09/23/2024 | Press release | Distributed by Public on 09/23/2024 14:56
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q/A
(Amendment No. 1)
(Mark One)
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2024
OR
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 001-39603
REVELATION BIOSCIENCES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware |
84-3898466 |
( State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
4660 La Jolla Village Drive, Suite 100, San Diego, CA |
92122 |
(Address of principal executive offices) |
(Zip Code) |
Registrant's telephone number, including area code: (650) 800-3717
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
||
Common stock, par value $0.001 per share |
REVB |
The NasdaqStock Market LLC |
||
Redeemable warrants, each exercisable for a 1/1,050thshare of common stock at an exercise price of $12,075.00 per share |
REVBW |
The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
☐ |
Accelerated filer |
☐ |
|||
Non-accelerated filer |
☒ |
Smaller reporting company |
☒ |
|||
Emerging growth company |
☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of May 6, 2024, the registrant had 1,632,935shares of common stock, $0.001 par value per share, outstanding.
EXPLANATORY NOTE
Revelation Biosciences, Inc., or the Company, is filing this Amendment No. 1, or the Amendment, on Form 10-Q/A to amend its original Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024, or the Original Form 10-Q, originally filed with the Securities and Exchange Commission, or SEC, on May 10, 2024, for the sole purpose of filing revised Exhibits 31.1 and 31.2 in order to include in the certifications set forth in such exhibits the language of revised paragraph 4(b), which language was inadvertently omitted from the certifications when originally filed as Exhibits 31.1 and 31.2. This Amendment consists solely of the preceding cover page, this explanatory note, Item 1, the list of exhibits filed with this Amendment, the signature page and the revised certifications filed as Exhibits 31.1 and 31.2 to this Amendment and the required certifications required by the Sarbanes-Oxley Act in connection with the filing of this Amendment.
Except as described above, this Amendment does not reflect events occurring after the date of the filing of the Original Form 10-Q or modify or update any of the other disclosures contained therein in any way. Accordingly, this Amendment should be read in conjunction with the Original Form 10-Q and the Company's other filings with the SEC. This Amendment does not reflect events that may have occurred subsequent to the filing of the Original Form 10-Q. The filing of this Amendment is not an admission that the Original Form 10-Q, when filed, included any untrue statement of a material fact or omitted to state a material fact necessary to make a statement not misleading.
PART I-FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
REVELATION BIOSCIENCES, INC.
Consolidated Balance Sheets
(Unaudited)
March 31, |
December 31, |
|||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ |
14,551,740 |
$ |
11,991,701 |
||||
Deferred offering costs |
- |
71,133 |
||||||
Prepaid expenses and other current assets |
71,876 |
84,691 |
||||||
Total current assets |
14,623,616 |
12,147,525 |
||||||
Property and equipment, net |
77,994 |
65,084 |
||||||
Total assets |
$ |
14,701,610 |
$ |
12,212,609 |
||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ |
1,681,665 |
$ |
1,359,898 |
||||
Accrued expenses |
620,280 |
1,152,460 |
||||||
Deferred underwriting commissions |
2,911,260 |
2,911,260 |
||||||
Warrant liability |
15,260 |
141,276 |
||||||
Total current liabilities |
5,228,465 |
5,564,894 |
||||||
Total liabilities |
5,228,465 |
5,564,894 |
||||||
Commitments and Contingencies(Note 4) |
||||||||
Stockholders' equity: |
||||||||
Common Stock, $0.001par value; 500,000,000shares authorized at March 31, 2024 and December 31, 2023 and 1,632,935and 264,537issued and outstanding at March 31, 2024 and December 31, 2023, respectively |
1,633 |
265 |
||||||
Additional paid-in-capital |
37,620,047 |
32,114,552 |
||||||
Accumulated deficit |
(28,148,535 |
) |
(25,467,102 |
) |
||||
Total stockholders' equity |
9,473,145 |
6,647,715 |
||||||
Total liabilities and stockholders' equity |
$ |
14,701,610 |
$ |
12,212,609 |
See accompanying notes to the consolidated financial statements.
REVELATION BIOSCIENCES, INC.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended |
||||||||
2024 |
2023 |
|||||||
Operating expenses: |
||||||||
Research and development |
$ |
717,582 |
$ |
525,273 |
||||
General and administrative |
1,184,556 |
1,094,574 |
||||||
Total operating expenses |
1,902,138 |
1,619,847 |
||||||
Loss from operations |
(1,902,138 |
) |
(1,619,847 |
) |
||||
Other (expense) income: |
||||||||
Change in fair value of warrant liability |
68,427 |
7,744,935 |
||||||
Other (expense) income, net |
(847,722 |
) |
34,107 |
|||||
Total other (expense) income, net |
(779,295 |
) |
7,779,042 |
|||||
Net (loss) earnings |
$ |
(2,681,433 |
) |
$ |
6,159,195 |
|||
Net (loss) earnings per share, basic |
$ |
(2.46 |
) |
$ |
45.52 |
|||
Weighted-average shares used to compute net (loss) earnings per share, basic |
1,089,833 |
135,305 |
||||||
Net (loss) earnings per share, diluted |
$ |
(2.46 |
) |
$ |
37.07 |
|||
Weighted-average shares used to compute net (loss) earnings per share, diluted |
1,089,833 |
166,144 |
||||||
See accompanying notes to the consolidated financial statements.
REVELATION BIOSCIENCES, INC.
