UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
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
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code
Title of each class | Trading Symbol | Name of exchange on which registered | ||
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. ☒
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). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Accelerated filer ☐ |
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 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 ☒
The number of shares common stock outstanding as of August 05, 2022 was , par value $0.0001 per share.
PART 1 — FINANCIAL INFORMATION
This Report on Form 10-Q (“Report”) contains forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements other than statements of historical facts contained in this Report are forward-looking statements. In some cases, you can identify forward-looking statements by words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or the negative of these words or other comparable terminology.
Any forward-looking statements in this Report reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those discussed in this Report under Item 1 of the Notes to Condensed Financial Statements, under Risk Factors in this Report and those listed under Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K as filed with the Securities Exchange Commission on March 29, 2022. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.
References to “AgeX,” “our” or “we” mean AgeX Therapeutics, Inc.
The description or discussion, in this Form 10-Q, of any contract or agreement is a summary only and is qualified in all respects by reference to the full text of the applicable contract or agreement.
2 |
Disposition and deconsolidation of LifeMap Sciences, Inc. effective March 15, 2021
On March 6, 2021, AgeX and its majority-owned subsidiary LifeMap Sciences, Inc. (“LifeMap Sciences”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Atlas Capital Partners Limited, a British Virgin Islands company limited by shares (“Atlas”), and GCLMS Acquisition Corporation (“GCLMS”), a Delaware corporation that was a wholly-owned subsidiary of Atlas. On March 15, 2021, the merger was completed pursuant to the terms of the Merger Agreement. As a result of the merger, GCLMS merged into LifeMap Sciences and (a) the shares of LifeMap Sciences common stock outstanding at the time of the merger entitled the holders of those shares to receive a pro rata portion of a $500,000 cash payment for all shares of LifeMap Sciences common stock in the aggregate (the “Merger Consideration”), with each LifeMap Sciences shareholder’s pro rata portion of the Merger Consideration to be determined in accordance with the number of shares of LifeMap Sciences common stock owned by such shareholder as a percentage of shares of LifeMap Sciences common stock outstanding immediately before the effective date of the merger, and (b) the outstanding shares of GCLMS common stock were converted into shares of LifeMap Sciences common stock so that Atlas is now the sole shareholder of LifeMap Sciences.
AgeX received approximately $466,400 in cash as its pro rata share of the Merger Consideration in the merger. Prior to and as a condition to the merger under the terms of the Merger Agreement, $1,761,296 of LifeMap Sciences’ indebtedness to AgeX was converted into shares of LifeMap Sciences common stock. LifeMap Sciences also paid AgeX $250,000 in cash to pay off a portion of LifeMap Sciences’ indebtedness to AgeX that was not converted into shares of LifeMap Sciences common stock.
The results of operations and cash flows for LifeMap Sciences are reported as discontinued operations for all periods presented in our consolidated financial statements.
As a result of the completion of the cash-out merger on March 15, 2021, LifeMap Sciences is no longer a subsidiary of AgeX. Effective March 15, 2021, AgeX deconsolidated LifeMap Sciences’ consolidated financial statements and consolidated results of operations from those of AgeX under applicable accounting principles generally accepted in the United States of America due to the disposition of LifeMap Sciences on that date.
The sale of LifeMap Sciences was a taxable transaction to AgeX; however, no income tax is due as the transaction resulted in a taxable loss primarily due to AgeX’s tax basis in the subsidiary.
AgeX’s consolidated balance sheet at December 31, 2021 and unaudited condensed consolidated balance sheet at June 30, 2022 do not include LifeMap Sciences’ consolidated assets and liabilities due to the deconsolidation of LifeMap Sciences on March 15, 2021.
AgeX’s unaudited condensed consolidated statements of operations for the six months ended June 30, 2021 include LifeMap Sciences’ consolidated results for the period through March 15, 2021 rather than the day immediately preceding the deconsolidation due to the conversion of $1,761,296 of LifeMap Sciences’ indebtedness to AgeX into shares of LifeMap Sciences common stock on March 15, 2021 followed by the completion of the cash-out merger on the same day.
The deconsolidation of LifeMap Sciences is also referred to as the “LifeMap Deconsolidation” in this Report.
For further discussion, see Notes to the Unaudited Condensed Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this report.
3 |
Item 1. Financial Statements
AGEX THERAPEUTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value amounts)
June 30, 2022 | December 31, 2021 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Accounts and grants receivable, net | ||||||||
Prepaid expenses and other current assets | ||||||||
Total current assets | ||||||||
Deposits | ||||||||
Intangible assets, net | ||||||||
TOTAL ASSETS | $ | $ | ||||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable and accrued liabilities | $ | $ | ||||||
Loan due to Juvenescence, net of debt issuance costs, current portion | ||||||||
Related party payables, net | ||||||||
Warrant liability | ||||||||
Insurance premium liability and other current liabilities | ||||||||
Total current liabilities | ||||||||
Loan due to Juvenescence, net of debt issuance costs, net of current portion | ||||||||
TOTAL LIABILITIES | ||||||||
Commitments and contingencies (Note 11) | ||||||||
STOCKHOLDERS’ DEFICIT | ||||||||
Preferred stock, $ par value, authorized shares; issued and outstanding as of June 30, 2022 and December 31, 2021 | ||||||||
Common stock, $ par value, shares authorized; and and shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively | ||||||||
Additional paid-in capital | ||||||||
Accumulated deficit | ( | ) | ( | ) | ||||
AgeX Therapeutics, Inc. stockholders’ deficit | ( | ) | ( | ) | ||||
Noncontrolling interest | ( | ) | ( | ) | ||||
Total stockholders’ deficit | ( | ) | ( | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | $ |
See accompanying notes to the condensed consolidated interim financial statements.
4 |
AGEX THERAPEUTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
(unaudited) | ||||||||||||||||
REVENUES | ||||||||||||||||
Grant revenues | $ | $ | $ | $ | ||||||||||||
Other revenues | ||||||||||||||||
Total revenues | ||||||||||||||||
Cost of sales | ||||||||||||||||
Gross profit | ||||||||||||||||
OPERATING EXPENSES | ||||||||||||||||
Research and development | ||||||||||||||||
General and administrative | ||||||||||||||||
Total operating expenses | ||||||||||||||||
Gain on deconsolidation of LifeMap Sciences (Note 3) | ||||||||||||||||
Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
OTHER EXPENSE, NET: | ||||||||||||||||
Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Unrealized loss on change in fair value of warrants (Note 6) | ( | ) | ( | ) | ||||||||||||
Other income, net | ||||||||||||||||
Total other expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
NET LOSS FROM CONTINUING OPERATIONS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
NET LOSS FROM DISCONTINUED OPERATIONS (Note 3) | ( | ) | ||||||||||||||
NET LOSS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Net loss attributable to noncontrolling interest from continuing operations | ||||||||||||||||
Net loss attributable to noncontrolling interest from discontinued operations | ||||||||||||||||
NET LOSS ATTRIBUTABLE TO AGEX | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
NET LOSS PER COMMON SHARE: | ||||||||||||||||
BASIC AND DILUTED | ||||||||||||||||
Continuing operations | $ | ( | ) | $ | ( | ) | ( | ) | ( | ) | ||||||
Discontinued operations | ||||||||||||||||
$ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: | ||||||||||||||||
BASIC AND DILUTED | ||||||||||||||||
AMOUNTS ATTRIBUTABLE TO AGEX: | ||||||||||||||||
Loss from continuing operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Loss from discontinued operations | ( | ) | ||||||||||||||
NET LOSS ATTRIBUTABLE TO AGEX | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
See accompanying notes to the condensed consolidated interim financial statements.
5 |
AGEX THERAPEUTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
(unaudited) | ||||||||||||||||
NET LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Other comprehensive expense, net of tax: | ||||||||||||||||
Foreign currency translation adjustments from discontinued operations | ( | ) | ||||||||||||||
COMPREHENSIVE LOSS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Less: Comprehensive loss attributable to noncontrolling interest from continuing operations | ||||||||||||||||
Less: Comprehensive loss attributable to noncontrolling interest from discontinued operations | ||||||||||||||||
COMPREHENSIVE LOSS ATTRIBUTABLE TO AGEX COMMON STOCKHOLDERS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
See accompanying notes to the condensed consolidated interim financial statements.
6 |
AGEX THERAPEUTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six Months Ended June 30, | ||||||||
2022 | 2021 | |||||||
(unaudited) | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss attributable to AgeX from continuing operations | $ | ( | ) | $ | ( | ) | ||
Net loss attributable to noncontrolling interest | ( | ) | ( | ) | ||||
Adjustments to reconcile net loss attributable to AgeX to net cash used in operating activities: | ||||||||
Gain on deconsolidation of LifeMap Sciences (Note 3) | ( | ) | ||||||
Gain on extinguishment of debt (Paycheck Protection Program Loan) | ( | ) | ||||||
Unrealized loss on change in fair value of warrants (Note 6) | ||||||||
Amortization of intangible assets | ||||||||
Amortization of debt issuance costs | ||||||||
Stock-based compensation | ||||||||
Changes in operating assets and liabilities: | ||||||||
Accounts and grants receivable, net | ||||||||
Prepaid expenses and other current assets | ||||||||
Accounts payable and accrued liabilities | ( | ) | ( | ) | ||||
Related party payables | ||||||||
Insurance premium liability | ( | ) | ( | ) | ||||
Other current liabilities | ( | ) | ( | ) | ||||
Net cash used in operating activities from continuing operations | ( | ) | ( | ) | ||||
Net cash used in operating activities from discontinued operations (Note 3) | ( | ) | ||||||
Net cash used in operating activities | ( | ) | ( | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Proceeds from the sale of LifeMap Sciences (Note 3) | ||||||||
Partial collection on loan due from LifeMap Sciences | ||||||||
Net cash provided by investing activities from continuing operations | ||||||||
Deconsolidation of cash and cash equivalents from discontinued operations (Note 3) | ( | ) | ||||||
Net cash provided by investing activities | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Draw down on loan facilities from Juvenescence | ||||||||
Proceeds from the issuance of common stock | ||||||||
Net cash provided by financing activities from continuing operations | ||||||||
Partial payment on loan due to AgeX from discontinued operations (Note 3) | ( | ) | ||||||
Net cash provided by financing activities | ||||||||
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | ||||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH: | ||||||||
At beginning of the period | ||||||||
At end of the period | $ | $ |
See accompanying notes to the condensed consolidated interim financial statements.
7 |
AGEX THERAPEUTICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(unaudited)
1. Organization, Business Overview and Liquidity
AgeX Therapeutics, Inc. (“AgeX”) was incorporated in January 2017 in the state of Delaware as a subsidiary of Lineage Cell Therapeutics, Inc. (“Lineage,” formerly known as BioTime, Inc.), a publicly traded, clinical-stage biotechnology company.
