Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2024 | Aug. 12, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2024 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2024 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 001-41964 | |
Entity Registrant Name | Chromocell Therapeutics Corporation | |
Entity Central Index Key | 0001919246 | |
Entity Tax Identification Number | 86-3335449 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 4400 Route 9 South | |
Entity Address, Address Line Two | Suite 1000 | |
Entity Address, City or Town | Freehold | |
Entity Address, State or Province | NJ | |
Entity Address, Postal Zip Code | 07728 | |
City Area Code | (877) | |
Local Phone Number | 265-8266 | |
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Trading Symbol | CHRO | |
Security Exchange Name | NYSEAMER | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Elected Not To Use the Extended Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 5,766,704 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Jun. 30, 2024 | Dec. 31, 2023 |
CURRENT ASSETS | ||
Cash | $ 2,405,098 | $ 96,391 |
Prepaid expenses | 158,102 | |
Due from Chromocell Corporation | 40,400 | |
TOTAL CURRENT ASSETS | 2,603,600 | 96,391 |
TOTAL ASSETS | 2,603,600 | 96,391 |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | 835,408 | 4,620,925 |
Accrued compensation | 363,429 | 645,947 |
Bridge loan, net of debt discount | 316,324 | |
Loan payable, net of debt discount | 1,455,416 | 202,279 |
Loan payable - related party, net of debt discount | 131,868 | 750,082 |
Due to Chromocell Corporation | 5,386 | |
TOTAL CURRENT LIABILITIES | 2,786,121 | 6,540,943 |
TOTAL LIABILITIES | 2,786,121 | 6,540,943 |
STOCKHOLDERS’ DEFICIT | ||
Common stock, $0.0001 par value, 200,000,000 shares authorized, 5,823,166 and 3,906,300 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively | 584 | 391 |
Additional paid in capital | 17,670,493 | 7,074,646 |
Accumulated deficit | (17,853,598) | (13,519,649) |
TOTAL STOCKHOLDERS’ DEFICIT | (182,521) | (6,444,552) |
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | 2,603,600 | 96,391 |
Series A Preferred Stock [Member] | ||
STOCKHOLDERS’ DEFICIT | ||
Preferred stock, value, issued | 60 | |
TOTAL STOCKHOLDERS’ DEFICIT | 60 | |
Series C Preferred Stock [Member] | ||
STOCKHOLDERS’ DEFICIT | ||
Preferred stock, value, issued | ||
TOTAL STOCKHOLDERS’ DEFICIT |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2024 | Dec. 31, 2023 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares outstanding | 5,823,166 | 3,906,300 |
Common stock, shares issued | 5,823,166 | 3,906,300 |
Series A Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 700,000 | 700,000 |
Preferred stock, shares outstanding | 0 | 600,000 |
Preferred stock, shares issued | 0 | 600,000 |
Series C Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,000 | 5,000 |
Preferred stock, shares outstanding | 2,600 | 0 |
Preferred stock, shares issued | 2,600 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
OPERATING EXPENSES | ||||
General and administrative expenses | $ 1,209,874 | $ 537,876 | $ 1,997,435 | $ 1,015,506 |
Research and development | 12,955 | 49,955 | 479,561 | 236,072 |
Professional fees | 541,257 | 189,329 | 1,221,072 | 440,165 |
Total operating expenses | 1,764,086 | 777,160 | 3,698,068 | 1,691,743 |
NET LOSS FROM OPERATIONS | (1,764,086) | (777,160) | (3,698,068) | (1,691,743) |
OTHER (EXPENSE) INCOME | ||||
Interest expense | (11,060) | (176,187) | (639,408) | (228,165) |
Other income | 3,527 | 3,527 | ||
Total other (expense) income | (7,533) | (176,187) | (635,881) | (228,165) |
Net loss before provision for income taxes | (1,771,619) | (953,347) | (4,333,949) | (1,919,908) |
Provision for income taxes | ||||
NET LOSS | $ (1,771,619) | $ (953,347) | $ (4,333,949) | $ (1,919,908) |
Net loss per common share - basic and diluted | $ (0.31) | $ (0.95) | $ (0.83) | $ (1.82) |
Weighted average number of common shares outstanding during the year - basic and diluted | 5,773,708 | 1,002,779 | 5,232,349 | 1,056,646 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (Unaudited) - USD ($) | Series A Preferred Stock [Member] | Series C Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2022 | $ 60 | $ 111 | $ 4,432,148 | $ (6,138,856) | $ (3,706,537) | |
Beginning balance (in shares) at Dec. 31, 2022 | 600,000 | 1,111,112 | ||||
Stock option compensation | 272,221 | 272,221 | ||||
Net loss | (966,561) | (966,561) | ||||
Ending balance, value at Mar. 31, 2023 | $ 60 | $ 111 | 2,704,369 | (7,105,417) | (4,440,877) | |
Ending balance (in shares) at Mar. 31, 2023 | 600,000 | 1,111,112 | ||||
Beginning balance, value at Dec. 31, 2022 | $ 60 | $ 111 | 4,432,148 | (6,138,856) | (3,706,537) | |
Beginning balance (in shares) at Dec. 31, 2022 | 600,000 | 1,111,112 | ||||
Net loss | (1,919,908) | |||||
Ending balance, value at Jun. 30, 2023 | $ 60 | $ 99 | 3,157,719 | (8,058,764) | (4,900,886) | |
Ending balance (in shares) at Jun. 30, 2023 | 600,000 | 982,923 | ||||
Beginning balance, value at Mar. 31, 2023 | $ 60 | $ 111 | 2,704,369 | (7,105,417) | (4,440,877) | |
Beginning balance (in shares) at Mar. 31, 2023 | 600,000 | 1,111,112 | ||||
Stock option compensation | 327,338 | 327,338 | ||||
Net loss | (953,347) | |||||
Issuance cost from common stock issued for extension of bridge loan | $ 1 | 125,999 | 126,000 | |||
Issuance cost from common stock issued for extension of bridge loan (in shares) | 5,556 | |||||
Shares forfeited | $ (13) | 13 | ||||
Shares Issued, Shares, Share-Based Payment Arrangement, Forfeited | (133,745) | |||||
Ending balance, value at Jun. 30, 2023 | $ 60 | $ 99 | 3,157,719 | (8,058,764) | (4,900,886) | |
Ending balance (in shares) at Jun. 30, 2023 | 600,000 | 982,923 | ||||
Beginning balance, value at Dec. 31, 2023 | $ 60 | $ 391 | 7,074,646 | (13,519,649) | (6,444,552) | |
Beginning balance (in shares) at Dec. 31, 2023 | 600,000 | 3,906,300 | ||||
Stock option compensation | 292,552 | 292,552 | ||||
Net loss | (2,562,300) | (2,562,330) | ||||
Issuance cost from common stock issued for extension of bridge loan | $ 9 | 447,770 | 447,779 | |||
Issuance cost from common stock issued for extension of bridge loan (in shares) | 81,112 | |||||
Conversion of preferred stock | $ (60) | $ 50 | 10 | |||
Conversion of preferred stock (in shares) | (600,000) | 499,429 | ||||
Shares issued for services | $ 110 | 5,971,890 | 5,972,000 | |||
Shares issued for services (in shares) | 1,100,000 | |||||
Standby agreement | $ 4 | (4) | ||||
Standby agreement (in shares) | 37,500 | |||||
Recission of common stock | $ (11) | (91,501) | (91,512) | |||
Recission of common stock (in shares) | (111,129) | |||||
Transfer of liabilities to Chromocell Corp. for preferred C shares | 2,153,362 | 2,153,363 | ||||
Transfer of liabilities to Chromocell Corp. for preferred C shares (in shares) | 2,600 | |||||
Common stock issued for conversion of notes | $ 25 | 1,362,796 | 1,362,821 | |||
Common stock issued for conversion of notes (in shares) | 253,492 | |||||
Ending balance, value at Mar. 31, 2024 | $ 578 | 17,211,521 | (16,081,979) | 1,130,120 | ||
Ending balance (in shares) at Mar. 31, 2024 | 2,600 | 5,766,704 | ||||
Beginning balance, value at Dec. 31, 2023 | $ 60 | $ 391 | 7,074,646 | (13,519,649) | (6,444,552) | |
Beginning balance (in shares) at Dec. 31, 2023 | 600,000 | 3,906,300 | ||||
Net loss | (4,333,949) | |||||
Ending balance, value at Jun. 30, 2024 | $ 584 | 17,670,493 | (17,853,598) | (182,521) | ||
Ending balance (in shares) at Jun. 30, 2024 | 2,600 | 5,823,166 | ||||
Beginning balance, value at Mar. 31, 2024 | $ 578 | 17,211,521 | (16,081,979) | 1,130,120 | ||
Beginning balance (in shares) at Mar. 31, 2024 | 2,600 | 5,766,704 | ||||
Stock option compensation | 366,503 | 366,503 | ||||
Net loss | (1,771,619) | (1,771,619) | ||||
Shares issued for services | $ 6 | 78,494 | 78,500 | |||
Shares issued for services (in shares) | 56,462 | |||||
RSU expense | 13,975 | 13,975 | ||||
Ending balance, value at Jun. 30, 2024 | $ 584 | $ 17,670,493 | $ (17,853,598) | $ (182,521) | ||
Ending balance (in shares) at Jun. 30, 2024 | 2,600 | 5,823,166 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2023 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (4,333,949) | $ (1,919,908) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Amortization of debt discount | 605,630 | 49,122 |
Issuance cost from shares issued on extension of bridge loan | 126,000 | |
Stock-based compensation | 751,530 | 599,559 |
Changes in operating assets and liabilities: | ||
Accounts payable and accrued expenses | (1,481,113) | 548,297 |
Accrued compensation | (282,518) | 229,941 |
Due from Chromocell Corporation | (45,786) | |
Prepaid expenses | (158,102) | |
Net Cash Used In Operating Activities | (4,944,308) | (366,989) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from loan payable, net of debt discount | 1,455,416 | 90,157 |
Proceeds from loan payable - related party, net of debt discount | 131,868 | 303,651 |
Payment of bridge loan, net of debt discount | (214,757) | |
Common stock issued for cash | 5,972,000 | |
Recission of common stock | (91,512) | |
Net Cash Provided By Financing Activities | 7,253,015 | 393,808 |
NET INCREASE IN CASH | 2,308,707 | 26,819 |
CASH AT BEGINNING OF PERIOD | 96,391 | 55,074 |
CASH AT END OF PERIOD | 2,405,098 | 81,893 |
Supplemental cash flow information: | ||
Cash paid for income taxes | ||
Cash paid for interest expense | ||
NONCASH INVESTING AND FINANCING ACTIVITIES: | ||
Debt discount from common stock issued for extension of bridge loan | 447,779 | 126,000 |
Conversion of notes | 1,362,821 | |
Transfer of liabilities to Chromocell Corp for Preferred Stock | $ 2,153,362 |
ORGANIZATION AND NATURE OF BUSI
ORGANIZATION AND NATURE OF BUSINESS | 6 Months Ended |
Jun. 30, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND NATURE OF BUSINESS | NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS Company Background Chromocell Therapeutics Corporation (“Chromocell” or the “Company”) was incorporated in the State of Delaware on March 19, 2021. On August 10, 2022, the Company entered into that certain Contribution Agreement (the “Contribution Agreement”) with Chromocell Corporation, a Delaware corporation (“Chromocell Holdings”), pursuant to which, effective July 12, 2022 (the “Contribution Date”), Chromocell Holdings contributed all assets and liabilities related to Chromocell Holdings’ historical therapeutic business, including all patents, pre-clinical and Phase I study results and data, and trade secrets related to the CC8464 compound to the Company. (See Note 4) The Company a clinical-stage biotech company focused on developing and commercializing new therapeutics to alleviate pain. The Company’s clinical focus is to selectively target the sodium ion-channel known as “NaV1.7”, which has been genetically validated as a pain receptor in human physiology. A NaV1.7 blocker is a chemical entity that modulates the structure of the sodium-channel in a way to prevent the transmission of pain perception to the central nervous system (“CNS”). The Company’s goal is to develop a novel and proprietary class of NaV blockers that target the body’s peripheral nervous system. The Company has formally launched two programs developing pain treatment therapeutics, both based on the same proprietary molecule, as follows: Neuropathic Pain Eye Pain The Company may further expand its pipeline with other internal or external compounds in the future, but all other internally discovered compounds are pre-clinical and no commercial discussions about in-licensing have been initiated to date, other than as disclosed in this quarterly report with respect to the licensing of the certain spray formulations from Benuvia Operations LLC (“Benuvia”), entered into on December 23, 2023. The Company has a limited operating history and has not generated revenue from its intended operations. The Company’s business and operations are sensitive to general business and economic conditions in the U.S. and worldwide along with local, state, and federal governmental policy decisions. A host of factors beyond the Company’s control could cause fluctuations in these conditions. Adverse conditions may include changes in the biotechnology regulatory environment, technological advances that render the Company’s technologies obsolete, availability of resources for clinical trials, acceptance of technologies into the medical community, and competition from larger, more well-funded companies. On February 21, 2024, the Company completed the initial public offering of its Common Stock (the “IPO”) and issued 1,100,000 6.00 5.7 million 0.9 million |