Consolidated Statements of Changes in Stockholders' Equity (Deficit)
(Unaudited)
Series A |
Common Stock |
Additional |
Accumulated |
Total |
||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
Capital |
Deficit |
Equity |
||||||||||||||||||||||
Balance at December 31, 2022 |
1 |
$ |
- |
77,375 |
$ |
77 |
$ |
26,399,224 |
$ |
(25,346,848 |
) |
$ |
1,052,453 |
|||||||||||||||
Redemption of Series A Preferred Stock |
(1 |
) |
- |
- |
- |
- |
- |
- |
||||||||||||||||||||
Issuance of common stock from the February 2023 Public Offering |
- |
- |
96,287 |
96 |
33,378 |
- |
33,474 |
|||||||||||||||||||||
Class C Pre-Funded Warrants exercise |
- |
- |
6,434 |
7 |
12 |
- |
19 |
|||||||||||||||||||||
Alternative cashless exercise of Class C Common Stock Warrants |
- |
- |
32,190 |
32 |
2,740,378 |
- |
2,740,410 |
|||||||||||||||||||||
Stock-based compensation expense |
- |
- |
- |
- |
32,095 |
- |
32,095 |
|||||||||||||||||||||
Net income |
- |
- |
- |
- |
- |
6,159,195 |
6,159,195 |
|||||||||||||||||||||
Balance as of March 31, 2023 |
- |
$ |
- |
212,286 |
$ |
212 |
$ |
29,205,087 |
$ |
(19,187,653 |
) |
$ |
10,017,646 |
|||||||||||||||
Balance at December 31, 2023 |
- |
$ |
- |
264,537 |
$ |
265 |
$ |
32,114,552 |
$ |
(25,467,102 |
) |
$ |
6,647,715 |
|||||||||||||||
Issuance of common stock from the February 2024 Public Offering |
- |
- |
128,470 |
128 |
5,416,925 |
- |
5,417,053 |
|||||||||||||||||||||
Class D Pre-Funded Warrants exercise |
- |
- |
1,236,530 |
1,237 |
(1,110 |
) |
- |
127 |
||||||||||||||||||||
Alternative cashless exercise of Class C Common Stock Warrants |
- |
- |
3,398 |
3 |
57,586 |
- |
57,589 |
|||||||||||||||||||||
Stock-based compensation expense |
- |
- |
- |
- |
32,094 |
- |
32,094 |
|||||||||||||||||||||
Net loss |
- |
- |
- |
- |
- |
(2,681,433 |
) |
(2,681,433 |
) |
|||||||||||||||||||
Balance as of March 31, 2024 |
- |
$ |
- |
1,632,935 |
$ |
1,633 |
$ |
37,620,047 |
$ |
(28,148,535 |
) |
$ |
9,473,145 |
See accompanying notes to the consolidated financial statements.
REVELATION BIOSCIENCES, INC.
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended |
||||||||
2024 |
2023 |
|||||||
Cash flows from operating activities: |
||||||||
Net (loss) income |
$ |
(2,681,433 |
) |
6,159,195 |
||||
Adjustments to reconcile net (loss) income to net cash used in operating activities: |
||||||||
Stock-based compensation expense |
32,094 |
32,095 |
||||||
Depreciation expense |
6,262 |
6,263 |
||||||
Change in fair value of warrant liability |
(68,427 |
) |
(7,744,935 |
) |
||||
Changes in operating assets and liabilities: |
||||||||
Prepaid expenses and other current assets |
12,815 |
(259,255 |
) |
|||||
Deferred offering costs |
71,133 |
61,154 |
||||||
Accounts payable |
321,767 |
168,801 |
||||||
Accrued expenses |
(532,180 |
) |
1,528 |
|||||
Net cash used in operating activities |
(2,837,969 |
) |
(1,575,154 |
) |
||||
Cash flows from investing activities: |
||||||||
Purchase of property and equipment |
(19,172 |
) |
- |
|||||
Net cash used in investing activities |
(19,172 |
) |
- |
|||||
Cash flows from financing activities: |
||||||||
Proceeds from the February 2024 Public Offering, net |
5,417,053 |
- |
||||||
Proceeds from Class D Pre-Funded Warrants exercise |
127 |
- |
||||||
Redemption of Series A Preferred Stock |
- |
(5,000 |
) |
|||||
Proceeds from the February 2023 Public Offering, net |
- |
14,029,974 |
||||||
Proceeds from Class C Pre-Funded Warrants exercise |
- |
19 |
||||||
Net cash provided by financing activities |
5,417,180 |
14,024,993 |
||||||
Net increase in cash and cash equivalents |
2,560,039 |
12,449,839 |
||||||
Cash and cash equivalents at beginning of period |
11,991,701 |
5,252,979 |
||||||
Cash and cash equivalents at end of period |
$ |
14,551,740 |
$ |
17,702,818 |
||||
Supplemental disclosure of non-cash investing and financing activities: |
||||||||
Issuance of Class D Common Stock Warrants in connection with the February 2024 Public Offering |
$ |
6,269,684 |
$ |
- |
||||
Fair Value of Class C Common Stock Warrants in connection with the February 2023 Public Offering |
$ |
- |
$ |
13,996,500 |
||||
Alternative cashless exercise of Class C Common Stock Warrants |
$ |
57,589 |
$ |
2,740,410 |
||||
See accompanying notes to the consolidated financial statements.
REVELATION BIOSCIENCES, INC.
Notes to the Consolidated Financial Statements
1. Organization and Basis of Presentation
Revelation Biosciences, Inc. (collectively with its wholly-owned subsidiaries, the "Company" or "Revelation"), formerly known as Petra Acquisition, Inc. ("Petra"), was incorporated in Delaware on November 20, 2019. The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities. On August 29, 2021 Petra and Old Revelation signed an agreement and plan of merger (the "Business Combination Agreement"). On January 10, 2022 (the "Closing Date") the Company consummated its business combination, with Revelation Biosciences Sub, Inc. ("Old Revelation" or "Revelation Sub"), the Company's wholly owned subsidiary (the "Business Combination"). Since the Business Combination, the Company is a clinical-stage biopharmaceutical company and has been focused on the development and commercialization of immunologic therapeutics and diagnostics.
The Company's common stock and warrants are listed on the Nasdaq Capital Market under the symbols "REVB" and "REVBW", respectively.
Reverse Stock Split
On January 25, 2024, the Company effected the approved 1-for-30reverse stock split of our shares of common stock. Unless specifically provided otherwise herein, the share and per share information that follows in this Quarterly Report, reflects the effect of the reverse stock split.