AgeX is a biotechnology company focused on the development and commercialization of novel therapeutics targeting human aging and degenerative diseases. AgeX’s mission is to apply its comprehensive experience in fundamental biological processes of human aging to a broad range of age-associated medical conditions.
AgeX’s proprietary technology, based on telomerase-mediated cellular immortality and regenerative biology, allows AgeX to utilize telomerase-expressing regenerative pluripotent stem cells (“PSCs”) for the manufacture of cell-based therapies to regenerate tissues afflicted with age-related chronic degenerative disease. AgeX’s main technology platforms and product candidates are:
● | PureStem® PSC-derived clonal embryonic progenitor cell lines that may be capable of generating a broad range of cell types for use in cell-based therapies; |
● | UniverCyte™ which uses the HLA-G gene to suppress rejection of transplanted cells and tissues to confer low immune observability to cells; |
● | AGEX-BAT1 using adipose brown fat cells for metabolic diseases such as Type II diabetes; |
● | AGEX-VASC1 using vascular progenitor cells to treat tissue ischemia; and |
● | Induced tissue regeneration or iTR technology to regenerate or rejuvenate cells to treat a variety of degenerative diseases including those associated with aging, as well as other potential tissue regeneration applications such as scarless wound repair. |
Emerging Growth Company
AgeX is an “emerging growth company” as defined in the Jumpstart our Business Startups Act of 2012.
Disposition and Deconsolidation of LifeMap Sciences
As
discussed in Note 3, on March 6, 2021, AgeX and its then majority-owned subsidiary LifeMap Sciences, Inc. (“LifeMap Sciences”)
entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Atlas Capital Partners Limited, a British Virgin
Islands company limited by shares (“Atlas”), and GCLMS Acquisition Corporation (“GCLMS”), a Delaware corporation
that was a wholly-owned subsidiary of Atlas. On March 15, 2021, the merger was completed pursuant to the terms of the Merger Agreement.
As a result of the merger, GCLMS merged into LifeMap Sciences and (a) the shares of LifeMap Sciences common stock outstanding at the
time of the merger entitled the holders of those shares to receive a pro rata portion of a $
AgeX
received approximately $
As a result of the completion of the cash-out merger on March 15, 2021, LifeMap Sciences is no longer a subsidiary of AgeX. Accordingly, AgeX has deconsolidated LifeMap Sciences’ consolidated financial statements and consolidated results of operations from AgeX, effective March 15, 2021 (the “LifeMap Deconsolidation”), in accordance with Accounting Standards Codification, or ASC 810-10-40, Consolidation. See Note 3 to AgeX’s condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q for additional information regarding the disposition and deconsolidation of LifeMap Sciences.
8 |
Going Concern
AgeX
primarily finances its operations through loans from its largest stockholder Juvenescence Limited (“Juvenescence”) and sales
of its common stock. AgeX has incurred operating losses and negative cash flows since inception and had an accumulated deficit of $
Based
on a strategic review of its operations, giving consideration to the status of its product development programs, human resources, capital
needs and resources, and current conditions in the capital markets, AgeX’s board of directors and management have adopted operating
plans and budgets to extend the period over which AgeX can continue its operations with its available cash resources. Notwithstanding
those operating plans and budgets, based on AgeX’s most recent projected cash flows AgeX believes that its cash and cash equivalents
of $
Staff Reductions and Elimination of Laboratory Facilities Lease
During April 2020, AgeX initiated staff layoffs that affected most of its research and development personnel. The staff reductions followed AgeX’s strategic review of its operations, giving consideration to the status of its product development programs, human resources, capital needs and resources, and the conditions in the capital markets at that time resulting from the COVID-19 pandemic. Following the staff reductions, AgeX subleased out a significant portion of its leased laboratory space and did not renew its lease or enter into a new lease for a replacement facility when its lease expired on December 31, 2020. Instead, AgeX entered into a lease for a smaller office only space commencing January 1, 2021.
Liquidity and Impact of COVID-19
In addition to general economic and capital market trends and conditions, AgeX’s ability to raise sufficient additional capital to finance its operations from time to time will depend on a number of factors specific to AgeX’s operations such as operating expenses and progress in out-licensing its technologies and development of its product candidates. Although AgeX has been able to reduce its operating expenses by eliminating internal research and development activities and focusing instead on out-sourcing research and development and seeking licensing arrangements for AgeX technologies, this approach has also made it more difficult for AgeX to make progress in developing its target product candidates and technologies, which in turn may make it more difficult for AgeX to raise capital. The availability of financing also may be adversely impacted by the COVID-19 pandemic which could depress national and international economies and disrupt capital markets, supply chains, and aspects of AgeX’s operations. The extent to which the ongoing COVID-19 pandemic will ultimately impact AgeX’s business, results of operations, financial condition, or cash flows is highly uncertain and difficult to predict because it will depend on many factors that are outside AgeX’s control. The unavailability or inadequacy of financing to meet future capital needs could force AgeX to modify, curtail, delay, or suspend some or all aspects of planned operations. Sales of additional equity securities could result in the dilution of the interests of its stockholders. AgeX cannot assure that adequate financing will be available on favorable terms, if at all.
2. Basis of Presentation and Summary of Significant Accounting Policies
The unaudited condensed consolidated interim financial statements presented herein, and discussed below, have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. In accordance with those rules and regulations certain information and footnote disclosures normally included in comprehensive consolidated financial statements have been condensed or omitted. The condensed consolidated balance sheet as of December 31, 2021 was derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by U.S. GAAP. These condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in AgeX’s Annual Report on Form 10-K for the year ended December 31, 2021.
The accompanying condensed consolidated interim financial statements, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of AgeX’s financial condition and results of operations. The condensed consolidated results of operations are not necessarily indicative of the results to be expected for any other interim period or for the entire year.
9 |
Principles of consolidation
AgeX’s condensed consolidated interim financial statements include the accounts of its subsidiaries and certain research and development departments. AgeX consolidated its direct and indirect wholly-owned or majority-owned subsidiaries because AgeX has the ability to control their operating and financial decisions and policies through its ownership, and the noncontrolling interest is reflected as a separate element of stockholders’ deficit on AgeX’s condensed consolidated balance sheets.
AgeX’s condensed consolidated balance sheet at December 31, 2021 and unaudited condensed consolidated balance sheet at June 30, 2022 do not include LifeMap Sciences’ consolidated assets and liabilities due to the deconsolidation of LifeMap Sciences on March 15, 2021. LifeMap Sciences’ consolidated financial statements and consolidated results of operations include its wholly-owned and consolidated subsidiary LifeMap Sciences, Ltd.
AgeX’s
unaudited condensed consolidated statements of operations for the six months ended June 30, 2021 include LifeMap Sciences’ consolidated
results for the period through March 15, 2021 rather than the day immediately preceding the deconsolidation due to the conversion of
$
AgeX
has two operating subsidiaries, Reverse Bioengineering, Inc. (“Reverse Bio”) and ReCyte Therapeutics, Inc. (“ReCyte”).
Reverse Bio is a wholly owned subsidiary of AgeX. AgeX plans to finance its iTRTM research and development through Reverse
Bio. To the extent that such financing is obtained through the sale of capital stock or other equity securities to investors or other
biopharma companies by Reverse Bio, AgeX’s equity interest in Reverse Bio and its iTRTM business would be diluted. ReCyte
is an early stage pre-clinical research and development company involved in stem cell-derived endothelial and cardiovascular related
progenitor cells for the treatment of vascular disorders and ischemic conditions. AgeX owns
Use of estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates. See Note 6 for discussion on estimated unrealized loss on change in fair value of warrant liability.
Fair value measurements of financial instruments
Fair value is defined as the price 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. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of the financial statement presentation date.
The carrying value of cash equivalents, accounts receivable and accounts payable, are carried at, or approximate, fair value as of the reporting date because of their short-term nature. The credit facility is reported at fair value as it bears market rates of interest. Fair values for the AgeX’s warrant liabilities are estimated by utilizing valuation models that consider current and expected stock prices, volatility, dividends, market interest rates, forward yield curves and discount rates. Such amounts and the recognition of such amounts are subject to significant estimates that may change in the future.
Fair value is defined as the price 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. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value (ASC 820-10-50), Fair Value Measurements and Disclosures:
● | Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
● | Level 2 – Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, and inputs that are observable for the assets or liabilities, either directly or indirectly, for substantially the full term of the financial instruments. |
● | Level 3 – Inputs to the valuation methodology are unobservable; that reflect management’s own assumptions about the assumptions market participants would make and significant to the fair value. |
10 |
The following table summarizes fair value measurements by level as of June 30, 2022 for liabilities measured at fair value on a recurring basis (in thousands):
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Warrant liability | $ | $ | $ | $ |
There were no warrant liabilities as of December 31, 2021.
In determining fair value, AgeX utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, and also considers counterparty credit risk in its assessment of fair value. For the periods presented, AgeX has no financial assets recorded at fair value on a recurring basis, except for cash and cash equivalents primarily consisting of money market funds. These assets are measured at fair value using the period-end quoted market prices as a Level 1 input.
The carrying amounts of accounts receivable, net, prepaid expenses and other current assets, related party amounts due to affiliates, accounts payable, accrued liabilities and other current liabilities approximate fair values because of the short-term nature of these items.
The accounting guidance establishes a hierarchy which requires an entity to maximize the use of quoted market prices and minimize the use of unobservable inputs. An asset or liability’s level is based on the lowest level of input that is significant to the fair value measurement. Fair value estimates are reviewed at the origination date and again at each applicable measurement date and interim or annual financial reporting dates, as applicable for the financial instrument, and are based upon certain market assumptions and pertinent information available to management at those times.
The methods and significant inputs and assumptions utilized in estimating the fair value of the warrant liabilities, as well as the respective hierarchy designations are discussed further in Note 6 “Warrant Liability”. The warrant liability measurement is considered a Level 3 measurement based on the availability of market data and inputs and the significance of any unobservable inputs as of the measurement date.
Restricted cash
In accordance with ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, a reconciliation of AgeX’s cash and cash equivalents in the condensed consolidated balance sheets to cash, cash equivalents and restricted cash in the condensed consolidated statements of cash flows for all periods presented is as follows (in thousands):
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
(unaudited) | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Restricted cash included in deposits | ||||||||
Total cash, cash equivalents, and restricted cash as shown in the condensed consolidated statements of cash flows | $ | $ |
Restricted cash entirely represents the deposit required to maintain AgeX’s corporate credit card program. All restricted cash was included in deposits in the condensed consolidated balance sheets.
