Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 09, 2023 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2023 | |
Entity File Number | 001-41096 | |
Entity Registrant Name | Molekule Group, 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, $0.01 Par Value | |
Trading Symbol | MKUL | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 34,654,459 | |
Entity Central Index Key | 0001872356 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash | $ 5,269,376 | $ 22,062,657 |
Restricted Cash | 629,742 | |
Accounts receivable | 2,210,700 | 36,188 |
Prepaid expenses and other current assets | 1,801,533 | 665,395 |
Inventories | 29,432,880 | 2,020,713 |
Total current assets | 39,344,231 | 24,784,953 |
Property and equipment, net | 8,626,031 | 2,119,134 |
Intangible assets, net | 45,301,689 | |
Goodwill | 21,031,064 | 626,647 |
Operating lease right-of-use assets | 10,952,143 | 1,606,485 |
Other assets | 184,854 | 21,667 |
Total assets | 125,440,012 | 29,158,886 |
Current liabilities: | ||
Accounts payable | 6,568,044 | 3,220,082 |
Accrued expenses and other current liabilities | 5,868,740 | 1,228,402 |
Current operating lease liability | 2,746,961 | 113,769 |
Notes payable, current portion | 2,112,710 | |
Total current liabilities | 17,296,455 | 4,562,253 |
Long-term liabilities: | ||
Warrant liability, at fair value | 23,634,000 | 3,372,000 |
Notes payable, net of current portion | 34,054,482 | |
Long-term operating lease liability | 8,245,493 | 1,521,431 |
Deferred tax liability | 1,504,526 | |
Total liabilities | 84,734,956 | 9,455,684 |
Stockholders' equity: | ||
Common stock, $0.01 par value per share; 110,000,000 shares authorized; 34,002,750 and 15,496,932 issued and outstanding as of June 30, 2023 and December 31, 2022, respectively | 340,465 | 154,969 |
Additional paid-in capital | 83,184,034 | 27,465,024 |
Accumulated deficit | (7,916,791) | |
Total stockholders' equity | 40,705,056 | |
Total liabilities and stockholders' equity | $ 125,440,012 | $ 29,158,886 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2023 | Dec. 31, 2022 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 110,000,000 | 110,000,000 |
Common stock, shares issued | 34,046,500 | 15,496,932 |
Common stock, shares outstanding | 34,046,500 | 15,408,828 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Product revenues | $ 13,242,959 | $ 70,918 | $ 21,592,380 | $ 77,652 |
Cost of sales | 8,763,888 | 36,126 | 13,438,147 | 39,890 |
Gross profit | 4,479,071 | 34,792 | 8,154,233 | 37,761 |
Operating expenses: | ||||
Selling, general and administrative | 15,005,356 | 4,105,066 | 28,666,969 | 6,247,290 |
Research and development | 1,174,846 | 579,061 | 1,422,625 | 1,110,544 |
Total operating expenses | 16,180,202 | 4,684,127 | 30,089,594 | 7,357,834 |
Loss from operations | (11,701,131) | (4,649,335) | (21,935,361) | (7,320,073) |
Change in fair value of warrant liability | (12,050,500) | (650,000) | (10,324,500) | (650,000) |
Interest expense | (1,443,009) | (2,691,686) | ||
Other expense | 132,242 | (44,257) | ||
Total other income | (1,310,767) | (2,735,943) | ||
Loss before income tax benefit | (25,062,398) | (5,299,335) | (34,995,804) | (7,970,073) |
Income tax benefit | $ 93,156 | (127,058) | $ 93,156 | (219,832) |
Net Loss | $ (5,172,277) | $ (7,750,241) | ||
Net Income (Loss) Per Common Share | ||||
Basic | $ (0.76) | $ (0.37) | $ (1.12) | $ (0.56) |
Diluted | $ (0.76) | $ (0.37) | $ (1.12) | $ (0.56) |
Weighted-average common shares outstanding: | ||||
Basic | 33,017,565 | 13,894,119 | 31,185,329 | 13,885,923 |
Diluted | 13,894,119 | 13,885,923 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS' STOCKHOLDERS' EQUITY - USD ($) | Common Stock | Accumulated Deficit | Additional Paid-in Capital | Total |
Beginning balance at Dec. 31, 2021 | $ 138,776 | $ (1,747,860) | $ 21,710,415 | |
Beginning balance (Shares) at Dec. 31, 2021 | 13,877,636 | 23,319,499 | ||
Issuance of common stock | $ 15,000 | 909,770 | ||
Issuance of common stock (Shares) | 1,531,192 | 894,770 | ||
Stock-based compensation | $ 1,379,378 | 1,379,378 | ||
Net loss | (7,750,241) | (7,750,241) | ||
Ending balance at Jun. 30, 2022 | $ 153,776 | (9,498,101) | $ 25,593,647 | 16,249,322 |
Ending balance (Shares) at Jun. 30, 2022 | 15,408,828 | 25,593,647 | ||
Beginning balance at Mar. 31, 2022 | $ 138,776 | (4,325,824) | $ 23,990,337 | 19,803,289 |
Beginning balance (Shares) at Mar. 31, 2022 | 13,877,636 | |||
Issuance of common stock | $ 15,000 | 894,770 | 909,770 | |
Issuance of common stock (Shares) | 1,531,192 | |||
Stock-based compensation | 708,540 | 708,540 | ||
Net loss | (5,172,277) | (5,172,277) | ||
Ending balance at Jun. 30, 2022 | $ 153,776 | (9,498,101) | $ 25,593,647 | 16,249,322 |
Ending balance (Shares) at Jun. 30, 2022 | 15,408,828 | 25,593,647 | ||
Beginning balance at Dec. 31, 2022 | $ 154,969 | (7,916,792) | ||
Beginning balance (Shares) at Dec. 31, 2022 | 15,496,932 | 27,465,024 | ||
Issuance of common stock and warrants | $ 34,000 | 34,000 | ||
Issuance of common stock and warrants (Shares) | 3,400,000 | |||
Acquisition of Molekule | $ 149,308 | 0 | $ 52,316,767 | 0 |
Acquisition of Molekule (Shares) | 14,930,818 | |||
Stock-based compensation | 0 | 3,404,431 | 3,404,431 | |
Transactions related to employee share-based compensation plan | $ 2,188 | (2,188) | ||
Transactions related to employee share-based compensation plan (Shares) | 218,750 | |||
Net loss | (34,902,650) | |||
Ending balance at Jun. 30, 2023 | $ 340,465 | (42,819,443) | $ 83,184,034 | 40,705,056 |
Ending balance (Shares) at Jun. 30, 2023 | 34,046,500 | 83,184,034 | ||
Beginning balance at Mar. 31, 2023 | $ 304,277 | (17,850,199) | $ 81,284,515 | 63,738,593 |
Beginning balance (Shares) at Mar. 31, 2023 | 30,427,750 | |||
Issuance of common stock and warrants | $ 34,000 | 34,000 | ||
Issuance of common stock and warrants (Shares) | 3,400,000 | |||
Stock-based compensation | 1,901,707 | 1,901,707 | ||
Transactions related to employee share-based compensation plan | $ 2,188 | (2,188) | ||
Transactions related to employee share-based compensation plan (Shares) | 218,750 | |||
Net loss | (24,969,244) | |||
Ending balance at Jun. 30, 2023 | $ 340,465 | $ (42,819,443) | $ 83,184,034 | $ 40,705,056 |
Ending balance (Shares) at Jun. 30, 2023 | 34,046,500 | 83,184,034 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ (7,750,241) | |
Adjustments to reconcile net loss to net cash flows used in operating activities | ||
Offering costs associated with warrant liability | 1,326,212 | |
Change in fair value of warrant liability | $ 10,324,500 | 650,000 |
Deferred tax benefit | (93,156) | (219,832) |
Depreciation and amortization | 1,082,488 | 72,047 |
Equity-based compensation | 3,404,431 | 1,379,378 |
Provision for doubtful accounts | 2,107 | |
Amortization of debt discounts | 188,088 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (1,798,424) | 149,009 |
Inventories | 3,669,072 | (358,755) |
Other current and non-current assets | 664,757 | 596,390 |
Accounts payable | (8,746,224) | (239,431) |
Accrued expenses and other liabilities | (1,136,152) | 82,517 |
Operating lease liabilities | 11,390 | |
Net cash flows used in operating activities | (27,329,771) | (4,312,706) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (1,196,104) | (154,065) |
Cash acquired in acquisition of Molekule Inc. | 2,988,096 | |
Net cash flows used in investing activities | 1,791,992 | (154,065) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of common stock and warrants | 9,971,500 | 15,000,000 |
Payment of debt issuance costs | (999,449) | |
Repayment of notes payable | (597,260) | |
Net cash flows provided by financing activities | 9,374,240 | 14,000,551 |
Net (decrease)/increase in cash | (16,163,539) | 9,533,780 |
Cash, beginning of period | 22,062,657 | 19,629,649 |
Cash, end of period | 5,899,118 | 29,163,429 |
Supplemental Disclosure of cash flow information: | ||
Cash paid for interest | 2,267,306 | |
Supplemental schedule of non-cash activities: | ||
Net assets acquired from Molekule Inc. | $ 52,466,073 | |
Offering costs in private placement | $ 422,000 |
Description of Business
Description of Business | 6 Months Ended |
Jun. 30, 2023 | |
Description of Business | |
Description of Business | 1. Description of Business Description of Business Molekule Group, Inc. (f/k/a AeroClean Technologies, Inc.) (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. On November 23, 2021, AeroClean Technologies, LLC incorporated in the state of Delaware as AeroClean Technologies, Inc. The Company is an interior space air purification technology company focused on the sale and distribution of its high-performance interior air sterilization and disinfection products for the eradication of coronavirus and other harmful airborne pathogens. The Company was established to develop technology-driven, medical-grade air purification solutions for hospitals and other healthcare settings. The company is headquartered in Palm Beach Gardens, Florida. On January 12, 2023, in connection with the acquisition of Molekule, Inc. (“Legacy Molekule”), the Company changed its name from AeroClean Technologies, Inc. to Molekule Group, Inc. (see Note 3). With the acquisition of Legacy Molekule, the Company is engaged in the manufacturing and selling of air purifiers and filters primarily in the United States, but also in Canada directly to consumers, through retail and distribution, and to commercial and enterprise customers. During 2020, Legacy Molekule began selling directly to distributors in Japan and South Korea. During 2021, Legacy Molekule also began selling directly to consumers in Europe. In 2022, sales continued to be primarily within the United States. Legacy Molekule incorporated in the state of Delaware in February 2015 as Transformair, Inc. and changed its name to Molekule, Inc. through an amendment to its articles of incorporation in June 2016. The accompanying condensed consolidated financial statements include the results of Legacy Molekule and its wholly owned subsidiary in the current period from the date of acquisition (January 12, 2023) and as of the most recent balance sheet date (June 30, 2023) and the results of GSI Germsweepusa Inc. (doing business as GSI Technology) (“GSI Technology”), which was acquired in 2022. Liquidity and Going Concern 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 $34,902,648 during the six months ended June 30, 2023 and its net cash used in operating activities was $27,329,771 for the six months ended June 30, 2023. In addition, the Company’s accumulated deficit was $42,819,441 at June 30, 2023. The Company’s recurring losses from operations, recurring cash used in operating activities, accumulated deficit, expected working capital needs to fund its combined operations and new debt obligations as a result of the acquisition of Molekule, Inc. in January 2023 (see Note 3), raise substantial doubt about its ability to continue as a going concern. The Company’s ability to fund its operations is dependent upon management’s plans, which include raising capital, managing costs and generating sufficient revenues to offset costs. There can be no assurances that the Company will be able to secure any such additional financing on acceptable terms and conditions, or at all. Accordingly, management has concluded there is substantial doubt as to the Company’s ability to continue as a going concern within one year after the date the financial statements were issued. Under its debt agreements (the Senior Term Loan and the Mezzanine Term Loan) with its lender, Silicon Valley Bank, now a division of First Citizens Bank (“SVB”), the Company is required to generate revenue of at least $50 million for the twelve months ended March 31, 2024. Non-compliance with this requirement may result in the debt maturity dates becoming accelerated. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2023 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation These unaudited condensed consolidated 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 U. S. Securities and Exchange Commission (the “SEC”) and include the Company’s wholly owned subsidiaries, GSI Technology, for the current period and Legacy Molekule since January 12, 2023. All significant intercompany accounts and transactions have been eliminated in consolidation. Accordingly, U.S. condensed consolidated Use of Estimates The preparation of the Company’s condensed consolidated 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 unaudited condensed consolidated financial statements include those related to the fair value of equity-based compensation, revenue recognition, the incremental borrowing rate for leases, the fair value of warrant liability, valuation in connection with business combination and the deferred tax valuation allowance. 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 include cash and highly liquid investments with maturities at the date of investment of not more than three months. The Company held no cash equivalents as of June 30, 2023 and 2022. Restricted Cash The Company had a restricted cash balance of $629,742 as of June 30, 2023 and nil as of December 31, 2022. The restricted cash balance constitutes collateral pursuant to the terms of an office lease. The restricted cash balance is held in a separate bank account. 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, allocates the transaction price to filters based upon their standalone sales price. The transaction price allocated to the device is estimated based on the residual method, as the devices do not have an established standalone sales price and are never sold without filters. All performance obligations are satisfied within one year; therefore, costs to obtain contracts are expensed as incurred. There is no financing component because the Company expects, at contract inception, the period between when the Company transfers product to the customer and when the customer pays for the product will be less than one year. Sales terms allow for the right of return, and the Company has recorded a related reserve based on historical, as well as post year-end, activity. Customers may, for any reason, return the product within 30 days for a full refund, excluding shipping charges. The Company establishes a liability for expected returns representing the amount of consideration the entity does not expect to be entitled to because it will be refunded to customers. The refund liability is remeasured at each reporting date to reflect changes in the estimate, with a corresponding adjustment to revenues. The Company satisfies the performance obligations and records revenues when transfer of control has passed to the customer based on the terms of sale. A customer is considered to have control once they are able to direct the use and receive substantially all of the benefits of the product. Sales taxes collected from customers are not recorded within revenues and are remitted to the taxing authorities periodically. Shipping and handling are recorded in revenues and cost of revenues on the Statements of Operations and are charged to customers at varying rates. The Company recognized revenue of $13,242,959 and $70,918 in the three months ended June 30, 2023 and 2022, respectively, and $21,592,380 and $77,652 for the six months ended June 30, 2023 and 2022, respectively. Warranty Cost The Company provides a three-year warranty on its Pūrgo device and a two year warranty for the Legacy Molekule devices, in each case, 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 a warranty accrual of $385,748 as of June 30, 2023 and nil as of December 31, 2022. Income Taxes Income taxes are accounted for under ACS 740 utilizing the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and operating loss and tax credit carry forwards are expected to be recovered, settled or utilized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets will not be realized. If such an event occurs, a valuation allowance is recorded. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained upon examination. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits as income tax expense. At June 30, 2023 and December 31, 2022, the company did not record any uncertain tax positions. 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. Stock-Based Compensation 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. Accounts Receivable Trade accounts receivable are stated net of an allowance for doubtful accounts. The Company performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current creditworthiness, as determined by review of their current credit information. The Company estimates 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. The Company also evaluates the need for a provision for estimated credit losses based upon historical experience and any specific customer collection issues that have been identified. Accounts are considered for write-off when they become past due and when it is determined that the probability of collection is remote. For more information on the adoption of Topic 326 Current Expected Credit Losses Inventories The Company values inventories at the lower of cost or net realizable value using the first-in, first-out or weighted average cost Fair Value of Financial Instruments 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 Valuations based on quoted prices for identical assets and liabilities in active markets. 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 that are 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 June 30, 2023 and December 31, 2022, the carrying amounts of the Company’s financial instruments, including cash and restricted 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. Financial Instruments – Derivatives Debt Issuance Costs Goodwill and Intangible Assets The Company has recorded intangible assets, and goodwill, in connection with business combinations. Estimated useful lives of amortizable intangible assets are determined by management based on an assessment of the period over which the asset is expected to contribute to future cash flows. In accordance with U.S. GAAP for goodwill and other indefinite-lived intangibles, the Company tests these assets for impairment annually and whenever events or circumstances make it more likely than not that impairment may have occurred. For the purposes of that assessment, the Company has determined to assign assets acquired in business combinations to a single reporting unit including all goodwill and indefinite-lived intangible assets acquired in business combinations. Business Acquisition Accounting The Company applies the acquisition method of accounting for acquisitions that meet the criteria of a business combination. The Company allocates the purchase price of its business acquisitions based on the fair value of identifiable tangible and intangible assets. The difference between the total purchase consideration and the sum of the fair values of acquired tangible and identifiable intangible assets less the fair value of the liabilities assumed is recorded as goodwill. Transaction costs are expensed as incurred in general and administrative expenses. Recent Accounting Pronouncements 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. 2016 13 2016 13 , 2023, not |
Business Combination
Business Combination | 6 Months Ended |
Jun. 30, 2023 | |
Business Combination | |
Business Combination | 3. Business Combination On January 12, 2023 At the effective date of the Molekule Merger, the outstanding shares of Legacy Molekule common stock, par value $0.0001, that were issued and outstanding immediately prior to the effective time of the Molekule Merger (the “Legacy Molekule Common Stock”) (including shares of Legacy Molekule Common Stock resulting from the conversion of Legacy Molekule’s eligible preferred stock, but excluding dissenting shares and shares held in treasury), were converted automatically into, and the holders of such shares of Legacy Molekule Common Stock were entitled to receive, by virtue of the Molekule Merger and upon the terms and subject to the conditions set forth in the merger agreement, 14,907,210 fully paid and nonassessable shares of the Company’s common stock, which resulted in the Legacy Molekule stockholders in the aggregate, after taking into account the 23,608 shares of Company Common Stock underlying In-the-Money Company Warrants (as defined in the merger agreement) and the grants of 500,380 RSUs by the Company to certain continuing Legacy Molekule employees that were deemed vested and outstanding as of immediately following the effective time of the Molekule Merger, holding 49.5% of the Outstanding Shares (as defined in the merger agreement). Immediately following the closing of the Molekule Merger, there were 30,427,750 shares of Company Common Stock outstanding, which does not include Company Common Stock that may be issued upon the vesting of RSUs. Based on the Company’s preliminary purchase price allocation, the excess of the purchase price over the fair value of the identifiable assets acquired approximated $66 million, of which $46 million was allocated to identifiable intangible assets consisting of customer relationships (approximately $3 million), Molekule’s trade name (approximately $27 million), and developed technology (approximately $16 million) and $20 million was allocated to goodwill. The Molekule Merger was accounted for under FASB ASC 805, Business Combinations (“ASC 805”). The results of operations for Legacy Molekule are included in the accompanying condensed consolidated statements of operations from the date of acquisition. The valuation of certain assets, principally intangible assets including goodwill and identified intangible assets related to the acquisition, inventory and property, plant and equipment, is not yet complete, and as such, the Company has not yet finalized its allocation of the purchase price for the acquisition. The following table summarizes the provisional amounts allocated to the estimated fair values of assets acquired and fair values of liabilities assumed in the Legacy Molekule acquisition in accordance with ASC 805: Legacy Molekule Cash and cash equivalents $ 2,988,100 Accounts receivable 378,195 Inventories 31,081,238 Prepaid and other current assets 1,138,784 Property, Plant and Equipment 6,402,425 Goodwill 20,404,413 Intangible assets, net 45,890,000 Right of Use Assets 10,479,883 Other long-term assets 220,779 Accounts payable (12,094,186) Accrued expenses (3,001,862) Accrued sales tax (516,530) Notes payable (36,576,443) Operating lease liabilities (10,480,088) Deferred tax liabilities (1,597,682) Other current and non-current liabilities (2,250,953) Total consideration $ 52,466,073 On a pro forma basis to give effect to the Molekule merger as if it occurred on January 1, 2022, revenues, net loss and loss per basic share for the six months ended June 30, 2023 and 2022 would have been as follows: June 30, 2023 June 30, 2022 Pro forma Pro forma Revenues $ 22,762,753 25,226,575 Net loss (36,498,858) (11,566,624) Loss per diluted share (1.17) (0.83) |
Financial Instruments Fair Valu
Financial Instruments Fair Value Measurements | 6 Months Ended |
Jun. 30, 2023 | |
Financial Instruments Fair Value Measurements | |