Liquidity and Capital Resources
Going Concern
The Company has incurred recurring losses since its inception, including a net loss of $2.7million for the three months ended March 31, 2024. As of March 31, 2024, the Company had an accumulated deficit of $28.1million, a stockholders' equity of $9.5million and available cash and cash equivalents of $14.6million. The Company expects to continue to incur significant operating and net losses, as well as negative cash flows from operations, for the foreseeable future as it continues to complete all necessary product development or future commercialization efforts. The Company has never generated revenue and does not expect to generate revenue from product sales unless and until it successfully completes development and obtains regulatory approval for GEM-AKI, GEM-CKD, GEM-SSI or other product candidates, which the Company expects will not be for at least several years, if ever. The Company does not anticipate that its current cash and cash equivalents balance will be sufficient to sustain operations within one-year after the date that the Company's unaudited financial statements for March 31, 2024 were issued, which raises substantial doubt about its ability to continue as a going concern.
To continue as a going concern, the Company will need, among other things, to raise additional capital resources. The Company plans to seek additional funding through public or private equity or debt financings. The Company may not be able to obtain financing on acceptable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of the Company's stockholders. If the Company is unable to obtain funding, it could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect the Company's business operations.
The unaudited consolidated financial statements for March 31, 2024, have been prepared on the basis that the Company will continue as a going concern, and does not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability for the Company to continue as a going concern.
Basis of Presentation
The accompanying financial statements are prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). All inter-company transactions and balances have been eliminated in consolidation.
2. Summary of Significant Accounting Policies
Unaudited Interim Condensed Consolidated Financial Statements
The unaudited interim consolidated financial statements have been prepared on the same basis as the audited financial statements as of December 31, 2023 and for the year ended December 31, 2023 and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company's financial position. The financial data and the other financial information contained in these notes to the consolidated financial statements related to the three months ended March 31, 2024 are unaudited. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any other future annual or interim period. The consolidated financial statements and notes thereto should be read in conjunction with the Company's audited financial statements and notes thereto for the year ended December 31, 2023 included on Form 10-K, as filed with the SEC on March 22, 2024. The accompanying consolidated balance sheet as of December 31, 2023 has been derived from the audited balance sheet at December 31, 2023 contained in the above referenced Form 10-K.
Use of Estimates
The preparation of the consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions about future events that affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of expenses. These estimates and assumptions are based on the Company's best estimates and judgment. The Company regularly evaluates its estimates and assumptions using historical and industry experience and other factors; however, actual results could differ materially from these estimates and could have an adverse effect on the Company's consolidated financial statements.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. The Company maintains its cash in checking and savings accounts. Income generated from cash held in savings accounts is recorded as interest income. The carrying value of the Company's savings accounts is included in cash and approximates the fair value.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents. Bank deposits are held by accredited financial institutions and these deposits may at times be in excess of federally insured limits. The Company limits its credit risk associated with cash and cash equivalents by placing them with financial institutions that it believes are of high quality. The Company has not experienced any losses on its deposits of cash or cash equivalents.
Deferred Offering Costs
The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of the equity financing, these costs are recorded as a reduction of the proceeds generated as a result of the offering. Should the planned equity financing be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the consolidated statements of operations.
Property and Equipment, Net
Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which is five years. Maintenance and repairs are charged to operating expense as incurred. When assets are sold, or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any gain or loss is included in other (expense) income.
Leases
The Company determines if an arrangement is a lease at inception. Lease right-of-use assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. For operating leases with an initial term greater than 12 months, the Company recognizes operating lease right-of-use assets and operating lease liabilities based on the present value of lease payments over the lease term at the commencement date. Operating lease right-of-use assets are comprised of the lease liability plus any lease payments made and excludes lease incentives. Lease terms include options to renew or terminate the lease when the Company is reasonably certain that the renewal option will be exercised or when it is reasonably certain that the termination option will not be exercised. For an operating lease, if the interest rate used to determine the present value of future lease payments is not readily determinable, the Company estimates the incremental borrowing rate as the discount rate for the lease. The Company's incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in similar economic environments. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for the development of the Company's product candidates, GEM-AKI, GEM-CKD, GEM-SSI and other product candidates. Research and development costs are charged to expense as incurred. The Company records accrued expenses for estimated preclinical, clinical study and research expenses related to the services performed but not yet invoiced pursuant to contracts with research institutions, contract research organizations, and clinical manufacturing organizations that conduct and manage preclinical studies, clinical studies, research services, and development services on the Company's behalf. Payments for these services are based on the terms of individual agreements and payment timing may differ significantly from the period in which the services were performed. Estimates are based on factors such as the work completed, including the level of patient enrollment. The Company monitors patient enrollment levels and related activity to the extent reasonably possible and makes judgments and estimates in determining the accrued balance in each reporting period. The Company's estimates of accrued expenses are based on the facts and circumstances known at the time. If the Company underestimates or overestimates the level of services performed or the costs of these services, actual expenses could differ from estimates. As actual costs become known, the Company adjusts accrued expenses. To date, the Company has not experienced significant changes in estimates of clinical study and development services accruals.
Patent Costs
Legal costs in connection with approved patents and patent applications are expensed as incurred, as recoverability of such expenditures is uncertain. These costs are recorded in general and administrative expenses in the consolidated statements of operations.
Stock-based Compensation
The Company recognizes stock-based compensation expense related to stock options, third-party warrants, and Restricted Stock Unit ("RSU") awards granted, based on the estimated fair value of the stock-based awards on the date of grant. The fair value of employee stock options and third-party warrants are generally determined using the Black-Scholes option-pricing model using various inputs, including estimates of historic volatility, term, risk-free rate, and future dividends. The grant date fair value of the stock-based awards, which have graded vesting, is recognized using the straight-line method over the requisite service period of each stock-based award, which is generally the vesting period of the respective stock-based awards. The Company recognizes forfeitures as they occur.
Income Taxes
Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates applied to taxable income in the years in which those temporary differences are expected to be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or loss in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized. Interest and penalties related to unrecognized tax benefits are included within the provision of income tax. To date, there have been nounrecognized tax benefits balances.
Fair Value
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company's valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company follows a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. These levels of inputs are the following:
• Level 1-Quoted prices in active markets for identical assets or liabilities.
• Level 2-Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
• Level 3-Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The Company has determined that the measurement of the fair value of the Class C Common Stock Warrants (as defined in Note 5) is a Level 3 fair value measurement and uses the Monte-Carlo simulation model for valuation (see Note 10).
