What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-03-28 compared with 2024-03-28 · 227 added, 216 removed, 639 unchanged (41% of the section changed)

2 unchanged sentences

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(e) and 15d-15(e) under the Exchange Act, the Company, with the participation of management, including our Chief Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in such rules) as of the end of the period covered by this report.

Based on this evaluation, our Chief Executive Officer and Principal Financial Officer concluded that, as of December 31, 2023, our disclosure controls and procedures were effective.

Based on this evaluation, our Chief Executive Officer and Principal Financial Officer concluded that, at December 31, 2024, our disclosure controls and procedures were effective.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.

11 unchanged sentences

Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements.

Further, because of changes in conditions, effectiveness of internal controls over financial

reporting may vary over time.

Further, because of changes in conditions, effectiveness of internal controls over financial reporting may vary over time.

Our system contains self-monitoring mechanisms, and actions are taken to correct deficiencies as they are identified.

Our management conducted an evaluation of the effectiveness of the system of internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the 2013 COSO Framework).

Based on the above evaluation, the Company’s Chief Executive Officer and Principal Financial Officer have concluded that our internal control over financial reporting was effective as of December 31, 2023.

Remediation of Previously Disclosed Material Weakness

As disclosed in Part II, Item 9A.

Controls and Procedures of our Annual Report on Form 10-K for the year ended December 31, 2022, we identified a material weakness in internal control related to ineffective controls over the Company’s LCT inventory reserve as reserves were inappropriately reversed on a per unit basis.

During the year ended December 31, 2023, management implemented our previously disclosed remediation plan to include specific review procedures to ensure inventory reserves are not inappropriately reversed.

This included engaging external advisors to oversee the remediation process, enhancing the design of inventory reserve related controls to include review procedures that ensure inventory reserves are properly accounted for and not reversed on a per unit basis, establishing a more robust review processes and procedures, and engaging outside consultants with the necessary technical expertise to supplement the Company’s resources.

As of December 31, 2023, management’s remediation plan was fully implemented, and the enhanced internal controls operated effectively for a sufficient period of time.

As such, management has concluded that the material weakness previously identified has been remediated as of December 31, 2023.

Changes in Internal Control Over Financial Reporting

Except for the remediation of our previously disclosed material weakness, there were no changes in our internal controls during the year ended December 31, 2023, that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

There were no changes in our internal controls during the year ended December 31, 2024, that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

OTHER INFORMATION

During the three months ended December 31, 2024, no director or “officer” (as defined in Rule 16a-1(f) of the Exchange Act) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

DISCLOSURES REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

1 unchanged sentence

The information required by this Item regarding our directors is incorporated by reference to the information in our definitive Proxy Statement (the “Proxy Statement”) expected to be filed with the Securities and Exchange Commission within 120 days of December 31, 2024, in connection with our 2024 Annual Meeting of Stockholders under the heading “Election of Directors.” The information required by this Item regarding our Code of Conduct and Ethics in incorporated by reference to the information in the Proxy Statement, expected to be filed within 120 days of December 31, 2024, under the caption “Code of Conduct and Ethics.” The information required by this Item regarding our Governance Committee and Audit Committee is incorporated by reference to the information in the Proxy Statement, expected to be filed within 120 days of December 31, 2024, under the caption “Corporate Governance.”

As of December 31, 2023, our executive officers were as follows:

At December 31, 2024, our executive officers were as follows:

Andrey Semechkin

67 unchanged sentences

Form of Note issued on September 15, 2023 (incorporated by reference to Exhibit 10.1 of Registrant’s Form 8-K filed on September 18, 2023).

Form of Note issued on March 1, 2023 (incorporated by reference to Exhibit 10.1 of Registrant's Form 8-K filed on March 16, 2023).

Form of Note issued on September 15, 2024 (incorporated by reference to Exhibit 10.1 of Registrant’s Form 8-K filed on September 17, 2024).

Insider Trading Compliance Program

Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 of the Registrant’s Form 10-K filed on March 30, 2016)

6 unchanged sentences

Policy for Recovery of Erroneously Awarded Incentive Compensation

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents

43 unchanged sentences

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the consolidated financial statements, the Company has a working capital deficit that raises substantial doubt about its ability to continue as a going concern.

As discussed in Note 1 to the consolidated financial statements, the Company has an accumulated deficit, has historically incurred net losses, has not generated revenue from its principal operations in therapeutic and clinical product development through research and development efforts, and does not have sufficient cash on hand to sustain operations, which raises substantial doubt about its ability to continue as a going concern.

Management’s plans in regard to these matters are also described in Note 1.

17 unchanged sentences

(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 a 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 separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

The communication of a 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.

Inventory Valuation – Excess and Obsolete Inventory

As described in Note 1 to the consolidated financial statements, the Company reviews the components of its inventory on a periodic basis for excess and obsolescence and adjusts inventory to the lower of cost or net realizable value as necessary.

The Lifeline Cell Technology (“LCT”) inventory has a long product life cycle, does not have a shelf life when frozen and future demand is uncertain.

such, management estimates its reserve for allowance for excess and obsolete LCT inventory using historical sales data and inventory turnover rates.

We identified auditing the Company’s estimate for excess and obsolete LCT inventory as a critical audit matter.

The Lifeline Cell Technology (“LCT”) cell inventory has a long product life cycle, does not have a shelf life when frozen and future demand is uncertain.

As such, management estimates its reserve for allowance for excess and obsolete LCT cell inventory using historical sales data and inventory turnover rates.

We identified auditing the Company’s estimate for excess and obsolete LCT cell inventory as a critical audit matter.

Auditing inventory turnover rates involves especially challenging auditor judgment due to the nature and extent of audit effort required to address the matter.

The primary procedures we performed to address this critical audit matter included:

• Testing the reliability of inventory turnover rates by agreeing certain sales and inventory movement data to relevant source documents.

• Testing the accuracy of the excess and obsolete LCT inventory reserve calculation.

• Assessing the reasonableness of inventory turnover rates by agreeing certain sales and inventory movement data to relevant source documents.

• Testing the mathematical accuracy of the excess and obsolete LCT cell inventory reserve calculation.

/s/ BDO USA, P.C.

