Cibus, Inc. 10-K/A

Item 9A. Controls and Procedures Management’s Evaluation of Disclosure Controls and Procedures The Company maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to Management, including the Company’s principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Under the supervision of the Company’s principal executive officer and principal financial officer, it evaluated the effectiveness of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of December 31, 2022. Based on that evaluation, as of December 31, 2022, the Company’s principal executive officer and principal financial officer have concluded that its disclosure controls and procedures were effective. Management’s Annual Report on Internal Control Over Financial Reporting The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. The Company’s management, including its principal executive officer and principal financial officer, conducted an evaluation of the effectiveness of its internal controls over financial reporting based on the framework set forth in the “Internal Control—Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on an evaluation under that framework, Management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2022. 38 Table of Contents Inherent Limitations on Controls and Procedures The Company’s management, including the principal executive officer and principal financial officer, does not expect that its disclosure controls and procedures and its internal control over financial reporting will prevent all error and all fraud. A control system, no matter how well designed and operated, can only provide reasonable assurances that the objectives of the control system are met. The design of a control system reflects resource constraints; the benefits of controls must be considered relative to their costs. Because there are inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, for the Company have been or will be detected. As these inherent limitations are known features of the disclosure and financial reporting processes, it is possible to design into the processes safeguards to reduce, though not eliminate, these risks. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events. While the Company’s disclosure controls and procedures and its internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives, there can be no assurance that any design will succeed in achieving its stated goals under all future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with the policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Changes in Internal Control over Financial Reporting There have been no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by Rules 13a-13(d) and 15d-15(d) of the Exchange Act that occurred during the fourth quarter ended December 31, 2022, that has materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Item 9B. Other Information None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 39 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance The information required by this item concerning the Company’s directors, executive officers, and corporate governance matters is incorporated by reference to its 2023 Proxy Statement. The Company’s Board of Directors has adopted a Code of Business Conduct and Ethics applicable to all officers, directors, and employees. The Company’s Code of Business Conduct and Ethics, Corporate Governance Guidelines, and the charters of its Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee are available on the Company’s website (www.calyxt.com) under “Corporate Governance” in the “Investors” section. The Company will provide a copy of these documents to any person, without charge, upon request. The Company intends to make all required disclosures concerning any amendments to, or waivers from, the Code of Business Conduct and Ethics on its website. Item 11. Executive Compensation The information required by this item regarding executive compensation is incorporated by reference to the Company’s 2023 Proxy Statement. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this item regarding security ownership of certain beneficial owners and management is incorporated by reference in the Company’s 2023 Proxy Statement. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by this item regarding certain relationships and related transactions is incorporated by reference to the Company’s 2023 Proxy Statement. Item 14. Principal Accounting Fees and Services The information required by this item regarding principal accounting fees and services is incorporated by reference to the Company’s 2023 Proxy Statement. 40 Table of Contents PART IV Item 15. Exhibits and Financial Statement Schedules (1) Consolidated Financial Statements (2) See “Index to Consolidated Financial Statements” in Item 8, which is incorporated into this Item by reference. (3) Financial Statement Schedules—Not applicable. (4) Schedules not filed with this Annual Report on Form 10-K are omitted because of the absence of conditions under which they are required or because the information called for is shown in the consolidated financial statements or related notes. (a)(3) Exhibits Exhibit Number Description 2.1 Agreement and Plan of Merger, dated January 13, 2023, by and among Calyxt, Inc., Calypso Merger Subsidiary, LLC, Cibus Global, LLC and the other parties thereto 3.1 Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Company’s Annual Report on Form 10-K filed with the SEC on March 14, 2018) 3.2 Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 of the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 7, 2018) 4.1 Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.1 to the Company’s Annual Report on Form 10-K filed with the SEC on March 5, 2020) 4.2 Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 23, 2022) 4.3 Form of Common Warrant (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the SEC on February 23, 2022) 10.1 Management Services Agreement between Cellectis S.A., Cellectis, Inc. and Calyxt, Inc., dated as of January 1, 2016 (incorporated by reference to Exhibit 10.1 of the Company’s Registration Statement on Form S-1 filed with the SEC on June 23, 2017) 10.2 First Amendment to the Management Services Agreement Amendment dated July 25, 2017 between Cellectis S.A. and Calyxt, Inc. (incorporated by reference to Exhibit 10.2 of the Company’s Annual Report on Form 10-K filed with the SEC on March 14, 2018) 10.3 Second Amendment to the Management Services Agreement Amendment dated January 29, 2020 between Cellectis S.A., Cellectis, Inc., Cellectis Biologics, Inc. and Calyxt, Inc. (incorporated by reference to Exhibit 10.3 of the Company’s Annual Report on Form 10-K filed with the SEC on March 5, 2020) 10.4 Separation Agreement dated July 25, 2017 between Cellectis S.A. and Calyxt, Inc. (incorporated by reference to Exhibit 10.3 of the Company’s Annual Report on Form 10-K filed with the SEC on March 14, 2018) 10.5 Stockholders Agreement dated July 25, 2017 between Cellectis S.A. and Calyxt, Inc. (incorporated by reference to Exhibit 10.4 of the Company’s Annual Report on Form 10-K filed with the SEC on March 14, 2018) 10.6 License Agreement dated July 25, 2017 between Cellectis S.A. and Calyxt, Inc. (incorporated by reference to Exhibit 10.5 of the Company’s Annual Report on Form 10-K filed with the SEC on March 14, 2018) 10.7# Exclusive Patent License Agreement between Regents of the University of Minnesota and Calyxt Inc. (f.k.a. Cellectis Plant Sciences, Inc.), dated December 15, 2014 (incorporated by reference to Exhibit 10.6 of the Company’s Registration Statement on Form S-1/A filed with the SEC on July 3, 2017) 10.11† Calyxt, Inc. Equity Incentive Plan (incorporated by reference to Exhibit 10.11 of the Company’s Registration Statement on Form S-1 filed with the SEC on June 23, 2017) 10.12† Form of Stock Option Agreement pursuant to the Calyxt, Inc. Equity Incentive Plan (incorporated by reference to Exhibit 10.12 of the Company’s Registration Statement on Form S-1 filed with the SEC on June 23, 2017) 10.16† Calyxt, Inc. 2017 Omnibus Incentive Plan, as amended (incorporated by reference to Annex A of the Company’s Definitive Proxy Statement filed with the SEC on April 6, 2021) 10.17† Calyxt, Inc. 2017 Stock Option Sub-Plan for French Employees and Directors (incorporated by reference to Exhibit 10.21 of the Company’s Registration Statement on Form S-1/A filed with the SEC on July 3, 2017) 10.18† Form of Stock Option Agreement pursuant to the Calyxt, Inc. 2017 Omnibus Incentive Plan, as amended (incorporated by reference to Exhibit 10.22 of the Company’s Form 10-Q for the quarter ended June 30, 2020) 10.19† Form of Restrictive Stock Unit Agreement pursuant to the Calyxt, Inc. 2017 Omnibus Incentive Plan, as amended (incorporated by reference to Exhibit 10.23 of the Company’s Form 10-Q for the quarter ended June 30, 2020) 10.20† Form of Performance Stock Unit Award Agreement pursuant to the Calyxt, Inc. 2017 Omnibus Incentive Plan, as amended (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019) 10.21† Calyxt, Inc. 2017 Restricted Stock Unit Sub-Plan for French Employees and Directors (incorporated by reference to Exhibit 10.25 of the Company’s Registration Statement on Form S-1/A filed with the SEC on July 3, 2017) 10.22† Lease Agreement between Calyxt, Inc., as Tenant, and NLD Mount Ridge LLC, as Landlord, dated September 6, 2017 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on September 7, 2017) 41 Table of Contents 10.23 Form of Indemnification Agreement (incorporated by reference to Exhibit 10.24 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017) 10.24 Amendment No. 1 to Stockholders Agreement dated May 7, 2018 between Cellectis S.A. and Calyxt, Inc. (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018) 10.25† Offer Letter between Calyxt, Inc. and Mr. Michael A. Carr, dated July 13, 2021 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on July 15, 2021) 10.26† Employment Agreement between Calyxt, Inc. and Mr. Bill Koschak, dated December 21, 2018 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on January 3, 2019) 10.27† Employment Agreement between Calyxt, Inc. and Ms. Debra Frimerman, dated January 21, 2019 (incorporated by reference to Exhibit 10.29 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018) 10.28† Employment Agreement between Calyxt, Inc. and Dr Travis J. Frey, dated May 13, 2019 (incorporated by reference to Exhibit 10.28 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019) 10.29† Calyxt, Inc. 2021 Short Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 18, 2021) 10.30† Calyxt, Inc. 2021 Executive Severance Plan (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on March 18, 2021) 10.31† Separation Agreement between Calyxt, Inc. and James Blome, dated March 18, 2021 10.32† Employment Agreement between Calyxt, Inc. and Ms. Sarah Reiter, dated October 13, 2020 10.33† Calyxt, Inc. 2021 Employee Inducement Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on July 15, 2021) 10.34† Form of Performance Stock Unit Agreement under the Calyxt, Inc. 2021 Employee Inducement Incentive Plan (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on July 15, 2021) 10.35† Participation Agreement of Mr. Michael A. Carr under the 2021 Executive Severance Plan (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on July 15, 2021) 10.36 Calyxt, Inc. Form of Non-Competition, Non-Solicitation, Confidentiality and Inventions Agreement (incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed on July 15, 2021) 10.37 Open Market Sale Agreement SM dated September 21, 2021, by and between Calyxt, Inc. and Jefferies LLC (incorporated by reference to Exhibit 1.1. to the Company’s Current Report on Form 8-K filed on September 21, 2021) 10.38† Annual Incentive Payment Criteria for Executive Officers—In Respect of Fiscal Year 2021 (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on November 4, 2021) 10.39† Separation Agreement between Calyxt, Inc. and Sarah Reiter, dated January 20, 2022 (incorporated by reference to Exhibit 10.39 to Calyxt’s Annual Report on Form 10-K filed on March 3, 2022). 