| Summary of Significant Accounting Policies | 2.
Summary of Significant Accounting Policies Basis
of Presentation and Principles of Consolidation The
accompanying condensed unaudited consolidated financial statements include the accounts of the Company and wholly owned and majority
owned subsidiary. The accompanying condensed unaudited condensed consolidated financial statements and related notes have been prepared
in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial statements and Article
8 of Regulation S-X. The consolidated balance sheet as of December 31, 2023, and related notes were derived from the audited consolidated
financial statements but does not include all disclosures required by U.S. GAAP. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission (“SEC”). These unaudited consolidated financial statements reflect, in the opinion
of management, all material adjustments (which include normal recurring adjustments) necessary to fairly state, in all material respects,
the Company’s financial position as of September 30, 2024, the results of operations for the nine months ended September 30, 2024
and 2023 and its cash flows for the nine months ended September 30, 2024 and 2023. The results of operations for the nine months ended
September 30, 2024, are not necessarily indicative of the operating results for the full year or any future period. The unaudited consolidated
financial information should be read in conjunction with the Company’s audited consolidated financial statements for the year ended
December 31, 2023, included in the Form S-1 Registration Statement, Number 333-276987, declared
effective November 8, 2024. All intercompany accounts and transactions have been eliminated in consolidation. Reclassification Certain
prior period balances have been reclassified to conform to the Company’s current year presentation. We have reclassified certain
prior period income amounts from R&D expenses and a total of $ 19,186 Use
of Estimates The
preparation of financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period, as well as the disclosure of contingent assets and liabilities.
Some of those judgments can be subjective and complex, and therefore, actual results could differ materially from those estimates under
different assumptions or conditions. Management bases its estimates on historical experience and on various assumptions that are believed
to be reasonable in relation to the financial statements taken under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management regularly
evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and
circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted
accordingly. Actual results could differ from those estimates. Significant estimates include those related to assumptions used in the
calculation of right-of-use asset and lease liabilities, accruals for potential liabilities, SAFE liability, and the realization of any
deferred tax assets. Emerging
Growth Company The
Company is an “emerging growth company,” or “EGC” as defined in Section 2(a) of the Securities Act of 1933, as
amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may
take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging
growth companies. Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do
not have a class of securities registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act) are required to
comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended
transition period and comply with the requirements that apply to non-emerging growth companies but any such choice to opt out is irrevocable.
The Company has elected to opt out of the extended transition periods. Concentration
of Risk Financial
instruments which are potentially subject to the Company’s concentrations of credit risk consist primarily of cash, cash equivalents,
and grants receivable. The Company may periodically have cash balances in financial institutions more than the FDIC insurance limits
of $ 250,000 64 36 Revenue
Recognition The
Company primarily generated revenues from its strategic alliances. The strategic alliances with strategic collaborators typically contain
multiple elements, including research and other licenses, research and development services, obligations to develop and manufacture pre-commercial
and commercial material, and options to obtain additional research and development services. Such arrangements provide for various types
of payments to us, including upfront fees, and funding of research and development services. Such payments are often not commensurate
with the timing of revenue recognition and therefore result in deferral of revenue recognition. The
Company analyzes the collaboration arrangements to assess whether they are within the scope of ASC Topic 808, Collaborative Arrangements
(ASC 808) to determine whether such arrangements involve joint operating activities performed by parties that are both active participants
in the activities and exposed to significant risks and rewards that are dependent on the commercial success of such activities. To the
extent the arrangement is within the scope of ASC 808, the Company assesses whether aspects of the arrangement between the Company and
the collaboration partner are within the scope of other accounting literature. If the Company concludes that some or all aspects of the
arrangement represent a transaction with a customer, the Company accounts for those aspects of the arrangement within the scope of ASC
606. If the Company concludes that some or all aspects of the arrangement are within the scope of ASC 808 and do not represent a transaction
with a customer, the Company recognizes its allocation of the shared costs incurred with respect to the jointly conducted activities
as a component of the related expense in the period incurred. Pursuant to ASC 606, a customer is a party that has contracted with an
entity to obtain goods or services that are an output of the entity’s ordinary activities in exchange for consideration. Under
ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the
consideration which the entity expects to receive in exchange for those goods or services. To
determine the appropriate amount of revenue to be recognized for arrangements that the Company determines are within the scope of ASC
606, the Company performs the following steps: (i) identify the contract(s) with the customer; (ii) identify the performance obligations
in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract;
and (v) recognize revenue when (or as) each performance obligation is satisfied. ASC 606 requires significant judgment and estimates
and results in changes to, but not limited to: (i) the determination of the transaction price, including estimates of variable consideration,
(ii) the allocation of the transaction price, including the determination of estimated selling price, and (iii) the pattern of recognition,
including the application of proportional performance as a measure of progress on service-related promises and application of point-in-time
recognition for supply-related promises. Cash
and Cash Equivalents The
Company considers highly liquid investments with original maturities or remaining maturities upon purchase of three months or less to
be cash equivalents. There were no cash equivalents held by the Company as of September 30, 2024. The
Company’s policy is to maintain its cash balances with financial institutions with high credit ratings and in accounts insured
by the Federal Deposit Insurance Corporation (the “FDIC”). The
Company periodically reviews the financial condition of the financial institutions and assesses the credit risk of such investments.