28 unchanged sentences

liquidation preference of $ 4,300 at December 31,

2023 and December 31, 2022

2024 and 2023

Stockholders’ Deficit:

4 unchanged sentences

liquidation preference of $ 9,811 and $ 9,796 at December 31, 2024 and

December 31, 2022, respectively

2023, respectively

Common stock, $ 0.001 par value;

120,000,000 shares authorized;

shares issued and outstanding at December 31, 2023 and December 31, 2022

shares issued and outstanding at December 31, 2024 and 2023

Additional paid-in capital

18 unchanged sentences

Interest expense

Other income (expense)

Total other income (expense), net

Other income, net

Total other (expense) income, net

Net loss per common share, basic and diluted

20 unchanged sentences

Cash flows from operating activities

Adjustments to reconcile net loss to net cash used in operating

Adjustments to reconcile net loss to net cash provided by operating activities:

Stock-based compensation

Depreciation and amortization

Non-cash operating lease expense

Stock-based compensation

Interest expense on related party note payable

Change in inventory reserve

Impairment of intangible assets

Changes in operating assets and liabilities:

11 unchanged sentences

Cash flows from financing activities

Proceeds from note payable from a related party

Net cash provided by financing activities

Net increase in cash

Principal repayment on note payable from related party

Net cash used in financing activities

Net (decrease) increase in cash

Cash, beginning of period

17 unchanged sentences

(“Cyto Therapeutics”) – performs research and development (“R&D”) for the therapeutic market and is currently conducting clinical trials in Australia for the use of ISC-hpNSC® in the treatment of Parkinson’s disease.

Liquidity and Going Concern

The Company had an accumulated deficit of approximately $ 110.5 million as of December 31, 2023 and has historically incurred net losses and negative operating cash flows.

The Company has had no revenue from its principal operations in therapeutic and clinical product development through research and development efforts.

Going Concern

The Company had an accumulated deficit of approximately $ 110.7 million at December 31, 2024 and has historically incurred net losses.

The Company has no revenue from its principal operations in therapeutic and clinical product development through research and development efforts.

Unless the Company obtains additional financing, the Company does not have sufficient cash on hand to sustain operations for at least one year from the issuance date of these consolidated financial statements.

15 unchanged sentences

• the number and type of product candidates that the Company decides to pursue.

• the development of major public health concerns, such as the novel coronavirus outbreak, or other pandemics arising globally, and the current and future impact that such concerns may have on the Company’s operations and funding requirements.

Additional debt financing may be expensive and require the Company to pledge all or a substantial portion of its assets.

3 unchanged sentences

Principles of Consolidation and Foreign Currency Transactions

The consolidated financial statements include the accounts of International Stem Cell Corporation and its subsidiaries.

The consolidated financial statements include the accounts of International Stem Cell Corporation and its wholly owned subsidiaries.

All intercompany balances and transactions have been eliminated in consolidation.

The functional currency of the Company and its subsidiaries, including its wholly owned Australian subsidiary, Cyto Therapeutics, is the U.S.

Assets and liabilities that are not denominated in the functional currency are remeasured into U.S.

dollars at foreign currency exchange rates in effect at the respective balance sheet dates.

Revenue and expenses are translated at the average rate in effect on the date of the transaction.

The functional currency of the Company and its wholly owned subsidiaries is the U.S.

Monetary assets and liabilities that are not denominated in the functional currency are remeasured each reporting period into U.S.

dollars at foreign currency exchange rates in effect at the respective balance sheet date.

Non-monetary assets and liabilities and equity are remeasured at the historical exchange rates.

Revenue and expenses are remeasured at the average rate in effect on the date of the transaction.

Net realized and unrealized gains and losses from foreign currency transactions and remeasurement are reported in general and administrative expense in the accompanying consolidated statements of operations and were not material for the periods presented.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the accompanying consolidated financial statements.

Significant estimates include patent life (remaining legal life versus remaining useful life), allowance for excess and obsolete inventories, and stock option awards using the Black-Scholes option valuation model.

Actual results could differ from those estimates.

The Company’s chief operating decision-maker reviews financial information presented on a consolidated basis, accompanied by disaggregated information by each reportable company’s statement of operations.

The Company operates the business on the basis of three reporting segments, the parent company and two business units:

ISCO – therapeutic market;

LCT – biomedical market;

and LSC – anti-aging market.

Inventories are accounted for using the average cost and first-in, first-out (“FIFO”) methods for LCT cell culture media and reagents, average cost and specific identification methods for LSC products, and specific identification method for other LCT products.

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the accompanying consolidated financial statements.

Significant estimates include patent life (remaining legal life versus remaining useful life) and allowance for excess and obsolete inventories.

By their nature, estimates are subject to an inherent degree of uncertainty and actual results could differ from these estimates.

The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer (Principal Executive Officer).

The CODM reviews financial information presented on a consolidated basis, accompanied by disaggregated information by each reportable company’s statement of operations.

The Company operates the business on the basis of three reporting segments:

therapeutic market (“ISCO”);

biomedical market (“LTC”);

and anti-aging market (“LSC”).

The accounting policies of the segments are the same as those described throughout Note 1 – Description of Business and Summary of Significant Accounting Policies .

All intercompany balances and transactions between reporting segments have been eliminated in consolidation.

Inventories are accounted for using the average cost and first-in, first-out (“FIFO”) methods for LCT cell culture media and reagents, specific identification method for other LCT products, and average cost and specific identification methods for LSC products.

Inventories are stated at the lower of cost or net realizable value.

6 unchanged sentences

Accounts Receivable

Trade accounts receivable are recorded at the net invoice value and are not interest bearing.

Trade accounts receivable is recorded at the net invoice value and are not interest bearing.

Accounts receivable primarily consist of trade accounts receivable from the sales of LCT’s products, timing of cash receipts by the Company related to LSC credit card sales to customers, as well as LSC trade receivable amounts related to spa and distributor sales.

2 unchanged sentences

Amounts are written off against the allowances for credit losses when the Company determines that a customer account is uncollectible.

As of both December 31, 2023 and 2022 , the Company's allowance for credit losses was immaterial.

At both December 31, 2024 and 2023 , the Company’s allowance for credit losses was immaterial.

In June 2008, the Company entered into an agreement with BioTime, Inc.

1 unchanged sentence

The $ 250 thousand advance will be paid down with the first $ 250 thousand of net revenues that otherwise would be allocated to LCT under the agreement.

As of December 31, 2023 , no revenues were realized and attributable to BioTime under this agreement.

For the years ended December 31, 2024 and 2023 , no revenues were realized and attributable to BioTime under this agreement.

Property and Equipment

7 unchanged sentences

Patents and other intangible assets are amortized on a straight-line basis over the shorter of the useful life of the underlying patent, which is generally 15 years, or when the intangible asset is rejected or abandoned.

All amortization expense and impairment charges related to intangible assets are included in general and administrative expense in the accompanying consolidated statements of operations.

All amortization expense and impairment charges related to intangible assets are recognized as general and administrative expenses in the accompanying consolidated statements of operations.

The Company determines if an arrangement is a lease at inception.

5 unchanged sentences

In addition, the Company does not separate lease components from non-lease components.