10.40† Form of Performance Stock Unit Agreement pursuant to the Calyxt, Inc. 2017 Omnibus Incentive Plan, as amended (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on March 28, 2022) 10.41† Calyxt, Inc. 2022 Short Term Incentive Plan (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 5, 2022) 10.42 Amendment No. 1 to Open Market Sale Agreement SM , dated October 3, 2022, by and between Calyxt, Inc. and Jefferies LLC (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on October 3, 2022) 10.43 Indemnification Agreement, dated November 10, 2017, between Calyxt Inc. and Cellectis S.A. (incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 13, 2017) 10.44†* Form of Restrictive Stock Unit Agreement pursuant to the Calyxt, Inc. 2017 Omnibus Incentive Plan, as amended 21.1 Subsidiaries of Registrant (incorporated by reference to Exhibit 21.1 to the Company’s Annual Report on Form 10-K filed with the SEC on March 5, 2020) 23.1* Consent of Independent Registered Public Accounting Firm 24.1* Power of Attorney (included on signature page to this Form 10-K) 31.1* Certification of the Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act 31.2* Certification of the Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act 32* Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS* Inline XBRL Instance Document 101.SCH* Inline XBRL Taxonomy Extension Schema Document 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document 42 Table of Contents 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document 104* The cover page for the Company’s Annual Report on 10-K for the year ended December 31, 2022, has been formatted in Inline IXBRL # Confidential treatment has been granted for certain information contained in this exhibit. These portions have been omitted and filed separately with the United States Securities and Exchange Commission. † Indicates management contract or compensatory plan. * Filed herewith Item 16. Form 10-K Summary None. 43 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. CALYXT, INC. Date: March 3, 2023 By: /s/ Michael A. Carr Name: Michael A. Carr Title: President and Chief Executive Officer Signature Title Date /s/ Michael A. Carr Michael A. Carr President, Chief Executive Officer, and Director (principal executive officer) March 3, 2023 /s/ William F. Koschak William F. Koschak Chief Financial Officer (principal financial and accounting officer) March 3, 2023 * Yves Ribeill Board Chair and Director March 3, 2023 * Laurent Arthaud Director March 3, 2023 * Philippe Dumont Director March 3, 2023 * Jonathan Fassberg Director March 3, 2023 * Anna Ewa Kozicz-Stankiewicz Director March 3, 2023 * Kimberly Nelson Director March 3, 2023 * Christopher Neugent Director March 3, 2023 * Pursuant to Power of Attorney By: /s/ Michael A. Carr Michael A. Carr Attorney-in-Fact 44 Table of Contents CALYXT, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) F-2 Consolidated Balance Sheets at December 31, 2022, and 2021 F-3 Consolidated Statements of Operations for the years ended December 31, 2022, 2021, and 2020 F-4 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2022, 2021, and 2020 F-5 Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021, and 2020 F-6 Notes to Consolidated Financial Statements F-7 through F-24 F-1 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Calyxt, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Calyxt, Inc. (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles. The Company’s Ability to Continue as a Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has incurred recurring losses from operations, utilized cash from operations, and has stated that substantial doubt exists about the Company’s ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Adoption of ASU No. 2016-02 As discussed in Notes 1 and 8 to the consolidated financial statements, the Company changed its method of accounting for leases in 2022 due to the adoption of ASU No. 2016-02, Leases. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Description of the Matter Common Stock Warrants As discussed in Note 5 to the consolidated financial statements, the Company entered into a follow-on public offering and issued common warrants to purchase shares of common stock. These warrants were initially recorded as a liability at their fair value on the date issued. Subsequent changes in the fair value of the warrants are recorded in earnings. As of December 31, 2022, the fair value of the warrants was $291 thousand. The Company has recognized an unrealized gain on the fair value of the warrants of $5,120 thousand in other income (expense), net in the year ended December 31, 2022. Auditing the Company’s valuation of the common stock warrants was complex due to the degree of judgment required in evaluating the significant assumptions, principally the expected volatility used in the Black-Scholes model. How We Addressed the Matter in Our Audit To test the Company’s valuation of the warrants determined by the Black-Scholes model, we performed audit procedures that included, among others, assessing the methodology used and testing significant assumptions and the underlying data used by the Company in its analysis, including assessing the completeness and accuracy of such underlying data. We involved internal valuation specialists in assessing the fair value methodology applied and evaluating the reasonableness of the assumptions used by management, including evaluating significant assumptions by comparing them to independently developed estimates. We performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the warrants that would result from changes in the assumptions. Furthermore, we assessed the appropriateness of the disclosures in the consolidated financial statements. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2015. Minneapolis, Minnesota March 2, 2023 F-2 Table of Contents CALYXT, INC. CONSOLIDATED BALANCE SHEETS (In Thousands, Except Par Value and Share Amounts) December 31, 2022 2021 Assets Current assets: Cash and cash equivalents $ 3,427 $ 13,823 Restricted cash 99 499 Prepaid expenses and other current assets 606 859 Total current assets 4,132 15,181 Non-current restricted cash — 99 Land, buildings, and equipment 4,516 21,731 Operating lease right-of-use assets 13,615 — Other non-current assets 158 183 Total assets $ 22,421 $ 37,194 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 340 $ 1,260 Accrued expenses 173 339 Accrued compensation 107 2,522 Due to related parties 175 172 Current portion of financing lease obligations 97 370 Common stock warrants 291 — Other current liabilities 479 191 Total current liabilities 1,662 4,854 Financing lease obligations — 17,506 Operating lease obligations 13,447 — Other non-current liabilities 79 702 Total liabilities 15,188 23,062 Stockholders’ equity: Common stock, $ 0.0001 par value; 275,000,000 shares authorized; 48,944,771 shares issued and 48,844,619 shares outstanding as of December 31, 2022, and 38,874,146 shares issued and 38,773,994 shares outstanding as of December 31, 2021 5 4 Additional paid-in capital 220,422 211,263 Common stock in treasury, at cost; 100,152 shares as of December 31, 2022, and December 31, 2021 ( 1,043 ) ( 1,043 ) Accumulated deficit ( 212,151 ) ( 196,092 ) Total stockholders’ equity 7,233 14,132 Total liabilities and stockholders’ equity $ 22,421 $ 37,194 See accompanying notes to the Consolidated Financial Statements. F-3 Table of Contents CALYXT, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands Except Shares and Per Share Amounts) Year Ended December 31, 2022 2021 2020 Revenue $ 157 $ 25,987 $ 23,851 Cost of goods sold — 28,557 35,127 Gross profit 157 ( 2,570 ) ( 11,276 ) Operating expenses: Research and development 11,553 11,335 11,082 Selling, general, and administrative 10,974 15,427 20,789 Restructuring costs — — 685 Total operating expenses 22,527 26,762 32,556 Loss from operations ( 22,370 ) ( 29,332 ) ( 43,832 ) Gain upon extinguishment of Payroll Protection Program loan — 1,528 — Interest, net ( 87 ) ( 1,414 ) ( 878 ) Non-operating income (expenses) 5,566 19 ( 126 ) Loss before income taxes ( 16,891 ) ( 29,199 ) ( 44,836 ) Income taxes — — — Net loss $ ( 16,891 ) $ ( 29,199 ) $ ( 44,836 ) Basic and diluted net loss per share $ ( 0.37 ) $ ( 0.78 ) $ ( 1.32 ) Weighted average shares outstanding - basic and diluted 45,997,525 37,475,763 33,882,406 Anti-dilutive stock options, restricted stock units, performance stock units, and common stock warrants 15,960,659 6,001,405 5,552,418 See accompanying notes to the Consolidated Financial Statements. F-4 Table of Contents CALYXT, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In Thousands Except Shares Outstanding) Shares Outstanding Common Stock Additional Paid-In Capital Shares in Treasury Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Balances at December 31, 2019 32,951,329 $ 3 $ 185,588 $ ( 1,043 ) $ ( 122,057 ) $ 17 $ 62,508 Net loss — — — — ( 44,836 ) — ( 44,836 ) Stock-based compensation — — 4,971 — — — 4,971 Issuance of common stock and payment of minimum employee taxes withheld upon net share settlement of restricted stock units 381,507 — 212 — — — 212 Issuance of common stock from the follow-on offering, net of $ 1.0 million of issuance costs 3,750,000 1 14,036 14,037 Shares withheld for net share settlement ( 17,792 ) — — — — — — Other comprehensive income — — — — — ( 17 ) ( 17 ) Balances at December 31, 2020 37,065,044 4 204,807 ( 1,043 ) ( 166,893 ) — 36,875 Net loss — — — ( 29,199 ) — ( 29,199 ) Stock-based compensation — — 2,090 — — — 2,090 Issuance of common stock and payment of minimum employee taxes withheld upon net share settlement of restricted stock units 270,303 — 227 — — — 227 Issuance of common stock from ATM Facility, net of $ 0.5 million of issuance costs 1,438,647 — 4,139 — — — 4,139 Shares withheld for net share settlement — — — — — — — Balances at December 31, 2021 38,773,994 4 211,263 ( 1,043 ) ( 196,092 ) — 14,132 Net loss — — — ( 16,891 ) — ( 16,891 ) Stock-based compensation — — 3,998 — — — 3,998 Issuance of common stock and payment of minimum employee taxes withheld upon net share settlement of restricted stock units 304,517 — — — — — — Issuance of common stock from ATM Facility, net of offering expenses 2,006,108 — 111 — — — 111 Issuance of common stock and pre-funded warrants in registered offering, net of $ 0.5 million of offering costs 3,880,000 1 5,050 — — — 5,051 Issuance of common stock upon exercise of pre-funded warrants 3,880,000 — — — — — — Cumulative effect of adoption of lease accounting standard — — — — 832 — 832 Balances at December 31, 2022 48,844,619 $ 5 $ 220,422 $ ( 1,043 ) $ ( 212,151 ) $ — $ 7,233 See accompanying notes to the Consolidated Financial Statements. F-5 Table of Contents CALYXT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) Year Ended December 31, 2022 2021 2020 Operating activities Net loss $ ( 16,891 ) $ ( 29,199 ) $ ( 44,836 ) Adjustments to reconcile net loss to net cash used by operating activities: Gain upon extinguishment of Payroll Protection Program loan — ( 1,528 ) — Depreciation and amortization 1,534 2,338 1,869 Stock-based compensation 3,998 2,090 4,971 Unrealized (gain) loss on mark-to-market of common stock warrants ( 5,120 ) — — Changes in operating assets and liabilities: Accounts receivable — 4,887 ( 3,765 ) Due to/from related parties 3 ( 594 ) ( 211 ) Inventory — 1,383 1,211 Prepaid expenses and other current assets 389 3,331 ( 3,122 ) Accounts payable ( 229 ) ( 360 ) ( 148 ) Accrued expenses ( 166 ) ( 2,542 ) 347 Accrued compensation ( 2,415 ) 572 ( 231 ) Other ( 467 ) 811 243 Net cash used by operating activities ( 19,364 ) ( 18,811 ) ( 43,672 ) Investing activities Sales and (purchases) of short-term investments, net — 11,698 ( 11,698 ) Purchases of land, buildings, and equipment ( 1,520 ) ( 497 ) ( 1,786 ) Net cash (used) provided by investing activities ( 1,520 ) 11,201 ( 13,484 ) Financing activities Proceeds from common stock issuance 11,538 4,380 15,000 Costs incurred related to the issuance of stock ( 1,173 ) ( 501 ) ( 963 ) Proceeds from Payroll Protection Program loan — — 1,518 Repayments of financing lease obligations ( 376 ) ( 364 ) ( 360 ) Proceeds from the exercise of stock options — 227 212 Net cash provided by financing activities 9,989 3,742 15,407 Net decrease in cash, cash equivalents, and restricted cash ( 10,895 ) ( 3,868 ) ( 41,749 ) Cash, cash equivalents, and restricted cash - beginning of period 14,421 18,289 60,038 Cash, cash equivalents, and restricted cash — end of period $ 3,526 $ 14,421 $ 18,289 See accompanying notes to the Consolidated Financial Statements. F-6 Table of Contents CALYXT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Overview Calyxt, Inc. was founded in 2010 and incorporated in Delaware. Calyxt is a plant-based synthetic biology company. The Company leverages its