judgments and methodologies. The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Due to the inherent uncertainty involved in making estimates, actual results could differ materially from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash and cash equivalents. The Company did not have any cash equivalents as of December 31, 2021. |
Revenue Recognition | Revenue Recognition The Company recognizes revenues related to sales of products upon the customer obtaining control of promised goods, in an amount that reflects the consideration that is expected to be received in exchange for those goods. To determine revenue recognition for arrangements within the scope of ASC Topic 606, Revenue from Contracts with Customers ( |
Warranty Costs | Warranty Costs The Company provides a three-year warranty on its Pūrgo device from the date of sale to its customers. The Company’s policy is to record a provision for estimated future costs related to warranty expense when they are probable and reasonably estimable, which is when revenue is recognized. There was no warranty accrual as of December 31, 2021 and 2020, respectively. |
Research & Development Expenses | Research & Development Expenses Research and development expenses are expensed as incurred and consist principally of contract labor and third-party engineering, product development and testing costs related to the development of medical grade air purification devices and related components as well as concepts for future product development. |
Income Taxes | Income Taxes Prior to the Public Offering, the Company was a limited liability company and was treated as a partnership for federal and state income tax purposes. Therefore, no provision for income taxes had been included in the financial statements since taxable income or loss was allocated to members, who were responsible for any taxes thereon, in accordance with the provisions of the operating agreement. On November 23, 2021 in conjunction with the Public Offering, the Company incorporated in the State of Delaware. The Company recognizes and measures its unrecognized tax benefit in accordance with FASB ASC 740, Income Taxes. The Company provides deferred income taxes for temporary differences between the amounts of assets and liabilities recognized for financial reporting purposes and such amounts recognized for income tax purposes. Deferred income taxes are computed using enacted tax rates that are expected to be in effect when the temporary differences reverse. Under that guidance, management assesses the likelihood that tax positions will be sustained upon examination based on the facts, circumstances and information available at the end of each period, including the technical merits of those positions. The measurement of unrecognized tax benefits is adjusted when new information is available or when an event occurs that requires a change. For the years ended December 31, 2021, and 2020, the Company did not identify any uncertain tax positions taken or expected to be taken in an income tax return that would require adjustment to, or disclosure in, its financial statements. |
Accounts Receivable | Accounts Receivable Trade accounts receivable are stated net of an allowance for doubtful accounts. We estimate the allowance for doubtful accounts based on review and analysis of specific customer balances that may not be collectible and how recently payments have been received. Accounts are considered for write-off when they become past due and when it is determined that the probability of collection is remote. As of December 31, 2021, there was no allowance for doubtful accounts. |
Inventories | Inventories The Company values inventories at the lower of cost or net realizable value using the first-in, first-out or weighted average cost method. Net realizable value is the estimated selling price in the ordinary course of business, less reasonable predictable costs of completion, disposal and transportation. Inventories on hand at December 31, 2021 consisted primarily of spare parts and finished goods. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost and depreciated generally under the straight-line method over their estimated useful lives (or the lesser of the term of the lease for leasehold improvements, as appropriate), except for tooling, which is depreciated utilizing the units-of-production method. The Company periodically reviews long-lived assets for impairment whenever events or changes in business circumstance indicate that the carrying value of the assets may not be recoverable. Under those circumstances, if the fair value were less than the carrying amount of the asset, the Company would recognize a loss for the difference. The Company has determined that long-lived assets were not impaired during the years ended December 31, 2021 and 2020. |
Offering Costs | Offering Costs The Company capitalizes certain legal, accounting and other third-party fees directly associated with in-process equity financing as deferred offering costs. Deferred offering costs were offset against the proceeds from the Public Offering. |
