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b

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 March 31, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to _______________

Commission File Number: 001-41455

 

MAIA BIOTECHNOLOGY, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

83-1495913

( State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

444 West Lake Street, Suite 1700

Chicago, IL

60606

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (312) 416-8592

 

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

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

 

MAIA

 

NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 


 

As of May 5, 2023 the registrant had 13,625,925 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 


 

 

 

 


2. Table of Contents

 

Page

PART I.

FINANCIAL INFORMATION

Item 1.

Financial Statements

1

Condensed Consolidated Balance Sheets as of March 31, 2023 (Unaudited) and December 31, 2022

1

Condensed Consolidated Statements of Operations (Unaudited) for the three months ended March 31, 2023 and 2022

2

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the three months ended March 31, 2023 and 2022

3

 

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) for the three months ended March 31, 2023 and 2022

4

Condensed Consolidated Statements of Cash Flows (Unaudited) for the three months ended March 31, 2023 and 2022

6

Notes to Unaudited Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

26

Item 4.

Controls and Procedures

26

PART II.

OTHER INFORMATION

Item 1.

Legal Proceedings

28

Item 1A.

Risk Factors

28

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

28

Item 3.

Defaults Upon Senior Securities

29

Item 4.

Mine Safety Disclosures

29

Item 5.

Other Information

29

Item 6.

Exhibits

30

Signatures

31

 

i


 

PART I—FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

MAIA Biotechnology, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

 

 

March 31,
2023

 

 

December 31,
2022

 

 

 

(unaudited)

 

 

 

 

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash

 

$

7,586,312

 

 

$

10,950,927

 

Prepaid expenses and other current assets

 

 

398,874

 

 

 

554,321

 

Australia research and development incentives receivable

 

 

348,379

 

 

 

302,789

 

Total current assets

 

 

8,333,565

 

 

 

11,808,037

 

Deferred offering costs

 

 

737,688

 

 

 

211,203

 

Other assets

 

 

2,800

 

 

 

2,800

 

Total assets

 

$

9,074,053

 

 

$

12,022,040

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

1,127,412

 

 

$

1,165,505

 

Accrued expenses

 

 

2,639,034

 

 

 

2,103,401

 

Total current liabilities

 

 

3,766,446

 

 

 

3,268,906

 

Long term liabilities:

 

 

 

 

 

 

Warrant liability

 

 

224,399

 

 

 

245,341

 

Total liabilities

 

 

3,990,845

 

 

 

3,514,247

 

Commitments and contingencies (Note 5)

 

 

 

 

Stockholders' equity (deficit)

 

 

 

 

  Preferred stock, $0.0001 par value, 30,000,000 shares
     authorized at March 31, 2023 and December 31, 2022,
     
0 shares issued and outstanding

 

 

 

 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Common stock, $0.0001 par value, 70,000,000 shares authorized at March 31, 2023
     and December 31, 2022,
10,996,404 and 10,955,904 shares issued
     and outstanding at March 31, 2023 and December 31, 2022, respectively

 

 

1,100

 

 

 

1,096

 

Additional paid-in capital

 

 

53,431,530

 

 

 

52,729,942

 

Accumulated deficit

 

 

(48,324,148

)

 

 

(44,207,272

)

Accumulated other comprehensive loss

 

 

(25,274

)

 

 

(15,973

)

Total stockholders' equity

 

 

5,083,208

 

 

 

8,507,793

 

Total liabilities and stockholders' equity

 

$

9,074,053

 

 

$

12,022,040

 

See the accompanying notes to the unaudited condensed consolidated financial statements.