proprietary PlantSpring ™ technology platform to engineer plant metabolism to produce innovative, high-value, and sustainable materials and products for use in helping customers meet their sustainability targets and financial goals. The Company’s primary focus and commercialization strategy is on engineering synthetic biology solutions through its PlantSpring technology platform for manufacture using its proprietary and differentiated BioFactory ™ production system for a diverse base of target customers across a range of end markets, including the cosmeceutical, nutraceutical, and pharmaceutical industries. The Company also commercializes its PlantSpring technology platform by licensing elements of the platform and historically developed traditional agriculture seed-trait product candidates, as well as selectively developing product candidates for customers in traditional agriculture. Prior to its IPO on July 25, 2017, the Company was a wholly owned subsidiary of Cellectis. As of December 31, 2022, Cellectis owned 49.1 percent of the Company’s issued and outstanding common stock. Cellectis has certain contractual rights as well as rights pursuant to the Company’s certificate of incorporation and bylaws, in each case, for so long as it maintains threshold beneficial ownership levels in the Company’s shares. See “Risk Factors—Although Cellectis and its affiliates hold less than a majority of the Company’s outstanding common stock, Cellectis possesses certain rights that prevent other stockholders from influencing significant decisions.” Basis of Presentation and Use of Estimates The Company has prepared its consolidated financial statements in accordance with accounting principles generally accepted in the United States (U.S. GAAP or GAAP) and has included the accounts of Calyxt and its subsidiary. The preparation of consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes, including those related to revenue recognition, the net realizable value of inventories, stock-based compensation, and valuation allowances on deferred tax assets. Actual results could materially differ from these estimates. Cash, Cash Equivalents, Restricted Cash, and Investments All investments purchased with an original maturity of three months or less are accounted for as cash equivalents. The Company’s restricted cash balances are cash and cash equivalents deposited in an amount equal to the future rent payments as required under the Company’s equipment lease facility. The Company may request the return of excess restricted cash collateral annually in December. The amount of the restricted cash balance the Company expects to have returned in 2023 is reflected as a current asset. The Company periodically invests its cash in high grade, highly liquid securities, and investment funds. The Company considers securities purchased with more than ninety days to their original maturity at issuance to be short-term investments. These short-term investments are classified as available-for-sale securities based on the Company’s intent to generally match maturities with Calyxt’s projected monthly cash usage. The Company held these securities to their planned maturity or liquidated them earlier in response to variations in the Company’s monthly cash usage. The Company ensures the credit risk in this portfolio is in accordance with its internal policies and if necessary, makes changes to investments to ensure credit risk is minimized. The Company has not experienced any counterparty credit losses. Accounts Receivable Accounts receivable are unsecured and are recorded at net realizable value. The Company makes judgments as to its ability to collect outstanding receivables based upon patterns of collectability, historical experience, and its evaluation of specific accounts and will provide an allowance for credit losses when collection becomes doubtful. The Company performs credit evaluations of its customers’ financial condition on an as-needed basis. Payment is generally due fifteen or thirty days from the invoice date depending upon the product, and accounts past 30 days are individually analyzed for collectability. When all collection efforts have been exhausted, the account is written off. Inventory Inventories are recorded at the lower of cost or net realizable value and include all costs of seed production and grain the Company purchased as well as costs to store and transport the grain. As of December 31, 2020, inventory included the costs to process the grain into finished products. Consideration received from growers when they purchase seed is recorded as a reduction of inventory. The Company evaluates inventory balances for obsolescence or estimated net realizable value on a regular basis based on the age of the inventory and its sales forecasts. At each period-end, the Company made assumptions regarding projected selling prices for its products considering futures market prices for the underlying agricultural markets and its associated risk management strategies, anticipated costs, and other factors that take into consideration its limited operating history and compare those prices to the current weighted average inventory costs. If the Company’s costs were higher than the projected selling prices, then a valuation adjustment was recorded. F-7 Table of Contents Prior to the commercialization of its high oleic soybean products, the Company expensed all grain costs as R&D. Forward Purchase Contracts Under the Company’s former go-to-market soybean strategy, it would enter into hedging contracts to convert fixed price grain inventories and fixed price grain production agreements to floating prices, consistent with how the grain was sold. The seed contracts often required the Company to pay prices for the seed produced at commodity futures market prices plus a premium. The seed growers had the option to fix their price with the Company throughout the term of the agreement. The Company paid a portion of the seed cost in December each year and the remainder upon delivery in either the first or second quarter of the following year. The grain grower contracts required the Company to pay prices for all grain produced at commodity futures market prices plus a premium. The grain growers had the option to fix their price with the Company throughout the term of the agreement. The grain grower contracts allowed for delivery of grain to the Company at harvest, if so specified when the agreement was executed, otherwise delivery occurred on a date that was elected by the Company through August 31, 2021. The Company paid for grain within a contractually determined number of days following delivery and final pricing. Upon delivery, the inventory was carried at historical cost but sold at prevailing market prices. As a result, the Company entered into hedging arrangements by selling futures contracts which converted its market exposure to these fixed prices to floating prices. By executing these hedging strategies, the Company could closely match the expected economic terms of the grain sale with the market, which helped stabilize margins until such inventory was sold. The Company did not account for these economic hedges as accounting hedges. All unrealized gains or losses on outstanding hedging contracts were recognized in Cost of Goods sold. The Company expected that any gains or losses from these hedging arrangements would be offset by gains or losses on the grain inventories when such grain inventories were sold. Prior to August 1, 2020, the Company designated all of its commodity derivative contracts as cash flow hedges based on the nature of its business activities. As a result, all gains or losses associated with recording those commodity derivative contracts at fair value were recorded as a component of accumulated other comprehensive income (loss) (AOCI). The Company reclassified amounts from AOCI to cost of goods sold when the underlying products were sold to which those hedges related. For the year ended December 31, 2020, the Company reclassified a nominal amount from AOCI to cost of goods sold, and there were no such reclassifications in 2021 or 2022. Land, Buildings, and Equipment Land, buildings, and equipment are stated at cost less accumulated depreciation. Assets under capital lease are stated at the lesser of their net present value of future lease payments or fair market value. Repair and maintenance costs are expensed as incurred. The cost and accumulated depreciation of property and equipment retired, or otherwise disposed of, are removed from the related accounts, and any residual values are charged to expense. Depreciation is recorded using the straight-line method over estimated useful lives as follows: Buildings and improvements 10 - 20 years Leasehold improvements Shorter of lease term or 15 years Office furniture and equipment 7 years Assets under capital lease 4 - 20 years Computer equipment and software 3 - 5 years Vehicles 3 - 6 years Impairment of Long-Lived Assets The Company has a single asset group and reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of that asset group may not be recoverable. If the impairment tests indicate that the carrying value of the asset group is greater than the expected undiscounted cash flows to be generated by the asset group, further analysis is performed to determine the fair value of the asset group. To the extent the fair value of the asset group is less than its carrying value, an impairment loss is recognized equal to the amount the carrying value exceeds the fair value of the asset group. If the Company’s plans or intentions change with regard to a specific asset within the asset group, that asset’s remaining useful life is assessed, and depreciation is accelerated if necessary. Assets to be disposed of are carried at the lower of their carrying value or fair value less costs to sell. Fair value is measured using a discounted cash flow model or independent appraisals, as appropriate. The Company has no t recognized any impairment losses in these consolidated financial statements. Revenue Recognition The Company accounts for a contract as revenue when it has approval and commitment to perform from both parties, the rights of the parties are identified, payment terms are established, the contract has commercial substance, and collectability of the consideration is probable. Changes to contracts are assessed for whether they represent a modification or should be accounted for as a new contract. The Company considers the following indicators, among others, when determining if it is acting as a principal in the transaction and recording revenue on a gross basis: (i) the Company is primarily responsible for fulfilling the promise to provide the specified good or service, (ii) the Company has inventory risk before the specified good F-8 Table of Contents or service has been transferred to a customer or after transfer of control to the customer and (iii) the Company has discretion in establishing the price for the specified good or service. If a transaction does not meet the Company’s indicators of being a principal in the transaction, then the Company is acting as an agent in the transaction and the associated revenues are recognized on a net basis. The Company recognizes revenue when control of the good or service has passed to the customer. The following indicators are evaluated in determining when control has passed to the customer: (i) the customer has legal title to the product, (ii) the Company has transferred physical possession of the product or service to the customer, (iii) the Company has a right to receive payment for the good or service, (iv) the customer absorbs the significant risks and rewards of ownership of the good and (v) the customer has accepted the good. The Company generally does not incur costs to obtain new contracts. Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company’s contracts may contain multiple performance obligations if a promise to transfer the individual good or service is separately identifiable from other promises in the contracts and, therefore, is considered distinct. Performance obligations that are not considered distinct are combined with other goods or services in the contract until that combination meets the distinct criteria above. For contracts with multiple performance obligations, the Company determines the standalone selling price of each performance obligation and allocates the total transaction price using the relative selling price basis. The following is a description of the principal goods and services from which the Company generates revenue: Product Sales Historically, the Company sold soybean grain, oil, and meal. The Company recognized sales revenue at the point in time that title transferred to the customer, which was based on shipping terms. Sales included shipping and handling charges if billed to the customer and were reported net of trade promotion and other costs, including estimated allowances for returns, unsalable products, and prompt pay discounts. Sales, use, value-added, and other excise taxes were not recognized in revenue. Trade promotions were recorded based on estimated participation and performance levels for offered programs at the time of sale. The Company generally did not allow a right of return. During 2021 and 2020, the Company sold soybean grain to a processor and subsequent to the sale they utilized the Company’s rented third-party storage facility to hold the grain until such time they requested it be delivered. The Company was responsible for all handling charges and delivery activities. In those instances, the Company recognized revenue from the sale of grain to the processor upon the transfer of the control of the grain, which was determined to be at the time of the issuance of the purchase order and assignment of warehouse receipts to the customer. The Company determined that the reason for the arrangement was substantive, in that the customer had requested the arrangement, the product was separately identified as belonging to the customer, the product was ready for physical transfer, and the Company did not have the ability to use the product or direct it to another customer. The Company concluded that any remaining performance obligations (e.g., for custodial services) were immaterial in relation to the contract. The Company concurrently accrued all estimated future storage, handling, and delivery costs associated with that sale. All arrangements of this nature were completed prior to December 31, 2021. In certain transactions occurring in the third quarter of 2020, the Company sold grain to a processor with a commitment to provide consideration to the processor in exchange for the soybean meal resulting from the grain crushing activity. The Company determined the consideration payable to the processor was not in exchange for a distinct good or service, as the soybean meal was considered highly interrelated to the grain because they both possess Calyxt specific genetic traits, and the transactions were entered into in contemplation of one another, and therefore, were not considered to be distinct within the context of the contract. For these transactions, the Company recognized revenue from the sale of grain in the amount of the final net cash settlement with the processor, as the consideration payable to the processor was treated as a reduction of revenue. Technology Licensing The Company recognizes revenue from license agreements, which may consist of nonrefundable up-front payments, milestone payments, annual licensing fee payments, royalty payments, and payments for services. Nonrefundable up-front payments are deferred and recognized as revenue over the term of the license agreement. If a license agreement is terminated before the original term of the agreement is fulfilled, all remaining deferred revenue is recognized at termination. Annual licensing fee payments are generally associated with services in the contract and are recognized over time as the customer receives the benefits of the services. If necessary, the Company establishes and increases a contract asset as the revenue is recognized. For these types of payments, the Company recognizes revenue using an input method, such as the completed contract or time elapsed methods, or an output method, such as the work performed or units produced methods. The Company will apply each method of revenue recognition consistently for like contracts and assess any revenue estimates periodically for cumulative adjustments. In certain instances, the receipt of payments in these arrangements are dependent upon the achievement of certain scientific, regulatory, commercial, or other milestones. The Company recognizes milestone payments when the triggering event has occurred, there are no further contingencies or services to be provided with respect to that event, and the counterparty has no right to refund of the payment. F-9 Table of Contents Royalty revenues are expected to arise following the commercialization of products developed using the licensed technology by the counterparty to the license agreement. The royalties may be a percentage of sales or another measurement achieved by the licensee. Royalty revenues will be recognized at the later of (i) when the licensee is generating sales subject to royalty payments or (ii) the performance obligation to which the sales-based or usage-based royalties relates has been satisfied. Product Development Agreements The Company recognizes revenue from product development agreements, which may consist of nonrefundable up-front payments, milestone payments, annual payments, and payments for services. Nonrefundable up-front payments are recognized as revenue over the term of the development agreement. If a development agreement is terminated before the original term of the agreement is fulfilled, all remaining deferred revenue is recognized at termination. In certain instances, the receipt of payments in these arrangements are dependent upon the achievement of certain scientific, regulatory, commercial, or other milestones. Milestone payments are considered variable consideration which are evaluated against the Company’s performance obligations for determination of when it is appropriate to recognize revenue. For purposes of revenue recognition, the Company considers whether the performance obligation is achieved, which may be (i) when a triggering event has occurred, (ii) there are no further contingencies or services to be provided with respect to that event, and (iii) the customer has no right to require refund of their payment. The Company recognizes milestone payments as revenue when it is highly probable that any revenue recognized will not be subsequently reversed. Annual payments are generally associated with services in the contract and are recognized over time as the customer receives the benefits of the services. If necessary, the Company establishes and increases a contract asset as the revenue is recognized. For these types of payments, the Company recognizes revenue using an input method, such as the completed contract or time elapsed methods, or an output method, such as the work performed or units produced methods. The Company will apply each method of revenue recognition consistently for like contracts and assess any revenue estimates periodically for cumulative adjustments. Agreements for the performance of R&D services and cost reimbursements are recognized as revenue over time based on work performed. Collaborative Arrangements For arrangements that do not represent contracts with a customer, the Company analyzes the transaction to assess whether the arrangement involves joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards that are dependent on the commercial success of such activities. The Company had no such arrangements as of December 31, 2022. Advertising Costs The Company expenses advertising costs as incurred. Research and Development Expenses The Company recognizes R&D expenses as incurred. These expenses consist of direct costs for R&D and R&D-related allocations of overhead costs such as facilities and information technology costs. Costs incurred in connection with customer-funded activities are expensed as incurred. Costs to acquire technologies that are utilized in R&D that have no alternative future use are expensed as incurred. Prior to the commercialization of the Company’s soybean product, the Company expensed all grain costs as R&D. Patents The Company expenses patent costs, including related legal costs, as incurred. Costs to write and support the research for filing patents are recorded as R&D expenses in the statements of operations. Costs to maintain, in-license, and defend patents are recorded as SG&A expenses in the statements of operations. Stock-Based Compensation The Company generally measures the fair value of employee and nonemployee stock-based awards on their grant date and records compensation expense on a straight-line basis over the related service period of the award, which is generally the vesting period. The Company uses the Black-Scholes option pricing model to value its stock option awards. The Company generally measures compensation expense for grants of restricted stock units using the Company’s share price on the date of grant. The Company uses a Monte Carlo simulation pricing model when estimating the fair values of PSUs. The Company estimates fair values and accounts for employee and nonemployee awards in a similar manner. Due to the Company’s limited history, it does not always have sufficient historical stock option activity to make predictive assumptions based solely on its stock or stock option activity for the Black-Scholes option pricing model. As a result, the Company may need to use data from other comparable public companies or alternative calculation methods to make predictive assumptions. The Company estimates its future stock price volatility using the weighted-average historical volatility calculated from a group of comparable public companies over the expected term of the option. The group of comparable public companies is determined by management on an annual basis. When F-10 Table of Contents selecting a comparable company, management considers relevant factors including industry and strategy, size, maturity, and financial leverage. The comparable companies used by management to calculate expected volatility may change from year-to-year because of changes in those factors and because a new comparable company may become publicly traded. The expected term of stock options is estimated using the average of the vesting tranches and the contractual life of each grant for employee options, or the simplified method, as the Company has limited historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants. Due to the limited historical experience of the Company’s stock awards program, it has elected to account for forfeitures of awards as they occur. If an award is forfeited prior to vesting, the associated reduction in expense is reflected net in stock-based compensation expense in that period. Stock-based compensation expense is recorded in R&D and SG&A expenses in the Company’s consolidated statements of operations. Income Taxes Current income taxes are recorded based on statutory obligations for the current operating period for the jurisdictions in which the Company has operations. Deferred taxes are provided on an asset and liability method, whereby deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when the Company believes it is more likely than not that some portion or all the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Foreign Currency Transactions Transactions in foreign currencies are translated at the exchange rates effective on the transaction dates. Assets and liabilities denominated in foreign currencies are translated at the period-end exchange rate. Foreign currency gains and losses are recognized in non-operating expenses in the consolidated statements of operations. Foreign currency fluctuations affect the Company’s foreign currency cash flows related primarily to payments to Cellectis. The Company’s principal foreign currency exposure is to the euro. The Company does not hedge these exposures, and it does not believe that the current level of foreign currency risk is significant to its operations. Net Loss Per Share Due to the Company’s net loss position for the years ended December 31, 2022, 2021, and 2020, all its outstanding stock options, restricted stock units, PSUs, and Common Warrants are considered anti-dilutive and excluded from the calculation of net loss per share. Accordingly, the treasury method was not used in determining the number of anti-dilutive stock options and restricted stock units. Recently Issued Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2016-02, Leases (Topic 842) and in July 2018, ASU No. 2018-10, Codification Improvements to Topic 842, Leases, and ASU 2018-11, Leases (Topic 842) – Targeted Improvements (collectively, the New Lease Standard). The New Lease Standard requires lessees to record assets and liabilities on the balance sheet for all leases with terms longer than 12 months. The New Lease Standard establishes ROU model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the income statement. The Company adopted the New Lease Standard as of January 1, 2022, using the transition method which does not require revisions to comparative periods. The Company elected to implement the transition package of practical expedients permitted within the New Lease Standard, which among other things, allows it to carryforward the historical lease classification. In addition, the Company elected the hindsight practical expedient to determine the lease term for existing leases and it also made an accounting policy election to not record leases with an initial term of 12 months or less on its consolidated balance sheet. The Company’s adoption of the New Lease Standard required it to remove the previously reported amounts for land, buildings, and equipment associated with its headquarters and laboratory facility lease as well as the associated liability. The Company assessed the elements of its lease agreement and upon adoption, recorded an operating lease associated with the sale leaseback of land component of the lease, and a second operating lease associated with the building component of the lease. The Company recorded operating lease assets and liabilities of $ 14.1 million within its consolidated balance sheet as of January 1, 2022. The New Lease Standard had no impact on the Company’s consolidated statements of operations or cash flows. The $ 0.8 million cumulative effect of the adoption of the New Lease Standard was recorded to stockholders’ equity. See Note 8 for further information regarding the Company’s leases. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326)” (ASU 2016-13). ASU 2016-13 creates accounting requirements on how to account for credit losses on most financial assets and certain other instruments. This will require the estimation of F-11 Table of Contents lifetime expected credit losses and corresponding recognition of allowance for losses on trade and other receivables, loans, and other instruments held at amortized cost. The ASU requires certain recurring disclosures and is effective for annual periods, and interim periods within those annual periods, beginning on or after December 15, 2023. The Company is analyzing the impact of this standard on its results of operations and financial position. 2. GOING CONCERN The Company has incurred losses since its inception. The Company’s net loss was $ 16.9 million for the year ended December 31, 2022, and it used $ 19.4 million of cash for operating activities for the year ended December 31, 2022. The Company’s primary sources of liquidity are its cash and cash equivalents, with additional liquidity accessible, subject to market conditions and other factors, including limitations that may apply to the Company under applicable SEC and Nasdaq Capital Market (Nasdaq) regulations, from the capital markets, including under the Open Market Sale Agreement SM with Jefferies LLC (as amended, the ATM Facility). As of December 31, 2022, the Company had $ 3.5 million of cash, cash equivalents, and restricted cash. The Company’s restricted cash is associated with its equipment financing leases and was $ 0.1 million as of December 31, 2022, and will be returned following the payoff of the lease obligations in 2023. Current liabilities were $ 1.7 million as of December 31, 2022. On October 3, 2022, the Company entered into an amendment to the Open Market Sale Agreement with Jefferies for the ATM Facility that enables it, subject to the applicable baby shelf rules described below, to offer and sell up to 15,661,000 shares of its common stock. At its discretion, the Company determines the timing and number of shares to be issued under the ATM Facility. During the fourth quarter of 2022, the Company issued approximately 2.0 million shares of common stock under the ATM Facility for proceeds of $ 0.1 million net of commissions and payments for other share issuance costs. From December 31, 2022, through the date of this report, the Company has not issued any additional shares under the ATM Facility. During the February 2022 Offering, the Company issued 3,880,000 shares of its common stock, Pre-Funded Warrants to purchase up to 3,880,000 shares of its common stock, and Common Warrants to purchase up to 7,760,000 shares of its common stock in the Follow-On Offering. In the aggregate, the Company received net proceeds of $ 10.0 million, after deducting approximately $ 0.9 million of underwriting discounts and estimated other offering expenses. The Company has incurred losses since its inception and anticipates that it will continue to generate losses for the next several years. Over the longer term and until the Company can generate cash flows sufficient to support its operating capital requirements, it expects to finance a portion of future cash needs through (i) cash on hand, (ii) commercialization activities, which may result in various types of revenue streams from (a) future product development agreements and technology licenses, including upfront and milestone payments, annual license fees, and royalties; and (b) product sales from its proprietary BioFactory production system; (iii) government or other third-party funding, (iv) public or private equity or debt financings, or (v) the execution of an alternative strategic transaction pursuant to the board of directors’ ongoing evaluation process, or (vi) a combination of the foregoing. However, capital generated by commercialization activities, if any, is expected to be received over a period of time and near-term additional capital may not be available on reasonable terms, if at all. Although the Company has access to the ATM Facility, based on the Company’s public float, as of the date of the filing of this Annual Report, the Company is only permitted to utilize a “shelf” registration statement for primary offerings, including the registration statement under which the ATM Facility is operated, subject to Instruction I.B.6 to Form S-3, which is referred to as the “baby shelf” rules. For so long as the Company’s public float is less than $ 75,000,000 , it may not sell more than the equivalent of one-third of its public float during any 12 consecutive months pursuant to the baby shelf rules. While alternative public and private transaction structures may be available, these may require additional time and cost, may result in substantial dilution to existing stockholders, particularly in light of the Company’s current stock price, may impose operational restrictions on the Company, and may not be available on attractive terms or at all. Accordingly, the Company continuously assesses market conditions and available financing alternatives. The Company’s ability to continue as a going concern will depend on its ability to obtain additional public or private equity or debt financing, obtain government or private grants and other similar types of funding, to consummate an alternative strategic transaction, attain further operating efficiencies, reduce or contain expenditures, and, ultimately, to generate revenue. The Company believes that its cash, cash equivalents, and restricted cash as of December 31, 2022, considering continuing actions taken to reduce its operating expenses to enable the Transactions to close, the legal settlement discussed in Note 8 to the consolidated financial statements, and funding to be provided by Cibus are sufficient to fund its operations through the second quarter of 2023. The Company’s management has concluded there is substantial doubt regarding its ability to continue as a going concern because it will need to raise additional capital to support its business plan for a period of 12 months or more from the date of this filing. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above. Management has implemented various cost reduction and other cash-focused measures to manage liquidity. If the Company is unable to raise additional capital in a sufficient amount or on acceptable terms or to consummate an alternative strategic transaction, the Company may have to implement increasingly stringent cost saving measures and significantly delay, scale back, or cease operations, in part or in full. If the Company raises additional funds through the issuance of additional debt or equity securities, including as part of a strategic alternative, it could result in substantial dilution to its existing stockholders and increased fixed payment obligations, and these securities may have rights senior to those of the Company’s shares of common stock. Any of these events could significantly harm the Company’s business, financial condition, and prospects. F-12 Table of Contents 3. FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE AND CONCENTRAIONS OF CREDIT RISK Financial Instruments Measured at Fair Value and Financial Statement Presentation Financial instruments including cash and cash equivalents, restricted cash, accounts payable, and all other current liabilities have carrying values that approximate fair value. The Company measures Common Warrants on a quarterly basis. The accounting guidance establishes a three-tier hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as of the measurement date as follows: Level 1: Fair values are based on unadjusted quoted prices in active trading markets for identical assets and liabilities. Level 2: Fair values are based on observable quoted prices other than those in Level 1, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets. Level 3: Fair values are based on at least one significant unobservable input for the asset or liability. Fair Value Measurements and Financial Statement Presentation As of December 31, 2021, the Company had no financial instruments measured at fair value. The fair values of the Company’s financial instruments measured at fair value and their respective levels in the fair value hierarchy as of December 31, 2022, were as follows: December 31, 2022 December 31, 2022 Fair Values of Assets Fair Values of Liabilities In Thousands Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Other items reported at fair value: Common stock warrants $ — $ — $ — $ — $ — $ — $ 291 $ 291 Total $ — $ — $ — $ — $ — $ — $ 291 $ 291 The Company estimates the fair value of the Common Warrants as of the date of issuance and at the end of every fiscal period using a Black-Scholes option pricing model, which requires it to make predictive assumptions regarding future stock price volatility and dividend yield. The Company estimates the risk-free interest rate based on the United States Treasury zero-coupon yield curve for the remaining life of the Common Warrants. The Company estimates its future stock price volatility using its historical volatility over the remaining life of the Common Warrants. The Company does not pay dividends and does not expect to pay dividends in the foreseeable future. The estimated fair values of the Common Warrants, and the assumptions used for the Black-Scholes option pricing model were as follows: As of December 31, 2022 Estimated fair value of Common Warrants: $ 0.04 Assumptions: Expected term to liquidation (in years) 4.6 Expected volatility 85.0 % Risk-free interest rate 4.0 % As of December 31, 2022, the Company had no other financial instruments measured at fair value. The non-current portion of the Company’s financing lease obligations are also considered a financial instrument, which the Company measures at fair value for disclosure purposes. It is a Level 2 liability and as of December 31, 2021, it had a fair value of $ 14.5 million. There is no non-current portion of the financing lease obligation at December 31, 2022. Concentrations of Credit Risk The Company invests its cash, cash equivalents, and restricted cash in highly liquid securities and investment funds. The Company diversifies the risk associated with investing in securities by allocating its investments to a diverse portfolio of short-dated, high investment-grade securities, which it classifies as short-term investments that are recorded at fair value in its consolidated financial statements. The Company maintains the credit risk in this portfolio in accordance with its internal policies and if necessary, makes changes to investments to minimize credit risk. The Company has no t experienced any counterparty credit losses. As of December 31, 2022, the Company did no t hold any short-term investments. 