Clene Inc

Note1. Nature of the Business

Clene Inc. (the “Company,” “we,” “us,” or similar such references) is a clinical-stage pharmaceutical company pioneering the discovery, development, and commercialization of novel clean-surfaced nanotechnology therapeutics. We have developed an electro-crystal-chemistry drug development platform which enables production of concentrated, stable, highly active, clean-surfaced nanocrystal suspensions. We have multiple drug assets currently in development for applications primarily in neurology. Our efforts are currently focused on addressing the high unmet medical needs in central nervous system disorders including amyotrophic lateral sclerosis (“ALS”), multiple sclerosis (“MS”), and Parkinson’s disease (“PD”). Our patented electro-crystal-chemistry manufacturing platform further enables us to develop very low concentration dietary supplements to advance the health and well-being of broad populations. These dietary supplements can vary greatly and include nanocrystals of varying composition, shapes and sizes as well as ionic solutions with diverse metallic constituents. Dietary supplements are marketed and distributed through our wholly owned subsidiary, dOrbital, Inc., or through an exclusive license with4Life Research LLC (“4Life”), an international supplier of health supplements, stockholder, and related party (see Note15).

Clene Nanomedicine, Inc. (“Clene Nanomedicine”) became a public company on* December 30, 2020 (*the “Closing Date”) when it completed a reverse recapitalization (the “Reverse Recapitalization”) with Tottenham Acquisition I Limited (“Tottenham”), Tottenham’s wholly-owned subsidiary and our predecessor, Chelsea Worldwide Inc., and Creative Worldwide Inc., a wholly-owned subsidiary of Chelsea Worldwide Inc. On the Closing Date, Chelsea Worldwide Inc. changed its name to Clene Inc. and listed its shares of common stock, par value $0.0001 per share (“Common Stock”) on the Nasdaq Capital Market (“Nasdaq”) under the symbol “CLNN.”

Going Concern

We incurred a loss from operations of $40.5 million and $48.4 million for the years ended* December 31, 2023and2022*, respectively. Our accumulated deficit was $242.7 million and $193.2 million as of* December 31, 2023and2022*. Our cash, cash equivalents, and marketable securities totaled $35.0 million and $23.3 million as of* December 31, 2023and2022*, respectively, and net cash used in operating activities was $30.2 million and $39.0 million for the years ended* December 31, 2023and2022*, respectively.

We have incurred significant losses and negative cash flows from operations since our inception. We havenot generated significant revenues since our inception, and we donot anticipate generating significant revenues unless we successfully complete development and obtain regulatory approval for commercialization of a drug candidate. We expect to incur additional losses in the future, particularly as we advance the development of our clinical-stage drug candidates, continue research and development of our preclinical drug candidates, and initiate additional clinical trials of, and seek regulatory approval for, these and other future drug candidates. We expect that within the nexttwelve months, we willnot have sufficient cash and other resources on hand to sustain our current operations or meet our obligations as they become due unless we obtain additional financing. Additionally, pursuant to our term loan with Avenue Venture Opportunities Fund, L.P. (“Avenue”), we are required to maintain unrestricted cash and cash equivalents of at least $5.0 million to avoid acceleration of the full balance of the loan (see Note8). These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

To mitigate our funding needs, we plan to raise additional funding, including exploring equity financing and offerings, debt financing, licensing or collaboration arrangements withthird parties, as well as utilizing our existing at-the-market facility, equity purchase agreement, and potential proceeds from the exercise of outstanding warrants and stock options. These plans are subject to market conditions and reliance onthird parties, and there isno assurance that effective implementation of our plans will result in the necessary funding to continue current operations. We have implemented cost-saving initiatives, including delaying and reducing certain research and development programs and commercialization efforts and elimination of certain staff positions. We have concluded that our plans donot alleviate the substantial doubt about our ability to continue as a going concern beyondone year from the date the consolidated financial statements are issued.

The accompanying consolidated financial statements have been prepared assuming we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As a result, the accompanying consolidated financial statements donot include any adjustments relating to the recoverability and classification of assets and their carrying amounts, or the amounts and classification of liabilities that* may*result should we be unable to continue as a going concern.

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Note2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Clene Inc. and our wholly-owned subsidiaries, Clene Nanomedicine, Inc., a subsidiary incorporated in Delaware, Clene Australia Pty Ltd (“Clene Australia”), a subsidiary incorporated in Australia, Clene Netherlands B.V. (“Clene Netherlands”), a subsidiary incorporated in the Netherlands, and dOrbital, Inc., a subsidiary incorporated in Delaware, after elimination of all intercompany accounts and transactions. We have prepared the accompanying consolidated financial statements in accordance with United States (“U.S.”) Generally Accepted Accounting Principles (“GAAP”) In the opinion of management, the consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosure of contingent assets and liabilities, and the reported amounts of expenses. We base our estimates on historical experience and various other assumptions that we believe to be reasonable. Actual results* may*differ from those estimates or assumptions. Estimates are periodically reviewed in light of changes in circumstances, facts, and experience, and any changes in estimates will be recorded in future periods as they develop.

Risks and Uncertainties

We are subject to certain risks and uncertainties and believe that changes in any of the following areas could have a material adverse effect on future financial condition, results of operations, or cash flows: ability to obtain additional financing; regulatory approval and market acceptance of, and reimbursement for, product candidates; performance ofthird-party contract research organizations (“CROs”) and manufacturers upon which we rely; protection of our intellectual property; litigation or claims against us based on intellectual property, patent, product, regulatory, or other factors; and our ability to attract and retain employees necessary to support our growth. The product candidates we develop require approvals from regulatory agencies prior to commercial sales. There can beno assurance that our current and future product candidates will receive the necessary approvals or be commercially successful. If we are denied approval or approval is delayed, it will have a material adverse impact on our business and our consolidated financial statements.

Concentrations of Credit Risk

Financial instruments which potentially subject us to significant concentrations of credit risk consist primarily of cash. Our cash is held in financial institutions and amounts on deposit* mayat times exceed federally insured limits. We havenot* experienced any losses on our deposits of cash and donot believe that we are subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

Cash and Cash Equivalents

We consider all short-term investments with original maturities of90 days or less when purchased to be cash equivalents.

Restricted Cash

We classify cash as restricted when it is unavailable for withdrawal or use in our general operating activities. Restricted cash is classified as current and noncurrent on the consolidated balance sheets based on the nature of the restriction. Our restricted cash balance includes contractually restricted deposits related to our corporate credit card.

Marketable Securities

Marketable securities are investments with original maturities of more than90 days when purchased. We donot invest in securities with original maturities of more thanone year. Marketable debt securities are considered available-for-sale and are recorded at fair value, with unrealized gains and losses included as a component of accumulated other comprehensive income until realized. Realized gains and losses are included in other income (expense), net, on the basis of specific identification. The cost of marketable securities is adjusted for amortization of premiums or accretion of discounts to maturity, and such amortization or accretion is included in other income (expense), net.

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Accounts Receivable

Accounts receivable are stated at invoice value less estimated allowances for sales returns and doubtful accounts. We estimate the allowance for sales returns based on historical percentage of returns over a12-month trailing average of sales. We continually monitor customer payments and maintain a reserve for expected losses resulting from our customers’ inability to make required payments. We consider factors when estimating the allowance for doubtful accounts such as historical experience, age of the accounts receivable balances, geographic related risks, and economic conditions that* mayaffect a customer’s ability to pay. In cases where there are circumstances that mayimpair a specific customer’s ability to meet its financial obligations, a specific allowance is recorded against amounts due, thereby reducing the net recognized receivable to the amount reasonably believed to be collectible. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received. Historically, there have beenno* sales returns,no written-off accounts receivable, andno allowance for doubtful accounts reducing the balance of the accounts receivable.