Warrant Liability
The Company reviews the terms of debt instruments, equity instruments, and other financing arrangements to determine whether there are embedded derivative features, including embedded conversion options that are required to be bifurcated and accounted for separately as a derivative financial instrument. Additionally, in connection with the issuance of financing instruments, the Company may issue freestanding options and warrants.
The Company accounts for its common stock warrants in accordance with ASC 480, Distinguishing Liabilities from Equity ("ASC 480") and ASC 815, Derivatives and Hedging ("ASC 815"). Based upon the provisions of ASC 480 and ASC 815, the Company accounts for common stock warrants as current liabilities if the warrant fails the equity classification criteria. Common stock warrants classified as liabilities are initially recorded at fair value on the grant date and remeasured at each balance sheet date with the offsetting adjustments recorded in change in fair value of warrant liabilities within the consolidated statements of operations.
The Company values its Class C Common Stock Warrants classified as liabilities using the Monte-Carlo simulation model.
Basic and Diluted Net (Loss) Earnings per Share
Basic net (loss) earnings per share is calculated by dividing net (loss) income by the weighted-average number of shares of common stock outstanding during the period, without consideration of potential shares of common stock. Diluted net (loss) earnings per share is calculated by dividing net (loss) income by the weighted-average number of shares of common stock outstanding plus potential shares of common stock. Convertible preferred stock on an as converted basis, RSU awards, warrants and stock options outstanding are considered potential shares of common stock and are included in the calculation of diluted net (loss) earnings per share using the treasury stock method when their effect is dilutive. Potential shares of common stock are excluded from the calculation of diluted net (loss) earnings per share when their effect is anti-dilutive.
As of March 31, 2024, there were 30,466potential shares of common stock, respectively, (see Note 8), that were excluded from the calculation of diluted net loss per share because their effect was anti-dilutive.
For the three months ended March 31, 2023, there were 30,839million potential common shares that were included in the calculation of diluted net earnings per share, which consists of: (i) 28,099shares of common stock issuable upon the alternative cashless exercise of the Class C Common Stock Warrants; (ii) 2,496Class C Pre-Funded Warrants; and (iii) 244Rollover RSU awards.
For the three months ended March 31, 2023, the basic and diluted weighted-average shares used to compute net earnings per share in the unaudited consolidated statements of operations includes the shares issued from the reverse stock split fractional share round up.
Comprehensive (Loss) Income
The Company has no components of comprehensive (loss) income other than net (loss) income. Thus, comprehensive (loss) income is the same as net (loss) incomefor the periods presented.
Segment Reporting
Operating segments are defined as components of an entity about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources in assessing performance.
The Company has oneoperating segment. The Company's chief operating decision maker manages the Company's operations for the purposes of allocating resources and evaluating financial performance.
Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") or other standard setting bodies that are adopted by the Company as of the specified effective date. The Company has evaluated recently issued accounting pronouncements and does not believe any will have a material impact on the Company's consolidated financial statements or related financial statement disclosures.
3. Balance Sheet Details
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following:
March 31, |
December 31, |
|||||||
Prepaid insurance costs |
$ |
3,900 |
$ |
55,215 |
||||
Other prepaid expenses & current assets |
67,976 |
29,476 |
||||||
Total prepaid expenses & current assets |
$ |
71,876 |
$ |
84,691 |
Property and Equipment, Net
Property and equipment, net consisted of the following:
March 31, |
December 31, |
|||||||
Lab equipment |
$ |
151,135 |
$ |
131,963 |
||||
Total property and equipment, gross |
151,135 |
131,963 |
||||||
Accumulated depreciation |
(73,141 |
) |
(66,879 |
) |
||||
Total property and equipment, net |
$ |
77,994 |
$ |
65,084 |
Depreciation expense was $6,262for the three months ended March 31, 2024 and $6,263for the three months ended March 31, 2023.
Accrued Expenses
Accrued expenses consisted of the following:
March 31, |
December 31, |
|||||||
Accrued payroll and related expenses |
$ |
242,841 |
$ |
768,720 |
||||
Accrued clinical study expenses |
56,414 |
10,268 |
||||||
Accrued professional fees |
225,137 |
219,888 |
||||||
Accrued clinical development costs |
95,888 |
153,584 |
||||||
Total accrued expenses |
$ |
620,280 |
$ |
1,152,460 |
4. Commitments and Contingencies
Lease Commitments
The Company leases 2,140square feet of laboratory space located at 11011 Torreyana Road, Suite 102, San Diego, California (the "Lease"). In January 2024, the Company signed an amendment extending the Lease until November 30, 2024, with a base monthly rent equal to $5,350. The Company is required to maintain a security deposit of $5,564. The Lease contains customary default provisions, representations, warranties and covenants. In addition to rent, the Lease requires the Company to pay certain taxes, insurance and operating costs relating to the leased premises. The Company has applied the short-term lease exception as the amendment is less than twelve months. The Lease is classified as an operating lease.
Rent expense was $16,050for the three months ended March 31, 2024 and $24,991for the three months ended March 31, 2023, respectively.
Future minimum lease payments under the operating lease as of March 31, 2024 is $42,800.
Commitments
The Company enters into contracts in the normal course of business with third party service providers and vendors. These contracts generally provide for termination on notice and, therefore, are cancellable contracts and not considered contractual obligations and commitments.
Contingencies
From time to time, the Company may become subject to claims and litigation arising in the ordinary course of business. The Company is not a party to any material legal proceedings, nor is it aware of any material pending or threatened litigation other than described below.
Legal Proceedings
On February 18, 2022, LifeSci Capital LLC filed an action against the Company in the U.S. District Court for the Southern District of New York seeking damages in the amount of approximately $5.3million plus interest for unpaid banking and advisory fees. These fees arise under contracts which were entered into prior to the Business Combination and the Company has asserted that LifeSci Capital LLC is not entitled to the fee because it violated its responsibilities by misrepresenting to Petra the funds that would be available following the Business Combination, absent which Petra would not have entered into the Business Combination Agreement. This action remains pending as of the date of this report. $1.5million of the claim relates to deferred underwriting commissions from the Petra initial public offering, which are recorded as a current liability in the financial statements as of March 31, 2024 under deferred underwriting commissions. On December 1, 2023 a Magistrate Judge issued a report recommending summary judgment in favor of LifeSci Capital LLC. On December 15, 2023, the Company filed objections to the Magistrate's report asserting that the Magistrate Judge made factual determinations not appropriate for summary judgment and misapplied the law. The Magistrate's report is a recommendation to the trial judge who is responsible for reviewing the case de novo. Other than the deferred underwriting commissions, no liabilities are reflected in the financial statements as the amount of any additional liability cannot be determined at this time.
