Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2022 | May 10, 2022 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2022 | |
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, $0.01 Par Value | |
Trading Symbol | AERC | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 13,877,636 | |
Entity Central Index Key | 0001872356 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONDENSED BALANCE SHEETS
CONDENSED BALANCE SHEETS - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash | $ 17,774,097 | $ 19,629,649 |
Accounts receivable | 6,186 | 177,064 |
Prepaid expenses and other current assets | 823,028 | 1,124,998 |
Inventories | 718,766 | 645,942 |
Total current assets | 19,322,077 | 21,577,653 |
Property and equipment, net | 2,115,675 | 2,123,428 |
Other assets | 21,667 | 21,667 |
Total assets | 21,459,419 | 23,722,748 |
Current liabilities: | ||
Accounts payable | 436,367 | 927,194 |
Accrued expenses and other current liabilities | 811,283 | 583,885 |
Total current liabilities | 1,247,650 | 1,511,079 |
Long-term Liabilities | ||
Deferred tax liability | 408,480 | 501,254 |
Total Liabilities | 1,656,130 | 2,012,333 |
Stockholders' equity: | ||
Preference Shares, $0.01 par value; 11,000,000 shares authorized; none issued and outstanding | ||
Common stock, $0.01 par value per share; 110,000,000 shares authorized; 13,877,636 issued and outstanding as of March 31, 2022 and December 31, 2021 | 138,776 | 138,776 |
Additional paid-in capital | 23,990,337 | 23,319,499 |
Accumulated deficit | (4,325,824) | (1,747,860) |
Total stockholders' equity | 19,803,289 | 21,710,415 |
Total liabilities and members' equity | $ 21,459,419 | $ 23,722,748 |
CONDENSED BALANCE SHEETS (Paren
CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2022 | Dec. 31, 2021 |
CONDENSED BALANCE SHEETS | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 11,000,000 | 11,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 110,000,000 | 110,000,000 |
Common stock, shares issued | 13,877,636 | |
Common Stock, Shares, Outstanding | 13,877,636 |
CONDENSED STATEMENTS OF OPERATI
CONDENSED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
CONDENSED STATEMENTS OF OPERATIONS | ||
Product revenues | $ 6,733 | |
Cost of sales | 3,764 | |
Gross profit | 2,969 | |
Operating Expenses: | ||
Selling, general and administrative | 1,471,386 | $ 380,002 |
Stock-based compensation | 670,838 | 0 |
Research and development | 531,483 | 1,589,690 |
Total operating expenses | 2,673,707 | 1,969,692 |
Loss before income tax benefit | (2,670,738) | (1,969,692) |
Income Tax Benefit | 92,774 | 0 |
Net loss | $ (2,577,964) | $ (1,969,692) |
Loss Per Common Share | ||
Basic | $ (0.19) | $ (0.26) |
Diluted | $ (0.19) | $ (0.26) |
Weighted-average common shares outstanding: | ||
Basic | 13,877,636 | 7,601,859 |
Diluted | 13,877,636 | 7,601,859 |
CONDENSED STATEMENTS OF CHANGES
CONDENSED STATEMENTS OF CHANGES IN MEMBERS' EQUITY (DEFICIT) - USD ($) | Common StockClass A | Common Stock | Accumulated Deficit | Additional Paid-in Capital | Total |
Common stock, beginning balance at Dec. 31, 2020 | $ 10,751,274 | ||||
Common stock, beginning balance (shares) at Dec. 31, 2020 | 8,081,578 | ||||
Stockholders' equity, beginning balance at Dec. 31, 2020 | $ (8,223,407) | $ 2,527,867 | |||
Issuance of equity units | $ 5,073,056 | 5,073,056 | |||
Issuance of equity units (shares) | 5,073,058 | ||||
Net loss | (1,969,692) | (1,969,692) | |||
Common stock, ending balance at Mar. 31, 2021 | $ 15,824,330 | ||||
Common stock, ending balance (shares) at Mar. 31, 2021 | 13,154,636 | ||||
Stockholders' equity, ending balance at Mar. 31, 2021 | (10,193,099) | 5,631,231 | |||
Common stock, beginning balance at Dec. 31, 2021 | $ 138,776 | 138,776 | |||
Common stock, beginning balance (shares) at Dec. 31, 2021 | 13,877,636 | ||||
Stockholders' equity, beginning balance at Dec. 31, 2021 | (1,747,860) | $ 23,319,499 | 21,710,415 | ||
Stock-based compensation | 670,838 | 670,838 | |||
Net loss | (2,577,964) | (2,577,964) | |||
Common stock, ending balance at Mar. 31, 2022 | $ 138,776 | $ 138,776 | |||
Common stock, ending balance (shares) at Mar. 31, 2022 | 13,877,636 | 13,877,636 | |||
Stockholders' equity, ending balance at Mar. 31, 2022 | $ (4,325,824) | $ 23,990,337 | $ 19,803,289 |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (2,577,964) | $ (1,969,692) |
Adjustments to reconcile net loss to net cash flows used in operating activities | ||
Deferred tax benefit | (92,774) | |
Depreciation and amortization | 35,827 | 0 |
Equity-based compensation | 670,838 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 170,879 | |
Inventories | (72,824) | (11,658) |
Other current and non-current assets | 301,970 | (15,025) |
Accounts payable | (490,827) | 162,018 |
Accrued expenses and other current liabilities | 227,398 | 11,802 |
Subscriptions receivable | 100,543 | |
Net cash flows used in operating activities | (1,827,477) | (1,722,012) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (28,075) | (1,048,813) |
Net cash flows used in investing activities | (28,075) | (1,048,813) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of equity units | 4,973,058 | |
Net cash flows provided by financing activities | 4,973,058 | |
