Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2023 | May 15, 2023 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 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, $0.01 Par Value | |
Trading Symbol | MKUL | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 34,002,750 | |
Entity Central Index Key | 0001872356 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash | $ 7,285,691 | $ 22,062,657 |
Restricted Cash | 1,115,890 | |
Accounts receivable | 1,014,072 | 36,188 |
Prepaid expenses and other current assets | 1,356,895 | 665,395 |
Inventories | 29,692,204 | 2,020,713 |
Total current assets | 40,464,752 | 24,784,953 |
Property and equipment, net | 10,713,155 | 2,119,134 |
Intangible assets, net | 45,616,856 | |
Goodwill | 20,680,212 | 626,647 |
Operating lease right-of-use assets | 10,822,618 | 1,606,485 |
Other assets | 186,290 | 21,667 |
Total assets | 128,483,883 | 29,158,886 |
Current liabilities: | ||
Accounts payable | 10,800,035 | 3,220,082 |
Accrued expenses and other current liabilities | 4,634,947 | 1,228,402 |
Current operating lease liability | 2,557,105 | 113,769 |
Notes payable, current portion | 2,394,421 | |
Total current liabilities | 20,386,508 | 4,562,253 |
Long-term liabilities: | ||
Warrant liability, at fair value | 1,646,000 | 3,372,000 |
Notes payable, net of current portion | 33,858,415 | |
Long-term operating lease liability | 8,854,367 | 1,521,431 |
Total liabilities | 64,745,290 | 9,455,684 |
Stockholders' equity: | ||
Common stock, $0.01 par value per share; 110,000,000 shares authorized; 30,427,750 and 15,496,932 issued and outstanding as of March 31, 2023 and December 31, 2022, respectively | 304,277 | 154,969 |
Additional paid-in capital | 81,284,515 | 27,465,024 |
Accumulated deficit | (17,850,199) | (7,916,791) |
Total stockholders' equity | 63,738,593 | 19,703,202 |
Total liabilities and stockholders' equity | $ 128,483,883 | $ 29,158,886 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 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 | 30,427,750 | 15,496,932 |
Common stock, shares outstanding | 30,427,750 | 15,408,828 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Product revenues | $ 8,349,422 | $ 6,733 |
Cost of sales | 4,674,259 | 3,764 |
Gross profit | 3,675,162 | 2,969 |
Operating expenses: | ||
Selling, general and administrative | 13,665,614 | 2,142,224 |
Research and development | 243,779 | 531,483 |
Total operating expenses | 13,909,393 | 2,673,707 |
Loss from operations | (10,234,231) | (2,670,738) |
Change in fair value of warrant liability | 1,726,000 | |
Interest expense | (1,248,677) | |
Other expense | (176,498) | |
Total other income | 300,825 | |
Loss before income tax benefit | (9,933,406) | (2,670,738) |
Income tax benefit | 92,774 | |
Net Loss | $ (9,933,406) | $ (2,577,964) |
Net Income (Loss) Per Common Share | ||
Basic | $ (0.35) | $ (0.19) |
Diluted | $ (0.35) | $ (0.19) |
Weighted-average common shares outstanding: | ||
Basic | 28,889,604 | 13,877,636 |
Diluted | 28,889,604 | 13,877,636 |
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 | 670,838 | |||
Issuance of common stock (Shares) | 670,838 | |||
Net loss | (2,577,964) | (2,577,964) | ||
Ending balance at Mar. 31, 2022 | $ 138,776 | (4,325,824) | 19,803,289 | |
Ending balance (Shares) at Mar. 31, 2022 | 13,877,636 | 23,990,337 | ||
Beginning balance at Dec. 31, 2022 | $ 154,969 | (7,916,792) | 19,703,202 | |
Beginning balance (Shares) at Dec. 31, 2022 | 15,496,932 | 27,465,024 | ||
Acquisition of Molekule | $ 149,308 | 0 | $ 52,316,767 | 0 |
Acquisition of Molekule (Shares) | 14,930,818 | |||
Stock-based compensation | 0 | $ 1,502,724 | 1,502,724 | |
Net loss | (9,933,406) | (9,933,406) | ||
Ending balance at Mar. 31, 2023 | $ 304,277 | $ (17,850,199) | $ 63,738,593 | |
Ending balance (Shares) at Mar. 31, 2023 | 30,427,750 | 81,284,515 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ (9,933,406) | $ (2,577,964) |
Adjustments to reconcile net loss to net cash flows used in operating activities | ||
Change in fair value of warrant liability | (1,726,000) | |
Deferred tax benefit | (92,774) | |
Depreciation and amortization | 1,180,880 | 35,827 |
Equity-based compensation | 1,502,724 | 670,838 |
Provision for doubtful accounts | 2,107 | |
Inventory reserve provision | (159,369) | |
Non-cash lease expense | 528,867 | |
Amortization of debt discounts | 83,471 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (600,990) | 170,879 |
Inventories | (695,397) | (72,824) |
Other current and non-current assets | 852,701 | 301,970 |
Accounts payable | (4,514,233) | (490,827) |
Accrued expenses and other liabilities | (2,044,554) | 227,398 |
Operating lease liabilities | (520,828) | |
Net cash flows used in operating activities | (16,044,027) | (1,827,477) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (433,167) | (28,075) |
Business acquisitions, net of cash | 2,988,086 | |
Net cash flows used in investing activities | 2,554,919 | (28,075) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Payment of debt issuance costs | (171,967) | |
Net cash flows provided by financing activities | (171,967) | |
Net (decrease)/increase in cash | (13,661,075) | (1,855,552) |
Cash, beginning of period | 22,062,657 | 19,629,649 |
Cash, end of period | 8,401,581 | $ 17,774,097 |
Supplemental Disclosure of cash flow information: | ||
Cash paid for interest | 1,247,267 | |
Supplemental schedule of non-cash activities: | ||
Net assets acquired from Molekule Inc. | $ 52,466,073 |
Description of Business
Description of Business | 3 Months Ended |
