| Preferred Stock | 7. Preferred Stock Convertible preferred stock consisted of the following: As of September 30, 2021: Preferred Stock Common Stock Preferred Stock Issued and Carrying Liquidation Issuable Upon Class of Preferred Authorized Outstanding Value Preference Conversion Series A Convertible Preferred Stock 3,067,519 2,819,027 $ 4,616 $ 5,051 871,541 Series A‑1 Convertible Preferred Stock 3,970,776 3,730,366 5,398 5,906 1,153,290 Series A‑2 Convertible Preferred Stock 3,565,063 3,565,063 5,809 6,355 1,102,182 Series B Convertible Preferred Stock 30,450,000 30,409,890 39,547 43,269 9,401,599 Series B‑1 Convertible Preferred Stock 10,928,155 10,926,089 29,391 16,038 3,377,925 Total 51,981,513 51,450,435 $ 84,761 $ 76,619 15,906,537 As of December 31, 2020: Preferred Stock Common Stock Preferred Stock Issued and Carrying Liquidation Issuable Upon Class of Preferred Authorized Outstanding Value Preference Conversion Series A Convertible Preferred Stock 3,067,519 2,819,027 $ 4,616 $ 4,766 871,541 Series A‑1 Convertible Preferred Stock 3,970,776 3,730,366 5,398 5,572 1,153,290 Series A‑2 Convertible Preferred Stock 3,565,063 3,565,063 5,809 5,997 1,102,182 Series B Convertible Preferred Stock 30,450,000 30,409,890 39,547 40,826 9,401,599 Total 41,053,358 40,524,346 $ 55,370 $ 57,161 12,528,612 On May 1, 2021, the holders of all of our outstanding convertible promissory notes agreed to an acceleration of the date of the automatic conversion from June 30, 2021 to May 1, 2021 for all convertible promissory notes. Accordingly, on May 1, 2021, all of our outstanding convertible promissory notes were converted into 10,926,089 shares of our Series B-1 convertible preferred stock, at a conversion price equal to $1.385 per share. The Series B-1 convertible preferred stock was recorded within mezzanine equity at fair value on the date of issuance. On October 13, 2021, upon the closing of the IPO, all shares of preferred stock were converted into 15,906,537 shares of common stock (see Note 13). Rights, preferences, privileges, and restrictions: The holders of shares of Series A, A-1, A-2, B and B-1 convertible preferred stock (collectively, the “Preferred Stock”) have the rights, preferences, privileges, and restrictions as set forth below: Dividends: The holders of the Preferred Stock are entitled to receive cumulative dividends when, as and if declared by the Company’s Board of Directors. Accrued dividends shall accrue only on the unreturned amount of the original issue price taking into account the payment of any mandatory dividend. As used herein, “original issue price” means $0.69 per share with respect to the Series A and A-1 Voting Rights: The holders of Preferred Stock are entitled to voting rights equal to the number of shares of common stock into which the shares of Preferred Stock can be converted. In addition, as long as there are shares of Preferred Stock outstanding, each of the holders of over 7.5% of the total Preferred Stock outstanding on a converted basis are entitled to designate one director of the Company to be elected by the holders of Preferred Stock. The holders of a majority of the then outstanding shares of common stock, voting together as a single class, are entitled to elect one director of the Company. If the holders of the Preferred Stock or common stock fail to elect a sufficient number of directors to fulfill directorships for which they are entitled to elect directors, then any directorship shall remain vacant until the holders of the Preferred Stock or common stock elect such person. Liquidation Rights: In the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the holders of Preferred Stock have liquidation preferences, before any distribution or payment is made to holders of any common stock, in an amount per share equal to the original issue price for such Preferred Stock plus all accruing dividends (the “Preferred Liquidation Amount”). If the assets and funds to be distributed among the holders of Preferred Stock are insufficient to permit the payment to such holders, then the entire assets and funds of the Company legally available for distribution will be distributed ratably among the holders of Preferred Stock in proportion to the Preferred Liquidation Amount each such holder is otherwise entitled to receive on each share, less any mandatory dividends. Upon completion of the payment of the full liquidation preference of Preferred Stock less any and all mandatory dividends previously distributed, the remaining assets of the Company, if any, shall be distributed among the holders of common stock and Preferred Stock, pro rata based on the number of common shares held by each (assuming conversion of all shares of the Preferred Stock into common stock). Conversion: Each share of Preferred Stock is convertible into shares of common stock, at the option of the holder, at any time after date of issuance. Each share of Preferred Stock automatically converts to the number of shares of common stock determined in accordance with the conversion rate upon the closing of a public