4. RELATED-PARTY TRANSACTIONS The Company is party to several agreements that govern its relationship with Cellectis, some of which require the Company to make payments to Cellectis. Pursuant to the Company’s management services agreement with Cellectis, it incurred no management fee expenses in 2022, and it incurred nominal management fee expenses in 2021 and 2020. F-13 Table of Contents Cellectis has also guaranteed the lease agreement for the Company’s headquarters. Cellectis’ guarantee of the Company’s obligations under the lease will terminate at the end of the second consecutive calendar year in which the Company’s tangible net worth exceeds $ 300 million. The Company agreed to indemnify Cellectis for any obligations incurred by Cellectis under its guaranty of the obligations under the lease, effective upon Cellectis’ ownership falling to 50 percent or less of the Company’s outstanding common stock. This indemnification obligation was triggered in October 2022. TALEN ® is the Company’s primary gene editing technology. TALEN ® technology was invented by researchers at the University of Minnesota and Iowa State University and exclusively licensed to Cellectis. The Company obtained an exclusive license for the TALEN ® technology for commercial use in plants from Cellectis. The Company also licenses other technology from Cellectis. Cellectis is entitled to royalties on any revenue the Company generates from sales of products less certain amounts as defined in the license agreement, royalties on certain cumulative revenue thresholds, and a percentage of any sublicense revenues. The Company has incurred nominal license and royalty fees for the years ended December 31, 2022, 2021, and 2020. 5. STOCKHOLDERS’ EQUITY Preferred Stock Preferred stock of 50.0 million shares, with a $ 0.0001 par value, is authorized but unissued. Follow-on Public Offerings During the February 2022 Offering, the Company issued 3,880,000 shares of its common stock, Pre-Funded Warrants to purchase up to 3,880,000 shares of its common stock, and Common Warrants to purchase up to 7,760,000 shares of its common stock. The aggregate offering price for each share of common stock and accompanying Common Warrant was $ 1.41 per share. The aggregate offering price for each Pre-Funded Warrant and accompanying Common Warrant was $ 1.4099 per share. In the aggregate, the Company received net proceeds of $ 10.0 million, after deducting approximately $ 0.9 million of underwriting discounts and estimated other offering expenses. Pre-Funded Warrants Each Pre-Funded Warrant entitled the holder to purchase one share of the Company’s common stock at an exercise price of $ 0.0001 per share. The Pre-Funded Warrants were recorded as a component of stockholders’ equity within additional paid-in capital. The Pre-Funded Warrants were exercised in full on May 4, 2022, and subsequently settled with the counterparty. Common Stock Warrants Each Common Warrant entitles the holder to purchase one share of common stock at an exercise price of $ 1.41 per share. The Common Warrants became exercisable on August 23, 2022 , and expire on August 23, 2027 . The Common Warrants are recorded as a liability in the Company’s consolidated balance sheet. Per the terms of the Common Warrants, a holder of an outstanding warrant is not entitled to exercise any portion of such warrant if, upon exercise of such portion of the warrant, the holder’s ownership of the Company’s common stock (together with its affiliates) or the combined voting power of the Company’s securities beneficially owned by such holder (together with its affiliates) would exceed the 4.99 percent after giving effect to the exercise. Warrant transactions for the year ended December 31, 2022, are as follows: Number of Pre-Funded Warrants Weighted Average Exercise Price Number of Common Warrants Weighted Average Exercise Price Outstanding as of December 31, 2021: Issued 3,880,000 $ 0.0001 7,760,000 $ 1.41 Forfeited/canceled — — — — Exercised 3,880,000 $ 0.0001 — Outstanding as of December 31, 2022: — — 7,760,000 $ 1.41 Exercisable as of December 31, 2022: — — 7,760,000 $ 1.41 On October 20, 2020, the Company completed a follow-on offering of its common stock. It sold an aggregate of 3,750,000 shares of common stock at a price of $ 4.00 per share. In the aggregate, the Company received net proceeds from the follow-on offering of $ 14.0 million, after deducting $ 1.0 million of placement and agent fees and other offering expenses. As part of the follow-on offering, Cellectis purchased 1,250,000 shares of common stock for a value of $ 5.0 million, the proceeds of which are included in the net proceeds of $ 14.0 million. ATM Facility On September 21, 2021, the Company entered into an ATM Facility with Jefferies LLC, as sole selling agent. The Company issued approximately 1.4 million shares of common stock under the ATM Facility in 2021. In the aggregate, the Company received net proceeds from the ATM Facility of $ 4.1 million through early January 2022. F-14 Table of Contents On October 3, 2022, the Company entered into an amendment to the Open Market Sale Agreement that enables it, subject to the applicable baby shelf rules, to offer and sell up to 15,661,000 shares of its common stock. At its discretion, the Company determines the timing and number of shares to be issued under the ATM Facility. During the fourth quarter of 2022, the Company issued approximately 2.0 million shares of common stock under the ATM Facility for proceeds of $ 0.1 million net of commissions and payments for other share issuance costs. From December 31, 2022, through the date of this report, the Company has not issued any additional shares under the ATM Facility. 6. STOCK-BASED COMPENSATION The Company uses broad-based stock plans to attract and retain highly qualified officers and employees and to help ensure that management’s interests are aligned with those of its shareholders. The Company has also granted equity-based awards to directors, nonemployees, and certain employees of Cellectis. In December 2014, the Company adopted the 2014 Plan, which allowed for the grant of stock options, and in June 2017, it adopted the 2017 Plan, which allowed for the grant of stock options, restricted stock units, PSUs, and other types of equity awards. On February 19, 2021, James Blome ceased serving as the Company’s Chief Executive Officer. The Company recorded a benefit to earnings from a $ 2.5 million recapture of non-cash stock compensation expense from the forfeiture of Mr. Blome’s unvested stock options, restricted stock units, and PSUs. On July 16, 2021, the Company filed a Registration Statement on Form S-8 with the SEC which registered an additional 4,299,904 shares of common stock that may be issued or delivered and sold pursuant to the 2017 Plan and 600,000 shares of common stock that may be issued or delivered and sold pursuant to the Calyxt, Inc. Inducement Plan. Shares of common stock are issuable under the Inducement Plan upon the settlement of PSUs which were granted to Mr. Michael A. Carr in July 2021 as a material inducement to accept employment as the Company’s President and Chief Executive Officer. As of December 31, 2022, 2,718,149 shares were registered and available for grant under effective registration statements, while 3,112,568 shares were available for grant in the form of stock options, restricted stock, restricted stock units, and PSUs under the 2017 Plan. Stock-based awards currently outstanding also include awards granted under the 2014 Plan and the Inducement Plan. No further awards will be granted under either the 2014 Plan or the Inducement Plan. Stock Options The estimated fair values of stock options granted, and the assumptions used for the Black-Scholes option pricing model were as follows: Year ended December 31, 2022 2021 2020 Estimated fair values of stock options granted $ 0.86 $ 3.61 $ 3.24 Assumptions: Risk-free interest rate 1.9 % - 3.5 % 0.6 % - 1.2 % 0.3 % - 1.7 % Expected volatility 89.7 % - 92.8 % 80.1 % - 91.0 % 77.4 % - 81.2 % Expected term (in years) 5.5 - 6.9 5.5 - 6.5 6.0 - 10.0 The Company estimates the fair value of each option on the grant date, or other measurement date if applicable, using a Black-Scholes option pricing model, which requires it to make predictive assumptions regarding employee exercise behavior, future stock price volatility, and dividend yield. The Company estimates the risk-free interest rate based on the United States Treasury zero-coupon yield curve at the date of grant for the expected term of the option. The Company estimates its future stock price volatility using the weighted-average historical volatility calculated from a group of comparable public companies over the expected term of the option. The expected term of stock options is estimated using the average of the vesting tranches and the contractual life of each grant for employee options, or the simplified method, as the Company has limited historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants. The use of the simplified method is dependent upon the type of equity award granted and the term of the award. The Company does not pay dividends and does not expect to pay dividends in the foreseeable future. Option strike prices are set at 100 percent or more of the closing share price on the date of grant and generally vest over three to six years following the grant date. Options generally expire 10 years after the date of grant. Information on stock option activity is as follows: Options Exercisable Weighted- Average Exercise Price Per Share Options Outstanding Weighted- Average Exercise Price Per Share Balance as of December 31, 2021 2,789,110 $ 10.23 4,658,405 $ 9.47 Granted 1,609,000 1.12 Exercised — — Forfeited or expired ( 425,952 ) 7.02 Balance as of December 31, 2022 3,396,624 $ 9.94 5,841,453 $ 7.35 F-15 Table of Contents Stock-based compensation expense related to stock option awards was as follows: Year ended December 31, In Thousands 2022 2021 2020 Stock-based compensation expense $ 2,031 $ 1,850 $ 3,371 As of December 31, 2022, options outstanding and exercisable had no aggregate intrinsic value and the weighted average remaining contractual term was 5.0 years as of that date. Net cash proceeds from the exercise of stock options less shares used for minimum withholding taxes and the intrinsic value of options exercised were as follows: Year ended December 31, In Thousands 2022 2021 2020 Net cash proceeds $ — $ 227 $ 212 Intrinsic value of options exercised $ — $ 344 $ 179 As of December 31, 2022, unrecognized compensation expense related to non-vested stock options was $ 3.1 million. This expense will be recognized over 22 months on average. Restricted Stock Units The Company grants restricted stock units which generally vest over three to five years after the date of grant. Information on restricted stock unit activity is as follows: Number of Restricted Stock Units Outstanding Weighted- Average Grant Date Fair Value Unvested balance at December 31, 2021 571,303 $ 6.15 Granted 1,077,600 1.26 Vested ( 303,728 ) 6.39 Forfeited ( 115,969 ) 4.14 Unvested balance at December 31, 2022 1,229,206 $ 1.99 The total grant-date fair value of restricted stock unit awards that vested was as follows: Year ended December 31, In Thousands 2022 2021 2020 Grant-date fair value $ 1,940 $ 1,489 $ 3,122 Information on the weighted average grant date fair value of restricted stock units issued was as follows: Year ended December 31, In Thousands 2022 2021 2020 Weighted average grant date fair value $ 1.26 $ 4.59 $ 6.54 Stock-based compensation expense related to restricted stock units was as follows: Year ended December 31, In Thousands 2022 2021 2020 Stock-based compensation expense $ 1,318 $ 224 $ 1,155 As of December 31, 2022, unrecognized compensation expense related to restricted stock units was $ 1.2 million. This expense will be recognized over 22 months on average. The Company accounts for stock-based compensation awards granted to employees of Cellectis as deemed dividends. The Company recorded deemed dividends as follows: Year ended December 31, In Thousands 2022 2021 2020 Deemed dividends from grants to Cellectis employees $ 90 $ ( 289 ) $ 1,168 F-16 Table of Contents Performance Stock Units From time-to-time, the Company issues PSUs to certain individuals in management in order to align their objectives with stockholders of the Company. Depending upon the type of PSU award, the Company uses a Monte Carlo simulation pricing model when estimating the fair values of these awards. 