Mar. 31, 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 with an immediate objective of initiating full-scale commercialization of its high-performance interior air sterilization and disinfection products for the eradication of coronavirus and other harmful airborne pathogens. 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 (March 31, 2023) and 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 $9,933,406 and its net cash used in operating activities was $16,044,027 for the quarterly period ended March 31, 2023. In addition, the Company’s accumulated deficit was $17,850,199 at March 31, 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 are issued. COVID-19 Pandemic The Company continues to monitor developments regarding COVID-19 and its variants, which have impacted and could continue to adversely impact global commercial activity and have contributed to significant declines and volatility in financial markets. The Company’s ongoing research and development activities, including development of product prototypes and manufacturing activities, are all conducted in the United States, and as a result, the Company has been able to mitigate some of the adverse impact of the COVID-19 pandemic on its global supply chain. The Company continues to actively monitor the situation and may take further actions that impact operations as may be required by federal, state or local authorities or that the Company determines is in the best interests of its employees, customers, suppliers and stockholders. As of the date of issuance of these financial statements, the pandemic presents uncertainty and risk as the Company cannot reasonably determine or predict the nature, duration or scope of the overall impact the COVID-19 pandemic will have on its business, results of operations, liquidity or capital resources. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 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 SEC 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 financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses and related disclosure of contingent assets and liabilities. Significant estimates in these financial statements include those related to the fair value of equity-based compensation, revenue recognition, the incremental borrowing rate for leases, fair value of warrant liability, valuation in connection with business combination and 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 March 31, 2023 and 2022. Restricted Cash The Company had a restricted cash balance of $1,115,890 as of March 31, 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, 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 $8,349,422 and $6,733 in the three months ended March 31, 2023 and 2022 respectively. Warranty Cost The Company provides a three-year warranty on its Pūrgo device and two year warranty for the Legacy Molekule devices. 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 March 31, 2023 and nil as of December 31, 2022. Income Taxes The Company recognizes and measures its unrecognized tax benefit in accordance with FASB ASC 740, Income Taxes. The Company provides deferred income taxes for temporary differences between the amounts of assets and liabilities recognized for financial reporting purposes and such amounts recognized for income tax purposes. Deferred income taxes are computed using enacted tax rates that are expected to be in effect when the temporary differences reverse. Under that guidance, management assesses the likelihood that tax positions will be sustained upon examination based on the facts, circumstances and information available at the end of each period, including the technical merits of those positions. The measurement of unrecognized tax benefits is adjusted when new information is available or when an event occurs that requires a change. At March 31, 2023 and December 31 2022, the Company did not identify any uncertain tax positions taken or expected to be taken in an income tax return that would require adjustment to, or disclosure in, its financial statements. Research & Development Expenses Research and development expenses are expensed as incurred and consist principally of contract labor and third-party engineering, product development and testing costs related to the development of medical grade air purification devices and related components as well as concepts for future product development. 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 March 31, 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. Business Acquisition Accounting The Company applies the acquisition method of accounting for those 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 | 3 Months Ended |
Mar. 31, 2023 | |
Business Combination | |
Business Combination | 3. Business Combination On January 12, 2023 of the Company. In connection with the closing of the Molekule Merger , the Company changed its name from AeroClean Technologies, Inc. to Molekule Group, Inc. 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 Company Common Stock underlying In-the-Money Company Warrants 23,608 (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), trade name (approximately $27 million), and developed technology (approximately $16 million) and $20 million was allocated to goodwill. The 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 379,001 Inventories 26,816,725 Prepaid and other current assets 1,138,784 Property, Plant and Equipment 9,481,992 Goodwill 20,053,565 Intangible assets, net 45,890,000 Right of Use Asset 9,744,961 Other long-term assets 220,779 Accounts payable (12,094,186) Accrued expenses (2,744,556) Accrued sales tax (513,560) Notes payable (36,341,332) Right of Use - liability (10,297,100) Other current and non-current liabilities (2,257,100) 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 three months ended March 31, 2023 and 2022 would have been as follows: March 31, 2023 March 31, 2022 Pro forma Pro forma Revenues $ 9,519,794 12,616,816 Net loss (11,449,924) (10,506,030) Loss per diluted share (0.40) (0.76) |
Financial Instruments Fair Valu
Financial Instruments Fair Value Measurements | 3 Months Ended |
Mar. 31, 2023 | |
Financial Instruments Fair Value Measurements | |
Financial Instruments Fair Value Measurements | 4. Financial Instruments Fair Value Measurements The 2022 Warrant issued in connection with the 2022 Private Placement (as the terms are defined in Note 13) was accounted for as a liability and accordingly 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 fair value of the 2022 Warrant was estimated using a Black-Scholes pricing model based on the following assumptions: At March 31, 2023 Stock price $ 1.69 Expiration term (in years) 4.49 Volatility 130.0 % Risk-free rate 3.7 % Dividend yield 0.0 % |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 3 Months Ended |
Mar. 31, 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 $1,356,895 and $665,395 at March 31, 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 | 3 Months Ended |