1


 

MAIA Biotechnology, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

 

For the Three Months Ended March 31,

 

 

 

 

 

 

 

2023

 

 

2022

 

 

 

 

Operating expenses:

 

 

Research and development expenses

$

2,195,991

 

$

2,077,329

 

General and administrative expenses

 

1,988,259

 

 

1,366,229

 

Total operating expenses

 

4,184,250

 

 

3,443,558

 

Loss from operations

 

(4,184,250

)

 

(3,443,558

)

 

 

 

Other (expense) income:

 

 

Interest expense

 

(5,147

)

 

 

Interest income

 

336

 

 

472

 

Australian research and development
   incentives

 

 

51,243

 

 

 

29,241

 

Change in fair value of warrant liability

 

20,942

 

 

 

Other income, net

 

67,374

 

 

29,713

 

 

 

 

Net loss

 

(4,116,876

)

 

(3,413,845

)

Deemed dividend on warrant modification

 

 

 

 

 

(450,578

)

Net loss attributable to MAIA Biotechnology, Inc.
  shareholders

$

(4,116,876

)

$

(3,864,423

)

 

 

 

Net loss per share

 

 

Basic and diluted

$

(0.38

)

$

(0.50

)

 

 

 

Weighted average common shares outstanding Basic and
   diluted

 

10,977,054

 

 

7,752,042

 

 

 

See the accompanying notes to the unaudited condensed consolidated financial statements.

 

2


 

MAIA Biotechnology, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

 

 

Three Months Ended
March 31,

 

 

 

 

 

 

 

2023

 

 

2022

 


Net loss

$

(4,116,876

)

$

(3,864,423

)

 Foreign currency translation adjustment

 

(9,301

)

 

1,721

 

Comprehensive loss

$

(4,126,177

)

$

(3,862,702

)

 

See the accompanying notes to the unaudited condensed consolidated financial statements.

3


 

MAIA Biotechnology, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)

 

For the Three Months Ended

 

March 31, 2023

 

 

 

Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional Paid-In Capital

 

 

Accumulated Deficit

 

 

Accumulated other comprehensive loss

 

 

Total
Stockholders'
Equity

 

Balance at December 31, 2022

 

 

 

 

$

 

 

 

10,955,904

 

 

$

1,096

 

 

$

52,729,942

 

 

$

(44,207,272

)

 

$

(15,973

)

 

$

8,507,793

 

Issuance of restricted stock

 

 

 

 

 

 

 

 

40,500

 

 

 

4

 

 

 

164,066

 

 

 

 

 

 

 

 

164,070

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

537,522

 

 

 

 

 

 

 

 

 

537,522

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,301

)

 

 

(9,301

)

        Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,116,876

)

 

 

 

 

 

(4,116,876

)

Balance at March 31, 2023

 

 

 

 

$

 

 

 

10,996,404

 

 

$

1,100

 

 

$

53,431,530

 

 

$

(48,324,148

)

 

$

(25,274

)

 

$

5,083,208

 

See the accompanying notes to the unaudited condensed consolidated financial statements.

 

4


 

 

MAIA Biotechnology, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)

 

For the Three Months Ended

 

March 31, 2022

 

 

 

Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional Paid-In Capital

 

 

Accumulated Deficit

 

 

Accumulated Other Comprehensive Income

 

 

Total
Stockholders'
Equity

 

Balance at December 31, 2021

 

 

 

 

$

 

 

 

7,584,980

 

 

$

758

 

 

$

37,618,438

 

 

$

(28,437,993

)

 

$

 

 

$

9,181,203

 

Issuance of common shares upon exercise of stock options

 

 

 

 

 

 

 

 

26,500

 

 

 

3

 

 

 

47,697

 

 

 

 

 

 

 

 

 

47,700

 

Issuance of common shares upon exercise of warrants

 

 

 

 

 

 

 

 

61,111

 

 

 

6

 

 

 

109,994

 

 

 

 

 

 

 

 

 

110,000

 

Issuance of common shares in connection with Equity Financing

 

 

 

 

 

 

 

 

263,729

 

 

 

27

 

 

 

2,373,534

 

 

 

 

 

 

 

 

 

2,373,561

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

713,330

 

 

 

 

 

 

 

 

 

713,330

 

Modification of warrant in equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

450,478

 

 

 

 

 

 

 

 

 

 

Deemed dividend on modification of warrant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(450,478

)

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,721

 

 

 

1,721

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,413,845

)

 

 

 

 

 

(3,413,845

)

Balance at March 31, 2022

 

 

 

 

$

 

 

 

7,936,320

 

 

$

794

 

 

$

40,862,993

 

 

$

(31,851,838

)

 

$

1,721

 

 

$

9,013,670

 

 

See the accompanying notes to the unaudited condensed consolidated financial statements.