Inventory

Inventory is stated at historic cost on afirst-infirst-out basis. Our inventory consisted of $23,000 in raw materials and $14,000 in finished goods as of* December 31, 2023*, and $29,000 in raw material and $14,000 in finished goods as of* December 31, 2022*. Inventory relates to our dietary supplement products.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Property and equipment consist of laboratory and office equipment, computer software, and leasehold improvements. Depreciation is calculated using the straight-line method over the estimated economic useful lives of the assets, which are 3-5 years for laboratory equipment,3-7 years for furniture and fixtures, and 2-5 years for computer software. Leasehold improvements are amortized over the lesser of the estimated lease term or the estimated useful life of the assets. Costs for capital assetsnot yet placed into service are capitalized as construction-in-progress and depreciated or amortized in accordance with the above useful lives once placed into service. Upon retirement or sale, the related cost and accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is included in the consolidated statements of operations and comprehensive loss. Maintenance and repairs that donot improve or extend the lives of the respective assets are expensed to operations as incurred.

We capitalize costs to obtain or develop computer software for internal use, including development costs incurred during the software development stage and costs to obtain software for access and conversion of historical data. We also capitalize costs to modify, upgrade, or enhance existing internal-use software that result in additional functionality. We expense costs incurred during the preliminary project stage, training costs, data conversion costs, and maintenance costs.

Impairment of Long-Lived Assets

Long-lived assets are tested for recoverability whenever events or changes in business circumstances indicate that the carrying amount of the assets* may**not* be fully recoverable. Factors we consider in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends, and significant changes or planned changes in the use of assets. If an impairment review is performed to evaluate an asset group for recoverability, we compare the forecasted undiscounted cash flows expected to result from the use and eventual disposition of the asset group to its carrying value. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use and eventual disposition of an asset group are less than its carrying amount. The impairment loss would be based on the excess of the carrying value of the impaired asset group over its fair value, determined based on discounted cash flows using market participant assumptions. We didnot record any impairment losses on long-lived assets during the years ended* December 31, 2023and2022*.

Debt

When debt is issued and a derivative is required to be separated (e.g., bifurcated conversion option) or another separate freestanding financial instrument (e.g., warrant) is issued, costs and fees incurred are allocated to the instruments issued (or bifurcated) in proportion to the allocation of proceeds. When some portions of the costs and fees relate to a bifurcated derivative or freestanding financial instrument that is being subsequently measured at fair value, those allocated costs are expensed immediately. Debt discounts, debt premiums, and debt issuance costs related to debt are recorded as deductions that net against the principal value of the debt and are amortized to interest expense over the contractual term of the debt using the effective interest method.

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In accordance with ASC470-20, Debt with Conversion and Other Options, when we issue debt with warrants, we treat the warrants as a debt discount, recorded as a contra-liability against the debt, and amortize the balance over the life of the underlying debt as interest expense in the consolidated statements of operations and comprehensive loss. The offset to the contra-liability is recorded as additional paid-in capital in the consolidated balance sheets if the warrants arenot treated as a derivative or liability under ASC480, Distinguishing Liabilities from Equity (“ASC480”). Otherwise, the offset to the contra-liability is recorded as a warrant liability in the consolidated balance sheets and is subject to re-measurement to fair value at each balance sheet date, with any changes in fair value recognized in the consolidated statements of operations and comprehensive loss. If the debt is retired early, the associated debt discount is then recognized immediately as interest expense in the consolidated statements of operations and comprehensive loss.

Convertible Debt

In accordance with ASU2020-06, Debt—Debt with Conversion and Other Options (Subtopic470*-20) and Derivatives and Hedging*—Contracts in Entity’s Own Equity (Subtopic815*-40): Accounting for Convertible Instruments and Contracts in an Entity*’s Own Equity, when we issue notes with conversion features, we evaluate if the conversion feature is freestanding or embedded. If the conversion feature is embedded, we donot separate the conversion feature from the host contract for convertible notes that arenot required to be accounted for as derivatives, or that donot result in substantial premiums accounted for as paid-in-capital. Consequently, we account for a convertible note as a single liability measured at its amortized cost as long asno other features require separation and recognition as derivatives. If the conversion feature is freestanding, or is embedded and meets the requirements to be separated, we account for the conversion feature as a derivative under ASC815, Derivatives and Hedging (“ASC815”). We record the derivative instrument at fair value at inception, and subsequently re-measure to fair value at each reporting period and immediately prior to the extinguishment of the derivative instrument, with any changes recorded in the consolidated statements of operations and comprehensive loss.

Deferred Offering Costs

We capitalize certainthird-party legal, accounting, and other fees that are directly associated with in-process equity financings until such financings are completed. After completion of the equity financing, these costs are recorded in stockholders’ equity as a reduction of proceeds generated as a result of the offering. Should any in-process equity financing be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the consolidated statements of operations and comprehensive loss. As of* December 31, 2023and2022*, we didnot have any deferred offering costs.

Leases

At inception of a contract, we determine if a contract meets the definition of a lease. We determine if the contract conveys the right to control the use of an identified asset for a period of time. We assess throughout the period of use whether we have both of the following: (i) the right to obtain substantially all the economic benefits from use of the identified asset, and (ii) the right to direct the use of the identified asset. This determination is reassessed if the terms of the contract are changed. Leases are classified as operating or finance leases based on the terms of the lease agreement and certain characteristics of the identified asset. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of the future lease payments less any lease incentives received. At the lease commencement date, the discount rate implicit in the lease is used to discount the lease liability if readily determinable. Ifnot readily determinable or leases donot contain an implicit rate, our incremental borrowing rate is used as the discount rate. Our policy is tonot record leases with an original term oftwelve months or less within the consolidated balance sheets and we recognize lease expense for these short-term leases on a straight-line basis over the lease term.

Certain lease agreements* mayrequire us to pay additional amounts for taxes, insurance, maintenance, and other expenses, which are generally referred to as non-lease components. Such variable non-lease components are treated as variable lease payments and recognized in the period in which the obligation for these payments is incurred. Variable lease components and variable non-lease components arenot* measured as part of the right-of-use asset and liability. Only when lease components and their associated non-lease components are fixed are they accounted for as a single lease component and are recognized as part of a right-of-use asset and liability. Total contract consideration is allocated to the fixed lease and non-lease component. This policy election applies consistently to all asset classes under lease agreements.

Leases* maycontain clauses for renewal at our option. Payments to be made in option periods are recognized as part of the right-of-use lease assets and lease liabilities when it is reasonably certain that the option to extend the lease will be exercised, or isnot* at our option. We determine whether the reasonably certain threshold is met by considering contract-, asset-, market-, and entity-based factors. Operating lease expense, which is recognized on a straight-line basis over the lease term, and the amortization of finance lease right-of-use assets, which are included in property and equipment and depreciated, are included in research and development or general and administrative expenses consistent with the leased assets’ primary use. Accretion on the liabilities for finance leases is included in interest expense.