The Company has elected to not recognize right-of-use assets and lease liabilities for leases with an initial term of 12 months or less.

The Company recognizes lease expense on a straight-line basis over the lease term beginning on the commencement date.

Long-Lived Asset Impairment

1 unchanged sentence

If a triggering event is determined to have occurred, the carrying value of an asset or group of assets is compared to the future undiscounted cash flows expected to be generated by the asset or group of assets.

If the carrying value exceeds the undiscounted cash flows of the asset or group of assets, then impairment exists.

If the carrying value exceeds the undiscounted cash flows of the asset or group of assets, which is measured as the excess of fair value over the asset or asset group’s carrying value, then impairment exists.

Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable.

1 unchanged sentence

The Company’s revenue consists primarily of sales of products from its two revenue-generating operating segments:

the biomedical products market and anti-aging products market.

the biomedical market segment (LCT) and anti-aging market segment (LSC).

The biomedical market segment markets and sells primary human cell research products with two product categories, cells and media, which are sold both domestically within the United States and internationally.

The anti-aging market segment markets and sells a line of skincare products directly to customers through online orders via the ecommerce sales channel.

The anti-aging market segment markets and sells a line of skin care products directly to customers through online orders via the ecommerce sales channel.

The following table presents the Company’s revenue disaggregated by segment, product and geography (in thousands, except percentages):

Biomedical market:

Year Ended December 31, 2024

4 unchanged sentences

Biomedical products

Anti-aging market:

Year Ended December 31,

1 unchanged sentence

Contract terms for unit price, quantity, shipping and payment are governed by sales agreements, invoices or online order forms, which the Company considers to be a customer’s contract in all cases.

The unit price is considered the observable stand-alone selling price for the arrangements.

The unit price is considered the observable stand-alone selling price for the performance obligation(s) within the arrangements.

Any promotional or volume sales discounts are applied evenly to the units sold for purposes of calculating standalone selling price.

The Company recognizes revenue when its customer obtains control of the promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.

The Company recognizes revenue when its customer obtains control of the promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services.

Product sales generally consist of a single performance obligation that the Company satisfies at a point in time (i.e., upon shipment of the product).

For LSC products, online sales and professional sales are pre-paid through credit card charges.

The Company sometimes extends 15, 30, or 60-day credit terms to select professional accounts.

For biomedical products, standard payment terms for its customers are generally 30 days after the Company satisfies the performance obligation(s).

For LSC, the Company honors a 30-day return policy, but historical returns have been minimal and as such, no estimated allowance for sales returns was recorded as of December 31, 2023 and 2022.

The standard payment terms for the Company’s customers are generally 30 days after the Company satisfies the performance obligation(s).

For LSC products, ecommerce sales are generally paid at the time of purchase.

The Company accounts for shipping and handling costs, recognized as cost of sales, as activities to fulfill the promise to transfer the goods to a customer.

2 unchanged sentences

Variable Consideration

The Company records revenue from customers in an amount that reflects the transaction price it expects to be entitled to after transferring control of those goods or services.

From time to time, the Company offers sales promotions on its skincare products such as discounts and free product offers.

The Company records revenue from customers in an amount that reflects the transaction price it expects to be entitled to after transferring control of those goods or services to the customer.

From time to time, the Company offers sales promotions on its LSC products, such as discounts and free product offers.

Variable consideration is estimated at contract inception only to the extent that it is probable that a significant reversal of revenue will not occur and updated at the end of each reporting period as additional information becomes available.

Contract Balances

The Company records a receivable when it has an unconditional right to receive consideration after a performance obligation is satisfied.

The opening and closing balances of accounts receivable, net for the year ended December 31, 2023 was $ 747 thousand and $ 574 thousand, respectively.

The opening and closing balances of accounts receivable, net for the year ended December 31, 2022 was $ 844 thousand and $ 747 thousand, respectively.

For the years ended December 31, 2023 and 2022 , the Company did no t incur material write-offs of its receivables.

Practical Expedients

The Company has elected the practical expedient to not determine whether contacts with customers contain significant financing components.

The Company has elected the practical expedient to not determine whether contracts with customers contain significant financing components.

The Company pays commissions on certain sales for its biomedical and anti-aging product markets once the customer payment has been received, which are accrued at the time of the sale.

The Company generally expenses sales commissions when incurred because the amortization period would have been one year or less.

These costs are recorded within sales and marketing expenses.

The Company generally expenses sales commissions when incurred because the amortization period would be one year or less.

These costs are recorded as selling and marketing expenses within the accompanying consolidated statement of operations.

In addition, the Company has elected to exclude sales taxes consideration from the determined transaction price.

2 unchanged sentences

however, the Company determined that there is a low probability that returns will occur based on its historical rate of returns.

Historically, returns have not been significant and are recognized as a reduction to current period revenue.

As of December 31, 2023 and 2022 , the Company recorded no allowance for sales returns.

Historically, returns have not been significant and are recognized as a reduction to curre nt period revenue.

At December 31, 2024 and 2023 , the Company recorded no allowance for sales returns.

Cost of Sales

Cost of sales consists primarily of salaries and benefits associated with employee efforts expended directly on the production of the Company’s products, as well as related direct materials, general laboratory supplies and an allocation of overhead.

Cost of sales consists primarily of salaries and benefits associated with employee efforts expended directly on the production of the Company’s products, as well as related direct materials, shipping costs, general laboratory supplies and an allocation of overhead.

Certain of the Company’s licensed technology agreements may require the Company to pay royalties based on the future sale of the Company’s products.

1 unchanged sentence

Additionally, milestone payments or the amortization of license fees related to developed technologies used in the Company’s products will be included as a component of cost of sales to the extent that such payments become due in the future.

Adverting costs are expensed as incurred and included as a component of selling and marketing costs on the accompanying consolidated statements of operations.

Adverting costs are expensed as incurred and included as a component of selling and marketing expenses in the accompanying consolidated statements of operations.

For the years ended December 31, 2024 and 2023, advertising costs were approximately $ 179 thousand and $ 204 thousand, respectively.

7 unchanged sentences

The refundable tax credit does not depend on the Company’s generation of future taxable income or ongoing tax status or position.

Accordingly, the credit is not considered an element of income tax accounting under FASB Accounting Standards Codification (“ASC”) 740 – Income Taxes.

Accordingly, the credit is not considered an element of income tax accounting under Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 740 – Income Taxes.

The Company uses the grant accounting model by analogy to International Accounting Standards (“IAS”) 20 to account for the refundable tax credit from the Australian government.

The Company recognizes the research and development tax credit

as a reduction to research and development expense when there is reasonable assurance that the tax credit will be received, the relevant expenses have been incurred, and the amount can be reliably measured.