Common Stock Equivalents | Common Stock Equivalents The Company has potential common stock equivalents related to its outstanding restricted stock units. These potential common stock equivalents are not included in diluted loss per share for any period presented in which there is a net loss because the effect would have been anti-dilutive. |
Share-based Payments | Share-based Payments The Company accounts for share-based payments to employees and non-employees in accordance with the provisions of FASB ASC 718, Compensation — Stock Compensation (“ASC 718”). Under ASC 718, the Company measures the share-based compensation cost on the date of grant, based on the fair value of the award, and expense is recognized over the requisite service period. Compensation cost recognized during the year ended December 31, 2021 related to the issuance of Class A Units and grants of restricted stock units. |
Fair Value Measurements | Fair Value Measurements Certain assets and liabilities are carried at fair value in accordance with U.S. GAAP. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants at the measurement date. A three-tier fair value hierarchy that prioritizes the inputs used in the valuation methodologies, is as follows: Level 1 Level 2 Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs observable or that can be corroborated by observable market data. Level 3 Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. At December 31, 2021 and 2020, the carrying amounts of the Company’s financial instruments, including cash, prepaid expenses and other current assets, accounts payable and accrued liabilities approximated their respective fair value due to the short-term nature of these instruments. |
Operating Segment | Operating Segment The Company operates in one segment. All of the Company’s assets are in the United States of America. |
Concentrations of Credit Risk | Concentrations of Credit Risk The Company maintains its cash at a major financial institution with high credit quality, and at times, the balance in its cash deposits may exceed the Federal Deposit Insurance Corporation limits of $250,000. The Company has not experienced and does not anticipate any losses on deposits with commercial banks and financial institutions that exceed federally insured limits. The Company’s suppliers and vendors include engineering firms and consultants, research and development companies, testing laboratories, contract manufacturers and other suppliers required to design, test and manufacture its products. The Company obtains some of its services from a limited group of vendors; however, the Company has neither experienced any significant disruptions nor expects any significant disruptions to its operations due to supplier concentration. The Company’s largest supplier accounted for 13% and 12% of total expenditures for the years ended December 31, 2021 and 2020, respectively, while its second largest supplier accounted for 11% and 33% of total expenditures for the years ended December 31, 2021 and 2020, respectively. Significant customers may change from year to year depending on the overall level of activity and the sales of the Company’s products to each customer. During the year ended December 31, 2021, the Company’s largest and second largest customers accounted for approximately 45% and 12% of the Company’s revenues, respectively. |
JOBS Act Accounting Election | JOBS Act Accounting Election The Company is an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to avail itself of this exemption from new or revised accounting standards and, therefore, the financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of the public company effective dates. |
Recent Accounting Standards | Recent Accounting Standards The Company has reviewed recent accounting pronouncements and, with the exception of the below, concluded they are either not applicable to the business or no material effect is expected on the financial statements as a result of future adoption. In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses, which was subsequently amended by ASU No. 2018-19 and ASU No. 2019-10, and which requires the measurement of expected credit losses for financial instruments carried at amortized cost held at the reporting date based on historical experience, current conditions and reasonable forecasts. The updated guidance also amends the current other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. In addition, the length of time a security has been in an unrealized loss position will no longer impact the determination of whether a credit loss exists. The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The standard is effective for the fiscal year beginning after December 15, 2022. The Company will continue to assess the possible impact of this standard, but it currently does not expect that the adoption of this standard will have a significant impact on its financial statements and its limited history of bad debt expense relating to trade accounts receivable. In February 2016, the FASB