Leases
AgeX accounts for leases in accordance with ASU 2016-02, Leases (Topic 842, “ASC 842”) and its subsequent amendments affecting AgeX: (i) ASU 2018-10, Codification Improvements to Topic 842, Leases, and (ii) ASU 2018-11, Leases (Topic 842): Targeted improvements, using the modified retrospective method. AgeX management determines if an arrangement is a lease at inception. Leases are classified as either financing or operating, with classification affecting the pattern of expense recognition in the consolidated statements of operations. When determining whether a lease is a financing lease or an operating lease, ASC 842 does not specifically define criteria to determine “major part of remaining economic life of the underlying asset” and “substantially all of the fair value of the underlying asset.” For lease classification determination, AgeX continues to use (i) 75% or greater to determine whether the lease term is a major part of the remaining economic life of the underlying asset and (ii) 90% or greater to determine whether the present value of the sum of lease payments is substantially all of the fair value of the underlying asset. Under the available practical expedients, and as applicable, AgeX accounts for the lease and non-lease components as a single lease component. AgeX recognizes right-of-use (“ROU”) assets and lease liabilities for leases with terms greater than twelve months in the consolidated balance sheet.
ROU assets represent an entity’s right to use an underlying asset during the lease term and lease liabilities represent an entity’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. If the lease agreement does not provide an implicit rate in the contract, an entity uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the entity will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. AgeX does not capitalize leases that have terms of twelve months or less.
11 |
On
November 3, 2020, AgeX entered into a one year lease effective January 1, 2021 for office space only comprising 135 square feet in a
building in an office and research park at 1101 Marina Village Parkway, Suite 201, Alameda, California. Base monthly rent was $
Accounting for warrants
AgeX determines the accounting classification of warrants it issues, as either liability or equity, by first assessing whether the warrants meet liability classification in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, then in accordance with ASC 815-40, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock. Under ASC 480, warrants are considered liability classified if the warrants are mandatorily redeemable, obligate AgeX to settle the warrants or the underlying shares by paying cash or other assets, or warrants that must or may require settlement by issuing a variable number of shares. If warrants do not meet liability classification under ASC 480-10, AgeX assesses the requirements under ASC 815-40, which states that contracts that require or may require the issuer to settle the contract for cash are liabilities recorded at fair value, irrespective of the likelihood of the transaction occurring that triggers the net cash settlement feature. If the warrants do not require liability classification under ASC 815-40, and in order to conclude equity classification, AgeX also assesses whether the warrants are indexed to its common stock and whether the warrants are classified as equity under ASC 815-40 or other applicable U.S. GAAP. After all relevant assessments, AgeX concludes whether the warrants are classified as liability or equity. Liability classified warrants require fair value accounting at issuance and subsequent to initial issuance with all changes in fair value after the issuance date recorded in the statements of operations. Equity classified warrants only require fair value accounting at issuance with no changes recognized subsequent to the issuance date. AgeX has liability classified warrants as of June 30, 2022. See Notes 5 and 6 for additional information regarding warrants.
Revenue recognition
AgeX recognizes revenue in a manner that depicts the transfer of control of a product or a service to a customer and reflects the amount of the consideration it expects to receive in exchange for such product or service. In doing so, AgeX follows a five-step approach: (i) identify the contract with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when (or as) the customer obtains control of the product or service. AgeX considers the terms of a contract and all relevant facts and circumstances when applying the revenue recognition standard. AgeX applies the revenue recognition standard, including the use of any practical expedients, consistently to contracts with similar characteristics and in similar circumstances.
Subscription and advertisement revenues – LifeMap Sciences sold subscription-based products, including research databases and software tools, for biomedical, gene, and disease research. LifeMap Sciences sold these subscriptions primarily through the internet to biotech and pharmaceutical companies worldwide. LifeMap Sciences’ principal subscription product was the GeneCards® Suite, which includes the GeneCards® human gene database, and the MalaCards™ human disease database. LifeMap Sciences’ performance obligations for subscriptions included a license of intellectual property related to its genetic information packages and premium genetic information tools. These licenses were deemed functional licenses that provide customers with a “right to access” to LifeMap Sciences’ intellectual property during the subscription period and, accordingly, revenue was recognized over a period of time, which was generally the subscription period. Payments were typically received at the beginning of a subscription period and revenue was recognized according to the type of subscription sold. For subscription contracts in which the subscription term commenced before a payment was due, LifeMap Sciences recorded an account receivable because the subscription was earned over time and billed the customer according to the contract terms. LifeMap Sciences deferred subscription revenues primarily represented subscriptions for which cash payment was received for the subscription term, but the subscription term was not completed as of the balance sheet date reported.
LifeMap Sciences licensed from third parties the databases and software it commercialized and had a contractual obligation to pay royalties to the licensor on subscriptions sold. These costs were included in operating loss from discontinued operations on the consolidated statements of operations when the cash was received and the royalty obligation was incurred as the royalty payments did not qualify for capitalization of costs to fulfill a contract under ASC 340-40, Other Assets and Deferred Costs - Contracts with Customers.
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For
the six months ended June 30, 2021, LifeMap Sciences recognized $
Grant revenues – AgeX accounts for grants received to perform research and development services in accordance with ASC 730-20, Research and Development Arrangements. At the inception of the grant, we perform an assessment as to whether the grant is a liability or a contract to perform research and development services for others. If AgeX or a subsidiary receiving the grant is obligated to repay the grant funds to the grantor regardless of the outcome of the research and development activities, then AgeX is required to estimate and recognize that liability. Alternatively, if AgeX or a subsidiary receiving the grant is not required to repay, or if it is required to repay the grant funds only if the research and development activities are successful, then the grant agreement is accounted for as a contract to perform research and development services for others, in which case, grant revenue is recognized when the related research and development expenses are incurred.
In applying the provisions of Topic 606, AgeX has determined that government grants are out of the scope of Topic 606 because the government entities do not meet the definition of a “customer”, as defined by Topic 606, as there is not considered to be a transfer of control of good or services to the government entities funding the grant. In the absence of applicable guidance under U.S. GAAP, our policy is to recognize grant revenue when the related costs are incurred, provided that the applicable conditions under the government contracts have been met. Only costs that are allowable under the grant award, certain government regulations and the National Institutes of Health’s supplemental policy and procedure manual may be claimed for reimbursement, and the reimbursements are subject to routine audits from governmental agencies from time to time. Costs incurred are recorded in research and development expenses on the accompanying condensed consolidated statements of operations.
On
April 8, 2020, AgeX was awarded a grant of up to approximately $
ESI BIO Research Products - AgeX, through its ESI BIO research product division, markets a number of products related to human pluripotent stem cells (“PSC lines”), including research-grade PSC lines and PSC lines produced under current good manufacturing practices or “cGMP”. AgeX offers cells from PSC lines to customers under contracts that permit the customers to utilize PSC lines for the research, development, and commercialization of cell-based therapies or other products in defined fields of application. The compensation to AgeX for providing the PSC line cells under such contracts may include up-front payments, milestone payments related to product development, regulatory matters, and commercialization, and the payment of royalties on sales of products developed from AgeX PSC lines.
For
the three and six months ended June 30, 2022, AgeX recognized $
Arrangements with multiple performance obligations – AgeX may enter into contracts with customers that include multiple performance obligations. For such arrangements, AgeX will allocate revenue to each performance obligation based on its relative standalone selling price. AgeX will determine or estimate standalone selling prices based on the prices charged, or that would be charged, to customers for that product or service. As of June 30, 2022 and December 31, 2021, AgeX did not have significant arrangements with multiple performance obligations.
Research and development
Research and development expenses consist primarily of personnel costs and related benefits, including stock-based compensation, amortization of intangible assets, outside consultants and contractors, sponsored research agreements with certain universities, and suppliers, and license fees paid to third parties to acquire patents or licenses to use patents and other technology. Research and development expenses incurred and reimbursed by grants from third parties or governmental agencies if any and as applicable, approximate the respective revenues recognized in the condensed consolidated statements of operations.
13 |
General and administrative
General and administrative expenses consist primarily of compensation and related benefits, including stock-based compensation, for executive and corporate personnel, and professional and consulting fees.
Basic loss per share is calculated by dividing net loss attributable to AgeX common stockholders by the weighted average number of shares of common stock outstanding, net of unvested restricted stock or restricted stock units, subject to repurchase by AgeX, if any, during the period. Diluted loss per share is calculated by dividing the net income attributable to AgeX common stockholders, if any, by the weighted average number of shares of common stock outstanding, adjusted for the effects of potentially dilutive common stock issuable under outstanding stock options, warrants, and restricted stock units, using the treasury-stock method, and convertible preferred stock, if any, using the if-converted method, and treasury stock held by subsidiaries, if any.
For the three and six months ended June 30, 2022 and 2021, because AgeX reported a net loss attributable to common stockholders, all potentially dilutive common stock, comprised of stock options, restricted stock units and warrants, is antidilutive.
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Stock options | ||||||||||||||||
Warrants (1) | ||||||||||||||||
Restricted stock units |
(1) |
Reclassifications
Certain reclassifications have been made to the prior period’s condensed consolidated financial statements to conform to current year presentation in the investing and financing activities section in the condensed consolidated statement of cash flows. Certain financial information is presented on a rounded basis, which may cause minor differences.
Recently adopted accounting pronouncement
In May 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). The amendment in this update addresses how an issuer should account for modifications made to equity-classified written call options. The guidance in the standard requires the issuer to treat a modification of an equity-classified call option that does not cause the instrument to become liability-classified as an exchange of the original call option for a new call option. This guidance applies whether the modification is structured as an amendment to the terms and conditions of the call option or as termination of the original call option and issuance of a new call option. The Emerging Issues Task Force (EITF) concluded that the recognition of the modification depends on the nature of the transaction in which a warrant is modified. If there is more than one element in a transaction (for example, if the modification involves both a debt modification and an equity issuance), then the guidance requires the issuer to allocate the effect of the option modification to each element. Amendments in the new standard are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted for all entities, including adoption in an interim period. If an entity elects to early adopt the amendments in this ASU in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. AgeX adopted this standard as of January 1, 2022 and it did not have a material impact on the condensed consolidated interim financial statements.
In November 2021, the FASB issued ASU No. 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. The amendments in this update require disclosures about transactions with a government that have been accounted for by analogizing to a grant or contribution accounting model to increase transparency about (1) the types of transactions, (2) the accounting for the transactions, and (3) the effect of the transactions on an entity’s financial statements. The amendments are effective for all entities within their scope, which excludes not-for-profit entities and employee benefit plans, for financial statements issued for annual periods beginning after December 15, 2021. Early application of the amendment is permitted. AgeX adopted this standard as of January 1, 2022 and it did not have a material impact on the condensed consolidated interim financial statements.
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Recently issued accounting pronouncements not yet adopted
The recently issued accounting pronouncements applicable to AgeX that are not yet effective should be read in conjunction with the recently issued accounting pronouncements, as applicable and disclosed in AgeX’s Annual Report on Form 10-K for the year ended December 31, 2021.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequent amendments to the initial guidance under ASU 2018-19, ASU 2019-04, ASU 2019-05 and ASU 2019-10, which amends the current approach to estimate credit losses on certain financial assets. This ASU requires immediate recognition of management’s estimates of current expected credit losses. Under the prior model, losses were recognized only as they were incurred, which FASB has noted delayed recognition of expected losses that might not yet have met the threshold of being probable. The standard is applicable to all financial assets (and net investment in leases) that are not accounted for at fair value through net income, such as trade receivables, loans, debt securities, and net investment in leases, thereby bringing consistency in accounting treatment across different types of financial instruments and requiring consideration of a broader range of variables when forming loss estimates. Subsequent changes in the valuation allowance are recorded in current earnings and reversal of previous losses are permitted. ASU 2016-13 is effective for AgeX beginning January 1, 2023 and is not expected to have a material impact on the condensed consolidated financial statements.