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Contingent Earn-Out Liabilities

In connection with the Reverse Recapitalization, certain Clene Nanomedicine stockholders are entitled to receive additional shares of Common Stock (the “Clene Nanomedicine Contingent Earn-out”) as follows: (i)3,338,483 shares if (a) the volume-weighted average price (“VWAP”) of our Common Stock equals or exceeds $15.00 (the “Milestone1 Price”) in anytwenty trading days within athirty trading day period withinthree years of the Reverse Recapitalization or (b) the change of control price equals or exceeds the Milestone1 Price if a change of control transaction occurs within three years of the closing of the Reverse Recapitalization (the requirements in (a) and (b) collectively, “Milestone1”); (ii)2,503,851 shares if (a) the VWAP of our Common Stock equals or exceeds $20.00 (the “Milestone2 Price”) in anytwenty trading days within athirty trading day period within five years of the closing of the Reverse Recapitalization or (b) the change of control price equals or exceeds the Milestone2 Price if a change of control transaction occurs within five years of the Reverse Recapitalization (the requirements in (a) and (b) collectively, “Milestone2”). Milestone1 wasnot achieved but if Milestone2 is achieved, the Clene Nanomedicine stockholders will receive additional shares equal to Milestone1. Tottenham’s former officers, directors, sponsor, and public stockholders (the “Initial Stockholders”) are entitled to receive earn-out shares (the “Initial Stockholders Contingent Earn-out,” and collectively with the Clene Nanomedicine Contingent Earn-out, the “Contingent Earn-outs”) as follows: (i)375,000 shares upon the achievement of Milestone1; and (ii)375,000 shares upon achievement of Milestone2. If Milestone1 isnot achieved but Milestone2 is achieved, the Initial Stockholders will receive additional shares equal to Milestone1.

In accordance with ASC815, the Contingent Earn-outs arenot indexed to our own stock and therefore were accounted for as a liability at the Reverse Recapitalization date and are subsequently remeasured to fair value at each reporting date with changes recorded as a component of other income (expense), net.

Common Stock Warrants

We account for common stock warrants as either equity-classified instruments or liability-classified instruments based on an assessment of the warrant terms. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC480, meet the definition of a liability pursuant to ASC480, and whether the warrants meet all the requirements for equity classification under ASC815, including whether the warrants are indexed to our Common Stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance, and, for liability-classified warrants, at each reporting period end date while the warrants are outstanding.

Revenue Recognition

Under ASC606, Revenue from Contracts with Customers (“ASC606”), an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC606, the entity performs the followingfive steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We only apply thefive-step model to contracts when it is probable that we will collect the consideration to which we are entitled in exchange for the goods or services we transfer to the customer.

Once a contract is determined to be within the scope of ASC606 at contract inception, we review the contract to determine which performance obligations we must deliver, and which performance obligations are distinct. We recognize as revenue the amount of the transaction price that is allocated to each performance obligation when that performance obligation is satisfied or as it is satisfied. We typically satisfy our performance obligations via delivery of dietary supplements to the customer. Payments are due upon receipt for commercial transactions, or a prepayment is collected for online retail sales. Our revenue during the years ended* December 31, 2023and2022* was comprised of sales of dietary supplements and royalties from sales of dietary supplements.

Grant Funding

We* maysubmit applications to receive grant funding from governmental and non-governmental entities. We account for grants by analogizing to the grant accounting model under IAS20,* Accounting for Government Grants and Disclosure of Government Assistance (“IAS20”). We recognize grant funding without conditions or continuing performance obligations, including certain research and development tax credits, as other income in the consolidated statements of operations and comprehensive loss. We accrue certain research and development tax credits receivable in other current assets (see Note4) in an amount equal to the qualifying expenses incurred in each period multiplied by the applicable reimbursement percentage and we recognize other income in the consolidated statements of operations and comprehensive loss. After submission of our tax returns, we receive a cash refund of certain research and development tax credits and relieve the receivable.

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We recognize grant funding with conditions or continuing performance obligations as a reduction in research and development expenses in the period during which the related qualifying expenses are incurred and as the conditions or performance obligations are fulfilled. Any amount received in advance of fulfilling such conditions or performance obligations is recorded in accrued liabilities (see Note6) if the conditions or performance obligations are expected to be met within the nexttwelve months. We recognized grant funding of $0.3 million and $0 as a reduction of research and development expenses during the years ended* December 31, 2023and2022*, respectively.

Fair Value of Financial Instruments

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed inone of the followingthree levels of the fair value hierarchy:

We review the fair value hierarchy classification of our applicable assets and liabilities on a quarterly basis. Changes in the observability of valuation inputs* mayresult in a reclassification for certain financial assets or liabilities. Reclassifications impacting all levels of the fair value hierarchy are reported as transfers in or out of the Level1,* 2, or3 categories as of the beginning of the period during which the reclassifications occur.

Foreign Currency Translation and Transactions

Our functional currency is the U.S. dollar. Clene Australia determined its functional currency to be the Australian dollar and Clene Netherlands determined its functional currency to be the Euro. We use the U.S. dollar as our reporting currency for the consolidated financial statements. The results of our non-U.S. dollar based functional currency operations are translated to U.S. dollars at the average exchange rates during the period. Our assets and liabilities are translated using the current exchange rate as of the balance sheet date and stockholders’ equity is translated using historical rates. Adjustments resulting from the translation of the consolidated financial statements of our foreign functional currency subsidiaries into U.S. dollars are excluded from the determination of net loss and are accumulated in a separate component of stockholders’ equity. We also incur foreign exchange transaction gains and losses for purchases denominated in foreign currencies. Foreign exchange transaction gains and losses are included in other income (expense), net, as incurred.

Comprehensive Loss

Comprehensive loss includes net loss as well as other changes in stockholders’ equity that result from transactions and economic events other than those with stockholders. The only elements of other comprehensive loss in any periods presented were translation of foreign currency denominated balances of Clene Australia and Clene Netherlands to U.S. dollars for consolidation and unrealized gain (loss) on available-for-sale securities.

Net Loss Per Share Attributable to Common Stockholders

Basic net loss per share attributable to common stockholders is calculated using our weighted-average outstanding common shares. Diluted net loss per share attributable to common stockholders is calculated using our weighted-average outstanding common shares including the dilutive effect of securities as determined under the treasury stock method, except for the dilutive effect of convertible notes payable, which is calculated under the if-converted method, even if the embedded conversion option is out-of-the-money. In periods in which we report a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, since dilutive common shares arenot assumed to have been issued if their effect is anti-dilutive.

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Segment Information

We report segment information based on ASC280 Segment Reporting (“ASC280”), which defines operating segments as components of a company that engage in activities from which it* mayrecognize revenues and incur expenses, and for which operating results are regularly reviewed by the entity’s chief operating decision maker (“CODM”) to make decisions regarding resource allocation and assess performance, and for which discrete financial information is available. Effective in thefourth* quarter of2023, we have revised our internal reporting processes to better align with our strategic priorities due to the immateriality of our dietary supplement operations. As a result and in accordance with ASC280, we have determined that the Company is a single operating and reportable segment. Our chief executive officer is the CODM and allocates resources and assesses performance at a consolidated level. Previously, we operated astwo operating and reportable segments related to our development and commercialization of drugs and dietary supplements. The change didnot require any prior period information to be recast.

Income Taxes

We account for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in our tax returns. Deferred tax assets and liabilities are determined based on the differences between the financial statement basis and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. We assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent we believe, based upon the weight of available evidence, that it is more likely thannot that all or a portion of the deferred tax assets willnot be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies.

We account for uncertainty in income taxes recognized in the consolidated financial statements by applying atwo-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the consolidated financial statements. The amount of the benefit that* maybe recognized is the largest amount that has a greater than50%* likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, which are considered appropriate as well as the related net interest and penalties.

Stock-Based Compensation

We account for stock-based compensation arrangements using a fair value-based method for costs related to all share-based payments including stock options and stock awards. Stock-based compensation expense is recorded in research and development and general and administrative expenses based on the classification of the work performed by the grantees. The fair value is recognized over the period during which a grantee is required to provide services in exchange for the option award and service-based stock awards, known as the requisite service period (usually the vesting period), on a straight-line basis. For stock awards with market conditions, the fair value is recognized over the period based on the expected milestone achievement dates as the derived service period (usually the vesting period), on a straight-line basis. For stock awards with performance conditions, the grant-date fair value of these awards is the market price on the applicable grant date, and compensation expense will be recognized when the conditions become probable of being satisfied. We recognize a cumulative true-up adjustment once the conditions become probable of being satisfied as the related service period had been completed in a prior period. We elect to account for forfeitures as they occur, rather than estimating expected forfeitures. We determine the fair value of each share of Common Stock underlying stock-based awards using a Black-Scholes option pricing model based on the closing price of our Common Stock as reported by Nasdaq on the date of grant. The fair value of stock awards with market conditions are determined using a Monte Carlo valuation model.

