What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-03-28 compared with 2023-03-30 · 171 added, 159 removed, 135 unchanged (71% of the section changed)

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Report on Form 10-K.

are a clinical-stage biotechnology company that intends to use cell therapy to treat cancer, injuries, and birth defects in the

believe our technology is likely to be used to treat esophageal cancer, esophageal injuries, and birth defects in the esophagus.

product candidates in our pipeline may treat bronchial cancer, intestinal cancer and colon cancer.

first esophageal product candidate, our esophageal implant was used in the first successful regeneration of the esophagus

in a patient with esophageal cancer.

This successful first-in-human experience, plus the research we have performed on over 50 pigs,

led the FDA to approve our 10-patient combined phase 1 and phase 2 clinical trial.

This combination trial will measure both safety and

efficacy in the patient population.

are a clinical-stage biotechnology company focused on the development of regenerative medicine treatments for disorders of the gastro-intestinal

system and other organs that result from cancer, trauma or birth defects.

believe that our technology represents a next generation solution for restoring organ function because it allows the patient to regenerate

their own organ, thus eliminating the need for human donor or animal transplants, the sacrificing of another of the patient’s own

organs or permanent artificial implants.

first esophageal product candidate, our esophageal implant was used in the first successful regeneration of the esophagus in a patient

with esophageal cancer.

This successful first-in-human experience, plus the research we have performed on over 50 pigs, led the FDA to

approve our 10-patient phase 1 clinical trial.

This combination trial will measure both safety and efficacy in the patient population.

We have contracted with IQVIA, a leading global provider

of advanced analytics, technology solutions and clinical research services to the life sciences industry, as the contract research organization

(CRO) to manage our first clinical trial.

We activated the first clinical trial site and started screening patients in the third quarter

Our product candidates are currently in development and have not yet received regulatory approval for sale anywhere in the world.

In addition to our development of regenerative medicine treatments, we

also sell longevity dietary supplements.

In the second quarter of 2023, the Company’s subsidiary in Hong Kong, Harvard Apparatus

Regenerative Technology Limited, or Longevity Products, started focusing on longevity products.

Longevity Products plans to include

a broad range of products focused on personal healthcare including longevity dietary supplements.

Longevity Products started selling longevity supplements

in the third quarter of 2023.

These products are marketed to the general public and initially targeted at consumers in the Great China

Region through eCommerce (online sales).

were incorporated and commenced operations on November 1, 2013 as a result of a spin-off from Harvard Bioscience, Inc., or Harvard Bioscience.

On that date, we became an independent company that operates the regenerative medicine business previously owned by Harvard Bioscience.

The spin-off was completed through the distribution of all the shares of common stock of Biostage to Harvard Bioscience stockholders.

have also formed a subsidiary in Hong Kong, Harvard Apparatus Regenerative Technology Limited, as we continue to assess the market and

regulatory approval pathway in China as to our implant products.

Any development and capital raising efforts in China may include a joint

venture in relation to our Hong Kong subsidiary, and would also involve a number of commercial variables, including rights and obligations

pertaining to licensing, development and financing, among others.

Our failure to receive or obtain such clearances or approvals on a

timely basis or at all, whether that be in the U.S., China or otherwise, would have an adverse effect on our results of operations.

The spin-off was completed through the distribution of all the shares of common stock of Harvard Apparatus Regenerative Technology to

Harvard Bioscience stockholders.

continue to assess the market and regulatory approval pathway in China as to our implant products.

We are not certain at this time as

to which market, including U.S.

or China for example, may provide the most viable initial pathway for regulatory approval to a commercial

This will depend on a number of factors, including the approval and development processes, related costs, ability to raise capital

and the terms and conditions thereof, among other factors.

Any development and capital raising efforts in China may include a joint venture

in relation to our Hong Kong subsidiary, and would also involve a number of commercial variables, including rights and obligations pertaining

to licensing, development, and financing, among others.