issued ASU 2016-02, Leases (“Topic 842”), which supersedes ASC Topic 840, Leases. Topic 842 requires lessees to recognize a lease liability and a lease asset for all leases, including operating leases, with a term greater than 12 months on its balance sheet. The update also expands the required quantitative and qualitative disclosures surrounding leases. Topic 842 will be applied using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. In November 2019, FASB deferred the effective date for implementation of Topic 842 by one year and, in June 2020, FASB deferred the effective date by an additional year. The guidance under Topic 842 is effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. Earlier adoption is permitted. The Company only has one operating lease in place as of December 31, 2021 related to its warehouse, distribution facility and corporate headquarters for a 10-year term. The Company’s remaining lease payments of approximately $2,675,000 will be discounted to record its lease liability using its incremental borrowing rate and to record the corresponding right of use asset. |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Inventories | |
Schedule of Inventories | December 31, 2021 2020 Raw materials $ 475,767 $ — Finished goods 170,175 — Total inventories $ 645,942 $ — |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property and Equipment | |
Schedule of Property and Equipment | Useful Life December 31, (Years) 2021 2020 Leasehold improvements Lesser of useful life or lease term $ 847,217 $ — Machinery and tooling 7 1,123,391 454,679 Furniture and equipment 3 - 10 232,466 — 2,203,074 454,679 Less accumulated depreciation 79,646 — $ 2,123,428 $ 454,679 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accrued Expenses and Other Current Liabilities | |
Schedule of Accrued Expenses and Other Current Liabilities | December 31, 2021 2020 Accrued wages and bonus $ 408,418 $ — Research and development 35,708 271,800 Professional and consulting fees 13,120 33,345 Legal fees 29,512 10,000 Customer advance deposits — 6,000 Other accrued liabilities 97,127 12,091 Total accrued expenses and other current liabilities $ 583,885 $ 333,236 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies. | |
Schedule of Future Minimum Lease Payments | Years ending December 31, 2022 $ 266,500 2023 273,163 2024 279,992 2025 286,991 2026 294,166 Thereafter 1,273,734 Total $ 2,674,546 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Stockholders' Equity | |
Schedule of Restricted Stock Unit Activity | Outstanding January 1, 2021 — Granted 626,268 Vested — Forfeited — Outstanding January 1, 2021 626,268 |
Loss Per Common Share (Tables)
Loss Per Common Share (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Loss Per Common Share | |
Schedule of Basic and Diluted Net Loss Per Share | Year Ended December 31, 2021 2020 Net (loss) earnings $ (7,923,607) $ (3,323,081) Basic weighted average common shares 10,675,765 3,250,980 Diluted weighted average common shares 10,675,765 3,250,980 Basic net (loss) earnings per common share $ (0.74) $ (1.02) Diluted net (loss) earnings per common share $ (0.74) $ (1.02) |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Taxes. | |
Schedule of Income Tax Benefit | December 31, 2021 Current Expense: Federal $ — State — — Deferred Benefit: Federal 266,278 State 53,860 320,138 Total Income Tax Benefit $ 320,138 |
Schedule of Deferred Tax Assets and Liabilities | December 31, 2021 Federal Net Operating Loss $ 205,018 State Net Operating Loss 42,419 Capitalized Costs (536,567) Tax credits 5,968 Stock Compensation 66,822 Accrued Expenses and Other (284,914) Total gross deferred tax assets/(liabilities) (501,254) Less valuation allowance — Net deferred tax assets/(liabilities) (501,254) |
Schedule of Effective Income Tax | December 31, 2021 Federal Statutory Rate $ (261,788) Permanent Differences 1,253 Research and Development (5,968) State Income Tax (53,860) Change in tax status — Effective Tax (320,363) |
Description of Business (Detail
Description of Business (Details) - USD ($) | Nov. 29, 2021 | Dec. 31, 2021 | Dec. 31, 2020 |
Description of Business | |||
Net loss | $ (7,923,607) | $ (3,323,081) | |
Working capital | 20,066,574 | ||
Accumulated deficit | 1,747,860 | 8,223,407 | |
Net cash used in operating activities | (7,795,087) | $ (3,069,976) | |
Revenue | $ 616,511 | ||
Gross proceeds from public offering | $ 25,140,000 | ||
Net proceeds from public offering | 21,640,000 | ||
Underwriting fees and closing costs | $ 3,500,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Product Warranty Period | 3 years | |
Cash, FDIC Insured Amount | $ 250,000 | |
Significant supplier 1 | ||
Supplier Concentration Risk, Percentage | 13.00% | 12.00% |
Significant supplier 2 | ||
Supplier Concentration Risk, Percentage | 11.00% | 33.00% |
Significant Customer 1 | ||
Customer Concentration Risk, Percentage | 45.00% | |
Significant Customer 2 | ||
Customer Concentration Risk, Percentage | 12.00% |
Public Offering (Details)