Mar. 31, 2023 | |
Inventories | |
Inventories | 6. Inventories Inventories consisted of the following: March 31, December 31, 2023 2022 Raw materials $ 8,118,999 $ 712,752 Finished goods 14,801,721 1,307,961 Work in process 6,771,484 — Total inventories $ 29,692,204 $ 2,020,713 |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2023 | |
Property and Equipment | |
Property and Equipment | 7 . Property and Equipment Property and equipment consisted of the following: Useful Life March 31, December 31, (Years) 2023 2022 Leasehold improvements Lesser of useful life or lease term $ 2,424,079 $ 847,217 Machinery and tooling 7 7,741,001 1,270,652 Furniture and equipment 3 - 10 260,571 241,835 Software 2-3 433,167 — 10,858,818 2,359,704 Less: accumulated depreciation 1,148,306 240,570 9,710,512 2,119,134 Construction in progress 1,002,643 — $ 10,713,155 $ 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, which is depreciated utilizing the units-of-production method. Depreciation expense was $907,736 and $35,827 for the three months ended March 31, 2023 and 2022, respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | 8. Goodwill and Intangible Assets Goodwill Goodwill was $20,680,212 as of March 31, 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 $273,144 for the three months ended March 31, 2023 and nil for 2022. The Company currently expects to recognize amortization expense related to intangible assets of approximately $904,000 in each of the next five fiscal years. The future amortization amounts are estimates. Actual future amortization expense may be different due to future acquisitions, impairments, changes in amortization periods or other factors. The following sets forth the intangible assets by major asset class as of March 31, 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 15,660,000 226,200 15,433,800 Customer Relationships 15 3,250,000 46,944 3,203,056 45,890,000 273,144 45,616,856 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 3 Months Ended |
Mar. 31, 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: March 31, December 31, 2023 2022 Accrued wages and bonus $ 861,142 $ 514,169 Research and development 238,000 47,547 Professional and consulting fees 392,000 16,876 Accrued legal fees 2,218,817 439,901 Other accrued liabilities 539,240 209,909 Total accrued expenses and other current liabilities $ 4,634,947 $ 1,228,402 |
Notes Payable and Revolving Lin
Notes Payable and Revolving Line of Credit | 3 Months Ended |
Mar. 31, 2023 | |
Notes Payable and Revolving Line of Credit | |
Notes Payable and Revolving Line of Credit | 10. Notes Payable and Revolving Line of Credit Notes payable and revolving line of credit consisted of the following: March 31, December 31, 2023 2022 Senior term loan $ 4,430,556 $ — Facility term loan 2,455,144 — Mezzanine term loan 30,000,000 — 36,885,700 — Less: Unamortized debt issuance fees 632,864 — Less: current portion 2,394,421 — Total long-term notes payable $ 33,858,415 $ — Senior Term Loan April 1, 2026 Mezzanine Term Loan March 2027 March 2028 periods occurring after December 31, 2023 shall be mutually agreed by the Company and SVB. The Company is also required to maintain its primary operating and other deposit accounts and securities accounts with SVB and its affiliates. 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 March 31, 2023. As of March 31, 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 event of default provisions. On May 2, 2023, the Company reached an agreement in principal, subject to final documentation, with SVB to amend the mezzanine loan agreement so as to provide for the deferral of principal payments for Mezzanine Term Loan A tranche from April 2024 to April 2025. The Company also reached an agreement in principal with SVB, subject to final documentation, to amend the senior term loan agreement so as to extend the maturity date from April 2026 to March 2028. The amendment of the mezzanine loan agreement to defer principal payments and the amendment of the senior term loan agreement to extend the maturity date will collectively result in a deferral of approximately $6.1 million of principal payments through March 31, 2025 (see note 17). |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 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 has a term of 10 years and an annual base rent of $260,000 subject to escalation of 2.5% on an annual basis. As of March 31, 2023, the future minimum lease payments under this arrangement approximated $2,385,000 . 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 $584,366 for the three months ended March 31, 2023. The Company leases office, warehouse and lab space under noncancelable leases with various expiration dates through 2026. Rent expense under these leases was $134,123 for the three months ended March 31, 2023. As of March 31, 2023, the future minimum lease payments under this arrangement approximated $10,161,134 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. As of March 31, 2023, the Company accrued a loss liability of $1,400,000 related to this matter 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 March 31, 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 | 3 Months Ended |
Mar. 31, 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 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 them 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 | 3 Months Ended |
Mar. 31, 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 expense was $1,502,724 and $670,838 for the three months ended March 31, 2023 and 2022, respectively. During the three months ended March 31, 2023, the Company granted 732,090 restricted stock units to members of management and 650,000 restricted stock units to members of the Board under the LTIP. The total number of restricted stock units issued at March 31, 2023 was 2,791,918. Unrecognized compensation expense related to restricted stock awards made by the Company was $15,006,636 at March 31, 2023. As of March 31, 2023, the Company had 5,100,085 shares available for issuance under the 2021 Plan. Number of RSUs Balance at December 31, 2022 1,451,448 Awarded 4,350,622 Forfeited (632,832) Balance at March 31, 2023 5,169,238 Private Placement On June 29, 2022, the Company completed the 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, in Note 17) 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. 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. In conjunction with the 2022 Private Placement, the Company entered into a registration rights agreement whereby the Company is 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. |