Our failure to receive or obtain such clearances or approvals on a timely basis

or at all, whether that be in the U.S., China or otherwise, would have an adverse effect on our results of operations.

our incorporation, we have devoted substantially all of our resources to developing our programs, building our intellectual property

portfolio, business planning, raising capital and providing general and administrative support for these operations.

To date, we have

financed our operations with proceeds from the sales of common stock and preferred stock.

In December 2017, we sold the inventory and

rights to manufacture and sell research-only versions of our bioreactors to Harvard Bioscience.

We did not recognize any revenues during

the years ended December 31, 2022 and December 31, 2021.

product candidates are currently in development and have not yet received regulatory approval for sale anywhere in the world.

have incurred substantial operating losses since our inception, and as of December 31, 2022 had an accumulated deficit of approximately

$83.0 million and will require additional financing to fund future operations.

We expect that our operating cash on-hand as of December

31, 2022 of approximately $1.2 million will enable us to fund our operating expenses and capital expenditure requirements into the second

portfolio, business planning, raising capital and providing selling, general and administrative support for these operations.

we have financed our operations with proceeds from the sales of common stock and preferred stock.

In December 2017, we sold the inventory

and rights to manufacture and sell research-only versions of our bioreactors to Harvard Bioscience.

have incurred substantial operating losses since our inception, and as of December 31, 2023 had an accumulated deficit of

approximately $92.0 million and will require additional financing to fund future operations.

We expect that our operating cash

on-hand as of December 31, 2023 of approximately $0.4 million and debt financing of $0.5 million received in gross proceeds

subsequent to December 31, 2023 will enable us to fund our operating expenses and capital expenditure requirements into the second

quarter of 2024.

We expect to continue to incur operating losses and negative cash flows from operations for 2022 and in future years.

Therefore, as disclosed in Note 1 to our Consolidated Financial Statements, these conditions raise substantial doubt about our ability

to continue as a going concern.

We expect to continue to incur operating losses and negative cash flows from operations in future years.

as disclosed in Note 1 to our Consolidated Financial Statements, these conditions raise substantial doubt about our ability to

continue as a going concern.

will need to raise additional funds to fund our operations.

In the event we do not raise additional capital from outside sources before

or during the second quarter of 2023, we may be forced to curtail or cease our operations.

In the event we do not raise additional capital from outside sources

during the first quarter of 2024, we may be forced to curtail or cease our operations.

Cash requirements and cash resource needs

will vary significantly depending upon the timing of the financial and other resource needs that will be required to complete ongoing

development, pre-clinical and clinical testing of product candidates, as well as regulatory efforts and collaborative arrangements necessary

for our products that are currently under development.

We are currently seeking and will continue to seek financings from other existing

and/or new investors to raise necessary funds through a combination of public or private equity offerings.

We may also pursue debt financings,

other financing mechanisms, research grants, or strategic collaborations and licensing arrangements.

We may not be able to obtain additional

financing on favorable terms, if at all.

will vary significantly depending upon the timing of the financial and other resource needs that will be required to complete

ongoing development, pre-clinical and clinical testing of product candidates, as well as regulatory efforts and collaborative

arrangements necessary for our products that are currently under development.

We are currently seeking and will continue to seek

financings from other existing and/or new investors to raise necessary funds through a combination of public or private equity

We may also pursue debt financings, other financing mechanisms, research grants, or strategic collaborations and

licensing arrangements.

We may not be able to obtain additional financing on favorable terms, if at all.

operations will be adversely affected if we are unable to raise or obtain needed funding and may materially affect our ability to continue

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classification of assets or the amount and classifications of liabilities that may result from the outcome of this uncertainty.

Business Segments

The Company has two separate

reportable segments.

The Company has one segment, Harvard Apparatus Regenerative Technology, Inc., or Regenerative Biotech, focused

on the development and commercialization of therapies to cure patients of cancers, injuries, and birth defects of the

gastro-intestinal tract and the airways.

The other segment, Longevity Products, is focused on personal healthcare including

longevity dietary supplements.