Public Offering (Details) | Nov. 29, 2021USD ($)$ / sharesshares | Nov. 23, 2021shares | Nov. 30, 2021USD ($)shares | Dec. 31, 2021shares |
Subsidiary, Sale of Stock [Line Items] | ||||
Gross proceeds from public offering | $ | $ 25,140,000 | |||
Net proceeds from public offering | $ | 21,640,000 | |||
Underwriting fees and closing costs | $ | $ 3,500,000 | |||
Common stock, shares authorized | 110,000,000 | |||
Preferred stock, shares authorized | 11,000,000 | |||
IPO | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Number of shares issued | 2,514,000 | 2,514,000 | ||
Offering price per share | $ / shares | $ 10 | |||
Gross proceeds from public offering | $ | $ 25,140,000 | |||
Net proceeds from public offering | $ | 21,640,000 | $ 21,640,000,000,000 | ||
Underwriting fees and closing costs | $ | 2,200,000 | |||
Deferred offering costs, capitalized and offset against proceeds from public offering | $ | $ 1,300,000 | |||
Number of common shares issued in conversion | 11,363,636 | |||
Number of member units outstanding | 13,428,948 | |||
Conversion ratio | 0.8462 | |||
Common stock, shares authorized | 110,000,000 | |||
Preferred stock, shares authorized | 11,000,000 | |||
Underwriters Purchase Option | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Number of shares issued | 125,700 | |||
Exercisable term for underwriters to purchase options | 5 years | |||
Percentage of common shares exercisable in the public offering under purchase options | 5.00% | |||
Exercise price | $ / shares | $ 12.50 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Prepaid Expenses and Other Current Assets | ||
Prepaid expenses and other current assets | $ 1,124,998 | $ 304,836 |
Inventories (Details)
Inventories (Details) | Dec. 31, 2021USD ($) |
Inventories | |
Raw materials | $ 475,767 |
Finished goods | 170,175 |
Total inventories | $ 645,942 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Property and Equipment, Net | ||
Property and equipment, gross | $ 2,203,074 | $ 454,679 |
Less accumulated depreciation | 79,646 | |
Property and equipment, net | 2,123,428 | 454,679 |
Depreciation | 79,646 | |
Depreciation Expense | 0 | |
Leasehold improvements | ||
Property and Equipment, Net | ||
Property and equipment, gross | $ 847,217 | |
Machinery and tooling | ||
Property, Plant and Equipment [Line Items] | ||
Useful life (in years) | 7 years | |
Property and Equipment, Net | ||
Property and equipment, gross | $ 1,123,391 | $ 454,679 |
Furniture and equipment | ||
Property and Equipment, Net | ||
Property and equipment, gross | $ 232,466 | |
Furniture and equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Useful life (in years) | 3 years | |
Furniture and equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Useful life (in years) | 10 years |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Accrued Expenses and Other Current Liabilities | ||
Accrued wages | $ 408,418 | |
Research and development | 35,708 | $ 271,800 |
Professional and consulting fees | 13,120 | 33,345 |
Legal fees | 29,512 | 10,000 |
Customer advance deposits | 6,000 | |
Other accrued liabilities | 97,127 | 12,091 |
Total accrued expenses and other current liabilities | $ 583,885 | $ 333,236 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) | Feb. 01, 2021USD ($)ft² | Dec. 31, 2021USD ($)shares | Apr. 01, 2021 |
Lessee, Lease, Description [Line Items] | |||
Contingency Reserve for Litigation Liability | $ 0 | ||
Percentage of consideration payable in cash | 50.00% | ||
Percentage of consideration payable in equity | 50.00% | ||
Threshold equity ownership subject to expenses for registration rights, percentage | 10.00% | ||
Executives | |||
Lessee, Lease, Description [Line Items] | |||
Executive Management Base Salary After Termination, Severance Period | 6 months | ||
IPO | Executives | |||
Lessee, Lease, Description [Line Items] | |||
Restricted Stock Units granted to Executives | shares | 443,269 | ||
IPO | Independent Contractor | |||
Lessee, Lease, Description [Line Items] | |||
Percentage of consideration payable in cash | 50.00% | ||
Percentage of consideration payable in equity | 50.00% | ||
Gardens Bio Science Partners, LLC | |||
Lessee, Lease, Description [Line Items] | |||
Area of premises leased | ft² | 20,000 | ||
Term of Lease contract | 10 years | ||
Annual base rent expense | $ 260,000 | ||
Escalation on Annual rent (in percentage) | 2.50% |
Commitments and Contingencies -
Commitments and Contingencies - Future Minimum Lease Payments (Details) | Dec. 31, 2021USD ($) |
Commitments and Contingencies. | |
2022 | $ 266,500 |
2023 | 273,163 |
2024 | 279,992 |
2025 | 286,991 |
2026 | 294,166 |
Thereafter | 1,273,734 |
Total | $ 2,674,546 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Nov. 05, 2021 | Sep. 30, 2021 | Dec. 31, 2021 |
Related Party Transactions | |||
Common Stock, Shares, Outstanding | 13,877,636 | ||
Revenue from Units Sold to Related Parties | $ 80,000 | ||
Accounts Receivable, Related Party | $ 63,290 | ||
Bridge Loan Agreements from Related Party [Member] | |||
Related Party Transactions | |||
Loan from related party | $ 500,000 | $ 500,000 | |