In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which amends the accounting for credit losses on financial instruments. This amendment eliminates the recognition and measurement guidance on troubled debt restructurings for creditors that have adopted the new credit losses guidance in Accounting Standards Codification 326 (“ASC 326”) and requires enhanced disclosures about loan modifications for borrowers experiencing financial difficulty. The new guidance also requires public business entities to present gross write-offs by year of origination in their vintage disclosures. The guidance is effective for AgeX on January 1, 2023, including interim periods. Early adoption is permitted, and the amendment applied prospectively, except for the recognition and remeasurement of troubled debt restructurings. Entities can elect to adopt the guidance on troubled debt restructurings using either a prospective or modified retrospective transition. If an entity elects to apply a modified retrospective transition, it will record a cumulative effect adjustment to retained earnings in the period of adoption. AgeX does not expect the adoption of this guidance to have a material impact on the condensed consolidated financial statements.
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was enacted and signed into law. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property. AgeX reviewed the provisions of the CARES Act, but does not expect it to have a material impact to its tax provision or its condensed consolidated financial statements. As described in Note 11, AgeX has obtained a loan under the Paycheck Protection Program under the CARES Act, the repayment of which was forgiven in February 2021.
3. Disposition and Deconsolidation of LifeMap Sciences
Discontinued Operations
On
March 6, 2021, AgeX and LifeMap Sciences entered into the Merger Agreement with Atlas and GCLMS. On March 15, 2021, the merger was completed
pursuant to the terms of the Merger Agreement. As a result of the merger, GCLMS merged into LifeMap Sciences and (a) the shares of LifeMap
Sciences common stock outstanding at the time of the merger entitled the holders of those shares to receive a pro rata portion of the
$
AgeX
received approximately $
The results of operations and cash flows for LifeMap Sciences are reported as discontinued operations under U.S. GAAP in accordance with ASC 205-20 Discontinued Operations for all periods presented in our consolidated financial statements. AgeX will not have any continuing involvement in LifeMap Sciences subsequent to the consummation of the merger on March 15, 2021. The following table presents the operating results of LifeMap Sciences that have been treated as discontinued operations for the periods presented (unaudited and in thousands):
Six Months Ended June 30, 2021 | ||||
Net revenues | $ | |||
Costs, operating and other expenses | ( | ) | ||
Loss from discontinued operations | ( | ) | ||
Net loss from discontinued operations attributable to noncontrolling interest | ||||
Loss from discontinued operations (1) | $ | ( | ) |
(1) |
Deconsolidation
As a result of the completion of the cash-out merger on March 15, 2021, LifeMap Sciences is no longer a subsidiary of AgeX. Effective March 15, 2021, AgeX deconsolidated LifeMap Sciences’ consolidated financial statements and consolidated results of operations from those of AgeX under U.S. GAAP ASC 810-10-40-4 Deconsolidation of a Subsidiary or Derecognition of a Group of Assets due to the disposition of LifeMap Sciences on that date.
AgeX’s consolidated balance sheet at December 31, 2021 and unaudited condensed consolidated balance sheet at June 30, 2022 do not include LifeMap Sciences’ consolidated assets and liabilities due to the deconsolidation of LifeMap Sciences on March 15, 2021.
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AgeX’s
unaudited condensed consolidated statements of operations for the six months ended June 30, 2021 include LifeMap Sciences’ consolidated
results for the period through March 15, 2021 rather than the day immediately preceding the LifeMap Deconsolidation due to the conversion
of $
AgeX
recognized a gain of $
4. Selected Balance Sheet Components
Intangible assets, net
At June 30, 2022 and December 31, 2021, intangible assets, primarily consisting of acquired in-process research and development and patents, and accumulated amortization were as follows (in thousands):
June 30, 2022 (unaudited) | December 31, 2021 | |||||||
Intangible assets | $ | $ | ||||||
Accumulated amortization | ( | ) | ( | ) | ||||
Total intangible assets, net | $ | $ |
AgeX
recognized $
Amortization of intangible assets for periods subsequent to June 30, 2022 is as follows (in thousands):
Year Ending December 31, | Amortization Expense | |||
2022 | $ | |||
2023 | ||||
2024 | ||||
2025 | ||||
Thereafter | ||||
Total | $ |
Accounts payable and accrued liabilities
At June 30, 2022 and December 31, 2021, accounts payable and accrued liabilities were comprised of the following (in thousands):
June 30, 2022 (unaudited) | December 31, 2021 | |||||||
Accounts payable | $ | $ | ||||||
Accrued compensation | ||||||||
Accrued vendors and other expenses | ||||||||
Total accounts payable and accrued liabilities | $ | $ |
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5. Related Party Transactions
2019 Loan Agreement
On
August 13, 2019, AgeX and Juvenescence entered into a Loan Facility Agreement (the “2019 Loan Agreement”) pursuant to which
Juvenescence has provided to AgeX a $
As
consideration for the line of credit under the 2019 Loan Agreement, AgeX issued to Juvenescence warrants to purchase
2020 Loan Agreement
On
March 30, 2020, AgeX and Juvenescence entered into a new Secured Convertible Facility Agreement (the “2020 Loan Agreement”)
pursuant to which Juvenescence provided to AgeX an $
Through
June 30, 2022, AgeX had drawn the full $
Under
the terms of the 2020 Loan Agreement, each time AgeX received an advance of funds under the 2020 Loan Agreement, AgeX issued to Juvenescence
a number of 2020 Warrants equal to 50% of the number determined by dividing the amount of the advance by the applicable Market Price.
The Market Price set each 2020 Warrant when issued was the closing price per share of AgeX common stock on the NYSE American on the date
of the applicable notice from AgeX requesting a draw of funds that triggered the obligation to issue the 2020 Warrant. The exercise price
of the 2020 Warrants is the applicable Market Price. The 2020 Warrants will expire at 5:00 p.m. New York time three years after the date
of issue. As of June 30, 2022, AgeX had issued to Juvenescence 2020 Warrants to purchase
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2022 Secured Convertible Promissory Note and Security Agreement
On
February 14, 2022, AgeX and Juvenescence entered into a Secured Convertible Promissory Note (the “Secured Note”) pursuant
to which Juvenescence has agreed to provide to AgeX a $
As an arrangement fee for the Secured Note, AgeX will pay Juvenescence an Origination Fee in an amount equal to 4% of the amount each draw of loan funds, which will accrue as each draw is funded, and an additional 4% of all the total amount of funds drawn that will accrue following the end of the 12 month period during which funds may be drawn from the line of credit. The Origination Fee will become due and payable on the Repayment Date or in a pro rata amount with any prepayment of in whole or in part of the outstanding principal balance of the Secured Note.
2022 Warrants – Upon each draw down of funds under the Secured Note, AgeX will issue to Juvenescence warrants to purchase shares of AgeX common stock (“2022 Warrants”). The 2022 Warrants will be governed by the terms of a Warrant Agreement between AgeX and Juvenescence. The number of 2022 Warrants to be issued will be equal to 50% of the number determined by dividing the amount of the applicable loan draw by the applicable Market Price. The Market Price will be the last closing price per share of AgeX common stock on the NYSE American or other national securities exchange preceding the delivery of the notice from AgeX requesting a draw of funds that triggers the obligation to issue 2022 Warrants; provided, however that if AgeX common stock is not traded on a national securities exchange the Market Price shall be determined with reference to closing prices quoted or bid and asked prices on an interdealer quotation system averaged over twenty consecutive trading days. The exercise price of the 2022 Warrants will be the applicable Market Price. The 2022 Warrants will expire at 5:00 p.m. New York time three years after the date of issue.
The Warrant Agreement governing the 2022 Warrants contains a “change of control blocker” provision intended to prevent an exercise of 2022 Warrants that would violate the Change in Control Rule. The exercise price of the 2022 Warrants is set with reference to the market price of AgeX common stock so the 20% Rule would have no effect on the exercise of 2022 Warrants. Under the terms of the Secured Note, AgeX has agreed to seek the vote of AgeX stockholders to approve the ability of Juvenescence to exercise its 2022 Warrants if the exercise would cause Juvenescence’s ownership of AgeX common stock to equal or exceed 50% of the outstanding AgeX common stock.
As
of June 30, 2022, AgeX had issued to Juvenescence 2022 Warrants to purchase
Conversion
of Loan Amounts to Common Stock – In lieu of repayment of funds borrowed, AgeX may convert the loan balance and any accrued
but unpaid Origination Fees (collectively the “Outstanding Amount”) into AgeX common stock or “units” (a “Borrower
Conversion”) if AgeX consummates a “Qualified Offering” which means a sale of common stock (or common stock paired
with warrants or other convertible securities in “units”) in which the gross sale proceeds are at least $
Juvenescence may convert the Outstanding Amount in whole or in part into AgeX common stock (a “Lender Conversion”) at any time at Juvenescence’s election at the closing price per share of AgeX common stock on the NYSE American or other national securities exchange on the date prior to the date Juvenescence gives AgeX notice Juvenescence’s election to convert the Outstanding Amount or a portion thereof into common stock.
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Any
Borrower Conversion or Lender Conversion is subject to certain restrictions to comply with applicable requirements of the NYSE American
(the “Exchange”) where AgeX common stock is listed. Section 713 of the Exchange Company Guide requires listed companies to
obtain stockholder approval as a prerequisite to Exchange listing approval before:
The 19.9% blocker provides that any conversion of the Secured Note into common stock must either (i) not involve the issuance of more than 19.9% of the common stock outstanding on the date of the Secured Note at a price lower than the applicable market price (as further explained below) so that stockholder approval under the 20% Rule would not be required, or (ii) be approved by the AgeX stockholders. Under the Secured Note, AgeX may borrow funds from Juvenescence in period installments or “tranches” and the market price of AgeX common stock is determined for each such tranche. Each tranche market price is based on the closing price of AgeX common stock on the date of the drawdown notice from AgeX to Juvenescence requesting funding of the loan tranche. Upon Borrower Conversion, which can take place only in connection with a Qualified Offering by AgeX, only shares of common stock issuable upon the conversion of a tranche with a tranche market price greater than the applicable conversion price would be aggregated (along with any other common stock that might be issued to Juvenescence in connection with the Qualified Offering) for the purpose of determining the applicability of the 19.9% blocker. Upon Lender Conversion, only shares issuable upon the conversion of a tranche with a tranche market price that is lower than the market price on the date prior to the date the Juvenescence delivers a conversion notice to AgeX are aggregated for the purposes of determining the applicability of the 19.9% blocker. The change of control blocker provision provides that without the prior approval of AgeX stockholders a Borrower Conversion or a Lender Conversion may not take place if it would cause Juvenescence’s ownership to equal or exceed 50% of the outstanding shares of AgeX common stock.