Financing Activities

During the year ended December 31, 2022, we completed the following financing activities:

the year ended December 31, 2023, we completed the following financing activities:

April 12, 2023 and on March 31, 2023, the Company entered into Securities Purchase Agreements, each a Purchase Agreement, with new

and existing investors, the Investors, pursuant to which the Investors purchased in a private placement an aggregate of

1,000,967 shares of common stock for the aggregate purchase price of approximately $6 million with a purchase price per unit of $6.00.

Financing Activities

the year ended December 31, 2022, we completed the following financing activities:

May 2022, we sold 854,771 shares of common stock and warrants to purchase 427,390 shares of common stock for the aggregate purchase

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indemnification obligations in the amount of $4.0 million, in lieu of paying cash.

The Company issued an aggregate of 180 shares of Series E Convertible Preferred Stock relating

to accrued dividends during the year ended December 31, 2022.

Financing Activities

the year ended December 31, 2021, we completed the following financing activities:

On May 4, 2020, we obtained

a loan from Bank of America in the aggregate amount of approximately $0.4 million, pursuant to the Paycheck Protection Program, established

as part of the CARES Act.

Such loan was evidenced by a promissory note dated May 4, 2020 issued by us whereas certain amounts of

the loan where eligible for forgiveness if used for qualifying expenses.

On December 18, 2020, we submitted the loan forgiveness

application for the entire borrowings of approximately $0.4 million to the lender and were notified on January 7, 2021 that the application

was submitted to the Small Business Administration, or SBA, for review.

On May 23, 2021, we were notified by the lender that the

SBA determined that the application for our loan forgiveness was approved, and the SBA remitted the forgiven amount to the lender.

We have accounted for this loan forgiveness as a gain on extinguishment of approximately $0.4 million (See Note 3 in the Consolidated

Financial Statements included in Item 15 of this Annual Report on Form 10-K for further discussion).

During the year ended December

31, 2021, we issued a total of 1,300,000 shares of our common stock at a purchase price of $2.00 per share and warrants to purchase

650,000 shares of common stock at an exercise price of $2.00 per share to a group of investors for aggregate gross and net proceeds

of approximately $2.6 million.

During the year ended December

31, 2021, we issued 72,464 shares of our common stock to our Chief Executive Officer at a purchase price of $3.45 per share and warrants

to purchase 36,232 shares of common stock at an exercise price of $3.45 per share for aggregate gross and net proceeds of approximately

$250 thousand.

Business Innovation Research Grant

March 28, 2018, we were awarded a Fast-Track Small Business Innovation Research, or SBIR, grant by the Eunice Kennedy National

Institute of Child Health and Human Development, or NICHD, to support testing of a pediatric esophageal implant.

for Phase I provided for the reimbursement of approximately $0.2 million of qualified research and development costs which was

received and recognized as grant income during 2018.

October 26, 2018, we were awarded the Phase II Fast-Track SBIR grant from the Eunice Kennedy NICHD grant aggregating $1.1 million to

support development, testing, and translation to the clinic through September 2019 and represented years one and two of the Phase II

portion of the award.

On August 3, 2020, we were awarded a third year of the Phase II grant totaling $0.5 million for support of development,

testing, and translation to the clinic covering qualified expenses incurred from October 1, 2019 through September 30, 2020.

of 2020, we filed and were granted a one year, no-cost extension for the Phase II grant period extending through September 30, 2021.

the years ended December 31, 2022 and 2021, we recognized approximately $0 and $0.2 million of grant income, respectively,

from Phase II of the SBIR grant.

The aggregate SBIR grant to date provided a total award of $1.8 million, of which approximately $1.5

million has been recognized through December 31, 2022.

Phase II portion of the award expired effective September 30, 2021.

Effective as of November 26, 2021, we appointed David Green as Chief Executive

Effective as of March 1, 2023, we transitioned the role of Chief Executive Officer to Junli (Jerry) He, our existing director,

The Company issued an aggregate of 180 shares

of Series E Convertible Preferred Stock relating to accrued dividends during the year ended December 31, 2023.

as of November 26, 2021, we appointed David Green as Chief Executive Officer.