During the year ended December 31, 2023 and 2022, the Company recognized a reduction in research and development expenses of $ 99 thousand and $ 80 thousand, respectively, within research and development expense on the accompanying consolidated statement of operations.

As of December 31, 2023 and 2022 , the Company recognized a research and development tax credit receivable of zero and $ 80 thousand, respectively, within prepaid expenses and other current assets on the accompanying consolidated balance sheet.

The Company recognizes the research and development tax credit as a reduction to research and development expense when there is reasonable assurance that the tax credit will be received, the relevant expenses have been incurred, and the amount can be reliably measured.

During the year ended December 31, 2024 and 2023, the Company recognized a reduction in qualified research and development expenses of $ 94 thousand and $ 99 thousand, respectively, in the accompanying consolidated statement of operations.

Employee Retention Credit

6 unchanged sentences

Stock-Based Compensation

The cost of a stock-based award is measured at the grant date based on the estimated fair value of the award, and is recognized as expense on a straight-line basis, net of forfeitures which are recognized as incurred, over the requisite service period of the award.

The cost of a stock-based award is measured at the grant date based on the estimated fair value of the award.

Stock-based compensation is recognized as expense on a straight-line basis, net of forfeitures, which are recognized as incurred, over the requisite service period of the award.

The fair value of stock options is estimated using the Black-Scholes option valuation model, which requires the input of subjective assumptions, including price volatility of the underlying stock, risk-free interest rate, dividend yield, and expected life of the option.

29 unchanged sentences

For the years ended December 31, 2024 and 2023 , one customer accounted for approxim ately 53 % and 46 % , respectively, of consolidated product sales, and approximately 58 % and 52 % , respectively, of biomedical product sales.

As of December 31, 2023 and 2022, the same customer accounted for 47 % and 73 % , respectively, of accounts receivable, net.

At December 31, 2024 and 2023, the same customer accounted for 67 % and 47 % , respectively, of accounts receivable, net.

No other single customer accounted for more than 10% of product sales, net for the years ended December 31, 2024 and 2023 in either segment.

As of December 31, 2023 , three customers individually accounted for more than 10 % of accounts receivable, net and in the aggregate, accounted for 33 % of accounts receivable, net.

No other single customer accounted for more than 10% of accounts receivable, net as of December 31, 2022 .

No other single customer accounted for more than 10% of accounts receivable, net at December 31, 2024.

At December 31, 2023 , three customers of LCT individually accounted for more than 10% of accounts receivable, net and in the aggregate, accounted for 33 % of accounts receivable, net.

Cash Concentrations

The Company maintains cash balances at various financial institutions.

Accounts at these institutions are secured up to $ 250 thousand by the Federal Deposit Insurance Corporation (“FDIC”).

At times, cash balances may exceed this limit.

As of December 31, 2024 and 2023, amounts on deposit in excess of FDIC insured limits approximated $ 327 thousand and $ 543 thousand, respectively.

The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash.

Recently Issued Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosure (“ASU 2023-09”).

ASU 2023-09 intends to provide improved transparency about income tax information through improvements to income tax disclosures.

Among other things, the amendments in ASU 2023-09 require enhanced disclosures regarding federal, state, and foreign income taxes primarily related to the income tax rate reconciliation and income taxes paid.

Further, the amendments eliminate certain disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities.

The new standard will be effective for the Company for the fiscal year ending December 31, 2025.

The Company is currently evaluating the potential impact that this standard may have on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”).

ASU 2024-03 requires disclosure of disaggregated information about any relevant expense captions presented on the face of the consolidated statement of operations, including the following required natural expense categories:

(1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) depreciation, depletion, and amortization (“DD&A”) recognized as part of oil- and gas-producing activities or other depletion expenses, as well as certain other expenses, when applicable.

The new standard will be effective for the Company for the fiscal year ending December 31, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

The Company is currently evaluating the potential impact that this standard may have on its consolidated financial statements and related disclosures.

Recently Adopted Accounting Pronouncements

In August 2020, the FASB issued ASU No.

2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40):

3 unchanged sentences

Further, the amendments require use of the if-converted method in the diluted earnings per share calculation for convertible instruments.

The new standard will be effective for the Company on January 1, 2024.

The Company is currently evaluating the potential impact that this standard may have on its consolidated financial statements and related disclosures.

The Company adopted ASC 2020-06 on January 1, 2024 .

The adoption of this standard did no t have a material impact on the Company’s consolidated financial statements.

In November 2023, the FASB issued ASU No.

4 unchanged sentences

Further, the amendments require interim segment reporting disclosures that were previously only required to be disclosed annually.

ASU 2023-07 will be effective for the Company for the fiscal year ending December 31, 2024 and for interim periods beginning January 1, 2025.

The Company is currently evaluating the potential impact that this standard may have on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosure (“ASU 2023-09”).

ASU 2023-09 intends to provide improved transparency about income tax information through improvements to income tax disclosures.

Further, the amendments eliminate certain disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities.

The new standard will be effective for the Company for the fiscal year ending December 31, 2025.

The Company is currently evaluating the potential impact that this standard may have on its consolidated financial statements and related disclosures.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”).

The ASU introduced a new credit loss methodology, the Current Expected Credit Losses (“CECL”) methodology, which requires earlier recognition of credit losses, while also providing additional transparency about credit risk.

The CECL methodology utilizes a lifetime “expected credit loss” measurement objective for the recognition of credit losses for loans, held-to maturity debt securities, trade receivables and other receivables measured at amortized cost at the time the financial asset is originated or acquired.

Subsequent to the issuance of ASU 2016-13, the FASB issued several additional ASUs to clarify implementation guidance, provide narrow-scope improvements and provide additional disclosure guidance.

The Company adopted ASC 2016-13 on January 1, 2023 .

The adoption of this standard did no t have a material impact on the Company's consolidated financial statements.

ASU 2023-07 is effective for the Company for the fiscal year ending December 31, 2024 and for interim periods beginning January 1, 2025.

The adoption of this standard for the year ended December 31, 2024 did no t have a material impact on the Company’s consolidated financial results, but resulted in enhanced disclosures as included in Note 12 – Segments and Geographic Information .

The components of inventories are as follows (in thousands):

6 unchanged sentences

Total inventories

As of December 31, 2023 and 2022, the allowance for inventory excess and obsolescence consists of the following activity (in thousands):

At December 31, 2024 and 2023, the allowance for inventory excess and obsolescence consists of the following activity (in thousands):

Balance, beginning of year

1 unchanged sentence

Balance, end of year

The write-offs include scrapped inventories and reserved inventories sold.

W rite-offs of inventories include scrapped inventories and reserved inventories sold.