2022 Grant In March 2022, the Company granted 530,000 PSUs under the 2017 Plan to five employees including four executive officers. The PSUs include three annual performance periods (2022, 2023, and 2024) and target performance levels for each of those periods linked to the achievement of Company objectives as determined annually for the respective period by the Compensation Committee. Once the annual objectives are approved, the associated expense will be recognized on a straight-line basis over the period through the determination date, which can be no later than March 15 of the following year. Earned awards will be settled in shares of Company stock no later than the March 15 determination date in the following calendar year. The grant date for the tranche of awards linked to 2022 performance is May 4, 2022. Determination of expense for the 2023 and 2024 tranches of PSUs will be made when the associated business objectives are determined. See Note 14 for more information about the vesting of these PSU awards. 2021 Grant In July 2021, the Company granted 600,000 PSUs under the Inducement Plan to Mr. Carr. The PSUs will vest if the Company’s stock remains above three specified price levels for 30 calendar days over the three-year performance period. The PSUs will be settled in unrestricted shares of the Company’s common stock on the vesting date. The estimated fair values of PSUs granted in 2021 and the assumptions used were as follows: Estimated fair values of performance stock units granted: At least $12 per share $ 2.16 At least $15 per share $ 1.89 At least $20 per share $ 1.55 Assumptions: Expected term (in years) 3.0 Expected volatility 90.0 % Risk-free interest rate 0.4 % The Company estimated the fair value of each tranche of the PSUs on the grant date using the Monte Carlo simulation pricing model, which required it to make predictive assumptions as to the expected term of the grant, future stock price volatility, and dividend yield. The expected term represents the expected service period of the PSUs granted. Expected volatility was based on the historical volatility of the Company’s common stock over the expected term. The Company estimates the risk-free interest rate based on the United States Treasury zero-coupon yield curve at the date of grant for the expected term of the option. 2019 Grant forfeitures In June 2022, PSU grants made to two executive officers in 2019 were forfeited because the underlying performance criteria were not met. These PSUs contained a market condition and had a five-year service period. The Company will continue to expense these PSUs over the remaining service period for these two executive officers. During 2021, the Company recognized a benefit from the forfeiture of 166,667 PSUs held by Mr. Blome, its former Chief Executive Officer. PSU activity for the year ended December 31, 2022, is as follows: Number of PSUs Outstanding as of December 31, 2021: 745,000 Issued 530,000 Forfeited/canceled ( 145,000 ) Awarded — Outstanding as of December 31, 2022: 1,130,000 Stock-based compensation expense related to PSUs is as follows: Year ended December 31, In Thousands 2022 2021 2020 Stock-based compensation expenses $ 649 $ 16 $ 445 F-17 Table of Contents As of December 31, 2022, unrecognized compensation expense related to PSUs was $ 0.9 million. This expense will be recognized over 19 months on average. 7. INCOME TAXES The following table reconciles the United States statutory income tax rate to the Company’s effective income tax rate: Year ended December 31, 2022 2021 2020 United States statutory rate 21.0 % 21.0 % 21.0 % State tax, net of federal benefit 1.0 % 1.0 % 4.2 % Stock-based compensation ( 1.7 %) ( 0.7 %) ( 0.5 %) Officer compensation ( 1.4 %) 1.5 % ( 1.0 %) Deferred rate change — % — % — % R&D credit 2.2 % 1.4 % 0.8 % PPP Loan — % 1.1 % — % Unrealized (gain) loss on mark-to-market of common stock warrants 6.4 % — % — % Other — % 0.1 % ( 0.1 )% Change in valuation allowance ( 27.5 %) ( 25.4 %) ( 24.4 %) Effective income tax rate — % — % — % Deferred assets and liabilities consist of the following: December 31, In Thousands 2022 2021 2020 Net operating losses $ 40,914 $ 38,671 $ 33,392 Stock-based compensation 2,950 2,724 2,531 Financing lease obligations — 3,820 4,574 Operating lease ROU liabilities 2,921 — Tax credit carry forwards 3,685 3,210 2,577 Capitalized R&D 2,183 — Compensation 14 514 339 Derivative liability — — 703 Other 124 143 391 Gross deferred tax assets 52,791 49,082 44,507 Less valuation allowance ( 49,843 ) ( 45,369 ) ( 39,898 ) Net deferred tax assets 2,948 3,713 4,609 Fixed assets ( 89 ) ( 3,667 ) ( 4,609 ) Operating lease ROU assets ( 2,859 ) — Other — ( 46 ) — Gross deferred tax liabilities ( 2,948 ) ( 3,713 ) ( 4,609 ) Net deferred tax asset or liability $ — $ — $ — The Company provides for a valuation allowance when it is more likely than not that it will not realize a portion of the deferred tax assets. The Company has established a full valuation allowance for deferred tax assets described above due to the uncertainty that enough taxable income will be generated in the taxing jurisdiction to utilize the assets. Therefore, the Company has not reflected any benefit of such deferred tax assets in the accompanying consolidated financial statements. The Company has $ 239.2 million of tax loss carryforwards. Of this amount, $ 55.2 million are state operating loss carryforwards and $ 184.0 million are federal operating loss carryforwards. The federal carryforward periods are as follows: $ 142.0 million do not expire and $ 41.9 million expire between 2032 and 2037 . The state net operating losses will expire between 2027 and 2041 , with some amounts having indefinite carryover. The Company also has federal and state R&D credit carryovers of $ 2.6 million and $ 1.3 million, which will expire between 2032 and 2042 . The Company is subject to federal income taxes in the United States as well as various state and local jurisdictions. The Company has reviewed its tax positions and concluded that no liability for uncertain tax positions is required as of December 31, 2022. The Company will classify any future interest and penalties as a component of income tax expense if incurred. The Company does not expect the amount of uncertain tax positions to change significantly in the next 12 months. The Company’s major taxing jurisdictions are in the United States, at both the federal and state levels. The number of years open for examination varies depending on the tax jurisdiction but are generally from three to five years. F-18 Table of Contents 8. LEASES, COMMITMENTS, AND CONTINGENCIES Litigation and Claims In the fourth quarter of 2022, the Company reached a settlement with one of its technology vendors regarding alleged intellectual property infringement. As a result of the settlement, the Company received $ 0.75 million in the fourth quarter of 2022. See Note 14 for further information regarding this legal settlement. The Company is not currently a party to any other material pending legal proceedings. Sale-Leaseback of Headquarters and Laboratory Facilities In September 2017, the Company consummated a sale-leaseback transaction with a third party for its corporate headquarters and laboratory facilities in Roseville, Minnesota, which encompasses approximately 44,000 square feet including office and lab space, the first pilot BioFactory production system, greenhouses, and outdoor research plots. The Company is deemed the owner for accounting purposes. The lease has a te rm of twenty years and includes four options to each extend the lease for five years subject to there being no default under the lease terms beyond any cure period and the Company occupying the property at the time of extension. In 2017, the Company received $ 7.0 million in connection with the sale of the land and uncompleted facility. The lease commenced in May 2018. Under the lease, the Company pays an annual base rent of eight percent of the total project cost with scheduled increases in rent of 7.5 percent on the sixth, eleventh, and sixteenth anniversaries of the start of the lease commencement as well as on the first day of each renewal term. Currently, the Company pays an annual base rent of $ 1.4 million. The first increase will occur during 2023. The Company is also responsible for all operating costs and expenses associated with the property. If the landlord decides to sell the property, the Company has a right of first refusal to purchase the property on the same terms offered to any third party. Concurrent with entering the lease, Cellectis guaranteed the lease agreement for the Company’s headquarters. However, the Company previously agreed to indemnify Cellectis for any obligations under this guaranty, effective upon Cellectis’ ownership falling to 50 percent or less of the Company’s outstanding common stock. Accordingly, the Company’s indemnification obligation was triggered in October 2022. Prior to 2022, this lease was considered a failed sale leaseback based on the nature of the transactions and was reported as a financing-type lease. As discussed in Note 1, Recently Issued Accounting Pronouncements, the Company adopted the New Lease Standard as of January 1, 2022, using the transition method which does not require revisions to comparative periods. The Company elected to implement the transition package of practical expedients permitted within the New Lease Standard, which among other things, allows it to carryforward the historical lease classification. In addition, the Company elected the hindsight practical expedient to determine the lease term for existing leases and it also made an accounting policy election to not record leases with an initial term of 12 months or less on its consolidated balance sheet. The Company’s adoption of the New Lease Standard required it to remove the previously reported amounts for land, buildings, and equipment associated with its headquarters and laboratory facilities lease as well as the associated liability. The Company assessed the elements of its lease agreement and upon adoption, recorded an operating lease associated with the sale leaseback of land underlying the headquarter facility, and a second operating lease associated with the building. The Company recorded operating lease assets and liabilities of $ 14.1 million within its consolidated balance sheet as of January 1, 2022. The New Lease Standard had no impact on the Company’s consolidated statements of operations or cash flows. The $ 0.8 million cumulative effect of the adoption of the New Lease Standard was recorded to stockholders’ equity. The impact of adoption of the New Lease Standard on the Company’s December 31, 2021, consolidated balance sheet was as follows: As Reported December 31, 2021 Adoption of Lease Standard As Adjusted December 31, 2021 Assets Land, buildings, and equipment $ 21,731 $ ( 16,543 ) $ 5,188 Operating lease right-of-use assets — 14,090 14,090 $ 21,731 $ ( 2,453 ) $ 19,278 Liabilities and stockholders’ equity Current portion of financing lease obligations $ 370 $ ( 4 ) $ 366 Other current liabilities 191 276 467 Financing lease obligations 17,506 ( 17,371 ) 135 Operating lease obligations — 13,814 13,814 Accumulated deficit ( 196,092 ) 832 ( 195,260 ) $ ( 178,025 ) $ ( 2,453 ) $ ( 180,478 ) F-19 Table of Contents Sale-Leaseback of Equipment The Company also has an equipment financing arrangement that is considered a financing-type lease which matures in 2023. The Company was required to deposit cash into a restricted account in an amount equal to the future rent payments required by the lease. As of December 31, 2022, restricted cash totaled $ 0.1 million, and will be returned following the payoff of the lease obligations in 2023. Recognition of Lease Liabilities The Company records its operating lease liabilities at the present value of the future lease payments over the lease term. If the lease term includes options to extend or terminate the lease, those elements are included in the determination of lease term when it is reasonably certain that the option will be exercised. The rate used to determine the present value of future lease payments is the rate stated in the lease agreement, or if not stated, the Company’s incremental borrowing rate is used, up to an effective rate that enables the lease liability