Effective as of March 1, 2023, we transitioned the role

of Chief Executive Officer to Junli (Jerry) He, our existing director, and Mr.

Green remains on our Board of Directors.

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accounting officer and principal financial officer.

of December 31, 2022, we had 8 employees, 7 of whom were full-time and one part-time.

As of December 31, 2023, our consolidated business employed 18 individuals.

of Operating Loss

Product revenue consists of longevity product sales, launched in the Asia region in the third quarter of 2023.

generated any revenue prior to the launch of our longevity products.

and development expense .

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synthetic scaffolds,

including investigation and development of materials and investigation and optimization of cellularization, autoseeders, and 3-D bioreactors,

as well as studies of cells and cell behavior.

Other research and development expenses include the costs of outside service providers

and material costs for prototype and test units and outside laboratories and testing facilities performing cell growth and materials

experiments, as well as the costs of all other preclinical research and testing including animal studies and expenses related to potential

We expense research and development costs as incurred.

including investigation and development of materials and investigation and optimization of cellularization, as well as studies of cells

and cell behavior.

Other research and development expenses include the costs of outside service providers and material costs for prototype

and test units and outside laboratories and testing facilities performing cell growth and materials experiments, as well as the costs

of all other preclinical research and testing including animal studies and expenses related to potential patents.

We expense research

and development costs as incurred.

and marketing expense .

Sales and marketing costs include advertising and payroll and related expenses for personnel engaged in marketing

and selling activities.

and administrative expense .

General and administrative expense consists primarily of salaries and other related expenses, including

share-based compensation, for personnel in executive, accounting, information technology and human resources roles.

Other costs include

professional fees for legal and accounting services, insurance, investor relations and facility costs.

of Notes Payable.

On May 23, 2021, we were notified by our lender that provided our related Loan that the SBA determined that our

application for loan forgiveness was approved, and the SBA remitted the forgiveness amount to our lender.

We have accounted for this

loan forgiveness as an extinguishment.

Grant income reflects income earned under the SBIR grant.

Grant income is recognized based on timing of when qualified research

and development costs are incurred.

General and administrative expense consists primarily of salaries and other related expenses,

including share-based compensation.

Other costs include professional fees for legal and accounting services, insurance, investor relations

and facility costs.

in Fair Value of Warrant Liability.

Changes in fair value of warrant liability represent the change in the fair value of

outstanding common stock warrants that were classified as liability awards during the years ended December 31, 2022 and 2021.

the Black-Scholes pricing model to value the related warrant liability.

Changes in fair value of warrant liability represent the change in the fair value of outstanding

common stock warrants that were classified as liability awards during the year ended December 31, 2022.

We used the Black-Scholes pricing

model to value the related warrant liability.

Accounting Estimates

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grant date fair value of share-based awards.

share-based compensation expense for each of the years ended December 31, 2022 and 2021 was approximately $1.0

Share-based compensation is further described in Note 15 to our Consolidated Financial Statements included in

Item 15 of this Annual Report on Form 10-K.

share-based compensation expense for each of the years ended December 31, 2023 and 2022 was approximately $3.5 million and $1.0 million,

respectively.

Share-based compensation is further described in Note 15 to our Consolidated Financial Statements included in Item 15 of

this Annual Report on Form 10-K.

of the warrants to purchase shares of our common stock have been classified on our consolidated balance sheets as equity.

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other income (expense) in the consolidated statements of operations.

We continued to adjust the liability for changes in fair value

until the expiration of the warrant liability in February 2022.

We continued to adjust the liability for changes in fair value until

the expiration of the warrant liability in February 2022.

of Operations

following table summarizes the results of our operations for the years ended December 31, 2023 and 2022 ($ in thousands):

the Year Ended

Year Ended December 31,

Change 2023 vs.