5


 

MAIA Biotechnology, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

Three Months Ended
March 31,

 

 

 

 

2023

 

2022

 

Cash flows from operating activities:

 

 

 

Net loss, including noncontrolling interests

 

$

(4,116,876

)

 

$

(3,413,845

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

Stock-based compensation

 

 

537,522

 

 

713,330

 

Consulting expense for restricted shares issued

 

 

164,070

 

 

 

 

Change in fair value of warrant liability

 

 

(20,942

)

 

 

Change in operating assets and liabilities:

 

 

 

 

 

Prepaid expenses and other current assets

 

 

153,775

 

 

 

(134,341

)

Australia research and development incentives receivable

 

 

(51,243

)

 

 

Other assets

 

 

 

 

 

322

 

Accounts payable

 

 

(35,163

)

 

(67,120

)

Accrued expenses

 

 

534,693

 

 

352,874

 

Deferred offering costs

 

 

(526,485

)

 

 

(262,093

)

Deferred compensation

 

 

 

 

 

3,062

 

Net cash used in operating activities

 

 

(3,360,649

)

 

(2,807,811

)

Cash flows from financing activities:

 

 

 

Proceeds from issuance of common stock, net of transaction
     costs

 

 

 

 

2,373,561

 

Proceeds from exercise of stock options

 

 

 

 

47,700

 

Proceeds from exercise of warrants

 

 

 

 

110,000

 

Proceeds from sale of common stock in initial public offering

 

 

 

 

 

 

Payment of initial public offering transaction costs

 

 

 

 

 

 

Payment on loan payable to officer

 

 

 

 

 

Net cash provided by financing activities

 

 

 

 

2,531,261

 

Net effect of foreign currency exchange on cash

 

 

(3,966

)

 

(4,282

)

Net decrease in cash

 

 

(3,364,615

)

 

 

(280,832

)

Cash at beginning of period

 

 

10,950,927

 

 

10,574,292

 

Cash at end of period

 

$

7,586,312

 

$

10,293,460

 

 

See the accompanying notes to the unaudited condensed consolidated financial statements.

6


 

MAIA Biotechnology, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

1.
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business, Organization, and Principles of Consolidation

MAIA Biotechnology, Inc. and Subsidiaries (collectively, "the Company") is a biopharmaceutical company that develops oncology drug candidates to improve and extend the lives of people with cancer. MAIA Biotechnology, Inc. ("MAIA") was incorporated in the state of Delaware on August 3, 2018. These consolidated financial statements include the accounts of MAIA and its subsidiaries, as follows:

THIO Therapeutics, Inc. ("THIO"), incorporated in the state of Delaware on November 26, 2018. On August 13, 2021, MAIA and THIO completed a plan of reorganization in which THIO merged with and into MAIA. Prior to the merger, MAIA owned 93.3% of the outstanding shares of THIO common stock, which were canceled in connection with the merger. The remaining 6.7% minority stockholder of THIO received one share of MAIA common stock for each share of THIO common stock owned prior to the merger.
DGD Pharmaceuticals Corporation ("DGD"), incorporated in the state of Delaware of April 1, 2019. In July 2020, the board of directors approved the dissolution of DGD, and shortly thereafter also approved a special dividend/return of capital to its stockholders. On August 13, 2021, DGD was officially dissolved via a filing of a Certificate of Dissolution with the state of Delaware.
MAIA Drug Development Corporation ("MAIA DD") incorporated in the state of Texas on September 10, 2018, and was 100% owned by MAIA, until MAIA DD was legally dissolved in July 2021. The operations of MAIA DD were nominal.
In July 2021, the Company established a wholly owned Australian subsidiary, MAIA Biotechnology Australia Pty Ltd, to conduct various pre-clinical and clinical activities for the development of the Company's product candidates.
In April 2022, the Company established a wholly owned Romanian subsidiary, MAIA Biotechnology Romania S.R.L., to conduct various pre-clinical and clinical activities for the development of the Company's product candidates.