Property and Equipment

8 unchanged sentences

Depreciation and amortization expense for the years ended December 31, 2024 and 2023 was $ 124 thousand and $ 112 thousand.

During the year ended December 31, 2023 and 2022, the Company disposed of approximately $ 5 thousand and $ 41 thousand, respectively, in property and equipment that had been depreciated and amortized in full and had no impact on the accompanying consolidated statements of operations.

During the year ended December 31, 2024 and 2023, the Company disposed of approximately $ 123 thousand and $ 5 thousand, respectively, in property and equipment that had been depreciated and amortized in full and had no impact to t he accompanying consolidated statements of operations.

Intangible Assets

Intangible Assets consists of the following (in thousands):

Intangible assets consist of the following (in thousands):

accumulated amortization

2 unchanged sentences

Amortization expense for the years ended December 31, 2024 and 2023 was $ 82 thousand and $ 82 thousand, respectively.

No impairment charges were recorded for the years ended December 31, 2023 and 2022.

Impairment charges for the years ended December 31, 2024 and 2023 was $ 2 thousand and zero , respectively.

The impairment charges, measured on a cost basis, relate to the abandonment of certain internally generated and licensed intellectual property in the Company’s therapeutic market segment that was determined by management to have no future economic benefit.

The timing of approval of pending patent applications is uncertain and, therefore, are included in the thereafter period below until issued.

Pending patents as of December 31, 2023 and 2022 was $ 61 thousand and $ 57 thousand.

As of December 31, 2023, future amortization expense related to intangible assets subject to amortization is expected to be as follows (in thousands):

Years ending December 31,

Pending patents at December 31, 2024 and 2023 was $ 64 thousand and $ 61 thousand, respectively.

At December 31, 2024, future amortization expense related to intangible assets subject to amortization is expected to be as follows (in thousands):

Year ending December 31,

Convertible Preferred Stock

As of December 31, 2023 and 2022, the Company was authorized to issue 20,000,000 shares of preferred stock , $ 0.001 par value per share.

The Company has designated 50 shares of Series D redeemable convertible preferred stock and as of both December 31, 2023 and 2022, a total of 10,004,310 of Series B, Series G and Series I-2 non-redeemable convertible preferred stock.

At December 31, 2024 and 2023, the Company was authorized to issue 20,000,000 shares of preferred stock , $ 0.001 par value per share, 50 shares of Series D redeemable convertible preferred stock and 10,004,310 of Series B, Series G and Series I-2 non-redeemable convertible preferred stock.

The Company’s Series B, Series G and Series I-2 non-redeemable convertible preferred stock has been classified as equity on the accompanying consolidated balance sheets.

The authorized, issued and outstanding shares of non-redeemable convertible preferred stock as of December 31, 2023 consist of the following:

The authorized, issued and outstanding shares of non-redeemable convertible preferred stock at December 31, 2024 consisted of the following:

(in thousands)

The authorized, issued and outstanding shares of non-redeemable convertible preferred stock as of December 31, 2022 consist of the following:

The authorized, issued and outstanding shares of non-redeemable convertible preferred stock at December 31, 2023 consisted of the following:

(in thousands)

2 unchanged sentences

The Series D and G convertible preferred stock previously had rights to cumulative dividends in liquidation whether declared or not declared.

Since the holders waived the rights to such dividends in prior years, this does not have an ongoing impact.

Since the holders waived the rights to such dividends in 2012, this does not have an ongoing impact.

No dividends have been declared for the year ended December 31, 2024.

1 unchanged sentence

Following the satisfaction of the liquidation preferences, all shares of common stock participate in any remaining distribution.

The shares of convertible preferred stock are convertible into shares of common stock at any time, at the option of the holder.

The conversion rates of the Series B, Series D, and Series I-2 are subject to anti-dilution adjustments whereby, subject to specified exceptions, if the Company issues equity securities or securities convertible into equity at a price below the applicable conversion price of the Series B, Series D, and Series I-2, the conversion price of each such series shall be adjusted downward to equal the price of the new securities.

The conversion rate of the Series G is subject to a weighted-average adjustment in the event of the issuance of additional shares of common stock below the conversion price, subject to specified exceptions.

Upon the occurrence of an event that triggers a down round protection, the Company will recognize the value of the down round as a beneficial conversion discount.

The conversion price of the Series I-2 are also subject to certain resets as set forth in the Certificates of Designation, including a reverse stock split.

The following table summarizes the number of shares of common stock into which each share of convertible preferred stock can be converted as of December 31, 2023:

The following table summarizes the conversion ratio of shares of common stock into which each share of convertible preferred stock can be converted at December 31, 2024:

The holders of Series B, Series D, and Series G are entitled to one vote for each share of common stock into which it would convert.

As long as there are at least 10 shares of Series D outstanding, the holders of Series D have (i) the right to nominate and elect two members of the Board of Directors, and (ii) the right to approve specified significant transactions affecting the Company.

As long as there are at least 1,000,000 shares of Series G outstanding, the holders of Series G have the initial right to propose the nomination of two members of the Board, at least one of which such nominees shall be subject to the approval of the Company’s independent directors, for election by the stockholders at the Company’s next annual meeting of stockholders, or, elected by the full board of directors to fill a

vacancy, as the case may be.

At least one of the two directors nominated by holders of the Series G shall be independent.

4 unchanged sentences

Stockholders’ Deficit

As of December 31, 2023, the Company was authorized to issue 120,000,000 shares of common stock, $ 0.001 par value per share.

At December 31, 2024, the Company was authorized to issue 120,000,000 shares of common stock, $ 0.001 par value per share.

Common Stock Reserved for Future Issuance

As of December 31, 2023, the Company had shares of common stock reserved for future issuance as follows:

At December 31, 2024, the Company had shares of common stock reserved for future issuance as follows:

Options outstanding

10 unchanged sentences

No new awards may be granted under the 2006 Plan following its expiration.

In April 2010, the Company adopted the 2010 Equity Participation Plan, as amended (“2010 Plan”), which provides for the grant of stock options, restricted stock and other equity-based awards.

In April 2010, the Company adopted the 2010 Equity Participation Plan (the “2010 Plan”), which provides for the grant of stock options, restricted stock and other equity-based awards.

Awards for up to 9,700,000 shares may be granted to employees, directors and consultants under the 2010 Plan.

1 unchanged sentence

Options may be granted with different vesting terms and expire no later than 10 years from the date of grant.

In June 2020, the Company amended the 2010 Plan to extend the term of the 2010 Plan until March 2030 .

In June 2020, the Company amended the 2010 Plan to extend the term until March 2030 .

No other material provisions were amended.