Product revenue

Operating expenses

Cost of sales

Research and development

Sales and marketing

General and administrative

Total operating expenses

Other income (expense)

Forgiveness of notes payable

Other income (expense), net

Sublease income

Change in fair value of warrant liability

Other income (expense),

other income (expense), net

Interest income

Interest expense

Other expense

Total other income, net

Ended December 31, 2023 Compared to Year Ended December 31, 2022

revenue was $103,000 and zero for the year ended December 31, 2023 and 2022, respectively.

Product revenue consists of longevity product

sales launched in the Asia region in the third quarter of 2023.

We had not generated any revenue prior to the launch of our longevity

of sales was $24,000 and zero for the year ended December 31, 2023 and 2022, respectively.

Cost of sales consists of the purchase price

of consumer products, taxes, inbound and outbound shipping costs.

and Development Expense

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as compared to approximately $1.7 million for the year ended December 31, 2022.

This was due primarily to higher headcount and preclinical

trial activities.

This was due primarily to higher headcount and preclinical trial activities to increase our product pipeline and clinical trial

activities resulting in our first site activation in the third quarter of 2023.

and Marketing Expense

Products launched its longevity products business in the second quarter of 2023 so there were no prior period costs.

marketing expense was $0.3 million for the year ended December 31, 2023 as compared to zero for the comparable period.

and Administrative Expense

and administrative expense decreased approximately $2.6 million, or 37%, to approximately $4.4 million for the year ended December 31,

and administrative expense increased approximately $1.3 million, or 30%, to approximately $5.7 million for the year ended December

31, 2023 as compared to approximately $4.4 million for the year ended December 31, 2022.

This decrease was due primarily to a charge in the

prior year of approximately $3.3 million relating to the contingency matter for our litigation for a wrongful death complaint and related

matters more fully described in Note 9 to our consolidated financial statements.

The decrease is offset, in part, by approximately $0.4

million of higher employee and share-based expenses and approximately $0.2 million for increased costs for supporting our ongoing public

company requirements.

of notes payable

May 23, 2021, we were notified by our lender that provided our related Loan that the SBA determined that our application for loan forgiveness

was approved, and the SBA remitted the forgiven amount to our lender.

As a result, we recorded a gain from forgiveness of our notes payable

of approximately $0.4 million for the year ended December 31, 2021 compared to none for 2022.

On January 5, 2022, the Company executed a four-month sublease agreement for certain laboratory and office space at its

Holliston, Massachusetts facility.

The Company further extended the sublease agreement to a month-to-month basis until August 31, 2022,

when the other party vacated the premises.

For the year ended December 31, 2022, the Company recorded sublease income of approximately

$87,000 relating to this agreement.

the year ended December 31, 2022, we recorded grant income of approximately $0 for qualified expenditures under the SBIR grant as the

Phase II portion of the award expired effective September 30, 2021.

For the year ended December 31, 2021, we recorded grant income of

approximately $165,000 for qualified expenditures under the SBIR grant.

This increase was primarily due to

share-based compensation expense of $2.4 million and increased headcount related costs of approximately $0.6 million offset by a

decrease of approximately $0.4 million for supporting our ongoing public company requirements and reduced legal and related costs of

approximately $1.3 million relating to the completion of litigation for a wrongful death complaint and related matters more fully

described in Note 9 to our consolidated financial statements.

January 5, 2022, the Company executed a four-month sublease agreement for certain laboratory and office space at its Holliston, Massachusetts

The Company further extended the sublease agreement to a month-to-month basis until August 31, 2022, when the other party vacated

the premises.

For the year ended December 31, 2022, the Company recorded sublease income of approximately $87,000 relating to this agreement.

We had no sublease agreements generating sublease income for the year ended December 31, 2023.

in Fair Value of Warrant Liability

the year ended December 31, 2022, the change in fair value of our warrant liability resulted in other income of approximately $2,000.

This compared to other income of approximately $15,000 for the year ended December 31, 2021, which was due primarily to a reduction in

the expected term of the outstanding warrants.