Consequently, without the approval of AgeX stockholders the Outstanding Amount may not be converted into AgeX common stock under the Borrower Conversion provisions or the Lender Conversion provisions of the Secured Note in an amount that would (a) equal or exceed 19.9% of the outstanding common stock (measured at the date of the Secured Note) at a conversion price less than the greater of the book value or the applicable tranche market value of AgeX common stock, or (b) cause Juvenescence’s ownership to equal or exceed 50% of the outstanding shares of AgeX common stock.
Under the terms of the Secured Note, AgeX has agreed to seek the vote of AgeX stockholders to approve the ability of AgeX and Juvenescence to convert the Outstanding Amount into shares of AgeX common stock under the Borrower Conversion and Lender Conversion provisions of the Secured Note even if the Borrower Conversion or Lender Conversion, as applicable, would result in (a) Juvenescence receiving additional shares in excess of 19.9% of the AgeX common stock outstanding as of the date of the Secured Note for less than the greater of book value or the applicable tranche market values of AgeX common stock, or (b) Juvenescence owning more than 50% of AgeX outstanding common stock.
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Default
Provisions – The Outstanding Amount may become immediately due and payable prior to the Repayment Date if an Event of Default
as defined in the Secured Note occurs. Events of Default under the Secured Note include: (a) AgeX fails to pay any principal amount payable
by it in the manner and at the time provided under and in accordance with the Secured Note, (b) AgeX fails to pay any other amount payable
by it in the manner and at the time provided under and in accordance with the Secured Note or the Security Agreement described below
or any other agreement executed in connection with the Secured Note (the “Loan Documents”) and the failure is not remedied
within three business days; (c) AgeX fails to perform any of its covenants or obligations or fail to satisfy any of the conditions under
the Secured Note or any other Loan Document and, such failure (if capable of remedy) remains unremedied to the satisfaction of Juvenescence
(in its sole discretion) for 10 business days after the earlier of (i) notice requiring its remedy has been given by Juvenescence to
AgeX and (ii) actual knowledge of the failure by senior officers of AgeX; (d)
Restrictive
Covenants – The Secured Note includes certain covenants that among other matters such as financial reporting: (i) impose financial
restrictions on AgeX while the Secured Note remains unpaid, including restrictions on the incurrence of additional indebtedness by AgeX
and its subsidiaries, except that AgeX’s subsidiary Reverse Bio will be permitted to incur debt convertible into equity not guaranteed
or secured by the assets of AgeX or any other AgeX subsidiary, and the restrictions on the incurrence of indebtedness applicable to Reverse
Bio will end if it raises more than $
Security Agreement – AgeX has entered into a Security Agreement granting Juvenescence a security interest in substantially all of the assets of AgeX, including a security interest in shares of AgeX subsidiaries that hold certain assets, as collateral for AgeX’s loan obligations. If an Event of Default occurs, Juvenescence will have the right to foreclose on the assets pledged as collateral.
Registration Rights
AgeX
entered into certain Registration Rights Agreements pursuant to which it has agreed to register for sale under the Securities Act of
1933, as amended (the “Securities Act”) all shares of AgeX common stock presently held by Juvenescence or that may be acquired
by Juvenescence through the exercise of common stock purchase warrants that they hold or that they may acquire pursuant to the 2020 Loan
Agreement, and shares that they may acquire through the conversion of the loans into AgeX common stock.
AgeX entered into an amendment to its Registration Rights Agreement with Juvenescence to include the 2022 Warrants and underlying shares and any shares issuable upon the conversion of the Secured Note into common stock as registrable securities under the Registration Rights Agreement.
20 |
Debt Issuance Costs
In accordance with ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, all debt issuance costs are recorded as a discount on the debt and amortized to interest expense over the term of the loan agreement using the effective interest method. Direct debt issuance costs include but are not limited to legal fees, debt origination fees, estimated fair market value of common stock and warrants issued in connection with the loan agreements, and NYSE American additional listing fees for the underlying shares of warrants issued with each draw down of funds.
The following table summarizes the debt issuance costs and the debt balances net of debt issuance costs by loan agreement as of June 30, 2022 (in thousands):
Draw Down of Funds | Origination Fee | Amount Refinanced | Total Debt | Debt Issuance Costs | Amortization of Debt Issuance Costs | Total Debt, Net | ||||||||||||||||||||||
2019 Loan Agreement | $ | 7,000 | $ | 160 | $ | (7,160 | ) | $ | - | $ | (494 | ) | $ | 494 | $ | - | ||||||||||||
2020 Loan Agreement | 8,000 | - | - | 8,000 | (2,806 | ) | 1,773 | 6,968 | ||||||||||||||||||||
2022 Secured Note | 10,160 | 473 | - | 10,633 | (4,620 | ) | 744 | 6,756 | ||||||||||||||||||||
$ | 25,160 | $ | 633 | $ | (7,160 | ) | $ | 18,633 | $ | (7,920 | ) | $ | 3,011 | $ | 13,724 |
Related party payables
Since
October 2018, AgeX’s Chief Operating Officer (“COO”), who is also an employee of Juvenescence, is devoting a majority
of his time to AgeX’s operations. AgeX reimburses Juvenescence for his services on an agreed-upon fixed annual amount of approximately
$
6. Warrant Liability
AgeX determines the accounting classification of warrants it issues, as either liability or equity, by first assessing whether the warrants meet liability classification in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, then in accordance with ASC 815-40, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock. Under ASC 480, Distinguishing Liabilities from Equity, warrants are considered liability classified if the warrants are mandatorily redeemable, obligate AgeX to settle the warrants or the underlying shares by paying cash or other assets, or warrants that must or may require settlement by issuing a variable number of shares. If warrants do not meet liability classification under ASC 480-10, AgeX assesses the requirements under ASC 815-40, which states that contracts that require or may require the issuer to settle the contract for cash are liabilities recorded at fair value, irrespective of the likelihood of the transaction occurring that triggers the net cash settlement feature. If the warrants do not require liability classification under ASC 815-40, and in order to conclude equity classification, AgeX also assesses whether the warrants are indexed to its common stock and whether the warrants are classified as equity under ASC 815-40 or other applicable U.S. GAAP.
As
a condition of each amount drawn from the $
Given
AgeX’s history, it is AgeX’s judgement that it is more-likely-than-not that AgeX will utilize the full credit available under
the Secured Note and accordingly warrants will be issued for each of the advances made within the credit availability period consisting
of the 12 month period starting February 14, 2022. After all relevant assessments, AgeX determined that the warrants issued under the
Secured Note require classification as a liability pursuant to ASC 480, Distinguishing Liabilities from Equity. In accordance
with the accounting guidance, the number of warrants that would have been issued if the $
The fair value of the warrant liabilities was measured using a Black-Scholes option pricing model. Significant inputs into the model at the inception, date when warrants were issued upon receipt of amounts drawn during the period, and as of the reporting period end remeasurement dates are as follows:
Black-Scholes Assumptions | Inception Date 14-Feb-22 | Issuance Date 14-Feb-22 | Issuance Date 15-Feb-22 | Period Ended 31-Mar-22 | Issuance Date 04-Apr-22 | Issuance Date 06-Jun-22 | Period Ended 30-Jun-22 | |||||||||||||||||||||
Exercise Price (1) | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Warrant Expiration Date (2) | ||||||||||||||||||||||||||||
Stock Price (3) | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Interest Rate (annual) (4) | % | % | % | % | % | % | % | |||||||||||||||||||||
Volatility (annual) (5) | % | % | % | % | % | % | % | |||||||||||||||||||||
Time to Maturity (Years) | ||||||||||||||||||||||||||||
Calculated fair value per share | $ | $ | $ | $ | $ | $ | $ |
(1) |
(2) |
(3) |
(4) |
(5) |
21 |
The warrants outstanding and fair values at each of the respective valuation dates are summarized below:
Warrant Liability | Amount (in thousands) | Warrants | Fair Value per Share | Fair Value (in thousands) | ||||||||||||
Fair value as of January 1, 2022 | $ | $ | ||||||||||||||
Fair value at initial measurement date of 2/14/2022 | (1) | (2) | $ | |||||||||||||
Fair value of warrants issued on 2/14/2022 | ( | )(3) | ( | )(4) | ( | ) | ||||||||||
Fair value of warrants issued on 2/15/2022 | ( | )(3) | ( | )(4) | ( | ) | ||||||||||
Fair value of warrants issued on 4/4/2022 | ( | )(3) | ( | )(4) | ( | ) | ||||||||||
Fair value of warrants issued on 6/6/2022 | ( | )(3) | ( | )(4) | ( | ) | ||||||||||
Unrealized loss on change in fair value of warrant liability | ||||||||||||||||
Fair value as of June 30, 2022 | $ | (1) | (2) | $ | $ |
(1) |
(2) |
(3) |
(4) |
During
the three and six months ended June 30, 2022, AgeX recorded a loss on changes in fair value of warrant liability of $
The warrant liabilities are considered Level 3 liabilities on the fair value hierarchy as the determination of fair value includes various assumptions about future activities and AgeX’s stock prices and historical volatility as inputs. During the six months ended June 30, 2022, none of the warrants issued were exercised.
7. Stockholders’ Deficit
Preferred Stock
AgeX is authorized to issue up to shares of $ par value preferred stock. At June 30, 2022 and December 31, 2021, there were preferred shares issued and outstanding.
Common Stock
AgeX has shares of $ par value common stock authorized. At June 30, 2022 and December 31, 2021, there were and shares of AgeX common stock issued and outstanding, respectively.
