Form 10-Q - Quarterly report [Sections 13 or 15(d)]

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐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: 001-40518

Miromatrix Medical Inc.

(Exact name of registrant as specified in its charter)

Delaware

27-1285782

(State or other jurisdiction of

incorporation)

(I.R.S. Employer

Identification Number)

6455 Flying Cloud Drive, Suite 107

Eden Prairie, MN 55344

(Address of principal executive offices, including zip code)

(952) 942-6000

(Registrant’s telephone number, including area code)

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol	Name of exchange on which registered
Common Stock, par value $0.00001 per share	MIRO	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, a 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 August 9, 2023, there were 27,310,553 shares of the registrant’s common stock outstanding.

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TABLE OF CONTENTS

		Page

Part I	Financial Information

Item 1.	Financial Statements	3

	Condensed Balance Sheets	3

	Condensed Statements of Operations	4

	Condensed Statements of Changes in Shareholders’ Equity	5

	Condensed Statements of Cash Flows	6

	Notes to Condensed Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	24

Item 4.	Controls and Procedures	24

Part II	Other Information

Item 1.	Legal Proceedings	25

Item 1A.	Risk Factors	25

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26

Item 3.	Defaults Upon Senior Securities	26

Item 4.	Mine Safety Disclosures	26

Item 5.	Other Information	26

Item 6.	Exhibits	27

Signatures

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PART I —FINANCIAL INFORMATION

Item 1. Financial Statements

MIROMATRIX MEDICAL INC.

Condensed Balance Sheets


	June 30,		December 31,
	2023		2022
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	4,571,777	$	5,208,005
Restricted cash		800,100		800,100
Short-term investments		15,828,281		19,989,489
Employee retention credit receivable		527,143		—
Receivable from Reprise Biomedical, Inc.		8,517		930,355
Interest receivable		30,707		107,861
Prepaid expenses and other current assets		114,943		274,952
Total current assets		21,881,468		27,310,762
Deferred offering costs		—		232,899
Right of use asset		1,570,837		1,673,575
Property and equipment, net		4,998,862		5,545,694
Total assets	$	28,451,167	$	34,762,930

Liabilities and Shareholders' Equity
Current liabilities:
Current portion of deferred royalties	$	739,738	$	979,167
Accounts payable		803,571		1,584,929
Current portion of financing lease obligations		22,506		44,157
Current portion of lease liability		405,566		389,649
Accrued expenses		1,916,104		1,948,376
Total current liabilities		3,887,485		4,946,278
Deferred royalties, net		—		491,733
Long-term debt		385,997		385,997
Financing lease obligations, net		3,964		11,689
Lease liability, net		2,512,062		2,720,781
Accrued interest		113,409		99,048
Total liabilities		6,902,917		8,655,526
Commitments and contingencies
Shareholders’ equity:
Common stock, par value $0.00001; 190,000,000 shares authorized; 27,310,553 issued and outstanding as of June 30, 2023 and 20,944,109 issued and outstanding as of December 31, 2022		273		209
Additional paid-in capital		139,570,460		130,119,106
Accumulated deficit		(118,022,483)		(104,011,911)
Total shareholders’ equity		21,548,250		26,107,404
Total liabilities and shareholders’ equity	$	28,451,167	$	34,762,930

The accompanying notes are an integral part of these condensed financial statements.

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MIROMATRIX MEDICAL INC.

Condensed Statements of Operations

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022

Licensing revenue	$	8,517	$	3,952	$	16,498	$	10,720
Cost of goods sold		125,000		125,000		250,000		250,000
Gross loss		(116,483)		(121,048)		(233,502)		(239,280)
Operating expenses:
Research and development		3,621,224		4,988,233		8,013,342		8,994,899
Regulatory and clinical		397,448		419,394		803,763		774,632
Quality		515,575		517,333		1,098,917		958,268
General and administration		2,037,682		2,188,460		4,637,917		4,461,017
Total operating expenses		6,571,929		8,113,420		14,553,939		15,188,816
Operating loss		(6,688,412)		(8,234,468)		(14,787,441)		(15,428,096)
Other income (expense)
Interest income		166,162		61,078		268,139		61,848
Interest expense		(8,170)		(8,799)		(18,413)		(19,690)
Employee retention credit		—		—		527,143		—
Total other income		157,992		52,279		776,869		42,158
Net loss	$	(6,530,420)	$	(8,182,189)	$	(14,010,572)	$	(15,385,938)
Net loss per share, basic and diluted	$	(0.24)	$	(0.40)	$	(0.56)	$	(0.75)
Weighted average shares used in computing net loss per share, basic and diluted		27,250,573		20,615,218		24,897,796		20,547,070

The accompanying notes are an integral part of these condensed financial statements.

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MIROMATRIX MEDICAL INC.

Condensed Statements of Shareholders’ Equity

(Unaudited)


				Additional				Total
	Common Stock			Paid-In		Accumulated		Shareholders’
	Shares	Amount		Capital		Deficit		Equity
Balance at March 31, 2023	27,239,938	$	272	$	139,291,810	$	(111,492,063)	$	27,800,019
Stock-based compensation expense	—		—		278,651		—		278,651
Issuance of restricted shares	70,615		1		(1)		—		—
Net loss	—		—		—		(6,530,420)		(6,530,420)
Balance at June 30, 2023	27,310,553	$	273	$	139,570,460	$	(118,022,483)	$	21,548,250

Balance at March 31, 2022	20,546,583	$	206	$	128,712,746	$	(81,255,663)	$	47,457,289
Stock-based compensation expense	—		—		266,390		—		266,390
Exercise of stock options	44,569		—		55,710		—		55,710
Exercise of stock warrants	191,559		2		414,096		—		414,098
Issuance of restricted shares	31,030		—		—		—		—
Net loss	—		—		—		(8,182,189)		(8,182,189)
Balance at June 30, 2022	20,813,741	$	208	$	129,448,942	$	(89,437,852)	$	40,011,298


				Additional				Total
	Common Stock			Paid-In		Accumulated		Shareholders’
	Shares	Amount		Capital		Deficit		Equity
Balance at December 31, 2022	20,944,109	$	209	$	130,119,106	$	(104,011,911)	$	26,107,404
Stock-based compensation expense	—		—		610,610		—		610,610
Issuance of restricted shares	116,444		1		(1)		—		—
Sales of common stock, net of expenses	6,250,000		63		8,855,374		—		8,855,437
Tax withholdings related to net share settlements of stock-based compensation awards	—		—		(14,629)		—		(14,629)
Net loss	—		—		—		(14,010,572)		(14,010,572)
Balance at June 30, 2023	27,310,553	$	273	$	139,570,460	$	(118,022,483)	$	21,548,250

Balance at December 31, 2021	20,385,645	$	204	$	128,177,594	$	(74,051,914)	$	54,125,884
Stock-based compensation expense	—		—		600,371		—		600,371
Exercise of stock options	205,507		2		256,881		—		256,883
Exercise of stock warrants	191,559		2		414,096		—		414,098
Issuance of restricted shares	31,030		—		—		—		—
Net loss	—		—		—		(15,385,938)		(15,385,938)
Balance at June 30, 2022	20,813,741	$	208	$	129,448,942	$	(89,437,852)	$	40,011,298

The accompanying notes are an integral part of these condensed financial statements.

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MIROMATRIX MEDICAL INC.

Condensed Statements of Cash Flows

(Unaudited)


	Six Months Ended June 30,
	2023		2022

Cash flows from operating activities:
Net loss	$	(14,010,572)	$	(15,385,938)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		579,367		536,507
Stock-based compensation		610,610		600,371
Loss on disposal of property and equipment		—		758
Non-cash interest income		77,154		(116,933)
Amortization of premium/discount on investments		(96,058)		6,734
Write-off of deferred offering costs		221,254		—
Employee retention credit		(527,143)		—
Changes in operating assets and liabilities:
Receivable from Reprise Biomedical, Inc.		921,838		13,867
Prepaid expenses		160,009		86,224
Operating lease right of use asset		102,738		(3,169,736)
Tenant improvement receivable reimbursement		—		1,256,950
Accounts payable and accrued expenses		(1,544,792)		(925,314)
Accrued interest		14,361		13,624
Operating lease liability		(192,802)		3,291,908
Net cash used in operating activities		(13,684,036)		(13,790,978)
Cash flows from investing activities:
Purchase of investments		(9,742,734)		(26,026,125)
Proceeds from maturity of investments		14,000,000		—
Purchases of property and equipment		(32,535)		(731,616)
Net cash provided by (used in) investing activities		4,224,731		(26,757,741)
Cash flows from financing activities:
Payments on long-term debt		—		(295,450)
Payments on financing lease obligations		(29,376)		(26,488)
Payments on offering costs		—		(18,540)
Proceeds from sale of common stock, net		8,867,082		—
Employee taxes paid for shares withheld		(14,629)		—
Proceeds from stock warrant exercises		—		414,098
Proceeds from stock option exercises		—		256,883
Net cash provided by financing activities		8,823,077		330,503
Net decrease in cash and cash equivalents		(636,228)		(40,218,216)
Cash, cash equivalents and restricted cash at beginning of period		6,008,105		53,611,631
Cash, cash equivalents and restricted cash at end of period	$	5,371,877	$	13,393,415

Cash and cash equivalents	$	4,571,777	$	12,593,315
Restricted cash		800,100		800,100
Cash, cash equivalents and restricted cash at end of period	$	5,371,877	$	13,393,415

Supplemental disclosure of cash flow information:
Interest paid	$	4,052	$	6,066
Purchases of property and equipment in accounts payable and accrued expenses	$	—	$	6,089
Accrued expenses related to deferred offering costs and financing	$	—	$	172,693
Leased assets obtained in exchange for new operating lease liabilities	$	—	$	1,986,172

The accompanying notes are an integral part of these condensed financial statements.

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MIROMATRIX MEDICAL INC.

Notes to Condensed Financial Statements

(Unaudited)

NOTE 1 — DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Miromatrix Medical Inc. (the “Company”) is a life sciences company pioneering a novel technology for bioengineering fully transplantable organs to help save and improve patients’ lives. Founded in 2009, the Company is one of a small group of companies at the forefront of developing alternatives to human-donor organ transplants, and within this small group of companies there are important differences between the technologies being developed. The Company’s proprietary technology is a scalable platform that uses a two-step method of decellularization and recellularization designed to remove the porcine cells from the organs obtained from pigs and replace them with unmodified human cells. The Company’s initial development focus is on bioengineering livers and kidneys, and the Company’s technology platform is also applicable to bioengineering other organs including hearts, lungs and pancreases. The Company has collaborations with Baxter International Inc. (“Baxter”), CareDx, Inc. (“CareDx”), the Mayo Clinic, the Mount Sinai Health System and the Texas Heart Institute, and we have received strategic investments from Baxter, CareDx and DaVita Inc.

Basis of Preparation

The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules of the United States (“U.S.”) Securities and Exchange Commission applicable to interim reports of companies filing as a smaller reporting company. These condensed financial statements should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

In the opinion of management, the accompanying condensed financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, stockholders’ equity and cash flows for the interim periods but are not necessarily indicative of the results of operations or cash flows to be anticipated for the full year 2023 or any future period. The Company has evaluated subsequent events occurring after the date of the condensed financial statements for events requiring recording or disclosure in the condensed financial statements.

Reclassifications

Certain reclassifications to previously reported financial information on the Condensed Balance Sheets and Condensed Statements of Operations have been made to conform to the current period presentation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Employee Retention Credit

Under the provisions of the extension of the Coronavirus Aid, Relief, and Economic Security Act, the Company is eligible for a refundable employee retention credit subject to satisfaction of certain eligibility criteria. The Company qualified for the employee retention credit for the first three quarters of 2020 and the second and third quarters of 2021. The Company recognized $527,143 during the six months ended June 30, 2023, consistent with guidance from International Accounting Standards 20, Accounting for Government Grants and Disclosure of Government Assistance, where the Company must have substantially met the program’s eligibility conditions to record revenue. It was reported as an employee retention credit receivable on the Condensed Balance Sheet and employee retention credit other income on the Condensed Statement of Operations for the six months ended June 30, 2023.

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Emerging Growth Company Status

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these condensed financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

The FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments and an updated ASU 2018-19 that clarifies the scope of the standard in the amendments in ASU 2016-13. This guidance introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. Financial instruments impacted are trade and other receivables, held-to-maturity debt securities, loans and other instruments. The Company adopted the standard effective January 1, 2023, using the modified retrospective approach. The adoption did not have an impact on the Company's financial statements.