Net (decrease) increase in cash | (1,855,552) | 2,202,233 |
Cash, beginning of period | 19,629,649 | 2,333,117 |
Cash, end of period | $ 17,774,097 | 4,535,350 |
Supplemental schedule of non-cash activities: | ||
Subscription receivable | $ 100,000 |
Description of Business
Description of Business | 3 Months Ended |
Mar. 31, 2022 | |
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 (ASC 205 40) require management to assess an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. In each reporting period (including interim periods), an entity is required to assess conditions known and reasonably knowable as of the financial statement issuance date to determine whether it is probable an entity will not meet its financial obligations within one year from the financial statement issuance date. Substantial doubt about an entity’s ability to continue as a going concern exists when conditions and events, considered in the aggregate, indicate it is probable the entity will be unable to meet its financial obligations as they become due within one year after the date the financial statements are issued. The Company incurred a net loss of $2,577,964 during the three months ended March 31, 2022 and had working capital of $18,074,427 and an accumulated deficit of $4,325,824 at March 31, 2022. The Company’s net cash used in operating activities was $1,827,477 for the three months ended March 31, 2022. For the three months ended March 31, 2021, the Company incurred a net loss of $1,969,692, and net cash used in operating activities was $1,722,012 for the three months ended March 31, 2021. The Company is an early-stage company and has begun generating revenues through the commercial production and sale of its Pūrgo 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 March 31, 2022 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 Based on the available cash balance and management’s plans as described above, management believes that it has the ability to fund the Company’s operations for one year after the financial statements are issued. 1. Description of Business (Continued) COVID-19 Pandemic The Company continues to monitor the ongoing COVID-19 pandemic, including the emergence of variant strains, which continue to spread throughout the world and have adversely impacted global commercial activity and contributed 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 the adverse impact of the COVID-19 pandemic on its global supply chain. During the year ended December 31, 2021, the Company did not experience any significant adverse impact on its operations as a result of the COVID-19 pandemic. However, across many industries, including the Company’s, COVID-19 - among other factors - has negatively impacted personnel and operations at third-party manufacturing and component part supplier facilities in the United States and around the world. These disruptions have adversely impacted the availability and cost of raw materials and component parts. For example, various electronic components and semi-conductor chips have become increasingly difficult to source, and when available, may be subject to substantially longer lead times and higher costs than historically applicable. The continued shortages impacted the ability to manufacture units during the first quarter of 2022, the weekly and monthly production run rates the Company expected to achieve during the first quarter, and likely the run rates the Company expects to achieve for the remainder of this fiscal year. The Company does have line of sight to improvement on some long lead-time board and electronics components in the second half of 2022 but cannot predict the ever-changing global logistics and supply chain environment. 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 we determine is in the best interests of our employees, customers, suppliers and stockholders. As of the date these financial statements were available to be issued, the pandemic presents uncertainty and risk as we 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 | 3 Months Ended |
Mar. 31, 2022 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties and potentially result in materially different results under different assumptions and conditions. The Company’s critical accounting policies are described in Note 2, Summary of Significant Accounting Policies, of the Company’s audited financial statements for the year ended December 31, 2021 included in its Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (the “SEC”) on April 1, 2022, except as noted below. 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. 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 condensed 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 2. 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 March 31, 2022 related to its warehouse, distribution facility and corporate headquarters for a 10-year term. The Company’s remaining lease payments of approximately $2,610,000 will be discounted to record its lease liability using its incremental borrowing rate and to record the corresponding right of use asset. Basis of Presentation These unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the SEC. Accordingly, U.S. Use of Estimates The preparation of the Company’s financial statements requires management to make estimates and assumptions that affect the 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 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. At March 31, 2022 and December 31, 2021, 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. 