GOING CONCERN ANALYSIS
GOING CONCERN ANALYSIS | 6 Months Ended |
Jun. 30, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GOING CONCERN ANALYSIS | NOTE 2 – GOING CONCERN ANALYSIS During the three months ended June 30, 2024, the Company had a net loss of approximately $ 4.3 2.4 0.2 The financial statements included in this report do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the matters discussed herein. While the Company believes in the viability of the Company’s strategy to generate sufficient revenue, control costs, and raise additional funds, when necessary, there can be no assurances to that effect. The Company’s ability to continue as a going concern is dependent upon the ability to implement the business plan, generate sufficient revenues, raise capital, and to control operating expenses. Liquidity and Capital Resources At June 30, 2024, the Company had approximately $ 2.4 0.2 0.1 6.4 Based on the Company’s current projections, management believes there is substantial doubt about its ability to continue to operate as a going concern and fund its operations through at least the next twelve months following the issuance of these financial statements. While the Company will continue to invest in its business and the development of CC8464 and CT2000, and potentially other molecules, it is unlikely that the Company will generate product or licensing revenue during the next twelve months. During the period, the Company completed its initial public offering, raising $ 5.7 million after deducting the underwriting discounts and commissions and offering expenses , and the Company may need to raise additional funds through either strategic partnerships or the capital markets. However, there is no assurance that the Company will be able to raise such additional funds on acceptable terms, if at all. If the Company raises additional funds by issuing securities, existing stockholders may be diluted. If adequate funds are not available and expenditures exceed the Company’s current expectations, the Company may be required to curtail its operations or other business activities or obtain funds through arrangements with strategic partners or others that may require the Company to relinquish rights to certain technologies or potential markets. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2024 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying 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 the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of the Company’s management, the accompanying condensed consolidated financial statements reflect all adjustments, consisting of normal, recurring adjustments, considered necessary for a fair presentation of the results for the interim periods ended June 30, 2024 and 2023. Although management believes that the disclosures in these unaudited condensed consolidated financial statements are adequate to make the information presented not misleading, certain information and footnote disclosures normally included in condensed consolidated financial statements that have been prepared in accordance U.S. GAAP have been omitted pursuant to the rules and regulations of the SEC. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s financial statements and notes related thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on April 16, 2024. The interim results for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any future interim periods. Principles of consolidation The consolidated financial statements include the accounts of Chromocell Therapeutics Corporation and its wholly owned subsidiary, Chromocell Therapeutics Australia Pty. Ltd. All significant intercompany balances and transactions have been eliminated. Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made by management include, but are not limited to, estimating the valuation of deferred income taxes. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. As of June 30, 2024 and December 31, 2023, the Company did not have any cash equivalents. As of June 30, 2024, the Company had deposits in excess of federally insured limits. Research and Development The Company incurs research and development (“R&D”) costs during the process of researching and developing technologies and future offerings. The Company expenses these costs as incurred unless such costs qualify for capitalization under applicable guidance. The Company reviews acquired R&D and licenses to determine if they should be capitalized or expensed under U.S. GAAP standards. Below is a disaggregation of R&D expenses: For the Three Months Ended For the Three Months Ended For the Six Months Ended For the Six Months Ended June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 Consultant $ 107,357 $ 16,400 $ 137,390 $ 23,300 Lab Materials 1,452 — 1,452 — Lab Cell Storage 27,272 7,653 51,398 17,753 Chemistry Manufacturing and Controls (“CMC”) (133,780 ) — 169,617 — IP Services 10,654 35,402 119,704 195,019 Total $ 12,955 $ 49,955 $ 479,561 $ 236,072 Fair Value Measurements and Fair Value of Financial Instruments The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels: ● Level 1 Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. ● Level 2 Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. ● Level 3 Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. The Company did not identify any assets or liabilities that are required to be presented on the balance sheets at fair value in accordance with ASC Topic 820. Due to the short-term nature of all financial assets and liabilities, their carrying value approximates their fair value as of the balance sheet dates. Stock-Based Compensation The Company accounts for stock-based compensation costs under the provisions of ASC 718, Compensation—Stock Compensation, which requires the measurement and recognition of compensation expense related to the fair value of stock-based compensation awards that are ultimately expected to vest. Stock-based compensation expense recognized includes the compensation cost for all stock-based payments granted to employees, officers, and directors based on the grant date fair value estimated in accordance with the provisions of ASC 718. ASC 718 is also applied to awards modified, repurchased, or cancelled during the periods reported. Stock-based compensation is recognized as expense over the employee’s requisite vesting period and over the nonemployee’s period of providing goods or services. Pursuant to ASC 718, the Company can elect to either recognize the expenses on a straight-line or graded basis and has elected to do so under the straight-line basis. Basic and Diluted Net Loss per Common Share Basic loss per common share is computed by dividing the net loss by the weighted average number of shares of Common Stock outstanding for each period. Diluted loss per share is computed by dividing the net loss by the weighted average number of shares of Common Stock outstanding plus the dilutive effect of shares issuable through the common stock equivalents. The weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti- dilutive. As of June 30, 2024, 820,449 55,000 257,993 of June 30, 2023, 208,672 Income Taxes The Company accounts for income taxes pursuant to the provision of ASC 740 “Accounting for Income Taxes,” which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized. The Company follows the provision of the ASC 740 related to Accounting for Uncertain Income Tax Position. When tax returns are filed, it is more likely than not that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is most likely that not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions will more likely than not be upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits. The federal and state income tax returns of the Company are subject to examination by the Internal Revenue Service and state taxing authorities, generally for three years after they were filed. The Company is in the process of filing the tax returns for the 2023 year. After review of the prior year financial statements and the results of operations through December 31, 2023, the Company has recorded a full valuation allowance on its deferred tax asset. Recently Issued Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disaggregated information about a reporting entity’s effective tax rate reconciliation, as well as information related to income taxes paid to enhance the transparency and decision usefulness of income tax disclosures. This ASU will be effective for the annual periods beginning after December 15, 2024. The Company is currently evaluating the timing and impacts of adoption of this ASU. Subsequent Events The Company has evaluated all transactions through the date the financial statements were issued for subsequent event disclosure consideration. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2024 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 4 – RELATED PARTY TRANSACTIONS Employment Agreement On February 14, 2024, the board of director of the Company (the “Board”) received a demand letter from an attorney representing Chromocell Holdings and Christian Kopfli, the Company’s former Chief Executive Officer and former Chief Strategy Officer. Mr. Kopfli alleges an improper termination for “cause” and seeks monetary damages in the amount of $479,169. Of the $479,169 asserted by Mr. Kopfli, as of June 30, 2024, the Company has accrued $363,091 in compensation expenses associated with Mr. Kopfli’s prior employment with the Company. Camden Consulting LLC The Company entered into a Consultant Agreement with Camden Capital LLC (“Camden”), dated January 10, 2023 (the “Consultant Agreement”). This Consultant Agreement replaced an agreement with Mr. Francis Knuettel II dated June 2, 2022 and pursuant to which, Camden agreed to provide the services of Mr. Knuettel, who was to serve as the Company’s Chief Financial and Strategy Officer, Treasurer and Secretary. Under the Consultant Agreement, Camden accrued a consulting fee for the period June 6, 2022 through August 31, 2022 of $10,000 per month and effective September 1, 2022, began to accrue a consulting fee of $20,000 per month, payable in cash at the rate of $5,000 per month (a minimum of $1,125 per week), with the remainder accrued. All accrued consulting fees are payable as of the earliest of a sale or liquidation of the Company, the Company’s bankruptcy or three days after Post-registration Approval. The Consultant Agreement provides for the following equity awards to Camden: (i) an option, awarded as of January 10, 2023, to acquire 200,000 shares of the Company’s Common Stock, vesting quarterly over 10 quarters and beginning October 1, 2022, with the option having an exercise price equal to the fair market value of the Company’s Common Stock on the date of grant and expiring on the 10th anniversary of the date of grant; (ii) an option, awarded as of January 10, 2023, to acquire 25,000 shares of the Company’s Common Stock, vesting 100% upon the sooner of the sale of the Company or Post-registration Approval, with the option having an exercise price equal to the fair market value of the Company’s Common Stock on the date of grant and expiring on the 10th anniversary of the date of grant; and (iii) a RSU, awarded as of January 10, 2023, of 150,000 shares of the Company’s Common Stock, vesting 100% on the day after the first trading window that opens after Post-registration Approval The Consultant Agreement contemplates an additional consulting fee, as determined by the Board. The potential additional consulting fee is 50% of the annualized consulting fee and will be based on achievement of performance goals and objectives established by the Board in concert with Mr. Knuettel in January of each year. The Board may increase the potential additional consulting fee in recognition of performance in excess of the performance objectives. Any amount shall only be paid if Camden continues to provide consulting services to the Company as of the date of payment, which will be no later than March 15 of the year following the year to which the additional consulting fee relates. Any additional consulting fee for 2022 is payable solely in the Board’s discretion. Pursuant to the Consultant Agreement, in the event the relationship with Camden is involuntarily terminated by the Company other than for “Cause” or if Camden terminates the relationship for “Good Reason,” Camden is entitled to receive (i) six months of consulting fees at the same rate existing immediately prior to termination, (ii) a potential additional consulting fee, if performance goals and objectives have been established for the year and prorated for the period of service, and (iii) six months of additional vesting credit with respect to any outstanding time-based equity awards. “Cause” and “Good Reason” are each defined in the Consultant Agreement. Finally, Camden and Mr. Knuettel agree to certain non-solicitation and non-competition provisions for a period of 12 months following termination of the relationship and to certain confidentiality obligations. Additional terms and conditions are set forth in the Consultant Agreement. On June 23, 2023, we amended and restated the Consultant Agreement by entering into an Amended and Restated Consultant Agreement with Camden whereby the RSU for 16,667 27,777 16,667 Effective July 19, 2023, the Board appointed Francis Knuettel II as Interim Chief Executive Officer and as of March 13, 2024, the appointed Francis Knuettel II as Chief Executive Officer of the Company. Mr. Knuettel will serve as the Company’s Chief Executive Officer until a successor is duly elected and qualified, unless sooner removed. In addition to his role as Chief Executive Officer of the Company, Mr. Knuettel will continue to serve in his capacity as Chief Financial Officer, Treasurer and Secretary of the Company. Director Note On December 6, 2022, the Company and Mr. Todd Davis, one of the Company’s directors, entered into the Director Note for $175,000. The Director Note has an original issuance discount of $ 75,000 15 April and September Bridge Financings On April 17, 2023 and September 1, 2023, the Company entered into bridge notes, the investors in which were almost entirely existing investors. Related party investors in the April Bridge Financing include Chromocell Holdings, Boswell Prayer Ltd., Motif Pharmaceuticals Ltd, Aperture Healthcare Ventures Ltd., MDB Merchants Park LLC, Balmoral Financial Group LLC and AME EQUITIES LLC (each a related party based on share ownership in excess of 5% or resulting from a principal at one of the entities being on the Board ). All of these investors, except Chromocell Holdings, also participated in the September Bridge Financing. On February 21, 2024, the principal and accrued interest on these notes converted into 130,494 shares of the Company’s Common Stock. Due from/to Chromocell Holdings As of June 30, 2024, the Company had a $ 40,400 As of December 31, 2023, the Company had a $ 5,586 Side Letter to the Contribution Agreement and Issuance of Series C Convertible Redeemable Preferred Stock On August 2, 2023, the Company entered into a side letter to the Contribution Agreement (the “Holdings Side Letter”) with Chromocell Holdings. Pursuant to the side letter, upon closing of the Company’s IPO: (a) Chromocell Holdings re-assumed all $1.6 million in direct liabilities previously assumed by the Company in accordance with the Contribution Agreement, (b) Chromocell Holdings waived the Company’s obligations to make a cash payment in the amount of $0.6 million to Chromocell Holdings, and (c) in consideration thereof, the Company issued to Chromocell Holdings 2,600 shares of Series C Convertible Redeemable Preferred Stock of the Company, par value of $ 0.0001 The Series C Preferred Stock has a liquidation preference of $1,000 per share. Holders of the Series C Preferred Stock are not entitled to dividends, have no voting rights other than as required by law, and the shares of Series C Preferred Stock are convertible into shares of Common Stock at a price of $7.50 per share of Common Stock. Following the IPO, at the Company’s option, the shares of Series C Preferred Stock are convertible into shares of Common Stock automatically if, the trading price of the Common Stock exceeds certain thresholds and are redeemable by the Company for cash. Related Party Note On May 10, 2024, the Company and Camden Capital LLC, a company controlled by Mr. Knuettel, the Company’s Chief Executive Officer and Chief Financial Officer, entered into the promissory note for approximately $131,868. The note matures on December 15, 2024, or, if earlier to occur, upon the closing of a public or private offering or other financing or capital-raising transaction of any kind. The note has an interest rate of 4.86% per annum. 131,868 895 |
NOTES PAYABLE
NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2024 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTE 5 – NOTES PAYABLE Investor Note On February 4, 2022, the Company entered into a note payable for $ 450,000 150,000 50 February 3, 2023 14,370 135,630 On February 27, 2023, the Investor Note was amended. The maturity date was extended from its original due date of February 3, 2023 to May 15, 2023, in return for the Company agreeing to pay 2% per month in accrued interest and the third party agreeing to settle its outstanding debt, including accrued interests in shares of Common Stock at the IPO. On June 23, 2023, the Company entered into a side letter with the holder of the Investor Note pursuant to which the Company (i) amended and restated the Investor Note to extend the maturity date to August 15, 2023 and (ii) in consideration therefor, issued to such holder 50,000 shares of Common Stock. The Company determined that this extension qualified as a modification of the Investor Note rather than an extinguishment. The Company recorded an expense of $126,000 from the issuance of the 556 shares of Common Stock based on a share price of $22.68. The $22.68 share price was based on a third-party valuation of the Company’s Common Stock, with certain adjustments as set forth below in detail in Note 7 – Stockholders’ Equity. On August 17, 2023, the Company entered into a second side letter with the holder of the Investor Note (the “August Investor Note Side Letter” and, together with the June Investor Note Side Letter, the “Investor Note Side Letters”) pursuant to which the Company (i) amended and restated the Investor Note to extend the maturity date to September 30, 2023 and (ii) in consideration therefor, issued to such holder 30,000 450,000 In addition, pursuant to the Investor Note Side Letters, the Company agreed to register the 8,890 shares of Common Stock (5,556 issued for the June 23, 2023 side letter, and 3,334 issued for the August 17, 2023 side letter) for resale. The Company recorded an expense of $75,600 from the issuance of the 3,333 shares of Common Stock based on a share price of $22.68. The $22.68 share price was based on a third-party valuation of the Company’s Common Stock, with certain adjustments as set forth below in detail in Note 7 – Stockholders’ Equity. Effective October 10, 2023, the Company entered into a side letter with the Holder of the Investor Note, which extended the maturity date of the Investor Note to November 14, 2023 and the Company issued to the Holder of the Investor Note 3,334 Effective November 13, 2023, the Company entered into another side letter with the holder of the Investor Note pursuant to which the Company (i) amended and restated the Investor Note to extend the maturity date to January 31, 2024, and (ii) in consideration therefor, agreed to issue to such Holder of the Investor Note 3,334 Effective January 30, 2024, the Company entered into another side letter with the holder of the Investor Note (the “January Investor Note Side Letter”) pursuant to which the Company (i) amended and restated the Investor Note to extend the maturity date to February 29, 2024, and (ii) in consideration therefor, agreed to issue to such Holder of the Investor Note 77,778 As of June 30, 2024, the Investor Note and the accrued interest on the note has been fully paid off. As of December 31, 2023, there was $ 98,036 0 27,000 15,517 44,036 Director Note On December 6, 2022, the Company and Mr. Todd Davis, one of the Company’s directors, entered into a note payable agreement (the “Director Note”) for $ 175,000 75,000 15 On December 28, 2023, the Company entered into an amendment to the Director Note, which extended the maturity date to February 29, 2024. The Director Note was exchanged for 29,167 shares of Common Stock at the time of the Company’s IPO. April Bridge Financing On April 17, 2023, the Company entered into a bridge loan for working capital purposes, with various accredited investors, all of whom are pre-existing stockholders, in the aggregate principal amount of $393,808 (the “April Bridge Financing”). During the three and six months ended June 30, 2023, the Company received $162,852 and $389,757, respectively, in Advances from certain participating investors. Such Advances accrued interest at a rate of 8% per annum until close of the April Bridge Financing on April 17, 2023, for a total of $1,870 in aggregate interest on all Advances. On October 12, 2023, the Company entered into a first amendment to the senior secured convertible notes in the April Bridge Financing, which extended the maturity of the notes to November 1, 2023. On October 24, 2023, the Company entered into a second amendment to the senior secured convertible notes in the April Bridge Financing, which extended the maturity of the notes to November 14, 2023. On November 13, 2023, the Company entered into a third amendment to the senior secured convertible notes in the April Bridge Financing, which further extended the maturity of