Research and Development

Research and development costs are expensed as incurred. We account for nonrefundable advance payments for goods and services that will be used in future research and development activities as expenses when the goods have been received or when the service has been performed. Research and development expenses consist of costs incurred for the discovery and development of our product candidates. Research and development costs include, but arenot limited to, payroll and personnel expenses including stock-based compensation, clinical trial supplies, fees for clinical trial services, consulting costs, and allocated overhead, including rent, equipment, and utilities.

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Clinical Trial Accrual

Our clinical trial accrual process accounts for expenses resulting from obligations under contracts with CROs, consultants, and under clinical site agreements in connection with conducting clinical trials. The financial terms of these contracts are subject to negotiations, which vary from contract to contract and* mayresult in payment flows that donot* match the periods over which materials or services are provided to us under such contracts. We estimate accruals for the progress of contract completion at each reporting date based upon the facts and circumstances known to us at that time and through discussion and reporting from applicable personnel and service providers. Clinical trial costs are charged to research and development expense in the period in which services and efforts are expended. In the event advance payments are made to a CRO, the payments will be recorded as a prepaid asset which will be amortized to research and development expense over the period the contracted services are performed. CRO contracts generally include pass-through costs including, butnot limited to, regulatory expenses, investigator fees, travel costs, shipping costs, printing fees, and other miscellaneous costs. In addition to pass-through costs, we generally incur costs in clinical trials infour distinct groups as follows:

Recently Adopted Accounting Pronouncements

In* June 2016,the FASB issued ASU2016*-13, Financial Instruments—Credit Losses (Topic326*): Measurement of Credit Losses on Financial Instruments*. The amendments in this update, among other things, require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. As a smaller reporting company, the guidance was effective for our fiscal years beginning after* December 15, 2022.The adoption of this guidance didnot* have an impact on our consolidated financial statements.

Recent Accounting PronouncementsNot Yet Adopted**

In* November 2023,the FASB issued ASU2023*-07, Segment Reporting (Topic280*): Improvements to Reportable Segment Disclosures* (“ASU2023-07”). ASU2023-07 requires, among other things, that public entities with a single reportable segment provide all the disclosures required by ASC280 and ASU2023-07, and that public entities provide all annual disclosures about a reportable segment’s profit or loss and assets currently required in interim periods. The guidance is effective for fiscal years beginning after* December 15, 2023,and interim periods within fiscal years beginning after December 15, 2024.We are currently evaluating the impact of ASU2023*-07.

In* December 2023,the FASB issued ASU2023*-09, Income Taxes (Topic740*): Improvements to Income Tax Disclosures* (“ASU2023-09”). ASU2023-09 requires, among other things, that public entities on an annual basis disclose specific categories of the tax rate reconciliation, provide additional information for reconciling items that meet a quantitative threshold, and disclose income taxes paid disaggregated by jurisdiction. The guidance is effective for annual periods beginning after* December 15, 2024.We are currently evaluating the impact of ASU2023*-09.

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Note3. Cash, Cash Equivalents, and Marketable Securities

Available-for-Sale Securities

Available-for-sale securities as of* December 31, 2023* were as follows:

Available-for-sale securities as of* December 31, 2022* were as follows:

Proceeds from the sale and maturity of marketable securities held as available-for-sale were as follows:

Realized gains and losses included in earnings from the sale of available-for-sale securities were insignificant. As of* December 31, 2023and2022*, we didnot have any allowance for credit losses or impairments of available-for-sale securities.

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Note4. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets as of* December 31, 2023and2022* were as follows:

Note5. Property and Equipment, Net

Property and equipment, net, as of* December 31, 2023and2022* were as follows:

Depreciation expense recorded in research and development expense and general and administrative expense for the years ended* December 31, 2023and2022* was as follows:

Note6. Accrued Liabilities

Accrued liabilities as of* December 31, 2023and2022* were as follows:

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Note7. Leases

We lease laboratory and office space and certain laboratory equipment under non-cancellable operating and finance leases. The carrying value of our right-of-use lease assets is substantially concentrated in our real estate leases, while the volume of lease agreements is primarily concentrated in equipment leases. We expect that, in the normal course of business, the existing leases will be renewed or replaced by similar leases.

Operating Leases

Operating leases primarily consist of real estate leases for office and laboratory space. We have three real estate leases: (i) a laboratory and manufacturing facility which commenced in* September 2021with aten-year term and an option to extend fortwo five-year periods; (ii) a laboratory and manufacturing facility which commenced in February 2022with aseven-year term and an option to extend fortwo five-year periods, which replaced a previous lease for the same facility and resulted a gain on termination of $0.4 million for the year ended December 31, 2022*; and (iii) our corporate office which commenced a renewed term in* September 2022forseven years with an option to extend forfive years. We didnot* recognize the payments to be made in the option periods as part of the right-of-use asset or lease liability because the exercise of the option isnot reasonably certain.

As of* December 31, 2023and2022*, our operating lease obligations had a weighted-average discount rate of 9.6% and 9.6%, respectively; and a weighted-average remaining term of 6.4 years and 7.3 years, respectively.

Finance Leases

Assets recorded under finance lease obligations and included within property and equipment as of* December 31, 2023and2022* were as follows:

As of* December 31, 2023and2022*, our finance lease obligations had a weighted-average interest rate of 11.0% and 10.2%, respectively; and a weighted-average remaining term of 0.4 years and 1.2 years, respectively.

Maturity Analysis of Lease Obligations

The maturity analysis of our finance and operating lease obligations as of* December 31, 2023* was as follows:

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Components of Lease Cost

The components of finance and operating lease costs for the years ended* December 31, 2023and2022* were as follows:

Supplemental Cash Flow Information

Note8. Notes Payable and Convertible Notes Payable

Our notes payable and convertible notes payable as of* December 31, 2023and2022* was as follows:

F-17

Maryland Loans

In* February 2019,we entered into a term loan agreement (the“2019* MD Loan”) with the Department of Housing and Community Development (“DHCD”), a principal department of the State of Maryland, for $0.5 million bearing simple interest at an annual rate of 8.00%. We are subject to covenants until maturity, including limitations on our ability to retire, repurchase, or redeem our stock, options, and warrants other than per the terms of the securities; and limitations on our ability to pay dividends. We arenot in violation of any covenants. The2019 MD Loan established “Phantom Shares” based on 119,907 shares of Common Stock. The2019 MD Loan matures in full on* February 22, 2034,with the repayment amount equal to the greater of (i) principal plus accrued interest or (ii) the Phantom Shares multiplied by the closing price of our Common Stock on Nasdaq on the trading day prior to the maturity date. As of December 31, 2023and2022*, the2019 MD Loan was recorded at principal plus accrued interest as it was greater than the value of the Phantom Shares. We recognized interest expense of $40,000 and of $40,000 for the years ended* December 31, 2023and2022*, respectively.

