Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 08, 2023 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-41567 | |
Entity Registrant Name | PROSOMNUS, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 88-2978216 | |
Entity Address, Address Line One | 5675 Gibraltar Drive | |
Entity Address, City or Town | Pleasanton | |
Entity Address State Or Province | CA | |
Entity Address, Postal Zip Code | 94588 | |
City Area Code | 844 | |
Local Phone Number | 537-5337 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 16,057,630 | |
Entity Central Index Key | 0001934064 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Common Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Trading Symbol | OSA | |
Security Exchange Name | NASDAQ | |
Warrant | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Warrants, each whole warrant exercisable for one share of Common Stock for $11.50 per share | |
Trading Symbol | OSAAW | |
Security Exchange Name | NASDAQ |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 6,175,632 | $ 15,916,141 |
Accounts receivable, net | 3,560,882 | 2,843,148 |
Inventory | 1,309,982 | 639,945 |
Prepaid expenses and other current assets | 1,162,921 | 1,846,870 |
Total current assets | 12,209,417 | 21,246,104 |
Property and equipment, net | 3,265,865 | 2,404,402 |
Finance lease right-of-use assets | 4,164,545 | 3,650,451 |
Operating lease right-of-use assets | 5,238,553 | 5,632,771 |
Other assets | 345,653 | 262,913 |
Total assets | 25,224,033 | 33,196,641 |
Current liabilities: | ||
Accounts payable | 2,072,393 | 2,101,572 |
Accrued expenses | 5,824,193 | 3,706,094 |
Equipment financing obligation | 57,457 | 58,973 |
Finance lease liabilities | 1,224,442 | 1,008,587 |
Operating lease liabilities | 277,677 | 215,043 |
Total current liabilities | 9,456,162 | 7,090,269 |
Equipment financing obligation, net of current portion | 167,346 | 185,645 |
Finance lease liabilities, net of current portion | 2,480,803 | 2,081,410 |
Operating lease liabilities, net of current portion | 5,377,154 | 5,525,562 |
Senior Convertible Notes at fair value | 12,928,404 | 13,651,000 |
Subordinated Convertible Notes at fair value | 15,225,000 | 10,355,681 |
Earnout liability | 4,610,000 | 12,810,000 |
Warrant liability | 727,664 | 1,991,503 |
Total noncurrent liabilities | 41,516,371 | 46,600,801 |
Total liabilities | 50,972,533 | 53,691,070 |
Commitments and contingencies | ||
Stockholders' deficit: | ||
Preferred stock, $0.0001 par value, 1,000,000 shares authorized at June 30, 2023 and December 31, 2022; no shares issued and outstanding | ||
Common stock, $0.0001 par value, 100,000,000; 16,057,630 and 16,041,464 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively | 1,606 | 1,604 |
Additional paid-in capital | 191,031,730 | 190,298,562 |
Accumulated deficit | (216,781,836) | (210,794,595) |
Total stockholders' deficit | (25,748,500) | (20,494,429) |
Total liabilities and stockholders' deficit | $ 25,224,033 | $ 33,196,641 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2023 | Dec. 31, 2022 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 16,057,630 | 16,041,464 |
Common stock, shares outstanding | 16,057,630 | 16,041,464 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Revenue | $ 6,933,910 | $ 4,859,909 | $ 12,742,290 | $ 8,603,052 |
Cost of revenue | 3,170,794 | 2,321,692 | 5,927,425 | 3,900,188 |
Gross profit | 3,763,116 | 2,538,217 | 6,814,865 | 4,702,864 |
Operating expenses | ||||
Sales and marketing | 3,642,718 | 2,013,392 | 6,466,766 | 4,130,811 |
Research and development | 1,376,036 | 669,348 | 2,395,005 | 1,226,980 |
General and administrative | 4,480,124 | 1,289,154 | 7,833,131 | 2,642,889 |
Total expenses | 9,498,878 | 3,971,894 | 16,694,902 | 8,000,680 |
Net loss from operations | (5,735,762) | (1,433,677) | (9,880,037) | (3,297,816) |
Other income (expense) | ||||
Interest expense | (1,240,159) | (1,197,237) | (2,411,969) | (2,293,075) |
Change in fair value of earnout liability | 6,700,000 | 8,200,000 | ||
Change in fair value of debt | (802,430) | (2,629,430) | ||
Change in fair value of warrant liability | 2,106,398 | 1,263,839 | (20,756) | |
Loss on extinguishment of debt | (192,731) | (192,731) | ||
Other expense | (123,117) | (529,644) | ||
Total other income (expense), net | 6,640,692 | (1,389,968) | 3,892,796 | (2,506,562) |
Net income (loss) before income taxes | 904,930 | (2,823,645) | (5,987,241) | (5,804,378) |
Net income (loss) | $ 904,930 | $ (2,823,645) | $ (5,987,241) | $ (5,804,378) |
Net income (loss) per share attributable to common stockholders, basic | $ 0.06 | $ (0.71) | $ (0.37) | $ (1.47) |
Net income (loss) per share attributable to common stockholders, diluted | $ (0.01) | $ (0.71) | $ (0.37) | $ (1.47) |
Weighted average shares used in computing net loss per share attributable to common stockholders, basic | 16,057,630 | 3,958,258 | 16,045,110 | 3,950,009 |
Weighted average shares used in computing net loss per share attributable to common stockholders, diluted | 19,141,231 | 3,958,258 | 16,045,110 | 3,950,009 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT - USD ($) | Series B redeemable convertible preferred stock Preferred Stock | Series A redeemable convertible preferred stock Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance at Dec. 31, 2021 | $ 12,389,547 | $ 26,245,000 | ||||
Beginning balance (in shares) at Dec. 31, 2021 | 7,288,333 | 26,245 | ||||
Ending balance at Jun. 30, 2022 | $ 12,389,547 | $ 26,245,000 | ||||
Ending balance (in shares) at Jun. 30, 2022 | 7,288,333 | 26,245 | ||||
Beginning balance at Dec. 31, 2021 | $ 2,456 | $ 150,425,960 | $ (203,649,275) | $ (53,220,859) | ||
Beginning balance (in shares) at Dec. 31, 2021 | 24,566,386 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Vesting of restricted stock awards | $ 13 | (13) | ||||
Vesting of restricted stock awards (in shares) | 136,505 | |||||
Stock-based compensation expense | 4,000 | 4,000 | ||||
Net income (loss) | (5,804,378) | (5,804,378) | ||||
Ending balance at Jun. 30, 2022 | $ 2,469 | 150,429,947 | (209,453,653) | (59,021,237) | ||
Ending balance (in shares) at Jun. 30, 2022 | 24,702,891 | |||||
Beginning balance at Mar. 31, 2022 | $ 12,389,547 | $ 26,245,000 | ||||
Beginning balance (in shares) at Mar. 31, 2022 | 7,288,333 | 26,245 | ||||
Ending balance at Jun. 30, 2022 | $ 12,389,547 | $ 26,245,000 | ||||
Ending balance (in shares) at Jun. 30, 2022 | 7,288,333 | 26,245 | ||||
Beginning balance at Mar. 31, 2022 | $ 2,463 | 150,425,953 | (206,630,008) | (56,201,592) | ||
Beginning balance (in shares) at Mar. 31, 2022 | 24,640,110 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Vesting of restricted stock awards | $ 6 | (6) | ||||
Vesting of restricted stock awards (in shares) | 62,781 | |||||
Stock-based compensation expense | 4,000 | 4,000 | ||||
Net income (loss) | (2,823,645) | (2,823,645) | ||||
Ending balance at Jun. 30, 2022 | $ 2,469 | 150,429,947 | (209,453,653) | (59,021,237) | ||
Ending balance (in shares) at Jun. 30, 2022 | 24,702,891 | |||||
Beginning balance at Dec. 31, 2022 | $ 1,604 | 190,298,562 | (210,794,595) | (20,494,429) | ||
Beginning balance (in shares) at Dec. 31, 2022 | 16,041,464 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Issuance of shares, net of cancellations and issuance costs | $ 2 | 163,571 | 163,573 | |||
Issuance of shares, net of cancellations and issuance costs (in shares) | 16,166 | |||||
Stock-based compensation expense | 569,597 | 569,597 | ||||
Net income (loss) | (5,987,241) | (5,987,241) | ||||
Ending balance at Jun. 30, 2023 | $ 1,606 | 191,031,730 | (216,781,836) | (25,748,500) | ||
Ending balance (in shares) at Jun. 30, 2023 | 16,057,630 | |||||
Beginning balance at Mar. 31, 2023 | $ 1,604 | 190,524,697 | (217,686,766) | (27,160,465) | ||
Beginning balance (in shares) at Mar. 31, 2023 | 16,041,464 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Issuance of Common Stock - services | $ 2 | 163,571 | 163,573 | |||
Issuance of Common Stock - services (in shares) | 16,166 | |||||
Stock-based compensation expense | 343,462 | 343,462 | ||||
Net income (loss) | 904,930 | 904,930 | ||||
Ending balance at Jun. 30, 2023 | $ 1,606 | $ 191,031,730 | $ (216,781,836) | $ (25,748,500) | ||
Ending balance (in shares) at Jun. 30, 2023 | 16,057,630 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (5,987,241) | $ (5,804,378) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 360,819 | 191,921 |
Reduction of finance right-of-use asset | 396,512 | 323,191 |
Reduction of operating right-of-use asset | 202,183 | 91,016 |
Noncash interest | 1,517,293 | 1,923,497 |
Noncash research and development | 100,000 | |
Loss on disposal of property and equipment | 117,449 | |
Bad debt expense | 71,884 | 17,828 |
Stock-based compensation | 569,597 | 4,000 |
Shares issued for services received | 163,573 | |
Change in fair value of earnout liability | (8,200,000) | |
Change in fair value of debt | 2,629,430 | |
Change in fair value of warrant liability | (1,263,839) | 20,756 |
Impairment of assets | 335,072 | |
Loss on extinguishment of debt | 192,731 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (789,618) | 45,300 |
Inventory | (670,037) | (47,863) |
Prepaid expenses and other current assets | 456,020 | (282,999) |
Other assets | (21,087) | (1,603,015) |
Accounts payable | (29,179) | 1,178,667 |
Accrued expenses | 2,118,099 | 565,410 |
Operating lease liabilities | 134,094 | (103,270) |
Net cash used in operating activities | (7,788,976) | (3,287,208) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (1,211,802) | (232,330) |
Net cash used in investing activities | (1,211,802) | (232,330) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from line of credit | 13,284,403 | |
Repayments of line of credit | (12,587,268) | |
Proceeds from issuance of subordinated notes | 375,000 | |
Repayments of subordinated notes | (75,000) | |
Payment of deferred financing cost | (61,653) | |
Principal payments on finance lease obligations | (658,263) | (499,038) |
Principal payments on equipment financing obligation | (19,815) | (27,713) |
Repayments of subordinated loan and security agreement | (409,911) | |
Proceeds from issuance of unsecured subordinated promissory notes | 3,625,123 | |
Repayments of unsecured subordinated promissory notes | (500,000) | |
Net cash provided by (used in) financing activities | (739,731) | 3,185,596 |
Net increase (decrease) in cash and cash equivalents | (9,740,509) | (333,942) |
Cash and cash equivalents at beginning of period | 15,916,141 | 1,500,582 |
Cash and cash equivalents at end of period | 6,175,632 | 1,166,640 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 656,626 | 333,917 |
Cash paid for franchise taxes | 7,652 | |
Supplemental disclosure of noncash investing and financing activities: | ||
Acquisition of property and equipment through capital leases | 291,031 | |
ROU assets obtained in exchange for finance lease obligations | $ 1,273,511 | |
Issuance of redeemable convertible preferred stock warrant in connection with subordinated loan and security agreement | $ 143,333 |
DESCRIPTION OF THE BUSINESS
DESCRIPTION OF THE BUSINESS | 6 Months Ended |
Jun. 30, 2023 | |
DESCRIPTION OF THE BUSINESS | |
DESCRIPTION OF THE BUSINESS | NOTE 1 — DESCRIPTION OF THE BUSINESS Company Organization ProSomnus, Inc., and its wholly owned subsidiaries, ProSomnus Holdings, Inc. and ProSomnus Sleep Technologies, Inc. (collectively, the “Company”) is an innovative medical technology company that develops, manufactures, and markets its proprietary line of precision intraoral medical devices for treating and managing patients with obstructive sleep apnea (“OSA”). The Company is located in Pleasanton, California and was incorporated as a Delaware company on May 3, 2022. Its accounting predecessor company, ProSomnus Sleep Technologies, Inc. was incorporated as a Delaware company on March 2, 2016. |
BASIS OF ACCOUNTING AND SIGNIFI
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2023 | |
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | |
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 — BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries and have been prepared in accordance with generally accepted accounting principles in the United States (GAAP) The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or any future periods. The condensed consolidated balance sheet as of December 31, 2022 has been derived from audited financial statements at that date but does not include all of the information required by GAAP for complete financial statements. Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. Liquidity and Management’s Plans The Company has incurred recurring losses from operations and recurring negative cash flows from operating activities. The Company expects operating losses and negative cash flows from operations to continue for the foreseeable future. Based on the Company’s current level of expenditures and management’s future cash flow projections, the Company believes its cash and cash equivalents of $6.2 million and working capital of $2.8 million at June 30, 2023, will not be sufficient for the Company to continue operations as a going concern for at least one year from the issuance date of these condensed consolidated financial statements. Additionally, from July 1, 2023, the Convertible Notes (as defined in Note 7) require the Company to maintain a minimum cash balance of $4.5 million on the first of each calendar month. The Company believes that these factors raise substantial doubt about its ability to continue as a going concern. The Company’s ability to continue as a going concern depends on its ability to execute on its strategies, which include achieving revenue growth forecast, controlling operating costs, and obtaining additional financing. The Company’s operating plan may change as a result of many factors currently unknown and there can be no assurance that the current operating plan will be achieved in the time frame anticipated by the Company. Furthermore, there can be no assurance that the Company will be able to obtain additional financing on terms acceptable to the Company, on a timely basis or at all. If adequate funds are not available to the Company on a timely basis, it may be required to delay, limit, reduce, or terminate certain commercial efforts, or pursue merger or acquisition strategies, all of which could adversely affect the holdings or the rights of the Company’s stockholders. The accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. Accordingly, the condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and disclosure of contingent assets and liabilities. Actual results could differ from these estimates, and such differences could materially affect the results of operations reported in future periods. The Company’s significant estimates in these condensed consolidated financial statements relate to the fair values, and the underlying assumptions used to formulate such fair values, of its Convertible Notes, earn-out liability, and warrants. Estimates also include the allowance for doubtful accounts receivable, warranty and earned discount accruals, measurements of tax assets and liabilities and stock-based compensation. Fair Value of Financial Instruments The accounting standard for fair value measurements provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. Fair value is defined as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. This accounting standard establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs that may be used to measure fair value: Level 1 Inputs — Level 2 Inputs — Level 3 Inputs — no Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. The Company’s financial instruments consist primarily of cash equivalents, accounts receivable (net of allowance for doubtful accounts), accounts payable and accrued expenses, long-term debt instruments, earnout and warrant liabilities. The carrying values of our working capital balances are representative of their fair values due to their short-term maturities. The carrying value of our equipment financing obligation is considered to approximate its fair value because the interest rate is comparable to current rates for financing available to us. Under the fair value option as prescribed by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 825, Financial Instruments The following tables provide a summary of the financial instruments that are measured at fair value on a recurring basis: June 30, 2023 Fair Value Level 1 Level 2 Level 3 Senior Convertible Notes $ 12,928,404 $ — $ — $ 12,928,404 Subordinated Convertible Notes 15,225,000 — — 15,225,000 Earnout liability 4,610,000 — — 4,610,000 Warrant liability 727,664 — — 727,664 December 31, 2022 Fair Value Level 1 Level 2 Level 3 Senior Convertible Notes $ 13,651,000 $ — $ — $ 13,651,000 Subordinated Convertible Notes 10,355,681 — — 10,355,681 Earnout liability 12,810,000 — — 12,810,000 Warrant liability 1,991,503 — — 1,991,503 A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Cash and Cash Equivalents The company considers all demand deposits with an original maturity to the Company of 90 days or less as cash and cash equivalents. The Company places its cash and cash equivalents with high credit-quality financial institutions. As of June 30, 2023 and December 31, 2022, the Company had $6.2 million and $15.9 million of cash and no cash equivalents, respectively. Senior and Subordinated Convertible Notes The Company accounts for its senior and subordinated Convertible Notes as derivatives in accordance with, ASC 815-10, Derivatives and Hedging, and ASC 815-15, Embedded Derivatives, depending on the nature of the derivative instrument. ASC 815 requires each contract that is not a derivative in its entirety be assessed to determine whether it contains embedded derivatives that are required to be bifurcated and accounted for as a derivative financial instrument. The embedded derivative is bifurcated from the host contract and accounted for as a freestanding derivative if the combined instrument is not accounted for in its entirety at fair value with changes in fair value recorded in earnings, the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract, and a separate instrument with the same terms as the embedded derivative would qualify as a derivative instrument. Embedded derivatives are measured at fair value and remeasured at each subsequent reporting period, and recorded within convertible notes, net on the accompanying condensed consolidated Balance Sheets and changes in fair value recorded in other expense within the condensed consolidated Statements of Operations. Debt discounts under these arrangements are amortized to interest expense using the interest method over the earlier of the term of the related debt or their earliest date of redemption. The Company has analyzed the redemption, conversion, settlement, and other derivative instrument features of its Convertible Notes.. ● The Company identified that the (i) redemption features, (ii) lender’s optional conversion feature, (iii) lender’s optional conversion upon merger event feature and (iv) additional interest rate upon certain events feature meet the definition of a derivative. The Company analyzed the scope exception for all the above features under ASC 815-10-15-74(a). ● Based on the further analysis, the Company identified that the (i) lender’s optional conversion feature, (ii) lender’s optional conversion upon merger event feature and (iii) additional interest rate upon certain events feature, do not meet the settlement criteria to be considered indexed to equity. The Company concluded that each of these features should be classified as a derivative liability measured at fair value with the changes in fair value in the condensed consolidated statement of operations. ● The Company also identified that the redemption features are settled in cash and do not meet the indexed to equity and the equity classification scope exception, thus, they must be bifurcated from the convertible notes and accounted for separately at fair value on a recurring basis reflecting the changes in fair value in the condensed consolidated statement of operations. The Company determined the Convertible Notes contained multiple embedded derivatives that are required to be bifurcated, two of which are conversion features. As per ASC 815, if there is a conversion feature that is required to be bifurcated, the cash conversion feature and beneficial conversion feature guidance is not applicable to such conversion feature and the fair value election is allowable provided the debt was not issued at a substantial premium. The Company concluded that the notes were not issued at a premium and hence the Company elected the fair value option under ASC 815-15-25. The Company elected to record changes in fair value through the condensed consolidated statement of operations as a fair value adjustment of the convertible debt each reporting period (with the portion of the change that results from a change in the instrument-specific credit risk recorded separately in other comprehensive income, if applicable). The Company has also elected not to separately present interest expense related to Convertible Notes and the entire change in fair value of the instrument will be recorded as a fair value adjustment of convertible debt within the condensed consolidated statement of operations. Thus, the multiple embedded derivatives do not need to be separately bifurcated and fair valued. The Convertible Notes are reflected at their respective fair values on the condensed Consolidated Balance Sheet at June 30, 2023. Warrants The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity Derivatives and Hedging For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and then remeasured at fair value at each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as other income or expense on the condensed consolidated statements of operations. Revenue Recognition The Company creates customized precision milled intraoral devices. When devices are sold, they include an assurance-type warranty guaranteeing the fit and finish of the product for a period of 3 years The Company recognizes revenue upon meeting the following criteria: ● Identifying the contract with a customer: customers submit authorized prescriptions and dental impressions to the Company. Authorized prescriptions constitute the contract with customers. ● Identifying the performance obligations within the contract: The sole performance obligation is the shipment of a completed customized intraoral device. ● Determining the transaction price: Prices are determined by standardized pricing sheets and adjusted for estimated returns, discounts, and allowances. ● Allocating the transaction price to the performance obligations: The full transaction price is allocated to the shipment of the completed intraoral device as it is the only element in the transaction. ● Recognizing revenue as the performance obligation is satisfied: revenue is recognized upon transfer of control which occurs upon shipment of the product. The Company does not require collateral or any other form of security from customers. Inbound shipping and handling costs related to sales are billed to customers. We charge for inbound shipping/handling and the costs are classified as Cost of Revenue. Outbound shipping costs are not billed to customers and are included in sales and marketing expenses. Taxes collected from customers and remitted to governmental authorities are excluded from revenue. Standalone selling price for the various intraoral device models are determined using the Company’s standard pricing sheet. The Company invoices customers upon shipment of the product and invoices are due within 30 days. Amounts that have been invoiced are recorded in accounts receivable and revenue as all revenue recognition criteria have been met. Given the nominal value of each transaction, the Company does not offer a financing component related to its revenue arrangements. Leases The Company assesses at contract inception whether a contract is, or contains, a lease. Generally, the Company determines that a lease exists when (1) the contract involves the use of a distinct