the notes to February 29, 2024. These notes were exchanged for 87,727 Common Stock at the time of the Company’s IPO. September Bridge Financing On September 1, 2023, the Company entered into a bridge loan for working capital purposes, with various accredited investors, certain of which are pre-existing stockholders, in the aggregate principal amount of $ 198,128 42,767 Common Stock at the time of the Company’s IPO. October Promissory Notes On October 12, 2023, the Company and four existing investors entered into promissory notes (the “October Promissory Notes”) with an aggregate face amount of $ 210,000 175,000 Bridge Financing Note Amendments and Recission Agreement On February 8, 2024, the Company and certain affiliates of A.G.P./Alliance Global Partners (“A.G.P.”) entered into amendments to the senior secured convertible notes issued to such affiliates of the A.G.P. in the April Bridge Financing and September Bridge Financing to remove the automatic conversion features from such notes (the “Bridge Financing Note Amendments”). Under the Bridge Financing Note Amendments, both notes issued in the April Bridge Financing and the September Bridge Financing have a maturity date of March 1, 2024, and the full principal amount of both notes and any accrued interest thereon shall be payable solely in cash upon the consummation of the IPO. Both notes have an annual interest rate of 8%, which accrues daily, and is calculated on the basis of a 360-day year (consisting of twelve 30 calendar day periods), giving an effective interest rate of 8.3%. On February 10, 2024, the Company entered into a Stock Rescission Agreement with certain affiliates of A.G.P. (the “Stock Rescission Agreement” and, together with the Bridge Financing Note Amendments, the “Representative Affiliate Transactions”), pursuant to which the Company rescinded 111,129 shares of Common Stock held by such affiliates of A.G.P. and agreed to refund an aggregate of $91,513 paid by such affiliates of A.G.P. in consideration therefor within 30 days of the effective date of the Stock Rescission Agreement. At June 30, 2024, all such amounts have been paid pursuant to the Representative Affiliate Transactions and there are no remaining obligations thereto. May Promissory Note On May 10, 2024, the Company entered into a promissory note with a professional advisor in the amount of $ 1,455,416 4.86 1,455,416 9,883 |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 6 Months Ended |
Jun. 30, 2024 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | NOTE 6 – STOCKHOLDERS’ EQUITY Initial Public Offering On February 21, 2024, the Company completed its IPO and issued 1,100,000 6.00 5.7 0.9 million Stock Split On February 15, 2024, the Company effected a 9-for-1 reverse stock split. All share and per share amounts have been retrospectively adjusted for the reverse stock split. Share Forfeiture Pursuant to the terms of the April Bridge Financing, Chromocell Holdings forfeited 1,203,704 Standby Investor Side letter On October 11, 2023, the Company entered into a securities purchase agreement with an institutional investor (the “Standby Investor”), pursuant to which (i) the Standby Investor agreed to purchase, upon close of the IPO and at the Company’s election, an aggregate of up to 750 0.0001 1,000 (ii) in consideration therefor, the Company would issue upon close of the IPO, and regardless of whether the Company would have issued any shares of Series B Preferred Stock, an aggregate of 4,167 shares (such shares, the “Standby Shares”) of Common Stock to the Standby Investor (such agreement, the “Series B Securities Purchase Agreement”). In addition, pursuant to the Series B Securities Purchase Agreement, the Company was required to file a registration statement within 180 calendar days after consummation of the IPO, providing for the resale of the Standby Shares and shares of Common Stock issuable upon conversion of the Series B Preferred Stock, if issued. Effective November 13, 2023, the Company entered into a side letter with the Standby Investor (the “Standby Investor Side Letter”), pursuant to which it (i) waived in full the Standby Investor’s obligation to fund the aggregate amount to be paid for the Series B Preferred Stock to be purchased under the Series B Securities Purchase Agreement and (ii) agreed to continue to have the obligation to issue the full amount of the Standby Shares upon the closing of the IPO. The Company and the Standby Investor also agreed to terminate each of their obligations solely with respect to the Series B Preferred Stock under the Series B Securities Purchase Agreement and a certain Registration Rights Agreement between the Company and the Standby Investor, which was required to be delivered pursuant to the Series B Securities Purchase Agreement. Rights Offering On November 22, 2023, the Company commenced a rights offering (the “Rights Offering”) pursuant to which the Company distributed non-transferable subscription rights (“Subscription Rights”) to each holder of its Common Stock held as of 5:00 p.m. Eastern Standard Time on November 22, 2023, the record date for the Rights Offering (the “Rights Offering Record Date”). The Subscription Rights could be exercised at any time during the subscription period, which commenced on November 22, 2023 and expired at 5:00 p.m., Eastern Standard Time, on December 1, 2023. Each Subscription Right entitled the eligible holder to purchase up to three shares of the Company’s Common Stock at a price per whole share of Common Stock of $0.1008 (the “Subscription Price”). Holders who fully exercised their rights could also subscribe for additional shares of Common Stock not subscribed for by other holders on a pro rata basis. In addition, the Company could distribute to one or more additional persons, at no charge to such person, additional non-transferable subscription rights to purchase shares of its Common Stock in the Rights Offering at the same Subscription Price, without notice to the holders of its Common Stock. Upon the closing of the Rights Offering, the Company issued an aggregate of 2,533,853 255,412 Recission Agreement On February 10, 2024, the Company entered into a Stock Rescission Agreement with certain affiliates of A.G.P. pursuant to which the Company rescinded 111,129 91,513 Equity Issuances On June 1, 2024, the Company agreed to issue up to 50,000 On June 12, 2024, the Company entered into a twelve-month agreement with such vendor to issue up to 7,500 6,462 Options During the six months ended June 30, 2024, the Company granted a total of 634,000 10 1.30 158,670 10 22.68 During the six months ended June 30, 2024 and 2023, the fair value of each stock option granted was estimated using the Black-Scholes Option Pricing Model using the following inputs: Exercise price $ 1.30 22.68 Expected dividend yield 0 % Risk free interest rate 3.61 4.20 % Expected life in years 10 Expected volatility 157 196 % The risk-free interest rate assumption for options granted is based upon observed interest rates on the United States Government Bond Equivalent Yield appropriate for the expected term of the options. With certain adjustments outlined below, the Company based its determination of the underlying fair value of the Company’s Common Stock on the findings of an independent third party engaged by the Company to determine the fair value of the Company’s intellectual property. The Company had the analysis conducted in conjunction with the Contribution Agreement, which was executed on August 10, 2022. The analysis determined that the fair value of the Company’s intellectual property was $ 44.8 million 1,187,302 600,000 37.71 Schedule the fair value of the Company’s intellectual property Value of intellectual property $ 44.8 million Common shares outstanding (as converted) 1,187,302 Value per common share $ 37.71 Illiquidity discount 20 % Minority discount 20 % Fair value of the common stock $ 22.68 After the completion of the Company’s IPO, the trading price of the Company’s Common Stock is used as the fair value of the Company’s Common Stock. The Company determined the expected volatility assumption for options granted using the historical volatility of comparable public companies’ common stock. The Company will continue to monitor peer companies and other relevant factors used to measure expected volatility for future option grants, until such time that the Company’s Common Stock has enough market history to use historical volatility. The dividend yield assumption for options granted is based on the Company’s history and expectation of dividend payouts. The Company has never declared nor paid any cash dividends on its Common Stock, and the Company does not anticipate paying any cash dividends in the foreseeable future. The Company recognizes option forfeitures as they occur as there is insufficient historical data to accurately determine future forfeiture rates. The following is an analysis of the stock option grant activity: Weighted Average Weighted Average Number of Exercise Price Remaining Life Stock Options Outstanding December 31, 2023 197,560 $ 22.68 9.08 Granted 634,000 $ 1.30 10.00 Expired (11,111 ) $ (22.68 ) — Exercised — $ — — Outstanding June 30, 2024 820,449 $ 6.159 9.63 Exercisable June 30, 2024 116,612 $ 22.68 8.61 Weighted Average Weighted Average Number of Exercise Price Remaining Life Stock Options Outstanding December 31, 2022 50,002 $ 22.68 9.76 Granted 158,670 $ 22.68 10.00 Expired (11,111 ) $ 22.68 — Exercised — $ — — Outstanding June 30, 2023 197,560 $ 22.68 9.57 Exercisable June 30, 2023 34,724 $ 22.68 9.45 A summary of the status of the Company’s nonvested options as of June 30, 2024, and changes during the six months ended June 30, 2024, is presented below: Non-vested Options Options Weighted- Average Exercise Price Non-vested at December 31, 2023 113,429 $ 22.68 Granted 634,000 $ 1.30 Vested (43,592 ) $ 22.68 Forfeited — $ — Non-vested at June 30, 2024 703,837 $ 3.42 Non-vested Options Options Weighted- Average Exercise Price Non-vested at December 31, 2022 45,556 $ 22.68 Granted 158,670 $ 22.68 Vested (30,232 ) $ 22.68 Forfeited — $ — Non-vested at June 30, 2023 173,994 $ 22.68 The total number of options granted during the six months ended June 30, 2024 and 2023 was 634,000 158,670 1.30 22.68 12,680 The Company recognized stock-based compensation expense related to option vesting amortization of $ 366,503 327,338 659,055 599,559 As of June 30, 2024, the unamortized stock option expense was $ 2,057,817 2.89 Warrants The following is an analysis of the stock warrant grant activity: Weighted Average Weighted Average Number of Exercise Price Remaining Life Stock Warrants Outstanding December 31, 2023 — $ — — Granted 55,000 $ 7.50 4.88 Expired — $ — — Exercised — $ — — Outstanding June 30, 2024 55,000 $ 7.50 4.46 Exercisable June 30, 2024 55,000 $ 7.50 4.46 A summary of the status of the Company’s nonvested warrants as of June 30, 2024, and changes during the six months ended June 30, 2024, is presented below: Non-vested Warrants Warrants Weighted- Average Exercise Price Non-vested at December 31, 2023 — $ — Granted 55,000 $ 7.50 Vested (55,000 ) $ 7.50 Forfeited — $ — Non-vested at June 30, 2024 — $ — The total number of warrants granted during the six months ended June 30, 2024 and 2023 was 55,000 0 7.50 0 The Company recognized stock-based compensation expense related to warrant vesting amortization of $0 and $0 for the three and six months ended June 30, 2024 and 2023, respectively. On February 21, 2024, the Company issued warrants to purchase up to 55,000 shares of Common Stock to the representative of the underwriters of the IPO (the “Representative”). These warrants have an exercise price of $7.50, have a cashless exercise provision, are exercisable 180 days following the commencement of sales of the shares of Common Stock of the IPO and have an expiration date of February 21, 2029 RSUs A summary of the status of the Company’s nonvested RSUs as of June 30, 2024, and changes during the six months ended June 30, 2024, is presented below: Non-vested RSUs RSUs Weighted- Average Exercise Price Non-vested at December 31, 2023 — $ — Granted 257,993 $ 1.30 Vested — $ — Forfeited — $ — Non-vested at June 30, 2024 257,993 $ 1.30 The total number of RSUs granted during the six months ended June 30, 2024 and 2023 was 257,993 and 0 1.30 The Company recognized stock-based compensation expense related to RSU vesting amortization of $ 13,975 0 13,975 0 |