The Company had no uninsured cash balances as of September 30, 2024. The Company did not experience any credit risk losses during the
nine months ended September 30, 2024 and 2023. Fair
Value Measurements Fair
value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction
between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets
or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
● Level
1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
● Level
2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted
prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active;
and
● Level
3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. In
some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In
those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input
that is significant to the fair value measurement. The
following tables set forth the fair value of the Company’s consolidated financial instruments that were measured at fair value
on a recurring basis as of September 30, 2024 and December 31, 2023: Schedule
of Financial Instruments Measured at Fair Value on Recurring Basis
Level 1 Level 2 Level 3 Total
September 30, 2024
Level 1 Level 2 Level 3 Total
SAFE Note $ - $ - $ 1,000,000 $ 1,000,000
Total fair value $ - $ - $ 1,000,000 $ 1,000,000
Level 1 Level 2 Level 3 Total
December 31, 2023
Level 1 Level 2 Level 3 Total
SAFE Note $ - $ - $ 1,000,000 $ 1,000,000
Total fair value $ - $ - $ 1,000,000 $ 1,000,000 The
fair value of the Company’s certain assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value
Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying consolidated balance sheets. The
fair values of cash and cash equivalents, prepaid expenses and other, accounts payable and accrued expenses, and due to related party
are estimated to approximate the carrying values as of September 30, 2024 and December 31, 2023. Property
and Equipment Property
and equipment are recorded at cost. Major improvements are capitalized, while maintenance and repairs are charged to expense as incurred.
Gains and losses from disposition of property and equipment are included in the statement of operations when realized. Depreciation is
provided using the straight-line method over the following estimated useful lives: Schedule
of Property and Equipment Estimated Useful Lives
Laboratory
equipment 5
Furniture
and fixtures 7
Leasehold
improvements Lesser
of the lease duration or the life of the improvements Property
and equipment consist of the following as of September 30, 2024 and December 31, 2023, respectively: Schedule
of Property and Equipment
September 30, 2024 December 31, 2023
Laboratory equipment $ 1,067,241 $ 885,696
Furniture and fixtures 54,338 49,838
Leasehold improvements 279,161 279,161
Total property and equipment 1,400,740 1,214,695
Less: Accumulated depreciation (661,134 ) (461,319 )
Property and equipment, net $ 739,606 $ 753,376 Depreciation
expenses were $ 199,815 137,971 68,878 49,722 Research
Grants Invizyne
receives grant reimbursements, which are offset against research and development expenses in the unaudited condensed consolidated statements
of operations. In addition to actual reimbursements, Invizyne also receives indirect expense grants (which are not reimbursement-based)
and fees (typically of minor significance). It is important to note that there may be instances where the grants received for indirect
costs exceed the actual costs, resulting in a negative impact. For capitalized assets, grant reimbursements are recognized over the useful
life of the assets. Any portion of the grant not yet recognized is recorded as deferred grant reimbursements and included as a liability
in the unaudited condensed consolidated balance sheet. Grants
that operate on a reimbursement basis are recognized on the accrual basis and are offsets to expenses to the extent of disbursements
and commitments that are reimbursable for allowable expenses incurred as of September 30, 2024 and 2023, and respectively, expected to
be received from funding sources in the subsequent year. Management considers such receivables on September 30, 2024 and 2023, respectively,
to be fully collectable due to the historical experience with the Federal Government of the United States of America. Accordingly, no
allowance for credit losses on the grants receivable was recorded in the accompanying unaudited condensed consolidated financial statements. Summary
of grants receivable activity for the nine months ended September 30, 2024 and 2023, is presented below: Schedule
of Grants Receivable Activity
2024 2023
Balance at beginning of period $ 882,319 $ 809,532
Grant costs expensed 1,756,852 2,180,581
Grants for equipment purchased 6,379 -
Grant fees 50,854 84,827
Grant funds received (2,142,441 ) (2,398,488 )
Balance at end of period $ 553,963 $ 676,452 Invizyne
has received three grants provided by the National Institute of Health, the Department of Energy and Department of Defense through
September 30, 2024. The first grant was awarded on October 1, 2023 and the latest of these grants was set to expire on May 14, 2026,
however grants can be extended, or new phases can be granted, extending the expiration of the grant. None of the grants has
commitments made by the parties, provisions for recapture, or any other contingencies, beyond complying with the terms of each
research and development grant. Research grants received from organizations are subject to the contract agreement as to how Invizyne
conducts its research activities, and Invizyne is required to comply with the agreement terms relating to those grants. Amounts
received under research grants are nonrefundable, regardless of the success of the underlying research project, to the extent that
such amounts are expended in accordance with the approved grant project. Invizyne is permitted to draw down the research grants
after incurring the related expenses. Amounts received under research grants are offset against the related research and development
costs in the unaudited condensed consolidated statements of operations. For the nine months ended September 30, 2024 and 2023,
respectively, grants amounting to $ 1,756,852 2,180,581 1,814,085 2,265,408 Research
and Development Costs Research
and development costs are expensed as incurred. Research and development costs consist primarily of compensation costs, fees paid to
consultants, and other expenses relating to the development of Invizyne’s technology. For the nine months ended September 30, 2024
and 2023, research and development costs prior to offset of the grants amounted to $ 3,046,169 2,332,503 Patent
and Licensing Legal and Filing Fees and Costs Due
to the significant uncertainty associated with the successful development of one or more commercially viable products based on the research
efforts and related patent applications, all patent and licensing legal and filing fees and costs related to the development and protection
of its intellectual property are charged to operations as incurred. Patent
and licensing legal and filing fees and costs were $ 165,872 98,794 Related
Party and Due to Affiliates Expenses As
of September 30, 2024, MDB Capital Holdings, LLC has advanced $ 3,669,933 The
payable balance includes $ 247,889 3,422,066 3,345,000 as
of September 30, 2024, and bears interest at a rate of 5 %,
compounding annually. Although there is no stated due date for repayment, the Company intends to repay the full amount of the
intercompany payables and all outstanding interest due in the aggregate amount of $ 77,066 as
of September 30, 2024, promptly after the consummation of the initial public offering of Common Stock by the Company. |