In* April 2019,we entered into a term loan agreement (the“2019* Cecil Loan”) with Advance Cecil Inc., a non-stock corporation formed under the laws of the State of Maryland, for $0.1 million bearing simple interest at an annual rate of 8.00%. The2019 Cecil Loan established “Phantom Shares” based on 23,981 shares of Common Stock. The2019 Cecil Loan matures in full on* April 30, 2034,with the repayment amount equal to the greater of (i) principal plus accrued interest or (ii) the Phantom Shares multiplied by the closing price of our Common Stock on Nasdaq on the trading day prior to the maturity date. As of December 31, 2023and2022*, the2019 Cecil Loan was recorded at principal plus accrued interest as it was greater than the value of the Phantom Shares. We recognized interest expense of $8,000 and $8,000 for the years ended* December 31, 2023and2022*, respectively.

In* May 2022,we entered into a term loan agreement (the“2022* MD Loan”) with DHCD for up to $3.0 million bearing simple interest at an annual rate of 6.00% for the purchase of certain manufacturing equipment (the “Assets”). As of* December 31, 2023*, we had drawn $1.1 million with the remainder available for future equipment purchases until* May 17, 2024.Thefirst* 12 payments, commencing* July 1, 2022,are deferred, followed by18* monthly installments of interest-only based on the outstanding principal, each up to$15,000 maximum; followed by monthly installments of principal and interest in the amount of $33,306, payable for the lesser of30 months or until the principal and accrued and unpaid interest is fully repaid, with a balloon payment of all remaining principal and unpaid interest due on the maturity date of* July 1, 2027.As of December 31, 2023and2022*, the balance of accrued and unpaid interest was $0.1 million and $22,000, respectively, and is recorded as part of the carrying amount of the loan. We recorded debt issuance costs of $31,000 as a debt discount. Under an agreement between DHCD and Avenue, an existing secured creditor of the Company, DHCD was granted afirst priority lien on the Assets as collateral. We recognized interest expense of $0.1 million and $23,000 for the years ended* December 31, 2023and2022*, respectively.

In* December 2022,we entered into a term loan agreement (the“2022* DHCD Loan”) with DHCD for $5.0 million bearing simple interest at an annual rate of 6.00%. Thefirst 12 payments, commencing* January 1, 2023,are deferred, followed by48* monthly installments of interest-only, with a balloon payment of all principal and unpaid interest due on the maturity date of* January 1, 2028.As of December 31, 2023and2022*, the balance of accrued and unpaid interest was $0.3 million and $8,000, respectively, and is recorded as part of the carrying amount of the loan. We recorded debt issuance costs of $0.1 million as a debt discount. At any time after* December 8, 2023,DHCD may,in its sole discretion, convert up to $5.0 million of principal into Common Stock in increments of $1.0 million, at a price equal to the greater of: (i)97% of the30*-day trailing VWAP of our Common Stock, or (ii) $4.00 per share (the “DHCD Conversion Feature”). The DHCD Conversion Feature didnot meet the requirements for derivative accounting. For the years ended* December 31, 2023and2022*, we recognized (i) total interest expense of $0.3 million and $7,200, respectively; (ii) coupon interest expense of $0.3 million and $7,500, respectively; and (iii) amortization of debt issuance costs of $1,000 and ($300), respectively; and the effective interest rate was 5.91%.

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Avenue Loan

In* May 2021,we entered into a term loan agreement (the“2021* Avenue Loan”) with Avenue for up to $30.0 million, bearing interest at a variable rate equal to (i) the greater of (a) the prime rate or (b)3.25%, plus (ii)6.60%. As of* December 31, 2023and2022*, the interest rate was 15.10% and 14.10%, respectively. We borrowed $15.0 million in* May 2021plus $5.0 million in September 2021 (“Tranche1”), and the remaining $10.0 million (“Tranche2”) wasnot* drawn and expired. We incurred $0.8 million of debt issuance costs of which $47,000 related to liability-classified warrants was expensed immediately and the remainder was recorded as a debt discount. Payments were interest-only for thefirst 12 months and the interest-only period was extended for (i)12 months due to our achievement of certain clinical trial milestones, plus (ii) an additional12 months (through* June 30, 2024),pursuant to an amendment in June 2023 (the “Second Amendment”), due to our receipt of at least $35.0 million from the sale and issuance of Common Stock in a public offering in June 2023 (“Equity Milestone1”). The interest-only period maybe extended through December 31, 2024,subject to (i) our receipt of net proceeds of at least $40.0 million, in addition to Equity Milestone1,* from the sale and issuance of our equity securities on or before* June 30, 2024 (“Equity Milestone2”), and (ii) acceptance of a New Drug Application (“NDA”) by the U.S. Food and Drug Administration (“FDA”) filed by us for the treatment of ALS (the “ALS NDA Milestone”). Following the interest-only period, we are required to make equal monthly installments of principal plus interest at the variable rate then in effect until December 1, 2024,which maybe extended to December 1, 2025,so long asno* event of default has occurred and is continuing and we have achieved (i) Equity Milestone2 and (ii) the ALS NDA Milestone. Additionally, a payment of 4.25% of the funded principal, equal to $0.9 million (the “Final Payment”), is due at maturity, which we recorded as a debt premium.

At any time between* May 21, 2022,and May 21, 2024,Avenue may,in its sole discretion, convert up to $5.0 million of outstanding principal into Common Stock at $10.36 per share (the “Avenue Conversion Feature”), subject to certain price and volume restrictions related to our Common Stock on Nasdaq. The Final Payment and Avenue Conversion Feature didnot* meet the requirements for derivative accounting. As of* December 31, 2023and2022*, unamortized debt discount and issuance costs related to the convertible note were $0.1 million and $0.2 million, respectively. For the convertible note for the years ended* December 31, 2023and2022*, we recognized (i) total interest expense of $1.0 million and $0.8 million, respectively; (ii) coupon interest expense of $0.8 million and $0.6 million, respectively; (iii) amortization of debt discount and issuance costs of $0.3 million and $0.2 million, respectively; and (iv) the effective interest rate was 22.79% and 19.69%, respectively.

We are subject to covenants until maturity, including limitations on our ability to retire, repurchase, or redeem our stock, options, and warrants other than per the terms of the securities; limitations on our ability to pay dividends; and we are required to maintain unrestricted cash and cash equivalents of at least $5.0 million. We arenot in violation of any covenants. Avenue has the ability to immediately accelerate all obligations under the2021 Avenue Loan upon the occurrence of certain events of default or material adverse effects. The2021 Avenue Loan is collateralized by substantially all our assets other than intellectual property, including our capital stock and the capital stock of our subsidiaries, in which Avenue is granted a continuing security interest. We recognized interest expense of $4.1 million and $3.2 million for the years ended* December 31, 2023and2022*, respectively.

At the inception of the2021 Avenue Loan, we issued a warrant to Avenue to purchase 115,851 shares of Common Stock at $8.63 per share (the “Original Avenue Warrant”). A portion of the net proceeds at issuance of the2021 Avenue Loan were allocated to the Original Avenue Warrant in an amount equal to its fair value of $1.5 million and were recorded as a debt discount. Pursuant to the Second Amendment, the Original Avenue Warrant was cancelled and a new warrant to purchase 3,000,000 shares of Common Stock at $0.80 per share was issued (the “New Avenue Warrant”). Avenue* mayexercise the New Avenue Warrant for cash or on a net or “cashless” basis. In the event of a change of control of the Company, the New Avenue Warrant shall be automatically exchanged for the number of shares of Common Stock which remain exercisable thereunder immediately prior to the change of control transaction, forno* payment or consideration from Avenue for such shares, and the New Avenue Warrant shall be terminated. At issuance, the New Avenue Warrant was recorded as a liability and debt discount in an amount equal to its fair value of $0.7 million. The Second Amendment, including the revised terms, cancellation of the Original Avenue Warrant, and issuance of the New Avenue Warrant was accounted for as a debt modification.

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Debt Maturities

Future debt payments, net of unamortized discounts and debt issuance costs, and without giving effect to any potential future exercise of conversion features, are as follows:

Note9. Commitments and Contingencies

Commitments

We enter into agreements in the normal course of business with CROs for clinical trials and with vendors for preclinical studies and other services and products for operating purposes, which are cancelable at any time by us, subject to payment of our remaining obligations under binding purchase orders and, in certain cases, nominal early termination fees. These commitments arenot deemed significant.

As of* December 31, 2023and2022*, we had commitments under various agreements for capital expenditures totaling $0.4 million and $1.6 million, respectively, related to the construction of our manufacturing facilities.

Contingencies

From time to time, we* mayhave certain contingent legal liabilities that arise in the ordinary course of business activities. We accrue a liability for such matters when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated. We arenot* aware of any current material pending legal matters or claims.

We received the following grants from the National Multiple Sclerosis Society (“NMSS”): (i) $0.3 million in* September 2019 (the“2019* Grant”) to fund biomarker analyses related our VISIONARY-MS Phase2 clinical trial, and (ii) $0.7 million in* May 2023 (the“2023* Grant”) to fund Cohort2 of our REPAIR-MS clinical trial. Pursuant to the grant agreements, if we make future commercial sales of CNM-Au8 for the treatment of MS, we will repay: (i)50% of the grants upon thefirst commercial product sale, (ii) an additional 50% of the grants upon cumulative sales of $10.0 million, (iii) an additional 150% of the grants upon cumulative sales of $50.0 million, and (iv) an additional 200% of the grants upon cumulative sales of $100.0 million, with the maximum repayment equal to 450% of the grants if all milestones are achieved. If NMSS hasnot yet received repayments equal in the aggregate to 300% of the2019 Grant or 150% of the2023 Grant, then upon the closing of any of the following events we will repay 300% of the2019 Grant, equal to $1.0 million, or 150% of the2023 Grant, equal to $1.0 million, less any amounts previously paid by us: (i) sale of all or substantially all of our assets and business, (ii) a public offering that occurs more thantwelve months after completion of the applicable research, (iii) sale of any portion of our assets and business including CNM-Au8 for the treatment of MS, (iv) exclusive licensing of our intellectual property claiming CNM-Au8 for the treatment of MS, (v) a collaboration with athird-party to develop CNM-Au8 for the treatment of MS (for the2019 Grant only), or (vi) licensing of our commercialization rights to CNM-Au8 for the treatment of MS (for the2023 Grant only). As of* December 31, 2023*, we havenot met any of the above milestones and the applicable research hasnot been completed. We accounted for these contingencies in accordance with ASC450, Contingencies. Management has assessed the likelihood of each contingent event as less than probable and thereforeno contingent liability is recognized. Management’s estimate of the possible range of loss is between the minimum and maximum repayment amounts, equal to 50% and 450% of each grant, or approximately $0.2 million and $1.5 million for the2019 Grant, respectively; and approximately $0.3 million and $3.0 million for the2023 Grant, respectively. However, it is at least reasonably possible that Management’s estimate of the likelihood of each contingent event and the possible range of loss will change in the near term.

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Note10. Income Taxes

The components of loss before income taxes for the years ended* December 31, 2023and2022* were as follows:

We hadno income tax expense or benefit for the years ended* December 31, 2023and2022*. A reconciliation of income tax computed at the U.S. federal statutory rate of 21.00% to expense for income taxes for the years ended* December 31, 2023and2022* was as follows:

Our effective tax rate was 0.00% and 0.00% during the years ended* December 31, 2023and2022*, respectively. Significant components of deferred tax assets (liabilities) as of* December 31, 2023and2022* were as follows:

In assessing the realizability of deferred tax assets, we consider whether it is more likely thannot that some portion or all of the deferred tax assets willnot be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income, carry back opportunities and tax planning strategies in making the assessment. We believe it is more likely thannot that we willnot realize the benefits of these deductible differences and have applied a full valuation allowance against them.

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We have federal and state net operating losses (“NOLs”) of approximately $147.1 million and $96.7 million as of* December 31, 2023*, respectively that, subject to limitation,* maybe available in future tax years to offset taxable income. Of the available federal NOLs, approximately $113.7 million can be carried forward indefinitely but utilization is limited to80%* of our taxable income in any given tax year based on current federal tax laws. The remaining balance of $33.4 million will begin to expire after 2034. Of the available state NOLs, approximately $83.7 million can be carried forward indefinitely but utilization is limited to80% of our taxable income in any given tax year based on current tax laws. The remaining balance of $12.9 million will begin to expire after 2032. Additionally, we had approximately $5.6 million of research and development credit carryforwards that will begin to expire after 2034 ifnot utilized.

Under the provisions of Section382 of the Internal Revenue Code of1986, substantial changes in our ownership* mayresult in limitations on the amount of NOL carryforwards and research and development credits that can be utilized in future years. NOL carryforwards and research and development credits are subject to examination in the year they are utilized regardless of whether the tax year in which they are generated has been closed by statute. The amount subject to disallowance is limited to the amount utilized. Accordingly, we may*be subject to examination for prior NOLs and credits generated as such tax attributes are utilized.

We havenot recorded any amounts for unrecognized tax benefits as of* December 31, 2023and2022*. We recognize interest and penalties related to income tax matters in income tax expense. We haveno accrual of interest and penalties on the consolidated balance sheets and havenot recognized interest and penalties in the consolidated statements of operations and comprehensive loss for the years ended* December 31, 2023and2022*.

We are subject to taxation in the U.S., Australia, Netherlands, and various state jurisdictions. Our tax returns from 2016 to present are subject to examination by the U.S. and state authorities due to the carry forward of unutilized net operating losses and research and development credits. We currently haveno pending examinations. The primary difference between the effective tax rate and the federal statutory tax rate relates to the full valuation allowance on our net operating losses and other deferred tax assets.

Note11. Benefit Plans

401(k) Plan

Our401(k) plan is a deferred salary arrangement under Section401(k) of the Internal Revenue Code. We match 100% of a participating employee’s deferral contributions up to 3% of annual compensation, limited to $4,500 of matching contributions. Our contributions to the401(k) plan totaled $0.2 million and $0.2 million for the years ended* December 31, 2023and2022*, respectively.

Stock Compensation Plans

The Clene Nanomedicine, Inc.2014 Stock Plan (the*“2014* Plan”) was adopted in* July 2014.Effective as of the closing of the Reverse Recapitalization,no additional awards maybe granted under the2014* Plan. As of* December 31, 2023*,5,360,658 stock options remained outstanding under the2014 Plan.

The Clene Inc.2020 Amended Stock Plan (the*“2020* Plan”) was adopted in* December 2020and amended in May 2023and 18,400,000 shares of Common Stock are reserved for issuance thereunder. As of December 31, 2023*, a total of 17,580,408 stock options and other stock awards had been granted under the2020 Plan and 819,592 shares remained available for future grant.

Stock-Based Compensation Expense

Stock-based compensation expense recorded in research and development expense and general and administrative expense for the years ended* December 31, 2023and2022* was as follows:

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Stock-based compensation expense by award type for the years ended* December 31, 2023and2022* was as follows:

Stock Options

Outstanding stock options and related activity for the year ended* December 31, 2023* was as follows:

As of* December 31, 2023and2022*, we had approximately $13.7 million and $18.2 million, respectively, of unrecognized stock-based compensation costs related to non-vested stock options which is expected to be recognized over a weighted-average period of 2.10 years and 2.58 years, respectively.