Going Concern Considerations

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

To date the Company has incurred recurring losses, negative cash flow from operations and has accumulated a deficit of $48,324,148 from the Company’s inception through March 31, 2023. As of March 31, 2023, the Company had $7,586,312 in cash and cash equivalents.

To meet the Company’s future working capital needs, the Company will need to raise additional equity or enter into debt financing. While the Company has historically been able to raise additional capital through issuance of equity and/or debt financing, and while the Company has implemented a plan to control its expenses in order to satisfy its obligations due within one year from the date of issuance of these financial statements, the Company cannot guarantee that it will be able to raise additional equity, raise debt, or contain expenses. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern within one year after these financial statements are issued.

Basis of Presentation

Basis of presentation and consolidation principles

7


 

The accompanying condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated financial statements may not include all disclosures required by GAAP; however, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and the notes thereto for the fiscal year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K filed on March 24, 2023. The condensed consolidated balance sheet as of December 31, 2022 was derived from the audited financial statements.

 

In the opinion of management, all adjustments, consisting of only normal recurring adjustments that are necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, have been made. The results of operations for the interim periods are not necessarily indicative of the operating results for the full fiscal year or any future periods.

The unaudited interim condensed consolidated financial statements include the accounts of the Company's wholly owned subsidiaries. All transactions and accounts between and among its subsidiaries have been eliminated. All adjustments and disclosures necessary for a fair presentation of these unaudited interim condensed consolidated financial statements have been included.

Segment Information

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision-maker in deciding how to allocate resources and assess performance. The Company and the Company’s chief operating decision-maker, the Company’s Chief Executive Officer, views the Company’s operations and manages its business as a single operating segment, which is the business of discovering and developing products for the treatment of immunotherapies for cancer.

Use of Estimates

The preparation of the Company’s unaudited interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The most significant estimates in the Company’s financial statements relate to the valuation of common stock, stock options and warrants, the embedded features in convertible notes, and accruals for outsourced research and development activities. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

Certain Risks and Uncertainties

The Company’s activities are subject to significant risks and uncertainties including the risk of failure to secure additional funding to properly execute the Company’s business plan. The Company is subject to risks that are common to companies in the pharmaceutical industry, including, but not limited to, development by the Company or its competitors of new technological innovations, dependence on key personnel, reliance on third party manufacturers, protection of proprietary technology, and compliance with regulatory requirements.

 

Foreign Currency Translation

 

The financial statements of the Company’s foreign subsidiaries, where the local currency is the functional currency, are translated using exchange rates in effect as of the applicable balance sheet dates for assets and liabilities and average exchange rates during the period for results of operations. The resulting foreign currency translation adjustment is included in shareholders’ equity as accumulated other comprehensive loss.

8


 

Off-Balance Sheet Risk and Concentrations of Credit Risk

The Company has no significant off-balance sheet risks, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Cash accounts are maintained at financial institutions that potentially subject the Company to concentrations of credit risk. At March 31, 2023 and December 31, 2022, substantially all of the Company’s cash was deposited in accounts at one financial institution. The Company maintains its cash deposits, which at times may exceed the federally insured limits, with a reputable financial institution and, accordingly, the Company believes such funds are subject to minimal credit risk.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with maturities of three months or less to be cash equivalents. As of March 31, 2023 and December 31, 2022, cash includes cash in a depository bank account; the Company has no cash equivalents as of March 31, 2023 or December 31, 2022.

Fair Value Measurements

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. “Accounting Standards Codification (ASC) Topic 820”, Fair Value Measurements and Disclosures (“ASC 820”) establishes a hierarchy of inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the observable inputs be used when available.

 

Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1 - Valuations based on quoted prices for identical assets and liabilities in active markets.
Level 2 - Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
Level 3 - Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management as of and during the three months ended March 31, 2023, and as of and during the twelve months ended December 31, 2022. The carrying amount of accounts payable approximated fair value as they are short term in nature. The fair value of warrants issued for services is estimated based on the Black-Scholes model during the three months ended March 31, 2022 and the three months ended March 31, 2023 . The estimated fair value of warrants issued to underwriters and embedded features, represented Level 3 measurements.

General and Administrative

General and administrative expenses primarily consist of costs for corporate functions, including payroll and related expenses, rent, outside legal expenses, insurance costs, and other general and administrative costs.

Research and Development

The Company’s research and development expenses consist primarily of costs associated with the Company’s clinical trials, salaries, payroll taxes, employee benefits, and stock-based compensation charges for those individuals involved in ongoing research and development efforts. Research and development costs are expensed as incurred.

9


 

Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received.

As part of the process of preparing the condensed consolidated financial statements, the Company is required to estimate its accrued expenses. This process involves reviewing quotations and contracts, identifying services that have been performed on the Company’s behalf and estimating the level of service performed and the associated cost incurred for the service when the Company has not yet been invoiced or otherwise notified of the actual cost. The majority of the Company’s service providers invoice the Company monthly in arrears for services performed or when contractual milestones are met. The Company makes estimates of its accrued expenses as of each balance sheet date in our consolidated financial statements based on facts and circumstances known to the Company at that time. The Company periodically confirms the accuracy of its estimates with the service providers and makes adjustments if necessary. The significant estimates in the Company’s accrued research and development expenses are related to expenses incurred with respect to CROs, CMOs and other vendors in connection with research and development and manufacturing activities.

The Company bases its expense related to CROs and CMOs on its estimates of the services received and efforts expended pursuant to quotations and contracts with such vendors that conduct research and development and manufacturing activities on the Company’s behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to the Company’s vendors will exceed the level of services provided and result in a prepayment of the applicable research and development or manufacturing expense. In accruing service fees, the Company estimates the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from its estimate, the Company adjusts the accrual or prepaid expense accordingly. Although the Company does not expect its estimates to be materially different from amounts actually incurred, the Company’s understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and could result in us reporting amounts that are too high or too low in any particular period. There have been no material changes in estimates for the periods presented.

Research and Development Incentive

The Company recognizes other income from Australian research and development incentives when there is reasonable assurance that the income will be received, the relevant expenditure has been incurred, and the consideration can be reliably measured. The research and development incentive is one of the key elements of the Australian Government’s support for Australia’s innovation system and is supported by legislative law primarily in the form of the Australian Income Tax Assessment Act 1997, as long as eligibility criteria are met. Under the program, a percentage of eligible research and development expenses incurred by the Company through its subsidiary in Australia are reimbursed.

Management has assessed the Company’s research and development activities and expenditures to determine which activities and expenditures are likely to be eligible under the research and development incentive regime described above. At each period end, management estimates the refundable tax offset available to the Company based on available information at the time and it is included in Australian research and development incentives in the condensed consolidated statements of operations.

Derivative Financial Instruments

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, to determine if such instruments contain features that qualify as embedded derivatives.

Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met. The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract. Bifurcated embedded derivatives are recognized at fair value, with changes in fair value recognized in the statement of operations each period.

10


 

Stock-Based Compensation

The Company records share-based compensation for awards granted to employees, non-employees, and to members of the board of directors based on the grant date fair value of awards issued, and the expense is recorded on a straight-line basis over the requisite service period. Forfeitures are recognized when they occur.