LEGAL
LEGAL | 6 Months Ended |
Jun. 30, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
LEGAL | NOTE 7 – LEGAL Demand Letter from Mr. Kopfli’s Attorney On February 14, 2024, the Board received a demand letter from an attorney representing Chromocell Holdings and the Company’s former Chief Executive Officer and former Chief Strategy Officer, Mr. Christian Kopfli, who was released for “cause” as disclosed elsewhere in this Report. Mr. Kopfli alleges an improper termination for “cause” and seeks monetary damages in the amount of $ 479,169 479,169 363,091 Holdings Complaint Filed by New Jersey Economic Development Authority On April 9, 2024, we received correspondence notifying us of an Entry of Default Notice, filed on April 8, 2024, against “Chromocell Corporation d/b/a Chromocell Therapeutics” in the matter New Jersey Economic Development Authority v. Chromocell Corporation, et al. (Docket No. MER-L-001748-23). The complaint filed by the New Jersey Economic Development Authority (the “EDA”) on September 12, 2023 in the Superior Court of New Jersey Law Division, Mercer County, alleges Chromocell Holdings’ (not the Company’s) breach of a Settlement Agreement between the EDA and Chromocell Holdings, dated December 31, 2022 (the “Settlement Agreement”), pursuant to which EDA and Chromocell Holdings agreed that Chromocell Holdings would (i) vacate the premises located at 671 US Highway One South, North Brunswick, New Jersey, on or before December 31, 2023, (ii) pay an initial lump-sum payment of $10,000 toward outstanding rent and provide a copy of its Registration Statement on Form S-1 for the Company’s IPO (the “Registration Statement”) and (iii) make a final one-time lump sum payment to the EDA of $510,701 to satisfy Chromocell Holdings’ outstanding rent and additional rent obligations within 90 days of Chromocell Holdings’ executing the Settlement Agreement or within 15 days of Chromocell Holdings’ IPO, whichever was the first to occur. The complaint alleges Chromocell Holdings’ breach of each of these provisions of the Settlement Agreement and seeks a judgment for the entire amount allegedly due and owing as of September 12, 2023 ($510,701), compensatory damages, pre-judgment interest, attorney’s fees, costs of suit and such other and further relief as the court deems just and proper Parexel Claim On July 31, 2024, the Company received a demand letter from an attorney representing Parexel International (IRL) Limited (“Parexel”). The letter, which was addressed to both the Company and Chromocell Holdings, purports to be a notice of default of a note (the “Promissory Note”) between Chromocell Holdings and Parexel and seeks the payment of allegedly unpaid principal in the amount of $682,551.49 plus interest exceeding $177,000. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2024 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 8 – SUBSEQUENT EVENTS Convertible Note On July 24, 2024, the Company entered into a securities purchase agreement with an accredited investor (the “July Note Holder”), pursuant to which the Company issued to the July Note Holder a senior unsecured convertible note (the “July Note”) in the aggregate principal amount of $ 750,000 6 (i) a 4.99% beneficial ownership limitation contained in the Note, which may be increased to 9.99% upon 61 days’ prior written notice to the Company by the July Note Holder, and (ii) the Exchange Cap (as defined below). The Company has agreed to hold a meeting of its stockholders to seek approval of a waiver of the Exchange Cap - no later than ninety (90) days from July 24, 2024. Under the applicable rules of the NYSE American LLC, in no event may the Company issue to July Note Holder and any of its affiliates under the CEF Purchase Agreement (as defined below), or otherwise, more than 1,152,764 shares of Common Stock, which number of shares represents 19.99% of the shares of the Common Stock outstanding immediately prior to the execution of the CEF Purchase Agreement (the “Exchange Cap”). The July Note is redeemable by the Company in whole or in part at any time after issuance and prior to the July Note Maturity Date in cash at a price equal to 110% of the greater of (i) the July Note Note’s outstanding principal amount, plus all accrued but unpaid interest and late charges due under the July Note (the “July Note Conversion Amount”) being redeemed as of the date on which such redemption will occur (the “Company Optional Redemption Date”) and (ii) the product of (1) the number of July Note Conversion Shares then issuable under the July Note multiplied by (2) the highest closing sale price of the Common Stock on any trading day during the period commencing on the date immediately preceding the date of the Company Optional Redemption Notice (as defined below) and ending on the trading day immediately prior to the date the Company makes the entire payment. The Company may deliver only one notice to exercise its right to require redemption (the “Company Optional Redemption Notice”) in any given 20 trading day period and each Company Optional Redemption Notice is irrevocable. At any time prior to the date on which such optional redemption payment is paid in full, the July Note may be converted by the July Note Holder into shares of Common Stock in accordance with the conversion terms thereof. Committed Equity Financing On July 26, 2024, the Company entered into a Common Stock Purchase Agreement, dated as of July 26, 2024 (the “CEF Purchase Agreement”), with Tikkun Capital LLC (“Tikkun”), providing for a committed equity financing facility, pursuant to which, upon the terms and subject to the satisfaction of the conditions contained in the CEF Purchase Agreement, Tikkun has committed to purchase, at the Company’s direction in its sole discretion, up to an aggregate of $ 30,000,000 Stock Repurchase Plan On August 5, 2024, the board of directors of the Company authorized a stock repurchase plan (the “Repurchase Plan”) pursuant to which up to $ 250,000 0.0001 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2024 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying 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 the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of the Company’s management, the accompanying condensed consolidated financial statements reflect all adjustments, consisting of normal, recurring adjustments, considered necessary for a fair presentation of the results for the interim periods ended June 30, 2024 and 2023. Although management believes that the disclosures in these unaudited condensed consolidated financial statements are adequate to make the information presented not misleading, certain information and footnote disclosures normally included in condensed consolidated financial statements that have been prepared in accordance U.S. GAAP have been omitted pursuant to the rules and regulations of the SEC. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s financial statements and notes related thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on April 16, 2024. The interim results for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any future interim periods. |
Principles of consolidation | Principles of consolidation The consolidated financial statements include the accounts of Chromocell Therapeutics Corporation and its wholly owned subsidiary, Chromocell Therapeutics Australia Pty. Ltd. All significant intercompany balances and transactions have been eliminated. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made by management include, but are not limited to, estimating the valuation of deferred income taxes. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. As of June 30, 2024 and December 31, 2023, the Company did not have any cash equivalents. As of June 30, 2024, the Company had deposits in excess of federally insured limits. |
Research and Development | Research and Development The Company incurs research and development (“R&D”) costs during the process of researching and developing technologies and future offerings. The Company expenses these costs as incurred unless such costs qualify for capitalization under applicable guidance. The Company reviews acquired R&D and licenses to determine if they should be capitalized or expensed under U.S. GAAP standards. Below is a disaggregation of R&D expenses: For the Three Months Ended For the Three Months Ended For the Six Months Ended For the Six Months Ended June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 Consultant $ 107,357 $ 16,400 $ 137,390 $ 23,300 Lab Materials 1,452 — 1,452 — Lab Cell Storage 27,272 7,653 51,398 17,753 Chemistry Manufacturing and Controls (“CMC”) (133,780 ) — 169,617 — IP Services 10,654 35,402 119,704 195,019 Total $ 12,955 $ 49,955 $ 479,561 $ 236,072 |
Fair Value Measurements and Fair Value of Financial Instruments | Fair Value Measurements and Fair Value of Financial Instruments The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels: ● Level 1 Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. ● Level 2 Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. ● Level 3 Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. The Company did not identify any assets or liabilities that are required to be presented on the balance sheets at fair value in accordance with ASC Topic 820. Due to the short-term nature of all financial assets and liabilities, their carrying value approximates their fair value as of the balance sheet dates. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation costs under the provisions of ASC 718, Compensation—Stock Compensation, which requires the measurement and recognition of compensation expense related to the fair value of stock-based compensation awards that are ultimately expected to vest. Stock-based compensation expense recognized includes the compensation cost for all stock-based payments granted to employees, officers, and directors based on the grant date fair value estimated in accordance with the provisions of ASC 718. ASC 718 is also applied to awards modified, repurchased, or cancelled during the periods reported. Stock-based compensation is recognized as expense over the employee’s requisite vesting period and over the nonemployee’s period of providing goods or services. Pursuant to ASC 718, the Company can elect to either recognize the expenses on a straight-line or graded basis and has elected to do so under the straight-line basis. |