identified asset, (2) the Company obtains the right At the lease commencement date, the Company recognizes a right-of-use asset and a lease liability for all leases, except short term leases with an original term of twelve months or less. The right-of-use asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease. The right-of-use asset is initially measured at cost, which primarily comprises the initial amount of the lease liability, less any lease incentives received. All right-of-use assets are periodically reviewed for impairment in accordance with standards that apply to long-lived assets. The lease liability is initially measured at the present value of the lease payments, discounted using an estimate of the Company’s incremental borrowing rate for a collateralized loan with the same term as the underlying leases for operating leases and the implied rate in the lease agreement for finance leases. Lease payments included in the measurement of lease liabilities consist of (1) fixed lease payments for the noncancelable lease term, (2) fixed lease payments for optional renewal periods where it is reasonably certain the renewal option will be exercised, and (3) variable lease payments that depend on an underlying index or rate, based on the index or rate in effect at lease commencement. The Company’s real estate operating lease agreement requires variable lease payments that do not depend on an underlying index or rate established at lease commencement. Such payments and changes in payments are recognized in operating expenses when incurred. Lease expense for operating leases consists of the fixed lease payments recognized on a straight-line basis over the lease term plus variable lease payments as incurred. Lease expense for finance leases consists of the amortization of assets obtained under finance leases on a straight-line basis over the lease term and interest expense on the lease liability based on the discount rate at lease commencement. Net Loss per Share Attributable to Common Stockholders Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, since the effects of potentially dilutive securities are antidilutive. Reclassifications Certain reclassifications have been made in how we present our ROU assets that were previously reported December 31, 2022, consolidated balance sheet, to conform to the current period presentation. However, in the consolidated balance sheet as of June 30, 2023, we have presented operating ROU assets and financing ROU assets as two separate line items. These reclassifications have no impact on previously reported earnings or cash flows. Recent Accounting Pronouncements The Company continues to monitor new accounting pronouncements issued by the FASB and does not believe any accounting pronouncements issued through the date of this report will have a material impact on the Company's consolidated financial statements. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2023 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | NOTE 3 — PROPERTY AND EQUIPMENT Property and equipment consist of the following: June 30, 2023 December 31, 2022 Manufacturing equipment $ 2,983,092 $ 2,516,859 Computers and software 1,573,337 1,608,075 Leasehold improvements 822,134 441,956 Furniture — 27,587 5,378,563 4,594,477 Less accumulated depreciation and amortization (2,112,698) (2,190,075) Property and equipment, net $ 3,265,865 $ 2,404,402 Depreciation and amortization expense for property and equipment was $0.2 million and $0.1 million for the three months ended June 30, 2023 and 2022, respectively, and $0.4 million and $0.2 million for the six months ended June 30, 2023 and 2022, respectively. During the six months ended June 30, 2023, the Company disposed of property and equipment of $0.7 million which had an accumulated depreciation and amortization balance of $0.6 million. The resulting $0.1 million loss on disposal is reflected in the condensed consolidated statement of operations as other expense. |
INVENTORY
INVENTORY | 6 Months Ended |
Jun. 30, 2023 | |
INVENTORY | |
INVENTORY | NOTE 4 — INVENTORY Inventory consists of the following: June 30, 2023 December 31, 2022 Raw materials $ 1,168,998 $ 561,726 Work-in-process 140,984 78,219 $ 1,309,982 $ 639,945 The Company did not have any excess or obsolete inventory reserves at June 30, 2023 and December 31, 2022. |
ACCRUED EXPENSES
ACCRUED EXPENSES | 6 Months Ended |
Jun. 30, 2023 | |
ACCRUED EXPENSES | |
ACCRUED EXPENSES | NOTE 5 — ACCRUED EXPENSES Accrued expenses consist of the following: June 30, 2023 December 31, 2022 Compensation related accruals $ 2,708,925 $ 2,104,008 Marketing programs 810,747 611,642 Interest 381,596 110,239 Warranty 414,191 269,496 Professional fees 637,337 129,169 Other 871,397 481,540 $ 5,824,193 $ 3,706,094 |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2023 | |
LEASES | |
LEASES | NOTE 6 — LEASES The Company’s previous corporate office lease had a remaining term of approximately one year as of December 31, 2022. On February 28, 2023, the Company abandoned the previous corporate office premises. There is no new cash inflow generated or expected from the sale or sublease of property and leasehold improvements at the location. The Company recorded an impairment loss of $0.2 million on the ROU operating lease assets and accrued liabilities of $0.1 million in anticipation of expected CAM payments on the lease through December 31, 2023. The impairment loss and the accrued expenses are reflected as other expense in the condensed consolidated statements of operations for the three and six months ended June 30, 2023. On May 17, 2022, the Company signed a ten-year lease for the Company’s new corporate headquarters. The lease commenced on December 15, 2022. The monthly payment is approximately $0.1 million and is subject to stated annual escalations. The Company received 5 months of free rent. The Company’s finance leases consist of various machinery, equipment, computer-related equipment, or software and have remaining terms from less than one year to five years. The components of the Company’s lease cost, weighted average lease terms and discount rates are presented in the tables below: Six months ended Three Months Ended June 30, 2023 June 30, 2023 Lease Cost: Operating lease cost $ 488,357 $ 223,304 Finance lease cost: Amortization of assets obtained under finance leases $ 396,512 $ 216,305 Interest on lease liabilities 156,110 78,108 $ 552,622 $ 294,413 Lease term and discount rate Weighted average discount rate: Weighted average remaining lease term: As of June 30, 2023 Operating leases 10.0 % 9.5 years Finance leases 10.2 % 3.3 years Six months ended June 30, 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 152,080 Operating cash flows from finance leases 156,110 Financing cash flows from finance leases 658,263 Right-of-use assets consisted of the following as of June 30, 2023: Total Manufacturing equipment $ 5,584,220 Computers and software 700,234 Leasehold improvements 218,244 Total 6,502,698 Less accumulated amortization (2,338,153) Right-of-use assets for finance leases 4,164,545 Right-of-use assets for operating leases 5,238,553 Total right-of-use assets $ 9,403,098 At June 30, 2023, the following table presents maturities of the Company’s finance lease liabilities: Six months ended June 30, 2023 Total 2023 (remaining 6 months) $ 1,031,425 2024 1,287,461 2025 1,057,500 2026 739,115 2027 192,568 Thereafter 47,300 Total minimum lease payments 4,355,369 Less amount representing interest (650,124) Present value of minimum lease payments 3,705,245 Less current portion (1,224,442) Finance lease obligations, less current portion $ 2,480,803 At June 30, 2023, the following Six months ended June 30, 2023 Total 2023 (remaining 6 months) $ 615,030 2024 842,553 2025 867,831 2026 893,862 2027 920,679 Thereafter 4,761,873 Total minimum lease payments 8,901,828 Less: amount representing interest (3,246,997) Present value of minimum lease payments 5,654,831 Less: current portion* (277,677) Operating lease liabilities, less current portion $ 5,377,154 *Excludes $0.1 million short term lease liability for previous headquarter lease impaired |
DEBT
DEBT | 6 Months Ended |
Jun. 30, 2023 | |
DEBT | |
DEBT | NOTE 7 — DEBT Equipment Financing Obligation The Company’s future principal maturities under the equipment financing obligation are summarized as follows: At June 30, 2023 Total 2023 (remaining 6 months) $ 33,523 2024 56,995 2025 69,333 2026 64,952 Total principal maturities 224,803 Less: current portion (57,457) Equipment financing obligation, net of current portion $ 167,346 Subordinated Notes The Company received advances under subordinated promissory note agreements for total proceeds of $0.4 million during the six months ended June 30, 2022. No issuance costs were incurred. Bridge Loans (Unsecured Subordinated Promissory Notes) During the six months ended June 30, 2022, the Company received proceeds of $3.6 million from unsecured subordinated promissory notes (the “Bridge Loans”). Prior to the closing of our December 2022 merger (the “Business Combination”), the Bridge Loans were converted into Series A Redeemable Convertible Preferred Stock. During March 2022, $0.5 million of the Bridge Loans were repaid. The primary stockholder of the Company was the borrower on this Bridge Loan, and a representative of this primary stockholder is a member of the Company’s Board of Directors. Convertible Debt Agreements Senior Convertible Notes On December 6, 2022, the Company entered into a senior indenture agreement, and Senior Secured Convertible Notes due December 6, 2025 (“Senior Convertible Notes”), with an aggregate principal amount of $16.96 million, pursuant to the senior securities purchase agreement, dated August 26, 2022. In connection with the closing of this Senior Convertible Notes offering, the Company issued 36,469 shares of common stock and 169,597 warrants to purchase common stock. The “Senior Convertible Notes Warrants” entitle the note holders to purchase shares of common stock of the Company, subject to adjustment, at a purchase price per share of $11.50. The debt bears interest at 9% per annum. Interest is payable in cash quarterly. On June 29, 2023, the Company entered into the first supplemental indenture which amended the senior indenture agreement. The amendment, amongst other things, (i) effects certain changes to the minimum EBITDA and minimum revenue financial covenants (ii) requires mandatory redemption of the Senior Convertible Notes in consecutive quarterly installments equal to $847,990 in the aggregate on January 1, April 1, July 1 and October 1 of each year, commencing October 1, 2024, until the earlier of the maturity date of the Senior Convertible Notes or the date the Senior Convertible Notes are no longer outstanding, and (iii) corrects an error in the definition of Conversion Rate. Subordinated Convertible Notes On December 6, 2022, the Company entered into that certain Subordinated Indenture by and between ProSomnus, Inc., ProSomnus Holdings, ProSomnus Sleep Technologies, and Wilmington Trust, National Association, as Trustee and Collateral Agent, and Subordinated Secured Convertible Notes due April 6, 2026 (“Subordinated Convertible Notes”, and, together with the Senior Convertible Notes, the “Convertible Notes”), with an aggregate principal amount of $17.45 million, pursuant to the previously disclosed Subordinated Securities Purchase Agreement, dated August 26, 2022. In connection with the closing of this Convertible Debt offering, the Company issued 290,244 shares of common stock and 1,745,310 warrants (“Subordinated Convertible Notes Warrants”, and, together with the Senior Convertible Notes Warrants, the “Convertible Notes Warrants”) to purchase common stock to certain Convertible Debt holders. The debt has an interest rate of Prime Rate plus an additional 9% per annum with a term of 3 years. Interest is due quarterly in cash or in kind at the option of the Company. On June 29, 2023, the Company entered into the first supplemental indenture agreement which amended the Subordinated Indenture. The amendment, amongst other