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. 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 three months ended March 31, 2022 related to grants of restricted stock units. Accounts Receivable An allowance for uncollectible accounts receivable is recorded when management believes the collectability of the accounts receivable is confirmed. Subsequent recoveries, if any, are credited to the allowance. The allowance is determined based on management’s review of the debtor’s ability to repay and repayment history, aging history and estimated value of collateral, if any. Inventories The Company values inventories at the lower of cost or net realizable value using the first-in, first-out or weighted average cost |
Public Offering
Public Offering | 3 Months Ended |
Mar. 31, 2022 | |
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 | 3 Months Ended |
Mar. 31, 2022 | |
Prepaid Expenses and Other Current Assets | |
Prepaid Expenses and Other Current Assets | 4. Prepaid expenses and other current assets consisted 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 $823,028 and $1,124,998 at March 31, 2022 and December 31, 2021, respectively. 5. Inventories |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2022 | |
Inventories | |
Inventories | 5. Inventories |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2022 | |
Property and Equipment | |
Property and Equipment | 6. Property and equipment consisted of the following: Useful Life March 31, December 31, (Years) 2022 2021 Leasehold improvements Lesser of useful life or lease term $ 847,217 $ 847,217 Machinery and tooling 7 1,145,541 1,123,391 Furniture and equipment 3 - 10 238,390 232,466 2,231,148 2,203,074 Less accumulated depreciation 115,473 79,646 $ 2,115,675 $ 2,123,428 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 $35,827 for the three months ended March 31, 2022. There was no depreciation expense for three months ended March 31, 2021. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 3 Months Ended |
Mar. 31, 2022 | |
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: March 31, December 31, 2022 2021 Accrued wages and bonus $ 409,314 $ 408,418 Research and development 59,233 35,708 Legal fees 242,105 29,512 Other accrued liabilities 100,631 110,247 Total accrued expenses and other current liabilities $ 811,283 $ 583,885 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 8. Commitments and Contingencies Lease Commitments Legal Proceedings 8. Commitments and Contingencies (Continued) Indemnities, Commitments and Guarantees |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2022 | |
Related Party Transactions | |
Related Party Transactions | 9. Related Party Transactions The Company had an accounts receivable balance of $5,625 and $63,290 for units sold to related parties as of March 31, 2022 and December 31, 2021, respectively. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2022 | |
Stockholders' Equity | |
Stockholders' Equity | 10. Stockholders’ Equity 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. 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. Compensation cost is generally recorded on a straight-line basis over the vesting term of the shares based on the grant date value using the closing trading price. Stock-based compensation expense of $670,838 was recorded in selling, general and administrative expense for the three months ended March 31, 2022 (none in the prior year period). Unrecognized compensation cost related to restricted stock awards made by the Company was $5,328,194 at March 31, 2022. 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. During the three months ended March 31, 2021, the Company sold an additional 5,073,056 Units to existing members resulting in gross proceeds of $5,073,056 of which $100,000 was receivable at March 31, 2021. 10. Stockholders’ Equity (Continued) 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 8, 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. |
Loss Per Common Share
Loss Per Common Share | 3 Months Ended |
Mar. 31, 2022 | |
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 three months ended March 31, 2022 and 2021: March 31, March 31, 2022 2021 Net loss $ (2,577,964) $ (1,969,692) Basic weighted average common shares 13,877,636 7,601,859 Diluted weighted average common shares 13,877,636 7,601,859 Basic net loss per common share $ (0.19) $ (0.26) Diluted net loss per common share $ (0.19) $ (0.26) |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2022 | |
Income Taxes. | |