NOTE 2 — GOING CONCERN

The accompanying condensed financial statements have been prepared on the basis that the Company will continue as a going concern. The Company has incurred losses since inception, negative cash flows from operations, and had an accumulated deficit of approximately $118.0 million as of June 30, 2023. The Company does not have adequate liquidity to fund its operations for at least twelve months from the issuance of these financial statements without raising additional capital and such actions are not solely within the control of the Company. If the Company is unable to raise additional capital, management believes planned expenditures may need to be reduced in order to extend the time period that existing resources can fund the Company’s operations. To date, the Company has funded its operations through the issuance of equity and debt securities, and the receipt of grants. The Company intends to fund ongoing operations by utilizing its current cash, cash equivalents and short-term investments on hand, and by exploring various dilutive and non-dilutive sources of funding, including equity financings, debt financings, strategic partnerships and collaborations, as well as other sources. If the Company is unable to obtain additional capital, it would have a material adverse effect on the operations of the Company and the development of its technology, and the Company may have to cease operations altogether. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

NOTE 3 — FAIR VALUE MEASUREMENT

The fair value of the Company’s financial instruments reflects the amount that the Company estimates that it would receive in connection with the sale of an asset or paid in connection with the transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). The Company uses a three-tier valuation hierarchy based upon observable and non-observable inputs to measure fair value:

Level 1: Inputs that include quoted prices in active markets for identical assets and 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 classifies cash and cash equivalents, as well as restricted cash, as Level 1 in the fair value hierarchy.

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The Company classifies its investments in U.S. Treasury notes as Level 1 in the fair value hierarchy. While the market for these securities are highly liquid and active, quoted prices for these securities may at times be derived from pricing models which use observable inputs such as benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and other reference data including market research publications.

NOTE 4 — INVESTMENTS

The Company currently invests its excess cash in U.S. Treasury securities. The Company intends and has the ability to hold these investments to maturity. Securities with original maturity dates of more than three months are reported as held-to-maturity investments and are recorded at amortized cost, which approximates fair value due to the negligible risk of changes in value due to interest rates. All investments held as of June 30, 2023 had contractual maturities of less than one year.

The amortized cost and estimated fair values of the Company’s investments as of June 30, 2023 are as follows:


	Amortized		Unrealized		Unrealized		Fair
	Cost		Holding Gains		Holding Losses		Value
Short-term:
U.S. Treasury notes	$	15,828,281	$	—	$	50,181	$	15,778,100
Total	$	15,828,281	$	—	$	50,181	$	15,778,100

NOTE 5 — PROPERTY AND EQUIPMENT, NET

Property and equipment consisted of the following as of:


	June 30,		December 31,
	2023		2022
Lab equipment	$	2,009,971	$	1,977,436
Leasehold improvements		3,392,220		3,392,220
Furniture, fixtures and computers		2,022,894		2,022,894
		7,425,085		7,392,550
Less accumulated depreciation and amortization		(2,426,223)		(1,846,856)
	$	4,998,862	$	5,545,694

Depreciation and amortization expense was $289,439 and $273,610 for the three months ended June 30, 2023 and 2022, respectively, and $579,367 and $536,507 for the six months ended June 30, 2023 and 2022, respectively.

NOTE 6 — ACCRUED EXPENSES

Accrued expenses consisted of the following as of:


	June 30,		December 31,
	2023		2022
Wages	$	1,174,792	$	1,434,675
Pre-clinical study costs		393,103		200,000
Research and development consulting		109,200		—
Taxes		75,000		112,974
Legal		25,000		80,794
Key opinion leader compensation		12,650		18,700
Royalties		—		3,422
Other		126,359		97,811
Accrued expenses	$	1,916,104	$	1,948,376

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NOTE 7 — DEBT

In January 2019, the Company issued the Regents of the University of Minnesota (the “University”) a promissory note in the amount of $385,997 in satisfaction of the Company’s minimum royalty obligation for the year ended December 31, 2018. The note bears interest at 6.0% per annum, compounded annually, and is due on January 31, 2025. As of both June 30, 2023 and December 31, 2022, the balance outstanding on this loan was $385,997. In addition, the Company issued the University a 10-year warrant to purchase 20,587 shares of the Company’s common stock at an exercise price of $3.75 per share, which remained outstanding through June 30, 2023.

Future principal maturities for debt were as follows:


Amounts Due in the Twelve Months Ending June 30,
2024	$	—
2025		385,997
Total future maturities payments		385,997
Less current portion		—
Long-term debt	$	385,997

NOTE 8 — EQUITY

Common Stock

The Company is authorized to issue 190,000,000 shares of common stock, with a par value of $0.00001. Holders of common stock are entitled to one vote for each share held on all matters submitted to a vote of common stockholders. Subject to preferences that may be applicable to any outstanding preferred shares, each share of common stock is entitled to share pro rata in any distributions. In any distribution of capital assets, holders of common stock are entitled to receive pro rata the assets remaining after payment of liabilities and liquidation preferences on any outstanding preferred stock.

In March 2023, the Company completed a public offering pursuant to which it sold an aggregate of 6,250,000 shares of the Company’s common stock at a public offering price of $1.60 per share, resulting in gross proceeds of $10 million. The offering closed on March 10, 2023, resulting in net proceeds of approximately $8.8 million, after deducting underwriting discounts and commissions and other offering expenses.

The Company previously capitalized $232,899 of deferred offering costs relating to the $200 million shelf registration statement declared effective on July 11, 2022. When the Company completed the public offering in March 2023, $11,645 was reclassified to additional paid-in capital on the Balance Sheet and $221,254 was written-off to general and administrative expenses in the Statement of Operations, on a pro-rata basis.

As of June 30, 2023 and December 31, 2022, there were 27,310,553 and 20,944,109 shares of common stock issued and outstanding, respectively.

Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock, with a par value of $0.00001. As of June 30, 2023 and December 31, 2022, there were no shares of preferred stock issued and outstanding.

Equity Incentive Plans

In May 2021, the Company’s stockholders approved the 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan provides for the issuance of stock options, restricted stock units and other awards to employees, directors and consultants of the Company. Shares of common stock underlying outstanding awards under the 2019 Plan (defined below) and the 2021 Plan that expire, are forfeited, are retained by the Company to satisfy any exercise price or any tax withholding, repurchased by the Company at their original purchase price or settled in cash may be added to the number of shares of common stock available for issuance under the 2021 Plan. The number of shares reserved for issuance under the 2021 Plan

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will automatically increase on the first day of each fiscal year, beginning January 1, 2022, in the amount equal to the lesser of (a) 4.5% of the total number of shares of common stock outstanding as of December 31 of the immediately preceding calendar year, (b) 600,000 shares of common stock, or (c) such lesser number of shares as determined by the Board of Directors. On January 1, 2023, the number of shares reserved for issuance under the 2021 Plan automatically increased by 600,000 shares of common stock.

The Company also maintains its prior stock option plans adopted in 2010 (the “2010 Plan”) and 2019 (the “2019 Plan”). The Company ceased making awards under the 2010 Plan upon adoption of the 2019 Plan and similarly under the 2019 Plan upon stockholder approval of the 2021 Plan.

As of June 30, 2023, there were options to purchase 2,309,853 and 266,500 shares of common stock outstanding under the 2010 Plan and 2019 Plan, respectively.

As of June 30, 2023, there were options to purchase 1,474,833 shares of common stock and restricted stock units eligible to vest and settle into 474,271 shares of common stock outstanding under the 2021 Plan.

As of June 30, 2023, there were 775,410 shares of common stock available for issuance under future awards granted under the 2021 Plan.

Stock Options

The Company recognizes stock option compensation expense based on the grant date fair value of the award. The Company issues new common shares for stock options exercised.

Stock option activity was as follows:


		Weighted
		Average
		Exercise
	Shares	Price
Options outstanding at December 31, 2022	3,831,686	$	4.12
Granted	462,000	$	2.95
Exercised	—	$	—
Canceled or expired	(242,500)	$	4.60
Options outstanding at June 30, 2023	4,051,186	$	3.96
Options exercisable at June 30, 2023	2,940,311	$	3.89

Stock-based compensation expense related to stock options was $150,849 and $141,773 for the three months ended June 30, 2023 and 2022, respectively. Stock-based compensation expense related to stock options was $333,055 and $332,589 for the six months ended June 30, 2023 and 2022, respectively.

Included in the stock-based compensation expense numbers above are stock options to be granted to key opinion leaders which are marked to market at each reporting period with the change in the accrued balance expensed through research and development operating expenses. Stock-based compensation related to the key opinion leaders increased by $2,650 and $1,400 for the three months ended June 30, 2023 and 2022, respectively, and decreased by $6,050 and $11,475 for the six months ended June 30, 2023 and 2022, respectively.

The weighted average fair value of options granted during the six months ended June 30, 2023 and 2022 was $2.16 and $1.48 per share, respectively.

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Restricted Stock Units

The Company recognizes restricted stock unit (“RSU”) compensation expense based on the grant date fair value of the award. Each RSU is eligible to vest over time and settle into one newly issued share of Company common stock.

RSU activity was as follows:


		Weighted
		Average Grant
		Date Fair
	Shares	Value
Unvested at December 31, 2022	239,198	$	4.20
Granted	381,005	$	1.60
Vested	(116,444)	$	3.62
Canceled	(29,488)	$	4.59
Unvested at June 30, 2023	474,271	$	2.23

Stock-based compensation expense related to RSUs was $130,452 and $126,017 for the three months ended June 30, 2023 and 2022, respectively. Stock-based compensation expense related to RSUs was $271,505 and $256,307 for the six months ended June 30, 2023 and 2022, respectively.

Employee Stock Purchase Plan

The Company accounts for employee stock purchases made under its 2021 Employee Stock Purchase Plan (“ESPP”) using the estimated grant date fair value in accordance with Accounting Standards Codification, Topic 718, Stock Compensation. The Company values ESPP shares using the Black-Scholes model.

There were 300,000 shares of common stock initially reserved for issuance under the ESPP. In addition, the ESPP contains a provision which provides for an automatic annual share increase on January 1 of each year, in an amount equal to the lesser of (i) 1% of the total number of shares outstanding as of December 31 of the immediately preceding calendar year, (ii) 200,000 shares or (iii) such number of shares as determined by the Board. As of December 31, 2022, there were 500,000 shares of common stock available for issuance under the ESPP. On January 1, 2023, the number of shares reserved for issuance under the ESPP automatically increased by 200,000 shares of common stock.

There were no shares issued under the ESPP during the six months ended June 30, 2023.

Stock Warrants

Stock warrant activity was as follows:


		Weighted
		Average
		Exercise
	Shares	Price
Warrants outstanding December 31, 2022	599,191	$	6.16
Granted	—	$	—
Exercised	—	$	—
Expired	(2,604)	$	2.50
Warrants outstanding June 30, 2023	596,587	$	6.18

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NOTE 9 — SIGNIFICANT CUSTOMERS

The Company had one customer that accounted for 100% of total revenue for the three and six months ended June 30, 2023 and 2022. The current receivable for this customer is included in Receivable from Reprise Biomedical, Inc. (“Reprise”) on the condensed balance sheets. The Company received $8,517 and $3,952 for the three months ended June 30, 2023 and 2022, respectively, and $16,498 and $10,720 for the six months ended June 30, 2023 and 2022, respectively, as royalties related from the spin-out of the Acellular Business to Reprise. As of June 30, 2023 and December 31, 2022, the Company had receivables related to the minimum royalties of $700,436 and $466,934, respectively, from Reprise, but due to the uncertainty regarding collectability the Company fully reserved against the receivable.

NOTE 10 — COMMITMENTS AND CONTINGENCIES

Patent License Agreement

Under an Exclusive Patent License Agreement between the Company and the University, the Company is required to make minimum royalty payments to the University of $500,000 per year. Under the Patent and Know-How License Agreement with Reprise, Reprise has minimum royalty obligations to the Company of $500,000 per year.

NOTE 11 — LEASES

The Company leases its corporate headquarters, which houses its research and development operations and office space. The lease term began in August 2021 and is scheduled to terminate in May 2029. The Company has one option to extend the term for a period of five years. The depreciable life of assets and leasehold improvements is limited by the expected lease term. The lease provided a tenant improvement allowance of $1,256,950, which was received by the Company during the first quarter of 2022. The tenant improvement allowance is included in the calculation of the right of use asset and lease liability.

The Company also leases pieces of equipment that are accounted for as financing leases. Financing lease assets are classified as lab equipment within property and equipment on the condensed balance sheets.