Net Income (Loss) Per Common Sh
Net Income (Loss) Per Common Share | 3 Months Ended |
Mar. 31, 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 March 31, 2023 and 2022: Three Months Ended March 31, 2023 2022 Net loss $ (9,933,406) $ (2,577,964) Basic and diluted weighted average common shares 28,889,604 13,877,636 Basic and diluted net loss per common share $ (0.35) $ (0.19) 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: Three Months Ended March 31, 2023 2022 Outstanding Warrants 1,500,000 — Restricted stock units 5,169,238 626,268 Total 6,669,238 626,268 |
Aura Smart Air Merger Agreement
Aura Smart Air Merger Agreement | 3 Months Ended |
Mar. 31, 2023 | |
Aura Smart Air Merger Agreement | |
Aura Smart Air Merger Agreement | 16. Aura Smart Air Merger Agreement |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2023 | |
Subsequent Events | |
Subsequent Events | 17. Subsequent Events Private Placement On May 3, 2023, the Company announced that it entered into a securities purchase agreement to sell in a private placement at an aggregate purchase price of approximately $9,971,500 , 3,400,000 shares of the Company’s common stock, a Series A Warrant to purchase up to 3,125,000 shares of common stock, a Series B Warrant to purchase up to 6,250,000 shares of common stock and a Pre-Funded Warrant to purchase up to 2,850,000 shares of common stock (the “2023 Private Placement”). The 2023 Private Placement closed on May 5, 2023. The Series A Warrant has an exercise price of $1.60 per share; the Series B Warrant has an exercise price of $1.84 per share; and the Pre-Funded Warrant has an exercise price of $1.60 per share with $1.59 pre-funded at issuance leaving a nominal exercise price of $0.01 per share. The Company obtained stockholder approval as required by Nasdaq rules, but the stockholder approval will not be effective until the Company files an information statement with the SEC, any SEC comments are cleared, the information statement is distributed to our stockholders and a 20-day post-distribution period expires. In connection with the 2023 Private Placement, the Company also reduced the exercise price of the 2022 Warrant owned by the institutional investor from $11.00 to $2.00 per share. Debt Modification On May 2, 2023, the Company reached an agreement in principle, subject to final documentation, with SVB to amend the mezzanine loan agreement so as to provide for the deferral of principal payments from April 2024 to April 2025. The Company also reached an agreement in principle with SVB, subject to final documentation, to amend the senior term loan agreement so as to extend the maturity date from April 2026 to March 2028. The amendment of the mezzanine loan agreement to defer principal payments and the amendment of the senior term loan agreement to extend the maturity date collectively result in a deferral of approximately $6.1 million of principal payments through March 31, 2025. Also, on May 12, 2023, the Company reached an agreement in principle to amend the revenue covenant of $50 million for the twelve months ended March 31, 2024. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 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 SEC 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 financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses and related disclosure of contingent assets and liabilities. Significant estimates in these financial statements include those related to the fair value of equity-based compensation, revenue recognition, the incremental borrowing rate for leases, fair value of warrant liability, valuation in connection with business combination and 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 March 31, 2023 and 2022. |
Restricted Cash | Restricted Cash The Company had a restricted cash balance of $1,115,890 as of March 31, 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, 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 $8,349,422 and $6,733 in the three months ended March 31, 2023 and 2022 respectively. |
Warranty Costs | Warranty Cost The Company provides a three-year warranty on its Pūrgo device and two year warranty for the Legacy Molekule devices. 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 March 31, 2023 and nil as of December 31, 2022. |
Income Taxes | Income Taxes The Company recognizes and measures its unrecognized tax benefit in accordance with FASB ASC 740, Income Taxes. The Company provides deferred income taxes for temporary differences between the amounts of assets and liabilities recognized for financial reporting purposes and such amounts recognized for income tax purposes. Deferred income taxes are computed using enacted tax rates that are expected to be in effect when the temporary differences reverse. Under that guidance, management assesses the likelihood that tax positions will be sustained upon examination based on the facts, circumstances and information available at the end of each period, including the technical merits of those positions. The measurement of unrecognized tax benefits is adjusted when new information is available or when an event occurs that requires a change. At March 31, 2023 and December 31 2022, the Company did not identify any uncertain tax positions taken or expected to be taken in an income tax return that would require adjustment to, or disclosure in, its financial statements. |
Research & Development Expenses | Research & 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 March 31, 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. |
Business Acquisition Accounting | Business Acquisition Accounting The Company applies the acquisition method of accounting for those 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) | 3 Months Ended |