These warrants expired unexercised in February of 2022.

income (expense), net

During the year ended December 31, 2022, we recorded interest expense of approximately $9,000 on insurance installment

June 2021, we received a refund payment of approximately $71,000 for certain withholding taxes paid in previous years to the German

tax authorities which were remitted to us on behalf of Harvard Apparatus Regenerative Technology GmbH, our German subsidiary.

the year ended December 31, 2023, we recorded interest income of approximately $64,000 earned from our money market account and certificate

During the year ended December 31, 2022, we received minimal interest income from cash accounts.

Interest expense

During the year ended December 31, 2023, we recorded

interest expense of approximately $14,000 on insurance installment payments.

During the year ended December 31, 2022, we recorded interest

expense of approximately $9,000 on insurance installment payments.

and Capital Resources

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operating cash flows for the foreseeable future.

Net cash used in operating activities of approximately $5.1 million for the year ended December 31, 2022 was primarily

a result of our net loss of approximately $6.1 million and $0.6 million for deferred financing costs, offset by approximately $1.1 million

of non-cash items related to share-based compensation and depreciation, and an increase of approximately $0.5 million of cash provided

Net cash used in operating activities of approximately $6.9 million for the year ended December 31, 2023 was due

primarily to our net loss of approximately $8.9 million offset by adjustments for non-cash items of approximately $3.6 million due

to non-cash expenses for share-based compensation, depreciation and amortization, and an approximately $1.6 million decrease to cash from changes in

working capital due to the timing of payments for accounts receivable, inventory, prepaid expenses, deferred financing costs,

long-term prepaid contracts, accounts payable and accrued expenses.

cash used in operating activities of approximately $5.1 million for the year ended December 31, 2022 was primarily a result of our

net loss of approximately $6.1 million and $0.6 million for deferred financing costs, offset by approximately $1.1 million of

non-cash items related to share-based compensation, depreciation and amortization, and an increase of approximately $0.5 million of cash provided

from working capital due to the timing of prepaid expenses, accounts payable, and accrued and other current liabilities.

cash used in operating activities of approximately $2.6 million for the year ended December 31, 2021 was primarily a result of our net

loss of approximately $8.0 million, offset by approximately $0.7 million of non-cash items related to the forgiveness of our notes payable,

share-based compensation and depreciation, and an increase of approximately $4.7 million of cash provided from working capital due to

the timing of prepaid expenses, accounts payable, accrued and other current liabilities and contingency accrual more fully described in Note 9 to our consolidated

financial statements.

Net cash used in investing activities for the years ended December 31, 2023 and 2022 totaled $11,000 and $5,000, respectively,

and represented purchases of property, plant and equipment.

Net cash generated from financing activities was approximately $5.1 million during the year ended December 31, 2022

and consisted of net proceeds received from private placement transactions for the issuance of common stock and warrants to purchase

common stock.

During the year ended December 31, 2023, we invested in a certificate of

deposit for $2.5 million.

We withdrew $1.3 million from the certificate of deposit prior to the maturity date to pay clinical trial related

The certificate of deposit matured in October 2023 with the remaining $1.2 million released from short-term investments into

cash and cash equivalents.

Net cash generated from financing activities was approximately $6.1 million during the year ended December 31, 2023 and

consisted of net proceeds received from a private placement transaction for the issuance of common stock and stock option exercises.

Net cash generated from financing activities was approximately $5.1 million during the year ended December

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needs into the second quarter of 2024.

We have incurred substantial operating losses since

our inception, and as of December 31, 2023 had an accumulated deficit of approximately $92.0 million and will require additional financing

to fund future operations.

We expect that our operating cash on-hand as of December 31, 2023 of approximately $0.4 million and debt financing

of $0.5 million received in gross proceeds subsequent to December 31, 2023 will enable us to fund our operating expenses and capital expenditure

requirements into the second quarter of 2024.

We expect to continue to incur operating losses and negative cash flows from operations

in future years.

Therefore, as disclosed in Note 1 to our Consolidated Financial Statements, these conditions raise substantial doubt

about our ability to continue as a going concern.

Issued Accounting Pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis