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Derivative liabilities and redeemable convertible preferred stock liability
9 Months Ended
Sep. 30, 2021
Derivative Liabilities And Redeemable Convertible Preferred Stock Liability [Abstract]  
Derivative liabilities and convertible preferred stock liability

7.

Derivative liabilities and redeemable convertible preferred stock liability

Warrants

In connection with the issuance of certain notes, lenders were issued Warrants to purchase 134,112 shares of Series A. The Warrants had a coverage percentage of 25% of the principal amount of the notes and had a ten-year expiration date from the applicable closing date of April 20, 2018 or June 6, 2018.

The underlying shares issuable upon the exercise of the Warrants were eligible to be exercised into the next round of equity financing. The Warrants became exercisable into shares of Series A for an exercise price of $9.32 per share.  

The Company recorded the Warrants initially at fair value as derivative liabilities on the consolidated balance sheet with the value being allocated to the notes as a debt discount. The fair value of the Warrants upon issuance on April 20, 2018 and June 6, 2018, was $0.7 million and $238,000, respectively. As of September 30, 2021 and December 31, 2020, due to the IPO in October 2020, all outstanding warrants were automatically exercised for the issuance of Common Stock, and following that exercise, such warrants were no longer outstanding.    

 As Series A contained a conditional obligation for the Company to repurchase the shares for cash consideration, the Warrants were exercised as of the IPO date, with changes in fair value being recorded on the consolidated statements of operations and comprehensive loss. The Company recorded a change in fair value of derivative liabilities of $240,000 and $296,000 for the three and nine months ended September 30, 2020, respectively.

Redeemable convertible preferred stock liability

In connection with the issuance of shares of Series B-1 (Note 8), the Series B-1 preferred stockholders committed to purchase and the Company committed to sell 3,569,630 shares of Series B-2 at a price of $11.20563 per share in a subsequent closing, contingent upon the achievement of certain developmental milestones or a receipt of a waiver of achievement of the milestones. The Redeemable Convertible Preferred Stock Liability is considered a freestanding instrument that qualifies as a liability under ASC Topic 480, Distinguishing Liabilities from Equity as the Company is committed to issue an instrument that ultimately may require a transfer of assets. The liability is accounted for at fair value and re-measured at each reporting date. On the date of the initial closing, the Company recorded the Redeemable Convertible Preferred Stock Liability at a fair value of $3.2 million. As of September 30, 2021 and December 31, 2020, all of the Series B-2 shares were issued and then, as a result of the IPO, converted to shares of common stock.  The Company recorded a change in fair value of derivative liabilities of $11.8 million and $11.4 million for the three and nine months ended September 30, 2020, respectively.