Mar. 31, 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 379,001 Inventories 26,816,725 Prepaid and other current assets 1,138,784 Property, Plant and Equipment 9,481,992 Goodwill 20,053,565 Intangible assets, net 45,890,000 Right of Use Asset 9,744,961 Other long-term assets 220,779 Accounts payable (12,094,186) Accrued expenses (2,744,556) Accrued sales tax (513,560) Notes payable (36,341,332) Right of Use - liability (10,297,100) Other current and non-current liabilities (2,257,100) 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 three months ended March 31, 2023 and 2022 would have been as follows: March 31, 2023 March 31, 2022 Pro forma Pro forma Revenues $ 9,519,794 12,616,816 Net loss (11,449,924) (10,506,030) Loss per diluted share (0.40) (0.76) |
Financial Instruments Fair Va_2
Financial Instruments Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Financial Instruments Fair Value Measurements | |
Schedule of fair value of warrants estimated using Black-Scholes pricing model, assumptions | The fair value of the 2022 Warrant was estimated using a Black-Scholes pricing model based on the following assumptions: At March 31, 2023 Stock price $ 1.69 Expiration term (in years) 4.49 Volatility 130.0 % Risk-free rate 3.7 % Dividend yield 0.0 % |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Inventories | |
Schedule of Inventories | Inventories consisted of the following: March 31, December 31, 2023 2022 Raw materials $ 8,118,999 $ 712,752 Finished goods 14,801,721 1,307,961 Work in process 6,771,484 — Total inventories $ 29,692,204 $ 2,020,713 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Property and Equipment | |
Schedule of Property and Equipment | Property and equipment consisted of the following: Useful Life March 31, December 31, (Years) 2023 2022 Leasehold improvements Lesser of useful life or lease term $ 2,424,079 $ 847,217 Machinery and tooling 7 7,741,001 1,270,652 Furniture and equipment 3 - 10 260,571 241,835 Software 2-3 433,167 — 10,858,818 2,359,704 Less: accumulated depreciation 1,148,306 240,570 9,710,512 2,119,134 Construction in progress 1,002,643 — $ 10,713,155 $ 2,119,134 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 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 March 31, 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 15,660,000 226,200 15,433,800 Customer Relationships 15 3,250,000 46,944 3,203,056 45,890,000 273,144 45,616,856 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 3 Months Ended |
Mar. 31, 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: March 31, December 31, 2023 2022 Accrued wages and bonus $ 861,142 $ 514,169 Research and development 238,000 47,547 Professional and consulting fees 392,000 16,876 Accrued legal fees 2,218,817 439,901 Other accrued liabilities 539,240 209,909 Total accrued expenses and other current liabilities $ 4,634,947 $ 1,228,402 |
Notes Payable and Revolving L_2
Notes Payable and Revolving Line of Credit (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Notes Payable and Revolving Line of Credit | |
Schedule of Notes Payable and Revolving Line of Credit | Notes payable and revolving line of credit consisted of the following: March 31, December 31, 2023 2022 Senior term loan $ 4,430,556 $ — Facility term loan 2,455,144 — Mezzanine term loan 30,000,000 — 36,885,700 — Less: Unamortized debt issuance fees 632,864 — Less: current portion 2,394,421 — Total long-term notes payable $ 33,858,415 $ — |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Stockholders' Equity | |
Schedule of Restricted Stock Unit Activity | Unrecognized compensation expense related to restricted stock awards made by the Company was $15,006,636 at March 31, 2023. As of March 31, 2023, the Company had 5,100,085 shares available for issuance under the 2021 Plan. Number of RSUs Balance at December 31, 2022 1,451,448 Awarded 4,350,622 Forfeited (632,832) Balance at March 31, 2023 5,169,238 |
Net Income (Loss) Per Common _2
Net Income (Loss) Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 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 March 31, 2023 and 2022: Three Months Ended March 31, 2023 2022 Net loss $ (9,933,406) $ (2,577,964) Basic and diluted weighted average common shares 28,889,604 13,877,636 Basic and diluted net loss per common share $ (0.35) $ (0.19) |
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: Three Months Ended March 31, 2023 2022 Outstanding Warrants 1,500,000 — Restricted stock units 5,169,238 626,268 Total 6,669,238 626,268 |
Description of Business (Detail
Description of Business (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Description of Business | |||
Net income (loss) | $ (9,933,406) | $ (2,577,964) | |
Accumulated deficit | (17,850,199) | $ (7,916,791) | |
Net cash used in operating activities | $ (16,044,027) | $ (1,827,477) |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Summary of Significant Accounting Policies | ||
Restricted Cash | $ 1,115,890 | |
Product revenues | $ 8,349,422 | $ 6,733 |
Product warranty accrual | $ 385,748 |
Business Combination (Details)
Business Combination (Details) - USD ($) | 3 Months Ended | ||
Jan. 12, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | |
Business Acquisition [Line Items] | |||
Goodwill | $ 20,680,212 | $ 626,647 | |
Common stock, par value | $ 0.01 | $ 0.01 | |
Restricted stock units, granted | 4,350,622 | ||
Common stock, shares outstanding | 30,427,750 | 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 | ||
Number of warrants issued | 23,608 | ||
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 | 379,001 |
Inventories | 26,816,725 |
Prepaid and other current assets | 1,138,784 |
Property, Plant and Equipment | 9,481,992 |
Goodwill | 20,053,565 |
Intangible assets, net | 45,890,000 |
Right of Use Asset | 9,744,961 |
Other long-term assets | 220,779 |
Accounts payable | (12,094,186) |
Accrued expenses | (2,744,556) |
Accrued sales tax | (513,560) |
Notes payable | (36,341,332) |
Right of Use Liability | (10,297,100) |
Other current and non-current liabilities | (2,257,100) |
Total consideration | $ 52,466,073 |
Business Combination - Pro-form
Business Combination - Pro-forma Share of Revenues (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Business Acquisition [Line Items] | |||
Revenues | $ 8,349,422 | $ 6,733 | |
Net loss | $ (9,933,406) | $ (2,577,964) | |