things, (i) effects certain changes to the minimum EBITDA and minimum revenue financial covenants and (ii) corrects an error in the definition of Conversion Rate. The Company has elected to measure the Convertible Notes in their entirety at fair value with changes in fair value recognized as non-operating gain or loss in the consolidated statements of operations (with the portion of the change that results from a change in the instrument-specific credit risk recorded separately in other comprehensive income, if applicable). The estimated fair values of the convertible debt was determined using a Monte Carlo Simulation method. We simulated the stock price using a Geometric Brownian Motion until maturity. For each simulation path we calculated the convertible bond value at maturity and then discount that back to the valuation date. The following assumptions were used as of June 30, 2023 and December 31, 2022: Monte Carlo Simulation Assumptions Asset Risky Expected Risk-Free As of June 30, 2023 Price Yield Volatility Interest Rate Senior Convertible Notes $ 3.10 26.00 % 45 % 4.70 % Subordinated Convertible Notes 3.10 35.30 % 45 % 4.58 % Monte Carlo Simulation Assumptions Asset Risky Expected Risk-Free As of December 31, 2022 Price Yield Volatility Interest Rate Senior Convertible Notes $ 5.56 31.80 % 45 % 4.23 % Subordinated Convertible Notes 5.56 41.20 % 45 % 4.19 % The following is a summary of changes in fair value of the Convertible Notes for three and six months ended June 30, 2023: Senior Convertible Notes Subordinated Convertible Notes Beginning fair value, January 1, 2023 $ 13,651,000 $ 10,355,681 Paid-in-kind interest — 723,699 Change in fair value of debt 827,000 1,000,000 Fair value as of March 31, 2023 14,478,000 12,079,380 Paid-in-kind interest — 793,594 Change in fair value of debt (1,549,596) 2,352,026 Ending fair value, June 30, 2023 $ 12,928,404 $ 15,225,000 The Convertible Notes are subject to a minimum revenue, cash, and EBITDA financial covenants. Management believes that the Company is in compliance with all financial covenants as of June 30, 2023. From July 1, 2023, the Convertible Notes require the Company to maintain a minimum cash balance of $4.5 million on the first of each calendar month. |
COMMON STOCK WARRANTS
COMMON STOCK WARRANTS | 6 Months Ended |
Jun. 30, 2023 | |
COMMON STOCK WARRANTS | |
COMMON STOCK WARRANTS | NOTE 8 – COMMON STOCK WARRANTS Estimated Fair Value of Outstanding Warrants Classified as Liabilities The estimated fair value of outstanding warrants classified as liabilities is determined at each consolidated balance sheet date. Any decrease or increase in the estimated fair value of the warrant liability since the most recent consolidated balance sheet date is recorded in the consolidated statements of operations as a change in fair value of warrant liability. The fair value of the outstanding warrants accounted for as liabilities as of June 30, 2023 and December 31, 2022 are calculated using the Black-Scholes option pricing model with the following assumptions: Exercise Asset Dividend Expected Risk-Free Expected As of June 30, 2023 Price Price Yield Volatility Interest Rate Life Convertible Notes Warrants $ 11.50 $ 3.10 0 % 50 % 4.20 % 4.43 years Exercise Asset Dividend Expected Risk-Free Expected As of December 31, 2022 Price Price Yield Volatility Interest Rate Life Convertible Notes Warrants $ 11.50 $ 5.56 0 % 40 % 4.00 % 4.93 years The changes in fair value of the outstanding warrants classified as liabilities for the three and six months ended June 30, 2023 are as follows: Convertible Notes Warrants Warrant liability, January 1, 2023 $ 1,991,503 Change in fair value 842,559 Warrant liability, March 31, 2023 2,834,062 Change in fair value (2,106,398) Warrant liability, June 30, 2023 $ 727,664 As of June 30, 2023 and December 31, 2022, there were 4,597,180 equity classified warrants granted. |
COMMON STOCK
COMMON STOCK | 6 Months Ended |
Jun. 30, 2023 | |
COMMON STOCK | |
COMMON STOCK | NOTE 9 – COMMON STOCK The Company has reserved shares of common stock for the following as of June 30, 2023: 2022 Equity Incentive Plan reserve 2,411,283 Reserve for earn-out shares 3,000,000 Reserve for exercise of warrants 6,512,057 Reserve for convertible debt 7,344,027 Employee stock purchase plan 500,000 Total 19,767,367 |
EARN-OUT SHARES
EARN-OUT SHARES | 6 Months Ended |
Jun. 30, 2023 | |
EARN-OUT SHARES | |
EARN-OUT SHARES | NOTE 10 - EARN-OUT SHARES In connection with the Business Combination, certain of the Company’s original stockholders are entitled to receive up to 3,000,000 Earn-out shares in three tranches: (1) the first tranche of 1,000,000 Earn-out shares will be issued when the volume-weighted average price per share of the Company’s common stock is $12.50 or greater for 20 trading days in any consecutive 30 trading day period commencing 6 months after the Closing and ending at the third anniversary of the Closing; (2) the second tranche of 1,000,000 Earn-out shares will be issued when the volume-weighted average price per share of the Company’s common stock is $15.00 or greater for 20 trading days in any consecutive 30 trading day period commencing 6 months after the Closing and ending at the third anniversary of the Closing; and · (3) the third tranche of 1,000,000 Earn-out shares will be issued when the volume-weighted average price per share of the Company’s common stock is $17.50 or greater for 20 trading days in any consecutive 30 trading day period commencing 6 months after the Closing and ending at the third anniversary of the Closing. The Earn-out shares will be allocated among the Company’s stockholders in proportion to the number of shares issued to them at the closing that continue to be held by them. Due to the variability in the number of Earn-out shares at settlement which could change upon a control event, the Earn-out arrangement contains a settlement provision that violates the indexation guidance under ASC 815-40 and liability classification is required. The Company recorded the earnout liability initially at fair value, and will subsequently remeasure the liability with changes in fair value recorded in the consolidated statement of operations. The changes in fair value of the earnout liability for the three and six months ended June 30, 2023 are as follows: Earnout Liability Earnout liability, January 1, 2023 $ 12,810,000 Change in fair value (1,500,000) Earnout liability, March 31, 2023 11,310,000 Change in fair value (6,700,000) Earnout liability, June 30, 2023 $ 4,610,000 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2023 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | NOTE 11 — STOCK-BASED COMPENSATION During May 2023, the Company issued 20,000 shares of common stock to a consultant for services received. The fair value of the shares issued of $0.2 million was recognized as a selling, general and administrative expense with a corresponding credit to additional paid-in capital. As of June 30, 2023, the Company has 339,000 shares of common stock in escrow for any merger consideration adjustments which are expected to be released from escrow within twelve months from the date of the Business Combination 2022 Equity Incentive Plan During the six months ended June 30, 2023, the Company issued 1,478,915 options under the 2022 Equity Incentive plan to certain employees and consultants of the Company. Stock option activity for the six months ended June 30, 2023 was as follows: Weighted-Average Weighted-Average Remaining Aggregate Shares Exercise Price Contractual Term Intrinsic Value Outstanding at January 1, 2023 — $ — Granted 1,478,915 5.20 Exercised — — Cancelled (13,098) 5.20 Outstanding at June 30, 2023 1,465,817 $ 5.20 9.59 years $ — Exercisable at June 30, 2023 — — — — Vested and expected to vest as of June 30, 2023 1,465,817 $ 5.20 9.59 years $ — As of June 30, 2023, and December 31, 2022, there were no exercisable or vested options. The weighted-average grant date fair value of options granted during the six months ended June 30, 2023 was $2.91. The Company estimated the fair value of stock options using the Black-Scholes option pricing model. The fair value of the stock options was estimated using the following weighted average assumptions: Six Months Ended June 30, 2023 Dividend yield 0.0% Expected volatility 55.0% Risk-free interest rate 3.6% Expected life 6.2 years Dividend Rate Expected Volatility Risk-Free Interest Rate Expected Term Forfeiture Rate The Company has recorded stock-based compensation expense for the three and six months ended June 30, 2023 related to the issuance of stock option awards to employees and nonemployees in the condensed consolidated statement of operations as follows: Three Months Ended Six Months Ended June 30, 2023 June 30, 2023 Cost of revenue $ 7,462 $ 7,462 Sales and marketing 38,755 66,166 Research and development 65,043 111,807 General and administrative 232,202 384,162 $ 343,462 $ 569,597 As of June 30, 2023, unamortized compensation expense related to unvested stock options was $3.7 million, which is expected to be recognized over a weighted average period of 3.3 2023 Employee Stock Purchase Plan The Board previously adopted, and the Company's stockholders approved, the Company’s 2023 Employee Stock Purchase Plan (the “2023 ESPP”). The first offering period under the plan commenced on June 15, 2023. The 2023 ESPP is a broad-based plan that provides employees of the Company and its designated affiliates with the opportunity to become stockholders through periodic payroll deductions that are applied towards the purchase of shares of the Company’s common stock at a discount from the then-current market price. Subject to adjustment in the case of certain capitalization events, a total of 500,000 shares of common stock were available for purchase at adoption of the 2023 ESPP. There were no shares issued under the plan for the six months ended June 30, 2023. As of June 30, 2023, 500,000 shares of common stock remained available for issuance under the 2023 ESPP. The Company estimates the fair value of ESPP grants on their grant date using the Black-Scholes option pricing model. The estimated fair value of ESPP grants is amortized on a straight-line basis over the requisite service period of the grants. The Company reviews, and when deemed appropriate, updates the assumptions used on a periodic basis. The Company utilizes its estimated volatility in the Black-Scholes option pricing model to determine the fair value of ESPP grants. ESPP compensation expense for the six months ended June 30, 2023 was de minimis. |
NET LOSS ATTRIBUTABLE TO COMMON
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | 6 Months Ended |
Jun. 30, 2023 | |
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | |
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | NOTE 12 — NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS The following table sets forth the computation of the basic and diluted net loss per share attributable to common stockholders for the three and six months ended June 30, 2023: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Numerator: Net income (loss) attributable to common stockholders - Basic $ 904,930 $ (2,823,645) $ (5,987,241) $ (5,804,378) Interest expense and remeasurement of Senior Convertible Notes liability (1,168,000) — — — Net income (loss) attributable to common stockholders - Diluted $ (263,070) $ (2,823,645) $ (5,987,241) $ (5,804,378) Denominator: Weighted-average common shares outstanding - Basic 16,057,630 3,958,258 * 16,045,110 3,950,009 * Senior Convertible Notes 3,083,601 — — — Weighted-average common shares outstanding - Diluted 19,141,231 3,958,258 * 16,045,110 3,950,009 * Basic earnings per share $ 0.06 $ (0.71) $ (0.37) $ (1.47) Diluted earnings per share $ (0.01) $ (0.71) $ (0.37) $ (1.47) * Basic and diluted weighted-average common shares outstanding for the three and six months ended June 30, 2022, have been computed based on the historical weighted-average common shares outstanding multiplied by the exchange ratio established in the Business Combination. The potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders for the three and six months ended June 30, 2023 and 2022 because including them would have been antidilutive are as follows: Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Common stock upon conversion of redeemable convertible preferred stock A — 4,214,422 — 4,214,422 Common stock upon conversion of redeemable convertible preferred stock B — 7,288,333 — 7,288,333 Non-vested shares of Series C common stock — 718,003 — 718,003 Warrants to purchase redeemable convertible preferred stock B, as-converted 322,223 — 322,223 Warrants to purchase common stock 6,512,057 — 6,512,057 — Options to purchase common stock 1,465,817 — 1,465,817 — Senior Convertible Notes — — 3,083,601 — Subordinated Convertible Notes 3,535,673 — 3,357,648 — Total 11,513,547 12,542,981 14,419,123 12,542,981 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2023 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 13 — SUBSEQUENT EVENT On August 8, 2023, the Company received a Notice of Conversion from a holder of the Subordinated Convertible Notes, pursuant to which such holder irrevocably exercised its right to convert $1,000,000 principal amount of its Subordinated Convertible Notes into 192,381 shares of Common Stock. |