2 unchanged sentences

Accordingly, on November 6, 2023, the 2010 Plan Amendment became effective.

For the year ended December 31, 2023, there were no restricted stock units granted.

As of December 31, 2023, there were no restricted stock units outstanding.

For the year ended December 31, 2024 and 2023 , there were no restricted stock units granted.

At December 31, 2024 , there were no restricted stock units outstanding.

Stock Options

Transactions involving stock options issued to employees, directors and consultants under the 2006 Plan and the 2010 Plan are summarized below.

Options issued have a maximum life of 10 years and no options were exercised in the years ended December 31,

2023 and 2022 .

The following tables summarize the changes in options outstanding and the related exercise prices for the Company’s common stock options issued:

Stock options are issued to employees, directors and consultants under the 2006 Plan and the 2010 Plan and have a maximum life of 10 years.

For the years ended December 31, 2024 and 2023 , no options were exercised.

The Co mpany’s stock option activity for the year ended December 31, 2024 is as follows:

(in thousands)

Outstanding at December 31, 2023

Forfeited or cancelled

Outstanding at December 31, 2024

15 unchanged sentences

Research and development

Unrecognized compensation expense related to stock options as of December 31, 2023 was $ 650 thousand, which is expected to be recognized over a weighted-average period of approximately 1.84 years.

Unrecognized compensation expense related to stock options at December 31, 2024 was $ 287 thousand, which is expected to be recognized over a weighted-average period of approximately 1.29 years.

Employee Retention Credit

7 unchanged sentences

In June 2023, the Company received confirmation from the IRS that changes to the Company’s Q1, Q2 and Q3 941 forms amounting to $ 224 thousand in the first quarter of 2021, $ 238 thousand in the second quarter of 2021, and $ 201 thousand in the third quarter of 2021 had been accepted.

received payment from the IRS related to the ERC during the second quarter of 2023 and recorded other income of $ 663 thousand in the accompanying consolidated statement of operations.

Pre-tax loss consists of the following jurisdictions (in thousands):

The Company received payment from the IRS related to the ERC during the second quarter of 2023 and recorded other income of $ 663 thousand in the accompanying consolidated statement of operations for the year ended December 31, 2023.

The components of worldwide pre-tax book loss are as follows:

Domestic pre-tax book loss

1 unchanged sentence

Consolidated pre-tax book loss

The Company accounts for income taxes in accordance with applicable authoritative guidance, which requires the Company to provide a net deferred tax asset/liability equal to the expected future tax benefit/expense of temporary reporting differences between book and tax accounting methods and any available operating loss or tax credit carryforwards.

The Company has available at December 31, 2024, federal net operating loss carryforwards of approximately $ 19.7 million, which may be applied against future taxable income.

At December 31, 2023, the Company had federal net operating loss carryforwards of approximately $ 20.3 million.

The decrease in federal operating loss carryforwards for the year ended December 31, 2024 is approximately $ 610 thousand, which is the estimated amount of net operating losses that will be used to offset taxable income for 2024.

The Australian net operating loss carryforwards as of December 31, 2024 are approximately $ 549 thousand, which may be carried forward indefinitely.

Any federal net operating losses generated prior to 2018 will start to expire beginning in 2026 , and net operating losses generated starting in 2018 will carry forward indefinitely until they are used.

The state net operating losses will start to expire beginning in 2036 .

The amount of and ultimate realization of the benefits from the operating loss carryforwards for income tax purposes is dependent, in part, upon the tax laws in effect, the future earnings of the Company, and other future events, the effects of which cannot be determined at this time.

Because of the uncertainty surrounding the realization of the loss carryforwards, the Company has established a valuation

allowance equal to the tax effect of the loss carryforwards, R&D credits, and accruals;

therefore, no net deferred tax asset has been recognized.

A reconciliation of the statutory federal income tax rate and the effective income tax rate for the years ended December 31, 2024 and 2023 is as follows:

16 unchanged sentences

The Company follows the provisions of FASB ASC 740-10 – Accounting for Uncertainty in Income Taxes .

ASC 740-10 prescribes a comprehensive model for the recognition, measurement, presentation and disclosure in consolidated financial statements of uncertain tax positions that have been taken or are expected to be taken on a tax return.

As of December 31, 2023 and 2022, the Company's reserve for unrecognized tax benefits was approximately $ 478 thousand and $ 953 thousand, respectively.

Due to the full valuation allowance as of December 31, 2023, current adjustments to the unrecognized tax benefits will have no impact on the Company's effective tax rate.

The Company does not anticipate any significant changes in its unrecognized tax benefits within 12 months of this reporting date.

For the years ended December 31, 2023 and 2022, there were no penalties or interest recognized related to unrecognized tax benefits given the Company's historical loss position and full valuation allowance.

At December 31, 2024, 2023, and 2022, the Company's reserve for unrecognized tax benefits is approximately $ 478 thousand, $ 478 thousand, and $ 953 thousand, respectively.

Due to the full valuation allowance at December 31, 2024, current adjustments to the unrecognized tax benefits will have no impact on the Company's effective tax rate.

The Company does not anticipate any significant change in its unrecognized tax benefits within 12 months of this reporting date.

The Company includes penalties and interest expense related to income taxes as a component of other expense and interest expense, respectively, as necessary.

A reconciliation of the reserve for unrecognized tax benefits is as follows (in thousands):

Balance as of December 31, 2021

Balance at December 31, 2022

Increase (decrease) related to prior year tax positions

2 unchanged sentences

Increase (decrease) related to lapse in statute of limitations

Balance as of December 31, 2022

Balance at December 31, 2023

Increase (decrease) related to prior year tax positions

2 unchanged sentences

Increase (decrease) related to lapse in statute of limitations

Balance as of December 31, 2023

As of December 31, 2023, the Company has available federal net operating loss (“NOL”) carryforwards of approximately $ 20.3 million, which may be applied against future taxable income and will expire in various years beginning 2026 through 2037 .

However, any NOL carryforwards generated in 2018 and future tax years will not expire and are carried forward indefinitely.

State NOL carryforwards will start to expire in 2036 .

As of December 31, 2022, the Company had federal NOL carryforwards of approximately $ 73.5 million.

The decrease in federal NOL carryforwards for the year ended December 31, 2023 is approximately $ 53.2 million, which is primarily attributable to the Internal Revenue Code (“IRC”) Section 382 limitation.

As of December 31, 2023, the Company has Australian NOL carryforwards of approximately $ 1.0 million, which may be carried forward indefinitely.

The amount of and ultimate realization of the benefits from NOL carryforwards for income tax purposes is dependent, in part, upon the tax laws in effect, the future earnings of the Company, and other future events, the effects of which cannot be determined at this time.