Loss per diluted share | $ (0.35) | $ (0.19) | $ (0.19) |
Acquisition of Molekule | |||
Business Acquisition [Line Items] | |||
Revenues | $ 9,519,794 | $ 12,616,816 | |
Net loss | $ (11,449,924) | $ (10,506,030) | |
Loss per diluted share | $ (0.40) | $ (0.76) |
Financial Instruments Fair Va_3
Financial Instruments Fair Value Measurements (Details) | 3 Months Ended | |
Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Gain on FV change in warrant liability | $ 1,726,000 | |
2022 Warrants | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrant liability | $ 1,646,000 | $ 3,372,000 |
Stock price | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Fair value of warrants, measurement input | 1.69 | |
Expiration term (in years) | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Fair value of warrants, measurement input | 4.49 | |
Volatility | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Fair value of warrants, measurement input | 130 | |
Risk-free Rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Fair value of warrants, measurement input | 3.7 | |
Dividend yield | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Fair value of warrants, measurement input | 0 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Prepaid Expenses and Other Current Assets | ||
Prepaid expenses and other current assets | $ 1,356,895 | $ 665,395 |
Inventories (Details)
Inventories (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Inventories | ||
Raw materials | $ 8,118,999 | $ 712,752 |
Finished goods | 14,801,721 | 1,307,961 |
Work in progress | 6,771,484 | |
Total inventories | $ 29,692,204 | $ 2,020,713 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 3 Months Ended | 12 Months Ended | 15 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Mar. 31, 2023 | |
Property and Equipment, Net | ||||
Property and equipment, gross | $ 10,858,818 | $ 2,359,704 | $ 10,858,818 | |
Less accumulated depreciation | 1,148,306 | 240,570 | 1,148,306 | |
Property and equipment, excluding construction in progress | 9,710,512 | 2,119,134 | 9,710,512 | |
Construction in progress | 1,002,643 | 1,002,643 | ||
Property and equipment, net | 10,713,155 | 2,119,134 | 10,713,155 | |
Depreciation | 907,736 | $ 35,827 | ||
Leasehold improvements | ||||
Property and Equipment, Net | ||||
Property and equipment, gross | $ 2,424,079 | $ 847,217 | 2,424,079 | |
Machinery and tooling | ||||
Property, Plant and Equipment [Line Items] | ||||
Useful life (in years) | 7 years | 7 years | ||
Property and Equipment, Net | ||||
Property and equipment, gross | $ 7,741,001 | $ 1,270,652 | 7,741,001 | |
Furniture and equipment | ||||
Property and Equipment, Net | ||||
Property and equipment, gross | 260,571 | $ 241,835 | $ 260,571 | |
Furniture and equipment | Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Useful life (in years) | 3 years | |||
Furniture and equipment | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Useful life (in years) | 10 years | |||
Software | ||||
Property and Equipment, Net | ||||
Property and equipment, gross | $ 433,167 | $ 433,167 | ||
Software | Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Useful life (in years) | 2 years | 2 years | ||
Software | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Useful life (in years) | 3 years | 3 years |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Indefinite-Lived Intangible Assets [Line Items] | ||
Goodwill | $ 20,680,212 | $ 626,647 |
Identifiable intangible assets | 45,890,000 | |
Intangible assets, amortization expense | 273,144 | $ 0 |
Intangible assets, expected future amortization expense | 904,000 | |
Intangible assets, original cost | 45,890,000 | |
Intangible assets, accumulated amortization | 273,144 | |
Intangible assets, net book value | 45,616,856 | |
Trademark | ||
Indefinite-Lived Intangible Assets [Line Items] | ||
Intangible assets, original cost | 26,980,000 | |
Intangible assets, net book value | $ 26,980,000 | |
Software | ||
Indefinite-Lived Intangible Assets [Line Items] | ||
Intangible assets useful life | 15 years | |
Intangible assets, original cost | $ 15,660,000 | |
Intangible assets, accumulated amortization | 226,200 | |
Intangible assets, net book value | $ 15,433,800 | |
Customer Relationships | ||
Indefinite-Lived Intangible Assets [Line Items] | ||
Intangible assets useful life | 15 years | |
Intangible assets, original cost | $ 3,250,000 | |
Intangible assets, accumulated amortization | 46,944 | |
Intangible assets, net book value | $ 3,203,056 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Accrued Expenses and Other Current Liabilities | ||
Accrued wages and bonus | $ 861,142 | $ 514,169 |
Research and development | 238,000 | 47,547 |
Professional and consulting fees | 392,000 | 16,876 |
Accrued Legal Fees | 2,218,817 | 439,901 |
Other accrued liabilities | 539,240 | 209,909 |
Total accrued expenses and other current liabilities | $ 4,634,947 | $ 1,228,402 |
Notes Payable and Revolving L_3
Notes Payable and Revolving Line of Credit (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | |||||
Aug. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2023 | May 02, 2023 | Mar. 31, 2021 | |
Silicon Valley Bank | Loan and Security Agreement | Senior Term Loan | |||||||
Line of Credit Facility [Line Items] | |||||||
Outstanding principal balance | $ 4.4 | ||||||
Long-Term Debt, Weighted Average Interest Rate, at Point in Time | 4.25% | ||||||
Duration of remaining monthly payments | 36 months | ||||||
Debt Instrument, Maturity Date | Apr. 01, 2026 | ||||||
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, Interest Rate, Stated Percentage | 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 | Senior Term Loan | Financial Covenants | |||||||
Line of Credit Facility [Line Items] | |||||||
Cash balance to maintain | $ 2 | ||||||
Annual revenue target | 50 | ||||||
Silicon Valley Bank | Loan and Security Agreement | Mezzanine Term Loan | |||||||
Line of Credit Facility [Line Items] | |||||||
Outstanding principal balance | $ 30 | $ 30 | |||||
Long-Term Debt, Weighted Average Interest Rate, at Point in Time | 9.25% | ||||||
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, Interest Rate, Stated Percentage | 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 Tranche A | |||||||