Income Taxes | 12. Income Taxes Income tax benefit was $92,774 and $0 for the three months ended March 31, 2022 and 2021, respectively, and was comprised primarily of a federal income tax benefit by applying the U.S. federal income tax rate of 21% to the loss before tax and adjusting for non-deductible expenses, tax credits generated, and utilization of net operating loss carryforwards. On November 23, 2021 in conjunction with the Public Offering, the Company incorporated in the State of Delaware. 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 prior to the Public Offering. The Company expects to be in a net deferred tax asset position in the year ending December 31, 2022, which will be offset by a valuation allowance. Accordingly, a tax benefit is being realized to the extent of the net deferred tax liability that existed at December 31, 2021 based upon the estimated effective tax rate for the year ending December 31, 2022. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2022 | |
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 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) | 3 Months Ended |
Mar. 31, 2022 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation These unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the SEC. Accordingly, U.S. |
Use of Estimates | Use of Estimates The preparation of the Company’s financial statements requires management to make estimates and assumptions that affect the |
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 |
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. At March 31, 2022 and December 31, 2021, 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 An allowance for uncollectible accounts receivable is recorded when management believes the collectability of the accounts receivable is confirmed. Subsequent recoveries, if any, are credited to the allowance. The allowance is determined based on management’s review of the debtor’s ability to repay and repayment history, aging history and estimated value of collateral, if any. |
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 |
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 three months ended March 31, 2022 related to grants of restricted stock units. |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Inventories | |
Schedule of Inventories | March 31, December 31, 2022 2021 Raw materials $ 505,903 $ 475,767 Finished goods 212,863 170,175 Total inventories $ 718,766 $ 645,942 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Property and Equipment | |
Schedule of Property and Equipment | Useful Life March 31, December 31, (Years) 2022 2021 Leasehold improvements Lesser of useful life or lease term $ 847,217 $ 847,217 Machinery and tooling 7 1,145,541 1,123,391 Furniture and equipment 3 - 10 238,390 232,466 2,231,148 2,203,074 Less accumulated depreciation 115,473 79,646 $ 2,115,675 $ 2,123,428 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Accrued Expenses and Other Current Liabilities | |
Schedule of Accrued Expenses and Other Current Liabilities | March 31, December 31, 2022 2021 Accrued wages and bonus $ 409,314 $ 408,418 Research and development 59,233 35,708 Legal fees 242,105 29,512 Other accrued liabilities 100,631 110,247 Total accrued expenses and other current liabilities $ 811,283 $ 583,885 |
Loss Per Common Share (Tables)
Loss Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Loss Per Common Share | |
Schedule of Basic and Diluted Net Loss Per Share | March 31, March 31, 2022 2021 Net loss $ (2,577,964) $ (1,969,692) Basic weighted average common shares 13,877,636 7,601,859 Diluted weighted average common shares 13,877,636 7,601,859 Basic net loss per common share $ (0.19) $ (0.26) Diluted net loss per common share $ (0.19) $ (0.26) |
Description of Business (Detail
Description of Business (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Description of Business | |||
Net loss | $ (2,577,964) | $ (1,969,692) | |
Working capital | 18,074,427 | ||
Accumulated deficit | (4,325,824) | $ (1,747,860) | |
Net cash used in operating activities | (1,827,477) | $ (1,722,012) | |
Revenues from contracts with customers | $ 623,244 |
Description of Business - Initi
Description of Business - Initial Public Offering (Details) - Initial public offering | Nov. 29, 2021USD ($) |
Subsidiary, Sale of Stock [Line Items] | |
Gross proceeds from initial public offering | $ 25,140,000 |
Offering costs | 3,500,000 |
Net proceeds from initial public offering | $ 21,640,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) | Nov. 23, 2021USD ($) | Mar. 31, 2022USD ($) |
Summary of Significant Accounting Policies | ||
Number of operating leases | 1 | |
Remaining lease term, warehouse facility | 10 years | |
Operating leases, remaining payments due | $ 2,610,000 | |
Provision for income taxes | $ 0 | |
Liability for uncertain tax positions | $ 0 |
Public Offering (Details)
Public Offering (Details) | Nov. 29, 2021USD ($)$ / sharesshares | Nov. 23, 2021shares | Mar. 31, 2022shares | Dec. 31, 2021shares |
Subsidiary, Sale of Stock [Line Items] | ||||
Common stock, shares authorized | 110,000,000 | 110,000,000 | ||
Preferred stock, shares authorized | 11,000,000 | 11,000,000 | ||
Initial public offering | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Number of shares issued | 2,514,000 | |||
Offering price per share | $ / shares | $ 10 | |||
Gross proceeds from initial public offering | $ | $ 25,140,000 | |||
Underwriting fees | $ | 2,200,000 | |||
Other underwriting fees payable | $ | 1,300,000 | |||
Net proceeds from initial public offering | $ | $ 21,640,000 | |||