to amortize to zero over the lease term. Rent expense for operating leases is recorded in SG&A expense in the consolidated statements of operations and in operating cash flows in the consolidated statements of cash flows. The Company also records operating lease ROU assets at an initial amount equal to the operating lease liability. Those ROU assets are amortized to lease expense within SG&A over the lease term using the effective interest method to ensure the ROU asset amortizes to zero concurrent with the associated liability, and the ROU asset amortization expense is also reported in operating cash flows in the consolidated statements of cash flows. The Company records its financing lease liabilities at the present value of the future lease payments over the lease term. If the lease term includes options to extend or terminate the lease, those elements are included in the determination of lease term when it is reasonably certain that the option will be exercised. The rate used to determine the present value of future lease payments is the rate stated in the lease agreement, or if not stated, the Company’s incremental borrowing rate is used, up to an effective rate that enables the lease liability to amortize to zero over the lease term. Expense associated with financing leases is recorded in interest, net in the consolidated statements of operations and in operating cash flows in the consolidated statements of cash flows. The Company is obligated under a non-cancellable operating lease for office and laboratory space at its facility in Roseville, Minnesota. The lease has a remaining term of 15.3 years and has a ROU asset of $ 13.6 million as of December 31, 2022. The Roseville, Minnesota lease includes four options to each extend the lease for five years . These options to extend the lease are not recognized as part of the ROU assets and operating lease liabilities as it is not reasonably certain that the Company will exercise those options. The Company’s agreement does not include options to terminate the lease. Lease Expense The components of lease expense were as follows: Year Ended December 31, In Thousands 2022 2021 2020 Finance lease costs $ 75 $ 1,431 $ 1,435 Operating lease costs 1,548 46 83 Variable lease costs 942 NA NA Total $ 2,565 $ 1,477 $ 1,518 NA- not applicable prior to the New Lease Standard Operating lease cost for short-term leases was not material for the year ended December 31, 2022. Other Lease Information Other information related to leases was as follows: Year Ended December 31, 2022 In Thousands except for lease term and discount rate Operating Financing Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows $ 276 $ — Financing cash flows $ — $ 376 Weighted average remaining lease term (years) 15.3 0.4 Weighted average discount rate 7.9 % 8.1 % F-20 Table of Contents As of December 31, 2022, future minimum payments under operating and finance leases were as follows: In Thousands Operating Leases Financing Leases Total Leases 2023 $ 1,446 $ 100 $ 1,546 2024 1,480 — 1,480 2025 1,479 — 1,479 2026 1,479 — 1,479 2027 1,479 — 1,479 Thereafter 16,991 — 16,991 Total including interest 24,354 100 24,454 Less: imputed interest ( 10,540 ) ( 3 ) ( 10,543 ) Total $ 13,814 $ 97 $ 13,911 9. EMPLOYEE BENEFIT PLAN The Company provides a 401(k) defined contribution plan for all regular full-time employees who have completed two months of service. The Company matches employee contributions up to certain amounts and those matching contributions vest immediately. Year Ended December 31, In Thousands 2022 2021 2020 Employee benefit plan expenses $ 259 $ 274 $ 309 10. SUPPLEMENTAL INFORMATION Certain balance sheet amounts are as follows: As of December 31, In Thousands 2022 2021 Cash, cash equivalents, and restricted cash: Cash and cash equivalents $ 3,427 $ 13,823 Restricted cash 99 499 Non-current restricted cash — 99 Total $ 3,526 $ 14,421 As of December 31, In Thousands 2022 2021 Prepaid expenses and other current assets: Common warrants – financing costs $ 396 $ — Prepaid expenses and other current assets 210 859 Total $ 606 $ 859 As of December 31, In Thousands 2022 2021 Other current liabilities: O perating lease obligations – current $ 367 $ — Other current liabilities 112 191 Total $ 479 $ 191 F-21 Table of Contents As of December 31, In Thousands 2022 2021 Land, buildings, and equipment: Land under capital lease $ — $ 5,690 Buildings 900 804 Buildings under capital lease — 3,812 Leasehold improvements 364 215 Leasehold improvements under capital lease — 10,023 Office furniture and equipment 7,803 5,409 Office furniture and equipment under capital lease 414 1,788 Computer equipment and software 912 831 Construction in progress — 849 Vehicles — 38 Total land, buildings, and equipment 10,393 29,459 Less accumulated depreciation and amortization ( 5,877 ) ( 7,728 ) Total $ 4,516 $ 21,731 Certain statements of operations amounts are as follows: Year Ended December 31, In Thousands 2022 2021 2020 Revenue: Soybean grain $ — $ 25,930 $ 12,976 Soybean meal — — 8,628 Soybean oil — — 2,220 Other 157 57 27 Total $ 157 $ 25,987 $ 23,851 Year Ended December 31, In Thousands 2022 2021 2020 Stock-based compensation expense: Research and development $ 946 $ 1,465 $ 1,132 Selling, general, and administrative 3,052 625 3,839 Total $ 3,998 $ 2,090 $ 4,971 Year Ended December 31, In Thousands 2022 2021 2020 Interest, net: Interest expense $ ( 75 ) $ ( 1,431 ) $ ( 1,435 ) Interest income 60 17 557 Common stock warrants – financing cost amortization ( 72 ) — — Total $ ( 87 ) $ ( 1,414 ) $ ( 878 ) F-22 Table of Contents Supplemental statement of cash flows information is as follows: Year Ended December 31, In Thousands 2022 2021 2020 Interest paid $ 69 $ 1,425 $ 1,455 Non-cash transactions not reported in the consolidated statement of cash flows are as follows: Year Ended December 31, In Thousands 2022 2021 2020 Receivable from Jefferies for shares issued under ATM Facility $ ( 260 ) $ 260 $ — Non-cash additions to land, buildings, and equipment $ ( 691 ) $ 691 $ — Cumulative effect of adoption of lease accounting standard on stockholders’ equity $ 832 $ — $ — Establishment of operating lease right-of-use assets and associated operating lease liabilities $ 14,090 $ — $ — 11. SEGMENT INFORMATION The Company operates in a single reportable segment, the development and commercialization of products derived from plant cells. The chief operating decision maker is the Company’s Chief Executive Officer, who makes resource allocation decisions and assesses business performance based on financial information presented on a consolidated basis. There are no segment managers who are held accountable by the chief operating decision maker, or anyone else, for operations, operating results, and planning for levels or components below the consolidated unit level. Accordingly, the Company has determined that it operates in a single reportable segment, the development and commercialization of products derived from plant cells. The Company’s current commercial focus is North America, and all revenue in 2022 was recognized in the United States. 12. LONG-TERM DEBT The Company’s long-term debt was comprised of a $ 1.5 million promissory note pursuant to the PPP loan established by the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) implemented by the SBA. The Company received the funds under the PPP loan on April 19, 2020. Subject to certain conditions, the PPP loan and accrued interest were eligible to be forgiven in whole or in part by applying for forgiveness pursuant to the CARES Act and the Paycheck Protection Program. In order to be eligible for forgiveness, the proceeds of the PPP loan were required to be applied to certain eligible expenses, including payroll costs, interest on certain mortgage obligations, rent payments on certain leases, and certain qualified utility payments, with not more than 40 percent of the amount applied to non-payroll costs. The Company applied the proceeds from the PPP loan toward qualifying expenses. On October 21, 2020, as modified December 29, 2020, the Company applied for forgiveness of the full principal amount and all accrued interest. On April 8, 2021, the Company was notified by the SBA that the full principal amount and all accrued interest of the PPP loan had been forgiven. Accordingly, the Company recognized a gain upon the extinguishment of the PPP loan for $ 1.5 million during the second quarter of 2021. 13. RESTRUCTURING COSTS On August 4, 2020, the Company approved a move to a streamlined go-to-market strategy for its soybean product line. The impact of the action included staffing adjustments related to soybean processing and product sales, as well as the gradual exit of all supply chain contractual commitments that were not associated with the soybean go-to-market strategy. In the fiscal year ended December 31, 2020, the Company recorded $ 0.7 million of restructuring costs for severance and other related payments, and also recorded a $ 0.9 million recapture benefit of non-cash stock compensation expense from the forfeiture or modification of unvested stock awards. The Company did not incur any other material costs from the disposal of any assets or contractual terminations in the years ended December 31, 2021, and 2020. As of December 31, 2020, all severance and transitional expenses were recorded, with $ 0.4 million to be paid during 2021. As of December 31, 2021, all amounts related to the restructuring had been paid. 14. SUBSEQUENT EVENTS Merger with Cibus Global LLC On January 13, 2023, the Company and Cibus Global, LLC entered into a definitive merger agreement under which the Company and Cibus will merge in an all-stock transaction. As a part of the proposed merger, beginning at the earlier of March 15, 2023 and the date the Company’s unrestricted cash balance first drops below $ 1,500,000 , the Company can request, and Cibus has agreed to provide, an unsecured, interest-free revolving line of credit of up to $ 3,000,000 in cash, which amount may be increased to $ 4,000,000 under certain conditions. In connection with the Transactions (as defined in Note 14), beginning at the earlier of March 15, 2023 and the date Calyxt’s unrestricted cash balance first drops below $ 1,500,000 , Calyxt can request, and Cibus has agreed to provide, an unsecured, interest-free revolving line of credit of up to $ 3,000,000 in cash, which amount may be increased to $ 4,000,000 if Cibus elects to extend the outside date (as defined in the Merger Agreement) to June 30, 2023 (the Interim Funding.” Funds can be drawn by Calyxt in $ 500,000 increments and may only be used to fund operating expenses incurred in the ordinary course of business consistent with past practice and consistent with the negative covenants in the Merger Agreement. The full outstanding F-23 Table of Contents balance of the Interim Funding will be reduced to zero in connection with the closing of the Transactions, if consummated. The full outstanding balance of the Interim Funding will be forgiven by Cibus if the Merger Agreement is terminated for any reason other than certain under certain conditions, as detailed in the Merger Agreement. The Interim Funding is subject to acceleration in connection with certain bankruptcy events. Modification of Stock Options On March 1, 2023, the Company’s Board of Directors approved the modification of the award terms of all outstanding stock options that have 90-day post-separation exercise periods from the current 90 days to five years from date of grant. These modifications may result in additional stock compensation expense that will be recognized immediately for vested awards or over the remaining service period for unvested awards as of that date. Grant of Restricted Stock Units On March 1, 2023, the Company’s Board of Directors authorized the grant of an aggregate of 3,487,503 RSUs. These awards will vest upon completion of the Transactions, and accordingly, the expense associated with these awards will be recognized over the period from the date of grant to the estimated closing date of the Transactions. Performance Stock Units On March 1, 2023, the Company’s Board of Directors determined the 2022 tranche of PSUs would vest at 100 %. Litigation and Claims In the fourth quarter of 2022, the Company reached a settlement with one of its technology vendors regarding alleged intellectual property infringement. The Company received the final installment of $ 0.75 million in the first quarter of 2023. F-24