The weighted-average grant-date fair value of stock options granted during the year ended* December 31, 2023and2022* was $0.73 and $1.49, respectively. The assumptions used to calculate the fair value of stock options granted during the year ended* December 31, 2023and2022* were as follows:

Stock Awards

Stock awards include rights to restricted stock awards with market-based vesting conditions and restricted stock units with service-based vesting conditions. Outstanding stock awards and related activity for the year ended* December 31, 2023* was as follows:

As of* December 31, 2023*, we had $11,000 of unrecognized stock-based compensation costs related to non-vested stock awards which is expected to be recognized over a weighted-average period of 0.23 years. As of* December 31, 2022*, we hadno unrecognized stock-based compensation costs related to non-vested stock awards.

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Note12. Fair Value

Cash, cash equivalents, and marketable securities are carried at fair value. Financial instruments, including accounts receivable, accounts payable, and accrued expenses are carried at cost, which approximates fair value given their short-term nature. Our remaining fair value measures are discussed below.

Financial Instruments with Fair Value Measurements on a Recurring Basis

The fair value hierarchy for financial instruments measured at fair value on a recurring basis as of* December 31, 2023* is as follows:

The fair value hierarchy for financial instruments measured at fair value on a recurring basis as of* December 31, 2022* is as follows:

There wereno transfers between Level1, Level2, or Level3 during any of the periods above.

Changes in the fair value of our Level3 financial instruments for the year ended* December 31, 2023* were as follows:

Changes in the fair value of our Level3 financial instruments for the year ended* December 31, 2022* were as follows:

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Valuation of Notes Payable and Convertible Notes Payable

The2019 MD Loan and the2019 Cecil Loan are carried at the greater of principal plus accrued interest or the value of the Phantom Shares (see Note8) which approximates fair value. The2021 Avenue Loan, the2022 MD Loan, and the2022 DHCD Loan are carried at amortized cost, which approximates fair value due to our credit risk and market interest rates. Our notes payable and convertible notes payable are categorized within Level3 of the fair value hierarchy.

Valuation of the Common Stock Warrant Liabilities

The Original Avenue Warrant, comprised of the Tranche1 warrant and the contingently issuable Tranche2 warrant to purchase shares of Common Stock, was classified as a liability and recorded at fair value at inception of the2021 Avenue Loan. As of* March 31, 2022,we reclassified the Tranche1* warrant to additional paid-in capital. Our ability to draw Tranche2 expired on* December 31, 2022and the warrant liability was extinguished and we recognized income of $0.2 million as of December 31, 2022.*

The New Avenue Warrant is classified as a liability and carried at fair value. We estimate the fair value using a Black-Scholes option-pricing model with probability weights for the occurrence of the following events: (i) settlement of the instrument upon a change of control transaction, (ii) dissolution of the Company, or (iii) another outcome outside of (i)-(ii). These estimates require significant judgment. The carrying amount* mayfluctuate significantly and the actual settlement amount may*be materially different from the estimated fair value. The unobservable inputs to the Black-Scholes option pricing model were as follows:

The Tranche A Warrants are classified as a liability and carried at fair value (the Tranche B Warrants qualified for equity classification at issuance). We estimate the fair value using a Black-Scholes option-pricing model with probability weights for the occurrence of the following events: (i) FDA acceptance of an NDA for CNM-Au8, (ii) settlement upon a fundamental transaction, (iii) dissolution of the Company, and (iv) another outcome outside of (i)-(iii). These estimates require significant judgment. The carrying amount* mayfluctuate significantly and the actual settlement amount may*be materially different from the estimated fair value. The unobservable inputs to the Black-Scholes option pricing model were as follows:

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Valuation of the Contingent Earn-Out Liabilities

The Contingent Earn-outs are carried at fair value, determined using a Monte Carlo valuation model in order to simulate the future path of our stock price over the earn-out periods. The carrying amount of the liabilities* mayfluctuate significantly and actual amounts paid may*be materially different from the liabilities’ estimated value. The unobservable inputs to the Monte Carlo valuation model were as follows:

Note13. Capital Stock

As of* December 31, 2023and2022*, our amended and restated certificate of incorporation authorized us to issue 300,000,000 and 150,000,000 shares of Common Stock, par value $0.0001 per share, respectively; and 1,000,000 shares of preferred stock, par value $0.0001 per share. As of* December 31, 2023and2022*, we had 128,422,851 and 74,759,591 shares of Common Stock issued and outstanding, respectively, andno shares of preferred stock issued or outstanding.

Our common stockholders are entitled toone vote per share and to notice of any stockholders’ meeting. Voting, dividend, and liquidation rights of the holders of Common Stock are subject to the prior rights of holders of all classes of stock and are qualified by the rights, powers, preferences, and privileges of the holders of preferred stock.No distributions shall be made with respect to Common Stock until all declared dividends to preferred stock have been paid or set aside for payment. Common Stock isnot redeemable at the option of the holder.

Common Stock Warrants

As of* December 31, 2023and2022*, outstanding warrants to purchase shares of Common Stock were as follows:

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Public Offerings

In* October 2022,we sold 10,723,926 shares of Common Stock at a sale price of $1.01 per share to certain existing stockholders, including affiliates of our directors. The aggregate gross proceeds were $10.8 million and we paid expenses of $25,000. The offering was made pursuant to our registration statement on Form S-3 (file number333*-264299), which was declared effective by the SEC on* April 26, 2022,*and our prospectus supplement relating to the offering.

In* June 2023,we sold 50,000,000 units at a sale price of $0.80 per unit pursuant to an underwriting agreement with Canaccord Genuity LLC (“Canaccord”) as underwriter. Each unit consisted of (i)one share of Common Stock, (ii)one warrant to purchaseone share of Common Stock at an exercise price of $1.10 per share (the “Tranche A Warrants”), and (iii)one warrant to purchaseone share of Common Stock at an exercise price of $1.50 per share (the “Tranche B Warrants”). The aggregate gross proceeds were $40.0 million, excluding the proceeds, if any, from the exercise of the Tranche A Warrants and Tranche B Warrants. We cannot predict when or if the Tranche A Warrants or Tranche B Warrants will be exercised, and it is possible they mayexpire and/or never be exercised. We paid underwriting discounts and commissions of $2.4 million and offering expenses of $0.2 million. The Tranche A Warrants were exercisable immediately and will expire on the earlier of (i)sixty (60) days following the date of our public announcement that the filing of an NDA for CNM-Au8 has been accepted by the FDA, or (ii) June 16, 2026.The Tranche B Warrants were exercisable immediately and will expire on the earlier of (i)sixty (60) days following the date of our public announcement that an NDA for CNM-Au8 has been approved by the FDA, or (ii) June 16, 2030.If we enter into or become party to a fundamental transaction (which generally includes a merger of the Company with or into another entity; the sale, lease, license, or transfer of all or substantially all of our assets; tender or exchange offers; or reclassification, reorganization, or recapitalization of our Common Stock), then (i) we or our successor entity shall purchase all outstanding Tranche A Warrants by paying the holders cash in an amount equal to the Black-Scholes value of the remaining unexercised portion of each Tranche A Warrant, and (ii) upon any subsequent exercise of a Tranche B Warrant, the holder shall be entitled to receive, at the option of the holder, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration receivable upon or as a result of such fundamental transaction by a holder of the number of shares of Common Stock for which the warrant is exercisable immediately prior to such fundamental transaction. The offering was made pursuant to our registration statement on Form S-3 (file number333*-264299), which was declared effective by the SEC on* April 26, 2022,a related registration statement pursuant to Rule462*(b) (file number333-272692), filed with the SEC and effective on* June 16, 2023,and our prospectus supplement relating to the offering. The total fair value of the Tranche A Warrants, Tranche B Warrants, and shares of Common Stock sold in the offering exceeded the offering proceeds by $14.8 million, therefore pursuant to ASC815,* this amount was recognized as a loss on the initial issuance of equity in the consolidated statements of operations and comprehensive loss. The underwriting discounts and commissions and underwriting expenses were allocated to the shares of Common Stock, Tranche A Warrants, and Tranche B Warrants sold in the offering based on their relative fair values, with the amount allocated to the liability-classified Tranche A Warrants recorded as an expense in the consolidated statements of operations and comprehensive loss, and the amounts allocated to the shares of Common Stock and Tranche B Warrants as a reduction to their initial carrying values.