Line of Credit Facility [Line Items] | |||||||
Outstanding principal balance | 15 | ||||||
Duration of remaining monthly payments | 36 months | ||||||
Debt Instrument, Maturity Date | Mar. 31, 2027 | ||||||
Silicon Valley Bank | Loan and Security Agreement | Mezzanine Term Loan Tranche B | |||||||
Line of Credit Facility [Line Items] | |||||||
Outstanding principal balance | $ 15 | ||||||
Duration of remaining monthly payments | 36 months | ||||||
Debt Instrument, Maturity Date | Mar. 31, 2028 | ||||||
Trinity | Facility Term Debt Agreement | Facility Term Loan | |||||||
Line of Credit Facility [Line Items] | |||||||
Additional payment due on loan draw downs | $ 0.4 | ||||||
Reclassification of term loan payment to long-term debt | 0.3 | ||||||
Outstanding principal balance | $ 2.4 | ||||||
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 | $ 2.9 | ||||||
Trinity | Facility Term Debt Agreement | Facility Term Loan | September 2020 | |||||||
Line of Credit Facility [Line Items] | |||||||
Draws on term loan | $ 0.6 | ||||||
Trinity | Facility Term Debt Agreement | Facility Term Loan | December 2020 | |||||||
Line of Credit Facility [Line Items] | |||||||
Draws on term loan | $ 0.9 | ||||||
Trinity | Facility Term Debt Agreement | Facility Term Loan | August 2021 | |||||||
Line of Credit Facility [Line Items] | |||||||
Draws on term loan | $ 0.5 | ||||||
Subsequent event | Silicon Valley Bank | Mezzanine Term Loan | Payment Deferral | |||||||
Line of Credit Facility [Line Items] | |||||||
Outstanding principal balance | $ 6.1 | ||||||
Subsequent event | Silicon Valley Bank | Loan and Security Agreement | Mezzanine Term Loan | |||||||
Line of Credit Facility [Line Items] | |||||||
Outstanding principal balance | $ 6.1 |
Notes Payable and Revolving L_4
Notes Payable and Revolving Line of Credit - Outstanding Loan Amounts (Details) | Mar. 31, 2023 USD ($) |
Line of Credit Facility [Line Items] | |
Senior notes | $ 36,885,700 |
Unamortized debt issuance fees | 632,864 |
Less: current portion | 2,394,421 |
Total long-term notes payable | 33,858,415 |
Senior Term Loan | |
Line of Credit Facility [Line Items] | |
Senior notes | 4,430,556 |
Facility Term Loan | |
Line of Credit Facility [Line Items] | |
Senior notes | 2,455,144 |
Mezzanine Term Loan | |
Line of Credit Facility [Line Items] | |
Senior notes | $ 30,000,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 1 Months Ended | 3 Months Ended | ||||||||
Oct. 03, 2022 shares | Aug. 10, 2022 USD ($) | May 01, 2021 shares | Nov. 30, 2020 | Feb. 28, 2019 USD ($) ft² | Mar. 31, 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 | $ 10,822,618 | $ 1,606,485 | ||||||||
Lease Commitments | Office Building | ||||||||||
Other Commitments [Line Items] | ||||||||||
Area of leased premises | ft² | 38,000 | |||||||||
Operating lease payments | $ 209,231 | 584,366 | ||||||||
Operating lease escalation rate | 3% | |||||||||
Lease Commitments | Warehouse Space | ||||||||||
Other Commitments [Line Items] | ||||||||||
Operating lease payments | 134,123 | |||||||||
Lease Commitments | Gardens Bio Science Partners, LLC | ||||||||||
Other Commitments [Line Items] | ||||||||||
Operating lease term of contract | 10 years | |||||||||
Area of leased premises | ft² | 20,000 | |||||||||
Operating lease payments | $ 260,000 | |||||||||
Operating lease escalation rate | 2.50% | |||||||||
Total Lease Payments | $ 2,385,000 | |||||||||
Legal Proceedings | ||||||||||
Other Commitments [Line Items] | ||||||||||
Litigation expense, settlement costs | $ 1,300,000 | |||||||||
Estimated litigation liability | $ 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 | ||
Feb. 26, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | |
Related Party Transactions | |||
Accounts receivable | $ 1,014,072 | $ 36,188 | |
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 | Mar. 31, 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 | ||
Nov. 23, 2021 | Mar. 31, 2023 | Mar. 31, 2022 | |
Restricted stock units, granted | 4,350,622 | ||
Stock-based compensation | $ 1,502,724 | $ 670,838 | |
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 | ||
Restricted stock units, granted | 2,791,918 | ||
Unrecognized compensation cost | $ 15,006,636 | ||
LTIP | Members of management | |||
Restricted stock units, granted | 732,090 | ||
LTIP | Members of the Board | |||
Restricted stock units, granted | 650,000 |
Stockholders' Equity - Restrict
Stockholders' Equity - Restricted stock unit activity (Details) | 3 Months Ended |
Mar. 31, 2023 shares | |
Restricted stock unit activity | |
RSU's, beginning balance | 1,451,448 |
RSU's granted | 4,350,622 |
RSU's forfeited | (632,832) |
RSU's, ending balance | 5,169,238 |
Stockholders' Equity - Private
Stockholders' Equity - Private Placement (Details) - USD ($) | Jun. 29, 2022 | Jan. 27, 2023 |
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 |
Net Income (Loss) Per Common _3
Net Income (Loss) Per Common Share (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Net Income (Loss) Per Common Share | |||
Net income (loss) | $ (9,933,406) | $ (2,577,964) | |
Basic weighted average common shares | 28,889,604 | 13,877,636 | |
Diluted weighted average common shares | 28,889,604 | 13,877,636 | 13,877,636 |
Basic net loss per common share | $ (0.35) | $ (0.19) | |
Loss per diluted share | $ (0.35) | $ (0.19) | $ (0.19) |
Net Income (Loss) Per Common _4
Net Income (Loss) Per Common Share - Anti-dilutive Securities (Details) - shares | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Class of Stock [Line Items] | ||
Anti-dilutive shares | 6,669,238 | 626,268 |
Outstanding Warrants | ||
Class of Stock [Line Items] | ||
Anti-dilutive shares | 1,500,000 | |
Restricted stock units, including market based RSUs | ||
Class of Stock [Line Items] | ||
Anti-dilutive shares | 5,169,238 | 626,268 |
Income Taxes - Income Tax Benef
Income Taxes - Income Tax Benefit (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Components of Income Tax Expense (Benefit), Continuing Operations [Abstract] | ||
Total Income Tax Benefit | $ 0 | $ 92,774 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | May 03, 2023 | Jan. 12, 2023 | Jun. 29, 2022 | May 05, 2023 | May 04, 2023 | Mar. 31, 2023 | Dec. 31, 2022 |
Subsequent Events | |||||||