5. 2023 Public Offering
On February 13, 2023, the Company closed a public offering of 96,287shares of its common stock, 11,214pre-funded warrants to purchase shares of common stock with an exercise price of $0.003which did not have an expiration date (the "Class C Pre-Funded Warrants") and 6,450,000warrants to purchase up to 215,000shares of common stock with an exercise price of $160.80which expire on February 14, 2028(the "Class C Common Stock Warrants") at a combined offering price of $144.90per share of common stock and two Class C Common Stock Warrants, or $144.8970per Class C Pre-Funded Warrant and two Class C Common Stock Warrants (the "February 2023 Public Offering"). Net cash proceeds to the Company from the offering were $14.0million.
Roth Capital Partners, LLC ("Roth")was engaged by the Company to act as its exclusive placement agent for the February 2023 Public Offering. The Company paid Roth a cash fee equal to 8.0% of the gross proceeds received by the Company in the public offering, totaling $1.2million.
The shares of common stock, the shares of common stock underlying the Class C Pre-Funded Warrants and the shares of common stock underlying the Class C Common Stock Warrants were registered with the SEC on Form S-1 (File No. 333-268576) and was declared effective by the SEC on February 9, 2023.
Between February 14, 2023 and April 6, 2023, the Company received notices of cash exercise for the Class C Pre-Funded Warrants issued in connection with the February 2023 Public Offering for 11,214shares of common stock at a total purchase price of $33.64. As of March 31, 2024, there were noClass C Pre-Funded Warrants outstanding.
Using a Monte-Carlo simulation model, the Class C Common Stock Warrants were valued in the aggregate at $14.0million and included in the issuance costs of the February 2023 Public Offering and treated as a liability (see Note 10).
From March 13, 2023 to March 31, 2024, the Company received notices of alternative cashless exercises for 6,217,640Class C Common Stock Warrants issued in connection with the February 2023 Public Offering for 82,919shares of common stock. As of March 31, 2024, there were 232,360of Class C Common Stock Warrants outstanding to purchase up to 7,746shares of common stock.
As part of the February 2024 Public Offering, the exercise price of the Class C Common Stock Warrants issued in the February 2023 Public Offering was reset from $160.80to $4.53.
6. 2024 Public Offering
On February 5, 2024, the Company closed a public offering of 128,470shares of its common stock, 1,236,530pre-funded warrants to purchase shares of common stock with an exercise price of $0.0001which did not have an expiration date (the "Class D Pre-Funded Warrants") and 2,730,000warrants to purchase up to 2,730,000shares of common stock with an exercise price of $4.53which expire on February 5, 2029(the "Class D Common Stock Warrants") at a combined offering price of $4.53per share of common stock and two Class D Common Stock Warrants, or $4.5299per Class C Pre-Funded Warrant and two Class D Common Stock Warrants (the "February 2024 Public Offering"). Net cash proceeds to the Company from the offering were $5.4million.
Roth was engaged by the Company to act as its exclusive placement agent for the February 2024 Public Offering. The Company paid Roth a cash fee equal to 8.0% of the gross proceeds received by the Company in the public offering, totaling $0.5million.
The shares of common stock, the shares of common stock underlying the Class D Pre-Funded Warrants and the shares of common stock underlying the Class D Common Stock Warrants were registered with the SEC on Form S-1 (File No. 333-276232) and was declared effective by the SEC on January 31, 2024.
Between February 5, 2024 and February 13, 2024, the Company received notices of cash exercise for the Class D Pre-Funded Warrants issued in connection with the February 2024 Public Offering for 1,236,530shares of common stock at a total purchase price of $123.65. As of March 31, 2024, there were noClass D Pre-Funded Warrants outstanding.
Using the Black-Scholes option pricing model, the Class D Common Stock Warrants were valued in the aggregate at $6.3million and was included in the issuance costs of the February 2024 Public Offering and treated as equity (see Note 10).
7. Preferred Stock
Revelation Authorized Preferred Stock
The Certificate of Amendment of the Company authorizes up to 5,000,000shares of preferred stock, which may be issued as designated by the Board of Directors without stockholder approval. As of March 31, 2024 and as of the date of this Report, there were no shares of preferred stock issued and outstanding.
Series A Preferred Stock
On December 19, 2022, the Company closed the sale of one share of the Company's Series A Preferred Stock, par value $0.001per share, to its Chief Executive Officer for $5,000.00. The outstanding share of Series A Preferred Stock was automatically redeemed for $5,000.00on January 30, 2023 upon the effectiveness of the Certificate of Amendment implementing the reverse stock split and the increase in authorized shares of common stock of the Company.
8. Common Stock
The Company is authorized under its articles of incorporation, as amended, to issue 500,000,000shares of common stock, par value $0.001per share.
Common Stock Issuance during the year ended December 31, 2023
On February 13, 2023, the Company issued 96,287shares of its common stock in connection with the February 2023 Public Offering. The Company received net cash proceeds of $14.0million.
From February 14, 2023 to April 6, 2023, the Company issued 11,214shares of common stock in connection with notices of cash exercise for Class C Pre-Funded Warrants issued in connection with the February 2023 Public Offering with a total purchase price of $33.64.
From March 13, 2023 to June 30, 2023, the Company issued 79,521shares of common stock in connection with notices of alternative cashless exercise for the Class C Common Stock Warrants issued in connection with the February 2023 Public Offering.
On April 18, 2023, the Company issued 140shares of common stock in connection with vested Rollover RSU awards.
Common Stock Issuance during the three months ended March 31, 2024
On January 29, 2024, the Company issued 3,398shares of common stock in connection with notices of alternative cashless exercise for the Class C Common Stock Warrants issued in connection with the February 2023 Public Offering.