Because of the uncertainty surrounding the realization of NOL carryforwards, the Company has established a valuation allowance equal to the tax effect of the NOL carryforwards, research and development (“R&D”) credits, and accruals;

therefore, no net deferred tax asset has been recognized as of December 31, 2023.

The Company is subject to IRC Sections 382 and 383, which limits the amount of NOL and tax credit carryovers that can be used in future years.

Balance at December 31, 2024

The Company is subject to IRC Code Section 382 and 383, which limits the amount of the net operating loss and tax credit carryovers that can be used in future years.

The Company has completed a study to assess whether an ownership change has occurred, as defined by IRC Sections 382 and 383, or whether there have been ownership changes since the Company's formation.

Based on the completed study, it was determined that the Company had significant ownership changes that occurred in January 2009 and November 2015.

As a result of the ownership changes, under IRC Sections 382 and 383, the NOL and R&D tax credit carryforwards that were generated in the year prior to November 2015 have been significantly limited and a substantial unused amount will expire.

The Company estimates that if another future change in ownership did occur, the federal and state NOL and R&D tax credit carryforwards that can be utilized in the future would be significantly limited as well.

There can be no assurance that the Company will ever be able to realize the benefit of some or all of the federal and state NOL and R&D tax credit carryforwards, either due to ongoing operating losses or significant ownership change limitations.

As a result of the ownership changes, under IRC Code Sections 382 and 383, the net operating losses and research and development credits that were generated in the periods prior to November 2015 have been significantly limited and a substantial amount will expire unused.

The Company estimates that if another future change in ownership did occur, the federal and state net operating loss carryforwards and research and development credit carryforwards that can be utilized in the future would be significantly limited as well.

There can be no assurance that the Company will ever be able to realize the benefit of some or all of the federal and state loss carryforwards or credit carryforwards, either due to ongoing operating losses or due to ownership change limitations.

Significant components of deferred tax assets and liabilities are as follows (in thousands):

17 unchanged sentences

S Real Estate Holdings LLC is owned by Dr.

Russell Kern, the Company’s Executive Vice President and Chief Scientific Officer.

The lease agreement was approved by the Board of Directors and was reviewed by the Company’s outside legal counsel.

The terms of the lease were reviewed by a committee of independent directors, and the Company believes that, in total, those terms are at least as favorable to the Company as could be obtained for comparable facilities from an unaffiliated party.

Russell Kern, the Company’s Executive Vice President, Chief Scientific Officer.

The Lease was personally guaranteed by the Dr.

Russell Kern, the Company’s Executive Vice President and Chief Scientific Officer.

Russell Kern, the Company’s Executive Vice President, Chief Scientific Officer.

On December 15, 2021, the Company and S Real Estate Holdings LLC entered into a co-tenant agreement, whereby the Company and S Real Estate Holdings LLC agreed to allocate portions of the base rent and variable charges, including insurance, maintenance costs, taxes and operating expenses, between the parties.

During the term of the Lease, the Company will be liable for 40 % of all costs incurred in connection with the Lease, while S Real Estate Holdings LLC will be liable for the remaining 60 %.

During the term of the Lease, the Company will be liable for 40 % of all costs incurred in connection with the Lease.

Refer to Note 11 – Commitments & Contingencies within the consolidated financial statements for further discussion.

1 unchanged sentence

Between March 2018 and March 2021, to obtain funding for working capital purposes, the Company borrowed a total of $ 2.9 million from Dr.

Semechkin and issued an unsecured, non-convertible promissory note in the principal amount of $ 2.7 million (the “Note”) to Dr.

Semechkin, Co-Chairman and CEO, and issued an unsecured, non-convertible promissory note in the principal amount of $ 2.9 million (the “Note”) to Dr.

Semechkin (the “Noteholder”).

The outstanding principal amount under the Note accrued interest at a rate of 4.5 % per annum.

The outstanding principal and accrued interest on the Note were due and payable on January 15, 2022 and could be pre-paid without penalty at any time.

In January 2022, to obtain additional funding for working capital purposes, the Company further modified the Note and issued an unsecured, non-convertible promissory note (the “January 2022 Note”) in the amount of $ 2.9 million to Dr.

In exchange, Dr.

Semechkin surrendered the Note and provided additional funding in the amount of $ 250 thousand to the Company.

The outstanding principal amount under the January 2022 Note accrues interest at a rate of 4.5 % per annum.

The outstanding principal and accrued interest on the January 2022 Note were due and payable on March 15, 2022 and may be pre-paid by the Company without penalty at any time.

In March 2022, the Noteholder surrendered the January 2022 Note, and the Company issued a new promissory note (“March 2022 Note”), which featured all the same terms as the previously outstanding note, with the exception of an extension of the maturity date from March 15, 2022 to September 15, 2022 .

The March 2022 Note has a principal balance of $ 2.9 million, an interest rate of 4.5 %, and features optional prepayment terms.

There were no debt issuance fees associated with this issuance.

In September 2022, the Noteholder surrendered the March 2022 Note, and the Company issued a new promissory note (“September 2022 Note”), which featured all the same terms as the previously outstanding note, with the exception of an extension of the maturity date from September 15, 2022 to March 15, 2023 .

The September 2022 Note has a principal balance of $ 2.9 million, an interest rate of 4.5 %, and features optional prepayment terms.

The outstanding principal and accrued interest on the Note were due and payable on March 15, 2023 and could be pre-paid without penalty at any time.

There were no debt issuance fees associated with this issuance.

In March 2023, the Noteholder surrendered the September 2022 Note, and the Company issued a new promissory note (“March 2023 Note”), which featured all the same terms as the previously outstanding note, with the exception of an extension of the maturity date from March 15, 2023 to September 15, 2023 .

In March 2023, the Noteholder surrendered the Note, and the Company issued a new promissory note (“March 2023 Note”), which featured all the same terms as the previously outstanding note, with the exception of an extension of the maturity date from March 15, 2023 to September 15, 2023 .

The March 2023 Note has a principal balance of $ 2.9 million, an interest rate of 4.5 %, and features optional prepayment terms.

1 unchanged sentence

In September 2023, the Noteholder surrendered the March 2023 Note, and the Company issued a new promissory note (“September 2023 Note”), which featured all the same terms as the previously outstanding note, with the exception of an extension of the maturity date from September 15, 2023 to September 15, 2024 .

The September 2023 Note has a principal balance of $ 2.9 million, accrues interest at 4.5 % per annum from the original borrowing date, and features optional prepayment terms.

The September 2023 Note has a principal balance of $ 2.9 million, an interest rate of 4.5 %, and features optional prepayment terms.

There were no debt issuance fees associated with this issuance.