Issuance and Sale of Warrants by AgeX
In
connection with the $
As
consideration for $
22 |
At-the-Market Offering Facility
On
January 8, 2021, AgeX entered into a sales agreement with Chardan Capital Markets LLC (“Chardan”), relating to the sale of
shares of AgeX common stock, par value $
Reconciliation of Changes in Stockholders’ Deficit
The following tables provide the activity in stockholders’ deficit for the three and six months ended June 30, 2022 and 2021 (unaudited and in thousands):
Common Stock | Additional | Accumulated Other | Total | |||||||||||||||||||||||||
Number of Shares | Par Value | Paid-In Capital | Accumulated Deficit | Noncontrolling Interest | Comprehensive Income | Stockholders’ Deficit | ||||||||||||||||||||||
BALANCE AT MARCH 31, 2022 | | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||
Issuance of common stock upon vesting of restricted stock units, net of shares retired to pay employee’s taxes | ( | ) | ( | ) | ||||||||||||||||||||||||
Fair value of liability classified warrants issued | - | |||||||||||||||||||||||||||
Stock-based compensation | - | |||||||||||||||||||||||||||
Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
BALANCE AT JUNE 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) |
Common Stock | Additional | Accumulated Other | Total | |||||||||||||||||||||||||
Number of Shares | Par Value | Paid-In Capital | Accumulated Deficit | Noncontrolling Interest | Comprehensive Income | Stockholders’ Deficit | ||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2021 | | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||
Issuance of common stock upon vesting of restricted stock units, net of shares retired to pay employee’s taxes | ( | ) | ( | ) | ||||||||||||||||||||||||
Fair value of warrants issued | - | |||||||||||||||||||||||||||
Fair value of liability classified warrants issued | - | |||||||||||||||||||||||||||
Stock-based compensation | - | |||||||||||||||||||||||||||
Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
BALANCE AT JUNE 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) |
Common Stock | Additional | Accumulated Other |
Total | |||||||||||||||||||||||||
Number of Shares | Par Value | Paid-In Capital | Accumulated Deficit | Noncontrolling Interest | Comprehensive Income | Stockholders’ Deficit | ||||||||||||||||||||||
BALANCE AT MARCH 31, 2021 | | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||
Issuance of common stock upon vesting of restricted stock units, net of shares retired to pay employee’s taxes | ( | ) | ( | ) | ||||||||||||||||||||||||
Stock-based compensation | - | |||||||||||||||||||||||||||
Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
BALANCE AT JUNE 30, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) |
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Common Stock | Additional | Accumulated Other |
Total | |||||||||||||||||||||||||
Number of Shares | Par Value | Paid-In Capital | Accumulated Deficit | Noncontrolling Interest | Comprehensive Income | Stockholders’ Deficit | ||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2020 | | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||
Issuance of common stock | ||||||||||||||||||||||||||||
Issuance of common stock upon vesting of restricted stock units, net of shares retired to pay employee’s taxes | ( | ) | ( | ) | ||||||||||||||||||||||||
Fair value of warrants issued | - | |||||||||||||||||||||||||||
Stock-based compensation | - | |||||||||||||||||||||||||||
Transactions with noncontrolling interests – LifeMap Sciences | - | ( | ) | |||||||||||||||||||||||||
Deconsolidation of LifeMap Sciences | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
BALANCE AT JUNE 30, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) |
Equity Incentive Plan Awards
AgeX has an Equity Incentive Plan (the “Plan”) under which a maximum of shares of common stock are available for the grant of stock options, the sale of restricted stock, the settlement of restricted stock units, and the grant of stock appreciation rights. The Plan also permits AgeX to issue such other securities as its Board of Directors or the Compensation Committee administering the Plan may determine.
Shares Available for Grant | Number of Options Outstanding | Number of RSUs Outstanding | Weighted Average Exercise Price | |||||||||||||
December 31, 2021 | $ | |||||||||||||||
Options granted | ( | ) | ||||||||||||||
Options forfeited, cancelled or expired | ( | ) | ||||||||||||||
Restricted stock units vested | ( | ) | ||||||||||||||
June 30, 2022 | $ | |||||||||||||||
Options exercisable at June 30, 2022 | $ |
There have been exercises of stock options to date.
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Stock-based Compensation Expense
The fair value of each option award is estimated on the date of grant using a Black-Scholes option pricing model applying the weighted-average assumptions including expected life, risk-free interest rates, volatility, and dividend yield.
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Grant price | $ | $ | $ | $ | ||||||||||||
Market price | $ | $ | $ | $ | ||||||||||||
Expected life (in years) | ||||||||||||||||
Volatility | % | % | % | % | ||||||||||||
Risk-free interest rates | % | % | % | % | ||||||||||||
Dividend yield | % | % | % | % |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Research and development | $ | $ | $ | $ | ||||||||||||
General and administrative | ||||||||||||||||
Total stock-based compensation expense – continued operations | $ | $ | $ | $ |
Stock-based compensation expense recognized under discontinued operations for the six months ended June 30, 2021 amounted to $ . See Note 3.
9. Income Taxes
The provision for income taxes for interim periods is determined using an estimated annual effective tax rate in accordance with ASC 740-270, Income Taxes, Interim Reporting. The effective tax rate may be subject to fluctuations during the year as new information is obtained, which may affect the assumptions used to estimate the annual effective tax rate, including factors such as valuation allowances against deferred tax assets, the recognition or de-recognition of tax benefits related to uncertain tax positions, if any, and changes in or the interpretation of tax laws in jurisdictions where AgeX conducts business.
Beginning
in 2018, the 2017 Tax Cuts and Jobs Act (“2017 Tax Act”) subjects a U.S. stockholder to tax on Global Intangible Low Tax
Income “GILTI” earned by certain foreign subsidiaries. In general, GILTI is the excess of a U.S. shareholder’s total
net foreign income over a deemed return on tangible assets. The provision further allows a deduction of
For the three and six months ended June 30, 2022, AgeX experienced a domestic loss from continuing operations; therefore, no income tax provision was recorded for the three and six months ended June 30, 2022.
The sale of LifeMap Sciences in 2021 was a taxable transaction to AgeX, however, no income tax is due as the transaction resulted in a taxable loss primarily due to AgeX’s tax basis in the subsidiary.
Due to losses incurred for all periods presented, AgeX did not record a domestic provision or benefit for income taxes. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized. AgeX established a full valuation allowance for all of its domestic deferred tax assets for all periods presented due to the uncertainty of realizing future tax benefits from its net operating loss carryforwards and other deferred tax assets.
25 |
10. Supplemental Cash Flow Information
Non-cash investing and financing transactions presented separately from the condensed consolidated statements of cash flows for the six months ended June 30, 2022 and 2021 are as follows (unaudited and in thousands):
Six Months Ended June 30, | ||||||||
2022 | 2021 | |||||||
Supplemental disclosures of non-cash investing and financing activities: | ||||||||
Cash paid during the period for interest | $ | $ | ||||||
Issuance of common stock upon vesting of restricted stock units (Note 7) | $ | $ | ||||||
Issuance of warrants for debt issuance under the 2020 Loan Agreement | $ | $ | ||||||
Issuance of warrants for debt issuance under the Secured Note (Note 6) | $ | $ | ||||||
Debt refinanced with new debt (Note 5) | $ | $ |
11. Commitments and Contingencies
Office Lease Agreement
Effective
January 1, 2021, AgeX relocated its principal offices to 1101 Marina Village Parkway, Suite 201, Alameda, California following the December
31, 2020 expiration of the lease at 965 Atlantic Avenue, Alameda, California. AgeX’s new office occupies
ASC 842
For the office lease, AgeX has elected to not apply the recognition requirements under ASC 842 as lease cost on a straight-line basis over the lease term because the amount of the lease payments is not deemed material.
There were no future minimum lease commitments as of June 30, 2022.
Litigation – General
AgeX is subject to various claims and contingencies in the ordinary course of its business, including those related to litigation, business transactions, employee-related matters, and others. When AgeX is aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, AgeX will record a liability for the loss. If the loss is not probable or the amount of the loss cannot be reasonably estimated, AgeX discloses the claim if the likelihood of a potential loss is reasonably possible and the amount involved could be material. AgeX is not aware of any claims likely to have a material adverse effect on its financial condition or results of operations.
Employment Contracts
AgeX has entered into employment contracts with certain executive officers. Under the provisions of the contracts, AgeX may be required to incur severance obligations for matters relating to changes in control, as defined, and involuntary terminations.
Indemnification
In the normal course of business, AgeX may provide indemnifications of varying scope under AgeX’s agreements with other companies or consultants, typically for AgeX’s research and development programs. Pursuant to these agreements, AgeX will generally agree to indemnify, hold harmless, and reimburse the indemnified parties for losses and expenses suffered or incurred by the indemnified parties arising from claims of third parties in connection with AgeX’s research and development. Indemnification provisions could also cover third-party infringement claims with respect to patent rights, copyrights, or other intellectual property licensed from AgeX to third parties. Office and laboratory leases will also generally indemnify the lessor with respect to certain matters that may arise during the term of the lease. The sales agreement between AgeX and Chardan also includes indemnification provisions pursuant to which the parties have agreed to indemnify each other from certain liabilities that could arise from the offer and sale of AgeX common stock through the ATM facility, including liabilities under the Securities Act. Similarly, the Registration Rights Agreement between Juvenescence and AgeX includes indemnification provisions pursuant to which the parties will indemnify each other from certain liabilities in connection with the registration, offer, and sale of securities under a registration statement, including liabilities arising under the Securities Act. The term of these indemnification obligations will generally continue in effect after the termination or expiration of the particular license, lease, or agreement to which they relate. The potential future payments AgeX could be required to make under these indemnification agreements will generally not be subject to any specified maximum amount. Historically, AgeX has not been subject to any claims or demands for indemnification. AgeX also maintains various liability insurance policies that limit AgeX’s financial exposure. As a result, AgeX believes the fair value of these indemnification agreements is minimal. Accordingly, AgeX has not recorded any liabilities for these agreements to date.
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Paycheck Protection Program Loan
On
April 13, 2020, AgeX obtained a loan in the amount of $
On December 27, 2020, the Consolidated Appropriations Act of 2021 was signed into law, retroactively allowing a federal deduction of the expenses that gave rise to the PPP Loan forgiveness. California does not allow a deduction for these expenses for publicly traded companies.
Notice of Delisting
On
June 1, 2020, AgeX received a letter (the “Deficiency Letter”) from the staff of the NYSE American (the “Exchange”)
indicating that AgeX does not meet certain of the Exchange’s continued listing standards as set forth in Section 1003(a)(i) of
the Exchange Company Guide in that AgeX has stockholders equity of less than $
On April 15, 2021, AgeX regained compliance with all of the Exchange’s continued listing standards set forth in Part 10 of the Exchange Company Guide. Specially, the Exchange has resolved the continued listing deficiency with respect to Section 1003(a)(i) of the Exchange Company Guide. AgeX however will be subject to normal continued listing monitoring. If AgeX is again determined to be below any of the continued listing standards within 12 months of April 15, 2021, the Exchange may take action, including truncating the compliance procedures described in Section 1009 of the Exchange Company Guide or immediately initiating delisting proceedings.
On
November 17, 2021, we received a second deficiency letter (2021 Deficiency Letter) from the staff of the Exchange indicating that AgeX
does not meet certain of the Exchange’s continued listing standards as set forth in Section 1003(a)(i) and (ii) of the Exchange
Company Guide in that we have stockholders equity of less than $
AgeX intends to make arrangements to have its common stock quoted on an interdealer quotation system if its common stock is delisted from the Exchange.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The matters addressed in this Item 2 that are not historical information constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, including statements about any of the following: any projections of earnings, revenue, cash, effective tax rate, use of net operating losses, or any other financial items; the plans, strategies and objectives of management for future operations or prospects for achieving such plans, and any statements of assumptions underlying any of the foregoing. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” “seeks,” “estimates,” and similar expressions are intended to identify forward-looking statements. While AgeX may elect to update forward-looking statements in the future, it specifically disclaims any obligation to do so, even if the AgeX estimates change and readers should not rely on those forward-looking statements as representing AgeX views as of any date subsequent to the date of the filing of this Quarterly Report. Although we believe that the expectations reflected in these forward-looking statements are reasonable, such statements are inherently subject to risks and AgeX can give no assurances that its expectations will prove to be correct. Actual results could differ materially from those described in this report because of numerous factors, many of which are beyond the control of AgeX. A number of important factors could cause the results of the company to differ materially from those indicated by such forward-looking statements, including those detailed under the heading “Risk Factors” in this Form 10-Q, our Form 10-K for the year ended December 31, 2021, and our other reports filed with the SEC from time to time.