On January 5, 2024, the Company issued 128,470shares of its common stock in connection with the February 2024 Public Offering. The Company received net cash proceeds of $5.4million.
Between February 5, 2024 and February 13, 2024, the Company issued 1,236,530shares of common stock in connection with notices of cash exercise for Class D Pre-Funded Warrants issued in connection with the February 2024 Public Offering with a total purchase price of $123.65.
As of March 31, 2024 and December 31, 2023, 1,632,935and 264,537shares of common stock were issued and outstanding, respectively. As of March 31, 2024, nocash dividends have been declared or paid.
The total shares of common stock reserved for issuance are summarized as follows:
March 31, |
March 31, |
|||||||
Public Warrants (exercise price of $12,075.00per share) |
10,012 |
10,012 |
||||||
Class A Common Stock Warrants (exercise price of $3,454.50per share) |
2,464 |
2,464 |
||||||
Class A Placement Agent Common Stock Warrants (exercise price of $3,454.50per share) |
345 |
345 |
||||||
Class B Common Stock Warrants (exercise price of $630.00per share) |
7,937 |
7,937 |
||||||
Class B Placement Agent Common Stock Warrants (exercise price of $787.50per share) |
556 |
556 |
||||||
Class C Pre-Funded Warrants (exercise price of $0.0030per share) |
- |
4,780 |
||||||
Class C Common Stock Warrants (exercise price of $160.80per share) |
7,746 |
134,516 |
||||||
Rollover Warrants (exercise price of $2,816.92per share) |
155 |
155 |
||||||
Rollover RSU awards outstanding |
94 |
244 |
||||||
Stock options outstanding |
1,157 |
321 |
||||||
Shares reserved for issuance |
30,466 |
161,330 |
||||||
Shares available for future stock grants under the 2021 Equity Incentive Plan |
20,466 |
1,957 |
||||||
Total common stock reserved for issuance |
50,932 |
163,287 |
9. Stock-Based Compensation
2021 Equity Incentive Plan
In January 2022, in connection with the Business Combination, the Board of Directors and the Company's stockholders adopted the 2021 Equity Incentive Plan (the "2021 Plan") and reserved 1,232authorized shares of common stock for issuance under the plan. The 2021 Plan is administered by the Board of Directors. Vesting periods and other restrictions for grants under the 2021 Plan are determined at the discretion of the Board of Directors. Grants to employees, officers, directors, advisors, and consultants of the Company typically vest over oneto four years. In addition, the number of shares of stock available for issuance under the 2021 Plan will be automatically increased each January 1, and began on January 1, 2022, by 10% of the aggregate number of outstanding shares of our common stock from the first day of the preceding calendar year to the first day of the current calendar year or such lesser number as determined by our board of directors. On July 14, 2023 at the Company's 2023 Annual Meeting of Stockholders, an amendment to the 2021 Equity Incentive Plan to increase the number of shares reserved under the Plan to 21,623was approved.
Under the 2021 Plan, stock options and stock appreciation rights are granted at exercise prices determined by the Board of Directors which cannot be less than 100% of the estimated fair market value of the common stock on the grant date. Incentive stock options granted to any stockholders holding 10% or more of the Company's equity cannot be granted with an exercise price of less than 110% of the estimated fair market value of the common stock on the grant date and such options are not exercisable after five yearsfrom the grant date.
As of March 31, 2024, there were 20,466shares available for future grants under the 2021 Plan.
Restricted Stock Units
At the Closing Date of the Business Combination, all Revelation Sub RSU award holders received a Rollover RSU award in exchange for each RSU award of Revelation Sub that vest in accordance with the original terms of the award. The Company determined this to be a Type I modification but did not record any incremental stock-based compensation expense since the fair value of the modified awards immediately after the modification was not greater than the fair value of the original awards immediately before the modification.
The Rollover RSU awards have time-based and milestone-based vesting conditions. Under time-based vesting conditions, the Rollover RSU awards vest quarterly over one-yearfor grants to the Board of Directorsand quarterly over four yearsor 25% on the one-year anniversary and the remainder vesting monthly thereafter for grants to officers, employees and consultants.The milestone-based vesting conditions vested on the Closing Date of the Business Combination.
As of March 31, 2024 and December 31, 2023, the Company has a total of 94Rollover RSU awards for shares of common stock outstanding, respectively. As of March 31, 2024, 61Rollover RSU awards have fully vested but are unissued and no Rollover RSU awards have been forfeited. As of March 31, 2024, 94Rollover RSU awards will vest and be issued over the next 0.9years. Each Rollover RSU award converts to one share of common stock.
Stock Options
The Company has granted stock options which(i) vest fully on the date of grant; (ii) vest 25% on the one-year anniversary of the grant date or the employees hiring date, with the remainder vesting quarterly thereafter; or (iii) vest quarterly over one-year, for grants to Board of Directors, officers and employees.Stock options have a maximum term of 3or 10 years.
The activity related to stock options during the three months ended March 31, 2024 is summarized as follows:
Shares |
Weighted-average Exercise Price |
Weighted-average Remaining Contractual Term (Years) |
||||||||||
Outstanding at December 31, 2023 |
1,157 |
$ |
285.47 |
|||||||||
Granted |
- |
- |
||||||||||
Exercised |
- |
- |
||||||||||
Expired and forfeited |
- |
- |
||||||||||
Outstanding at March 31, 2024 |
1,157 |
$ |
285.47 |
7.7 |
||||||||
Exercisable at March 31, 2024 |
1,091 |
$ |
213.81 |
7.7 |
For the three months ended March 31, 2024, the weighted-average Black-Scholes value per stock option was $314.03.The fair value of the stock options was estimated using the Black-Scholes option pricing model with the following weighted-average assumptions:
Volatility |
126.0 |
% |
||
Expected term (years) |
5.03 |
|||
Risk-free interest rate |
3.09 |
% |
||
Expected dividend yield |
0.0 |
% |
Expected volatility is based on the historical volatility of shares of the Company's common stock. In determining the expected term of stock options, the Company uses the "simplified" method. Under this method, the expected term is presumed to be the midpoint between the average vesting date and the end of the contractual term. The risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the stock options in effect at the time of the grants. The dividend yield assumption is based on the expectation of no future dividend payments by the Company. In addition to assumptions used in the Black-Scholes model, the Company reduces stock-based compensation expense based on actual forfeitures in the period that each forfeiture occurs.