Number of member units outstanding | 13,428,948 | |||
Number of common shares issued in conversion | 11,363,636 | |||
Member shares to common shares, 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] | ||||
Exercisable term | 5 years | |||
Percentage of common shares exercisable | 5.00% | |||
Common stock, shares exercisable | 125,700 | |||
Exercise price | $ / shares | $ 12.50 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Prepaid Expenses and Other Current Assets | ||
Prepaid expenses and other current assets | $ 823,028 | $ 1,124,998 |
Inventories (Details)
Inventories (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Inventories | ||
Raw materials | $ 505,903 | $ 475,767 |
Finished goods | 212,863 | 170,175 |
Total inventories | $ 718,766 | $ 645,942 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Property and Equipment, Net | |||
Property and equipment, gross | $ 2,231,148 | $ 2,203,074 | |
Less accumulated depreciation | 115,473 | 79,646 | |
Property and equipment, net | 2,115,675 | 2,123,428 | |
Depreciation | 35,827 | $ 0 | |
Leasehold improvements | |||
Property and Equipment, Net | |||
Property and equipment, gross | $ 847,217 | $ 847,217 | |
Machinery and tooling | |||
Property, Plant and Equipment [Line Items] | |||
Useful life (in years) | 7 years | 7 years | |
Property and Equipment, Net | |||
Property and equipment, gross | $ 1,145,541 | $ 1,123,391 | |
Furniture and equipment | |||
Property and Equipment, Net | |||
Property and equipment, gross | $ 238,390 | $ 232,466 | |
Furniture and equipment | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Useful life (in years) | 3 years | 3 years | |
Furniture and equipment | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Useful life (in years) | 10 years | 10 years |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Accrued Expenses and Other Current Liabilities | ||
Accrued wages and bonus | $ 409,314 | $ 408,418 |
Research and development | 59,233 | 35,708 |
Legal fees | 242,105 | 29,512 |
Other accrued liabilities | 100,631 | 110,247 |
Total accrued expenses and other current liabilities | $ 811,283 | $ 583,885 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Nov. 29, 2021shares | Feb. 01, 2021USD ($)ft² | Mar. 31, 2022USD ($) |
Lessee, Lease, Description [Line Items] | |||
Remaining lease term, warehouse facility | 10 years | ||
Operating leases, remaining payments due | $ 2,610,000 | ||
Contingency reserve, litigation liability | $ 0 | ||
Executives | |||
Lessee, Lease, Description [Line Items] | |||
Executive management severance period | 6 months | ||
Initial public offering | Executives | |||
Lessee, Lease, Description [Line Items] | |||
Restricted stock units granted to executives | shares | 443,269 | ||
Initial public offering | Independent contractors | |||
Lessee, Lease, Description [Line Items] | |||
Cash compensation, percentage | 50.00% | ||
Equity compensation, percentage | 50.00% | ||
Gardens Bio Science Partners, LLC | |||
Lessee, Lease, Description [Line Items] | |||
Area of premises leased | ft² | 20,000 | ||
Remaining lease term, warehouse facility | 10 years | ||
Annual base rent expense | $ 260,000 | ||
Percentage escalation, annual rent | 2.50% | ||
Operating leases, remaining payments due | $ 2,610,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Related Party Transactions | ||
Related party receivables | $ 5,625 | $ 63,290 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) | Apr. 01, 2021shares | Mar. 31, 2022USD ($) | Mar. 31, 2021USD ($)shares | Nov. 23, 2021Voteshares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation | $ | $ 670,838 | $ 0 | ||
Deferred stock-based compensation | $ | $ 5,328,194 | |||
Long-term incentive plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares reserved for long-term incentive plan | 1,802,273 | |||
Number of units authorized to issue | 274,314 | |||
Members' units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of units issued | 5,073,056 | |||
Gross proceeds from units issued | $ | $ 5,073,056 | |||
Proceeds receivable from units issued | $ | $ 100,000 | |||
Class A | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Member shares, number of votes per unit | Vote | 1 | |||
Board members | Long-term incentive plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of units issued | 134,229 | |||
Independent contractor | Long-term incentive plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of units issued | 140,085 | |||
Cash compensation, percentage | 50.00% | |||
Equity compensation, percentage | 50.00% |
Loss Per Common Share (Details)
Loss Per Common Share (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Loss Per Common Share | ||
Net loss | $ (2,577,964) | $ (1,969,692) |
Basic weighted average common shares | 13,877,636 | 7,601,859 |
Diluted weighted average common shares | 13,877,636 | 7,601,859 |
Basic net loss per common share | $ (0.19) | $ (0.26) |
Diluted net loss per common share | $ (0.19) | $ (0.26) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | Nov. 23, 2021 | Mar. 31, 2022 | Mar. 31, 2021 |
Income Taxes. | |||
Income tax benefit | $ 92,774 | $ 0 | |
Federal Income Tax Rate | 21.00% | ||
Provision for income taxes | $ 0 |