The Company uses the Black-Scholes-Merton option pricing model to determine the fair value of stock options and warrants. The use of the Black-Scholes-Merton option-pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the common stock. The Company has concluded that its historical share option exercise experience does not provide a reasonable basis upon which to estimate expected term. Therefore, the expected term was determined according to the simplified method, which is the average of the vesting tranche dates and the contractual term. Due to the lack of company specific historical and implied volatility data, the estimate of expected volatility is primarily based on the historical volatility of a group of similar companies that are publicly traded. For these analyses, companies with comparable characteristics are selected, including enterprise value and position within the industry, and with historical share price information sufficient to meet the expected life of the share-based awards. The Company computes the historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of its share-based awards. The risk-free interest rate is determined by reference to U.S. Treasury zero-coupon issues with remaining maturities similar to the expected term of the options. The Company has not paid, and does not anticipate paying, cash dividends on shares of its common stock.

Prior to the initial public offering, in order to estimate the fair value of shares of the common stock, the Company's board of directors considered, among other things, sales of common stock to third party investors and valuations of common stock, business, financial condition and results of operations, including related industry trends affecting operations; the likelihood of achieving a liquidity event, such as an initial public offering, or sale, given prevailing market conditions; the lack of marketability of our common stock; the market performance of comparable publicly traded companies; and U.S. and global economic and capital market conditions.

During the three months ended March 31, 2023, 40,500 restricted shares of common stock were issued. There were no issuances of restricted stock awards during three months ended March 31, 2022. The fair value of restricted stock awards is based on the common stock price.

All stock-based compensation costs are recorded in general and administrative or research and development costs in the condensed consolidated statements of operations based upon the underlying individual’s role at the Company.

Common Stock Warrants

The Company accounts for common stock warrants as either equity instruments or as liabilities in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), depending on the specific terms of the warrant agreement.

 

When warrants are issued for services provided by non-employees, under ASC 718, Compensation – Stock Compensation (“ASC 718”), the warrants shall be classified as a liability if 1) the underlying shares are classified as liabilities or 2) the entity can be required under any circumstances to settle the warrant by transferring cash or other assets. The measurement of equity-classified non-employee share-based payments is generally fixed on the grant date and are considered compensatory, as defined by ASC 718.

 

Income Taxes

Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not

11


 

that some or all of the deferred tax assets will not be realized. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. The Company recognizes any interest and penalties accrued related to unrecognized tax benefits as income tax expense.

Deferred Offering Costs

Deferred offering costs are included in other assets and consist of legal, accounting, underwriting fees and other costs incurred through the December 31, 2022 and the March 31, 2023 balance sheet date that are directly related to a planned follow-on offering and will be charged to additional paid-in capital upon the completion of the follow-on offering.

Net Loss Per Share

Basic loss per share of common stock is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net loss per share is calculated by adjusting the weighted-average number of shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. Diluted loss per share excludes, when applicable, the potential impact of stock options, unvested shares of restricted stock awards, and common stock warrants because their effect would be anti-dilutive due to our net loss. Gains on warrant liabilities are only considered dilutive when the average market price of the common stock during the period exceeds the exercise price of the warrants. Since the Company had a net loss in each of the periods presented, basic and diluted net loss per common share are the same.

The following table summarizes the Company’s potentially dilutive securities, in common share equivalents, which have been excluded from the calculation of dilutive loss per share as their effect would be anti-dilutive:

 

 

 

Three Months Ended
March 31,

 

 

 

2023

 

 

2022

 

Shares issuable upon exercise of stock options

 

 

7,217,915

 

 

 

5,859,589

 

Shares issuable upon exercise of warrants

 

 

796,985

 

 

 

1,250,006

 

Unvested restricted stock awards

 

 

 

 

 

29,168

 

 

Recent Accounting Standards

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

 

Leases

In February 2016, the FASB issued ASU No. 2016-02, as amended, Leases (“Topic 842”), which applies to all leases. Under Topic 842, a right-of-use asset and lease obligation will be recorded for all leases, whether operating or financing leases, while the statement of operations will reflect lease expense for operating leases and amortization and interest expense for financing leases. Topic 842 is effective for public entities for fiscal years beginning after December 15, 2018 and periods beginning after December 15, 2021 for all other entities. Entities are required to use a modified retrospective approach of adoption for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company adopted this new standard as of January 1, 2022. At the inception of an arrangement the Company determines whether the arrangement is or contains a lease based on the circumstances present. Currently none of the Company’s operating lease commitments are subject to the new standard as its leases are short-term in nature (i.e., less than twelve months).