offering, at a price per share of not less than three times the highest, then applicable conversion price, resulting in offering proceeds of at least $30,000 net of underwriting discounts and commissions. The conversion ratio will be adjusted in the case of specified changes to the Company’s capitalization as a result of stock splits, combinations, common stock dividends and distributions, reclassifications, exchanges, substitutions, reorganizations, mergers or consolidations. Redemption: Prior to the July 29, 2020 amendment to the Company’s second amended and restated certificate of incorporation, holders of Preferred Stock had the right to redeem shares of preferred stock on or after March 20, 2021 after receipt of written notice requesting redemption from 60% of the then outstanding shares of the preferred stock voting together as a single class on an as-converted to common stock basis at a price equal to the original issue price plus all accruing dividends. As the Preferred Stock was redeemable due to the passage of time prior to the amendment, the Company recorded changes in the redemption value and accreted the Preferred Stock immediately to its redemption value during each reporting period. On July 29, 2020, the Company’s second amended and restated certificate of incorporation was amended resulting in the removal of the redemption right. As the redemption option was removed in connection with the amendment, the only option for redemption is based on the occurrence of a deemed liquidation event. As the events that would trigger a deemed liquidation event are corporate transactions that are not certain to occur, the Company determined that post July 29, 2020, the Preferred Stock is no longer considered probable to become redeemable, and is instead contingently redeemable. As a result, the Company ceased the accretion of the Preferred Stock to redemption value upon execution of the amendment to the articles of incorporation. Protective Provisions: At any time when shares of Preferred Stock are outstanding, the Company shall not, either directly, indirectly by amendment, merger, consolidation or otherwise, do any of the following without the written consent or affirmative vote of at least 60% of the then outstanding shares of Preferred Stock, voting together as a single class on an as-converted to Common Stock basis: (i) effect the consummation of a liquidation event or any other merger or consolidation, (ii) amend, alter or repeal any provision of the Company’s certificate of incorporation of bylaws in a manner that adversely affects the powers, preferences or rights of the Preferred Stock, (iii) amend, alter, or repeal any provision of the by-laws of the Company, in a manner that affects the powers, preferences, or rights of Preferred Stock, (iv) increase or decrease the authorized number of shares of Preferred Stock or Common Stock, (v) reclassify, alter, or amend any existing security of the Company in respect to the distribution of assets on the liquidation, dissolution, or winding up of the Company or payment of dividends, if such reclassification, alteration, or amendment would render such other security senior to Preferred Stock in respect to any such right, preference, or privilege, (vi) purchase or redeem, or declare any dividend, on any shares of capital stock of the Company other than repurchase of stock pursuant to stock restriction agreements approved by the board of directors that grant to the Company the right of repurchase upon termination of the service, (vii) borrow or authorize any amount of indebtedness, other than inventory financing in the ordinary course of business and any indebtedness in an amount of up to $250 in aggregate that is approved by the board of directors, (viii) increase or decrease the authorized number of directors of the board of directors (ix) effect a change in business from the discovery and development of small molecule therapeutics targeting toxic proteins that cause cognitive decline associated with Alzheimer’s disease and other neurodegenerative diseases, (x) enter into any transaction with any person other than in the ordinary course of business on an arm’s length basis, (xi) increase the number of shares of common stock reserved for issuance, (xii) make any loan except advances in ordinary course of business or advances up to $50 in aggregate approved by the board of directors, (xiii) hire, terminate, or change compensation in excess of $100 of any officer, director, or employee, unless approved by the board of directors, (xiv) own any stock or securities of any other corporation, unless approved by the board of directors, (xv) guarantee any indebtedness except for trade accounts of the Company or any guarantee approved by the board of directors, (xvi) make any investment other than investments in prime commercial paper, money market funds, certificates of deposits in any United States bank having a net worth in excess of $100,000 or obligations issued or guaranteed by the United States of America, unless approved by the board of directors. |