Common Stock Sales Agreement

In* April 2022,we entered into an Equity Distribution Agreement which we amended in December 2022 (the “ATM Agreement”). Canaccord acts as placement agent and we mayoffer and sell shares of Common Stock from time to time through Canaccord having an aggregate offering place of up to $50.0 million. The issuance and sale of Common Stock by us under the ATM Agreement is made pursuant to our registration statement on Form S-3 (file number333*-264299), which was declared effective by the Securities and Exchange Commission on* April 26, 2022.On June 16, 2023,we suspended and terminated the prospectus supplement relating to the offering, and on November 7, 2023,*we filed a prospectus supplement for the future offer and sale of Common Stock pursuant to the ATM Agreement having an aggregate offering price of up to $15.0 million.

Pursuant to the ATM Agreement, Canaccord isnot required to sell any specific number or dollar amount of Common Stock but will act as our placement agent to sell, on our behalf, all the Common Stock requested by us to be sold, consistent with Canaccord’s normal trading and sales practices, on terms mutually agreed between Canaccord and us. Canaccord is entitled to compensation at a fixed commission rate of 3.0% of the gross proceeds from each sale of Common Stock, if any. During the year ended* December 31, 2023*, we sold 2,895,090 shares of Common Stock, generated gross proceeds of $4.5 million, and paid commissions of $0.1 million. During the year ended* December 31, 2022*, we sold 358,769 shares of Common Stock and generated gross proceeds of $0.8 million, and commissions paid to Canaccord were insignificant.

Common Stock Purchase Agreement

In* March 2023,we entered into a purchase agreement (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which Lincoln Park committed to purchase up to $25.0 million of shares of Common Stock at our sole discretion, from time to time over a 36-month period commencing on March 7, 2023.The issuance and sale of Common Stock under the Purchase Agreement is made pursuant to our registration statement on Form S-3 (file number333*-264299), which was declared effective by the SEC on* April 26, 2022.On June 16, 2023,we suspended and terminated the prospectus supplement (the “Purchase Agreement Prospectus Supplement”) related to the offering with respect to the unsold shares of Common Stock issuable pursuant to the Purchase Agreement. We willnot* make any further sales of our securities pursuant to the Purchase Agreement, unless and until a new prospectus supplement is filed. Other than the termination of the Purchase Agreement Prospectus Supplement and offering with respect to future sales by us, the Purchase Agreement remains in full force and effect.

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Pursuant to the Purchase Agreement, we* maydirect Lincoln Park to purchase up to 75,000 shares of Common Stock (a “Regular Purchase”), which maybe increased up to (i)100,000 shares if the closing price of our Common Stock isnot* below $1.00, (ii)150,000 shares if the closing price of our Common Stock isnot below $2.00, and (iii)200,000 shares if the closing price of our Common Stock isnot below $4.00. The purchase price for a Regular Purchase is based on the market price of our Common Stock at the time of sale. We* maysell shares in excess of a Regular Purchase (an “Accelerated Purchase”) on any day on which we have directed Lincoln Park to purchase the maximum amount allowed for such Regular Purchase, up to the lesser of (i)300% of the number of shares purchased pursuant to such prior business day Regular Purchase or (ii)30% of the aggregate shares of our Common Stock traded on Nasdaq on the trading day immediately following the purchase date for such Regular Purchase (subject to certain volume and market price limitations). Additionally, we may*sell shares in excess of an Accelerated Purchase (an “Additional Accelerated Purchase”) on any day on which we have directed Lincoln Park to purchase the maximum amount allowed for such Accelerated Purchase, up to the lesser of (i)300% of the number of shares purchased pursuant to such prior business day Regular Purchase or (ii)30% of the aggregate shares of our Common Stock traded on Nasdaq during a certain period on the date of the Additional Accelerated Purchase (subject to certain volume and market price limitations). The purchase price for Accelerated Purchases and Additional Accelerated Purchases is equal to 97% of the lesser of (i) the VWAP of our Common Stock on Nasdaq during certain periods on the date of the Accelerated Purchase or Additional Accelerated Purchase or (ii) the closing price of our Common Stock on the date of the Accelerate Purchase or Additional Accelerated Purchase.

On the date of the Purchase Agreement, we issued 332,668 shares of Common Stock (the “Initial Commitment Shares”) to Lincoln Park as an initial fee for its commitment under the Purchase Agreement. We recorded the fair value of the Initial Commitment Shares on the date of issuance in other income (expense), net. We* mayfurther issue up to 166,334 additional shares of Common Stock (the “Additional Commitment Shares,” and, together with the Initial Commitment Shares, the “Commitment Shares”) on a pro rata basis upon each purchase by Lincoln Park under the Purchase Agreement. Under applicable Nasdaq listing rules, the total number of shares of Common Stock that we maysell to Lincoln Park is limited to 15,310,115 shares (including the Commitment Shares), representing 19.99% of the outstanding shares of our Common Stock immediately prior to the execution of the Purchase Agreement, unless we (i)first obtain stockholder approval in accordance with applicable Nasdaq listing rules or (ii) the average price paid by Lincoln Park for all shares of Common Stock issued by us under the Purchase Agreement is equal to or greater than $1.2404. The Purchase Agreement prohibits us from directing Lincoln Park to purchase any shares of Common Stock that would result in Lincoln Park having beneficial ownership of greater than 4.99% of our outstanding Common Stock, which Lincoln Park may,in its sole discretion, increase up to 9.99% of our outstanding Common Stock by delivering written notice thereof to us, which shallnot* be effective until the61st day after such written notice is delivered to us. We* mayterminate the Purchase Agreement at any time, for any reason and without any payment or liability to us, by giving Lincoln Park a termination notice with effectone* business date after the notice has been received by Lincoln Park.

We evaluated the Purchase Agreement under ASC815-40 Derivatives and Hedging—Contracts on an Entity's Own Equity as it represents the right to require Lincoln Park to purchase shares of Common Stock in the future, similar to a put option. We concluded it represents a freestanding derivative instrument that doesnot qualify for equity classification and therefore requires fair value accounting. We analyzed the terms of the contract and concluded the derivative instrument hasno value as of* December 31, 2023*. During the year ended* December 31, 2023*, we sold 400,000 shares of Common Stock under the Purchase Agreement, issued 2,893 Additional Commitment Shares, and generated proceeds of $0.4 million.

Note14. Net Loss Per Share

The computation of basic and diluted net loss per share attributable to common stockholders for the years ended* December 31, 2023and2022* was as follows:

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The following shares of potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the years ended* December 31, 2023and2022* because they were antidilutive, out-of-the-money, or the issuance of such shares is contingent upon certain conditions which werenot satisfied by the end of the period:

Note15. Related Party Transactions

License and Supply Agreements

In* August 2018,we entered into a license agreement (the “License Agreement”) and exclusive supply agreement (the “Supply Agreement”) in conjunction with4Life’s* investment in the Series C preferred stock and warrants of our predecessor.

We currently provide an aqueous zinc-silver ion dietary (mineral) supplement to4Life on a non-exclusive basis, which is sold by4Life under the tradename Zinc Factor™; and an aqueous gold dietary (mineral) supplement of very low-concentration gold nanoparticles on an exclusive basis, which is sold by4Life under the tradename Gold Factor™ and is subject to royalties. Total revenue under the License and Supply Agreements for the years ended* December 31, 2023and2022* was as follows:

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