BASIS OF ACCOUNTING AND SIGNI_2
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries and have been prepared in accordance with generally accepted accounting principles in the United States (GAAP) The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or any future periods. The condensed consolidated balance sheet as of December 31, 2022 has been derived from audited financial statements at that date but does not include all of the information required by GAAP for complete financial statements. |
Principles of Consolidation | Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. |
Liquidity and Management's Plans | Liquidity and Management’s Plans The Company has incurred recurring losses from operations and recurring negative cash flows from operating activities. The Company expects operating losses and negative cash flows from operations to continue for the foreseeable future. Based on the Company’s current level of expenditures and management’s future cash flow projections, the Company believes its cash and cash equivalents of $6.2 million and working capital of $2.8 million at June 30, 2023, will not be sufficient for the Company to continue operations as a going concern for at least one year from the issuance date of these condensed consolidated financial statements. Additionally, from July 1, 2023, the Convertible Notes (as defined in Note 7) require the Company to maintain a minimum cash balance of $4.5 million on the first of each calendar month. The Company believes that these factors raise substantial doubt about its ability to continue as a going concern. The Company’s ability to continue as a going concern depends on its ability to execute on its strategies, which include achieving revenue growth forecast, controlling operating costs, and obtaining additional financing. The Company’s operating plan may change as a result of many factors currently unknown and there can be no assurance that the current operating plan will be achieved in the time frame anticipated by the Company. Furthermore, there can be no assurance that the Company will be able to obtain additional financing on terms acceptable to the Company, on a timely basis or at all. If adequate funds are not available to the Company on a timely basis, it may be required to delay, limit, reduce, or terminate certain commercial efforts, or pursue merger or acquisition strategies, all of which could adversely affect the holdings or the rights of the Company’s stockholders. The accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. Accordingly, the condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and disclosure of contingent assets and liabilities. Actual results could differ from these estimates, and such differences could materially affect the results of operations reported in future periods. The Company’s significant estimates in these condensed consolidated financial statements relate to the fair values, and the underlying assumptions used to formulate such fair values, of its Convertible Notes, earn-out liability, and warrants. Estimates also include the allowance for doubtful accounts receivable, warranty and earned discount accruals, measurements of tax assets and liabilities and stock-based compensation. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The accounting standard for fair value measurements provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. Fair value is defined as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. This accounting standard establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs that may be used to measure fair value: Level 1 Inputs — Level 2 Inputs — Level 3 Inputs — no Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. The Company’s financial instruments consist primarily of cash equivalents, accounts receivable (net of allowance for doubtful accounts), accounts payable and accrued expenses, long-term debt instruments, earnout and warrant liabilities. The carrying values of our working capital balances are representative of their fair values due to their short-term maturities. The carrying value of our equipment financing obligation is considered to approximate its fair value because the interest rate is comparable to current rates for financing available to us. Under the fair value option as prescribed by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 825, Financial Instruments The following tables provide a summary of the financial instruments that are measured at fair value on a recurring basis: June 30, 2023 Fair Value Level 1 Level 2 Level 3 Senior Convertible Notes $ 12,928,404 $ — $ — $ 12,928,404 Subordinated Convertible Notes 15,225,000 — — 15,225,000 Earnout liability 4,610,000 — — 4,610,000 Warrant liability 727,664 — — 727,664 December 31, 2022 Fair Value Level 1 Level 2 Level 3 Senior Convertible Notes $ 13,651,000 $ — $ — $ 13,651,000 Subordinated Convertible Notes 10,355,681 — — 10,355,681 Earnout liability 12,810,000 — — 12,810,000 Warrant liability 1,991,503 — — 1,991,503 A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. |
Cash and Cash Equivalents | Cash and Cash Equivalents The company considers all demand deposits with an original maturity to the Company of 90 days or less as cash and cash equivalents. The Company places its cash and cash equivalents with high credit-quality financial institutions. As of June 30, 2023 and December 31, 2022, the Company had $6.2 million and $15.9 million of cash and no cash equivalents, respectively. |
Senior and Subordinated Convertible Notes | Senior and Subordinated Convertible Notes The Company accounts for its senior and subordinated Convertible Notes as derivatives in accordance with, ASC 815-10, Derivatives and Hedging, and ASC 815-15, Embedded Derivatives, depending on the nature of the derivative instrument. ASC 815 requires each contract that is not a derivative in its entirety be assessed to determine whether it contains embedded derivatives that are required to be bifurcated and accounted for as a derivative financial instrument. The embedded derivative is bifurcated from the host contract and accounted for as a freestanding derivative if the combined instrument is not accounted for in its entirety at fair value with changes in fair value recorded in earnings, the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract, and a separate instrument with the same terms as the embedded derivative would qualify as a derivative instrument. Embedded derivatives are measured at fair value and remeasured at each subsequent reporting period, and recorded within convertible notes, net on the accompanying condensed consolidated Balance Sheets and changes in fair value recorded in other expense within the condensed consolidated Statements of Operations. Debt discounts under these arrangements are amortized to interest expense using the interest method over the earlier of the term of the related debt or their earliest date of redemption. The Company has analyzed the redemption, conversion, settlement, and other derivative instrument features of its Convertible Notes.. ● The Company identified that the (i) redemption features, (ii) lender’s optional conversion feature, (iii) lender’s optional conversion upon merger event feature and (iv) additional interest rate upon certain events feature meet the definition of a derivative. The Company analyzed the scope exception for all the above features under ASC 815-10-15-74(a). ● Based on the further analysis, the Company identified that the (i) lender’s optional conversion feature, (ii) lender’s optional conversion upon merger event feature and (iii) additional interest rate upon certain events feature, do not meet the settlement criteria to be considered indexed to equity. The Company concluded that each of these features should be classified as a derivative liability measured at fair value with the changes in fair value in the condensed consolidated statement of operations. ● The Company also identified that the redemption features are settled in cash and do not meet the indexed to equity and the equity classification scope exception, thus, they must be bifurcated from the convertible notes and accounted for separately at fair value on a recurring basis reflecting the changes in fair value in the condensed consolidated statement of operations. The Company determined the Convertible Notes contained multiple embedded derivatives that are required to be bifurcated, two of which are conversion features. As per ASC 815, if there is a conversion feature that is required to be bifurcated, the cash conversion feature and beneficial conversion feature guidance is not applicable to such conversion feature and the fair value election is allowable provided the debt was not issued at a substantial premium. The Company concluded that the notes were not issued at a premium and hence the Company elected the fair value option under ASC 815-15-25. The Company elected to record changes in fair value through the condensed consolidated statement of operations as a fair value adjustment of the convertible debt each reporting period (with the portion of the change that results from a change in the instrument-specific credit risk recorded separately in other comprehensive income, if applicable). The Company has also elected not to separately present interest expense related to Convertible Notes and the entire change in fair value of the instrument will be recorded as a fair value adjustment of convertible debt within the condensed consolidated statement of operations. Thus, the multiple embedded derivatives do not need to be separately bifurcated and fair valued. The Convertible Notes are reflected at their respective fair values on the condensed Consolidated Balance Sheet at June 30, 2023. |
Warrants | Warrants The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity Derivatives and Hedging For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and then remeasured at fair value at each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as other income or expense on the condensed consolidated statements of operations. |