The following discussion should be read in conjunction with AgeX’s condensed consolidated interim financial statements and the related notes provided under “Item 1- Financial Statements” above.
Critical Accounting Policies
This Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses and analyzes data in our unaudited condensed consolidated interim financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Senior management has discussed the development, selection and disclosure of these estimates with the Audit Committee of our Board of Directors. Actual conditions may differ from our assumptions and actual results may differ from our estimates.
An accounting policy is deemed critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate are reasonably likely to occur, that could materially impact the financial statements. Management believes that there have been no significant changes during the six months ended June 30, 2022 to the items that we disclosed as our critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2021, except as disclosed in Note 2 of our condensed consolidated interim financial statements included elsewhere in this Report.
Impact of COVID-19 pandemic
The global outbreak of the coronavirus COVID-19, and the various attempts throughout the world to contain it, have created significant volatility, uncertainty and disruption. In response to government directives and guidelines, health care advisories and employee and other concerns, we have altered certain aspects of our operations. A number of our employees have had to work remotely from home and those on site have had to follow our social distance guidelines, which could impact their productivity. COVID-19 could also disrupt our operations due to absenteeism by infected or ill members of management or other employees, or absenteeism by members of management and other employees who cannot effectively work remotely but who elect not to come to work due to the illness affecting others in our office or in the laboratory facilities of third parties undertaking research work for us, or due to quarantines. COVID-19 illness could also impact members of our Board of Directors resulting in absenteeism from meetings of the directors or committees of directors and making it more difficult to convene the quorums of the full Board of Directors or its committees needed to conduct meetings for the management of our affairs.
We have a Sponsored Research Agreement with the University of California at Irvine (UCI) for the derivation of neural stem cells, with the goal of developing cellular therapies to treat neurological disorders and diseases. The pace of work on the research project was slowed by COVID-19 safety procedures, but we expect the initial work to be concluded during 2022.
28 |
The full extent to which the COVID-19 pandemic and the various responses might impact our business, operations and financial results will depend on numerous evolving factors that we will not be able to accurately predict, including: the duration and scope of the pandemic; governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic; and the availability, effectiveness, and cost to access COVID-19 tests, vaccines and therapies. Due to the uncertain scope and duration of the COVID-19 pandemic and uncertain timing of any recovery or normalization, we are currently unable to estimate the resulting impacts on our operations and financial results. We will continue to actively monitor the issues raised by the COVID-19 pandemic and may take further actions that alter our operations, as may be required by federal, state, local or foreign authorities, or that we determine are in the best interests of our employees, any customers and stockholders. It is not clear what the potential effects any such alterations or modifications may have on our business, including the effects on our financial results.
Results of Operations
The following comparisons exclude the impact of the operations of LifeMap Sciences which have been presented in our consolidated financial results as discontinued operations. See Note 3 to our condensed consolidated interim financial statements included in this Report for a discussion of discontinued operations.
Comparison of Three and Six Months Ended June 30, 2022 and 2021
Revenues and Cost of Sales
During the three and six months ended June 30, 2021, we recognized income of approximately $11,000 and $57,000, respectively, from a grant awarded by the NIH. During the three and six months ended June 30, 2022 we did not recognize any grant revenues as we had expended the full amount available under the grant as of December 31, 2021.
During the three and six months ended June 30, 2022, we recognized $12,000 and $17,000, respectively from the sale of research products. For the three and six months ended June 30, 2021, we recognized $26,000 and $36,000, respectively from the sale of research products. Revenues from the sale of research products are included in other revenues.
Operating Expenses
We continue to maintain a minimal work force since the May 1, 2020 reduction in force which resulted in the layoff of most of our research and development personnel and certain administrative personnel. The following table shows our consolidated operating expenses for the periods presented (unaudited and in thousands).
Three Months Ended June 30, | $ Increase/ | % Increase/ | ||||||||||||||
2022 | 2021 | (Decrease) | (Decrease) | |||||||||||||
Research and development expenses | $ | 259 | $ | 481 | $ | (222 | ) | (46.2 | )% | |||||||
General and administrative expenses | 1,338 | 1,748 | (410 | ) | (23.5 | )% |
Six Months Ended June 30, | $ Increase/ | % Increase/ | ||||||||||||||
2022 | 2021 | (Decrease) | (Decrease) | |||||||||||||
Research and development expenses | $ | 655 | $ | 805 | $ | (150 | ) | (18.6 | )% | |||||||
General and administrative expenses | 2,998 | 3,770 | (772 | ) | (20.5 | )% |
Research and development expenses
Research and development expenses decreased by approximately $0.2 million to $0.3 million during the three months ended June 30, 2022 from $0.5 million during the same period in 2021. The net decrease was primarily attributable to reductions of $0.2 million in scientific consulting and outside research and service and patent related expenses under a sponsored research agreement with a university.
Research and development expenses decreased by approximately $0.1 million to $0.7 million during the six months ended June 30, 2022 from $0.8 million during the same period in 2021. The net decrease was primarily attributable to $0.2 million in scientific consulting and patent related expenses under a sponsored research agreement with a university. This decrease was offset to some extent by a $0.1 million increase in outside research and services expenses under research agreements with two universities.
29 |
General and administrative expenses
General and administrative expenses for the three months ended June 30, 2022 decreased by $0.4 million to $1.3 million as compared to $1.7 million during the same period in 2021. The $0.4 million decrease is primarily attributable to decreases of $0.1 million in each of the following expense categories: professional fees for legal services, consulting expenses, noncash stock-based compensation expense to directors, and annual minimum royalties due under license agreements.
General and administrative expenses for the six months ended June 30, 2022 decreased by $0.8 million to $3.0 million as compared to $3.8 million during the same period in 2021. The net decrease is primarily attributable to decreases of $0.4 million in professional fees for legal services, $0.3 million for consulting expenses due to a non-recurring transaction proposal terminated in April 2021, $0.1 million in annual minimum royalties due under license agreements, and $0.1 million in patent and license maintenance related fees including investor relations related expenses. These decreases were offset to some extent by a $0.1 million increase in insurance expense.
General and administrative expenses include employee and director compensation allocated to general and administrative expenses, consulting fees other than those paid for science-related consulting, facilities and equipment rent and maintenance related expenses, insurance costs allocated to general and administrative expenses, stock exchange-related costs, depreciation expense, marketing costs, legal and accounting costs, and other miscellaneous expenses which are allocated to general and administrative expense.
Other expense, net
Total other expense, net for the three months ended June 30, 2022 consists primarily of $0.9 million amortization of deferred debt issuance costs to interest expense and other debt related expenses included in interest expense and $0.2 million unrealized loss on change in fair value of warrants issued to Juvenescence in connection with borrowings under the Secured Note. Total other expense, net for the three months ended June 30, 2021 consists primarily of $0.3 million amortization of deferred debt issuance costs to interest expense.
Total other expense, net for the six months ended June 30, 2022 consists primarily of $1.4 million amortization of deferred debt issuance costs to interest expense and other debt related expenses included in interest expense and $0.3 million unrealized loss on change in fair value of warrants issued to Juvenescence in connection with borrowings under the Secured Note. Total other expense, net for the six months ended June 30, 2021 consists primarily of $0.4 million from forgiveness of our PPP Loan including accrued interest on February 19, 2021 offset by $0.5 million amortization of deferred debt issuance costs to interest expense.
See Notes 5 and 6 to our condensed consolidated financial statements included elsewhere in this Report for additional information about our loan agreements with Juvenescence and liability classified warrants.
Income taxes
Beginning in 2018, the 2017 Tax Act subjects a U.S. stockholder to tax on Global Intangible Low Tax Income “GILTI” earned by certain foreign subsidiaries. In general, GILTI is the excess of a U.S. shareholder’s total net foreign income over a deemed return on tangible assets. The provision further allows a deduction of 50% of GILTI, however this deduction is limited to the company’s pre-GILTI U.S. income. For the year ended December 31, 2021, AgeX’s foreign entity operated at a loss; therefore, no GILTI was included in income. For the three and six months ended June 30, 2022, there was no income or loss related to foreign activities as the entity deconsolidated from AgeX on March 15, 2021. Current interpretations under ASC 740 state that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense. We have elected to account for GILTI as a current period expense when incurred.
For the three and six months ended June 30, 2022, AgeX experienced a domestic loss from continuing operations; therefore, no income tax provision was recorded for the six months ended June 30, 2022.
Due to losses incurred for all periods presented, we did not record a domestic provision or benefit for income taxes. A valuation allowance will be provided when it is more likely than not that some portion of the deferred tax assets will not be realized. We established a full valuation allowance for all domestic deferred tax assets for the periods presented due to the uncertainty of realizing future tax benefits from our net operating loss carryforwards and other deferred tax assets.
For years beginning after December 31, 2021, the 2017 Tax Act requires companies to capitalize their research and experimentation expenditures as defined under Section 174 and amortize those expenditures on a straight-line bases over a period of 5 years. Previously AgeX was able to immediately expense such costs. It is possible that Congress will defer or eliminate the ultimate implementation of this provision. AgeX has sufficient federal net operation loss carryforwards to offset the impact of this provision.
Liquidity and Capital Resources
Operating Losses and Going Concern Considerations
We have incurred operating losses and negative cash flows since inception and had an accumulated deficit of $111.1 million as of June 30, 2022. We expect to continue to incur operating losses and negative cash flows.
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We have made certain adjustments to our operating plans and budgets to reduce our projected cash expenditures in order to extend the period over which we can continue our operations with our available cash resources. These adjustments entailed down-sizing of our leased office space effective January 1, 2021, a staff force reduction during 2020, primarily impacting research and development personnel, and the elimination of our leased laboratory facility, that will require the deferral of certain work on the development of our product candidates and technologies. However, notwithstanding those adjustments, based on our most recent projected cash flows, our cash and cash equivalents and potential additional loans that may become available to us from Juvenescence under the Secured Note, and the proceeds we may receive from the sale of additional shares of our common stock in “at-the-market” transactions through a Sales Agreement with Chardan as a sales agent, would not be sufficient to satisfy our anticipated operating and other funding requirements for the next twelve months from the date of filing of this Report. These factors raise substantial doubt regarding our ability to continue as a going concern. See Note 5 to our condensed consolidated financial statements included elsewhere in this Report for additional information about our loan agreements with Juvenescence. We will need to raise additional capital in the near term to be able to meet our operating expenses.