Financial Instruments Fair Value Measurements | 4. Financial Instruments Fair Value Measurements 2022 Private Placement Warrants The 2022 Warrant issued in connection with the 2022 Private Placement (as such terms are defined in Note 13) was accounted for as a liability and accordingly the warrant liability is re-measured at each balance sheet date until its exercise or expiration, and any change in fair value is recognized in the Company’s condensed consolidated statement of operations. 2023 Private Placement Warrants On May 3, 2023, the Company entered into the Securities Purchase Agreement (“SPA”) with a selling stockholder (the “Selling Stockholder”), pursuant to which the Company agreed to sell (i) 3,400,000 shares of common stock, (ii) 3,125,000 shares of common stock that are issuable upon the exercise of the Series A Warrant, (iii) 6,250,000 shares of common stock that are issuable upon the exercise of the Series B Warrant and (iv) 2,850,000 shares of common stock that are issuable upon the exercise of the Pre-Funded Warrant collectively the “2023 Warrants”), for an aggregate purchase price of approximately $9,971,500 (the “2023 Private Placement”) as such terms defined in Note 13. The SPA contains customary representations, warranties and agreements by the Company. The Company also agreed to reduce the exercise price of the 2022 Warrant owned by the Selling Stockholder from $11.00 to $2.00 per share of common stock. The Company utilizes a Black-Scholes option pricing model to estimate the fair value of the 2022 Warrant, which is considered a Level 3 fair value measurement. The Black-Scholes option-pricing model considers several variables and assumptions in estimating the fair value of financial instruments, including the per-share fair value of the underlying common stock, exercise price, expected term, risk-free interest rate, expected stock price volatility over the expected term, and expected annual dividend yield. Certain inputs utilized in the Company’s Black-Scholes pricing model may fluctuate in future periods based upon factors that are outside of the Company’s control. A significant change in one or more of these inputs used in the calculation of the fair value may cause a significant change to the fair value of the warrant liability, which could also result in material non-cash gain or loss being reported in the accompanying unaudited condensed consolidated statements of operations. The following table provides the significant inputs to the Black-Scholes pricing model for the fair value of the 2022 Warrant: At May 3, 2023 At May 5, 2023 At June 30, 2023 Stock price $ 1.57 $ 1.57 $ 2.34 Expiration term (in years) 4.39 4.39 4.24 Volatility 98.0 % 98.0 % 96.0 % Risk-free rate 3.50 % 3.50 % 4.3 % Dividend yield 0.0 % 0.0 % 0.0 % Fair Value per Warrant $ 0.61 $ 1.07 $ 1.71 The following table provides the significant inputs to the Black-Scholes pricing model for the fair value of the Series A Warrant: At May 5, 2023 At June 30, 2023 Stock price $ 1.57 $ 2.34 Expiration term (in years) 0.67 0.51 Volatility 85.0 % 99.0 % Risk-free rate 5.00 % 5.5 % Dividend yield 0.0 % 0.0 Fair Value per Warrant $ 0.43 $ 1.01 The following table provides the significant inputs to the Black-Scholes pricing model for the fair value of the Series B Warrant: At May 5, 2023 At June 30, 2023 Stock price $ 1.57 $ 2.34 Expiration term (in years) 5.00 4.85 Volatility 98.0 % 96.0 % Risk-free rate 3.40 % 4.2 % Dividend yield 0.0 % 0.0 % Fair Value per Warrant $ 1.14 $ 1.80 The following table provides the significant inputs to the Black-Scholes pricing model for the fair value of the Pre-Funded Warrant: At May 5, 2023 At June 30, 2023 Stock price $ 1.57 $ 2.34 Expiration term (in years) 5.00 4.85 Volatility 98.0 % 96.0 % Risk-free rate 3.40 % 4.2 % Dividend yield 0.0 % 0.0 % Fair Value per Warrant $ 1.56 $ 2.33 The private placement offering costs of $673,290 were allocated to the Warrants entirely and were immediately expensed and recorded as selling, general and administrative expense in the statement of operations for the quarter ended June 30, 2023. The 2023 Warrants issued in connection with the 2023 Private Placement are being accounted for as a liability and accordingly the warrant liability is re-measured at each balance sheet date until its exercise or expiration, and any change in fair value is recognized in the Company’s condensed consolidated statement of operations. A reconciliation of the 2022 Warrant liability and the 2023 Warrants liability for the three months ended June 30, 2023, as follows: 2022 Warrant 2023 Warrants Balance at March 31, 2023 $ 1,646,000 $ — Change in fair value on date of modification 691,000 — Initial fair value on date of issuance — 12,956,000 Change in fair value 223,000 8,118,000 Balance at June 30, 2023 $ 2,560,000 $ 21,074,000 A reconciliation of the 2022 Warrant liability and the 2023 Warrants liability for the six months ended June 30, 2023 as follows: 2022 Warrant 2023 Warrants Balance at December 31, 2023 $ 3,372,000 $ — Change in fair value on date of modification 691,000 — Initial fair value on date of issuance — 12,956,000 Change in fair value (1,503,000) 8,118,000 Balance at of June 30, 2023 $ 2,560,000 $ 21,074,000 The fair value of the 2023 Warrants and the 2022 Warrant aggregated was $23,634,000 at June 30, 2023 and the fair value of the 2022 Warrant was $3,372,000 at December 31, 2022, respectively. The Company recognized a loss in connection with the change in the fair value of warrant liabilities of $12,050,500 and $10,324,500 in the statements of operations for the three months and six months ended June 30, 2023, respectively. The fair value of the 2023 Warrants at the date of issuance was greater than the gross proceeds, resulting in $3,018,500 being recognized as an expense and par value of $34,000 being recognized for the 3,400,000 of shares of common stock issued. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 6 Months Ended |
Jun. 30, 2023 | |
Prepaid Expenses and Other Current Assets | |
Prepaid Expenses and Other Current Assets | 5. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets of $1,801,533 and $665,395 at June 30, 2023 and December 31, 2022, respectively, 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. |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2023 | |
Inventories | |
Inventories | 6. Inventories Inventories consisted of the following: June 30, December 31, 2023 2022 Raw materials $ 4,002,445 $ 712,752 Finished goods 15,096,071 1,307,961 Work in process 10,334,364 — Total inventories $ 29,432,880 $ 2,020,713 |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2023 | |
Property and Equipment | |
Property and Equipment | 7 . Property and Equipment Property and equipment consisted of the following: Useful Life June 30, December 31, (Years) 2023 2022 Leasehold improvements Lesser of useful life or lease term $ 2,748,934 $ 847,217 Machinery and tooling 5 - 7 3,780,221 1,270,652 Furniture and equipment 3 - 10 928,208 241,835 Software 2-3 1,390,514 — Construction in progress 651,857 — 9,499,734 2,359,704 Less: accumulated depreciation 873,703 240,570 $ 8,626,031 $ 2,119,134 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. Tooling is depreciated utilizing either the units-of-production method or a straight-line method over a life of 5-7 years depending on the type of tooling. As a result of the fair value adjustments made during the three months ended June 30, 2023 the Company made an adjustment to decrease depreciation expense for the six months ended June 30, 2023 resulting in a total of ($274,603) being recognized in the three months ended June 30, 2023 Depreciation expenses was $36,219 for the three months ended June 30, 2023 and 2022, respectively, and $633,133 and $72,047 for the six months ended June 30, 2003 and 2022, respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | 8. Goodwill and Intangible Assets Goodwill Goodwill was $21,031,064 as of June 30, 2023 compared to $626,647 as of December 31, 2022. Intangible Assets Identifiable intangible assets were $45,890,000 and amortization expense associated with identifiable intangible assets was $131,994 and $522,238 for the three and six months and ended June 30, 2023, respectively, and nil for 2022. The Company currently expects to recognize amortization expense related to intangible assets of approximately $1,260,666 in each of the next five fiscal years. The future amortization amounts are estimates. The following sets forth the intangible assets by major asset class as of June 30, 2023, all of which were acquired through business purchase transactions: Useful Life Original Accumulated Net Book (Years) Cost Amortization Value Trademark Indefinite 26,980,000 — 26,980,000 Internally-developed software 15 15,660,000 487,200 15,172,800 Customer Relationships 15 3,250,000 101,111 3,148,889 45,890,000 588,311 45,301,689 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 6 Months Ended |
Jun. 30, 2023 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | 9. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following: June 30, December 31, 2023 2022 Accrued wages and bonus $ 175,892 $ 514,169 Research and development 402,100 47,547 Professional and consulting fees 494,307 16,876 Warranty reserve 385,748 — Accrued legal fees 2,153,956 439,901 Other accrued liabilities 2,256,736 209,909 Total accrued expenses and other current liabilities $ 5,868,740 $ 1,228,402 |
Notes Payable and Revolving Lin
Notes Payable and Revolving Line of Credit | 6 Months Ended |
Jun. 30, 2023 | |
Notes Payable and Revolving Line of Credit | |
Notes Payable and Revolving Line of Credit | 10. Notes Payable Senior Term Loan thirty-six fifty-nine March 1, 2028 Mezzanine Term Loan March 1, 2028 Facility Term Loan In June 2020, Legacy Molekule entered into a Facility Term Debt Agreement (the “Facility Term Loan”) with Trinity Capital, Inc. (“Trinity”) in order to obtain financing related to funding the build out of the Company’s filter manufacturing plant. The Company became a co-borrower under this agreement upon the closing of the Molekule Merger. Legacy Molekule drew down $2.9 million in June 2020, $0.6 million in September 2020, $0.9 million in December 2020 and $0.5 million in August 2021. Principal and interest are paid monthly with the principal being repaid in equal monthly installments from the month after the amount was drawn until April 1, 2026, with the last two months’ payments having been made at the inception of each loan. At the end of the term, Trinity also requires the Company to pay down an additional 10% of the total term draw down amount, which results in an additional payment of $0.4 million in total for all the draws. This additional payment is being accreted to the total outstanding amount over the term of the Facility Term Loan and resulted in an incremental $0.3 million of long-term debt to Trinity as of June 30, 2023. As of June 30, 2023, the outstanding principal balance under the Facility Term Loan was $2.4 million. The Facility Term Loan contains customary representations and warranties, affirmative and negative covenants and events of default. Notes payable consisted of the following: June 30, December 31, 2023 2022 Senior term loan $ 4,860,367 $ — Facility term loan 2,202,167 — Mezzanine term loan 30,300,000 — 37,362,534 — Less: Unamortized debt issuance fees 1,195,342 — Less: current portion 2,112,710 — Total long-term notes payable $ 34,054,483 $ — |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 11. Commitments and Contingencies Lease Commitments – On February 1, 2021, the Company entered into a lease with Gardens Bio Science Partners, LLC, an entity controlled by the Company’s co-founder and Chairman of the Company’s Board of Directors (the “Board”). The leased premises consist of 20,000 square feet of office and warehouse space. The lease expires in February 2031. The annual base rent of $260,000 is subject to escalation of 2.5% on an annual basis. Rent expense under this lease was $118,549 and $244,602 for the three and six months ended June 30, 2023, respectively. As of June 30, 2023, the future minimum lease payments under this arrangement approximated $2,295,325 . In February 2019, Legacy Molekule entered into a lease agreement for office space in San Francisco, California. The leased premises consist of 38,000 square feet of office space. The lease expires in August 2026. The lease calls for monthly base rental payments of $209,231 commencing in the first month