Stock-Based Compensation Expense
For the three months ended March 31, 2024 and 2023, the Company recorded stock-based compensation expense for the period indicated as follows:
Three Months Ended |
||||||||
2024 |
2023 |
|||||||
General and administrative: |
||||||||
RSU awards |
$ |
22,383 |
$ |
22,383 |
||||
Stock Options |
7,215 |
7,216 |
||||||
General and administrative stock-based compensation expense |
29,598 |
29,599 |
||||||
Research and development: |
||||||||
RSU awards |
1,898 |
1,898 |
||||||
Stock Options |
598 |
598 |
||||||
Research and development stock-based compensation expense |
2,496 |
2,496 |
||||||
Total stock-based compensation expense |
$ |
32,094 |
$ |
32,095 |
As of March 31, 2024, there was $82,621and $59,564of unrecognized stock-based compensation expense related to Rollover RSU awards and stock options, respectively. The unrecognized stock-based compensation expense is expected to be recognized over a period of 0.9years and 1.9years for Rollover RSU's and stock options, respectively.
10. Warrants
Public Warrants
In connection with Petra's initial public offering ("IPO"), Petra issued and has outstanding as of March 31, 2024 10,511,597Public Warrants to purchase an aggregate of 10,012shares of common stock with an exercise price of $12,075.00per share which expire on January 10, 2027 (the "Public Warrants"). The Public Warrants trade on the Nasdaq Capital Market under the ticker symbol REVBW.
The Company may redeem the Public Warrants at a price of $0.01per Public Warrant upon not less than 30 days' prior written notice of redemption if, and only if, the reported last sale price of the Company's common stock equals or exceeds $18,900.00per share for any 20 trading days within a 30-trading day period ending on the third business day prior to the notice of redemption to the Public Warrant holders; and if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying the Public Warrants. If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a "cashless basis," as described in the warrant agreement.
Rollover Warrants
Prior to the Merger, Revelation Sub issued warrants to a placement agent to purchase up to 157shares of common stock with an exercise price of $2,816.92per share which expire on January 31, 2027, valued on the issuance date in the aggregate at $326,675. At the Closing Date of the Business Combination, all warrant holders received a Rollover Warrant, which was exercisable in accordance with its original issuance.
On February 2, 2022, the Company received a notice of cash exercise for the Company's Rollover Warrants for 2shares of common stock at a purchase price of $5,073. As of March 31, 2024, there were 155Rollover Warrants remaining to be exercised or exchanged.
The fair value of the Rollover Warrants were estimated using the Black-Scholes option pricing model with the following assumptions:
Volatility |
115 |
% |
||
Expected term (years) |
6 |
|||
Risk-free interest rate |
0.85 |
% |
||
Expected dividend yield |
0.0 |
% |
Class A Common Stock Warrants
In connection with the closing of a private placement on January 25, 2022 ("PIPE Investment"), the Company issued warrants to an institutional investor to purchase up to 2,464shares of common stock at an exercise price of $3,454.50per share (the "Class A Common Stock Warrants"), valued on the PIPE Investment purchase date in the aggregate at $3.6million and included in the issuance costs of the PIPE Investment and treated as equity. The warrants were exercisable immediately upon issuance, provide for a cash or cashless exercise right and expire on July 25, 2027.
The fair value of the Class A Common Stock Warrants were estimated using the Black-Scholes option pricing model with the following assumptions:
Volatility |
47 |
% |
||
Expected term (years) |
5 |
|||
Risk-free interest rate |
1.54 |
% |
||
Expected dividend yield |
0.0 |
% |
Class A Placement Agent Common Stock Warrants
In connection with the PIPE Investment, the Company issued warrants to Roth to purchase an aggregate of 345shares of common stock at an exercise price of $3,454.50per share (the "Class A Placement Agent Common Stock Warrants"), valued on the PIPE Investment purchase date in the aggregate at $0.5million and included in the issuance costs of the PIPE Investment and treated as equity. The warrants were exercisable immediately upon issuance, provide for a cash or cashless exercise right and expire on July 25, 2027.
The fair value of the Class A Placement Agent Common Stock Warrants were estimated using the Black-Scholes option pricing model with the following assumptions:
Volatility |
47 |
% |
||
Expected term (years) |
5 |
|||
Risk-free interest rate |
1.54 |
% |
||
Expected dividend yield |
0.0 |
% |
Class B Common Stock Warrants
In connection with closing of a public offering on July 28, 2022 ("the July 2022 Public Offering"), the Company issued and has outstanding 8,333,334warrants to purchase an aggregate of 7,937shares of common stock at an exercise price of $630.00per share(the "Class B Common Stock Warrants"), valued on the public offering purchase date in the aggregate at $4.5million and included in the issuance costs of the public offering and treated as equity. The warrants were exercisable immediately upon issuance, provide for a cash or cashless exercise right and expire on July 28, 2027.
The fair value of the Class B Common Stock Warrants were estimated using the Black-Scholes option pricing model with the following assumptions:
Volatility |
144 |
% |
||
Expected term (years) |
5 |
|||
Risk-free interest rate |
2.69 |
% |
||
Expected dividend yield |
0.0 |
% |
Class B Placement Agent Common Stock Warrants
In connection with the July 2022 Public Offering, the Company issued warrants to the Placement Agent to purchase up to 556shares of common stock at an exercise price of $787.50per share (the "Class B Placement Agent Common Stock Warrants"), valued on the public offering purchase date in the aggregate at $0.3million and included in the issuance costs of the public offering and treated as equity. The warrants were exercisable immediately upon issuance, provide for a cash or cashless exercise right and expire on July 25, 2027.