As of June 30, 2022, we had borrowed a total of $8.0 million under the 2020 Loan Agreement and $10.2 million under the Secured Note. Of the $10.2 million, $7.2 million was used to refinance the $7.0 million outstanding principal amount of the loans and a $160,000 origination fee due under the 2019 Loan Agreement, as amended in February 2022. The Secured Note and the 2020 Loan Agreement prohibit us and our subsidiaries ReCyte and Reverse Bio from borrowing funds from other lenders or engaging in certain other transactions without the consent of Juvenescence unless we repay all amounts owed to Juvenescence, except that Reverse Bio may borrow funds through convertible debt and the borrowing restrictions will lapse as to Reverse Bio if it raises more than $15.0 million in debt or equity capital by February 14, 2023. AgeX has granted Juvenescence a security interest and lien on substantially all of AgeX’s assets to secure AgeX’s obligations under the Secured Note. These factors and the impact of potential dilution through the issuance of shares of our common stock upon the conversion of the Juvenescence loans into AgeX common stock and the exercise of warrants issued or issuable to Juvenescence in connection with the loans made to us could make AgeX less attractive to new equity investors and could impair our ability to finance our operations or the operations of our subsidiaries unless Juvenescence agrees, in its discretion, to lend us funds.
We may sell up to $12.1 million of additional shares of common shares in “at-the-market” transactions through a Sales Agreement with Chardan. The actual market value of common shares that we may sell in any 12 month period will be limited to one-third of aggregate market value of our common shares held by shareholders that would not be considered “affiliates” of AgeX, determined in accordance with applicable SEC rules. We do not have any other committed sources of funds for additional financing.
Although AgeX has been able to reduce its operating expenses by eliminating internal research and development activities and focusing instead on out-sourcing research and development and seeking licensing arrangements for AgeX technologies, this approach has also made it more difficult for AgeX to make progress in developing its target product candidates and technologies, which in turn may make it more difficult for AgeX to raise capital.
The availability of financing for AgeX may be adversely impacted by the COVID-19 pandemic which could depress national and international economies and disrupt capital markets, supply chains, and aspects of our operations. The extent to which the ongoing COVID-19 pandemic will ultimately impact our business, results of operations, financial condition, or cash flows is highly uncertain and difficult to predict because it will depend on many factors that are outside our control. The unavailability or inadequacy of financing to meet future capital needs could force us to modify, curtail, delay, or suspend some or all aspects of planned operations.
To the extent that we are able to raise additional capital through the sale of AgeX equity or convertible debt securities or the sale of equity or convertible debt securities of any of our subsidiaries, the ownership interest of our present stockholders will be diluted, and the terms of any securities we or our subsidiaries issue may include liquidation or other preferences that adversely affect the rights of our common stockholders. Additional debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, and may involve the issuance of convertible debt or stock purchase warrants that would dilute the equity interests of our stockholders. If we raise funds through additional strategic partnerships or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us.
Cash used in operating activities
During the six months ended June 30, 2022, our total research and development expenses were $0.7 million and our general and administrative expenditures were $3.0 million. Net loss attributable to us for the six months ended June 30, 2022 amounted to $5.3 million. Net cash used in operating activities from continuing operations during this period amounted to $3.4 million. The difference between the net loss attributable to us and net cash used in operating activities from continuing operations during the six months ended June 30, 2022 was primarily attributable to $0.7 million payment of financed insurance premium liability. This amount was offset to some extent by $1.4 million in amortization of intangible assets and deferred debt issuance costs, $0.4 million in stock-based compensation expense, $0.3 million loss on change in fair value of warrants, $0.1 million in related party payables, and $0.4 million net change in working capital from operating activities. See Notes 5 and 6 to our condensed consolidated financial statements included elsewhere in this Report for additional information about our loan agreements with Juvenescence and liability classified warrants.
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Cash provided by (used in) investing activities
During the six months ended June 30, 2022, AgeX had no investing activities.
Cash provided by financing activities
During the six months ended June 30, 2022, net cash provided by financing activities from continuing operations amounted to $3.5 million, which was attributable to the $0.5 million drawn against the final remaining funds available under the 2020 Loan Agreement and the $10.2 million drawn against the $13.2 million made available under the Secured Note entered into with Juvenescence in February 2022 of which $7.2 million was used to refinance the $7.0 million outstanding principal amount of the loans and a $160,000 origination fee due under the 2019 Loan Agreement, as amended. See Note 5 to our condensed consolidated financial statements included elsewhere in this Report for additional information about our loan agreements with Juvenescence.
Off-Balance Sheet Arrangements
As of June 30, 2022 and December 31, 2021, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Under SEC rules and regulations, as a smaller reporting company, we are not required to provide the information required by this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
It is management’s responsibility to establish and maintain adequate internal control over all financial reporting pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 (“Exchange Act”). Our management, including our principal executive officer and principal financial officer, have reviewed and evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Following this review and evaluation, the principal executive officer and principal financial officer determined that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to management, including our principal executive officer, and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Controls
There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may be involved in routine litigation incidental to the conduct of our business. We are not presently involved in any material litigation or proceedings, and to our knowledge no material litigation or proceedings are contemplated.
Item 1A. Risk Factors
Our business, financial condition, results of operations and future growth prospects are subject to various risks, including those described in Item 1A “Risk Factors” of our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 31, 2022 (the “2021 Form 10-K”), which we encourage you to review. There have been no material changes from the risk factors disclosed in the 2021 Form 10-K, except as follows:
We need additional financing to execute our operating plan and continue to operate as a going concern.
As required under Accounting Standards Update 2014-15, Presentation of Financial Statements-Going Concern (ASC 205-40), we have the responsibility to evaluate whether conditions and/or events raise substantial doubt about our ability to meet our future financial obligations as they become due within one year after the date the financial statements are issued. Based on our most recent projected cash flows, we believe that our cash and cash equivalents, even with the amount of credit remaining available under our loan agreements with Juvenescence, and the proceeds we may receive from the sale of additional shares of our common stock in “at-the-market” transactions through a Sales Agreement with Chardan as a sales agent, would not be sufficient to satisfy our anticipated operating and other funding requirements for the next twelve months from the date of filing of this Report. These factors raise substantial doubt regarding our ability to continue as a going concern and the report of our independent registered public accountants accompanying our audited consolidated financial statements in this Report contains a qualification to such effect.
We have incurred operating losses and negative cash flows since inception and had an accumulated deficit of $111.1 million as of June 30, 2022. We expect to continue to incur operating losses and negative cash flows. Because we will continue to experience net operating losses, our ability to continue as a going concern is subject to our ability to obtain necessary capital from outside sources, including obtaining additional capital from the sale of our common stock or other equity securities or assets, obtaining additional loans from financial institutions or investors, and entering into collaborative research and development arrangements or licensing some or all of our patents and know-how to third parties while retaining a royalty and other contingent payment rights related to the development and commercialization of products covered by the licenses. Our continued net operating losses, the amount of our debt obligations to Juvenescence and the provisions of our indebtedness agreements with them, including restrictions on the use of loan funds and the security interest they hold in our assets, the risks associated with the development of our product candidates and technologies, and our deferral of in-house development of our product candidates and technologies in connection with our reductions in staffing and the closing of our research laboratory facilities, will increase the difficulty in obtaining such capital, and there can be no assurances that we will be able to obtain such capital on favorable terms or at all. If we are unable to raise capital when needed, we may be forced to delay, reduce or eliminate our research and development activities, or ultimately not be able to continue as a going concern.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On January 29, 2021, our Registration Statement on Form S-3, File No. 333-251988 (the “Registration Statement”), became effective under the Securities Act of 1933, as amended (the “Securities Act”), with respect to an offering of up to $12.6 million of shares of our common stock, par value $0.0001 per share, for our account from time to time in transactions intended to qualify as “at-the-market” transactions as defined in Securities Act Rule 415(a)(4) (the “ATM Offering”). Shares will be sold in the ATM Offering through Chardan Capital Markets LLC (“Chardan”) as “Sales Agent” under a Sales Agreement with us.
The Registration Statement also includes 19,695,746 shares of AgeX common stock registered for sale for the account of Juvenescence. Those shares are not part of the ATM Offering. Juvenescence has informed us that they did not sell any of the shares registered for their account during the six months ended June 30, 2022.
We did not sell any shares of common stock during the six months ended June 30, 2022. During the six months ended June 30, 2021, we sold 242,200 shares of common stock in the ATM Offering through the Sales Agreement for approximately $496,000 of gross proceeds. The net proceeds from the sale of shares in the ATM Offering during the period were approximately $480,790 after deducting the expenses of the ATM Offering shown in the following table that provides certain information with regard to the fees and expenses we incurred during the period commencing on the effective date of the Registration Statement and ending on March 31, 2021 in connection with the ATM Offering.
Sales Agent fees | $ | 14,871 | ||
Other expenses (1) | 47 | |||
Total expenses (1) | $ | 14,918 |
(1) | Amounts shown represent a reasonable estimate of expenses incurred. |
No payments on account of the expenses shown in the table above were made directly or indirectly to any directors or officers of AgeX or to their associates, to any persons owning ten percent or more of any class of equity securities of AgeX, or to affiliates of AgeX.
All of the net proceeds after deducting total Registration Statement and ATM Offering expenses of approximately $14,918 was used for working capital. The forgoing amounts are estimated amounts. Of the amount used for working capital, approximately $224,300 was used to pay for legal, tax, and audit professional fees, $103,700 for insurance premiums, $58,400 for consulting fees, $37,500 to pay compensation to our directors, and $56,800 in other day to day operating expenses. No other payments of net proceeds of the ATM Offering were made directly or indirectly to any directors or officers of AgeX or to their associates, to any persons owning ten percent or more of any class of equity securities of AgeX, or to affiliates of AgeX.
Item 3. Default Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.
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Item 6. Exhibits
Exhibit Number |
Exhibit Description | |
3.1 | Certificate of Incorporation (Incorporated by reference to AgeX Therapeutics, Inc.’s Form 10-12(b) filed with the Securities and Exchange Commission on June 8, 2018) | |
3.2 | Bylaws (Incorporated by reference to AgeX Therapeutics, Inc.’s Form 10-12(b) filed with the Securities and Exchange Commission on June 8, 2018) | |
31 | Rule 13a-14(a)/15d-14(a) Certification* | |
32 | Section 1350 Certification** | |
101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | |
101.SCH | Inline XBRL Taxonomy Extension Schema* | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase* | |
101.DEF | Inline XBRL Taxonomy Extension Definition Document* | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase* | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase* | |
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
* | Filed herewith |
** | Furnished herewith |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AGEX THERAPEUTICS, INC. | |
Date: August 12, 2022 | /s/ Michael D. West |
Michael D. West | |
Chief Executive Officer | |
Date: August 12, 2022 | /s/ Andrea E. Park |
Andrea E. Park | |
Chief Financial Officer |
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