and fixed annual base rental increases of 3%. Rent expense is accounted for on a straight-line basis. Rent expense under this lease was $691,753 and $1,286,468 for the three and six months ended June 30, 2023, respectively. The lease expires in August 2026. Since June 2023, the lessor has been drawing under an existing letter of credit, which was put in place as security for payment of the monthly base rental payments. Amounts available under such letter of credit will be fully utilized by September, 2023 after which the Company will be required to pay its monthly base rental payments to the lessor. The Company is currently in discussions with the lessor to renegotiate the terms of the lease. There is no assurance that any such renegotiation will be successful. The Company leases office, warehouse and lab space under noncancelable leases with various expiration dates through 2026. Rent expense under these leases was $161,529 and $295,799 for the three and six months ended June 30, 2023, respectively. As of June 30, 2023, the future minimum lease payments under this arrangement approximated $10,817,986. Legal Proceedings From time to time, the Company is subject to legal proceedings in the normal course of operating its business. The outcome of litigation, regardless of the merits, is inherently uncertain. In August 2022, the Company received notice of a complaint filed in the U.S. District Court for the Southern District of New York (the “Court”) by Sterilumen, Inc. (“Sterilumen”), a wholly-owned subsidiary of Applied UV, Inc., in connection with the marketing and sale of the Company’s patented air purification products. In the complaint, the plaintiff alleged trademark infringement, violation of fair competition practices and damages to Sterilumen. On March 13, 2023, the Court dismissed Sterilumen’s claims with prejudice and ruled that the Company’s counterclaims remained extant. The Company subsequently agreed with Sterilumen that Sterilumen will not challenge the Court’s dismissal and will not bring any future claim against the Company alleging infringement from the use of SteriDuct or AeroClean and that the Company will file a notice to dismiss its counterclaims without prejudice. The Company did not establish a contingency reserve related to this matter. In November 2020, Legacy Molekule was named as the defendant in a class-action complaint in which the plaintiffs alleged that Legacy Molekule misrepresented the capabilities of its products. Legacy Molekule denied all allegations made by the plaintiffs. Without admitting any liability and solely for the purpose of eliminating the uncertainties and expenses of further protracted litigation, Legacy Molekule entered into a class-wide settlement of this matter, where the class was defined to include purchasers who bought Molekule devices from third-party retailers (e.g. Amazon, Best Buy). The settlement required dismissal of all remaining class-action claims against Legacy Molekule. The Court approved this settlement and entered judgment in the matter on January 25, 2022. The settlement is currently being administered with the cash settlement payment of $1,300,000 made in March 2022. The Company accrued a loss liability related to the matter of $1,400,000 as of June 30, 2023 and nil as of December 31, 2022. The Company enters into agreements with its customers, business partners and other parties in the ordinary course of business that include provisions for the indemnification, holding harmless and defense of indemnified parties of varying scope and terms with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of such agreements and out of third-party IP infringement claims. In these circumstances, payment by the Company may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract. In addition, the Company has indemnification agreements with its directors and executive officers. As of June 30, 2023, the Company had no other accrued liabilities related to other legal matters. Indemnities, Commitments and Guarantees fifty fifty Guaranteed Payment – one year five years Registration Rights Agreement – In connection with the Company’s initial public offering (the “Public Offering”) the Company entered into a registration rights agreement with the Chairman of its Board and each of its other stockholders that held 10% or more of its outstanding common stock immediately upon completion of the Public Offering. On January 12, 2023, this registration rights agreement was amended and restated in connection with the Molekule Merger by and among the Company and certain stockholders of AeroClean Technologies, Inc. and Legacy Molekule (the “Registration Rights Agreement”). The Registration Rights Agreement provides the stockholders party thereto with certain “demand” and customary “piggyback” registration rights. The Registration Rights Agreement provides that the Company will pay certain expenses relating to such registrations and indemnify the registration rights holders against certain liabilities that may arise under the Securities Act of 1933, as amended. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2023 | |
Related Party Transactions | |
Related Party Transactions | 12. Related Party Transactions On February 26, 2023, the Company entered into an Agreement and Plan of Merger with Aura Smart Air Ltd. (“Aura”), an Israeli company listed on the Tel Aviv Stock Exchange (see Note 16 for more information). In connection with the transaction, the Company also entered into a Technology Collaboration Agreement and a Co-Distribution Agreement. Under the Technology Collaboration Agreement the Company paid $250,000 to Aura for a perpetual license to Aura’s Background Intellectual Property and other Intellectual Property owned or controlled by Aura for use in, amongst other items, selling Molekule products and services. Additionally, the Company paid $68,182 under the Technology Collaboration Agreement, the monthly payment amount due to Aura, for services as part of the Company’s collaboration with Aura on the statement of work specified in the agreement. The objectives of the statement of work include onboarding Company devices onto the Aura platform, sending and receiving data to the platform and implementing various internet of things and other Aura technologies into the Company’s devices and software. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2023 | |
Stockholders' Equity | |
Stockholders' Equity | 13. Stockholders’ Equity Long-term Incentive Plan In conjunction with its IPO, on November 23, 2021, the Company adopted the Employee Stock Purchase Plan, the 2021 Incentive Award Plan (the “Long-Term Incentive Plan” or the “LTIP”) and the Non-Employee Directors Stock and Deferred Compensation Plan (collectively, the “Plans”) and has reserved 2,802,273 shares, collectively, for issuance or sale under the Plans. The Board approved an amendment to the LTIP to increase the shares authorized to be issued by 1,500,000, and the evergreen set forth in the LTIP resulted in an increase of 277,552 shares. The Company’s Compensation Committee has the authority under the LTIP 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 expenses were $1,502,724 and $708,540 for the three months ended June 30, 2023 and 2022, respectively, and $3,404,431 and $1,379,378 for the six months ended June 30, 2023 and 2022, respectively. During the three months ended June 30, 2023, the Company granted 500,000 restricted stock units to members of management and none to members of the Board under the LTIP. During the six months ended June 30, 2023, the Company granted 1,232,090 restricted stock units to members of management and 742,000 restricted stock units to members of the Board under the LTIP. The total number of restricted stock units issued at June 30, 2023 was 3,425,537. Unrecognized compensation expense related to restricted stock awards made by the Company was $10,957,851 at June 30, 2023. As of June 30, 2023, the Company had 2,530,859 shares available for issuance under the 2021 Plan. Number of RSUs Weighted Average Grant-Date Fair Value Balance at December 31, 2022 1,451,448 $ 5.67 Awarded Legacy AeroClean 1,974,090 $ 2.78 Awarded Molekule Merger 2,964,241 $ 3.40 Forfeited/Vested (901,764) $ 3.40 Balance at June 30, 2023 5,488,015 $ 3.73 Private Placements On June 29, 2022, the Company completed a private placement in connection with a securities purchase agreement dated June 26, 2022 (the “2022 Private Placement”). In the 2022 Private Placement, the Company received gross cash proceeds of $15,000,000 in connection with the issuance of (i) 1,500,000 shares of common stock and (ii) a warrant to purchase up to 1,500,000 shares of common stock, as amended (the “2022 Warrant”). The Warrant had an exercise price of $11.00 per share, which amount was adjusted to $2.00 per share in connection with the 2023 Private Placement (as defined, and further described below) and is exercisable until July 21, 2027. Net proceeds amounted to $13,578,551 after issuance costs of $1,421,449. As the 2022 Warrant was liability classified, the gross proceeds and issuance costs were allocated to the 2022 Warrant liability based on its fair value with the residual being allocated to the common stock, resulting in the allocation of gross proceeds of $13,995,000 and $1,005,000 to the 2022 Warrant liability and common stock, respectively, and issuance costs of $1,326,212 and $95,237 were charged to expense and additional paid in capital, respectively. In conjunction with the 2022 Private Placement, the Company entered into a registration rights agreement whereby the Company was required to register for resale and maintain the effectiveness of the registration statement that registers the resale of shares of common stock held by the selling stockholder and the shares of common stock issuable upon exercise of the 2022 Warrant. Pursuant to the registration rights agreement, the Company is liable for certain liquidated damages upon failure to comply with such registration rights. On January 27, 2023, the Company’s registration statement on Form S-3 relating to the resale of 3,000,000 shares of common stock by the selling stockholder listed in the prospectus (including 1,500,000 shares of common stock issued in the 2022 Private Placement and 1,500,000 shares of common stock issuable upon the exercise of the outstanding 2022 Warrant acquired in the 2022 Private Placement) was declared effective by the SEC. The Company will not receive any proceeds in connection with the sale of common stock by the selling stockholder but will receive the exercise price of the 2022 Warrant to the extent the 2022 Warrant is exercised by the selling stockholder. On May 3, 2023, the Company entered into a Securities Purchase Agreement with the Selling Stockholder, pursuant to which the Company agreed to sell (i) 3,400,000 Shares, (ii) 3,125,000 shares of common stock that are issuable upon the exercise of the Series A Warrant, (iii) 6,250,000 shares of common stock that are issuable upon the exercise of the Series B Warrant and (iv) 2,850,000 shares of common stock that are issuable upon the exercise of the Pre-Funded Warrant, for an aggregate purchase price of approximately $9,971,500 (the “ 2023 Private Placement”). The Securities Purchase Agreement contains customary representations, warranties and agreements by the Company. The closing of the 2023 Private Placement occurred on May 5, 2023. The Company also agreed to reduce the exercise price of the 2022 Warrant owned by the Selling Stockholder to $2.00 per share of common stock. The Series A Warrant has an exercise price of $1.60 per share of common stock, the Series B Warrant has an exercise price of $1.84 per share of common stock, and the Pre-Funded Warrant has an exercise price of $0.01 per share of common stock. The Series A Warrant, the Series B Warrant and the Pre-Funded Warrant are all exercisable as of June 30, 2023. The Series A Warrant will terminate on February 23, 2024. The Series B Warrant and the Pre-Funded Warrant will terminate on June 23, 2028. As of June 30, 2023, the Selling Stockholder beneficially owns approximately 9.9% of the outstanding shares of common stock of the Company. Each of the Series A Warrant, the Series B Warrant and the Pre-Funded Warrant, contain an ownership limitation providing that the Selling Stockholder may not exercise the Series A Warrant, the Series B Warrant or the Pre-Funded Warrant with respect to any shares of common stock that would result in the Selling Stockholder beneficially owning more than 4.99% of the outstanding shares of common stock. The Selling Stockholder may increase or decrease this limitation upon notice to us, but in no event will any such limitation exceed 9.99%. In connection with the 2023 Private Placement, the Company entered into a Registration Rights Agreement with the Selling Stockholder. Pursuant to the Registration Rights Agreement, the Company was required to file and maintain a resale registration statement with the SEC in order to register the shares sold to the Selling Stockholder and the shares underlying the Warrants. The Company will be obligated to pay certain liquidated damages to the Selling Stockholder if it fails to maintain the effectiveness of the registration statement pursuant to the terms of the Registration Rights Agreement. In accordance with the requirements of the Registration Rights Agreement, the Company filed a resale registration statement on Form S-3 covering the shares acquired by the Selling Shareholder and the shares issuable upon the conversion of the Series A Warrant, the Series B Warrant and the Pre-Funded Warrant. The Form S-3 was declared effective by the SEC on June 26, 2023. |