Revenue Recognition | Revenue Recognition The Company creates customized precision milled intraoral devices. When devices are sold, they include an assurance-type warranty guaranteeing the fit and finish of the product for a period of 3 years The Company recognizes revenue upon meeting the following criteria: ● Identifying the contract with a customer: customers submit authorized prescriptions and dental impressions to the Company. Authorized prescriptions constitute the contract with customers. ● Identifying the performance obligations within the contract: The sole performance obligation is the shipment of a completed customized intraoral device. ● Determining the transaction price: Prices are determined by standardized pricing sheets and adjusted for estimated returns, discounts, and allowances. ● Allocating the transaction price to the performance obligations: The full transaction price is allocated to the shipment of the completed intraoral device as it is the only element in the transaction. ● Recognizing revenue as the performance obligation is satisfied: revenue is recognized upon transfer of control which occurs upon shipment of the product. The Company does not require collateral or any other form of security from customers. Inbound shipping and handling costs related to sales are billed to customers. We charge for inbound shipping/handling and the costs are classified as Cost of Revenue. Outbound shipping costs are not billed to customers and are included in sales and marketing expenses. Taxes collected from customers and remitted to governmental authorities are excluded from revenue. Standalone selling price for the various intraoral device models are determined using the Company’s standard pricing sheet. The Company invoices customers upon shipment of the product and invoices are due within 30 days. Amounts that have been invoiced are recorded in accounts receivable and revenue as all revenue recognition criteria have been met. Given the nominal value of each transaction, the Company does not offer a financing component related to its revenue arrangements. |
Leases | Leases The Company assesses at contract inception whether a contract is, or contains, a lease. Generally, the Company determines that a lease exists when (1) the contract involves the use of a distinct identified asset, (2) the Company obtains the right At the lease commencement date, the Company recognizes a right-of-use asset and a lease liability for all leases, except short term leases with an original term of twelve months or less. The right-of-use asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease. The right-of-use asset is initially measured at cost, which primarily comprises the initial amount of the lease liability, less any lease incentives received. All right-of-use assets are periodically reviewed for impairment in accordance with standards that apply to long-lived assets. The lease liability is initially measured at the present value of the lease payments, discounted using an estimate of the Company’s incremental borrowing rate for a collateralized loan with the same term as the underlying leases for operating leases and the implied rate in the lease agreement for finance leases. Lease payments included in the measurement of lease liabilities consist of (1) fixed lease payments for the noncancelable lease term, (2) fixed lease payments for optional renewal periods where it is reasonably certain the renewal option will be exercised, and (3) variable lease payments that depend on an underlying index or rate, based on the index or rate in effect at lease commencement. The Company’s real estate operating lease agreement requires variable lease payments that do not depend on an underlying index or rate established at lease commencement. Such payments and changes in payments are recognized in operating expenses when incurred. Lease expense for operating leases consists of the fixed lease payments recognized on a straight-line basis over the lease term plus variable lease payments as incurred. Lease expense for finance leases consists of the amortization of assets obtained under finance leases on a straight-line basis over the lease term and interest expense on the lease liability based on the discount rate at lease commencement. |
Net Loss per Share Attributable to Common Stockholders | Net Loss per Share Attributable to Common Stockholders Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, since the effects of potentially dilutive securities are antidilutive. |
Reclassifications | Reclassifications Certain reclassifications have been made in how we present our ROU assets that were previously reported December 31, 2022, consolidated balance sheet, to conform to the current period presentation. However, in the consolidated balance sheet as of June 30, 2023, we have presented operating ROU assets and financing ROU assets as two separate line items. These reclassifications have no impact on previously reported earnings or cash flows. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company continues to monitor new accounting pronouncements issued by the FASB and does not believe any accounting pronouncements issued through the date of this report will have a material impact on the Company's consolidated financial statements. |
BASIS OF ACCOUNTING AND SIGNI_3
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | |
Summary of the financial instruments that are measured at fair value on a recurring basis | June 30, 2023 Fair Value Level 1 Level 2 Level 3 Senior Convertible Notes $ 12,928,404 $ — $ — $ 12,928,404 Subordinated Convertible Notes 15,225,000 — — 15,225,000 Earnout liability 4,610,000 — — 4,610,000 Warrant liability 727,664 — — 727,664 December 31, 2022 Fair Value Level 1 Level 2 Level 3 Senior Convertible Notes $ 13,651,000 $ — $ — $ 13,651,000 Subordinated Convertible Notes 10,355,681 — — 10,355,681 Earnout liability 12,810,000 — — 12,810,000 Warrant liability 1,991,503 — — 1,991,503 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
PROPERTY AND EQUIPMENT | |
Schedule of Property and equipment | June 30, 2023 December 31, 2022 Manufacturing equipment $ 2,983,092 $ 2,516,859 Computers and software 1,573,337 1,608,075 Leasehold improvements 822,134 441,956 Furniture — 27,587 5,378,563 4,594,477 Less accumulated depreciation and amortization (2,112,698) (2,190,075) Property and equipment, net $ 3,265,865 $ 2,404,402 |
INVENTORY (Tables)
INVENTORY (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
INVENTORY | |
Schedule of Inventory | June 30, 2023 December 31, 2022 Raw materials $ 1,168,998 $ 561,726 Work-in-process 140,984 78,219 $ 1,309,982 $ 639,945 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
ACCRUED EXPENSES | |
Schedule of accrued compensation and other accrued expenses | June 30, 2023 December 31, 2022 Compensation related accruals $ 2,708,925 $ 2,104,008 Marketing programs 810,747 611,642 Interest 381,596 110,239 Warranty 414,191 269,496 Professional fees 637,337 129,169 Other 871,397 481,540 $ 5,824,193 $ 3,706,094 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
LEASES | |
Schedule of components of lease cost, weighted average lease terms and discount rates | Six months ended Three Months Ended June 30, 2023 June 30, 2023 Lease Cost: Operating lease cost $ 488,357 $ 223,304 Finance lease cost: Amortization of assets obtained under finance leases $ 396,512 $ 216,305 Interest on lease liabilities 156,110 78,108 $ 552,622 $ 294,413 Lease term and discount rate Weighted average discount rate: Weighted average remaining lease term: As of June 30, 2023 Operating leases 10.0 % 9.5 years Finance leases 10.2 % 3.3 years Six months ended June 30, 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 152,080 Operating cash flows from finance leases 156,110 Financing cash flows from finance leases 658,263 |
Schedule of right-of-use assets | Total Manufacturing equipment $ 5,584,220 Computers and software 700,234 Leasehold improvements 218,244 Total 6,502,698 Less accumulated amortization (2,338,153) Right-of-use assets for finance leases 4,164,545 Right-of-use assets for operating leases 5,238,553 Total right-of-use assets $ 9,403,098 |
Schedule of maturities of finance lease liabilities | Six months ended June 30, 2023 Total 2023 (remaining 6 months) $ 1,031,425 2024 1,287,461 2025 1,057,500 2026 739,115 2027 192,568 Thereafter 47,300 Total minimum lease payments 4,355,369 Less amount representing interest (650,124) Present value of minimum lease payments 3,705,245 Less current portion (1,224,442) Finance lease obligations, less current portion $ 2,480,803 |
Schedule of future minimum rental payments required under operating lease | Six months ended June 30, 2023 Total 2023 (remaining 6 months) $ 615,030 2024 842,553 2025 867,831 2026 893,862 2027 920,679 Thereafter 4,761,873 Total minimum lease payments 8,901,828 Less: amount representing interest (3,246,997) Present value of minimum lease payments 5,654,831 Less: current portion* (277,677) Operating lease liabilities, less current portion $ 5,377,154 *Excludes $0.1 million short term lease liability for previous headquarter lease impaired |
DEBT (Tables)
DEBT (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Debt | |
Schedule of fair value of convertible notes on issuance | Monte Carlo Simulation Assumptions Asset Risky Expected Risk-Free As of June 30, 2023 Price Yield Volatility Interest Rate Senior Convertible Notes $ 3.10 26.00 % 45 % 4.70 % Subordinated Convertible Notes 3.10 35.30 % 45 % 4.58 % Monte Carlo Simulation Assumptions Asset Risky Expected Risk-Free As of December 31, 2022 Price Yield Volatility Interest Rate Senior Convertible Notes $ 5.56 31.80 % 45 % 4.23 % Subordinated Convertible Notes 5.56 41.20 % 45 % 4.19 % Senior Convertible Notes Subordinated Convertible Notes Beginning fair value, January 1, 2023 $ 13,651,000 $ 10,355,681 Paid-in-kind interest — 723,699 Change in fair value of debt 827,000 1,000,000 Fair value as of March 31, 2023 14,478,000 12,079,380 Paid-in-kind interest — 793,594 Change in fair value of debt (1,549,596) 2,352,026 Ending fair value, June 30, 2023 $ 12,928,404 $ 15,225,000 |
Equipment Financing Obligation | |
Debt | |
Schedule of payments | At June 30, 2023 Total 2023 (remaining 6 months) $ 33,523 2024 56,995 2025 69,333 2026 64,952 Total principal maturities 224,803 Less: current portion (57,457) Equipment financing obligation, net of current portion $ 167,346 |
COMMON STOCK WARRANTS (Tables)
COMMON STOCK WARRANTS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
COMMON STOCK WARRANTS | |
Schedule of assumptions for fair value of the outstanding warrants classified as liabilities | Exercise Asset Dividend Expected Risk-Free Expected As of June 30, 2023 Price Price Yield Volatility Interest Rate Life Convertible Notes Warrants $ 11.50 $ 3.10 0 % 50 % 4.20 % 4.43 years Exercise Asset Dividend Expected Risk-Free Expected As of December 31, 2022 Price Price Yield Volatility Interest Rate Life Convertible Notes Warrants $ 11.50 $ 5.56 0 % 40 % 4.00 % 4.93 years |
Schedule of change in fair value of the outstanding warrants classified as liabilities | Convertible Notes Warrants Warrant liability, January 1, 2023 $ 1,991,503 Change in fair value 842,559 Warrant liability, March 31, 2023 2,834,062 Change in fair value (2,106,398) Warrant liability, June 30, 2023 $ 727,664 |
COMMON STOCK (Tables)
COMMON STOCK (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
COMMON STOCK | |
Schedule of reserved shares of Common Stock | 2022 Equity Incentive Plan reserve 2,411,283 Reserve for earn-out shares 3,000,000 Reserve for exercise of warrants 6,512,057 Reserve for convertible debt 7,344,027 Employee stock purchase plan 500,000 Total 19,767,367 |
EARN-OUT SHARES (Tables)
EARN-OUT SHARES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
EARN-OUT SHARES | |
Schedule of changes in fair value of the earnout liability | Earnout Liability Earnout liability, January 1, 2023 $ 12,810,000 Change in fair value (1,500,000) Earnout liability, March 31, 2023 11,310,000 Change in fair value (6,700,000) Earnout liability, June 30, 2023 $ 4,610,000 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
STOCK-BASED COMPENSATION | |
Summary of stock option activity | Weighted-Average Weighted-Average Remaining Aggregate Shares Exercise Price Contractual Term Intrinsic Value Outstanding at January 1, 2023 — $ — Granted 1,478,915 5.20 Exercised — — Cancelled (13,098) 5.20 Outstanding at June 30, 2023 1,465,817 $ 5.20 9.59 years $ — Exercisable at June 30, 2023 — — — — Vested and expected to vest as of June 30, 2023 1,465,817 $ 5.20 9.59 years $ — |
Summary of fair value of the stock options weighted average assumptions | Six Months Ended June 30, 2023 Dividend yield 0.0% Expected volatility 55.0% Risk-free interest rate 3.6% Expected life 6.2 years |