Basic and Diluted Net Loss per Common Share | Basic and Diluted Net Loss per Common Share Basic loss per common share is computed by dividing the net loss by the weighted average number of shares of Common Stock outstanding for each period. Diluted loss per share is computed by dividing the net loss by the weighted average number of shares of Common Stock outstanding plus the dilutive effect of shares issuable through the common stock equivalents. The weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti- dilutive. As of June 30, 2024, 820,449 55,000 257,993 of June 30, 2023, 208,672 |
Income Taxes | Income Taxes The Company accounts for income taxes pursuant to the provision of ASC 740 “Accounting for Income Taxes,” which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized. The Company follows the provision of the ASC 740 related to Accounting for Uncertain Income Tax Position. When tax returns are filed, it is more likely than not that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is most likely that not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions will more likely than not be upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits. The federal and state income tax returns of the Company are subject to examination by the Internal Revenue Service and state taxing authorities, generally for three years after they were filed. The Company is in the process of filing the tax returns for the 2023 year. After review of the prior year financial statements and the results of operations through December 31, 2023, the Company has recorded a full valuation allowance on its deferred tax asset. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disaggregated information about a reporting entity’s effective tax rate reconciliation, as well as information related to income taxes paid to enhance the transparency and decision usefulness of income tax disclosures. This ASU will be effective for the annual periods beginning after December 15, 2024. The Company is currently evaluating the timing and impacts of adoption of this ASU. |
Subsequent Events | Subsequent Events The Company has evaluated all transactions through the date the financial statements were issued for subsequent event disclosure consideration. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Accounting Policies [Abstract] | |
Below is a disaggregation of R&D expenses: | Below is a disaggregation of R&D expenses: For the Three Months Ended For the Three Months Ended For the Six Months Ended For the Six Months Ended June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 Consultant $ 107,357 $ 16,400 $ 137,390 $ 23,300 Lab Materials 1,452 — 1,452 — Lab Cell Storage 27,272 7,653 51,398 17,753 Chemistry Manufacturing and Controls (“CMC”) (133,780 ) — 169,617 — IP Services 10,654 35,402 119,704 195,019 Total $ 12,955 $ 49,955 $ 479,561 $ 236,072 |
STOCKHOLDERS_ EQUITY (Tables)
STOCKHOLDERS’ EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Equity [Abstract] | |
During the six months ended June 30, 2024 and 2023, the fair value of each stock option granted was estimated using the Black-Scholes Option Pricing Model using the following inputs: | During the six months ended June 30, 2024 and 2023, the fair value of each stock option granted was estimated using the Black-Scholes Option Pricing Model using the following inputs: Exercise price $ 1.30 22.68 Expected dividend yield 0 % Risk free interest rate 3.61 4.20 % Expected life in years 10 Expected volatility 157 196 % |
Schedule the fair value of the Company’s intellectual property | Schedule the fair value of the Company’s intellectual property Value of intellectual property $ 44.8 million Common shares outstanding (as converted) 1,187,302 Value per common share $ 37.71 Illiquidity discount 20 % Minority discount 20 % Fair value of the common stock $ 22.68 |
The following is an analysis of the stock option grant activity: | The following is an analysis of the stock option grant activity: Weighted Average Weighted Average Number of Exercise Price Remaining Life Stock Options Outstanding December 31, 2023 197,560 $ 22.68 9.08 Granted 634,000 $ 1.30 10.00 Expired (11,111 ) $ (22.68 ) — Exercised — $ — — Outstanding June 30, 2024 820,449 $ 6.159 9.63 Exercisable June 30, 2024 116,612 $ 22.68 8.61 Weighted Average Weighted Average Number of Exercise Price Remaining Life Stock Options Outstanding December 31, 2022 50,002 $ 22.68 9.76 Granted 158,670 $ 22.68 10.00 Expired (11,111 ) $ 22.68 — Exercised — $ — — Outstanding June 30, 2023 197,560 $ 22.68 9.57 Exercisable June 30, 2023 34,724 $ 22.68 9.45 |
A summary of the status of the Company’s nonvested options as of June 30, 2024, and changes during the six months ended June 30, 2024, is presented below: | A summary of the status of the Company’s nonvested options as of June 30, 2024, and changes during the six months ended June 30, 2024, is presented below: Non-vested Options Options Weighted- Average Exercise Price Non-vested at December 31, 2023 113,429 $ 22.68 Granted 634,000 $ 1.30 Vested (43,592 ) $ 22.68 Forfeited — $ — Non-vested at June 30, 2024 703,837 $ 3.42 Non-vested Options Options Weighted- Average Exercise Price Non-vested at December 31, 2022 45,556 $ 22.68 Granted 158,670 $ 22.68 Vested (30,232 ) $ 22.68 Forfeited — $ — Non-vested at June 30, 2023 173,994 $ 22.68 |
The following is an analysis of the stock warrant grant activity: | The following is an analysis of the stock warrant grant activity: Weighted Average Weighted Average Number of Exercise Price Remaining Life Stock Warrants Outstanding December 31, 2023 — $ — — Granted 55,000 $ 7.50 4.88 Expired — $ — — Exercised — $ — — Outstanding June 30, 2024 55,000 $ 7.50 4.46 Exercisable June 30, 2024 55,000 $ 7.50 4.46 A summary of the status of the Company’s nonvested warrants as of June 30, 2024, and changes during the six months ended June 30, 2024, is presented below: Non-vested Warrants Warrants Weighted- Average Exercise Price Non-vested at December 31, 2023 — $ — Granted 55,000 $ 7.50 Vested (55,000 ) $ 7.50 Forfeited — $ — Non-vested at June 30, 2024 — $ — |
A summary of the status of the Company’s nonvested RSUs as of June 30, 2024, and changes during the six months ended June 30, 2024, is presented below: | A summary of the status of the Company’s nonvested RSUs as of June 30, 2024, and changes during the six months ended June 30, 2024, is presented below: Non-vested RSUs RSUs Weighted- Average Exercise Price Non-vested at December 31, 2023 — $ — Granted 257,993 $ 1.30 Vested — $ — Forfeited — $ — Non-vested at June 30, 2024 257,993 $ 1.30 |
ORGANIZATION AND NATURE OF BU_2
ORGANIZATION AND NATURE OF BUSINESS (Details Narrative) - USD ($) | 6 Months Ended | ||
Feb. 21, 2024 | Jun. 30, 2024 | Jun. 30, 2023 | |
Subsidiary, Sale of Stock [Line Items] | |||
Net proceeds | $ 1,455,416 | $ 90,157 | |
IPO [Member] | |||
Subsidiary, Sale of Stock [Line Items] | |||
Offering shares of common stock | 1,100,000 | ||
Common stock, per share | $ 6 | ||
Net proceeds | $ 5,700,000 | $ 5,700,000 | |
Offering expenses | $ 900,000 |
GOING CONCERN ANALYSIS (Details
GOING CONCERN ANALYSIS (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||||||
Feb. 21, 2024 | Jun. 30, 2024 | Mar. 31, 2024 | Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | |
Subsidiary, Sale of Stock [Line Items] | ||||||||
Net loss | $ (1,771,619) | $ (2,562,330) | $ (953,347) | $ (966,561) | $ (4,333,949) | $ (1,919,908) | ||
Cash | 2,405,098 | 2,405,098 | $ 96,391 | |||||
Working capital deficit | $ 200,000 | 200,000 | 6,400,000 | |||||
Cash and cash equivalents | $ 100,000 | |||||||
Net proceeds | 1,455,416 | $ 90,157 | ||||||
IPO [Member] | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Net proceeds | $ 5,700,000 | $ 5,700,000 |
Below is a disaggregation of R&
Below is a disaggregation of R&D expenses: (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Product Information [Line Items] | ||||
Research and development expense | $ 12,955 | $ 49,955 | $ 479,561 | $ 236,072 |
Research and development expense | (12,955) | (49,955) | (479,561) | (236,072) |
Consultant [Member] | ||||
Product Information [Line Items] | ||||
Research and development expense | 107,357 | 16,400 | 137,390 | 23,300 |
Research and development expense | (107,357) | (16,400) | (137,390) | (23,300) |
Lab Materials [Member] | ||||
Product Information [Line Items] | ||||
Research and development expense | 1,452 | 1,452 | ||
Research and development expense | (1,452) | (1,452) | ||
Lab Cell Storage [Member] | ||||
Product Information [Line Items] | ||||
Research and development expense | 27,272 | 7,653 | 51,398 | 17,753 |
Research and development expense | (27,272) | (7,653) | (51,398) | (17,753) |
Chemistry Manufacturing And Controls [Member] | ||||
Product Information [Line Items] | ||||
Research and development expense | 133,780 | 169,617 | ||
Research and development expense | (133,780) | (169,617) | ||
IP Services [Member] | ||||
Product Information [Line Items] | ||||
Research and development expense | 10,654 | 35,402 | 119,704 | 195,019 |
Research and development expense | $ (10,654) | $ (35,402) | $ (119,704) | $ (195,019) |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - shares | 6 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2023 | |
Stock Options [Member] | ||
Subsidiary, Sale of Stock [Line Items] | ||
Anti-dilutive share | 820,449 | 208,672 |
Warrants [Member] | ||
Subsidiary, Sale of Stock [Line Items] | ||
Anti-dilutive share | 55,000 | |
Restricted Stock Units (RSUs) [Member] | ||
Subsidiary, Sale of Stock [Line Items] | ||
Anti-dilutive share | 257,993 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 6 Months Ended | |||||||||
May 10, 2024 | Feb. 21, 2024 | Feb. 14, 2024 | Aug. 02, 2023 | Jun. 23, 2023 | Jan. 10, 2023 | Dec. 06, 2022 | Jun. 30, 2024 | Aug. 02, 2024 | Dec. 31, 2023 | |
Related Party Transaction [Line Items] | ||||||||||
Description of director note | the Company and Mr. Todd Davis, one of the Company’s directors, entered into the Director Note for $175,000. The Director Note has an original issuance discount of $75,000, and matures on December 31, 2023, or, if earlier to occur, upon the closing of an underwritten offering of securities resulting in at least $15 million in gross proceeds. On December 28, 2023, the Company entered into an amendment to the Director Note, which extended the maturity date to February 29, 2024. On February 21, 2024, the principal and accrued interest on this note converted into 29,167 shares of the Company’s Common Stock. | |||||||||
Original issuance discount | $ 75,000 | |||||||||
Gross proceeds | $ 15,000,000 | |||||||||
Due to receivable | $ 40,400 | |||||||||
Liabilities | 2,786,121 | $ 6,540,943 | ||||||||
Principal amount | 131,868 | |||||||||
Accrued interest | $ 895 | |||||||||
Mr Knuettel [Member] | Chief Executive Officer [Member] | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Description of related party | the Company and Camden Capital LLC, a company controlled by Mr. Knuettel, the Company’s Chief Executive Officer and Chief Financial Officer, entered into the promissory note for approximately $131,868. The note matures on December 15, 2024, or, if earlier to occur, upon the closing of a public or private offering or other financing or capital-raising transaction of any kind. The note has an interest rate of 4.86% per annum. | |||||||||
Series C Preferred Stock [Member] | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||
IPO [Member] | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Stock Issued During Period, Shares, New Issues | 1,100,000 | |||||||||
Restricted Stock Units (RSUs) [Member] | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Stock Issued During Period, Shares, New Issues | 16,667 | |||||||||
Restricted Stock Units (RSUs) [Member] | IPO [Member] | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Stock Issued During Period, Shares, New Issues | 27,777 | |||||||||
Employment Agreement [Member] | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Employment Agreement | the board of director of the Company (the “Board”) received a demand letter from an attorney representing Chromocell Holdings and Christian Kopfli, the Company’s former Chief Executive Officer and former Chief Strategy Officer. Mr. Kopfli alleges an improper termination for “cause” and seeks monetary damages in the amount of $479,169. Of the $479,169 asserted by Mr. Kopfli, as of June 30, 2024, the Company has accrued $363,091 in compensation expenses associated with Mr. Kopfli’s prior employment with the Company. | |||||||||
Consultant Agreement [Member] | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Employment Agreement | Camden accrued a consulting fee for the period June 6, 2022 through August 31, 2022 of $10,000 per month and effective September 1, 2022, began to accrue a consulting fee of $20,000 per month, payable in cash at the rate of $5,000 per month (a minimum of $1,125 per week), with the remainder accrued. All accrued consulting fees are payable as of the earliest of a sale or liquidation of the Company, the Company’s bankruptcy or three days after Post-registration Approval. The Consultant Agreement provides for the following equity awards to Camden: (i) an option, awarded as of January 10, 2023, to acquire 200,000 shares of the Company’s Common Stock, vesting quarterly over 10 quarters and beginning October 1, 2022, with the option having an exercise price equal to the fair market value of the Company’s Common Stock on the date of grant and expiring on the 10th anniversary of the date of grant; (ii) an option, awarded as of January 10, 2023, to acquire 25,000 shares of the Company’s Common Stock, vesting 100% upon the sooner of the sale of the Company or Post-registration Approval, with the option having an exercise price equal to the fair market value of the Company’s Common Stock on the date of grant and expiring on the 10th anniversary of the date of grant; and (iii) a RSU, awarded as of January 10, 2023, of 150,000 shares of the Company’s Common Stock, vesting 100% on the day after the first trading window that opens after Post-registration Approval | |||||||||
Consultant Agreement [Member] | Restricted Stock Units (RSUs) [Member] | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Employment Agreement | we amended and restated the Consultant Agreement by entering into an Amended and Restated Consultant Agreement with Camden whereby the RSU for 16,667 shares of Common Stock was cancelled, and the Company agreed to grant Camden an option to acquire 27,777 shares of Common Stock within 30 days of the closing of the IPO. As of June 23, 2023, such RSU for 16,667 shares of the Company’s Common Stock had not vested, and no expense was recorded on the Company’s financial statements. | |||||||||
Contribution Agreement [Member] | Series C Preferred Stock [Member] | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Description of preferred stock redeemable | the Company entered into a side letter to the Contribution Agreement (the “Holdings Side Letter”) with Chromocell Holdings. Pursuant to the side letter, upon closing of the Company’s IPO: (a) Chromocell Holdings re-assumed all $1.6 million in direct liabilities previously assumed by the Company in accordance with the Contribution Agreement, (b) Chromocell Holdings waived the Company’s obligations to make a cash payment in the amount of $0.6 million to Chromocell Holdings, and (c) in consideration thereof, the Company issued to Chromocell Holdings 2,600 shares of Series C Convertible Redeemable Preferred Stock of the Company, par value of $0.0001 per share (the “Series C Preferred Stock”). |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||||||||||
May 10, 2024 | Feb. 10, 2024 | Nov. 13, 2023 | Sep. 01, 2023 | Jun. 23, 2023 | Apr. 17, 2023 | Feb. 27, 2023 | Dec. 06, 2022 | Feb. 04, 2022 | Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Aug. 17, 2024 | Feb. 21, 2024 | Jan. 30, 2024 | Dec. 31, 2023 | Oct. 12, 2023 | Oct. 10, 2023 | Aug. 17, 2023 | |
Debt Instrument [Line Items] | ||||||||||||||||||||
Note payable | $ 450,000 | |||||||||||||||||||
Discount issued | $ 150,000 | $ 605,630 | $ 49,122 | |||||||||||||||||
Interest rate | 50% | |||||||||||||||||||
Maturity date | Feb. 03, 2023 | |||||||||||||||||||
Interest expense | $ 14,370 | 135,630 | ||||||||||||||||||
Note agreement was amended | the Investor Note was amended. The maturity date was extended from its original due date of February 3, 2023 to May 15, 2023, in return for the Company agreeing to pay 2% per month in accrued interest and the third party agreeing to settle its outstanding debt, including accrued interests in shares of Common Stock at the IPO. | |||||||||||||||||||
Note agreement was amended | (ii) in consideration therefor, issued to such holder 50,000 shares of Common Stock. The Company determined that this extension qualified as a modification of the Investor Note rather than an extinguishment. The Company recorded an expense of $126,000 from the issuance of the 556 shares of Common Stock based on a share price of $22.68. The $22.68 share price was based on a third-party valuation of the Company’s Common Stock, with certain adjustments as set forth below in detail in Note 7 – Stockholders’ Equity. | |||||||||||||||||||
Common Stock, Shares, Issued | 5,823,166 | 5,823,166 | 3,906,300 | |||||||||||||||||
IPO [Member] | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Common Stock, Shares, Issued | 1,100,000 | |||||||||||||||||||
Common stock exchange share | 87,727 | 42,767 | ||||||||||||||||||
Investor Note [Member] | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Common Stock, Shares, Issued | 3,334 | 77,778 | 3,334 | 30,000 | ||||||||||||||||
Face amount | $ 450,000 | |||||||||||||||||||
Resale shares of common stock | In addition, pursuant to the Investor Note Side Letters, the Company agreed to register the 8,890 shares of Common Stock (5,556 issued for the June 23, 2023 side letter, and 3,334 issued for the August 17, 2023 side letter) for resale. The Company recorded an expense of $75,600 from the issuance of the 3,333 shares of Common Stock based on a share price of $22.68. The $22.68 share price was based on a third-party valuation of the Company’s Common Stock, with certain adjustments as set forth below in detail in Note 7 – Stockholders’ Equity. | |||||||||||||||||||
Accrued interest | $ 98,036 | |||||||||||||||||||
Interest expense | $ 0 | $ 27,000 | $ 15,517 | $ 44,036 | ||||||||||||||||
Director Note [Member] | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Notes Payable | $ 175,000 | |||||||||||||||||||
Interest Expense, Operating and Nonoperating | 75,000 | |||||||||||||||||||
Underwritten offering of securities | $ 15,000,000 | |||||||||||||||||||
Bridge Loan [Member] | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Note agreement was amended | the Company entered into a bridge loan for working capital purposes, with various accredited investors, all of whom are pre-existing stockholders, in the aggregate principal amount of $393,808 (the “April Bridge Financing”). During the three and six months ended June 30, 2023, the Company received $162,852 and $389,757, respectively, in Advances from certain participating investors. Such Advances accrued interest at a rate of 8% per annum until close of the April Bridge Financing on April 17, 2023, for a total of $1,870 in aggregate interest on all Advances. | |||||||||||||||||||
Aggregate principal amount | $ 198,128 | |||||||||||||||||||
Promissory Note [Member] | IPO [Member] | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Aggregate face amount | $ 210,000 | |||||||||||||||||||
Aggregate purchase price | $ 175,000 | |||||||||||||||||||
Recission Agreement [Member] | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Note agreement was amended | pursuant to which the Company rescinded 111,129 shares of Common Stock held by such affiliates of A.G.P. and agreed to refund an aggregate of $91,513 paid by such affiliates of A.G.P. in consideration therefor within 30 days of the effective date of the Stock Rescission Agreement. At June 30, 2024, all such amounts have been paid pursuant to the Representative Affiliate Transactions and there are no remaining obligations thereto. | |||||||||||||||||||
May Promissory Note [Member] | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Professional Advisor Fee | $ 1,455,416 | |||||||||||||||||||
Debt Interest Rate | 4.86% | |||||||||||||||||||
Principal Amount Outstanding | 1,455,416 | 1,455,416 | ||||||||||||||||||
Promissory Accrued Interest | $ 9,883 | $ 9,883 |
During the six months ended Jun
During the six months ended June 30, 2024 and 2023, the fair value of each stock option granted was estimated using the Black-Scholes Option Pricing Model using the following inputs: (Details) | 6 Months Ended |
Jun. 30, 2024 $ / shares | |
Offsetting Assets [Line Items] | |
Exercise price | $ 7.50 |
Equity Option [Member] | |
Offsetting Assets [Line Items] | |
Expected dividend yield | 0% |
Expected option life (in years) | 10 years |
Equity Option [Member] | Minimum [Member] | |
Offsetting Assets [Line Items] | |
Exercise price | $ 1.30 |
Risk-free interest rate | 3.61% |
Expected volatility | 157% |
Equity Option [Member] | Maximum [Member] | |
Offsetting Assets [Line Items] | |
Exercise price | $ 22.68 |
Risk-free interest rate | 4.20% |
Expected volatility | 196% |
Schedule the fair value of the
Schedule the fair value of the Company’s intellectual property (Details) - USD ($) | Jun. 30, 2024 | Dec. 31, 2023 | Aug. 10, 2022 |
Equity [Abstract] | |||
Value of intellectual property | $ 44,800,000 | ||
Common shares outstanding (as converted) | 5,823,166 | 3,906,300 | 1,187,302 |
Value per common share | $ 0.0001 | $ 0.0001 | $ 37.71 |
Llliquidity discount | 20% | ||
Minority discount | 20% | ||
Fair value of the common stock | $ 22.68 |
The following is an analysis of
The following is an analysis of the stock option grant activity: (Details) - $ / shares | 6 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2023 | |
Equity [Abstract] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Number, Beginning Balance | 197,560 | 50,002 |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning Balance | $ 22.68 | $ 22.68 |
Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Weighted Average Remaining Life | 9 years 29 days | 9 years 9 months 3 days |
Granted | 634,000 | 158,670 |
Granted | $ 1.30 | $ 22.68 |
Granted | 10 years | 10 years |
Expired | (11,111) | (11,111) |
Expired | $ (22.68) | $ (22.68) |
Exercised | ||
Exercised | ||
Outstanding December 31, 2023 | 820,449 | 197,560 |
Outstanding December 31, 2023 | $ 6.159 | $ 22.68 |
Outstanding December 31, 2023 | 9 years 7 months 17 days | 9 years 6 months 25 days |
Exercisable December 31, 2023 | 116,612 | 34,724 |
Exercisable December 31, 2023 | $ 22.68 | $ 22.68 |
Exercisable December 31, 2023 | 8 years 7 months 10 days | 9 years 5 months 12 days |
Expired | $ 22.68 | $ 22.68 |
A summary of the status of the
