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Item 8. Financial Statements and Supplementary Data

2022-03-10 compared with 2021-03-11 · 1531 added, 1641 removed, 433 unchanged (88% of the section changed)

STATEMENTS AND SUPPLEMENTARY DATA

FINANCIAL STATEMENTS

AND SUPPLEMENTARY DATA

to consolidated financial statements

Report of OUM & CO.

LLP, Independent Registered Public Accounting Firm – Audit Opinion

Registered Public Accounting Firm - Audit Opinion

Financial Statements:

Balance Sheets

Statements of Operations

Statements of Comprehensive Loss

Statements of Shareholders Equity

Statements of Cash Flows

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Shareholders Equity

Consolidated Statements of Cash Flows

accompanying notes to consolidated financial statements.

of Independent Registered Public Accounting Firm

and Board of Directors

Report of Independent Registered Public Accounting

the Shareholders and Board of Directors

Cell Therapeutics, Inc.

on the Consolidated Financial Statements

have audited the consolidated balance sheets of Lineage Cell Therapeutics, Inc.

on the Financial Statements

have audited the accompanying consolidated balance sheet of Lineage Cell Therapeutics, Inc.

and Subsidiaries (collectively, the “Company”)

as of December 31, 2020 and 2019, and the related consolidated statements of operations, comprehensive income (loss), changes

in shareholders’ equity, and cash flows for each of the two years in the period ended December 31, 2020, and the related

notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial

statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and

the results of their operations and their cash flows for each of the two years in the period ended December 31, 2020 , in

conformity with accounting principles generally accepted in the United States of America.

as of December 31, 2021, the related consolidated statements of operations, comprehensive loss, changes in shareholders’ equity,

and cash flows for the year ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial

statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position

of the Company at December 31, 2021, and the results of its operations and its cash flows for the year ended December 31, 2021, in conformity

with accounting principles generally accepted in the United States of America.

consolidated financial statements of the Company as of and for the year ended December 31, 2020 were audited by OUM & Co.

joined WithumSmith+Brown, PC on July 15, 2021, and rendered their opinion on such statements on March 11, 2021.

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an

opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered

with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws

and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether

due to error or fraud.

audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether

due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis,

evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the

accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the

consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements

that was communicated or required to be communicated to the Audit Committee and that:

(1) relates to accounts or disclosures that

are material to the consolidated financial statements;

Our responsibility is to express an opinion

on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public

Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company

in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission

and the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due

to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that

was communicated or required to be communicated to the Audit Committee and that:

(1) relates to accounts or disclosures that are material

to the consolidated financial statements;

and (2) involved our especially challenging, subjective, or complex judgments.

The communication of 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.

Assets Impairment Assessment - In-Process Research and Development

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.

for revenue and collaboration agreements

of the Matter

described in Note 7 to the consolidated financial statements, the Company’s in-process research and development indefinite-lived

intangible assets had a balance of $46.5 million as of December 31, 2020.

Indefinite-lived

intangible assets are tested for impairment annually and when events or changes in circumstances indicate that the asset might

As part of its indefinite-live intangible asset impairment assessment, management estimates the fair values of the

Company’s indefinite-lived intangible assets using an income approach that utilizes a discounted cash flow model or, where

appropriate, a market approach.

The discounted cash flow model is dependent upon management’s estimates of future cash flows

and other factors such as estimates of (i) future operating performance, including future sales, long-term growth rates, operating

margins, discount rates, variations in the amount and timing of cash flows and the probability of achieving the estimated cash

flows, and (ii) future economic conditions.

the Company’s impairment analysis of its indefinite-lived intangible assets is complex because of the significant judgment

and estimates used by management in developing the fair value measurement of in-process research and development intangible assets.

This in turn leads to significant audit effort and a high degree of auditor judgment and subjectivity in performing procedures

to evaluate management’s estimated cash flows, including significant assumptions related to future sales, long-term growth

rates, operating margins, discount rates, variations in the amount and timing of cash flows and the probability of achieving the

estimated cash flows, and future economic conditions in determining the fair value of each of the in-process research and development

intangible assets.

Company recorded deferred revenue and revenue from collaboration agreements of $50.4 million and $1.1 million, respectively, as of and

for the year ended December 31, 2021.

As described in Note 2, the terms of the Company’s collaboration agreements may include licenses

for the Company’s technology or programs, research and development services, and services or obligations in connection with participation

in research or steering committees.

Amounts received under these arrangements typically include nonrefundable upfront payments and license

fees, research funding, milestone and other contingent payments for the achievement of defined collaboration objectives and certain preclinical,

clinical, regulatory and sales-based events, as well as royalties on sales of any commercialized products.

the Company’s accounting for revenues from collaboration arrangements was complex and required significant judgments primarily

in identifying which elements represent revenue producing performance obligations, determining the measurement and allocation of arrangement

consideration, and evaluating estimates of the total expected inputs under the input method for revenue recognized over time.

We Addressed the Matter in Our Audit

the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the

consolidated financial statements.

These procedures included, among others, obtaining an understanding of and evaluating management’s

process for identifying potential impairment events;

evaluating the appropriateness of the cash flow model used in the impairment

testing process;

testing the completeness, accuracy, and relevance of underlying data used in the model;

and evaluating the reasonableness

of the significant assumptions used by management, including the future cash flow projections and discount rates.

the reasonableness of management’s assumptions for future cash flow projections and discount rates in consideration of (i)

the current and past performance of the asset group, (ii) the consistency with external market and industry data, and (iii) whether

these assumptions were consistent with evidence obtained in other areas of the audit.

Francisco, California

test the accounting treatment for revenue from collaboration arrangements, we evaluated, among other things, whether the identified performance

obligations were properly determined, and the transaction price was properly measured and allocated to the identified performance obligations.

To test the measurement of efforts toward satisfying the performance obligation, our audit procedures included, among others, reviewing

management’s analysis for accuracy and completeness by agreeing data to the underlying contract, inspecting communications with

the collaborative partner, evaluating the application of the input method for the recognition of revenue and testing the estimated total

inputs and actual inputs incurred.

WithumSmith+Brown, PC

have served as the Company’s auditor since 2014.

Francisco, California

ID Number 100

of Independent Registered Public Accounting Firm

and Board of Directors

Cell Therapeutics, Inc.

on the Consolidated Financial Statements

have audited the consolidated balance sheet of Lineage Cell Therapeutics, Inc.

and Subsidiaries (collectively, the “Company”)

as of December 31, 2020, and the related consolidated statements of operations, comprehensive loss, changes in shareholders’ equity,

and cash flows for the year ended December 31, 2020, and the related notes (collectively referred to as the “consolidated financial

statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position

of the Company at December 31, 2020, and the results of their operations and their cash flows for the year ended December 31, 2020 ,

in conformity with accounting principles generally accepted in the United States of America.

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion

on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the PCAOB

and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.