Summary of stock-based compensation expense | Three Months Ended Six Months Ended June 30, 2023 June 30, 2023 Cost of revenue $ 7,462 $ 7,462 Sales and marketing 38,755 66,166 Research and development 65,043 111,807 General and administrative 232,202 384,162 $ 343,462 $ 569,597 |
NET LOSS ATTRIBUTABLE TO COMM_2
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | |
Schedule of computation of the basic and diluted net loss per share attributable to common stockholders | Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Numerator: Net income (loss) attributable to common stockholders - Basic $ 904,930 $ (2,823,645) $ (5,987,241) $ (5,804,378) Interest expense and remeasurement of Senior Convertible Notes liability (1,168,000) — — — Net income (loss) attributable to common stockholders - Diluted $ (263,070) $ (2,823,645) $ (5,987,241) $ (5,804,378) Denominator: Weighted-average common shares outstanding - Basic 16,057,630 3,958,258 * 16,045,110 3,950,009 * Senior Convertible Notes 3,083,601 — — — Weighted-average common shares outstanding - Diluted 19,141,231 3,958,258 * 16,045,110 3,950,009 * Basic earnings per share $ 0.06 $ (0.71) $ (0.37) $ (1.47) Diluted earnings per share $ (0.01) $ (0.71) $ (0.37) $ (1.47) |
Schedule of potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders because including them would have been antidilutive | Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Common stock upon conversion of redeemable convertible preferred stock A — 4,214,422 — 4,214,422 Common stock upon conversion of redeemable convertible preferred stock B — 7,288,333 — 7,288,333 Non-vested shares of Series C common stock — 718,003 — 718,003 Warrants to purchase redeemable convertible preferred stock B, as-converted 322,223 — 322,223 Warrants to purchase common stock 6,512,057 — 6,512,057 — Options to purchase common stock 1,465,817 — 1,465,817 — Senior Convertible Notes — — 3,083,601 — Subordinated Convertible Notes 3,535,673 — 3,357,648 — Total 11,513,547 12,542,981 14,419,123 12,542,981 |
BASIS OF ACCOUNTING AND SIGNI_4
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2023 | Dec. 31, 2022 | |
DESCRIPTION OF THE BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | |||
Working capital | $ 2,800,000 | ||
Cash and cash equivalents | 6,175,632 | $ 15,916,141 | |
Cash equivalents | $ 0 | $ 0 | |
Warranty guaranteeing the fit and finish product period | 3 years | ||
Invoices customers upon shipment product period | 30 days | ||
Minimum | Subsequent Event [Member] | |||
DESCRIPTION OF THE BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | |||
Cash and cash equivalents | $ 4,500,000 |
BASIS OF ACCOUNTING AND SIGNI_5
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES - Fair value of Financial Instruments (Details) - Recurring - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Convertible notes payable | ||
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | ||
Fair value | $ 12,928,404 | $ 13,651,000 |
Subordinated convertible notes | ||
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | ||
Fair value | 15,225,000 | 10,355,681 |
Earn-out liability | ||
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | ||
Fair value | 4,610,000 | 12,810,000 |
Warrant liability | ||
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | ||
Fair value | 727,664 | 1,991,503 |
Level 3 | Convertible notes payable | ||
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | ||
Fair value | 12,928,404 | 13,651,000 |
Level 3 | Subordinated convertible notes | ||
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | ||
Fair value | 15,225,000 | 10,355,681 |
Level 3 | Earn-out liability | ||
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | ||
Fair value | 4,610,000 | 12,810,000 |
Level 3 | Warrant liability | ||
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | ||
Fair value | $ 727,664 | $ 1,991,503 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
PROPERTY AND EQUIPMENT | |||||
Property and equipment, gross | $ 5,378,563 | $ 5,378,563 | $ 4,594,477 | ||
Less accumulated depreciation and amortization | (2,112,698) | (2,112,698) | (2,190,075) | ||
Total property and equipment, net | 3,265,865 | 3,265,865 | 2,404,402 | ||
Depreciation expense | 200,000 | $ 100,000 | 360,819 | $ 191,921 | |
Disposals of Property, Plant and Equipment, | 700,000 | ||||
Accumulated Depreciation on Disposal of Property, Plant and Equipment | 600,000 | ||||
Gain (Loss) on Disposition of Property Plant Equipment | (117,449) | ||||
Manufacturing equipment | |||||
PROPERTY AND EQUIPMENT | |||||
Property and equipment, gross | 2,983,092 | 2,983,092 | 2,516,859 | ||
Computers and software | |||||
PROPERTY AND EQUIPMENT | |||||
Property and equipment, gross | 1,573,337 | 1,573,337 | 1,608,075 | ||
Leasehold Improvements | |||||
PROPERTY AND EQUIPMENT | |||||
Property and equipment, gross | $ 822,134 | $ 822,134 | 441,956 | ||
Furniture | |||||
PROPERTY AND EQUIPMENT | |||||
Property and equipment, gross | $ 27,587 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
INVENTORY | ||
Raw Materials | $ 1,168,998 | $ 561,726 |
Work in progress | 140,984 | 78,219 |
Inventory net | 1,309,982 | 639,945 |
Excess or obsolete inventory reserves | $ 0 | $ 0 |
ACCRUED EXPENSES - Components (
ACCRUED EXPENSES - Components (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Accrued compensation | ||
Compensation related accruals | $ 2,708,925 | $ 2,104,008 |
Marketing programs | 810,747 | 611,642 |
Interest | 381,596 | 110,239 |
Warranty | 414,191 | 269,496 |
Professional fees | 637,337 | 129,169 |
Other | 871,397 | 481,540 |
Accrued expenses | $ 5,824,193 | $ 3,706,094 |
LEASES - General (Details)
LEASES - General (Details) - USD ($) $ in Millions | Feb. 28, 2023 | May 17, 2022 | Dec. 31, 2022 |
LEASES | |||
Monthly payment | $ 0.1 | ||
Rent free period | 5 months | ||
Impairment loss on the ROU | $ 0.2 | ||
Accrued lease liabilities | $ 0.1 | ||
Minimum | |||
LEASES | |||
Finance lease, Remaining term (in years) | 1 year | ||
Maximum | |||
LEASES | |||
Finance lease, Remaining term (in years) | 5 years | ||
Lease for corporate office | |||
LEASES | |||
Operating lease, Remaining term (in months) | 1 year | ||
Lease for corporate headquarters | |||
LEASES | |||
Operating lease, Lease term (in years) | 10 years |
LEASES - Components of lease co
LEASES - Components of lease cost, weighted average lease terms and discount rates (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | |
Lease Cost: | |||
Operating lease cost | $ 223,304 | $ 488,357 | |
Finance lease cost: | |||
Amortization of assets obtained under finance leases | 216,305 | 396,512 | $ 323,191 |
Interest on lease liabilities | 78,108 | 156,110 | |
Finance leases cost | $ 294,413 | $ 552,622 | |
Weighted average discount rate: | |||
Operating leases | 10% | 10% | |
Finance leases | 10.20% | 10.20% | |
Weighted average remaining lease term: | |||
Operating leases | 9 years 6 months | 9 years 6 months | |
Finance leases | 3 years 3 months 18 days | 3 years 3 months 18 days | |
Cash paid for amounts included in the measurement of lease liabilities: | |||
Operating cash flows from operating leases | $ 152,080 | ||
Operating cash flows from finance leases | 156,110 | ||
Financing cash flows from finance leases | 658,263 | $ 499,038 | |
Right-of-use assets obtained in exchange for lease liabilities: | |||
ROU assets obtained in exchange for finance lease obligations | $ 1,273,511 |
LEASES - Right-of-use assets (D
LEASES - Right-of-use assets (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
LEASES | ||
Total | $ 6,502,698 | |
Less accumulated amortization | (2,338,153) | |
Right-of-use assets for finance leases | 4,164,545 | $ 3,650,451 |
Right-of-use assets for operating leases | 5,238,553 | $ 5,632,771 |
Total right-of-use assets | 9,403,098 | |
Manufacturing equipment | ||
LEASES | ||
Total | 5,584,220 | |
Computers and software | ||
LEASES | ||
Total | 700,234 | |
Leasehold Improvements | ||
LEASES | ||
Total | $ 218,244 |
LEASES - Maturities of finance
LEASES - Maturities of finance lease liabilities (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Years ending December 31 | ||
2023 (remaining 6 months) | $ 1,031,425 | |
2024 | 1,287,461 | |
2025 | 1,057,500 | |
2026 | 739,115 | |
2027 | 192,568 | |
Thereafter | 47,300 | |
Total minimum lease payments | 4,355,369 | |
Less amount representing interest | (650,124) | |
Present value of minimum lease payments | 3,705,245 | |
Less current portion | (1,224,442) | $ (1,008,587) |
Finance lease liabilities, less current portion | $ 2,480,803 | $ 2,081,410 |
LEASES - Maturities of operatin
LEASES - Maturities of operating lease liabilities (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Year ending December 31 | ||
2023 (remaining 6 months) | $ 615,030 | |
2024 | 842,553 | |
2025 | 867,831 | |
2026 | 893,862 | |
2027 | 920,679 | |
Thereafter | 4,761,873 | |
Total minimum lease payments | 8,901,828 | |
Less amount representing interest | (3,246,997) | |
Present value of minimum lease payments | 5,654,831 | |
Less current portion | (277,677) | $ (215,043) |
Operating lease liabilities, less current portion | 5,377,154 | $ 5,525,562 |
Short term lease liability lease impaired | 100,000 | |
Excluding short term lease liability for previous headquarter [Member] | ||
Year ending December 31 | ||
Less current portion | $ (277,677) |
DEBT - Equipment Financing Obli
DEBT - Equipment Financing Obligation (Details) | Jun. 30, 2023 USD ($) |
Future principal maturities under the equipment financing obligation | |
2023 (remaining 6 months) | $ 33,523 |
2024 | 56,995 |
2025 | 69,333 |
2026 | 64,952 |
Total principal maturities | 224,803 |
Less current portion | (57,457) |
Equipment financing obligation, net of current portion | $ 167,346 |
DEBT - Subordinated Notes (Deta
DEBT - Subordinated Notes (Details) - Subordinated Notes | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Debt | |
Gross proceeds | $ 400,000 |
Issuance costs | $ 0 |
DEBT - Unsecured Subordinated P
DEBT - Unsecured Subordinated Promissory Notes (Details) - USD ($) | 1 Months Ended | 6 Months Ended |
Mar. 31, 2022 | Jun. 30, 2022 | |
Debt | ||
Repayments of debt | $ 75,000 | |
The Bridge Loans | ||
Debt | ||
Proceeds from debt | $ 3,600,000 | |
Repayments of debt | $ 500,000 |
DEBT - Convertible debt agreeme
DEBT - Convertible debt agreements (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 29, 2023 | Dec. 06, 2022 | Jun. 30, 2022 | Jun. 30, 2022 | Aug. 26, 2022 | |
Debt | |||||
Loss on extinguishment of debt | $ (192,731) | $ (192,731) | |||
Subordinated convertible notes | |||||
Debt | |||||
Equipment financing arrangements to purchase capital equipment | $ 17,450,000 | ||||
Issuance of shares, net of cancellations and issuance costs (in shares) | 36,469 | ||||
Senior Convertible Notes | |||||
Debt | |||||
Equipment financing arrangements to purchase capital equipment | $ 16,960,000 | ||||
Interest rate per annum | 9% | ||||
Frequency of periodic payment | quarterly | ||||
Debt installment payments | $ 847,990 | ||||
Debt repayment commencement date | Oct. 01, 2024 | ||||
Senior Convertible Notes | Senior Convertible Notes warrants | |||||
Debt | |||||
Number of common stock shares, called by warrants | 169,597 | ||||
Exercise price of warrants | $ 11.50 | ||||
Subordinated Convertible Notes | |||||
Debt | |||||
Maturity | 3 years | ||||
Issuance of shares, net of cancellations and issuance costs (in shares) | 290,244 | ||||
Subordinated Convertible Notes | Senior Convertible Notes warrants | |||||
Debt | |||||
Number of common stock shares, called by warrants | 1,745,310 | ||||
Subordinated Convertible Notes | Prime Rate [Member] | |||||
Debt | |||||
Spread on interest rate | 9% |
DEBT - Fair Value of Convertibl
DEBT - Fair Value of Convertible Notes (Details) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2023 USD ($) $ / shares | Mar. 31, 2023 USD ($) | Jun. 30, 2023 USD ($) $ / shares | Jun. 30, 2022 USD ($) | Jul. 01, 2023 USD ($) | Dec. 31, 2022 USD ($) $ / shares | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||||
Change in fair value of warrant liability | $ (2,106,398) | $ (1,263,839) | $ 20,756 | |||
Minimum cash balance | $ 4,500,000 | |||||