A summary of the status of the Company’s nonvested options as of June 30, 2024, and changes during the six months ended June 30, 2024, is presented below: (Details) - $ / shares | 6 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2023 | |
Equity [Abstract] | ||
Non-vested at December 31, 2022 | 113,429 | 45,556 |
Non-vested at December 31, 2022 | $ 22.68 | $ 22.68 |
Granted | 634,000 | 158,670 |
Granted | $ 1.30 | $ 22.68 |
Vested | (43,592) | (30,232) |
Vested | $ 22.68 | $ 22.68 |
Forfeited | ||
Forfeited | ||
Non-vested at December 31, 2023 | 703,837 | 173,994 |
Non-vested at December 31, 2023 | $ 3.42 | $ 22.68 |
The following is an analysis _2
The following is an analysis of the stock warrant grant activity: (Details) | 6 Months Ended |
Jun. 30, 2024 $ / shares shares | |
Equity [Abstract] | |
Share Based Compensation Arrangement By Share Based Payment Award Warrants Outstanding Number | shares | |
Share Based Compensation Arrangement By Share Based Payment Award Warrants Outstanding Weighted Average Exercise Price | |
Granted | shares | 55,000 |
Granted | $ 7.50 |
Granted | 4 years 10 months 17 days |
Expired | shares | |
Expired | |
Exercised | shares | |
Exercised | |
Outstanding December 31, 2023 | shares | 55,000 |
Outstanding December 31, 2023 | $ 7.50 |
Outstanding December 31, 2023 | 4 years 5 months 16 days |
Exercisable December 31, 2023 | shares | 55,000 |
Exercisable December 31, 2023 | $ 7.50 |
Exercisable December 31, 2023 | 4 years 5 months 16 days |
Non-vested at December 31, 2022 | |
Granted | $ 7.50 |
Vested | shares | (55,000) |
Vested | $ 7.50 |
Forfeited | shares | |
Forfeited | |
Non-vested at December 31, 2023 | shares | |
Non-vested at December 31, 2023 |
A summary of the status of th_2
A summary of the status of the Company’s nonvested RSUs as of June 30, 2024, and changes during the six months ended June 30, 2024, is presented below: (Details) - $ / shares | 3 Months Ended | 6 Months Ended |
Mar. 31, 2024 | Jun. 30, 2024 | |
Equity [Abstract] | ||
Non-vested at December 31, 2022 | ||
Non-vested at December 31, 2023 | $ 1.30 | |
Granted | 257,993 | |
Granted | $ 1.30 | |
Vested | ||
Vested | ||
Forfeited | ||
Forfeited | ||
Non-vested at December 31, 2023 | 257,993 |
STOCKHOLDERS_ EQUITY (Details N
STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||||||||||||
Jun. 12, 2024 | Jun. 01, 2024 | Feb. 21, 2024 | Feb. 15, 2024 | Feb. 10, 2024 | Nov. 22, 2023 | Sep. 22, 2023 | Apr. 17, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | Oct. 11, 2023 | Aug. 10, 2022 | |
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||
Common stock, shares issued | 5,823,166 | 5,823,166 | 3,906,300 | ||||||||||||
Value per common share | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 37.71 | |||||||||||
Description of stock split | the Company effected a 9-for-1 reverse stock split. All share and per share amounts have been retrospectively adjusted for the reverse stock split. | ||||||||||||||
Share forfeiture | 1,203,704 | ||||||||||||||
Sale of stock, description of transaction | (ii) in consideration therefor, the Company would issue upon close of the IPO, and regardless of whether the Company would have issued any shares of Series B Preferred Stock, an aggregate of 4,167 shares (such shares, the “Standby Shares”) of Common Stock to the Standby Investor (such agreement, the “Series B Securities Purchase Agreement”). In addition, pursuant to the Series B Securities Purchase Agreement, the Company was required to file a registration statement within 180 calendar days after consummation of the IPO, providing for the resale of the Standby Shares and shares of Common Stock issuable upon conversion of the Series B Preferred Stock, if issued. | ||||||||||||||
Common stock, shares issued | $ (214,757) | ||||||||||||||
Equity issuances, shares | 7,500 | 50,000 | |||||||||||||
Shares of common stock agreement | 6,462 | ||||||||||||||
Options share granted | 634,000 | 158,670 | |||||||||||||
Intellectual property | $ 44,800,000 | ||||||||||||||
Common shares outstanding (as converted) | 5,823,166 | 5,823,166 | 3,906,300 | 1,187,302 | |||||||||||
Total number of options granted | 634,000 | 158,670 | |||||||||||||
Exercise price for options | $ 1.30 | ||||||||||||||
Exercise price for options | $ 22.68 | ||||||||||||||
Intrinsic value | $ 12,680 | ||||||||||||||
Amortization | $ 366,503 | $ 327,338 | 13,975 | $ 0 | |||||||||||
General And Administrative Expenses | 659,055 | $ 599,559 | |||||||||||||
Unamortized stock option expense | $ 2,057,817 | ||||||||||||||
Period for the unamortized stock compensation | 2 years 1 month 9 days | ||||||||||||||
Total number of options granted | 55,000 | 0 | |||||||||||||
Exercise price for options | $ 7.50 | ||||||||||||||
Intrinsic value | $ 0 | ||||||||||||||
Description of warrants issued | the Company issued warrants to purchase up to 55,000 shares of Common Stock to the representative of the underwriters of the IPO (the “Representative”). These warrants have an exercise price of $7.50, have a cashless exercise provision, are exercisable 180 days following the commencement of sales of the shares of Common Stock of the IPO and have an expiration date of February 21, 2029 | ||||||||||||||
Warrants granted, share | 257,993 | ||||||||||||||
Warrants granted, share | 0 | ||||||||||||||
Exercise price for options | $ 1.30 | ||||||||||||||
Adjustment For AmortizationOne | $ 13,975 | $ 0 | |||||||||||||
Recission Agreement [Member] | |||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||
Common stock, shares issued | 111,129 | ||||||||||||||
Common stock, shares issued | $ 91,513 | ||||||||||||||
Right Offering [Member] | |||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||
Common stock, shares issued | 2,533,853 | ||||||||||||||
Common stock, shares issued | $ 255,412 | ||||||||||||||
Series B Preferred Stock [Member] | |||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||
Shaes issue to investor | 750 | ||||||||||||||
Shaes par value | $ 0.0001 | ||||||||||||||
Purchase price of shares | $ 1,000 | ||||||||||||||
Series A Preferred Stock [Member] | |||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||
Shaes issue to investor | 0 | 0 | 600,000 | ||||||||||||
Shaes par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||||
Conversion of the series A convertible preferred stock | 600,000 | ||||||||||||||
IPO [Member] | |||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||
Common stock, shares issued | 1,100,000 | ||||||||||||||
Value per common share | $ 6 | ||||||||||||||
Aggregate net proceeds | $ 5,700,000 | ||||||||||||||
Offering expenses | $ 900,000 | ||||||||||||||
IPO [Member] | Right Offering [Member] | |||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||
Sale of stock, description of transaction | the Company commenced a rights offering (the “Rights Offering”) pursuant to which the Company distributed non-transferable subscription rights (“Subscription Rights”) to each holder of its Common Stock held as of 5:00 p.m. Eastern Standard Time on November 22, 2023, the record date for the Rights Offering (the “Rights Offering Record Date”). The Subscription Rights could be exercised at any time during the subscription period, which commenced on November 22, 2023 and expired at 5:00 p.m., Eastern Standard Time, on December 1, 2023. Each Subscription Right entitled the eligible holder to purchase up to three shares of the Company’s Common Stock at a price per whole share of Common Stock of $0.1008 (the “Subscription Price”). Holders who fully exercised their rights could also subscribe for additional shares of Common Stock not subscribed for by other holders on a pro rata basis. In addition, the Company could distribute to one or more additional persons, at no charge to such person, additional non-transferable subscription rights to purchase shares of its Common Stock in the Rights Offering at the same Subscription Price, without notice to the holders of its Common Stock. Upon the closing of the Rights Offering, the Company issued an aggregate of 2,533,853 shares of Common Stock and received aggregate net proceeds of $255,412, after giving effect to the Representative Affiliate Transactions (as defined below), which it intended to use primarily for general corporate purposes and expenses associated with the IPO | ||||||||||||||
Options [Member] | |||||||||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||||||||
Options share granted | 634,000 | 158,670 | |||||||||||||
Options life | 10 years | 10 years | |||||||||||||
Exercise price, per share | $ 1.30 | $ 22.68 | $ 1.30 | $ 22.68 |
LEGAL (Details Narrative)
LEGAL (Details Narrative) - USD ($) | Jul. 31, 2024 | Jun. 30, 2024 | Apr. 09, 2024 | Feb. 14, 2024 |
Subsequent Event [Line Items] | ||||
Loss contingency, damages paid, value | $ 479,169 | |||
Other expenses | $ 363,091 | |||
Loss contingency, allegations | pay an initial lump-sum payment of $10,000 toward outstanding rent and provide a copy of its Registration Statement on Form S-1 for the Company’s IPO (the “Registration Statement”) and (iii) make a final one-time lump sum payment to the EDA of $510,701 to satisfy Chromocell Holdings’ outstanding rent and additional rent obligations within 90 days of Chromocell Holdings’ executing the Settlement Agreement or within 15 days of Chromocell Holdings’ IPO, whichever was the first to occur. The complaint alleges Chromocell Holdings’ breach of each of these provisions of the Settlement Agreement and seeks a judgment for the entire amount allegedly due and owing as of September 12, 2023 ($510,701), compensatory damages, pre-judgment interest, attorney’s fees, costs of suit and such other and further relief as the court deems just and proper | |||
Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ||||
Description of demand letter | the Company received a demand letter from an attorney representing Parexel International (IRL) Limited (“Parexel”). The letter, which was addressed to both the Company and Chromocell Holdings, purports to be a notice of default of a note (the “Promissory Note”) between Chromocell Holdings and Parexel and seeks the payment of allegedly unpaid principal in the amount of $682,551.49 plus interest exceeding $177,000. |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] - USD ($) | 1 Months Ended | ||
Aug. 05, 2024 | Jul. 24, 2024 | Jul. 26, 2024 | |
Subsequent Event [Line Items] | |||
Aggregate purchase of shares | $ 30,000,000 | ||
Board of Directors Chairman [Member] | |||
Subsequent Event [Line Items] | |||
Stock repurchase plan | $ 250,000 | ||
Stock repurchase plan, per share | $ 0.0001 | ||
Convertible Note [Member] | |||
Subsequent Event [Line Items] | |||
Aggregate principal amount | $ 750,000 | ||
Interest rate | 6% | ||
Subsequent description | (i) a 4.99% beneficial ownership limitation contained in the Note, which may be increased to 9.99% upon 61 days’ prior written notice to the Company by the July Note Holder, and (ii) the Exchange Cap (as defined below). The Company has agreed to hold a meeting of its stockholders to seek approval of a waiver of the Exchange Cap - no later than ninety (90) days from July 24, 2024. Under the applicable rules of the NYSE American LLC, in no event may the Company issue to July Note Holder and any of its affiliates under the CEF Purchase Agreement (as defined below), or otherwise, more than 1,152,764 shares of Common Stock, which number of shares represents 19.99% of the shares of the Common Stock outstanding immediately prior to the execution of the CEF Purchase Agreement (the “Exchange Cap”). |