Supplemental condensed balance sheet information for the Company is as follows:


		June 30,		December 31,
Leases	Classification	2023		2022
Assets
Operating lease assets	Right of use asset	$	1,570,837	$	1,673,575
Financing lease assets	Property and equipment, net of accumulated depreciation	$	62,366	$	81,325

Liabilities
Current
Operating	Current portion of lease liability	$	405,566	$	389,649
Financing	Current portion of financing lease obligations	$	22,506	$	44,157
Noncurrent
Operating	Lease liability, net	$	2,512,062	$	2,720,781
Financing	Financing lease obligations, net	$	3,964	$	11,689

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Information on the Company’s lease costs is as follows:


		Three Months Ended June 30,
Lease cost	Classification	2023		2022
Operating lease cost	Operating expenses: General and administrative	$	82,885	$	82,885
Financing lease cost
Amortization of leased assets	Depreciation and amortization	$	9,479	$	9,479
Interest on lease liabilities	Interest expense	$	613	$	1,228
Variable lease cost⁽¹⁾	Operating expenses: General and administrative	$	56,145	$	57,090

(1)	Variable lease costs consist primarily of taxes, insurance and common area maintenance costs for the Company’s operating lease.


		Six Months Ended June 30,
Lease cost	Classification	2023		2022
Operating lease cost	Operating expenses: General and administrative	$	165,771	$	163,569
Financing lease cost
Amortization of leased assets	Depreciation and amortization	$	18,959	$	18,959
Interest on lease liabilities	Interest expense	$	1,463	$	2,943
Variable lease cost⁽¹⁾	Operating expenses: General and administrative	$	96,245	$	96,319

(1)	Variable lease costs consist primarily of taxes, insurance and common area maintenance costs for the Company’s operating lease.

Future payments for the Company’s leases are as follows:


Amounts Due in Years Ending	Operating Leases		Financing Leases		Total
2023	$	255,835	$	15,450	$	271,285
2024		527,020		12,030		539,050
2025		542,830		—		542,830
2026		559,115		—		559,115
2027		575,889		—		575,889
Thereafter		847,731		—		847,731
Total lease payments		3,308,420		27,480		3,335,900
Less imputed interest		(390,792)		(1,010)		(391,802)
Present value of lease liabilities	$	2,917,628	$	26,470	$	2,944,098

Additional information related to leases is as follows:


Lease term and discount rate	June 30, 2023
Weighted-average remaining term (years)
Operating lease	5.9
Financing leases	0.9
Weighted-average discount rate
Operating lease	4.2	%
Financing leases	6.9	%

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NOTE 12 — NET LOSS PER SHARE

Basic net loss per share is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is calculated by dividing the weighted average number of common shares outstanding, after taking into consideration all dilutive potential shares outstanding during the period. Due to the existence of net losses for the three and six months ended June 30, 2023 and 2022, basic and diluted net loss per share were the same, as the effect of potentially dilutive securities would have been anti-dilutive.

The following potentially dilutive securities outstanding have been excluded from the computations of diluted weighted average shares outstanding because such securities would have had an antidilutive impact due to losses reported for the periods presented:


	Three and Six Months Ended June 30,
	2023	2022
Common stock options outstanding	4,051,186	3,954,756
Restricted stock units	474,271	192,535
Common stock warrants	596,587	599,191
Total common stock equivalents	5,122,044	4,746,482

NOTE 13 — SUBSEQUENT EVENTS

On July 31, 2023, the Company received cash payments totaling $457,143 of the $527,143 employee retention receivable.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

References in this report (the “Quarterly Report”) to “we,” “us,” “our” or the “Company” refer to Miromatrix Medical Inc. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report. Information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Special Note Regarding Forward-Looking Statements

This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the U.S. Securities and Exchange Commission (“SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Overview

We are a life sciences company pioneering a novel technology for bioengineering fully transplantable organs to help save and improve patients’ lives. Founded in 2009, we are one of a small group of companies at the forefront of developing alternatives to human-donor organ transplants, and within this small group of companies there are important differences between the technologies being developed. Our proprietary technology is a scalable platform that uses a two-step method of decellularization and recellularization designed to remove the porcine cells from the organs obtained from pigs and replace them with unmodified human cells. Our initial development focus is on bioengineering livers and kidneys, and our technology platform is also applicable to bioengineering other organs including hearts, lungs and pancreases. We have collaborations with the Mayo Clinic, Baxter, CareDx, Mount Sinai and the Texas Heart Institute, and have received strategic investments from Baxter, CareDx and DaVita.

Substantially all of our revenue to date has been generated by sales of and royalties we received from acellular biologic surgical products, which we spun out as Reprise Biomedical, Inc. (“Reprise”) effective June 30, 2019. We subsequently divested our minority ownership stake in Reprise in March 2021. We have continued to receive royalties on the sales of these products by Reprise. Our revenue for the three and six months ended June 30, 2023 was $8,517 and $16,498, respectively, consisting entirely of licensing revenue. Our net loss for the three and six months ended June 30, 2023 was $6,530,420 and $14,010,572, respectively. We have not been profitable since inception and as of June 30, 2023, we had an accumulated deficit of $118,022,483.

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Our product pipeline consists of three active programs, as described below:

●

miroliverELAP_®, our External Liver Assist Product (“ELAP”) designed to provide liver dialysis for acute liver failure patients.

●

miroliver, our fully implantable bioengineered liver intended to treat patients with acute and chronic liver failure.

●

mirokidney, our fully implantable bioengineered kidney intended to treat patients with end-stage renal disease.

Recent Developments

In the fourth quarter of 2022, we filed an IND application for our miroliverELAP to the FDA. In response to the IND application, we received a clinical hold letter from the FDA in January 2023 identifying certain nonclinical and clinical deficiencies and requesting responsive information, including, among other things, new toxicology studies in an appropriate animal model, biocompatibility studies, as well as various validations to be provided in our IND application. We plan to submit our complete response to the clinical hold letter to the FDA in the second half of 2023. If our complete response addresses the deficiencies to the FDA’s satisfaction and does not raise new concerns regarding risks to subjects, we expect the FDA will lift the clinical hold and we then intend to initiate a first-in-human, phase 1 clinical trial shortly thereafter. We have reallocated resources previously intended for miroliver and mirokidney, our fully implantable bioengineered liver and kidney programs, to miroliverELAP, which will likely delay the preclinical development of miroliver and mirokidney.

Components of Our Results of Operations

Licensing Revenue

For the periods presented, all of our revenue consists of licensing revenue pursuant to our license agreement with Reprise. Revenue pursuant to this agreement is recognized at the later of (i) when the related sales occur after the minimum guarantee is satisfied, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). Due to future uncertainty regarding the collectability of the 2021 and 2023 minimum royalties from Reprise, we determined the contract did not meet the requirements of Accounting Standards Codification, Topic 606, Revenue from Contracts with Customers (“ASC 606”); therefore, we did not record revenues or a receivable.

Cost of Goods Sold

Cost of goods sold relates to our license agreement with the University of Minnesota (the “University”), pursuant to which we owe the University royalties on our revenues, which are subject to annual minimum payments.

Gross Loss

Our gross loss is calculated by subtracting our cost of goods sold from our revenue.

Research and Development Expenses

Research and development expenses consist primarily of engineering, product development, consulting services, materials, depreciation and other costs associated with products and technologies in development. These expenses include payroll and related expenses, consulting expenses, laboratory supplies, and amounts incurred under certain collaborative agreements. Expenditures for research and development activities are charged to operations as incurred.

We expect research and development expenses to increase in the future, as we continue the development of our current product candidates. Research and development expenses will be dependent upon such factors including the results of our preclinical and clinical trials, and the number of product candidates under development.

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Regulatory and Clinical Expenses

Regulatory and clinical expenses include costs for developing our regulatory and clinical study strategies for our product candidates. These expenses include payroll and related expenses and consulting expenses. We expect regulatory and clinical expenses will be dependent on the size and duration of any clinical programs that we may initiate.

Quality Expenses

Quality expenses relate to costs of systems and procedures to develop a manufacturing facility that is compliant with Current Good Manufacturing Practices. These expenses include payroll and related expenses. We expect quality expenses to increase in future years as we continue to develop the process and systems needed to produce our product candidates.

General and Administrative Expenses

General and administrative expenses include costs for our executive, accounting and human resources functions. Costs consist primarily of payroll and related expenses, professional service fees related to accounting, legal and other contract and administrative services and related infrastructure expenses.

Interest Income

Interest income consists of interest earned on our cash and cash equivalents and U.S. Treasury securities.

Interest Expense

Interest expense consists of interest under our loan agreements. See “— Liquidity and Capital Resources.”

Results of Operations

Comparison of the Three Months Ended June 30, 2023 to the Three Months Ended June 30, 2022


	Three Months Ended
	June 30,				Change
	2023		2022		Dollar		Percentage
Licensing revenue	$	8,517	$	3,952	$	4,565	115.5	%
Cost of goods sold		125,000		125,000		—	—
Gross loss		(116,483)		(121,048)		4,565	(3.8)
Operating expenses:
Research and development		3,621,224		4,988,233		(1,367,009)	(27.4)
Regulatory and clinical		397,448		419,394		(21,946)	(5.2)
Quality		515,575		517,333		(1,758)	(0.3)
General and administrative		2,037,682		2,188,460		(150,778)	(6.9)
Total operating expenses		6,571,929		8,113,420		(1,541,491)	(19.0)
Operating loss		(6,688,412)		(8,234,468)		1,546,056	(18.8)
Other income (expense)
Interest income		166,162		61,078		105,084	172.0
Interest expense		(8,170)		(8,799)		629	(7.1)
Total other income (expense)		157,992		52,279		105,713	202.2
Net loss	$	(6,530,420)	$	(8,182,189)	$	1,651,769	(20.2)	%

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Licensing Revenue

Licensing revenue was $8,517 for the three months ended June 30, 2023 and $3,952 for the three months ended June 30, 2022, an increase of $4,565, or 115.5%. The licensing revenue is a result of the license agreement with Reprise. The remainder of minimum royalties due from Reprise for 2023 are due in January 2024. The remainder of the minimum royalties due from Reprise for 2021 have been deferred to 2023. Due to the uncertainty regarding the collectability of the 2021 and 2023 minimum royalties from Reprise, we determined the contract did not meet the requirements of ASC 606; therefore, we did not record revenues or a receivable.

Cost of Goods Sold

Cost of goods sold was $125,000 for both the three months ended June 30, 2023 and 2022. Cost of goods sold relates to the minimum royalty due to the University under our license agreement.

Gross Loss

Gross loss was $116,483 for the three months ended June 30, 2023 and $121,048 for the three months ended June 30, 2022, a decrease of $4,565, or 3.8%.

Research and Development

Research and development expenses were $3,621,224 for the three months ended June 30, 2023 and $4,988,233 for the three months ended June 30, 2022, a decrease of $1,367,009, or 27.4%. The decrease was primarily due to a lab supply expense decrease of $1,315,041, consulting expense decrease of $234,266 and office expense decrease of $96,172. The decrease was partially offset by a headcount increase which resulted in an increase in payroll expense of $257,238 and other expense increase of $21,232.

Regulatory and Clinical

Regulatory and clinical expenses were $397,448 for the three months ended June 30, 2023 and $419,394 for the three months ended June 30, 2022, a decrease of $21,946, or 5.2%. The decrease was primarily due to lower consulting expenses.

Quality

Quality expenses were $515,575 for the three months ended June 30, 2023 and $517,333 for the three months ended June 30, 2022, a decrease of $1,758, or 0.3%.

General and Administrative

General and administrative expenses were $2,037,682 for the three months ended June 30, 2023 and $2,188,460 for the three months ended June 30, 2022, a decrease of $150,778, or 6.9%. The decrease was primarily due to professional service fee decrease of $85,450, office expense decrease of $44,218, travel and entertainment expense decrease of $34,549, consulting expense decrease of $29,037 and other expense decrease of $2,849. The decrease was partially offset by taxes and licenses expense increase of $45,325.

Interest Income

Interest income was $166,162 for the three months ended June 30, 2023 and $61,078 for the three months ended June 30, 2022, an increase of $105,084, or 172.0%. The increase was primarily due to U.S. Treasury securities purchased during the second quarter of 2022 and the second quarter of 2023 with cash received from our initial public offering and our secondary public offering, which was completed in the first quarter of 2023.

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Interest Expense

Interest expense was $8,170 for the three months ended June 30, 2023 and $8,799 for the three months ended June 30, 2022, a decrease of $629, or 7.1%.

Comparison of the Six Months Ended June 30, 2023 to the Six Months Ended June 30, 2022


	Six Months Ended
	June 30,				Change
	2023		2022		Dollar		Percentage
Licensing revenue	$	16,498	$	10,720	$	5,778	53.9	%
Cost of goods sold		250,000		250,000		—	—
Gross loss		(233,502)		(239,280)		5,778	(2.4)
Operating expenses:
Research and development		8,013,342		8,994,899		(981,557)	(10.9)
Regulatory and clinical		803,763		774,632		29,131	3.8
Quality		1,098,917		958,268		140,649	14.7
General and administrative		4,637,917		4,461,017		176,900	4.0
Total operating expenses		14,553,939		15,188,816		(634,877)	(4.2)
Operating loss		(14,787,441)		(15,428,096)		640,655	(4.2)
Other income (expense)
Interest income		268,139		61,848		206,291	333.5
Interest expense		(18,413)		(19,690)		1,277	(6.5)
Employee retention credit		527,143		—		527,143	100.0
Total other income (expense)		776,869		42,158		734,711	1,742.8
Net loss	$	(14,010,572)	$	(15,385,938)	$	1,375,366	(8.9)	%

Licensing Revenue

Licensing revenue was $16,498 for the six months ended June 30, 2023 and $10,720 for the six months ended June 30, 2022, an increase of $5,778, or 53.9%. The licensing revenue is a result of the license agreement with Reprise. The remainder of minimum royalties due from Reprise for 2023 are due in January 2024. The remainder of the minimum royalties due from Reprise for 2021 have been deferred to 2023. Due to the uncertainty regarding the collectability of the 2021 and 2023 minimum royalties from Reprise, we determined the contract did not meet the requirements of ASC 606; therefore, we did not record revenues or a receivable.

Cost of Goods Sold

Cost of goods sold was $250,000 for both the six months ended June 30, 2023 and 2022. Cost of goods sold relates to the minimum royalty due to the University under our license agreement.

Gross Loss

Gross loss was $233,502 for the six months ended June 30, 2023 and $239,280 for the six months ended June 30, 2022, a decrease of $5,778, or 2.4%.

Research and Development

Research and development expenses were $8,013,342 for the six months ended June 30, 2023 and $8,994,899 for the six months ended June 30, 2022, a decrease of $981,557, or 10.9%. The decrease was primarily due to lab supply expense decrease of $1,512,769, contract services expense decrease of $151,181, consulting expense decrease of $87,436, office expense decrease of $77,418 and travel and entertainment expense decrease of $22,664. The decrease was partially offset by payroll expense increase of $806,397 and other expense increase of $63,514.

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Regulatory and Clinical

Regulatory and clinical expenses were $803,763 for the six months ended June 30, 2023 and $774,632 for the six months ended June 30, 2022, an increase of $29,131, or 3.8%. The increase was primarily due to a headcount increase which resulted in an increase in payroll expense of $85,199, partially offset by consulting expense decrease of $30,940, office expense decrease of $7,951, contract services expense decrease of $7,658, travel and entertainment expense decrease of $6,087 and other expense decrease of $3,432.

Quality

Quality expenses were $1,098,917 for the six months ended June 30, 2023 and $958,268 for the six months ended June 30, 2022, an increase of $140,649, or 14.7%. The increase was primarily due to an increase in lab supply expense of $341,972 and other expense increase of $22,982. The increase was partially offset by a decrease in payroll expense of $143,708, consulting expense decrease of $70,882, contract services expense decrease of $7,652 and office expense decrease of $2,063.

General and Administrative

General and administrative expenses were $4,637,917 for the six months ended June 30, 2023 and $4,461,017 for the six months ended June 30, 2022, an increase of $176,900, or 4.0%. The increase was primarily due to deferred offering costs write-off of $221,254, payroll expense increase of $122,278, shareholder expense increase of $7,420 and professional service expense increase of $3,551. The increase was partially offset by travel and entertainment expense decrease of $59,875, office expense decrease of $45,842, insurance expense decrease of $34,059, consulting expense decrease of $31,604 and other expense decrease of $6,223.

Interest Income

Interest income was $268,139 for the six months ended June 30, 2023 and $61,848 for the six months ended June 30, 2022, an increase of $206,291, or 333.5%. The increase was primarily due to U.S. Treasury securities purchased during the second quarter of 2022 and the second quarter of 2023 with cash received from our initial public offering and our secondary public offering, which was completed in the first quarter of 2023.

Interest Expense

Interest expense was $18,413 for the six months ended June 30, 2023 and $19,690 for the six months ended June 30, 2022, a decrease of $1,277, or 6.5%.

Employee Retention Credit

Employee retention credit income was $527,143 for the six months ended June 30, 2023. This is a refundable credit against certain employment taxes recognized under the provisions of the Coronavirus Aid, Relief, and Economic Security Act.

Liquidity and Capital Resources

We have incurred net losses since our inception. For the three months ended June 30, 2023 and 2022, we incurred net losses of $6,530,420 and $8,182,189, respectively. For the six months ended June 30, 2023 and 2022, we incurred net losses of $14,010,572 and $15,385,938, respectively. As of June 30, 2023, we had an accumulated deficit of $118,022,483.

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We expect to incur additional losses in the near future, and we expect our expenses to increase in connection with our ongoing activities, particularly as we continue to develop our bioengineered organs, conduct clinical trials and other studies for our bioengineered organs, seek regulatory clearances or approvals for miroliverELAP, mirokidney and miroliver, continue preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights, invest in our infrastructure to support our future manufacturing and other activities, and incur costs associated with operating as a public company in the U.S. The timing and amount of our operating expenditures will depend largely on our ability to, among other things:

●

advance clinical development of our product candidates;

●

manufacture, or have manufactured on our behalf, our preclinical and clinical materials and develop processes for commercial manufacturing of any product candidates that may receive regulatory approval;

●

seek regulatory approvals for any product candidates that successfully complete clinical trials;

●

establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any product candidates for which we may obtain marketing approval and intend to commercialize on our own;

●

establish collaborations to commercialize any product candidates for which we may obtain marketing approval but do not intend to commercialize on our own;

●

expand our operational, financial and management systems and hire additional personnel, including personnel to support our clinical development, quality control, research and development, manufacturing and commercialization efforts, our general and administrative activities and our operations as a public company; and

●

obtain new intellectual property and maintain, expand and protect our intellectual property portfolio.

Sources of Liquidity

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. To date, we have primarily financed our operations through equity and debt financings, including public offerings of our common stock, as well as research grants. We do not have adequate liquidity to fund our operations for at least twelve months from the issuance of these financial statements without raising additional capital and such actions are not solely within our control. If we are unable to raise additional capital, we believe planned expenditures may need to be reduced in order to extend the time period that existing resources can fund our operations. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. As of June 30, 2023, we had cash and cash equivalents of $4,571,777 and short-term investments of $15,828,281.

Until such time, if ever, as we can generate substantial revenue from sales of our bioengineered organs, we expect to finance our cash needs through a combination of equity offerings, debt financings, strategic partnerships and collaborations, as well as other sources. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Additional capital may not be available when needed, on reasonable terms, or at all, and our ability to raise additional capital may be adversely impacted by factors not solely within our control. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, curtail or discontinue our product development or future commercialization efforts, or grant rights to develop and market products that we would otherwise prefer to develop and market ourselves.

Debt Financing

In January 2019, we issued the University a promissory note in the amount of $385,997 in satisfaction of our minimum royalty obligation under the license agreement with the University for the year ended December 31, 2018. The note bears interest at 6% per annum, compounded annually, and is due on January 31, 2025. In addition, we issued the University a 10-year warrant to purchase 20,587 shares of our common stock at an exercise price of $3.75 per share. As of both June 30, 2023 and December 31, 2022, the principal outstanding on this loan was $385,997.

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Registration Statement

We filed a Registration Statement on Form S-3 with the SEC on July 1, 2022, which was declared effective on July 11, 2022 (the “Registration Statement”). The Registration Statement registered the offer and sale of an indeterminate number of shares of common stock and preferred stock, an indeterminate principal amount of debt securities and an indeterminate number of warrants to purchase common stock, preferred stock, and various series of debt securities and warrants to purchase any of such securities, having an aggregate initial offering price of $200.0 million.

Equity Distribution Agreement

On July 1, 2022, we entered into an Equity Distribution Agreement with Piper Sandler & Co. (“Piper Sandler”). The Equity Distribution Agreement provides that, upon the terms and subject to the conditions set forth therein, we may issue and sell through Piper Sandler, acting as the sales agent, shares of our common stock having an aggregate offering price of up to $50.0 million. We have no obligation to sell any such shares under the Equity Distribution Agreement. The sale of the shares of our common stock by Piper Sandler, if any, will be effected pursuant to the Registration Statement. We did not issue any shares under the Equity Distribution Agreement in the six months ended June 30, 2023.

Public Offering

In March 2023, we completed a public offering pursuant to which we sold an aggregate of 6,250,000 shares of our common stock at a public offering price of $1.60 per share. The offering closed on March 10, 2023, resulting in net proceeds of approximately $8.8 million, after deducting underwriting discounts and commissions and other offering expenses.

Employee Retention Credit

On July 31, 2023, we received cash payments totaling $457,143 of the $527,143 employee retention receivable.

Cash Flows

The following table summarizes our sources and uses of cash for each of the periods presented:


	Six Months Ended
	June 30,
	2023		2022
Net cash (used in) provided by:
Operating activities	$	(13,684,036)	$	(13,790,978)
Investing activities		4,224,731		(26,757,741)
Financing activities		8,823,077		330,503
Net decrease in cash and cash equivalents	$	(636,228)	$	(40,218,216)

Operating Activities

Net cash used in operating activities consisted of net losses adjusted for certain non-cash items and changes in operating assets and liabilities.

During the six months ended June 30, 2023, net cash used in operating activities was $13,684,036 and reflected (i) the net loss of $14,010,572, (ii) net non-cash usage items of $865,184, including stock-based compensation of $610,610, depreciation and amortization expense of $579,367, deferred offering costs write-off of $221,254 and non-cash interest income of $77,154, which was partially offset by employee retention credit of $527,143 and amortization of premium/discount on investments of $96,058, and (iii) a net cash outflow from changes in balances of operating assets and liabilities of $538,648. The most significant items comprising the changes in balances of operating assets and liabilities

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were a cash inflow of the receivable from Reprise Biomedical, Inc. of $921,838 and a cash outflow of accounts payable and accrued expenses of $1,544,792.

During the six months ended June 30, 2022, net cash used in operating activities was $13,790,978 and reflected (i) the net loss of $15,385,938, (ii) net non-cash usage items of $1,027,437, including $600,371 of stock-based compensation, $536,507 of depreciation and amortization expense, amortization of premium/discount on investments of $6,734 and $758 of loss on disposal of property and equipment, partially offset by non-cash interest income of $116,933, and (iii) a net cash inflow from changes in balances of operating assets and liabilities of $567,523.

Investing Activities

During the six months ended June 30, 2023, net cash provided by investing activities was $4,224,731, driven by proceeds from the maturity of investments of $14,000,000, partially offset by the purchase of investments of $9,742,734 and property and equipment purchase of $32,535.

During the six months ended June 30, 2022, net cash used by investing activities was $26,757,741 and reflected the purchase of investments of $26,026,125 and property and equipment purchases of $731,616.

Financing Activities

During the six months ended June 30, 2023, net cash provided by financing activities was $8,823,077 and was primarily the result of proceeds from the sale of common stock of $8,867,082, partially offset by payments on financing lease obligations of $29,376 and payments on employee taxes for shares withheld of $14,629.

During the six months ended June 30, 2022, net cash provided by financing activities was $330,503 and was primarily the result of proceeds from stock warrant exercises of $414,098 and proceeds from stock option exercises of $256,883, partially offset by payments on long-term debt of $295,450, payments on financing lease obligations of $26,488 and payments on offering costs of $18,540.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not required for smaller reporting companies.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended June 30, 2023, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were not effective as of June 30, 2023 because of our previously reported material weaknesses in our internal control over financial reporting, which we describe in Part II, Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2022.

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Management is committed to remediating its material weaknesses as promptly as possible and is in the process of implementing its remediation plan. We are in the process of designing, implementing, documenting and testing the effectiveness of our processes, procedures and internal controls over financial reporting. The material weakness cannot be considered completely remediated until the applicable internal controls over financial reporting have operated for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We cannot reasonably assure we will be able to remediate the material weaknesses we have identified or avoid potential future material weaknesses.

Changes in Internal Control over Financial Reporting

As outlined above, due to the identification of the material weaknesses, we continued to design, implement, document and test the effectiveness of our processes, procedures and internal controls over financial reporting. We made no other changes in our internal control over financial reporting that occurred during the fiscal quarter of 2023 covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

We are not presently a party to any litigation the outcome of which, we believe, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, cash flows or financial condition.

Item 1A. Risk Factors

This Quarterly Report on Form 10-Q should be read in conjunction with the risk factors included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on March 31, 2023. Other than as set forth below, there have been no material changes to the risk factors disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

As a result of our limited financial liquidity, we have expressed substantial doubt regarding our ability to continue as a “going concern.”

As a result of our current limited financial liquidity, the notes accompanying our unaudited interim condensed financial statements, which are included as part of this report, contain a statement concerning our ability to continue as a “going concern.” Our limited liquidity could make it more difficult for us to secure additional financing or enter into strategic relationships on terms acceptable to us, if at all, and may materially and adversely affect the terms of any financing that we may obtain and our public stock price generally.

We have incurred losses since inception, negative cash flows from operations, and had an accumulated deficit of approximately $118.0 million as of June 30, 2023. The Company does not have adequate liquidity to fund its operations for at least twelve months from the issuance of these financial statements without raising additional capital and such actions are not solely within the control of the Company. If the Company is unable to raise additional capital, management believes planned expenditures may need to be reduced in order to extend the time period that existing resources can fund the Company’s operations. To date, the Company has funded its operations through the issuance of equity and debt securities, and the receipt of grants. The Company intends to fund ongoing operations by utilizing its current cash, cash equivalents and short-term investments on hand, and by exploring various dilutive and non-dilutive sources of funding, including equity financings, debt financings, strategic partnerships and collaborations, as well as other sources. If the Company is unable to obtain additional capital on commercially reasonable terms, or at all, it would have a material adverse effect on the operations of the Company and the development of its technology, and the Company may have to cease operations altogether. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

None.

Use of Proceeds

On June 28, 2021, we completed our initial public offering on common stock (the “IPO”) in which we sold 5,520,000 shares of common stock at a public offering price of $9.00 per share. The offer and sale of all of the shares in the IPO were registered under the Securities Act pursuant to the Company’s registration statement on Form S-1 (File No. 333-256649), as amended, which was declared effective on June 23, 2021 pursuant to Rule 462(b) under the Securities Act. Craig-Hallum Capital Group acted as sole managing underwriter for the IPO.

We received net proceeds of approximately $44.5 million from the IPO, after paying $342,500 of fees and expenses of Craig-Hallum. We are using the net proceeds from the IPO as follows:

●

between approximately $34.8 million to $40.0 million to fund our research and development activities, including, but not limited to, our Phase I trial for the miroliverELAP product and certain pre-clinical trials for our bioengineered organs;

●

between approximately $3.0 million and $4.0 million to fund the full cost of constructing a new facility; and

●

the remaining funds for working capital and general corporate purposes.

Pending the uses of proceeds above, we have invested in a variety of capital preservation instruments, including short-term, interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the United States government.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

During the three months ended June 30, 2023, no director or officer of the Company adopted, modified or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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Item 6. Exhibits


Exhibit No.	Description
3.1	Second Amended and Restated Certificate of Incorporation of Miromatrix Medical Inc.	Incorporated by reference to Exhibit 3.1 of the Company’s Annual Report on Form 10-K, filed March 30, 2022.
3.2	Amended and Restated Bylaws of Miromatrix Medical Inc.	Incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K, filed June 28, 2021.
10.1	Twelfth Amendment to the License Agreement, dated May 7, 2023, by and between Miromatrix Medical Inc. and Mayo Foundation for Medical Education and Research	Filed herewith.
10.2	Thirteenth Amendment to the License Agreement, dated July 17, 2023, by and between Miromatrix Medical Inc. and Mayo Foundation for Medical Education and Research	Filed herewith.
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith.
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith.
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith.
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith.

101.INS	Inline 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	Filed herewith.
101.SCH	Inline XBRL Taxonomy Extension Schema Document	Filed herewith.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith.
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document	Filed herewith.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith.
104	Cover Page Interactive Data File (embedded within the inline XBRL document)	Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereto, duly authorized.


	MIROMATRIX MEDICAL INC.

Dated: August 14, 2023	By:	/s/ Jeffrey Ross
	Name:	Jeffrey Ross
	Title:	Chief Executive Officer
		(on behalf of Registrant)

Dated: August 14, 2023	By:	/s/ James Douglas
	Name:	James Douglas
	Title:	Chief Financial Officer
		(Principal Financial and Accounting Officer)

Exhibit 10.1

LICENSE AGREEMENT

AMENDMENT #12

WHEREAS, effective as of the 1st day of December, 2024, and as further amended, Miromatrix Medical Inc., a corporation organized under the laws of the State of Delaware and having an office 10399 West 70th Street, Eden Prairie, MN 55344 (“Miromatrix”) and Mayo Foundation for Medical Education and Research, a not for profit corporation with an address at 200 First Street SW, Rochester, MN 55905 (“Mayo”) executed a License Agreement (the “Agreement”) for Services as outlined in the Agreement.

WHEREAS, Miromatrix and Mayo wish to amend said Agreement.

NOW, THEREFORE, Miromatrix and Mayo agree as follows:

Miromatrix has agreed to provide additional funding. Accordingly, the attached Exhibit B-5 shall amend Section 3 of the Agreement.

This Agreement may be executed in any number of counterparts which, when taken together, will constitute one original, and photocopy, facsimile, electronic, or other copies shall have the same effect for all purposes as an ink-signed original. Each Party hereto consents to be bound by photocopy, facsimile or electronic signatures of such Party’s representation hereto.

Except as specifically provided herein, the terms and conditions of the Agreement shall remain in force.

IN WITNESS WHEREOF, the Parties have executed this Amendment which shall be effective as of the last dated signature below.

MIROMATRIX MEDICAL INC.MAYO FOUNDATION FOR MEDICAL

EDUCATION AND RESEARCH

By: /s/ Jeff Ross By: /s/ Brenda L. Burns

Name: Jeff Ross Name: Brenda L. Burns

Title: CEO Title: Operations Manager, Legal Contract Administration

Date: 5/7/2023 Date: 4/25/2023

Budget – Exhibit B-5

Exhibit 10.2

LICENSE AGREEMENT

AMENDMENT #13

WHEREAS, effective as of December 1, 2014, and as further amended, Miromatrix Medical Inc., a corporation organized under the laws of the State of Delaware and having an office 10399 West 70th Street, Eden Prairie, MN 55344 (“Miromatrix”) and Mayo Foundation for Medical Education and Research, a not for profit corporation with an address at 200 First Street SW, Rochester, MN 55905 (“Mayo”) executed a License Agreement (the “Agreement”) for Services as outlined in the Agreement.

WHEREAS, Miromatrix and Mayo wish to amend said Agreement.

NOW, THEREFORE, Miromatrix and Mayo agree as follows:

The Term of the Agreement shall be extended to December 31, 2023.

Except as specifically provided herein, the terms and conditions of the Agreement shall remain in force.

IN WITNESS WHEREOF, the Parties have executed this Amendment which shall be effective as of the last dated signature below.

MIROMATRIX MEDICAL INC.MAYO FOUNDATION FOR MEDICAL

EDUCATION AND RESEARCH

By: /s/ Jeff Ross By: /s/ Julie Johnson

Name: Jeff Ross Name: Julie Johnson

Title: CEO Title: Operations Manager

Date: 7/17/2023 Date: 7/14/2023

Budget – Exhibit B-5

U MAYO CLINIC

PI Name: Scott Nyberg, MD, PhD

MCR Funding Proposal Number: FP86573-A10

Sponsor: Miromatrix Medical Inc.

Date: 10/5/2022

Study Title: Amendment #11: Miromatrix/Mayo Transplantable Liver Project (Nyberg)


		Additional funding to extend project through 6/30/2023 (Amendment #11)**

Personnel:	$	57,467.00

Lab Supplies & Internal Services:	$	208,341.00

Sub-Total	$	265,808.00
Indirects (30%)	$	79,742.00

BUDGET TOTAL (excluding fees)	$	345,550.00
One-time, non-refundable fees:
IACUC Initial Review Fee	$	2,000.00
Total Fees:	$	2,000.00
BUDGET TOTAL	$	347,550.00

Payment Terms: The total budget will be payable in three payments. The first payment of $117,183.33 which includes the $2,000 non-refundable Initial IACUC Review Fee, will be due upon the execution of contract amendment #11, the second payment of $115,183.33 will be due three months after the execution of contract amendment #11. The final payment of $115,183.33 will be due 6 months after the execution of contract amendment #11

*Salary and benefit rate information is confidential. Mayo cannot share individual costs or rate information, as this would be against Mayo policy

**This budget only reflects the additional funds that have added with amendments #11.

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Jeffrey Ross, certify that:

I have reviewed this quarterly report on Form 10-Q of Miromatrix Medical Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2023


	By:	/s/ Jeffrey Ross
	Name:	Jeffrey Ross
	Title:	Chief Executive Officer

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, James Douglas, certify that:

I have reviewed this quarterly report on Form 10-Q of Miromatrix Medical Inc.;

(a)

(b)

(c)

(d)

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2023


	By:	/s/ James Douglas
	Name:	James Douglas
	Title:	Chief Financial Officer

Exhibit 32.1

Certification of CEO Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report of Miromatrix Medical Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2023 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, the undersigned, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

(1)

The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 14, 2023



	By:	/s/ Jeffrey Ross
	Name:	Jeffrey Ross
	Title:	Chief Executive Officer

Exhibit 32.2

Certification of CFO Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(1)

The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 14, 2023



	By:	/s/ James Douglas
	Name:	James Douglas
	Title:	Chief Financial Officer

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2023	Aug. 09, 2023
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	001-40518
Entity Registrant Name	Miromatrix Medical Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	27-1285782
Entity Address, Address Line One	6455 Flying Cloud Drive, Suite 107
Entity Address, City or Town	Eden Prairie
Entity Address State Or Province	MN
Entity Address, Postal Zip Code	55344
City Area Code	952
Local Phone Number	942-6000
Title of 12(b) Security	Common Stock
Trading Symbol	MIRO
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		27,310,553
Entity Central Index Key	0001527096
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Amendment Flag	false

Balance Sheets - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 4,571,777	$ 5,208,005
Restricted cash	800,100	800,100
Short-term investments	15,828,281	19,989,489
Employee retention credit receivable	527,143
Receivable from Reprise Biomedical, Inc.	8,517	930,355
Interest receivable	30,707	107,861
Prepaid expenses and other current assets	114,943	274,952
Total current assets	21,881,468	27,310,762
Deferred offering costs		232,899
Right of use asset	1,570,837	1,673,575
Property and equipment, net	4,998,862	5,545,694
Total assets	28,451,167	34,762,930
Current liabilities:
Current portion of deferred royalties	739,738	979,167
Accounts payable	803,571	1,584,929
Current portion of financing lease obligations	22,506	44,157
Current portion of lease liability	405,566	389,649
Accrued expenses	1,916,104	1,948,376
Total current liabilities	3,887,485	4,946,278
Deferred royalties, net		491,733
Long-term debt	385,997	385,997
Financing lease obligations, net	3,964	11,689
Lease liability, net	2,512,062	2,720,781
Accrued interest	113,409	99,048
Total liabilities	6,902,917	8,655,526
Commitments and contingencies
Shareholders' equity:
Common stock, par value $0.00001; 190,000,000 shares authorized; 27,310,553 issued and outstanding as of June 30, 2023 and 20,944,109 issued and outstanding as of December 31, 2022	273	209
Additional paid-in capital	139,570,460	130,119,106
Accumulated deficit	(118,022,483)	(104,011,911)
Total shareholders' equity	21,548,250	26,107,404
Total liabilities and shareholders' equity	$ 28,451,167	$ 34,762,930

Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
Balance Sheets
Common stock, par value (in dollars per share)	$ 0.00001	$ 0.00001
Common stock, authorized (in shares)	190,000,000	190,000,000
Common stock, issued (in shares)	27,310,553	20,944,109
Common stock, outstanding (in shares)	27,310,553	20,944,109

Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
Statements of Operations - USD ($)	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statements of Operations
Licensing revenue	$ 8,517	$ 3,952	$ 16,498	$ 10,720
Revenue from Contract with Customer, Product and Service	us-gaap:LicenseMember	us-gaap:LicenseMember	us-gaap:LicenseMember	us-gaap:LicenseMember
Cost of goods sold	$ 125,000	$ 125,000	$ 250,000	$ 250,000
Cost, Product and Service	us-gaap:LicenseMember	us-gaap:LicenseMember	us-gaap:LicenseMember	us-gaap:LicenseMember
Gross profit (loss)	$ (116,483)	$ (121,048)	$ (233,502)	$ (239,280)
Operating expenses:
Research and development	3,621,224	4,988,233	8,013,342	8,994,899
Regulatory and clinical	397,448	419,394	803,763	774,632
Quality	515,575	517,333	1,098,917	958,268
General and administration	2,037,682	2,188,460	4,637,917	4,461,017
Total operating expenses	6,571,929	8,113,420	14,553,939	15,188,816
Operating loss	(6,688,412)	(8,234,468)	(14,787,441)	(15,428,096)
Other income (expense)
Interest income	166,162	61,078	268,139	61,848
Interest expense	(8,170)	(8,799)	(18,413)	(19,690)
Employee retention credit			(527,143)
Total other income	157,992	52,279	776,869	42,158
Net loss	$ (6,530,420)	$ (8,182,189)	$ (14,010,572)	$ (15,385,938)
Net loss per share, basic (in dollar per share)	$ (0.24)	$ (0.40)	$ (0.56)	$ (0.75)
Net loss per share, diluted (in dollar per share)	$ (0.24)	$ (0.40)	$ (0.56)	$ (0.75)
Weighted average shares used in computing net loss per share, basic (in shares)	27,250,573	20,615,218	24,897,796	20,547,070
Weighted average shares used in computing net loss per share, diluted (in shares)	27,250,573	20,615,218	24,897,796	20,547,070

Statements of Shareholders' Equity - USD ($)	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Total
Balance at beginning of period at Dec. 31, 2021	$ 204	$ 128,177,594	$ (74,051,914)	$ 54,125,884
Balance at beginning of period (in shares) at Dec. 31, 2021	20,385,645
Increase (Decrease) in Stockholders' Equity
Stock-based compensation expense		600,371		600,371
Exercise of stock options	$ 2	256,881		256,883
Exercise of stock options (in shares)	205,507
Exercise of stock warrants	$ 2	414,096		414,098
Exercise of stock warrants (in shares)	191,559
Issuance of restricted shares (in shares)	31,030
Net Income (Loss)			(15,385,938)	(15,385,938)
Balance at end of period at Jun. 30, 2022	$ 208	129,448,942	(89,437,852)	40,011,298
Balance at end of period (in shares) at Jun. 30, 2022	20,813,741
Balance at beginning of period at Mar. 31, 2022	$ 206	128,712,746	(81,255,663)	47,457,289
Balance at beginning of period (in shares) at Mar. 31, 2022	20,546,583
Increase (Decrease) in Stockholders' Equity
Stock-based compensation expense		266,390		266,390
Exercise of stock options		55,710		55,710
Exercise of stock options (in shares)	44,569
Exercise of stock warrants	$ 2	414,096		414,098
Exercise of stock warrants (in shares)	191,559
Issuance of restricted shares (in shares)	31,030
Net Income (Loss)			(8,182,189)	(8,182,189)
Balance at end of period at Jun. 30, 2022	$ 208	129,448,942	(89,437,852)	40,011,298
Balance at end of period (in shares) at Jun. 30, 2022	20,813,741
Balance at beginning of period at Dec. 31, 2022	$ 209	130,119,106	(104,011,911)	26,107,404
Balance at beginning of period (in shares) at Dec. 31, 2022	20,944,109
Increase (Decrease) in Stockholders' Equity
Stock-based compensation expense		610,610		610,610
Issuance of restricted shares	$ 1	(1)
Issuance of restricted shares (in shares)	116,444
Sales of common stock, net of expenses	$ 63	8,855,374		8,855,437
Sales of common stock, net of expenses (in shares)	6,250,000
Tax withholdings related to net share settlements of stock-based compensation awards		(14,629)		(14,629)
Net Income (Loss)			(14,010,572)	(14,010,572)
Balance at end of period at Jun. 30, 2023	$ 273	139,570,460	(118,022,483)	21,548,250
Balance at end of period (in shares) at Jun. 30, 2023	27,310,553
Balance at beginning of period at Mar. 31, 2023	$ 272	139,291,810	(111,492,063)	27,800,019
Balance at beginning of period (in shares) at Mar. 31, 2023	27,239,938
Increase (Decrease) in Stockholders' Equity
Stock-based compensation expense		278,651		278,651
Issuance of restricted shares	$ 1	(1)
Issuance of restricted shares (in shares)	70,615
Net Income (Loss)			(6,530,420)	(6,530,420)
Balance at end of period at Jun. 30, 2023	$ 273	$ 139,570,460	$ (118,022,483)	$ 21,548,250
Balance at end of period (in shares) at Jun. 30, 2023	27,310,553

Statements of Cash Flows - USD ($)	6 Months Ended
Statements of Cash Flows - USD ($)	Jun. 30, 2023	Jun. 30, 2022
Cash flows from operating activities:
Net loss	$ (14,010,572)	$ (15,385,938)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	579,367	536,507
Stock-based compensation	610,610	600,371
Loss on disposal of property and equipment		758
Non-cash interest income	77,154	(116,933)
Amortization of premium/discount on investments	(96,058)	6,734
Write-off of deferred offering costs	221,254
Employee retention credit	(527,143)
Changes in operating assets and liabilities:
Receivable from Reprise Biomedical, Inc.	921,838	13,867
Prepaid expenses	160,009	86,224
Operating lease right of use asset	102,738	(3,169,736)
Tenant improvement receivable reimbursement		1,256,950
Accounts payable and accrued expenses	(1,544,792)	(925,314)
Accrued interest	14,361	13,624
Operating lease liability	(192,802)	3,291,908
Net cash used in operating activities	(13,684,036)	(13,790,978)
Cash flows from investing activities:
Purchase of investments	(9,742,734)	(26,026,125)
Proceeds from maturity of investments	14,000,000
Purchases of property and equipment	(32,535)	(731,616)
Net cash provided by (used in) investing activities	4,224,731	(26,757,741)
Cash flows from financing activities:
Payments on long-term debt		(295,450)
Payments on financing lease obligations	(29,376)	(26,488)
Payments on offering costs		(18,540)
Proceeds from sale of common stock, net	8,867,082
Employee taxes paid for shares withheld	(14,629)
Proceeds from stock warrant exercises		414,098
Proceeds from stock option exercises		256,883
Net cash provided by financing activities	8,823,077	330,503
Net decrease in cash and cash equivalents	(636,228)	(40,218,216)
Cash, cash equivalents and restricted cash at beginning of period	6,008,105	53,611,631
Cash, cash equivalents and restricted cash at end of period	5,371,877	13,393,415
Cash and cash equivalents	4,571,777	12,593,315
Restricted cash	800,100	800,100
Cash, cash equivalents and restricted cash at end of period	5,371,877	13,393,415
Supplemental disclosure of cash flow information:
Interest paid	$ 4,052	6,066
Purchases of property and equipment in accounts payable and accrued expenses		6,089
Accrued expenses related to deferred offering costs and financing		172,693
Leased assets obtained in exchange for new operating lease liabilities		$ 1,986,172

DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2023

DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 — DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Basis of Preparation

Reclassifications

Use of Estimates

Employee Retention Credit

Emerging Growth Company Status

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

GOING CONCERN

6 Months Ended

Jun. 30, 2023

GOING CONCERN

GOING CONCERN

NOTE 2 — GOING CONCERN

FAIR VALUE MEASUREMENT

6 Months Ended

Jun. 30, 2023

FAIR VALUE MEASUREMENT

FAIR VALUE MEASUREMENT

NOTE 3 — FAIR VALUE MEASUREMENT

Level 1: Inputs that include quoted prices in active markets for identical assets and 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 classifies cash and cash equivalents, as well as restricted cash, as Level 1 in the fair value hierarchy.

INVESTMENTS

6 Months Ended

Jun. 30, 2023

INVESTMENTS

INVESTMENTS

NOTE 4 — INVESTMENTS

The amortized cost and estimated fair values of the Company’s investments as of June 30, 2023 are as follows:


	Amortized		Unrealized		Unrealized		Fair
	Cost		Holding Gains		Holding Losses		Value
Short-term:
U.S. Treasury notes	$	15,828,281	$	—	$	50,181	$	15,778,100
Total	$	15,828,281	$	—	$	50,181	$	15,778,100

PROPERTY AND EQUIPMENT

6 Months Ended

Jun. 30, 2023

PROPERTY AND EQUIPMENT, NET

LAB EQUIPMENT, FURNITURE, LEASEHOLD IMPROVEMENTS AND CONSTRUCTION IN PROGRESS

NOTE 5 — PROPERTY AND EQUIPMENT, NET

Property and equipment consisted of the following as of:


	June 30,		December 31,
	2023		2022
Lab equipment	$	2,009,971	$	1,977,436
Leasehold improvements		3,392,220		3,392,220
Furniture, fixtures and computers		2,022,894		2,022,894
		7,425,085		7,392,550
Less accumulated depreciation and amortization		(2,426,223)		(1,846,856)
	$	4,998,862	$	5,545,694

ACCRUED EXPENSES

6 Months Ended

Jun. 30, 2023

ACCRUED EXPENSES

ACCRUED EXPENSES

NOTE 6 — ACCRUED EXPENSES

Accrued expenses consisted of the following as of:


	June 30,		December 31,
	2023		2022
Wages	$	1,174,792	$	1,434,675
Pre-clinical study costs		393,103		200,000
Research and development consulting		109,200		—
Taxes		75,000		112,974
Legal		25,000		80,794
Key opinion leader compensation		12,650		18,700
Royalties		—		3,422
Other		126,359		97,811
Accrued expenses	$	1,916,104	$	1,948,376

DEBT

6 Months Ended

Jun. 30, 2023

DEBT

DEBT

NOTE 7 — DEBT

Future principal maturities for debt were as follows:


Amounts Due in the Twelve Months Ending June 30,
2024	$	—
2025		385,997
Total future maturities payments		385,997
Less current portion		—
Long-term debt	$	385,997

EQUITY

6 Months Ended

Jun. 30, 2023

EQUITY

EQUITY

NOTE 8 — EQUITY

Common Stock

As of June 30, 2023 and December 31, 2022, there were 27,310,553 and 20,944,109 shares of common stock issued and outstanding, respectively.

Preferred Stock

Equity Incentive Plans

As of June 30, 2023, there were options to purchase 2,309,853 and 266,500 shares of common stock outstanding under the 2010 Plan and 2019 Plan, respectively.

As of June 30, 2023, there were 775,410 shares of common stock available for issuance under future awards granted under the 2021 Plan.

Stock Options

The Company recognizes stock option compensation expense based on the grant date fair value of the award. The Company issues new common shares for stock options exercised.

Stock option activity was as follows:


		Weighted
		Average
		Exercise
	Shares	Price
Options outstanding at December 31, 2022	3,831,686	$	4.12
Granted	462,000	$	2.95
Exercised	—	$	—
Canceled or expired	(242,500)	$	4.60
Options outstanding at June 30, 2023	4,051,186	$	3.96
Options exercisable at June 30, 2023	2,940,311	$	3.89

The weighted average fair value of options granted during the six months ended June 30, 2023 and 2022 was $2.16 and $1.48 per share, respectively.

Restricted Stock Units

RSU activity was as follows:


		Weighted
		Average Grant
		Date Fair
	Shares	Value
Unvested at December 31, 2022	239,198	$	4.20
Granted	381,005	$	1.60
Vested	(116,444)	$	3.62
Canceled	(29,488)	$	4.59
Unvested at June 30, 2023	474,271	$	2.23

Employee Stock Purchase Plan

There were no shares issued under the ESPP during the six months ended June 30, 2023.

Stock Warrants

Stock warrant activity was as follows:


		Weighted
		Average
		Exercise
	Shares	Price
Warrants outstanding December 31, 2022	599,191	$	6.16
Granted	—	$	—
Exercised	—	$	—
Expired	(2,604)	$	2.50
Warrants outstanding June 30, 2023	596,587	$	6.18

SIGNIFICANT CUSTOMERS

6 Months Ended

Jun. 30, 2023

SIGNIFICANT CUSTOMERS

SIGNIFICANT CUSTOMERS

NOTE 9 — SIGNIFICANT CUSTOMERS

COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2023

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

NOTE 10 — COMMITMENTS AND CONTINGENCIES

Patent License Agreement

LEASES

6 Months Ended

Jun. 30, 2023

LEASES

LEASES

NOTE 11 — LEASES

Supplemental condensed balance sheet information for the Company is as follows:


		June 30,		December 31,
Leases	Classification	2023		2022
Assets
Operating lease assets	Right of use asset	$	1,570,837	$	1,673,575
Financing lease assets	Property and equipment, net of accumulated depreciation	$	62,366	$	81,325

Liabilities
Current
Operating	Current portion of lease liability	$	405,566	$	389,649
Financing	Current portion of financing lease obligations	$	22,506	$	44,157
Noncurrent
Operating	Lease liability, net	$	2,512,062	$	2,720,781
Financing	Financing lease obligations, net	$	3,964	$	11,689

Information on the Company’s lease costs is as follows:


		Three Months Ended June 30,
Lease cost	Classification	2023		2022
Operating lease cost	Operating expenses: General and administrative	$	82,885	$	82,885
Financing lease cost
Amortization of leased assets	Depreciation and amortization	$	9,479	$	9,479
Interest on lease liabilities	Interest expense	$	613	$	1,228
Variable lease cost⁽¹⁾	Operating expenses: General and administrative	$	56,145	$	57,090

(1)	Variable lease costs consist primarily of taxes, insurance and common area maintenance costs for the Company’s operating lease.


		Six Months Ended June 30,
Lease cost	Classification	2023		2022
Operating lease cost	Operating expenses: General and administrative	$	165,771	$	163,569
Financing lease cost
Amortization of leased assets	Depreciation and amortization	$	18,959	$	18,959
Interest on lease liabilities	Interest expense	$	1,463	$	2,943
Variable lease cost⁽¹⁾	Operating expenses: General and administrative	$	96,245	$	96,319

(1)	Variable lease costs consist primarily of taxes, insurance and common area maintenance costs for the Company’s operating lease.

Future payments for the Company’s leases are as follows:


Amounts Due in Years Ending	Operating Leases		Financing Leases		Total
2023	$	255,835	$	15,450	$	271,285
2024		527,020		12,030		539,050
2025		542,830		—		542,830
2026		559,115		—		559,115
2027		575,889		—		575,889
Thereafter		847,731		—		847,731
Total lease payments		3,308,420		27,480		3,335,900
Less imputed interest		(390,792)		(1,010)		(391,802)
Present value of lease liabilities	$	2,917,628	$	26,470	$	2,944,098

Additional information related to leases is as follows:


Lease term and discount rate	June 30, 2023
Weighted-average remaining term (years)
Operating lease	5.9
Financing leases	0.9
Weighted-average discount rate
Operating lease	4.2	%
Financing leases	6.9	%

NET LOSS PER SHARE

6 Months Ended

Jun. 30, 2023

NET LOSS PER SHARE

NET LOSS PER SHARE

NOTE 12 — NET LOSS PER SHARE


	Three and Six Months Ended June 30,
	2023	2022
Common stock options outstanding	4,051,186	3,954,756
Restricted stock units	474,271	192,535
Common stock warrants	596,587	599,191
Total common stock equivalents	5,122,044	4,746,482

SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2023

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 13 — SUBSEQUENT EVENTS

On July 31, 2023, the Company received cash payments totaling $457,143 of the $527,143 employee retention receivable.

DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Policies)	6 Months Ended
	Jun. 30, 2023
DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation	Basis of Preparation The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules of the United States (“U.S.”) Securities and Exchange Commission applicable to interim reports of companies filing as a smaller reporting company. These condensed financial statements should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. In the opinion of management, the accompanying condensed financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, stockholders’ equity and cash flows for the interim periods but are not necessarily indicative of the results of operations or cash flows to be anticipated for the full year 2023 or any future period. The Company has evaluated subsequent events occurring after the date of the condensed financial statements for events requiring recording or disclosure in the condensed financial statements.
Reclassifications	Reclassifications Certain reclassifications to previously reported financial information on the Condensed Balance Sheets and Condensed Statements of Operations have been made to conform to the current period presentation.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Employee Retention Credit - CARES Act	Employee Retention Credit Under the provisions of the extension of the Coronavirus Aid, Relief, and Economic Security Act, the Company is eligible for a refundable employee retention credit subject to satisfaction of certain eligibility criteria. The Company qualified for the employee retention credit for the first three quarters of 2020 and the second and third quarters of 2021. The Company recognized $527,143 during the six months ended June 30, 2023, consistent with guidance from International Accounting Standards 20, Accounting for Government Grants and Disclosure of Government Assistance, where the Company must have substantially met the program’s eligibility conditions to record revenue. It was reported as an employee retention credit receivable on the Condensed Balance Sheet and employee retention credit other income on the Condensed Statement of Operations for the six months ended June 30, 2023.
Emerging Growth Company Status	Emerging Growth Company Status The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these condensed financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.
Recently Adopted Accounting Pronouncements	Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements The FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments and an updated ASU 2018-19 that clarifies the scope of the standard in the amendments in ASU 2016-13. This guidance introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. Financial instruments impacted are trade and other receivables, held-to-maturity debt securities, loans and other instruments. The Company adopted the standard effective January 1, 2023, using the modified retrospective approach. The adoption did not have an impact on the Company's financial statements.

INVESTMENTS (Tables)

6 Months Ended

Jun. 30, 2023

INVESTMENTS

Schedule of amortized cost and estimated fair values of investments


	Amortized		Unrealized		Unrealized		Fair
	Cost		Holding Gains		Holding Losses		Value
Short-term:
U.S. Treasury notes	$	15,828,281	$	—	$	50,181	$	15,778,100
Total	$	15,828,281	$	—	$	50,181	$	15,778,100

PROPERTY AND EQUIPMENT (Tables)

6 Months Ended

Jun. 30, 2023

PROPERTY AND EQUIPMENT, NET

Schedule of lab equipment, furniture, leasehold improvements and construction in progress


	June 30,		December 31,
	2023		2022
Lab equipment	$	2,009,971	$	1,977,436
Leasehold improvements		3,392,220		3,392,220
Furniture, fixtures and computers		2,022,894		2,022,894
		7,425,085		7,392,550
Less accumulated depreciation and amortization		(2,426,223)		(1,846,856)
	$	4,998,862	$	5,545,694

ACCRUED EXPENSES (Tables)

6 Months Ended

Jun. 30, 2023

ACCRUED EXPENSES

Schedule of current accrued expenses


	June 30,		December 31,
	2023		2022
Wages	$	1,174,792	$	1,434,675
Pre-clinical study costs		393,103		200,000
Research and development consulting		109,200		—
Taxes		75,000		112,974
Legal		25,000		80,794
Key opinion leader compensation		12,650		18,700
Royalties		—		3,422
Other		126,359		97,811
Accrued expenses	$	1,916,104	$	1,948,376

DEBT (Tables)

6 Months Ended

Jun. 30, 2023

DEBT

Schedule of future principal maturities for debt


Amounts Due in the Twelve Months Ending June 30,
2024	$	—
2025		385,997
Total future maturities payments		385,997
Less current portion		—
Long-term debt	$	385,997

EQUITY (Tables)

6 Months Ended

Jun. 30, 2023

Share-based compensation

Schedule of stock option activity

Stock option activity was as follows:


		Weighted
		Average
		Exercise
	Shares	Price
Options outstanding at December 31, 2022	3,831,686	$	4.12
Granted	462,000	$	2.95
Exercised	—	$	—
Canceled or expired	(242,500)	$	4.60
Options outstanding at June 30, 2023	4,051,186	$	3.96
Options exercisable at June 30, 2023	2,940,311	$	3.89

Schedule of stock warrant activity


		Weighted
		Average
		Exercise
	Shares	Price
Warrants outstanding December 31, 2022	599,191	$	6.16
Granted	—	$	—
Exercised	—	$	—
Expired	(2,604)	$	2.50
Warrants outstanding June 30, 2023	596,587	$	6.18

Restricted stock units

Share-based compensation

Summary of restricted stock unit activity

RSU activity was as follows:


		Weighted
		Average Grant
		Date Fair
	Shares	Value
Unvested at December 31, 2022	239,198	$	4.20
Granted	381,005	$	1.60
Vested	(116,444)	$	3.62
Canceled	(29,488)	$	4.59
Unvested at June 30, 2023	474,271	$	2.23

LEASES (Tables)

6 Months Ended

Jun. 30, 2023

LEASES

Schedule of supplemental condensed balance sheet information


		June 30,		December 31,
Leases	Classification	2023		2022
Assets
Operating lease assets	Right of use asset	$	1,570,837	$	1,673,575
Financing lease assets	Property and equipment, net of accumulated depreciation	$	62,366	$	81,325

Liabilities
Current
Operating	Current portion of lease liability	$	405,566	$	389,649
Financing	Current portion of financing lease obligations	$	22,506	$	44,157
Noncurrent
Operating	Lease liability, net	$	2,512,062	$	2,720,781
Financing	Financing lease obligations, net	$	3,964	$	11,689

Schedule of lease costs


		Three Months Ended June 30,
Lease cost	Classification	2023		2022
Operating lease cost	Operating expenses: General and administrative	$	82,885	$	82,885
Financing lease cost
Amortization of leased assets	Depreciation and amortization	$	9,479	$	9,479
Interest on lease liabilities	Interest expense	$	613	$	1,228
Variable lease cost⁽¹⁾	Operating expenses: General and administrative	$	56,145	$	57,090

(1)	Variable lease costs consist primarily of taxes, insurance and common area maintenance costs for the Company’s operating lease.


		Six Months Ended June 30,
Lease cost	Classification	2023		2022
Operating lease cost	Operating expenses: General and administrative	$	165,771	$	163,569
Financing lease cost
Amortization of leased assets	Depreciation and amortization	$	18,959	$	18,959
Interest on lease liabilities	Interest expense	$	1,463	$	2,943
Variable lease cost⁽¹⁾	Operating expenses: General and administrative	$	96,245	$	96,319

(1)	Variable lease costs consist primarily of taxes, insurance and common area maintenance costs for the Company’s operating lease.

Schedule of future payments, Operating leases

Future payments for the Company’s leases are as follows:


Amounts Due in Years Ending	Operating Leases		Financing Leases		Total
2023	$	255,835	$	15,450	$	271,285
2024		527,020		12,030		539,050
2025		542,830		—		542,830
2026		559,115		—		559,115
2027		575,889		—		575,889
Thereafter		847,731		—		847,731
Total lease payments		3,308,420		27,480		3,335,900
Less imputed interest		(390,792)		(1,010)		(391,802)
Present value of lease liabilities	$	2,917,628	$	26,470	$	2,944,098

Schedule of future payments, Financing leases


Amounts Due in Years Ending	Operating Leases		Financing Leases		Total
2023	$	255,835	$	15,450	$	271,285
2024		527,020		12,030		539,050
2025		542,830		—		542,830
2026		559,115		—		559,115
2027		575,889		—		575,889
Thereafter		847,731		—		847,731
Total lease payments		3,308,420		27,480		3,335,900
Less imputed interest		(390,792)		(1,010)		(391,802)
Present value of lease liabilities	$	2,917,628	$	26,470	$	2,944,098

Schedule of lease term and discount rate


Lease term and discount rate	June 30, 2023
Weighted-average remaining term (years)
Operating lease	5.9
Financing leases	0.9
Weighted-average discount rate
Operating lease	4.2	%
Financing leases	6.9	%

NET LOSS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2023

NET LOSS PER SHARE

Schedule of potentially dilutive securities


	Three and Six Months Ended June 30,
	2023	2022
Common stock options outstanding	4,051,186	3,954,756
Restricted stock units	474,271	192,535
Common stock warrants	596,587	599,191
Total common stock equivalents	5,122,044	4,746,482

DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - Employee Retention Credit (Details)	6 Months Ended
	Jun. 30, 2023 USD ($)
DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Employee retention credit	$ 527,143

GOING CONCERN (Details) - USD ($)	6 Months Ended
GOING CONCERN (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
GOING CONCERN
Accumulated deficit	$ (118,022,483)	$ (104,011,911)
Substantial Doubt about Going Concern, within One Year	true

INVESTMENTS - Amortized Cost and Estimated Fair Value (Details)	Jun. 30, 2023 USD ($)
Investments
Amortized Cost	$ 15,828,281
Unrealized Holding Losses	50,181
Fair Value	15,778,100
U.S. Treasury notes, Short-term
Investments
Amortized Cost	15,828,281
Unrealized Holding Losses	50,181
Fair Value	$ 15,778,100

PROPERTY AND EQUIPMENT, NET (Details) - USD ($)	3 Months Ended		6 Months Ended
PROPERTY AND EQUIPMENT, NET (Details) - USD ($)	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Property and equipment, net
Property and equipment, gross	$ 7,425,085		$ 7,425,085		$ 7,392,550
Less accumulated depreciation and amortization	(2,426,223)		(2,426,223)		(1,846,856)
Property and equipment, net	4,998,862		4,998,862		5,545,694
Depreciation and amortization	289,439	$ 273,610	579,367	$ 536,507
Lab equipment
Property and equipment, net
Property and equipment, gross	2,009,971		2,009,971		1,977,436
Leasehold improvements
Property and equipment, net
Property and equipment, gross	3,392,220		3,392,220		3,392,220
Furniture and fixtures & computers
Property and equipment, net
Property and equipment, gross	$ 2,022,894		$ 2,022,894		$ 2,022,894