Net Income (Loss) Per Common Sh
Net Income (Loss) Per Common Share | 6 Months Ended |
Jun. 30, 2023 | |
Net Income (Loss) Per Common Share | |
Net Income (Loss) Per Common Share | 14. Net Income (Loss) Per Common Share Basic net income (loss) per common share is computed using the weighted average common shares outstanding during the period. Diluted net income (loss) per common share reflects the potential dilution from the assumed conversion of all dilutive securities such as unvested restricted stock units, the purchase option issued to the underwriters in the Public Offering (the “Underwriter Option”) and the 2022 Warrant using the treasury stock method. When the effects of the outstanding unvested restricted stock units, the Underwriter Option and the 2022 Warrant 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 common share for the three months ended June 30, 2023 and 2022: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net loss $ (24,969,242) $ (5,172,277) $ (34,902,648) $ (7,750,241) Basic and diluted weighted average common shares 33,017,565 13,894,119 31,185,329 13,885,923 Basic and diluted net loss per common share $ (0.76) $ (0.37) $ (1.12) $ (0.56) The following outstanding common stock equivalents were excluded from the computation of diluted net loss per share for the periods presented because including them would have been anti-dilutive: Six Months Ended June 30, 2023 2022 Outstanding Warrants 13,725,000 1,500,000 Restricted stock units 5,488,015 626,268 Total 19,213,015 2,126,268 |
Aura Smart Air Merger Agreement
Aura Smart Air Merger Agreement | 6 Months Ended |
Jun. 30, 2023 | |
Aura Smart Air Merger Agreement | |
Aura Smart Air Merger Agreement | 16. Aura Smart Air Merger Agreement |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation These unaudited condensed consolidated 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 U. S. Securities and Exchange Commission (the “SEC”) and include the Company’s wholly owned subsidiaries, GSI Technology, for the current period and Legacy Molekule since January 12, 2023. All significant intercompany accounts and transactions have been eliminated in consolidation. Accordingly, U.S. condensed consolidated |
Use of Estimates | Use of Estimates The preparation of the Company’s condensed consolidated 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 unaudited condensed consolidated financial statements include those related to the fair value of equity-based compensation, revenue recognition, the incremental borrowing rate for leases, the fair value of warrant liability, valuation in connection with business combination and the deferred tax valuation allowance. 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 Cash and cash equivalents include cash and highly liquid investments with maturities at the date of investment of not more than three months. The Company held no cash equivalents as of June 30, 2023 and 2022. |
Restricted Cash | Restricted Cash The Company had a restricted cash balance of $629,742 as of June 30, 2023 and nil as of December 31, 2022. The restricted cash balance constitutes collateral pursuant to the terms of an office lease. The restricted cash balance is held in a separate bank account. |
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, allocates the transaction price to filters based upon their standalone sales price. The transaction price allocated to the device is estimated based on the residual method, as the devices do not have an established standalone sales price and are never sold without filters. All performance obligations are satisfied within one year; therefore, costs to obtain contracts are expensed as incurred. There is no financing component because the Company expects, at contract inception, the period between when the Company transfers product to the customer and when the customer pays for the product will be less than one year. Sales terms allow for the right of return, and the Company has recorded a related reserve based on historical, as well as post year-end, activity. Customers may, for any reason, return the product within 30 days for a full refund, excluding shipping charges. The Company establishes a liability for expected returns representing the amount of consideration the entity does not expect to be entitled to because it will be refunded to customers. The refund liability is remeasured at each reporting date to reflect changes in the estimate, with a corresponding adjustment to revenues. The Company satisfies the performance obligations and records revenues when transfer of control has passed to the customer based on the terms of sale. A customer is considered to have control once they are able to direct the use and receive substantially all of the benefits of the product. Sales taxes collected from customers are not recorded within revenues and are remitted to the taxing authorities periodically. Shipping and handling are recorded in revenues and cost of revenues on the Statements of Operations and are charged to customers at varying rates. The Company recognized revenue of $13,242,959 and $70,918 in the three months ended June 30, 2023 and 2022, respectively, and $21,592,380 and $77,652 for the six months ended June 30, 2023 and 2022, respectively. |
Warranty Costs | Warranty Cost The Company provides a three-year warranty on its Pūrgo device and a two year warranty for the Legacy Molekule devices, in each case, 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 a warranty accrual of $385,748 as of June 30, 2023 and nil as of December 31, 2022. |
Income Taxes | Income Taxes Income taxes are accounted for under ACS 740 utilizing the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and operating loss and tax credit carry forwards are expected to be recovered, settled or utilized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets will not be realized. If such an event occurs, a valuation allowance is recorded. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained upon examination. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits as income tax expense. At June 30, 2023 and December 31, 2022, the company did not record any uncertain tax positions. |
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. |
Stock-Based Compensation | Stock-Based Compensation 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. |
Accounts Receivable | Accounts Receivable Trade accounts receivable are stated net of an allowance for doubtful accounts. The Company performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current creditworthiness, as determined by review of their current credit information. The Company estimates 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. The Company also evaluates the need for a provision for estimated credit losses based upon historical experience and any specific customer collection issues that have been identified. Accounts are considered for write-off when they become past due and when it is determined that the probability of collection is remote. For more information on the adoption of Topic 326 Current Expected Credit Losses |
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 |
Fair Value of Financial Instruments | Fair Value of Financial Instruments 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 Valuations based on quoted prices for identical assets and liabilities in active markets. 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 that are 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 June 30, 2023 and December 31, 2022, the carrying amounts of the Company’s financial instruments, including cash and restricted 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. |
Financial Instruments - Derivatives | Financial Instruments – Derivatives |
Debt Issuance Costs | Debt Issuance Costs |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The Company has recorded intangible assets, and goodwill, in connection with business combinations. Estimated useful lives of amortizable intangible assets are determined by management based on an assessment of the period over which the asset is expected to contribute to future cash flows. In accordance with U.S. GAAP for goodwill and other indefinite-lived intangibles, the Company tests these assets for impairment annually and whenever events or circumstances make it more likely than not that impairment may have occurred. For the purposes of that assessment, the Company has determined to assign assets acquired in business combinations to a single reporting unit including all goodwill and indefinite-lived intangible assets acquired in business combinations. |
Business Acquisition Accounting | Business Acquisition Accounting The Company applies the acquisition method of accounting for acquisitions that meet the criteria of a business combination. The Company allocates the purchase price of its business acquisitions based on the fair value of identifiable tangible and intangible assets. The difference between the total purchase consideration and the sum of the fair values of acquired tangible and identifiable intangible assets less the fair value of the liabilities assumed is recorded as goodwill. Transaction costs are expensed as incurred in general and administrative expenses. |
Recent Accounting Pronouncements | 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. 2016 13 2016 13 , 2023, not |
Business Combination (Tables)
Business Combination (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Business Combination | |
Schedule of Fair Values of Assets Acquired and Liabilities Assumed in the Legacy Molekule Acquisition | The following table summarizes the provisional amounts allocated to the estimated fair values of assets acquired and fair values of liabilities assumed in the Legacy Molekule acquisition in accordance with ASC 805: Legacy Molekule Cash and cash equivalents $ 2,988,100 Accounts receivable 378,195 Inventories 31,081,238 Prepaid and other current assets 1,138,784 Property, Plant and Equipment 6,402,425 Goodwill 20,404,413 Intangible assets, net 45,890,000 Right of Use Assets 10,479,883 Other long-term assets 220,779 Accounts payable (12,094,186) Accrued expenses (3,001,862) Accrued sales tax (516,530) Notes payable (36,576,443) Operating lease liabilities (10,480,088) Deferred tax liabilities (1,597,682) Other current and non-current liabilities (2,250,953) Total consideration $ 52,466,073 |