Cash and cash equivalents | $ 6,175,632 | $ 6,175,632 | $ 15,916,141 | |||
Measurement Input, Asset Price [Member] | Senior Convertible Notes | ||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||||
Debt Instrument, Measurement Input | $ / shares | 3.10 | 3.10 | 5.56 | |||
Measurement Input, Asset Price [Member] | Subordinated Convertible Notes | ||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||||
Debt Instrument, Measurement Input | $ / shares | 3.10 | 3.10 | 5.56 | |||
Measurement Input, Risky Yield [Member] | Senior Convertible Notes | ||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||||
Debt Instrument, Measurement Input | 0.2600 | 0.2600 | 0.3180 | |||
Measurement Input, Risky Yield [Member] | Subordinated Convertible Notes | ||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||||
Debt Instrument, Measurement Input | 0.3530 | 0.3530 | 0.4120 | |||
Expected Volatility | Senior Convertible Notes | ||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||||
Debt Instrument, Measurement Input | 0.45 | 0.45 | 0.45 | |||
Expected Volatility | Subordinated Convertible Notes | ||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||||
Debt Instrument, Measurement Input | 0.45 | 0.45 | 0.45 | |||
Risk-Free Interest rate | Senior Convertible Notes | ||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||||
Debt Instrument, Measurement Input | 0.0470 | 0.0470 | 0.0423 | |||
Risk-Free Interest rate | Subordinated Convertible Notes | ||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||||
Debt Instrument, Measurement Input | 0.0458 | 0.0458 | 0.0419 | |||
Senior Convertible Notes | ||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||||
Convertible notes, beginning balance | $ 14,478,000 | $ 13,651,000 | $ 13,651,000 | |||
Change in fair value of debt | (1,549,596) | 827,000 | ||||
Convertible notes, ending balance | 12,928,404 | 14,478,000 | 12,928,404 | |||
Subordinated Convertible Notes | ||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||||
Convertible notes, beginning balance | 12,079,380 | 10,355,681 | 10,355,681 | |||
Paid-in-kind interest | 793,594 | 723,699 | ||||
Change in fair value of debt | 2,352,026 | 1,000,000 | ||||
Convertible notes, ending balance | $ 15,225,000 | $ 12,079,380 | $ 15,225,000 |
COMMON STOCK WARRANTS - Black-S
COMMON STOCK WARRANTS - Black-Scholes Option Pricing Assumptions (Details) - Convertible notes warrants | Jun. 30, 2023 $ / shares | Dec. 31, 2022 $ / shares |
COMMON STOCK WARRANTS | ||
Exercise Price | $ 11.50 | $ 11.50 |
Share Price | ||
COMMON STOCK WARRANTS | ||
Measurement input | 3.10 | 5.56 |
Dividend Yield | ||
COMMON STOCK WARRANTS | ||
Measurement input | 0 | 0 |
Expected Volatility | ||
COMMON STOCK WARRANTS | ||
Measurement input | 0.50 | 0.40 |
Risk-Free Interest rate | ||
COMMON STOCK WARRANTS | ||
Measurement input | 0.0420 | 0.0400 |
Expected Life | ||
COMMON STOCK WARRANTS | ||
Measurement input | 4.43 | 4.93 |
COMMON STOCK WARRANTS - Fair Va
COMMON STOCK WARRANTS - Fair Value of Outstanding Warrants (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Change in fair value of the outstanding warrants classified as liabilities | |||||
Change in fair value of warrant liability | $ (2,106,398) | $ (1,263,839) | $ 20,756 | ||
Warrant or right issued | 4,597,180 | 4,597,180 | |||
Convertible notes warrants | |||||
Change in fair value of the outstanding warrants classified as liabilities | |||||
Warrant liability, beginning | 2,834,062 | $ 1,991,503 | $ 1,991,503 | ||
Change in fair value of warrant liability | (2,106,398) | 842,559 | |||
Warrant liability, ending | $ 727,664 | $ 2,834,062 | $ 727,664 | $ 1,991,503 |
COMMON STOCK - Schedule of comm
COMMON STOCK - Schedule of common stock (Details) - shares | Jun. 30, 2023 | Jun. 15, 2023 |
Class of Stock [Line Items] | ||
Total | 19,767,367 | |
Reserve for convertible debt | ||
Class of Stock [Line Items] | ||
Total | 7,344,027 | |
Warrant | ||
Class of Stock [Line Items] | ||
Total | 6,512,057 | |
Reserve for earn-out shares | ||
Class of Stock [Line Items] | ||
Total | 3,000,000 | |
2022 Equity Incentive Plan reserve | ||
Class of Stock [Line Items] | ||
Total | 2,411,283 | |
Employee stock purchase plan | ||
Class of Stock [Line Items] | ||
Total | 500,000 | 500,000 |
EARN-OUT SHARES (Details)
EARN-OUT SHARES (Details) - PubCo Merger | May 09, 2022 tranche $ / shares shares |
Common Stock | |
Maximum number of shares entitled to receive | 3,000,000 |
Number of tranches | tranche | 3 |
First tranche | |
Common Stock | |
Number of shares issued | 1,000,000 |
Share price | $ / shares | $ 12.50 |
Trading period | 20 days |
Consecutive trading period | 30 days |
Term of issuance | 6 months |
Second tranche | |
Common Stock | |
Number of shares issued | 1,000,000 |
Share price | $ / shares | $ 15 |
Trading period | 20 days |
Consecutive trading period | 30 days |
Term of issuance | 6 months |
Third tranche | |
Common Stock | |
Number of shares issued | 1,000,000 |
Share price | $ / shares | $ 17.50 |
Trading period | 20 days |
Consecutive trading period | 30 days |
Term of issuance | 6 months |
EARN-OUT SHARES - Schedule of c
EARN-OUT SHARES - Schedule of changes in fair value of the earnout liability (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2023 | |
EARN-OUT SHARES | |||
Earning liability beginning balance | $ 11,310,000 | $ 12,810,000 | $ 12,810,000 |
Change in fair value of earnout liability | (6,700,000) | (1,500,000) | (8,200,000) |
Earnout liability, ending balance | $ 4,610,000 | $ 11,310,000 | $ 4,610,000 |
STOCK-BASED COMPENSATION - 2022
STOCK-BASED COMPENSATION - 2022 Equity Incentive Plan (Details) - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Number of Options Outstanding | ||
Granted (in shares) | 1,478,915 | |
Cancelled (in shares) | 13,098 | |
Options outstanding, end of period (in shares) | 1,465,817 | |
Exercisable, end of period (in shares) | 0 | 0 |
Vested and expected to vest, end of period (in shares) | 1,465,817 | |
Vested (in shares) | 0 | 0 |
Weighted-average Exercise Price | ||
Granted (in dollars per share) | $ 5.20 | |
Cancelled (in dollars per share) | 5.20 | |
Options outstanding, end of period (in dollars per share) | 5.20 | |
Options vested and expected to vest, end of period (in dollars per share) | $ 5.20 | |
Weighted average Remaining Contractual Life and intrinsic value | ||
Weighted-average remaining life, Options outstanding | 9 years 7 months 2 days | |
Weighted-average remaining life, Option exercisable, end of period | 0 years | |
Weighted-average remaining life, Options vested and expected to vest, end of period | 9 years 7 months 2 days | |
Weighted-average grant date fair value of options granted | $ 2.91 |
STOCK-BASED COMPENSATION - Fair
STOCK-BASED COMPENSATION - Fair value of the stock options weighted average assumptions (Details) | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions and Methodology [Abstract] | |
Dividend yield | 0% |
Expected volatility | 55% |
Risk-free interest rate | 3.60% |
Expected life | 6 years 2 months 12 days |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock-based compensation expense (Details) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2023 USD ($) | Jun. 30, 2023 USD ($) | |
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Stock-based compensation expense | $ 343,462 | $ 569,597 |
Unamortized compensation expense | 3,700,000 | $ 3,700,000 |
Unrecognized compensation expense recognized over a weighted-average period | 3 years 3 months 19 days | |
Cost of revenue | ||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Stock-based compensation expense | 7,462 | $ 7,462 |
Research and development | ||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Stock-based compensation expense | 65,043 | 111,807 |
Sales and marketing | ||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Stock-based compensation expense | 38,755 | 66,166 |
General and administrative | ||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Stock-based compensation expense | $ 232,202 | $ 384,162 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended |
May 31, 2023 | Jun. 30, 2023 | Jun. 30, 2023 | |
STOCK-BASED COMPENSATION | |||
Issuance of Common Stock - services (in shares) | 20,000 | ||
Issuance of Common Stock - services | $ 200,000 | $ 163,573 | |
Number of shares in escrow | 339,000 | ||
Term within which escrow shares are to be released | 12 months | ||
Dividend yield | 0% | ||
Common stock dividends paid | $ 0 | ||
Common stock dividends declared | $ 0 |
STOCK-BASED COMPENSATION - 2023
STOCK-BASED COMPENSATION - 2023 Employee Stock Purchase Plan (Details) - shares | 6 Months Ended | |
Jun. 30, 2023 | Jun. 15, 2023 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Number of shares available for purchase | 19,767,367 | |
Number of shares issued | 0 | |
2023 ESPP | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Number of shares available for purchase | 500,000 | 500,000 |
NET LOSS ATTRIBUTABLE TO COMM_3
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Numerator: | ||||
Net income (loss) attributable to common stockholders - Basic | $ 904,930 | $ (2,823,645) | $ (5,987,241) | $ (5,804,378) |
Interest expense and remeasurement of Senior Convertible Notes liability | (1,168,000) | |||
Net income (loss) attributable to common stockholders - Diluted | $ (263,070) | $ (2,823,645) | $ (5,987,241) | $ (5,804,378) |
Denominator: | ||||
Weighted-average common shares outstanding used in basic calculation | 16,057,630 | 3,958,258 | 16,045,110 | 3,950,009 |
Add: dilutive effect of potential common shares | 3,083,601 | |||
Weighted-average common shares outstanding used in diluted calculation | 19,141,231 | 3,958,258 | 16,045,110 | 3,950,009 |
Basic earnings per share | $ 0.06 | $ (0.71) | $ (0.37) | $ (1.47) |
Diluted earnings per share | $ (0.01) | $ (0.71) | $ (0.37) | $ (1.47) |
Shares excluded from diluted earnings per share due to their anti-dilutive effect | 11,513,547 | 12,542,981 | 14,419,123 | 12,542,981 |
NET LOSS ATTRIBUTABLE TO COMM_4
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS - Potential shares of common stock (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Antidilutive securities | ||||
Potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders because including them would have been antidilutive | 11,513,547 | 12,542,981 | 14,419,123 | 12,542,981 |
Series A common stock upon conversion of redeemable convertible preferred stock A | ||||
Antidilutive securities | ||||
Potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders because including them would have been antidilutive | 4,214,422 | 4,214,422 | ||
Series A common stock upon conversion of redeemable convertible preferred stock B | ||||
Antidilutive securities | ||||
Potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders because including them would have been antidilutive | 7,288,333 | 7,288,333 | ||
Non-vested shares of Series C common stock | ||||
Antidilutive securities | ||||
Potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders because including them would have been antidilutive | 718,003 | 718,003 | ||
Warrants to Purchase Redeemable Convertible Preferred Stock B, As-Converted | ||||
Antidilutive securities | ||||
Potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders because including them would have been antidilutive | 322,223 | 322,223 | ||
Warrant | ||||
Antidilutive securities | ||||
Potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders because including them would have been antidilutive | 6,512,057 | 6,512,057 | ||
Options to purchase common stock | ||||
Antidilutive securities | ||||
Potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders because including them would have been antidilutive | 1,465,817 | 1,465,817 | ||
Senior Convertible Notes | ||||
Antidilutive securities | ||||
Potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders because including them would have been antidilutive | 3,083,601 | |||
Subordinated Convertible Notes | ||||
Antidilutive securities | ||||
Potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders because including them would have been antidilutive | 3,535,673 | 3,357,648 |