ACCRUED EXPENSES (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
ACCRUED EXPENSES
Wages	$ 1,174,792	$ 1,434,675
Pre-clinical study costs	393,103	200,000
Research and development consulting	109,200
Taxes	75,000	112,974
Legal	25,000	80,794
Key opinion leader compensation	12,650	18,700
Royalties		3,422
Other	126,359	97,811
Accrued expenses	$ 1,916,104	$ 1,948,376

DEBT - Agreements (Details) - USD ($)	1 Months Ended
DEBT - Agreements (Details) - USD ($)	Jan. 31, 2019	Jun. 30, 2023	Dec. 31, 2022
Debt
Long-term debt outstanding		$ 385,997
Warrants, University of Minnesota
Debt
Term of warrant	10 years
Number of warrants issued	20,587
Warrant exercise price (in dollars per share)	$ 3.75
Promissory Note, University of Minnesota, Due January 31, 2025
Debt
Face value of debt	$ 385,997
Interest rate (as a percent)	6.00%
Long-term debt outstanding		$ 385,997	$ 385,997

DEBT - Debt Maturities (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Amounts Due in the Twelve Months Ending June 30
2025	$ 385,997
Total future maturities payments	385,997
Long-term debt	$ 385,997	$ 385,997

EQUITY - Common Stock (Details)		1 Months Ended	6 Months Ended
EQUITY - Common Stock (Details)	Jul. 11, 2022 USD ($)	Mar. 31, 2023 USD ($) $ / shares shares	Jun. 30, 2023 USD ($) Vote $ / shares shares	Dec. 31, 2022 $ / shares shares
Capital stock
Common stock, authorized (in shares) \| shares			190,000,000	190,000,000
Common stock, par value (in dollars per share) \| $ / shares			$ 0.00001	$ 0.00001
Number of votes \| Vote			1
Write-off of deferred offering costs			$ 221,254
Common stock, issued (in shares) \| shares			27,310,553	20,944,109
Common stock, outstanding (in shares) \| shares			27,310,553	20,944,109
2022 shelf registration
Capital stock
Deferred offering costs	$ 232,899
Initial offering price	$ 200,000,000
Offering costs recorded to additional paid-in capital		$ 11,645
Write-off of deferred offering costs		$ 221,254
March 2023 Offering
Capital stock
Sale of common stock (in shares) \| shares		6,250,000
Share price (in dollars per share) \| $ / shares		$ 1.60
Gross proceeds from sale of common stock		$ 10,000,000
Net proceeds from sale of stock after deducting underwriting discounts and commissions and other offering expenses		$ 8,800,000

EQUITY - Preferred Stock (Details) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
EQUITY
Preferred stock , authorized (in shares)	10,000,000	10,000,000
Preferred stock, par value (in dollars per share)	$ 0.00001	$ 0.00001
Preferred stock, issued (in shares)	0	0

EQUITY - Equity Incentive Plans (Details) - shares	Jan. 01, 2023	Jan. 01, 2022	Jun. 30, 2023	Dec. 31, 2022
Share-based compensation
Options outstanding (in shares)			4,051,186	3,831,686
2010 Plan
Share-based compensation
Options outstanding (in shares)			2,309,853
2019 Plan
Share-based compensation
Options outstanding (in shares)			266,500
2021 Plan
Share-based compensation
Maximum annual increase in shares reserved for issuance, as a percent of total shares of common stock outstanding		4.50%
Maximum number of additional shares reserved for issuance annually		600,000
Increase in number of shares reserved for issuance during the period	600,000
Options outstanding (in shares)			1,474,833
Number of shares of common stock available for issuance			775,410
2021 Plan \| Restricted stock units
Share-based compensation
Units outstanding (in shares)			474,271

EQUITY - Stock Option Activity (Details) - USD ($)	3 Months Ended		6 Months Ended
EQUITY - Stock Option Activity (Details) - USD ($)	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Summary of options granted - Shares
Options outstanding at beginning of the period (in shares)			3,831,686
Granted (in shares)			462,000
Canceled or expired (in shares)			(242,500)
Options outstanding at end of the period (in shares)	4,051,186		4,051,186
Options exercisable (in shares)	2,940,311		2,940,311
Summary of options granted - Weighted Average Exercise Price
Options outstanding at beginning of the period (in dollars per share)			$ 4.12
Granted (in dollars per share)			2.95
Canceled or expired (in dollars per share)			4.60
Options outstanding at end of the period (in dollars per share)	$ 3.96		3.96
Options exercisable (in dollars per share)	$ 3.89		3.89
Weighted average fair value of options granted (in dollars per share)			$ 2.16	$ 1.48
Employee Stock Option
Summary of options granted - Weighted Average Exercise Price
Stock based compensation	$ 150,849	$ 141,773	$ 333,055	$ 332,589
Employee Stock Option \| Nonemployee, Key opinion leaders
Summary of options granted - Weighted Average Exercise Price
Increase (decrease) in stock-based compensation accrued balance related to key opinion leaders	$ 2,650	$ 1,400	$ (6,050)	$ (11,475)

EQUITY - Restricted Stock Unit Activity (Details) - Restricted stock units - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Share-based compensation
Number of common shares issued upon vesting of each RSU			1
Summary of RSU activity, Shares
Unvested at beginning of the year			239,198
Granted (in shares)			381,005
Vested (in shares)			(116,444)
Canceled (in shares)			(29,488)
Unvested at end of the year	474,271		474,271
Summary of RSU activity, Weighted Average Grant Date Fair Value
Granted, Weighted average grant date fair value (in dollars per share)			$ 1.60
Vested, Weighted average grant date fair value (in dollars per share)			3.62
Canceled, Weighted average grant date fair value (in dollars per share)			4.59
Unvested, Weighted average grant date fair value (in dollars per share)	$ 2.23		$ 2.23		$ 4.20
Stock based compensation	$ 130,452	$ 126,017	$ 271,505	$ 256,307

EQUITY - Employee Stock Purchase Plan (Details) - 2021 ESPP - shares		6 Months Ended	12 Months Ended
	Jan. 01, 2023	Jun. 30, 2023	Dec. 31, 2021	Dec. 31, 2022
Share-based compensation
Number of shares reserved for issuance			300,000
Maximum annual increase in shares reserved for issuance, as a percent of total shares of common stock outstanding			1.00%
Maximum number of additional shares reserved for issuance annually			200,000
Stock available for issuance (in shares)				500,000
Automatic increase in shares reserved for issuance (in shares)	200,000
Number of shares issued, ESPP		0

EQUITY - Stock Warrant Activity (Details) - $ / shares	6 Months Ended
EQUITY - Stock Warrant Activity (Details) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
Summary of stock warrant activity, Shares
Warrants outstanding, beginning balance (in shares)	599,191
Expired (in shares)	(2,604)
Warrants outstanding, ending balance (in shares)	596,587
Summary of stock warrant activity, Weighted Average Exercise Price
Expired (in dollars per share)	$ 2.50
Outstanding (in dollars per share)	$ 6.18	$ 6.16

SIGNIFICANT CUSTOMERS (Details)	3 Months Ended		6 Months Ended
SIGNIFICANT CUSTOMERS (Details)	Jun. 30, 2023 USD ($) customer	Jun. 30, 2022 USD ($) customer	Jun. 30, 2023 USD ($) customer	Jun. 30, 2022 USD ($) customer	Dec. 31, 2022 USD ($)
SIGNIFICANT CUSTOMERS
Net sales	$ 8,517	$ 3,952	$ 16,498	$ 10,720
Reprise Biomedical, Inc. \| Patent and Know-How License Agreement
SIGNIFICANT CUSTOMERS
Net sales	8,517	$ 3,952	16,498	$ 10,720
Long term receivables	$ 700,436		$ 700,436		$ 466,934
Revenue \| Customer \| One customer
SIGNIFICANT CUSTOMERS
Number of customers \| customer	1	1	1	1
Concentration risk, percentage	100.00%	100.00%	100.00%	100.00%

COMMITMENTS AND CONTINGENCIES - Patent License Agreement (Details)	Jun. 30, 2023 USD ($)
University \| Patent License Agreement
Agreements
Minimum royalty payments to be paid per year	$ 500,000
Reprise Biomedical, Inc. \| Patent and Know-How License Agreement
Agreements
Minimum royalty payments to be received per year from related party	$ 500,000

LEASES - Agreements (Details) - Building	1 Months Ended	3 Months Ended
LEASES - Agreements (Details) - Building	Aug. 31, 2021 item	Mar. 31, 2022 USD ($)
Leases
Number of options to extend \| item	1
Option to extend term	5 years
Tenant improvement allowance received during the period \| $		$ 1,256,950

LEASES - Balance Sheet Information (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Assets
Operating lease assets, Right of use asset	$ 1,570,837	$ 1,673,575
Financing lease assets	$ 62,366	81,325
Finance Lease, Right-of-Use Asset, Statement of Financial Position	Property and equipment, net
Liabilities
Current Operating - Current portion of lease liability	$ 405,566	389,649
Current Financing - Current portion of financing lease obligations	22,506	44,157
Noncurrent Operating - Lease liability, net	2,512,062	2,720,781
Noncurrent Financing - Financing lease obligations, net	$ 3,964	$ 11,689

LEASES - Lease costs (Details) - USD ($)	3 Months Ended		6 Months Ended
LEASES - Lease costs (Details) - USD ($)	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Lease cost
Operating lease cost - Operating expenses: General and administrative	$ 82,885	$ 82,885	$ 165,771	$ 163,569
Financing lease cost
Amortization of leased assets - Depreciation and amortization	9,479	9,479	18,959	18,959
Interest on lease liabilities - Interest expense	613	1,228	1,463	2,943
Variable lease cost - Operating expenses: General and administrative	$ 56,145	$ 57,090	$ 96,245	$ 96,319

LEASES - Lease payments (Details)	Jun. 30, 2023 USD ($)
Operating Leases
Remainder of 2023	$ 255,835
2024	527,020
2025	542,830
2026	559,115
2027	575,889
Thereafter	847,731
Total lease payments	3,308,420
Less imputed interest	(390,792)
Present value of lease liabilities	$ 2,917,628
Operating Lease, Liability, Statement of Financial Position	Current portion of lease liability, Lease liability, net
Financing Leases
2023, Remainder of fiscal year	$ 15,450
2024	12,030
Total lease payments	27,480
Less imputed interest	(1,010)
Present value of lease liabilities	$ 26,470
Finance Lease, Liability, Statement of Financial Position	Current portion of financing lease obligations, Financing lease obligations, net
Total Operating and Financing Leases
2023, Remainder of fiscal year	$ 271,285
2024	539,050
2025	542,830
2026	559,115
2027	575,889
Thereafter	847,731
Total lease payments	3,335,900
Less imputed interest	(391,802)
Present value of lease liabilities	$ 2,944,098

LEASES - Additional information (Details)	Jun. 30, 2023
LEASES
Weighted-average remaining term (in years) - Operating leases	5 years 10 months 24 days
Weighted-average remaining term (in years) - Financing leases	10 months 24 days
Weighted-average discount rate - Operating lease (as a percent)	4.20%
Weighted-average discount rate - Financing lease (as a percent)	6.90%

NET LOSS PER SHARE (Details) - shares	6 Months Ended
NET LOSS PER SHARE (Details) - shares	Jun. 30, 2023	Jun. 30, 2022
NET LOSS PER SHARE
Potentially dilutive securities	5,122,044	4,746,482
Employee Stock Option [Member]
NET LOSS PER SHARE
Potentially dilutive securities	4,051,186	3,954,756
Restricted stock units
NET LOSS PER SHARE
Potentially dilutive securities	474,271	192,535
Common stock warrants
NET LOSS PER SHARE
Potentially dilutive securities	596,587	599,191

SUBSEQUENT EVENTS (Details) - USD ($)	Jul. 31, 2023	Jun. 30, 2023
SUBSEQUENT EVENTS
Employee retention credit receivable		$ 527,143
Subsequent event
SUBSEQUENT EVENTS
Cash proceeds related to employee retention receivable	$ 457,143

Pay vs Performance Disclosure - USD ($)	3 Months Ended		6 Months Ended
Pay vs Performance Disclosure - USD ($)	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Pay vs Performance Disclosure
Net Income (Loss)	$ (6,530,420)	$ (8,182,189)	$ (14,010,572)	$ (15,385,938)

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Jun. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

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