Interest rate (as percent) | 6.25% | 6.25% | |
Prime Rate [Member] | |||
Related Party Transactions | |||
Basis spread (as percent) | 3.00% | 3.00% |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock and Preference Shares (Details) | Nov. 29, 2021USD ($)shares | Nov. 30, 2021USD ($)shares | Dec. 31, 2021item$ / sharesshares | Nov. 23, 2021shares |
Common stock, shares authorized | 110,000,000 | |||
Common stock, par value | $ / shares | $ 0.01 | |||
Net proceeds from public offering | $ | $ 21,640,000 | |||
Number of votes per share | item | 1 | |||
Preferred Stock, Par or Stated Value Per Share | $ / shares | $ 0.01 | |||
Preferred Stock, Shares Authorized | 11,000,000 | |||
IPO | ||||
Common stock, shares authorized | 110,000,000 | |||
Number of shares issued | 2,514,000 | 2,514,000 | ||
Net proceeds from public offering | $ | $ 21,640,000 | $ 21,640,000,000,000 | ||
Preferred Stock, Shares Authorized | 11,000,000 | |||
Maximum | ||||
Common stock, shares authorized | 110,000,000 |
Stockholders' Equity - Long-ter
Stockholders' Equity - Long-term Incentive Plan (Details) - USD ($) | Nov. 29, 2021 | Dec. 31, 2021 | Nov. 23, 2021 |
Restricted stock units, granted | 626,268 | ||
Stock-based compensation expense | $ 924,438 | ||
LTIP | |||
Common stock shares reserved for future issuance | 1,802,273 | ||
Stock-based compensation expense | $ 263,648 | ||
Weighted Average Remaining Life, Stock Awards | 2 years 4 months 6 days | ||
Share Price, Stock Awards | $ 10 | ||
Unrecognized compensation cost | $ 5,999,032 | ||
LTIP | Maximum | |||
Vesting period | 3 years | ||
LTIP | Minimum | |||
Vesting period | 2 years | ||
LTIP | Members of management | |||
Restricted stock units, granted | 443,269 | ||
LTIP | Members of the Board | |||
Restricted stock units, granted | 182,999 |
Stockholders' Equity - Restrict
Stockholders' Equity - Restricted stock unit activity (Details) | 12 Months Ended |
Dec. 31, 2021shares | |
Restricted stock unit activity | |
Granted | 626,268 |
Outstanding, ending balance | 626,268 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Details) | Apr. 01, 2021shares | Dec. 31, 2021USD ($)Vote$ / sharesshares | Dec. 31, 2020USD ($) |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of votes per unit | Vote | 1 | ||
Subscription receivable | $ | $ 100,543 | ||
Number of units issued | 5,073,056 | ||
Gross proceeds from units issued | $ | $ 5,073,056 | ||
Number of units authorized to issue | 274,314 | ||
Percentage of consideration payable in cash | 50.00% | ||
Percentage of consideration payable in equity | 50.00% | ||
Equity-based compensation expense included in general and administrative expenses | $ | $ 924,438 | ||
Fair value per unit | $ / shares | $ 3.37 | ||
Board Members | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of units issued | 134,229 | ||
Independent Contractors | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of units issued | 140,085 |
Loss Per Common Share (Details)
Loss Per Common Share (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Loss Per Common Share | ||
Net (loss) earnings | $ (7,923,607) | $ (3,323,081) |
Basic weighted average common shares | 10,675,765 | 3,250,980 |
Diluted weighted average common shares | 10,675,765 | 3,250,980 |
Basic net (loss) earnings per common share | $ (0.74) | $ (1.02) |
Diluted net (loss) earnings per common share | $ (0.74) | $ (1.02) |
Income Taxes - Income Tax Benef
Income Taxes - Income Tax Benefit (Details) | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Deferred Tax Benefit: | |
Federal | $ 266,278 |
State | 53,860 |
Total Deferred Tax Benefit | 320,138 |
Total Income Tax Benefit | $ 320,138 |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) | Dec. 31, 2021USD ($) |
Components of Deferred Tax Assets and Liabilities [Abstract] | |
Federal Net Operating Loss | $ 205,018 |
State Net Operating Loss | 42,419 |
Capitalized Costs | 536,567 |
Tax Credits | 5,968 |
Stock Compensation | 66,822 |
Accrued Expenses and Other | 284,914 |
Total gross deferred tax assets/(liabilities) | 501,254 |
Net deferred tax assets/(liabilities) | $ (501,254) |
Income Taxes - Effective Income
Income Taxes - Effective Income Tax (Details) | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Effective Income Tax Rate Reconciliation, Amount [Abstract] | |
Federal Statutory Rate | $ (261,788) |
Permanent Differences | 1,253 |
Research and Development | (5,968) |
State Income Tax | (53,860) |
Effective Tax | $ (320,363) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Components of Income Tax Expense (Benefit), Continuing Operations [Abstract] | |
Federal Income Tax Rate | 21.00% |
Federal Operating Loss Carryforwards | $ 976,277 |
State Operating Loss Carryforwards | 976,277 |
Tax credits, research and development | $ 5,968 |
Threshold change in ownership percentage that limits utilization of tax carryforwards | 50.00% |
Cumulative change in ownership, period threshold | 3 years |
Subsequent Events (Details)
Subsequent Events (Details) | 12 Months Ended |
Dec. 31, 2021shares | |
Subsequent Events | |
Granted (in shares) | 626,268 |