Common stock, par value | $ 0.01 | $ 0.01 | |||||
Common stock, shares outstanding | 30,427,750 | 15,408,828 | |||||
2022 Private Placement | |||||||
Subsequent Events | |||||||
Gross proceeds from private placement | $ 15,000,000 | ||||||
2022 Private Placement | Common Stock | |||||||
Subsequent Events | |||||||
Number of common stock shares issued | 1,500,000 | ||||||
Number of warrants issued | 1,500,000 | ||||||
2023 Private Placement | |||||||
Subsequent Events | |||||||
Adjusted exercise price of warrants | $ 2 | ||||||
Acquisition of Molekule | AeroClean Technologies, Inc. | |||||||
Subsequent Events | |||||||
Effective date of acquisition | Jan. 12, 2023 | ||||||
Acquisition of Molekule | AeroClean Technologies, Inc. | Common Stock | |||||||
Subsequent Events | |||||||
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 | |||||||
Subsequent Events | |||||||
Number of warrants issued | 23,608 | ||||||
Shares issued at effective time of acquisition | 14,907,210 | ||||||
Subsequent event | 2023 Private Placement | |||||||
Subsequent Events | |||||||
Exercise price of warrants | $ 11 | ||||||
Adjusted exercise price of warrants | $ 2 | ||||||
Subsequent event | Securities Purchase Agreement Private Placement | |||||||
Subsequent Events | |||||||
Gross proceeds from private placement | $ 9,971,500 | ||||||
Subsequent event | Securities Purchase Agreement Private Placement | Common Stock | |||||||
Subsequent Events | |||||||
Number of common stock shares issued | 3,400,000 | ||||||
Subsequent event | Securities Purchase Agreement, Series A Warrants | |||||||
Subsequent Events | |||||||
Number of warrants issued | 3,125,000 | ||||||
Exercise price of warrants | 1.60 | ||||||
Subsequent event | Securities Purchase Agreement, Series B Warrants | |||||||
Subsequent Events | |||||||
Number of warrants issued | 6,250,000 | ||||||
Exercise price of warrants | 1.84 | ||||||
Subsequent event | Securities Purchase Agreement, Pre-Funded Warrants | |||||||
Subsequent Events | |||||||
Number of warrants issued | 2,850,000 | ||||||
Exercise price of warrants | 1.60 | ||||||
Pre-funded exercise price of warrants at issuance | 1.59 | ||||||
Nominal exercise price of warrants | $ 0.01 |
Subsequent Events - Loan Agreem
Subsequent Events - Loan Agreements (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | |||||
May 02, 2023 | Aug. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2023 | Mar. 31, 2021 | |
Silicon Valley Bank | Loan and Security Agreement | Senior Term Loan | |||||||
Debt Instrument [Line Items] | |||||||
Outstanding principal balance | $ 4.4 | ||||||
Long-Term Debt, Weighted Average Interest Rate, at Point in Time | 4.25% | ||||||
Duration of remaining monthly payments | 36 months | ||||||
Debt Instrument, Maturity Date | Apr. 01, 2026 | ||||||
Silicon Valley Bank | Loan and Security Agreement | Senior Term Loan | Annual Interest Rate (Greater of Prime +1% or 4.25%) | Base Rate | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.25% | ||||||
Silicon Valley Bank | Loan and Security Agreement | Senior Term Loan | Annual Interest Rate (Greater of Prime +1% or 4.25%) | Prime Rate | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, Basis Spread on Variable Rate | 1% | ||||||
Silicon Valley Bank | Loan and Security Agreement | Senior Term Loan | Financial Covenants | |||||||
Debt Instrument [Line Items] | |||||||
Cash balance to maintain | $ 2 | ||||||
Annual revenue target | 50 | ||||||
Silicon Valley Bank | Loan and Security Agreement | Mezzanine Term Loan | |||||||
Debt Instrument [Line Items] | |||||||
Outstanding principal balance | $ 30 | $ 30 | |||||
Long-Term Debt, Weighted Average Interest Rate, at Point in Time | 9.25% | ||||||
Silicon Valley Bank | Loan and Security Agreement | Mezzanine Term Loan | Annual Interest Rate (Greater of Prime +6% or 9.25%) | Base Rate | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 9.25% | ||||||
Silicon Valley Bank | Loan and Security Agreement | Mezzanine Term Loan | Annual Interest Rate (Greater of Prime +6% or 9.25%) | Prime Rate | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, Basis Spread on Variable Rate | 6% | ||||||
Silicon Valley Bank | Loan and Security Agreement | Mezzanine Term Loan Tranche A | |||||||
Debt Instrument [Line Items] | |||||||
Outstanding principal balance | 15 | ||||||
Duration of remaining monthly payments | 36 months | ||||||
Debt Instrument, Maturity Date | Mar. 31, 2027 | ||||||
Silicon Valley Bank | Loan and Security Agreement | Mezzanine Term Loan Tranche B | |||||||
Debt Instrument [Line Items] | |||||||
Outstanding principal balance | $ 15 | ||||||
Duration of remaining monthly payments | 36 months | ||||||
Debt Instrument, Maturity Date | Mar. 31, 2028 | ||||||
Trinity | Facility Term Debt Agreement | Facility Term Loan | |||||||
Debt Instrument [Line Items] | |||||||
Additional payment due on loan draw downs | $ 0.4 | ||||||
Reclassification of term loan payment to long-term debt | 0.3 | ||||||
Outstanding principal balance | $ 2.4 | ||||||
Fee percentage on total amount drawn, end of loan term | 10% | ||||||
Trinity | Facility Term Debt Agreement | Facility Term Loan | June 2020 | |||||||
Debt Instrument [Line Items] | |||||||
Draws on term loan | $ 2.9 | ||||||
Trinity | Facility Term Debt Agreement | Facility Term Loan | September 2020 | |||||||
Debt Instrument [Line Items] | |||||||
Draws on term loan | $ 0.6 | ||||||
Trinity | Facility Term Debt Agreement | Facility Term Loan | December 2020 | |||||||
Debt Instrument [Line Items] | |||||||
Draws on term loan | $ 0.9 | ||||||
Trinity | Facility Term Debt Agreement | Facility Term Loan | August 2021 | |||||||
Debt Instrument [Line Items] | |||||||
Draws on term loan | $ 0.5 | ||||||
Subsequent event | Silicon Valley Bank | Mezzanine Term Loan | Revenue covenant 12 months ended 2023 | |||||||
Debt Instrument [Line Items] | |||||||
Revenue covenant threshold | $ 50 | ||||||
Subsequent event | Silicon Valley Bank | Loan and Security Agreement | Mezzanine Term Loan | |||||||
Debt Instrument [Line Items] | |||||||
Outstanding principal balance | 6.1 | ||||||
Subsequent event | Payment Deferral | Silicon Valley Bank | Mezzanine Term Loan | |||||||
Debt Instrument [Line Items] | |||||||
Outstanding principal balance | $ 6.1 |