The fair value of the Class B Placement Agent Common Stock Warrants were estimated using the Black-Scholes option pricing model with the following assumptions:
Volatility |
144 |
% |
||
Expected term (years) |
5 |
|||
Risk-free interest rate |
2.69 |
% |
||
Expected dividend yield |
0.0 |
% |
Class C Pre-Funded Warrants
In connection with the February 2023 Public Offering, the Company issued pre-funded warrants to purchase up to 11,214shares of common stock at an exercise price of $0.003per share. Between February 14, 2023 and April 6, 2023, the Company received notices of cash exercise for the Class C Pre-Funded Warrants issued in connection with the February 2023 Public Offering for 336,400shares of common stock at a total purchase price of $33.64. As of March 31, 2024, there were noClass C Pre-Funded Warrants outstanding.
Class C Common Stock Warrants
In connection with the February 2023 Public Offering, the Company issued 6,450,000warrants to purchase up to 215,000shares of common stock at anexercise price of $160.80per share, valued on the public offering purchase date in the aggregate at $13,996,500and included in the issuance costs of the public offering and treated as a liability . The warrants were exercisable immediately upon issuance, provide for a cash, cashless exercise right or an alternative cashless exercise right for 0.4shares of common stock per Class C Common Stock Warrant and expire on February 14, 2028.
The Company evaluated the Class C Common Stock Warrants under ASC 815-40, Derivatives and Hedging-Contracts in Entity's Own Equity ("ASC 815-40") and concluded that they do not meet the criteria to be classified in stockholders' equity and accounted for the Class C Common Stock Warrants as current liabilities.
The Company concluded that the multiplier of 0.4shares of common stock per Class C Common Stock Warrant used in the alternative cashless exercise precludes the Class C Common Stock Warrants from being considered indexed to the Company's stock. The Company recorded the Class C Common Stock Warrants as current liabilities on the balance sheet at fair value, with subsequent changes in their respective fair values recognized in the consolidated statements of operations at each reporting date. Estimating fair values of liability-classified financial instruments requires the development of estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques are highly volatile and sensitive to changes in the trading market price of the Company's common stock. Because liability-classified financial instruments are initially and subsequently carried at fair value, the Company's financial results will reflect the volatility in these estimate and assumption changes. Changes in fair value are recognized as a component of other (expense) income in the consolidated statements of operations.
At the date of issuance, the Company valued the Class C Common Stock Warrants using a Monte-Carlo simulation model with a fair value of $14.0million.
As of March 31, 2024, the Company received notices of alternative cashless exercises for 6,217,640Class C Common Stock Warrants issued in connection with the February 2023 Public Offering for 82,919shares of common stock.
As of March 31, 2024, the Company re-valued 232,360outstanding Class C Common Stock Warrants to purchase up to 7,746shares of common stock using a Monte-Carlo simulation model with a fair value of $15,260.0million. For the three months ended March 31, 2024, the gain of $0.1million, respectively, resulting from the change in the fair value of the liability for the unexercised warrants was recorded as a change in fair value of the warrant liability in the accompanying consolidated statements of operations for the three months ended March 31, 2024.
As part of the February 2024 Public Offering, the exercise price of the Class C Common Stock Warrants issued in the February 2023 Public Offering was reset from $160.80to $4.53.
Class D Pre-Funded Warrants
In connection with the February 2024 Public Offering, the Company issued pre-funded warrants to purchase up to 1,236,530shares of common stock at an exercise price of $0.0001per share. Between February 5, 2024 and February 13, 2024, the Company received notices of cash exercise for the Class D Pre-Funded Warrants issued in connection with the February 2024 Public Offering for 1,236,530shares of common stock at a total purchase price of $123.65. As of March 31, 2024, there were noClass D Pre-Funded Warrants outstanding.
Class D Common Stock Warrants
In connection with the February 2024 Public Offering, the Company issued and has outstanding 2,730,000warrants shares of common stock at an exercise price of $4.53per share, valued on the public offering purchase date in the aggregate at $6.3million and included in the issuance costs of the public offering and treated as equity. The warrants were exercisable immediately upon issuance, provide for a cash or cashless exercise right and expire on February 5, 2029.
The fair value of the Class D Common Stock Warrants were estimated using the Black-Scholes option pricing model with the following assumptions:
Volatility |
100 |
% |
||
Expected term (years) |
5 |
|||
Risk-free interest rate |
4.20 |
% |
||
Expected dividend yield |
0.0 |
% |
11. Income Taxes
The quarterly provision for or benefit from income taxes is computed based upon the estimated annual effective tax rate and the year-to-date pre-tax (loss) income and other comprehensive (loss) income. The Company did not record a provision or benefit for income taxes during the three months ended March 31, 2024 and 2023, respectively.
For the three months ended March 31, 2024 and 2023, the Company recorded non-taxable income of $0.1million and $7.7million, respectively, related to a change in the fair value of a warrant liability. The Company incurred taxable losses in 2023 and projects further taxable losses for 2024. The Company did not record a benefit from income taxes because, based on evidence involving its ability to realize its deferred tax assets, the Company recorded a full valuation allowance against its deferred tax assets.
14. Subsequent Events
On April 26, 2024 the Company entered into a confidential settlement agreement with A-IR Clinical Research Ltd. ("A-IR") for a previously filed claim against the Company in the High Court of Justice, in the Business and Property Courts of England and Wales and is included in other (expense) income in the accompanying consolidated statements of operations.
Item 6. Exhibits, Financial Statement Schedules.
Furnish the exhibits required by Item 601 of Regulation S-K (§ 229.601 of this chapter).
EXHIBIT |
DESCRIPTION |
|
31.1* |
Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a_14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
31.2* |
Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a_14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
32.1* |
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
32.2* |
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
101.INS* |
XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document. |
|
101.SCH* |
Inline XBRL Taxonomy Extension Scema Document |
|
101.CAL* |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
101.DEF* |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
101.LAB* |
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
101.PRE* |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
104* |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* |
Filed herewith. |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report on Form 10-Q/A to be signed on its behalf by the undersigned, thereunto duly authorized.
REVELATION BIOSCIENCES, INC. |
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Date: September 23, 2024 |
By: |
/s/ James Rolke |
|
James Rolke |
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Chief Executive Officer |
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(principal executive officer) |
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Date: September 23, 2024 |
By: |
/s/ Chester S. Zygmont, III |
|
Chester S. Zygmont, III |
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Chief Financial Officer |
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(principal financial and accounting officer) |