All amendments during the years ended December 31, 2023 and 2022 qualified as troubled debt restructurings, which did not result in a gain as the carrying amount of the debt was less than the total future cash payments of the restructured debt.

All amendments during the year ended December 31, 2023 qualified as troubled debt restructurings, which did not result in a gain as the carrying amount of the debt was less than the total future cash payments of the restructured debt.

On September 15, 2024, the Company surrendered its September 2023 Note, which included repaying $ 0.2 million in outstanding principal, reducing the principal balance to $ 2.7 million, increasing the interest rate from 4.5 % to 5.5 %, and extending the maturity date from September 15, 2024 to September 15, 2025 (“September 2024 Note”).

All other terms of the September 2024 Note are the same as the previously outstanding note and there were no debt issuance fees associated with this issuance.

Pursuant to ASC 470-60, the amendment did not qualify as a troubled debt restructuring as the creditor did not grant a concession.

As the terms of the September 2024 Note were not substantially different than the terms of the September 2023 Note, the amendment was accounted for as a debt modification.

The repayment of principal was accounted for as a partial extinguishment of debt, which did not result in an extinguishment gain or loss.

Commitments and Contingencies

As of December 31, 2023 , the Company has three operating leases for real estate in California and Maryland:

• San Diego, California – corporate headquarters, including corporate, R&D, and manufacturing operations, with a term date of December 2026 , jointly leased with a related party (refer to Note 10 – Related Party Transactions within the consolidated financial statements for further discussion);

• San Diego, California – supplemental office space adjacent to the Company’s corporate headquarters with a term date of December 2026 ;

At December 31, 2024 , the Company has three operating leases for real estate in California and Maryland:

• San Diego, California – corporate headquarters, including corporate, R&D, and manufacturing operations, with a termination date of December 2026 , jointly leased with a related party (refer to Note 10 – Related Party Transactions within the consolidated financial statements for further discussion).

This lease contains no renewal or term extension options;

• San Diego, California – supplemental office space adjacent to the Company’s corporate headquarters with a termination date of December 2026 .

This lease contains no renewal or term extension options;

• Frederick, Maryland – mixed laboratory and administrative space with a term date of November 2025 .

The lease contains one renewal option for an additional three-year term through November 2028.

The renewal option is not included in the lease term as it is not reasonably certain that the Company will exercise its renewal option.

In October 2021, the Company entered into an operating lease for its new corporate headquarters.

9 unchanged sentences

The Company’s operating leases for real estate are subject to additional variable charges for common area maintenance and other variable costs, and do not include an option to extend the lease term.

As of December 31, 2023, total right-of-use assets and operating lease liabilities were approximately $ 557 thousand and $ 721 thousand, respectively.

As of December 31, 2023 , the Company had no finance leases.

At December 31, 2024, total right-of-use assets and operating lease liabilities were approximately $ 352 thousand and $ 445 thousand, respectively.

At December 31, 2024 , the Company had no finance leases.

Information related to the Company’s right-of-use assets and related lease liabilities were as follows (in thousands, except years and percentages):

7 unchanged sentences

Weighted-average discount rate

Maturities of lease liabilities as of December 31, 2023 were as follows (in thousands):

Years ending December 31,

Maturities of lease liabilities at December 31, 2024 were as follows (in thousands):

Year ending December 31,

Total minimum lease payments

9 unchanged sentences

Segments and Geographic Information

The Company operates the business on the basis of three reporting segments, the parent company and two business units:

ISCO – therapeutic market;

LCT – biomedical market;

and LSC – anti-aging market.

The CODM reviews financial information presented on a consolidated basis, accompanied by disaggregated information by each reportable company’s statement of operations.

The Company operates the business on the basis of three reporting segments:

therapeutic market (“ISCO”);

biomedical market (“LTC”);

and anti-aging market (“LSC”).

The Company identifies their reporting segments based on market offering as each segment has unique customer needs and regulatory requirements.

The CODM uses operating income (loss) to allocate resources (including employees, financial, and capital resources) for each segment predominantly in the annual forecasting process.

Corporate overhead expenses have been allocated to the segments either through specific identification or based on a reasonable methodology.

The CODM compares year-over-year actual results on a quarterly basis to assess performance and make decisions about allocating resources to the segments.

The Company’s measure of segment profit or loss is the operating income (loss) metric.

This aligns the segment reporting with the Company's internal management reporting and performance evaluation practices.

The Company does not measure the performance of its segments on any asset-based metrics.

Therefore, segment information is presented only for net loss.

Therefore, segment information is presented only for results of operations, including operating income (loss).

Results of operations by market segment were as follows (in thousands):

Year Ended December 31, 2024

Biomedical market

Anti-aging market

Total revenues

Product sales

Operating expenses:

Therapeutic market

Biomedical market

Anti-aging market

Cost of sales

General and administrative

Selling and marketing

Research and development

Total operating expenses

Operating income (loss):

Therapeutic market

Biomedical market

Anti-aging market

Total operating loss

Other income (expense), net:

Therapeutic market

Biomedical market

Anti-aging market

Total other income (expense), net

Net income (loss):

Therapeutic market

Biomedical market

Anti-aging market

Total net loss

(Loss) income from operations

Total other expense, net

Additional Segment Information

Interest expense

Depreciation and amortization

Share-based compensation expense

Year Ended December 31, 2023

Product sales

Operating expenses:

Cost of sales

General and administrative

Selling and marketing

Research and development

Total operating expenses

(Loss) income from operations

Total other income, net

Additional Segment Information

Interest expense

Depreciation and amortization

Share-based compensation expense

Geographic Information

The Company’s wholly owned subsidiaries are located in Maryland, California and Melbourne, Australia, and have customer and vendor relationships worldwide.

The Company’s wholly owned subsidiaries are located in Maryland, California and Victoria, Australia, and have customer and vendor relationships worldwide.

The Company’s long-lived assets including property, plant, and equipment, net, right-of-use assets, and intangible assets, net are domiciled in the United States.

3 unchanged sentences

All other regions

Subsequent Events

In February 2025, the Company and S Real Estate Holdings, LLC, a related party, amended its co-tenant agreement to re-allocate portions of the base rent and variable charges.

Retroactively, as of January 2025, the Company will now be liable for 75 % of all costs incurred in connection with the Lease.

As a result of the amended co-tenant agreement, the Company will recognize a lease liability and right-of-use asset as of the modification date in Fiscal Year 2025.

In March 2025, the Company and St.

John Properties, Inc, amended its lease agreement to extend the lease expiration for one year from December 31, 2025 to December 31, 2026 .

As a result of the amended lease agreement, the Company will reassess the lease liability and associated right-of-use-asset in Fiscal Year 2025.

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 9A. Controls and Procedures