Schedule of Pro Forma Information in Acquisition of Molekule Inc. | On a pro forma basis to give effect to the Molekule merger as if it occurred on January 1, 2022, revenues, net loss and loss per basic share for the six months ended June 30, 2023 and 2022 would have been as follows: June 30, 2023 June 30, 2022 Pro forma Pro forma Revenues $ 22,762,753 25,226,575 Net loss (36,498,858) (11,566,624) Loss per diluted share (1.17) (0.83) |
Financial Instruments Fair Va_2
Financial Instruments Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Financial Instruments Fair Value Measurements | |
Schedule of fair value of warrants estimated using Black-Scholes pricing model, assumptions | The following table provides the significant inputs to the Black-Scholes pricing model for the fair value of the 2022 Warrant: At May 3, 2023 At May 5, 2023 At June 30, 2023 Stock price $ 1.57 $ 1.57 $ 2.34 Expiration term (in years) 4.39 4.39 4.24 Volatility 98.0 % 98.0 % 96.0 % Risk-free rate 3.50 % 3.50 % 4.3 % Dividend yield 0.0 % 0.0 % 0.0 % Fair Value per Warrant $ 0.61 $ 1.07 $ 1.71 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Inventories | |
Schedule of Inventories | Inventories consisted of the following: June 30, December 31, 2023 2022 Raw materials $ 4,002,445 $ 712,752 Finished goods 15,096,071 1,307,961 Work in process 10,334,364 — Total inventories $ 29,432,880 $ 2,020,713 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Property and Equipment | |
Schedule of Property and Equipment | Property and equipment consisted of the following: Useful Life June 30, December 31, (Years) 2023 2022 Leasehold improvements Lesser of useful life or lease term $ 2,748,934 $ 847,217 Machinery and tooling 5 - 7 3,780,221 1,270,652 Furniture and equipment 3 - 10 928,208 241,835 Software 2-3 1,390,514 — Construction in progress 651,857 — 9,499,734 2,359,704 Less: accumulated depreciation 873,703 240,570 $ 8,626,031 $ 2,119,134 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets | |
Schedule of Intangible Assets by Major Asset Class Acquired Via Business Acquisition | The following sets forth the intangible assets by major asset class as of June 30, 2023, all of which were acquired through business purchase transactions: Useful Life Original Accumulated Net Book (Years) Cost Amortization Value Trademark Indefinite 26,980,000 — 26,980,000 Internally-developed software 15 15,660,000 487,200 15,172,800 Customer Relationships 15 3,250,000 101,111 3,148,889 45,890,000 588,311 45,301,689 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Accrued Expenses and Other Current Liabilities | |
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consisted of the following: June 30, December 31, 2023 2022 Accrued wages and bonus $ 175,892 $ 514,169 Research and development 402,100 47,547 Professional and consulting fees 494,307 16,876 Warranty reserve 385,748 — Accrued legal fees 2,153,956 439,901 Other accrued liabilities 2,256,736 209,909 Total accrued expenses and other current liabilities $ 5,868,740 $ 1,228,402 |
Notes Payable and Revolving L_2
Notes Payable and Revolving Line of Credit (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Notes Payable and Revolving Line of Credit | |
Schedule of Notes Payable and Revolving Line of Credit | Notes payable consisted of the following: June 30, December 31, 2023 2022 Senior term loan $ 4,860,367 $ — Facility term loan 2,202,167 — Mezzanine term loan 30,300,000 — 37,362,534 — Less: Unamortized debt issuance fees 1,195,342 — Less: current portion 2,112,710 — Total long-term notes payable $ 34,054,483 $ — |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Stockholders' Equity | |
Schedule of Restricted Stock Unit Activity | Unrecognized compensation expense related to restricted stock awards made by the Company was $10,957,851 at June 30, 2023. As of June 30, 2023, the Company had 2,530,859 shares available for issuance under the 2021 Plan. Number of RSUs Weighted Average Grant-Date Fair Value Balance at December 31, 2022 1,451,448 $ 5.67 Awarded Legacy AeroClean 1,974,090 $ 2.78 Awarded Molekule Merger 2,964,241 $ 3.40 Forfeited/Vested (901,764) $ 3.40 Balance at June 30, 2023 5,488,015 $ 3.73 |
Net Income (Loss) Per Common _2
Net Income (Loss) Per Common Share (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Net Income (Loss) Per Common Share | |
Schedule of Basic and Diluted Net Loss Per Share | The following table sets forth the computation of basic and diluted net loss per common share for the three months ended June 30, 2023 and 2022: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net loss $ (24,969,242) $ (5,172,277) $ (34,902,648) $ (7,750,241) Basic and diluted weighted average common shares 33,017,565 13,894,119 31,185,329 13,885,923 Basic and diluted net loss per common share $ (0.76) $ (0.37) $ (1.12) $ (0.56) |
Schedule of Anti-Dilutive Shares Excluded From EPS | The following outstanding common stock equivalents were excluded from the computation of diluted net loss per share for the periods presented because including them would have been anti-dilutive: Six Months Ended June 30, 2023 2022 Outstanding Warrants 13,725,000 1,500,000 Restricted stock units 5,488,015 626,268 Total 19,213,015 2,126,268 |
Description of Business (Detail
Description of Business (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Net income (loss) | $ (5,172,277) | $ (7,750,241) | ||
Accumulated deficit | $ (7,916,791) | |||
Net cash used in operating activities | $ (27,329,771) | $ (4,312,706) | ||
Revenue covenant 12 months ended March 2024 | ||||
Disaggregation of Revenue [Line Items] | ||||
Annual revenue target | $ 50,000,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Restricted Cash | $ 629,742 | $ 629,742 | ||
Product revenues | $ 13,242,959 | $ 70,918 | $ 21,592,380 | $ 77,652 |
Product warranty accrual | $ 385,748 | $ 385,748 | ||
Purgo air purification devices | ||||
Product warranty term | 30 days | 30 days |
Business Combination (Details)
Business Combination (Details) - USD ($) | Jan. 12, 2023 | Jun. 30, 2023 | Dec. 31, 2022 |
Business Acquisition [Line Items] | |||
Goodwill | $ 21,031,064 | $ 626,647 | |
Common stock, par value | $ 0.01 | $ 0.01 | |
Common stock, shares outstanding | 34,046,500 | 15,408,828 | |
Acquisition of Molekule | AeroClean Technologies, Inc. | |||
Business Acquisition [Line Items] | |||
Net assets acquired | $ 66,000,000 | ||
Identifiable intangible assets acquired | 46,000,000 | ||
Goodwill | $ 20,000,000 | ||
Effective date of acquisition | Jan. 12, 2023 | ||
Acquisition of Molekule | AeroClean Technologies, Inc. | Trademark | |||
Business Acquisition [Line Items] | |||
Identifiable intangible assets acquired | $ 27,000,000 | ||
Acquisition of Molekule | AeroClean Technologies, Inc. | Software | |||
Business Acquisition [Line Items] | |||
Identifiable intangible assets acquired | 16,000,000 | ||
Acquisition of Molekule | AeroClean Technologies, Inc. | Customer Relationships | |||
Business Acquisition [Line Items] | |||
Identifiable intangible assets acquired | $ 3,000,000 | ||
Acquisition of Molekule | AeroClean Technologies, Inc. | Common Stock | |||
Business Acquisition [Line Items] | |||
Common stock, par value | $ 0.0001 | ||
Equity ownership in outstanding shares | 49.50% | ||
Common stock, shares outstanding | 30,427,750 | ||
Acquisition of Molekule | AeroClean Technologies, Inc. | Non-Assessable Common Stock | |||
Business Acquisition [Line Items] | |||
Shares issued at effective time of acquisition | 14,907,210 | ||
Restricted stock units, granted | 500,380 |
Business Combination - Fair Val
Business Combination - Fair Value of Acquired Assets and Liabilities (Details) - Acquisition of Molekule | Jan. 12, 2023 USD ($) |
Business Acquisition [Line Items] | |
Cash and cash equivalents | $ 2,988,100 |
Accounts receivable | 378,195 |
Inventories | 31,081,238 |
Prepaid and other current assets | 1,138,784 |
Property, Plant and Equipment | 6,402,425 |
Goodwill | 20,404,413 |
Intangible assets, net | 45,890,000 |
Right of Use Asset | 10,479,883 |
Other long-term assets | 220,779 |
Accounts payable | (12,094,186) |
Accrued expenses | (3,001,862) |
Accrued sales tax | (516,530) |
Notes payable | (36,576,443) |
Operating lease liabilities | (10,480,088) |
Deferred tax liabilities | (1,597,682) |
Other current and non-current liabilities | (2,250,953) |
Total consideration | $ 52,466,073 |
Business Combination - Pro-form
Business Combination - Pro-forma Share of Revenues (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Business Acquisition [Line Items] | ||||
Revenues | $ 13,242,959 | $ 70,918 | $ 21,592,380 | $ 77,652 |
Net loss | $ (5,172,277) | $ (7,750,241) | ||
Loss per diluted share | $ (0.76) | $ (0.37) | $ (1.12) | $ (0.56) |
Acquisition of Molekule | ||||
Business Acquisition [Line Items] | ||||
Revenues | $ 22,762,753 | $ 25,226,575 | ||
Net loss | $ (36,498,858) | $ (11,566,624) | ||
Loss per diluted share | $ (1.17) | $ (0.83) |
Financial Instruments Fair Va_3
Financial Instruments Fair Value Measurements (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
May 03, 2023 | Jun. 29, 2022 | Jun. 30, 2023 | Jun. 30, 2023 | May 05, 2023 | Dec. 31, 2022 | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||||
Warrant liability, at fair value | $ 23,634,000 | $ 23,634,000 | $ 3,372,000 | |||
Gain on FV change in warrant liability | (12,050,500) | $ (10,324,500) | ||||
Private placement offering costs | $ 673,290 | |||||
Common stock, par value | $ 0.01 | $ 0.01 | $ 0.01 | |||
Common stock, shares outstanding | 34,046,500 | 34,046,500 | 15,408,828 | |||
2022 Private Placement | ||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||||
Gross proceeds from private placement | $ 15,000,000 | |||||
2023 Private Placement | ||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||||
Adjusted exercise price of warrants | $ 2 | |||||
Securities Purchase Agreement Private Placement | ||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||||
Number of common stock shares issued | 3,400,000 | |||||
Gross proceeds from private placement | $ 9,971,500 | |||||
Securities Purchase Agreement, Series A Warrants | ||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||||
Number of common stock shares issued | 3,125,000 | |||||
Securities Purchase Agreement, Series B Warrants | ||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||||
Number of common stock shares issued | 6,250,000 | |||||
Securities Purchase Agreement, Pre-Funded Warrants | ||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||||
Number of common stock shares issued | 2,850,000 | |||||
2022 Warrants | ||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||||
Warrant liability, at fair value | $ 3,372,000 | |||||
2022 Warrants | Securities Purchase Agreement Private Placement | ||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||||
Exercise price of warrants | $ 11 | |||||
Exercise price of warrants after reductions | $ 2 | |||||
Series A Warrants | Securities Purchase Agreement Private Placement | ||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||||
Number of common stock shares issued | 3,125,000 | |||||
Series B Warrants | Securities Purchase Agreement Private Placement | ||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||||
Number of common stock shares issued | 6,250,000 | |||||
Pre-Funded Warrants | Securities Purchase Agreement Private Placement | ||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||||
Number of common stock shares issued | 2,850,000 | |||||
2023 Warrants | ||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||||
Warrant liability, at fair value | $ 23,634,000 | $ 23,634,000 | ||||
Number of warrants issued | 3,400,000 | 3,400,000 | ||||
Expense, warrants fair value in excess of gross proceeds | $ 3,018,500 | |||||
Value of warrants at par value | $ 34,000 | |||||
Stock price | 2022 Warrants | ||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||||
Exercise price of warrants | $ 1.57 | $ 2.34 | $ 2.34 | 1.57 | ||
Stock price | Series A Warrants | ||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||||
Exercise price of warrants | 2.34 | 2.34 | 1.57 | |||
Stock price | Series B Warrants | ||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||||
Exercise price of warrants | 2.34 | 2.34 | 1.57 | |||
Stock price | Pre-Funded Warrants | ||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||||
Exercise price of warrants | $ 2.34 | $ 2.34 | $ 1.57 |
Financial Instruments Fair Va_4
Financial Instruments Fair Value Measurements - Black-Scholes Measurement Inputs (Details) | 6 Months Ended | ||
May 05, 2023 $ / shares | May 03, 2023 $ / shares | Jun. 30, 2023 $ / shares | |
Stock price | 2022 Warrants | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value warrants measurement input (price per share) | $ 1.57 | $ 1.57 | $ 2.34 |
Stock price | Series A Warrants | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value warrants measurement input (price per share) | 1.57 | 2.34 | |
Stock price | Series B Warrants | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value warrants measurement input (price per share) | 1.57 | 2.34 | |
Stock price | Pre-Funded Warrants | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value warrants measurement input (price per share) | $ 1.57 | $ 2.34 | |
Expiration term (in years) | 2022 Warrants | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value warrants measurement input (expiration term) | 4 years 4 months 20 days | 4 years 4 months 20 days | 4 years 2 months 26 days |
Expiration term (in years) | Series A Warrants | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value warrants measurement input (expiration term) | 8 months 1 day | 6 months 3 days | |
Expiration term (in years) | Series B Warrants | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value warrants measurement input (expiration term) | 5 years | 4 years 10 months 6 days | |
Expiration term (in years) | Pre-Funded Warrants | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value warrants measurement input (expiration term) | 5 years | 4 years 10 months 6 days | |
Volatility | 2022 Warrants | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value warrants measurement input (percentage) | 98 | 98 | 96 |
Volatility | Series A Warrants | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value warrants measurement input (percentage) | 85 | 99 | |
Volatility | Series B Warrants | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value warrants measurement input (percentage) | 98 | 96 | |
Volatility | Pre-Funded Warrants | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value warrants measurement input (percentage) | 98 | 96 | |
Risk-free Rate | 2022 Warrants | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value warrants measurement input (percentage) | 3.50 | 3.50 | 4.3 |
Risk-free Rate | Series A Warrants | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value warrants measurement input (percentage) | 5 | 5.5 | |
Risk-free Rate | Series B Warrants | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value warrants measurement input (percentage) | 3.40 | 4.2 | |
Risk-free Rate | Pre-Funded Warrants | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value warrants measurement input (percentage) | 3.40 | 4.2 | |
Dividend yield | 2022 Warrants | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value warrants measurement input (percentage) | 0 | 0 | 0 |
Dividend yield | Series A Warrants | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value warrants measurement input (percentage) | 0 | 0 | |
Dividend yield | Series B Warrants | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value warrants measurement input (percentage) | 0 | 0 | |
Dividend yield | Pre-Funded Warrants | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value warrants measurement input (percentage) | 0 | 0 | |
Fair Value per Warrant | 2022 Warrants | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value warrants measurement input (price per share) | $ 1.07 | $ 0.61 | $ 1.71 |
Fair Value per Warrant | Series A Warrants | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value warrants measurement input (price per share) | 0.43 | 1.01 | |
Fair Value per Warrant | Series B Warrants | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value warrants measurement input (price per share) | 1.14 | 1.80 | |
Fair Value per Warrant | Pre-Funded Warrants | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value warrants measurement input (price per share) | $ 1.56 | $ 2.33 |
Financial Instruments Fair Va_5
Financial Instruments Fair Value Measurements - Reconciliation of Warrant Liability (Details) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2023 USD ($) | Jun. 30, 2023 USD ($) | |
2022 Warrants | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants at fair value, opening balance | $ 1,646,000 | $ 3,372,000 |
Warrants, change in fair value | 691,000 | 691,000 |
Warrants, change in fair value | 223,000 | (1,503,000) |
Warrants at fair value, closing balance | 2,560,000 | 2,560,000 |
2023 Warrants | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants, initial fair value on date of issuance | 12,956,000 | 12,956,000 |
Warrants, change in fair value | 8,118,000 | 8,118,000 |
Warrants at fair value, closing balance | $ 21,074,000 | $ 21,074,000 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Prepaid Expenses and Other Current Assets | ||
Prepaid expenses and other current assets | $ 1,801,533 | $ 665,395 |
Inventories (Details)
Inventories (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Inventories | ||
Raw materials | $ 4,002,445 | $ 712,752 |
Finished goods | 15,096,071 | 1,307,961 |
Work in progress | 10,334,364 | |
Total inventories | $ 29,432,880 | $ 2,020,713 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 6 Months Ended | 15 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Dec. 31, 2022 | |
Property and Equipment, Net | ||||
Property and equipment, gross | $ 9,499,734 | $ 9,499,734 | $ 2,359,704 | |
Less accumulated depreciation | 873,703 | 873,703 | 240,570 | |
Construction in progress | 651,857 | 651,857 | ||
Property and equipment, net | 8,626,031 | 8,626,031 | 2,119,134 | |
Depreciation | 633,133 | $ 72,047 | 36,219 | |
Adjustment in depreciation expense | (274,603) | |||
Leasehold improvements | ||||
Property and Equipment, Net | ||||
Property and equipment, gross | 2,748,934 | 2,748,934 | 847,217 | |
Machinery and tooling | ||||
Property and Equipment, Net | ||||
Property and equipment, gross | $ 3,780,221 | $ 3,780,221 | 1,270,652 | |
Machinery and tooling | Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Useful life (in years) | 5 years | 5 years | ||
Machinery and tooling | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Useful life (in years) | 7 years | 7 years | ||
Furniture and equipment | ||||
Property and Equipment, Net | ||||
Property and equipment, gross | $ 928,208 | $ 928,208 | $ 241,835 | |
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 | ||
Software | ||||
Property and Equipment, Net | ||||
Property and equipment, gross | $ 1,390,514 | $ 1,390,514 | ||
Software | Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Useful life (in years) | 2 years | 2 years | 2 years | |
Software | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Useful life (in years) | 3 years | 3 years | 3 years |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2023 | Dec. 31, 2022 | |
Indefinite-Lived Intangible Assets [Line Items] | |||
Goodwill | $ 21,031,064 | $ 21,031,064 | $ 626,647 |
Identifiable intangible assets | 45,890,000 | 45,890,000 | |
Intangible assets, amortization expense | $ 0 | ||
Amortization expense, intangible assets | 131,994 | 522,238 | |
Intangible assets, expected future amortization expense | 1,260,666 | 1,260,666 | |
Intangible assets, original cost | 45,890,000 | 45,890,000 | |
Intangible assets, accumulated amortization | 588,311 | 588,311 | |
Intangible assets, net book value | 45,301,689 | 45,301,689 | |
Trademark | |||
Indefinite-Lived Intangible Assets [Line Items] | |||
Intangible assets, original cost | 26,980,000 | 26,980,000 | |
Intangible assets, net book value | $ 26,980,000 | $ 26,980,000 | |
Software | |||
Indefinite-Lived Intangible Assets [Line Items] | |||
Intangible assets useful life | 15 years | 15 years | |
Intangible assets, original cost | $ 15,660,000 | $ 15,660,000 | |
Intangible assets, accumulated amortization | 487,200 | 487,200 | |
Intangible assets, net book value | $ 15,172,800 | $ 15,172,800 | |
Customer Relationships | |||
Indefinite-Lived Intangible Assets [Line Items] | |||
Intangible assets useful life | 15 years | 15 years | |
Intangible assets, original cost | $ 3,250,000 | $ 3,250,000 | |
Intangible assets, accumulated amortization | 101,111 | 101,111 | |
Intangible assets, net book value | $ 3,148,889 | $ 3,148,889 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Accrued Expenses and Other Current Liabilities | ||
Accrued wages and bonus | $ 175,892 | $ 514,169 |
Research and development | 402,100 | 47,547 |
Professional and consulting fees | 494,307 | 16,876 |
Warranty reserve | 385,748 | |
Accrued Legal Fees | 2,153,956 | 439,901 |
Other accrued liabilities | 2,256,736 | 209,909 |
Total accrued expenses and other current liabilities | $ 5,868,740 | $ 1,228,402 |
Notes Payable and Revolving L_3
Notes Payable and Revolving Line of Credit (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||
Aug. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2023 | Jun. 30, 2023 | Mar. 31, 2021 | Jun. 30, 2016 | |
Loan and Security Agreement | Senior Term Loan | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Outstanding principal balance | $ 4,300,000 | |||||||
Silicon Valley Bank | Loan and Security Agreement | Senior Term Loan | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 7,600,000 | |||||||
Debt Issuance Costs, Gross, Current | $ 380,000 | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 9.25% | |||||||
Duration of remaining monthly payments | 36 months | 59 months | ||||||
Debt Instrument, Maturity Date | Mar. 01, 2028 | |||||||
Restructuring fee | $ 200,000 | |||||||
Silicon Valley Bank | Loan and Security Agreement | Senior Term Loan | Annual Interest Rate (Greater of Prime +1% or 4.25%) | Base Rate | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Debt Instrument, Basis Spread on Variable Rate | 4.25% | |||||||
Silicon Valley Bank | Loan and Security Agreement | Senior Term Loan | Annual Interest Rate (Greater of Prime +1% or 4.25%) | Prime Rate | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Debt Instrument, Basis Spread on Variable Rate | 1% | |||||||
Silicon Valley Bank | Loan and Security Agreement | Mezzanine Term Loan | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Outstanding principal balance | $ 30,000,000 | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 14.25% | |||||||
Duration of remaining monthly payments | 36 months | |||||||
Debt Instrument, Maturity Date | Mar. 01, 2028 | |||||||
Restructuring fee | $ 300,000 | |||||||
Silicon Valley Bank | Loan and Security Agreement | Mezzanine Term Loan | Annual Interest Rate (Greater of Prime +6% or 9.25%) | Base Rate | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Debt Instrument, Basis Spread on Variable Rate | 9.25% | |||||||
Silicon Valley Bank | Loan and Security Agreement | Mezzanine Term Loan | Annual Interest Rate (Greater of Prime +6% or 9.25%) | Prime Rate | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Debt Instrument, Basis Spread on Variable Rate | 6% | |||||||
Silicon Valley Bank | Loan and Security Agreement | Mezzanine Term Loan | Financial Covenants | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Cash balance to maintain | $ 2,000,000 | |||||||
Annual revenue target | 50,000,000 | |||||||
Silicon Valley Bank | Loan and Security Agreement | Mezzanine Term Loan Tranche A | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 15,000,000 | |||||||
Silicon Valley Bank | Loan and Security Agreement | Mezzanine Term Loan Tranche B | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 15,000,000 | |||||||
Trinity | Facility Term Debt Agreement | Facility Term Loan | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Additional payment due on loan draw downs | 400,000 | |||||||
Reclassification of term loan payment to long-term debt | 300,000 | |||||||
Outstanding principal balance | $ 2,400,000 | |||||||
Fee percentage on total amount drawn, end of loan term | 10% | |||||||
Trinity | Facility Term Debt Agreement | Facility Term Loan | June 2020 | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Draws on term loan | $ 2,900,000 | |||||||
Trinity | Facility Term Debt Agreement | Facility Term Loan | September 2020 | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Draws on term loan | $ 600,000 | |||||||
Trinity | Facility Term Debt Agreement | Facility Term Loan | December 2020 | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Draws on term loan | $ 900,000 | |||||||
Trinity | Facility Term Debt Agreement | Facility Term Loan | August 2021 | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Draws on term loan | $ 500,000 |
Notes Payable and Revolving L_4
Notes Payable and Revolving Line of Credit - Outstanding Loan Amounts (Details) | Jun. 30, 2023 USD ($) |
Line of Credit Facility [Line Items] | |
Senior notes | $ 37,362,534 |
Unamortized debt issuance fees | 1,195,342 |
Less: current portion | 2,112,710 |
Total long-term notes payable | 34,054,483 |
Senior Term Loan | |
Line of Credit Facility [Line Items] | |
Senior notes | 4,860,367 |
Facility Term Loan | |
Line of Credit Facility [Line Items] | |
Senior notes | 2,202,167 |
Mezzanine Term Loan | |
Line of Credit Facility [Line Items] | |
Senior notes | $ 30,300,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||||||
Oct. 03, 2022 shares | Aug. 10, 2022 USD ($) | May 01, 2021 shares | Nov. 30, 2020 | Feb. 28, 2019 USD ($) ft² | Jun. 30, 2023 USD ($) | Jun. 30, 2023 USD ($) | Jan. 12, 2023 | Dec. 31, 2022 USD ($) | Jan. 25, 2022 USD ($) | Feb. 28, 2021 ft² | |
Other Commitments [Line Items] | |||||||||||
Operating lease right-of-use assets | $ 10,952,143 | $ 10,952,143 | $ 1,606,485 | ||||||||
Gardens Bio Science Partners, LLC | |||||||||||
Other Commitments [Line Items] | |||||||||||
Operating lease payments | 260,000 | ||||||||||
Lease Commitments | Office Building | |||||||||||
Other Commitments [Line Items] | |||||||||||
Area of leased premises | ft² | 38,000 | ||||||||||
Operating lease payments | $ 209,231 | 691,753 | 1,286,468 | ||||||||
Operating lease escalation rate | 3% | ||||||||||
Lease Commitments | Warehouse Space | |||||||||||
Other Commitments [Line Items] | |||||||||||
Operating lease payments | 161,529 | 295,799 | |||||||||
Total Lease Payments | 10,817,986 | 10,817,986 | |||||||||
Lease Commitments | Gardens Bio Science Partners, LLC | |||||||||||
Other Commitments [Line Items] | |||||||||||
Area of leased premises | ft² | 20,000 | ||||||||||
Operating lease payments | $ 118,549 | $ 244,602 | |||||||||
Operating lease escalation rate | 2.50% | 2.50% | |||||||||
Total Lease Payments | $ 2,295,325 | $ 2,295,325 | |||||||||
Legal Proceedings | |||||||||||
Other Commitments [Line Items] | |||||||||||
Litigation expense, settlement costs | $ 1,300,000 | ||||||||||
Estimated litigation liability | $ 1,400,000 | $ 1,400,000 | |||||||||
Indemnities, Commitments and Guarantees | Executives | |||||||||||
Other Commitments [Line Items] | |||||||||||
Executive management severance period in the event of termination | 6 months | ||||||||||
Restricted stock units granted to executives in amended employment agreement | shares | 732,090 | ||||||||||
Indemnities, Commitments and Guarantees | Independent contractors | |||||||||||
Other Commitments [Line Items] | |||||||||||
Cash compensation, percentage | 50% | ||||||||||
Equity compensation, percentage | 50% | ||||||||||
Indemnities, Commitments and Guarantees | Initial public offering | Executives | |||||||||||
Other Commitments [Line Items] | |||||||||||
Restricted stock units granted to executives in IPO | shares | 443,269 | ||||||||||
Sales Agency Agreement | |||||||||||
Other Commitments [Line Items] | |||||||||||
Sales Agency Agreement term | 1 year | ||||||||||
Sales Agency Agreement | Minimum | |||||||||||
Other Commitments [Line Items] | |||||||||||
Guaranteed minimum monthly payments | $ 502,500 | ||||||||||
Sales Agency Agreement | Maximum | |||||||||||
Other Commitments [Line Items] | |||||||||||
Sales Agency Agreement renewal term | 5 years | ||||||||||
Guaranteed minimum monthly payments | $ 667,500 | ||||||||||
Registration Rights Agreement | Minimum | |||||||||||
Other Commitments [Line Items] | |||||||||||
Common stock ownership threshold for parties subject to the Registration Rights Agreement | 10% |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Feb. 26, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Related Party Transactions | ||||||
Product revenues | $ 13,242,959 | $ 70,918 | $ 21,592,380 | $ 77,652 | ||
Accounts receivable | 2,210,700 | 2,210,700 | $ 36,188 | |||
Notes payable, current portion | $ 2,112,710 | 2,112,710 | ||||
Aura Smart Air | Technology Collaboration Agreement | ||||||
Related Party Transactions | ||||||
Payments for perpetual licensing agreement | $ 250,000 | |||||
Monthly payments to Aura Smart Air | $ 68,182 |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock and Preference Shares (Details) - $ / shares | Jun. 30, 2023 | Dec. 31, 2022 |
Stockholders' Equity | ||
Common stock, shares authorized | 110,000,000 | 110,000,000 |
Common stock, par value | $ 0.01 | $ 0.01 |
Stockholders' Equity - Long-ter
Stockholders' Equity - Long-term Incentive Plan (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Nov. 23, 2021 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Stock-based compensation | $ 1,502,724 | $ 708,540 | $ 3,404,431 | $ 1,379,378 | |
Unrecognized compensation cost | $ 10,957,851 | $ 10,957,851 | |||
LTIP | |||||
Common stock shares reserved for future issuance | 2,802,273 | ||||
Number of share units authorized | 1,500,000 | ||||
Additional shares authorized for issuance | 277,552 | 2,530,859 | |||
Restricted stock units, granted | 3,425,537 | ||||
LTIP | Members of management | |||||
Restricted stock units, granted | 500,000 | 1,232,090 | |||
LTIP | Members of the Board | |||||
Restricted stock units, granted | 0 | 742,000 |
Stockholders' Equity - Restrict
Stockholders' Equity - Restricted stock unit activity (Details) | 6 Months Ended |
Jun. 30, 2023 $ / shares shares | |
Restricted stock unit activity | |
RSU's, beginning balance | 1,451,448 |
RSUs vested | 799,965 |
RSU's forfeited | (901,764) |
RSU's, ending balance | 5,488,015 |
Weighted-average grant date FV per share, beginning balance | $ / shares | $ 5.67 |
Weighted-average grant date FV per share, forfeited | $ / shares | 3.40 |
Weighted-average grant date FV per share, ending balance | $ / shares | $ 3.73 |
Awarded Legacy AeroClean | |
Restricted stock unit activity | |
RSU's granted | 1,974,090 |
Weighted-average grant date FV per share, granted | $ / shares | $ 2.78 |
Awarded Molekule Merger | |
Restricted stock unit activity | |
RSU's granted | 2,964,241 |
Weighted-average grant date FV per share, granted | $ / shares | $ 3.40 |
Stockholders' Equity - Private
Stockholders' Equity - Private Placement (Details) - USD ($) | 6 Months Ended | ||||
May 03, 2023 | Jun. 29, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Jan. 27, 2023 | |
Amount charged to expense | $ 1,326,212 | ||||
2023 Warrants | |||||
Number of warrants issued | 3,400,000 | ||||
2022 Private Placement | |||||
Gross proceeds from private placement | $ 15,000,000 | ||||
Net proceeds | 13,578,551 | ||||
Issuance costs | $ 1,421,449 | ||||
Resale of common stock held by selling stocksholder | 1,500,000 | ||||
2022 Private Placement | Outstanding Warrants | |||||
Exercise price of warrants | $ 11 | ||||
2022 Private Placement | Common Stock | |||||
Number of common stock shares issued | 1,500,000 | ||||
Number of warrants issued | 1,500,000 | ||||
2023 Private Placement | |||||
Adjusted exercise price of warrants | $ 2 | ||||
2022 Warrants | |||||
Gross proceeds allocated to warrant liability | $ 13,995,000 | ||||
Gross proceeds allocated to common stock | 1,005,000 | ||||
Amount charged to expense | 1,326,212 | ||||
Amount charged to additional paid-in capital | $ 95,237 | ||||
Resale of common stock held by selling stocksholder | 1,500,000 | ||||
Registration Statement Form S-3 | |||||
Resale of common stock held by selling stocksholder | 3,000,000 | ||||
Securities Purchase Agreement Private Placement | |||||
Gross proceeds from private placement | $ 9,971,500 | ||||
Number of common stock shares issued | 3,400,000 | ||||
Selling stockholder, percentage ownership in outstanding common shares | 9.90% | ||||
Securities Purchase Agreement Private Placement | 2022 Warrants | |||||
Exercise price of warrants | $ 11 | ||||
Securities Purchase Agreement Private Placement | Series A Warrants | |||||
Number of common stock shares issued | 3,125,000 | ||||
Securities Purchase Agreement Private Placement | Series B Warrants | |||||
Number of common stock shares issued | 6,250,000 | ||||
Securities Purchase Agreement Private Placement | Pre-Funded Warrants | |||||
Number of common stock shares issued | 2,850,000 | ||||
Securities Purchase Agreement Private Placement | Outstanding Warrants | |||||
Adjusted exercise price of warrants | $ 2 | ||||
Aggregate purchase price warrant offering | $ 9,971,500 | ||||
Securities Purchase Agreement Private Placement | Outstanding Warrants | Minimum | |||||
Selling stockholder, percentage ownership threshold to exercise warrants | 4.99% | ||||
Securities Purchase Agreement Private Placement | Outstanding Warrants | Maximum | |||||
Selling stockholder, percentage ownership threshold to exercise warrants | 9.99% | ||||
Securities Purchase Agreement, Series A Warrants | |||||
Number of common stock shares issued | 3,125,000 | ||||
Exercise price | $ 1.60 | ||||
Securities Purchase Agreement, Series B Warrants | |||||
Number of common stock shares issued | 6,250,000 | ||||
Exercise price | $ 1.84 | ||||
Securities Purchase Agreement, Pre-Funded Warrants | |||||
Number of common stock shares issued | 2,850,000 | ||||
Exercise price | $ 0.01 |
Net Income (Loss) Per Common _3
Net Income (Loss) Per Common Share (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Net Income (Loss) Per Common Share | ||||
Net income (loss) | $ (5,172,277) | $ (7,750,241) | ||
Basic weighted average common shares | 33,017,565 | 13,894,119 | 31,185,329 | 13,885,923 |
Diluted weighted average common shares | 13,894,119 | 13,885,923 | ||
Basic net loss per common share | $ (0.76) | $ (0.37) | $ (1.12) | $ (0.56) |
Loss per diluted share | $ (0.76) | $ (0.37) | $ (1.12) | $ (0.56) |
Net Income (Loss) Per Common _4
Net Income (Loss) Per Common Share - Anti-dilutive Securities (Details) - shares | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Class of Stock [Line Items] | ||
Anti-dilutive shares | 19,213,015 | 2,126,268 |
Outstanding Warrants | ||
Class of Stock [Line Items] | ||
Anti-dilutive shares | 13,725,000 | 1,500,000 |
Restricted stock units, including market based RSUs | ||
Class of Stock [Line Items] | ||
Anti-dilutive shares | 5,488,015 | 626,268 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Income Taxes. | ||
Total Current Tax Expense | $ 93,156 | $ 219,832 |
Deferred Tax Liabilities, Gross | $ 1,598,000 |