12


 

2. RELATED PARTY TRANSACTIONS

 

10b5-1 Plan

 

Certain of our directors and executive officers have adopted written plans, known as Rule 10b5-1 plans, in which they have contracted with a broker to buy shares of our common stock on a periodic basis. Our other directors and executive officers may also adopt Rule 10b5-1 plans in which they contract with a broker to buy or sell shares of our common stock on a periodic basis. Under a Rule 10b5-1 plan, a broker executes trades pursuant to parameters established by the director or officer when entering into the plan, without further direction from the director or officer. The director or officer may amend or terminate the plan in limited circumstances. Our directors and executive officers may also buy or sell additional shares of our common stock outside of a Rule 10b5-1 plan when they are not in possession of material, nonpublic information.

 

3. ACCRUED EXPENSES

As of March 31, 2023 and December 31, 2022, accrued expenses consisted of the following:

 

 

 

March 31,

 

 

December 31,

 

 

 

2023

 

 

2022

 

Bonus

 

$

1,409,860

 

 

$

1,094,582

 

Professional fees

 

 

709,454

 

 

 

332,589

 

Research and development costs

 

 

357,469

 

 

 

516,961

 

Other

 

 

162,251

 

 

 

159,269

 

Total accrued expenses

 

$

2,639,034

 

 

$

2,103,401

 

 

 

4.
FAIR VALUE OF FINANCIAL LIABILITIES

Derivative Liability

Financial liabilities consisting of warrant liabilities measured at fair value on a recurring basis are summarized below. The fair value of the warrant liabilities recorded are as follows:

 

Fair value at March 31, 2023

 

Total

 

Level 1

 

Level 2

 

Level 3

 

Liabilities:

 

 

 

 

Warrant liability

 

224,399

 

 

 

 

 

 

224,399

 

Total liabilities

$

224,399

 

$

 

$

 

$

224,399

 

 

The table below provides a summary of the changes in fair value of the warrant liabilities measured on a recurring basis using significant unobservable inputs (Level 3):

 

Years Ended March 31,

 

Warrant liabilities:

2023

 

2022

 

Balance, beginning of period

$

245,341

 

$

 

Warrant liability

 

 

 

Gain on fair value of warrant liability

 

(20,942

)

 

 

Reclassification of warrant liability to equity

 

 

 

 

Balance, end of period

$

224,399

 

$

 

 

13


 

 

5.
STOCKHOLDERS’ EQUITY

Upon the closing of the Company’s initial public offering, the Company’s shareholders agreement terminated pursuant to its terms. In connection with the closing of the Company’s initial public offering, the Company amended and restated its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”) and amended and restated its Bylaws (the “Amended and Restated Bylaws”). The Amended and Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on August 1, 2022 and became effective on that date, and among other things, increased the authorized number of common stock to 70,000,000 shares and decreased the authorized number of preferred stock to 30,000,000 shares.

Sales of MAIA Common Stock

During January and February 2022, the Company sold 263,729 shares of common stock at $9.00 per share for gross proceeds of $2,373,561 with no transaction costs. During May 2022, the Company sold 11,111 shares of common stock at $9 per share for gross proceeds of $99,999 with no transaction costs. The Company issued these shareholders additional shares (“Ratchet Shares”) upon the closing of the Company's initial public offering such that the $9.00 price per share they paid was equal to the price per share in the Company's initial public offering of $5.00. The number of Ratchet Shares were calculated using the $5.00 per share price in the Company's initial public offering and 219,872 shares of common stock were issued on August 1, 2022 to the investors in the Recent Private Rounds. The Ratchet shares were determined to be a freestanding instrument that was classified as a liability when the right was granted and subsequently reclassified to equity when shares were issued. The Ratchet Shares were valued at $1,099,360, based on the $5 price of the initial public offering and were recorded as expense included in operating expense in the 2022 Consolidated Statement of Operations.

Initial Public Offering